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www.barrick.com
Barrick Gold Corporation
Corporate Office:
Brookfield Place
TD Canada Trust Tower
161 Bay Street, Suite 3700
P.O. Box 212
Toronto, Canada M5J 2S1
Tel: +1 416 861-9911
Toll-free throughout North America:
1 800 720-7415
Email: investor@barrick.com
Creating a
New Champion
for long-term value creation.
■ Committed to creating long-term value
for all shareholders
■ Five of the world’s top 10 Tier One gold assets1
■ Geology driven business focused on
exploration and resource management
■ Team with proven record of delivery
■ Focus on disciplined growth and
sustainable profitability
Contents
Connect with us
Barrick Gold Corporation
Annual Report 2018
Message from the Executive Chairman 6 / Message from the President and Chief Executive Officer 9
Board of Directors 16 / Management’s Discussion and Analysis 18 / Mineral Reserves and Resources 86
Financial Statements 98 / Notes to Financial Statements 103 / Shareholder Information 176
The New
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www.barrick.com
Barrick Gold Corporation
Corporate Office:
Brookfield Place
TD Canada Trust Tower
161 Bay Street, Suite 3700
P.O. Box 212
Toronto, Canada M5J 2S1
Tel: +1 416 861-9911
Toll-free throughout North America:
1 800 720-7415
Email: investor@barrick.com
Creating a
New Champion
for long-term value creation.
■ Committed to creating long-term value
for all shareholders
■ Five of the world’s top 10 Tier One gold assets1
■ Geology driven business focused on
exploration and resource management
■ Team with proven record of delivery
■ Focus on disciplined growth and
sustainable profitability
Contents
Connect with us
Barrick Gold Corporation
Annual Report 2018
Message from the Executive Chairman 6 / Message from the President and Chief Executive Officer 9
Board of Directors 16 / Management’s Discussion and Analysis 18 / Mineral Reserves and Resources 86
Financial Statements 98 / Notes to Financial Statements 103 / Shareholder Information 176
BARRICK AT-A-GLANCE
Industry Leading Portfolio of Tier One mines.
CORTEZ
GOLDSTRIKE
LOULO–GOUNKOTO
KIBALI
PUEBLO VIEJO
NEVADA – 100%
NEVADA – 100%
MALI – 80%
DEMOCRATIC REPUBLIC OF CONGO – 45%
DOMINICAN REPUBLIC – 60%
Cortez consists of the Pipeline open pit complex
and the Cortez Hills open pit and underground
mines. Processing at Cortez consists of an oxide
mill and heap leach pads.
Operations at Goldstrike comprise the Betze-Post
and South Arturo JV (60%) open pits and the Meikle
and Rodeo underground mines. Refractory ore from
both Cortez and Goldstrike, including ore stockpiles
at Goldstrike, are processed through the Goldstrike
roaster and autoclaves.
Loulo-Gounkoto comprises the Yalea and Gara underground
mines at Loulo, as well as the Gounkoto open pit. Production
from Loulo started in 2005 as an open pit operation. Gounkoto,
a greenfi elds discovery, poured fi rst gold in 2011, with ore
processed at Loulo. Gounkoto is being extended through the
development of a super pit.
Kibali is one of the largest gold mines in Africa, consisting
of an open pit, an underground operation and a 7.2 Mtpa
processing plant. First gold was poured in 2013 from
open pit operations. Full underground commissioning was
completed at the end of 2017.
Pueblo Viejo consists of two open pits, Moore and Monte
Negro, with processing through autoclaves. Ongoing studies
and test work are supportive of a plant expansion that could
increase throughput by roughly 50 percent to 12 million
tonnes per year (100% basis).
Global Presence with high grade reserves in prolifi c gold districts.
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PRODUCING
1 Cortez-Goldstrike
2 Turquoise Ridge (75%)
3 Golden Sunlight
4 Hemlo
5 Pueblo Viejo (60%)
6 Lagunas Norte
7 Veladero (50%)
8 Loulo-Gounkoto (80%)
9 Tongon (89.7%)
10 Morila (40%)
11 Kibali (45%)
12 Porgera (47.5%)
13 Kalgoorlie (50%)
PROJECTS
14 Donlin Gold (50%)
15 Goldrush and Fourmile
16 Norte Abierto (50%)
17 Pascua-Lama
18 Massawa (83.25%)
ACACIA (63.9%)
19 North Mara
20 Bulyanhulu
21 Buzwagi
COPPER PRODUCING
22 Jabal Sayid (50%)
23 Lumwana
24 Zaldívar (50%)
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Emerging
Assets with Tier One potential.
TURQUOISE RIDGE
GOLDRUSH AND FOURMILE
NEVADA – 75%
NEVADA – 100%
The Turquoise Ridge underground mine has one of the
highest grades in the gold industry. Completion of the third
shaft will improve access to the North Zone, with initial
production expected in 2022.
The Goldrush and Fourmile deposits are located within the
Cortez District, with the potential to be developed as a single
optimized project. Looking ahead, we will continue testing
the gap between Goldrush and Fourmile, as well as seek to
extend mineralization to the north.
Geology Driven Focus
with a track record of exploration success.
Goldstrike
Pueblo Viejo
Cortez
Kibali†
Veladero
Lagunas Norte
Loulo
Goldrush
Turquoise Ridge
Alturas
Morila
Gounkoto
Tongon
Massa wa
ACQUIRED
ADDED
Barrick has a long history of making
world-class, grassroots exploration
discoveries as well as major reserve and
resource additions to acquired assets.
† Acquired ounces refl ects only reserves at the time of acquisition by Randgold,
while subsequent additions represents both reserves and resources.
Barrick Gold Corporation | Annual Report 2018
1
BARRICK AT-A-GLANCE
Long-life, High-grade
Reserve Base supported by
an intense company focus on mineral resource
management to maximize long-term value.
Focused mineral resource management means:
■ Taking ownership of the orebody
as gatekeeper to ensure reserves
pass investment fi lters
■ Clear accountability for resource
sustainability, feasibility and
replenishment
■ Superior orebody knowledge to
minimize technical risks, ensure
optimized mineplans and enable
proactive management
BARRICK 2018 RESERVES
AND RESOURCES1
RANDGOLD 2018 RESERVES
AND RESOURCES2,†
33.5Moz @ 1.22g/t
Inferred resources
88.8Moz @ 1.40g/t
Measured and indicated
resources
62.3Moz @ 1.56g/t
Proven and probable
reserves
4.2Moz @ 2.8g/t
Inferred resources
18.8Moz @ 3.6g/t
Measured and indicated
resources
12.8Moz @ 4.0g/t
Proven and probable
reserves
† Mineral resources are
inclusive of reserves.
2
Barrick Gold Corporation | Annual Report 2018
Disciplined Criteria and
Strategic Filters for investment
to create real value for all stakeholders.
■ It applies principally to gold (copper)
■ It is located in a world-class geological gold district
■ We have the right to mine and repatriate profi ts
■
It fi ts our values in respect of social license, political risk,
environmental compliance, manage closure liability
■ We have active management participation
■ It enhances our strategic partnering network
INVESTMENT
INVESTMENT
FILTERS
FILTERS
■
■
Tier 1 - a reserve potential greater than 5 million ounces of gold
and at least a 15% IRR at a long-term gold price†
Tier 2 - a reserve potential of greater than 3 million ounces of gold
and at least a 20% IRR at a long-term gold price†
† Long-term gold price calculated with reference to a standard reference gold mine model using current input costs.
10%
28%
44%
18%
Australia
Pacific
Africa
North
America
Latin
America
2019 OUTLOOK3
Production and costs
Gold
Production
(koz)
Cost of Sales4
($/oz)
Cash Costs5
($/oz)
AISC5
($/oz)
5,100–5,600
880–940
650–700
870–920
Copper
Production
(mlb)
Cost of Sales4
($/lb)
C1 Cash Costs5
($/lb)
AISC5
($/lb)
375–430
2.30–2.70
1.70–2.00
2.40–2.90
Five-year gold production and cost outlook to be within the 2019 range,
albeit cash costs and all-in sustaining costs are expected to decline over
that period to below the bottom of these ranges.
Global gold distribution††
10%
28%
44%
18%
Australia
Pacific
Africa
North
America
Latin
America
Gold
Production
(koz)
Cost of Sales4
Cash Costs5
($/oz)
($/oz)
AISC5
($/oz)
5,100–5,600
880–940
650–700
870–920
Copper
Production
(mlb)
Cost of Sales4
C1 Cash Costs5
($/lb)
($/lb)
AISC5
($/lb)
375–430
2.30–2.70
1.70–2.00
2.40–2.90
Five-year gold production and cost outlook to be within the 2019 range,
albeit cash costs and all-in sustaining costs are expected to decline over
that period to below the bottom of these ranges.
†† Based on the midpoint of guidance.
Barrick Gold Corporation | Annual Report 2018
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BARRICK AT-A-GLANCE
Proven Leadership and a
management team with a strong ownership culture.
Mark Bristow
President and
Chief Executive
Officer
Graham
Shuttleworth
Senior Executive
Vice-President, Chief
Financial Officer
Kevin Thomson
Senior Executive
Vice-President,
Strategic Matters
Mr. Bristow had been the Chief
Executive of Randgold Resources
since its incorporation in 1995.
Randgold was founded on his
pioneering exploration work in West
Africa and he subsequently led
the company’s growth through
the discovery and development
of world-class assets.
Mr. Shuttleworth is a chartered
accountant with 25 years of mining
industry experience. Previously, he
was the Financial Director and Chief
Financial Officer of Randgold from July
2007, and prior to that the managing
director and head of metals and mining
for the Americas in the global investment
banking division of HSBC.
Mr. Thomson is intimately involved in all
activities of strategic significance to the
company, including the development
of partnerships with other mining
companies, investors, suppliers and
other business partners, strategic legal
issues, management of complex
negotiations, as well as development
of corporate strategy and governance.
Rob Krcmarov
Executive
Vice-President,
Exploration and
Growth
Rod Quick
Mineral Resource
Management and
Evaluation Executive
Catherine Raw
Chief Operating
Officer, North America
With over 30 years of experience in
geology and exploration, Mr. Krcmarov
leads a global team of geoscientists
and exploration professionals who
are responsible for the discovery of a
number of the largest gold deposits
in recent decades, including Lagunas
Norte, Goldrush, and Alturas.
Mr. Quick is a geologist with an MSc
and 24 years of experience in the gold
mining industry. He joined Randgold
in 1996, and had been involved in the
exploration, evaluation and production
phases of all of Randgold’s projects
since Morila.
Ms. Raw is the executive responsible
for the North America region. She was
formerly Chief Financial Officer of
Barrick. Ms. Raw joined the company in
May 2015 as Executive Vice-President,
Business Performance, and was
previously co-manager of BlackRock’s
flagship mining funds.
Greg Walker
Head of Operations
and Technical
Excellence,
North America
Lois Wark
Group Corporate
Communications and
Investor Relations
Executive
Mr. Walker is the executive responsible
for the operational and technical
excellence of the North America region.
He was formerly Senior Vice-President,
Operational and Technical Excellence of
Barrick. Prior to this, Mr. Walker was the
Executive General Manager of the Pueblo
Viejo mine in the Dominican Republic.
Ms. Wark joined Randgold when the
company was established in 1995 and
headed its corporate communications
function for the past 20 years. She
has assumed responsibility as
executive in charge of Barrick’s
global corporate communications
and investor relations programs.
4
Barrick Gold Corporation | Annual Report 2018 Grant Beringer
Group Sustainability
Executive
Mr. Beringer oversees all sustainability-
related aspects for the company and
is a member of the environmental and
social oversight committee. Mr. Beringer
holds an MSc in environmental
management and has over 15 years
of experience in the environmental
and social consulting industry.
Mark Hill
Chief Operating Officer,
LATAM and
Australia Pacific
Willem Jacobs
Chief Operating Officer,
Africa and Middle East
Mr. Hill is the executive responsible
for the Latin America and Australia
Pacific region. He was formerly
Chief Investment Officer of Barrick,
chairing its investment committee.
Mr. Hill has more than 25 years of
experience in the mining industry.
Mr. Jacobs is the executive responsible
for the Africa and Middle East region.
He joined Randgold in 2010 and had
been responsible for the establishment
of Randgold’s activities in Central
and East Africa, specifically in the
Democratic Republic of Congo.
Darian Rich
Human Resources
Executive
Kathy Sipos
General Manager,
Corporate Office
John Steele
Metallurgy,
Engineering and
Capital Projects
Executive
Mr. Rich, who has more than 25 years
of experience in human resource
management, was appointed Executive
Vice-President, Talent Management,
in July 2014, in which he was tasked
with attracting, retaining and developing
exceptional people.
Ms. Sipos is the executive responsible
for the Toronto corporate office. She
facilitates and coordinates the activities
of the executive leadership team
to ensure seamless and efficient
decision-making and execution against
priority initiatives.
Mr. Steele is the executive responsible
for capital projects and provides
operational and engineering oversight to
the group. He joined Randgold in 1996
and was responsible for the successful
construction and commissioning
of Randgold’s Morila, Loulo, Tongon,
Gounkoto and Kibali mines.
5
Barrick Gold Corporation | Annual Report 2018 MESSAGE FROM THE EXECUTIVE CHAIRMAN
John L. Thornton
Executive Chairman
In my message to you
last year, I noted that we
operate in a world which
is not only increasingly
complex but changing in
unpredictable ways and
at an accelerating rate.
Since then, it has become even more so, posing a particular challenge for
mining companies – long-term businesses which have to plan for and invest in
a future where the certainties are shifting and the risks are great.
The mining industry has generally struggled in these circumstances to
devise and execute strategies capable of delivering real, sustainable value.
Learning from our own experience in this regard, Barrick launched a new
strategic initiative in 2015, designed to reinvent the business in order to secure
its long-term success. We called it “Back to the Future” because while it looked
to new horizons and the ridges that will rise beyond them, it was based on the
values on which Barrick’s original ascendancy was built.
Over the past year, we have continued to make significant progress with
this transformation process. Our portfolio is being enhanced through a renewed
focus on quality assets with good growth prospects and the disposal of those
deemed to be non-core. The balance sheet has been restored to a position of
strength and the business model has been recalibrated with returns, margins
and free cash flow as its key criteria. We have continued to decentralize
management. The aim is a smaller corporate office; senior operational
executives moving to the mine sites; and a flattened management structure. We
have deepened our engagement with China, where the partnerships we have
already forged will link us to that country’s growing economic and geopolitical
stature and give us access to the many value-creating opportunities it is
generating. We have also made significant advances on the technological
front, and autonomous production systems and projects throughout Barrick will
position us as a global leader in mining efficiency.
The most important milestone on this journey was Barrick’s merger with
Randgold Resources, completed on January 1, 2019, which has taken us a long
way towards our goal of combining the industry’s best assets with its best people.
The numbers speak for themselves. The new Barrick owns five of the world’s
Top 10 Tier One gold assets, with two more under development. At the time of
announcement, our combined company had the lowest total cash costs and the
highest adjusted EBITDA margin among its peers, as well as the largest gold
reserves and extensive land positions in the world’s most prolific gold districts.
6
Barrick Gold Corporation | Annual Report 2018 It also brought together two companies with a bedrock belief in the primacy
of partnerships and a culture of forging mutually beneficial relationships with host
governments, communities and suppliers, and a commitment to sharing the value
they create equitably with all stakeholders. That commitment extends to treating
the people they employ and the environments in which they operate with care
and respect, as demonstrated by their exemplary health and safety records.
Mark Bristow, the Chief Executive of Randgold, was appointed to the
new position of President and Chief Executive Officer of Barrick. Mark and
his team have brought to Barrick the industry’s best record of value creation
and a reputation for operational excellence and disciplined execution. Within
his first month here he significantly advanced our decentralization program
by establishing regional managements for North America, Latin America and
Australia Pacific, and Africa and the Middle East. These are already making a
tangible impact on the way we operate. At corporate office and throughout the
group, the members of both companies have been completely integrated and
aligned with the new Barrick’s aims and values.
These are to be results-driven, with agile decision-making and effective
execution; to deliver fit-for-purpose solutions; to foster genuine partnerships
and deliver on our promises to our partners; to communicate directly, honestly
and transparently; to act as responsible and accountable owners; and to earn
our social license by being a good neighbor to our communities, managing the
impact of our operations, and building sustainable legacies for them.
We have also decided on our strategic filters for investment. Tier One assets
have been defined as having a reserve potential greater than 5 million ounces of
gold and at least a 15% IRR at the long-term gold price, while Tier Two assets
need a reserve potential of more than 3 million ounces with a minimum 20% IRR.
These assets should be in world-class geological districts, where we will have the
right to mine and repatriate profits, and which fit our political risk, social license
and environmental compliance criteria. We should have active management
participation and it should enhance our strategic partnering network.
We are now one team, with one mission: to be the world’s most valued gold
mining business by finding, developing and operating the best assets, with the
best people, to deliver sustainable returns for our owners and partners. We are
reinventing Barrick, and while we are not yet where we want to be, I believe
the model of a modern mining company we are creating will lead the way for
a reinvention of the industry.
Building on the clear success of our merger with Randgold, in March 2019
we announced an agreement with Newmont Mining Corporation to create a
joint venture combining our respective mining operations, assets, reserves and
talent in Nevada. It is also expected to deliver an estimated $500 million in
average annual pre-tax synergies in the first five full years of the combination,
representing a projected total of $4.7 billion in pre-tax net present value over
a 20-year period.
7
Barrick Gold Corporation | Annual Report 2018 MESSAGE FROM THE EXECUTIVE CHAIRMAN
We are now one team, with one mission: to be the
world’s most valued gold mining business by finding,
developing and operating the best assets, with the
best people, to deliver sustainable returns for our
owners and partners.
Following the merger between Barrick and Randgold, Barrick’s Board was
reconstituted and streamlined with nine directors, down from the previous 15,
six of whom were appointed by Barrick and three by Randgold. The Barrick
nominees were Maria Ignacia Benitez, Gustavo A. Cisneros, J. Michael Evans,
Brian L. Greenspun, J. Brett Harvey (Lead Director) and me. The Randgold
nominees were Mark Bristow, Christopher L. Coleman and Andrew J. Quinn.
Very tragically, in late February Maria Ignacia Benitez passed away after a
struggle with cancer. Maria joined Barrick’s Board of Directors in April 2018,
and quickly became a trusted advisor and cherished friend to the company.
We will all greatly miss her sage counsel, her leadership, and equally, her deep
sense of kindness and decency.
I continue to serve as Executive Chairman, while Mark Bristow became
President and Chief Executive Officer. Graham Shuttleworth was appointed
as Senior Executive Vice-President and Chief Financial Officer, and Kevin
Thompson continues as Senior Executive Vice-President, Strategic Matters.
Also following the merger, the Board was reorganized to operate with
three standing committees. These are Audit & Risk, chaired by Brett Harvey,
Compensation, chaired by Christopher Coleman, and Corporate Governance
and Nominating, chaired by Gustavo Cisneros.
The new Board includes international business leaders and mining
industry professionals, and brings together a wide range of skills, experience
and perspectives. Its composition is in line with our strategy of regularly
strengthening and refreshing the Board, ensuring that it is equipped to address
effectively the changes, opportunities and risks in our business.
John L. Thornton
Executive Chairman
8
Barrick Gold Corporation | Annual Report 2018 Mark Bristow
President and
Chief Executive Officer
MESSAGE FROM THE PRESIDENT AND CHIEF EXECUTIVE OFFICER
In recent history, the
gold mining industry has
underperformed the gold
price because its focus
has been on short-term
exploitation rather than
long-term value creation.
The merger between Barrick and Randgold was conceived to create an industry
leader with the means and mindset to counter this trend. My first priority has
therefore been to see that we have the people and the structures that are fit for
our purpose of creating the world’s most valued gold business – dynamic managers
thriving in an enabling environment, equipped with the tools and techniques
that will enable them to respond quickly and effectively to opportunities as well
as challenges.
Within the first month of the merger, as John Thornton noted in his message,
we established strong regional executive teams in each of our three geographical
zones: North America, Latin America and Australia Pacific, and Africa and the
Middle East. Supporting them is a new corporate team with a mix of skills and
experience which I believe is unequalled in this industry. The corporate office
and its satellites are being restructured to move people and functions out of
the backrooms and into the operations where they belong.
Operationally, mining plans are being shifted from a primarily cash flow-
optimization base to a model focused on optimizing the orebody and the margins.
To this end, there are now mineral resource management teams at each of the mines.
At the same time, all our systems are being upgraded to give managers access
to consistent real-time data to facilitate speedy and accurate decision-making.
All in all, at the time of this writing, Barrick is already beginning to take a shape
that is in line with my vision of what a modern mining company should look like.
A strong performance, exciting prospects
Turning now to the past year, Barrick delivered its gold production and cost
guidance with zero fatalities and reduced injury and environmental incident rates
– a significant achievement in a business of its size and in an industry where
recent events have highlighted the critical importance of effective safety and
environmental management. The annual dividend was increased by 33% on the
9
Barrick Gold Corporation | Annual Report 2018
MESSAGE FROM THE PRESIDENT AND CHIEF EXECUTIVE OFFICER
Barrick is already beginning to take a shape that is
in line with my vision of what a modern mining company
should look like.
back of strong cash flows, and total debt was reduced, leaving Barrick with
a healthy balance sheet at year-end. Barrick’s debt repayments over the past
five years now total $10 billion.
On the new business front, exploration and project development in
Nevada and the Dominican Republic produced some really exciting results.
Nevada in particular is a gold district with enormous upside through
brownfields extensions, new discoveries and synergistic opportunities with
other operators in the area.
On March 11, we announced that we had reached an agreement with
Newmont Mining Corporation to combine our assets and operations in
Nevada in a joint venture which will be 61.5% owned by Barrick and which
we will operate.
The agreement represents an historic accord between our two companies
that will allow us to unlock the enormous geological potential of the Nevada
goldfields. It is expected to deliver an estimated $500 million in average
annual pre-tax synergies in the first five full years of the combination,
representing a projected total of $4.7 billion in pre-tax net present value over
a 20-year period. By operating Nevada as one orebody, we will deliver its full
value to both sets of shareholders as well as our stakeholders in the state.
The Nevada joint venture will be operated as a single complex under a
new executive general manager, with dedicated managers on-site at each
mine and project. Within this complex, Cortez is transitioning from an open
pit to an underground operation and from processing predominantly oxide
ore to more refractory material from underground. The higher grade, low cost
Cortez Hills open pit is scheduled for completion during the current year.
Within the Cortez complex, Goldrush and the nearby Fourmile discovery have
been combined into a single project under a new management team. The final
feasibility study is due next year, but it is already clear that Goldrush-Fourmile
is a genuine world-class project with the potential to become Barrick’s next
Tier One mine. Still in Nevada, Turquoise Ridge is continuing its production
ramp-up and exploration is identifying significant opportunities to drive the
cut-off grade down and reduce the cost profile.
10
Barrick Gold Corporation | Annual Report 2018
Opportunities and Issues
In the Dominican Republic, the Tier One Pueblo Viejo open pit mine is
already one of the largest of its kind in the world and still offers a lot of
upside. A scoping study and pilot plant have confirmed its expansion
prospects and a feasibility study is underway on plans to keep up the
current production rate and extend the life of the mine beyond 2035.
In Argentina, Veladero is struggling with internal and external challenges
including the currency devaluation and fiscal changes. This has resulted in
an impairment of some $300 million. To restore Veladero to its former Tier One
status, we have to reinvent the way it has been operated and a team is
on-site to get a grip on the situation and find the best way forward. There are
some significant potential resources that currently fall outside the current pit
which need evaluating and that is the focus of the team.
We are also looking at a new plan for Lagunas Norte, our Peruvian
operation, following the suspension of the plan to sell all of Barrick’s assets in
that country. This will enable us to decide the future of this business.
Generally speaking, we intend to strengthen our presence in Latin
America. As a first step, we have revitalized our exploration programs there
and are actively pursuing brownfields and greenfields opportunities across
the region. We have also established ourselves in the highly prospective and
underexplored Guiana Shield through an increased investment and strategic
alliance with Reunion.
The African Endowment
In the merger, Barrick acquired two Tier One assets in Africa: the Loulo-
Gounkoto complex in Mali and the Kibali mine in the Democratic Republic of
Congo. Both are consistently strong performers, with Kibali last year
exceeding its production guidance by a substantial margin. Kibali is the most
mechanized mine in the Barrick stable, with a mission control system that
manages the underground ore handling logistics without human involvement.
The experience we gained there will help drive the development of
automated mining across Barrick’s operations.
Brownfields exploration at both operations continues to identify numerous
reserve replacement opportunities, while greenfields programs are hunting
for another world-class discovery in the extensive and highly prospective
landholdings acquired from Randgold.
In Tanzania, Barrick and the government have agreed on a proposal to
settle the protracted disputes concerning Acacia Mining’s operations in that
country. (Barrick holds a 63.9% interest in the London-listed Acacia but it is
independently operated.) The proposal, which is in line with the agreement
reached by John Thornton and the Tanzanian president in 2017, must still be
approved by Acacia shareholders and the government. Significant amounts
of real value have been destroyed by this dispute and once the proposal is
accepted, it will allow Acacia to rebuild its mining operations in partnership
with its stakeholders.
11
Barrick Gold Corporation | Annual Report 2018 MESSAGE FROM THE PRESIDENT AND CHIEF EXECUTIVE OFFICER
I’m excited by the prospect of putting the Barrick
brand back where it belongs – at the head of the
gold mining industry.
The Year Ahead
Barrick’s production guidance for 2019 is between 5.1 and 5.6 million ounces
of gold and between 375 and 430 million pounds of copper. The higher cost
of sales guidance for gold of $880 to $940 per ounce and the all-in sustaining
costs guidance of $870 to $920 per ounce is mainly due to the completion of
the Cortez Hills open pit. Lower anticipated costs at Turquoise Ridge as well
as the contribution of lower-cost production from Loulo-Gounkoto and Kibali
partially offset this impact in the 2019 guidance. Higher grades, improved
efficiencies and tight cost discipline are expected to reverse the trend within
the next two to three years.
Our strategic priorities for 2019 are:
■ Right-size the corporate office and settle the organizational structure.
■ Develop our orebody knowledge, find new opportunities and review existing assets
for optimization or disposal.
■ Break down operational silos and simplify processes and systems.
Introduce real-time management systems and reporting alignment.
■
■ Strengthen our social license.
■ Review all JV board structures and agreements.
■ Above all, focus on delivering value for all our stakeholders in everything we do.
Over the next few months I’ll be conducting strategy reviews and team
effectiveness exercises at all our operations to ensure that these initiatives are
fully implemented. I’m confident that by the end of this year we’ll be able to
report that we’ve kept our key promises, and I’m excited by the prospect of
putting the Barrick brand back where it belongs – at the head of the gold
mining industry.
Mark Bristow
President and
Chief Executive Officer
12
Barrick Gold Corporation | Annual Report 2018
SUSTAINABILITY
Our Sustainability Vision
is to create long-term value for all
our stakeholders.
■ Contributing to the social and economic development of our host countries and communities.
■ Protecting the safety and health of our workforce.
■ Respecting human rights.
■
Managing our impacts on the natural environment, both today and with future
generations in mind.
We live our vision every day, by embedding environmental, social and economic
considerations into all our business decisions, through partnership with host governments
and communities, and by engaging respectfully with all our stakeholders.
Sustainability is at the heart of the restructured
Barrick business. One of our first acts
post-merger was to set out a new vision for
sustainability that captures our commitment to
creating long-term value for all our stakeholders.
Our approach to achieving this vision is set
out in a range of sustainability policies, and
implemented through transparent and effective
governance and reporting. It is an approach
underpinned by the development of deep
partnerships with all stakeholders including
our host governments and communities, our
workforce and wider society.
Governance of Sustainability
Ensuring that the restructured business
maintained effective, accountable procedures
to govern sustainability was a key short-term
priority post-merger.
Our governance puts day-to-day ownership
of sustainability risks and opportunities in
the hands of individual sites, which report to
regional leads and a Sustainability Executive
who is accountable to the Board.
13
Barrick Gold Corporation | Annual Report 2018
SUSTAINABILITY
Barrick’s Board holds ultimate responsibility
for sustainability, including areas such as safety
and health, environmental management and
corporate social responsibility. Supporting the
Board in this work is the Environmental and
Social (E&S) Oversight Committee, chaired by
the President and CEO, which oversees the
implementation of sustainability policies and the
achievement of relevant targets.
The bedrock of our sustainability
governance is a set of universal policies related
to sustainability that have been drafted to meet
or exceed the requirements of our host country
legislation and international standards such
as the IFC Performance Standards or the
UN Guiding Principles on Business and Human
Rights. One of our fi rst areas of progress has
been to review the key sustainability policies
of the two companies in order to develop
new policies that align with best practice and
refl ect the needs of our expanded organization.
We have also committed to conducting
independent audits to ensure our policies
comply with host country legislation and the
IFC Performance Standards.
Looking Forward
In the short time we have been together,
the combined team has already made
great progress in aligning approaches
on sustainability. For example, work has
been completed to standardize the internal
reporting metrics on safety, with additional
emphasis on using ‘leading’ indicators such
as near misses to help avoid more serious
occurrences. Priorities also include resetting
the key sustainability policies for the merged
entity, aligning all our operations with the new
ISO 14001:2015 environmental standard and
deepening our stakeholder engagement.
We look forward to meeting these
challenges and others in the year ahead,
including the preparation of the new
group’s fi rst full Sustainability Report,
which will be written in accordance with
GRI Standards: Core.
Barrick’s fi rst post-merger Sustainability
Report will be published later this year, and
we include here a snapshot of three key
areas: workforce management, environmental
management and economic development.
Our Workforce
Our people are our most important asset. It
is their skill, effort and dedication that drive
our company’s results. We want all employees
to feel respected, well compensated, and
equipped with the skills to perform their job to
the highest level. Most important of all, we want
all staff and contractors to return home safe
and healthy at the end of each shift.
Safety remains a constant challenge, but
our safety record in 2018 was encouraging.
It showed a year-on-year decrease in the Lost
HEALTH AND
SAFETY OVERVIEW
Combined data for 2018†
LTIs
LTI FR
TRIs
TRIFR
Q1
12
0.52
49
2.12
Q2
10
0.42
48
2.00
Q3
10
0.43
49
2.09
Q4
11
0.46
54
2.28
Total
43
0.46
200
2.12
14
Barrick Gold Corporation | Annual Report 2018
14
13
0
2016
8
2
0
2017
2018
7
1
0
Barrick Reportable Environmental Incidents
Randgold Class 2 Incidents
Randgold Class 1 Incidents
Barrick Significant Environmental Incidents
LTIs
LTI FR
TRIs
TRIFR
Q1
12
0.52
49
2.12
Q2
10
0.42
48
2.00
Q3
10
0.43
49
2.09
Q4
11
0.46
54
2.28
Total
43
0.46
200
2.12
14
13
0
2016
REPORTABLE ENVIRONMENTAL INCIDENTS
Combined data for 2018‡
8
2
0
7
1
0
Barrick Reportable Environmental Incidents
Randgold Class 2 Incidents
Randgold Class 1 Incidents
Barrick Significant Environmental Incidents
2017
2018
Time Injury Frequency Rate (LTIFR) across the
combined assets of 33%. The Total Recordable
Injury Frequency Rate (TRIFR) also improved,
decreasing by 14% over 2017.
occur. These incidents have reduced across
both merged entities since 2016. Note that the
two companies used different classifi cation
systems which will be brought together into
a consistent reporting criteria in 2019.
Environmental Management
We work to minimize the environmental impacts
our operations may have, and where they do
occur, we put in place appropriate remediation
and reclamation measures. By using natural
resources and energy effi ciently, recycling
waste, and working to protect and rehabilitate
biodiversity, we deliver signifi cant cost savings
to our business, reduce future liabilities and
help build strong stakeholder relationships.
Each mine has a robust Environmental
Management System in place, with almost
all audited against and certifi ed to the
ISO 14001 global best practice standard.
We are targeting having all sites certifi ed to
this standard in 2019. One of our key metrics
is the number of environmental incidents that
Economic Development
We strive to be a good corporate citizen and
a genuine partner for our host communities in
locally-led economic development. Alongside
site-specifi c community investment programs,
we leverage our supply chain and procurement
to multiply economic benefi t at a local and
national level. Our long-term ambition is to help
develop diverse and thriving economies that
are sustainable beyond the life of the mine.
One of our early priorities has been to
establish a Sustainable Development policy
that provides an overarching commitment to
catalyze socio-economic development for local
communities and to engage all our operations
in the implementation of this policy.
† LTIs – Lost Time Injuries, defi ned as injuries that occur in the execution of duties which prevent our workers from performing those duties for at
least one day.
LTIFR – Lost Time Injury Frequency Rates, defi ned as the number of LTIs per million hours worked.
TRIs – Total Recordable Injuries is the total number of fatalities, lost-time injuries, and injuries requiring medical treatment.
TRIFR – Total Recordable Injury Frequency Rate, defi ned as the total number of TRIs per million hours worked.
‡ Randgold Class 1 incidents, defi ned as major incidents that result in death or injury of people or destruction of community property or husbandry.
Randgold Class 2 incidents, defi ned as medium incidents involving material disruption to production or uncontrolled release of contaminated
effl uent outside the boundary fence of an operation.
Barrick Signifi cant Environmental Incidents, defi ned as those incidents with the highest negative impacts on human health, the environment or
associated fi nancial costs.
Barrick Reportable Environmental Incidents, defi ned as incidents that have a “high” ranking on Barrick’s REI Severity Index and usually require
immediate reporting to relevant government authorities.
Barrick Gold Corporation | Annual Report 2018 15
Board of Directors
John L.
Thornton
Non-Independent
Executive Chairman
Palm Beach, Florida
Mark Bristow
Non-Independent
President and
Chief Executive
Officer
Beau Champ,
Mauritius
Gustavo A.
Cisneros
Independent
Santo Domingo,
Dominican Republic
Mr. Thornton has been Executive
Chairman of Barrick since 2014.
He has decades of experience in
global business, finance, and public
affairs. He has served as a director of
numerous public companies, including
China Unicom, Ford, HSBC, Industrial
and Commercial Bank of China, Intel,
and News Corporation.
Mr. Bristow had been the Chief
Executive of Randgold Resources
since its incorporation in 1995.
Randgold was founded on his
pioneering exploration work in West
Africa and he subsequently led
the company’s growth through
the discovery and development
of world-class assets.
Mr. Cisneros is the Chairman of
Cisneros, a privately-held media,
entertainment, technology, and
consumer products organization.
Mr. Cisneros is a member of Barrick’s
International Advisory Board.
He is also a senior advisor to RRE
Ventures LLC, a venture capital firm.
Christopher L.
Coleman
Independent
London, U.K.
J. Michael
Evans
Independent
New York, New York
Brian L.
Greenspun
Independent
Henderson, Nevada
Mr. Coleman is the group head of
banking at Rothschild & Co and has
more than 25 years of experience in
the financial services sector, including
corporate and private client banking
and project finance. He has had
a long-standing involvement in the
mining sector in Africa and globally.
Mr. Evans is the President of Alibaba
Group Holding Ltd., a position he
has held since August 2015. Prior to
becoming President, Mr. Evans was
an independent director and member
of the audit committee of Alibaba
Group Holding Ltd.
Mr. Greenspun is the Publisher and
Editor of the Las Vegas Sun. He
is also Chairman and Chief Executive
Officer of Greenspun Media Group.
Mr. Greenspun has been appointed
to two U.S. Presidential Commissions.
J. Brett Harvey
Independent
Mesquite, Nevada
Mr. Harvey was CONSOL Energy Inc.’s
Chairman Emeritus from May 2016 to
May 2017, Chairman from January 2015
to May 2016, Executive Chairman from
May 2014 to January 2015, Chairman
and Chief Executive Officer from June
2010 to May 2014, and Chief Executive
Officer from January 1998 to June 2010.
16
Andrew J. Quinn
Independent
Llanboidy
Carmarthenshire, U.K.
For 15 years, prior to his retirement in
2011, Mr. Quinn was head of Mining
Investment Banking for Europe and
Africa at CIBC. He has over 40 years
of experience in the mining industry.
Regrettably, on February 28, 2019,
Ms. María Ignacia Benítez, an
independent director of Barrick from
Chile, passed away. Ms. Benítez joined
Barrick’s Board of Directors in April
2018 and was a trusted advisor and
cherished friend to the Company.
Barrick Gold Corporation | Annual Report 2018 1. Please see pages 83–84 of the 2018 Financial Report for
corresponding endnotes.
2. Please see page 22 of Randgold’s Q4 2018 Report.
3. On an attributable basis. The 2019 outlook is based on a gold and
copper price assumption of $1,250/oz and $2.75/lb, respectively.
For economic sensitivity analysis of these assumptions, please
refer to page 34 of the 2018 Financial Report. 2019 guidance and
the five-year outlook do not include the impact of the Randgold
purchase price allocation or the impact of the Nevada Joint
Venture with Newmont Mining Corporation.
4. 2019 cost of sales applicable to gold per ounce is calculated
using cost of sales applicable to gold on an attributable
basis (removing the non-controlling interest of 40% Pueblo
Viejo, 20% Loulo-Gounkoto, 10.3% Tongon, 36.1% Acacia and
40% South Arturo from cost of sales), divided by attributable
gold ounces sold. Cost of sales applicable to copper per
pound is calculated using cost of sales applicable to copper
including our proportionate share of cost of sales attributable
to equity method investments (Zaldívar and Jabal Sayid),
divided by consolidated copper pounds sold (including our
proportionate share of copper pounds sold from our equity
method investments).
5. These are non-GAAP financial performance measures
with no standardized meaning under IFRS and therefore
may not be comparable to similar measures presented by
other issuers. For further information and a detailed
reconciliation of each non-GAAP measure to the most directly
comparable IFRS measure, please see pages 67–82 of
the 2018 Financial Report.
Financial Report for 2018
Contents
Management’s Discussion and Analysis 18 / Mineral Reserves and Resources 86
Financial Statements 98 / Notes to Financial Statements 103 / Shareholder Information 176
20163_BARRICK_AR18_MDA_MAR 15.indd 17
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Barrick Gold Corporation | Financial Report 2018
17
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 the present
and future business environment. This MD&A, which
has been prepared as of February 12, 2019, should
be read in conjunction with our audited consolidated
financial statements (“Financial Statements”) for the
year ended December 31, 2018. Unless otherwise
indicated, all amounts are presented in U.S. 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; (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”,
“target”, “plan”, “objective”, “assume”, “intend”, “intention”,
“project”, “goal”, “continue”, “budget”, “estimate”, “potential”,
“may”, “will”, “can”, “could”, “would” and similar expressions
identify forward-looking statements. In particular, this
MD&A contains forward-looking statements including,
without limitation, with respect to: (i) Barrick’s forward-
looking production guidance; (ii) estimates of future cost
of sales per ounce for gold and per pound for copper,
cash costs per ounce and C1 cash costs per pound, and
all-in-sustaining costs per ounce/pound; (iii) cash flow
forecasts; (iv) projected capital, operating and exploration
expenditures; (v) targeted debt and cost reductions; (vi)
mine life and production rates; (vii) potential mineralization
and metal or mineral recoveries; (viii) the benefits expected
from the Randgold merger and Barrick’s expectations
regarding the assets it acquired in its merger with
Randgold; (ix) our ability to identify, invest in and develop
potential Tier One, Tier Two and Strategic Assets;
(x) the combined Company’s future plans, growth potential,
financial strength, investments and overall strategy;
(xi) Barrick’s business improvement and automation
initiatives; (xii) the success of our efforts to evaluate
opportunities at Pascua-Lama; (xiii) our ability to convert
resources into reserves; (xiv) asset sales, joint ventures
and partnerships; (xv) expectations regarding future price
assumptions, financial performance and other outlook or
guidance; and (xvi) timing of completion of the proposed
50 kilometer gas pipeline at Pueblo Viejo.
Forward-looking statements are necessarily based
upon a number of estimates and assumptions including
material estimates and assumptions related to the factors
set forth below that, while considered reasonable by the
18
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Barrick Gold Corporation | Financial Report 2018MANAGEMENT’S DISCUSSION AND ANALYSIS Company as at the date of this MD&A in light of
management’s experience and perception of current
conditions and expected developments, 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 and
undue reliance should not be placed on such statements
and information. 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,
natural gas and electricity); the speculative nature of
mineral exploration and development; changes in mineral
production performance, exploitation and exploration
successes; risks associated with the fact that certain
Best-in-Class initiatives are still in the early stages of
evaluation and additional engineering and other analysis is
required to fully assess their impact; the duration of the
Tanzanian ban on mineral concentrate exports; the ultimate
terms of any definitive agreement between Acacia and the
Government of Tanzania to resolve a dispute relating to the
imposition of the concentrate export ban and allegations
by the Government of Tanzania that Acacia under-declared
the metal content of concentrate exports from Tanzania;
the status of certain tax reassessments by the Tanzanian
government; the manner in which amendments to the 2010
Mining Act (Tanzania) increasing the royalty rate applicable
to metallic minerals such as gold, copper and silver to
6% (from 4%), the new Finance Act (Tanzania) imposing
a 1% clearing fee on the value of all minerals exported from
Tanzania from July 1, 2017, and the new Mining Regulations
announced by the Government of Tanzania in January
2018 will be implemented and the impact of these and
other legislative changes on Acacia; whether Barrick will
successfully negotiate an agreement with respect to the
dispute between Acacia and the Government of Tanzania
and whether Acacia will approve the terms of any such final
agreement; the benefits expected from recent transactions
(including the Randgold merger) being realized; diminishing
quantities or grades of reserves; increased costs, delays,
suspensions and technical challenges associated with the
construction of capital projects; operating or technical
difficulties in connection with mining or development
activities, including geotechnical challenges and disruptions
in the maintenance or provision of required infrastructure
and information technology systems; 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; uncertainty whether some or all
of the Best-in-Class initiatives, targeted investments and
projects (including our project to treat refractory sulfide ore
at Lagunas Norte) will meet the Company’s capital allocation
objectives and internal hurdle rate; 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 ratings;
the impact of inflation; fluctuations in the currency markets;
changes in U.S. dollar interest rates; risks arising from
holding derivative instruments; 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 and other jurisdictions in which the
Company or its affiliates do or may carry on business in
the future; lack of certainty with respect to foreign legal
systems, corruption and other factors that are inconsistent
with the rule of law; the outcome of the appeal of the
decision of Chile’s Superintendencia del Medio Ambiente;
damage to the Company’s reputation due to the actual or
perceived occurrence of any number of events, including
negative publicity with respect to the Company’s handling
of environmental matters or dealings with community
groups, whether true or not; the possibility that future
exploration results will not be consistent with the Company’s
expectations; risks that exploration data may be incomplete
and considerable additional work may be required to
complete further evaluation, including but not limited to
drilling, engineering and socioeconomic studies and
investment; risk of loss due to acts of war, terrorism,
sabotage and civil disturbances; 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; risks associated
with the fact that certain of the initiatives described in this
MD&A are still in the early stages and may not materialize;
our ability to successfully integrate acquisitions or complete
divestitures; risks associated with working with partners in
jointly controlled assets; employee relations including loss
of key employees; increased costs and physical risks,
including extreme weather events and resource shortages,
related to climate change; 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
19
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Barrick Gold Corporation | Financial Report 2018MANAGEMENT’S DISCUSSION AND ANALYSIS 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 more
detailed discussion of some of the factors underlying
forward-looking statements and the risks that may affect
Barrick’s ability to achieve the expectations set forth in
the forward-looking statements contained in this MD&A.
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.
Use of Non-GAAP Financial Performance Measures
We use the following non-GAAP financial performance
measures in our MD&A:
n “adjusted net earnings”
n “free cash flow”
n “EBITDA”
n “adjusted EBITDA”
n “cash costs per ounce”
n “C1 cash costs per pound”
n “all-in sustaining costs per ounce/pound”
n “all-in costs per ounce” and
n “realized price”
For a detailed description of each of the non-GAAP
measures used in this MD&A and a detailed reconciliation
to the most directly comparable measure under
International Financial Reporting Standards (“IFRS”),
please refer to the Non-GAAP Financial Performance
Measures section of this MD&A on pages 67 to 82. Each
non-GAAP financial performance measure has been
annotated with a reference to an endnote on page 83. The
non-GAAP financial performance measures set out in
this MD&A are intended to provide additional information
to investors and do not have any standardized meaning
under IFRS, and therefore may not be comparable to
other issuers, and should not be considered in isolation or
as a substitute for measures of performance prepared in
accordance with IFRS.
Changes in Presentation of Non-GAAP Financial
Performance Measures
Adjusted EBITDA
Starting in the fourth quarter of 2018, we amended our
calculation of Adjusted EBITDA to remove the impact
of the income tax expense, finance costs, finance income
and depreciation incurred in our equity method accounted
investments. The prior periods have been restated to
reflect the change in presentation. We believe this change
will assist analysts, investors and other stakeholders
of Barrick in better understanding the ability of our full
business, including equity method investments, to
generate liquidity from operating cash flow.
20
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Barrick Gold Corporation | Financial Report 2018MANAGEMENT’S DISCUSSION AND ANALYSIS Index
21 Overview
21 Our Vision
21 Our Business
22 Our Strategy
23 Full Year Financial and Operating Highlights
29 Key Business Developments
31 Outlook for 2019
34 Risks and Risk Management
36 Market Overview
39 Review of Annual Financial Results
39 Revenue
40 Production Costs
41 Capital Expenditures
41 General and Administrative Expenses
41 Exploration, Evaluation and Project Costs
42 Finance Costs, Net
42 Additional Significant Statement of Income Items
43
Income Tax Expense
45 Financial Condition Review
45 Balance Sheet Review
45 Shareholders’ Equity
45 Financial Position and Liquidity
46 Summary of Cash Inflow (Outflow)
47 Summary of Financial Instruments
47 Operating Segments Performance
48 Barrick Nevada
51 Turquoise Ridge
53 Pueblo Viejo
55 Veladero
58 Lagunas Norte
59 Acacia Mining plc
62 Pascua-Lama
63 Commitments and Contingencies
64 Review of Quarterly Results
65 Internal Control over Financial Reporting and
Disclosure Controls and Procedures
66 IFRS Critical Accounting Policies and
Accounting Estimates
67 Non-GAAP Financial Performance Measures
83 Technical Information
83 Endnotes
85 Glossary of Technical Terms
Overview
Our Vision
Our Vision is to be the world’s most valued gold mining
business by finding, developing and owning the best assets,
and employing the best people, to deliver sustainable
returns for our owners, and real benefits to our partners,
host countries, and communities.
Our Business
The merger of Barrick and Randgold Resources Limited
(“Randgold”) on January 1, 2019 has created a sector-
leading gold mining company with five Tier One Gold
Assets8 and a diversified asset portfolio positioned for
growth in many of the world’s most prolific gold districts.
The combination of Barrick and Randgold holds interests
in thirteen producing gold mines, which are located in
Argentina, Australia, Canada, Côte d’Ivoire, the Democratic
Republic of Congo, the Dominican Republic, Mali, Papua
New Guinea, Peru and the United States. We also hold a
63.9% equity interest in Acacia Mining plc (“Acacia”), a
company listed on the London Stock Exchange (“LSE”)
that owns gold mines and exploration properties in Africa,
principally in Tanzania. Our copper business contains a
wholly-owned copper mine in Zambia and 50% interests
in copper mines in Chile and Saudi Arabia. We also have
21
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Barrick Gold Corporation | Financial Report 2018MANAGEMENT’S DISCUSSION AND ANALYSIS
projects located throughout the Americas and Africa. We
sell our production in the world market through the following
distribution channels: gold bullion is sold in the gold spot
market; and gold and copper concentrate is sold to
independent smelting companies. Barrick changed its ticker
symbol on the New York Stock Exchange (“NYSE”) from
ABX to GOLD beginning on the merged company’s first day
of trading on January 2, 2019. Barrick continues to trade
on the Toronto Stock Exchange under the symbol ABX.
2018 REVENUE1 ($ millions)
Gold $6,600
Copper $512
Other $131
1. Reflects revenue and production prior to the merger
with Randgold on January 1, 2019.
Our Strategy
Our strategy is to operate as business owners, focused on
returns to shareholders by optimizing return on free cash
flow, alongside managing risk to create long-term value for
our shareholders and partnering with host governments
and communities to transform their natural resources into
sustainable benefits and mutual prosperity. We aim to
achieve this through the following:
Asset Quality
• Grow and invest in a portfolio of Tier One Gold Assets,
Tier Two Gold Assets and Strategic Assets10 with an
emphasis on organic growth. We will focus our efforts
on identifying, investing in and developing assets that
meet our investment criteria. With respect to Tier One
Gold Assets, we are focused on assets with a reserve
potential greater than 5 million ounces of gold that will
generate an internal rate of return (IRR) of at least 15%.
With respect to Tier Two Gold Assets, we are focused
on assets with a reserve potential of greater than
3 million ounces of gold that will generate an IRR of
at least 20% (in each case based on our long-term
gold price assumptions). Near-term priorities include
Goldrush, Fourmile, Turquoise Ridge and the strategic
partnership with Shandong Gold in the El Indio belt.
• Sell non-core assets over time in a disciplined manner.
• Brownfields focus on Goldstrike, and Loulo-Gounkoto
Complex and Kibali, which were both added to our
portfolio as a result of the merger with Randgold.
• Invest in exploration across extensive land positions
in many of the world’s most prolific gold districts.
• Maximize the long-term value of a strategic Copper
Business11.
Operational Excellence
• Fully implement a flat management structure with
a strong ownership culture.
• Streamline management and operations, and hold
management accountable for the businesses
they manage.
• Leverage innovation and technology to drive industry-
leading efficiencies.
• Build trust-based partnerships with host governments,
business partners, and local communities to drive shared
long-term value.
• Strive for zero harm workplaces.
Sustainable Profitability
• Disciplined approach to growth, emphasizing long-term
value for all stakeholders.
• Increased returns to shareholders driven by a focus
on return on capital, internal rate of return and free
cash flow.
22
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Barrick Gold Corporation | Financial Report 2018MANAGEMENT’S DISCUSSION AND ANALYSIS Full Year Financial and Operating Highlights
OPERATING CASH FLOW AND FREE CASH FLOW1
DEBT ($ billions)
$1,251
$1,257
$1,268
15.8
2,640
1,514
2,065
720
to
770
1,765
546
669
365
13.1
10.0
7.9
6.4
5.7
2016
2017
2018
Q2 2013
2014
2015
2016
2017
2018
Operating Cash Flow ($ millions)
Free Cash Flow ($ millions)
Gold Market Price ($/oz)
GOLD PRODUCTION (000s ounces)
Divested Sites
5,517
5,323
4,527
5,100
to
5,600
COST OF SALES2, CASH COSTS1 AND
ALL-IN SUSTAINING COSTS1 ($ per ounce)
Cost of sales
Cash costs
AISC
798
730
794
546
750
526
892
806
588
880
to
940
870
to
920
650
to
700
2016
2017
2018
2019 (est)3
2016
2017
2018
2019 (est)3
COPPER PRODUCTION (millions of pounds)
415
413
383
375
to
430
COST OF SALES2, CASH COSTS1 AND
ALL-IN SUSTAINING COSTS1 ($ per pound)
Cost of sales
C1 Cash costs
AISC
2.34
2.40
2.05
1.41
1.49
1.77
1.66
2.82
1.97
2.30
to
2.70
2.40
to
2.90
1.70
to
2.00
2016
2017
2018
2019 (est)
2016
2017
2018
2019 (est)
1. These are non-GAAP financial performance measures with no standardized meaning under IFRS and therefore may not be comparable to similar
measures presented by other issuers. For further information and a detailed reconciliation of each non-GAAP measure to the most directly comparable
IFRS measure, please see pages 67 to 82 of this MD&A.
2. Cost of sales applicable to gold per ounce is calculated using cost of sales applicable to gold on an attributable basis (removing the non-controlling interest
of 40% Pueblo Viejo, 36.1% Acacia and 40% South Arturo from cost of sales), divided by attributable gold ounces sold. Cost of sales applicable to
copper per pound is calculated using cost of sales applicable to copper including our proportionate share of cost of sales attributable to equity method
investments (Zaldívar and Jabal Sayid), divided by consolidated copper pounds sold (including our proportionate share of copper pounds sold from
our equity method investments).
3. Outlook for 2019 includes Loulo-Gounkoto on an 80% basis, Kibali on a 45% basis, Tongon on an 89.7% basis, and Morila on a 40% basis, which
were acquired as a result of the merger with Randgold on January 1, 2019.
23
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Barrick Gold Corporation | Financial Report 2018MANAGEMENT’S DISCUSSION AND ANALYSIS For the years ended
December 31
For the three months
ended December 31
($ millions, except per share amounts in dollars)
2018
2017
2016
2018
2017
Net (loss) earnings attributable to equity holders
of the Company
Per share (dollars)1
Adjusted net earnings2
Per share (dollars)1,2
Operating cash flow
Free cash flow2
$ (1,545)
(1.32)
409
0.35
1,765
365
$
$ 1,438
1.23
876
0.75
2,065
$ 669
$ 655
0.56
818
0.70
2,640
$ 1,514
$ (1,197)
(1.02)
69
0.06
411
37
$
$ (314)
(0.27)
253
0.22
590
$ 240
1. Calculated using weighted average number of shares outstanding under the basic method of earnings per share of 1,167 million shares in 2018
(2017: 1,166 million shares; 2016: 1,165 million shares).
2. Adjusted net earnings, adjusted net earnings per share, and free cash flow are non-GAAP financial performance measures with no standardized meaning under
IFRS and therefore may not be comparable to similar measures of performance presented by other issuers. For further information and a detailed reconciliation
of the non-GAAP measures used in this section of the MD&A to the most directly comparable IFRS measures, please see pages 67 to 82 of this MD&A.
In 2018, we generated net cash flow provided by operating
activities (“operating cash flow”) of $1.8 billion and free
cash flow1 of $365 million for the year. Our cost of sales
applicable to gold4 increased by $98 per ounce to $892 per
ounce, while our all-in sustaining costs1 (“AISC”) increased
by 7% to $806 per ounce. Our cost of sales applicable to
copper4 increased by $0.63 per pound to $2.40 per pound,
while our AISC1 increased by 21% to $2.82 per pound.
The increases for both gold and copper reflect the impact
of lower sales volume, and higher capital expenditures on
a per ounce basis as we increased investments in the
future of our business.
In 2018, we recognized $900 million ($799 million net
of tax and non-controlling interest) of impairments, mainly
relating to a non-current asset impairment of $405 million
(no tax impact) at Lagunas Norte following the decision
not to proceed with the treatment of refractory sulphide
ore project (“PMR”) at this time; and a non-current asset
impairment of $246 million (pre-tax) and a goodwill
impairment of $154 million (no tax impact) at Veladero
reflecting an increase in the cost structure related to
increasing government imposts coupled with higher energy
costs. In addition, an inventory impairment of $166 million
(no tax impact) was recorded as we concluded that
the Lagunas Norte project related to the processing of
carbonaceous material (“CMOP”) does not meet our
investment criteria. We also recorded deferred tax expense
of $673 million and $141 million related to de-recognition of
the deferred tax assets in Canada and Peru, respectively.
It was determined that the realizability of these deferred tax
assets was no longer probable due to management’s focus
on growing the business globally, particularly on our
Tier One Gold Assets outside of Canada, the updated mine
plan at Lagunas Norte and a change in our expected
approach to financing future reclamation activities in Peru.
Balance Sheet and Liquidity
Our liquidity position is strong and continues to improve,
with robust cash flow generation, modest near-term
debt repayment obligations, a $3 billion undrawn credit
facility and a consolidated cash balance of approximately
$1.6 billion3. As discussed on page 29, on January 1,
2019, we completed the merger with Randgold. As at
December 31, 2018, Randgold had $0.7 billion of cash and
cash equivalents, which would bring the cash position of
the combined company to $2.3 billion from January 1, 2019,
and had no debt outstanding.
In 2018, we reduced our total debt by $685 million,
or 11%, from $6.42 billion to $5.74 billion. We currently
have less than $50 million2 in debt due before 2020,
and approximately $5 billion of our outstanding debt
matures after 2032. We increased the dividend by 33%
from $0.12 per share in respect of the 2017 financial
year to $0.16 per share in respect of the 2018 financial
year. Barrick has targeted a quarterly dividend of $0.04 per
share, commencing with the dividend we anticipate
declaring in April 2019 in respect of the first quarter
of 2019.
24
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Barrick Gold Corporation | Financial Report 2018MANAGEMENT’S DISCUSSION AND ANALYSIS
Net Earnings (Loss), Adjusted Net Earnings1, Operating Cash Flow and Free Cash Flow1
FACTORS AFFECTING NET EARNINGS AND ADJUSTED NET EARNINGS1
($M)
Controllable
Uncontrollable
2017
Net
earnings
2017
Adjusting
items
2017
Adjusted
net
earnings1
1,438
562
Gold and
copper
cash costs1
876
Gold and
copper
sales
volume
Depreciation
Income
tax
expense
Exploration
&
evaluation
costs
2018
Adjusted
net
earnings1
2018
Adjusting
items
2018
Net
earnings
Gold &
copper
prices
Other
Foreign
exchange2
73
30
409
(512)
280
139
11
11
(499)
1. These are non-GAAP financial performance measures with no standardized meaning under IFRS and therefore may not be comparable to similar measures
of performance presented by other issuers. For further information and a detailed reconciliation of the non-GAAP measures used in this section of the MD&A
to the most directly comparable IFRS measures, please see pages 67 to 82 of this MD&A.
2. Estimated impact of foreign exchange.
1,954
(1,545)
Net earnings attributable to equity holders of Barrick
(“net earnings”) for 2018 was a net loss of $1,545 million
compared with net earnings of $1,438 million in the prior
year. This significant decrease in net earnings was primarily
due to net impairment charges of $900 million ($799 million
net of tax and non-controlling interest), primarily relating to
impairments of $405 million (no tax impact) of non-current
assets at Lagunas Norte, and $246 million ($160 million net
of tax) of non-current assets and $154 million (no tax impact)
of goodwill at the Veladero mine. This was combined with
the de-recognition of deferred tax assets of $814 million,
and inventory impairment at Lagunas Norte of $166 million.
After adjusting for items that are not indicative of future
operating earnings, adjusted net earnings1 of $409 million
in 2018 were $467 million lower than the prior year primarily
due to the impact of lower grades and recoveries across
most operations as disclosed in previous guidance
combined with higher direct mining costs and the divestment
20163_BARRICK_AR18_MDA_MAR 8.indd 25
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25
Barrick Gold Corporation | Financial Report 2018MANAGEMENT’S DISCUSSION AND ANALYSIS
FACTORS AFFECTING OPERATING CASH FLOW AND FREE CASH FLOW1
($M)
Controllable
Uncontrollable
2017
Operating
cash flow
2017
Capex
2,065
1,396
2017
Free Cash
Flow1
Change
in
working
capital
Cash taxes
paid
Exploration,
Evaluation
and Project
costs
251
417
(34)
Gold &
copper
sales
volume
Gold &
copper
cash costs1
Other
Gold &
copper
price
2018
Capex
2018
Operating
cash flow
2018
Free Cash
Flow1
1,400
1,765
669
(499)
43
30
365
(512)
1. These are non-GAAP financial performance measures with no standardized meaning under IFRS and therefore may not be comparable to similar measures
of performance presented by other issuers. For further information and a detailed reconciliation of the non-GAAP measures used in this section of the MD&A
to the most directly comparable IFRS measures, please see pages 67 to 82 of this MD&A.
of 50% of the Veladero mine on June 30, 2017. The
increase in direct mining costs was mainly attributable to
higher energy prices and consumption. This was further
impacted by lower throughput at Acacia as a result of
reduced operations at Bulyanhulu, lower tonnage processed
at Lagunas Norte, and higher government imposts at
Veladero. This was partially offset by lower income tax
expense related to lower earnings and sales volumes, and
lower depreciation. Earnings were also positively impacted
by favorable foreign exchange movements and higher
realized gold prices1 of $1,267 per ounce compared to
$1,258 per ounce in the prior year.
Significant adjusting items to net earnings (pre-tax
and non-controlling interest effects) in 2018 include:
n $900 million ($799 million net of tax and non-controlling
interest) in net impairment charges primarily relating
to Veladero and Lagunas Norte;
n $742 million in significant tax adjustments primarily
relating to the de-recognition of deferred tax assets of
$814 million, partially offset by a deferred tax recovery
of $107 million on United States withholding taxes;
n Additional adjustments relating to the inventory
impairment at Lagunas Norte of $166 million, a write-off of
a Western Australia long-term stamp duty tax receivable
of $43 million, and costs associated with the merger
with Randgold of $37 million; partially offset by
n $68 million ($46 million net of tax and non-controlling
interest) in disposition gains mainly relating to the sale
of a non-core royalty asset at Acacia.
Refer to page 68 for a full list of reconciling items between
net earnings and adjusted net earnings1 for the current
and prior year.
In 2018, we generated $1,765 million in operating cash
flow, compared to $2,065 million of operating cash flow in
the prior year. The decrease of $300 million was due to
the impact of lower grades and recoveries across most
operations as disclosed in previous guidance combined
with higher direct mining costs and the divestment of
50% of the Veladero mine on June 30, 2017. The increase
in direct mining costs was mainly attributable to higher
energy prices and consumption. This was further impacted
by lower throughput at Acacia as a result of reduced
operations at Bulyanhulu, lower tonnage processed at
Lagunas Norte, and higher government imposts at Veladero.
This was partially offset by a favorable movement in
working capital, mainly as a result of increased drawdown
of inventory and the timing of payments and changes in
other current assets and liabilities. Operating cash flow was
also positively affected by lower cash taxes paid as a result
of lower earnings and sales volumes, and higher realized
gold prices1 of $1,267 per ounce compared to $1,258 per
ounce in the prior year.
26
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Barrick Gold Corporation | Financial Report 2018MANAGEMENT’S DISCUSSION AND ANALYSIS
Free cash flow1 for 2018 was $365 million, compared
to $669 million in the prior year, reflecting lower operating
cash flows. Capital expenditures were in line with the
prior year, as an increase in project capital expenditures
was offset by a decrease in minesite sustaining capital
expenditures. The increase in project capital expenditures
is primarily a result of greater spending incurred at
Crossroads, the Cortez Range Front declines, the Goldrush
exploration declines, the Deep South Expansion at Barrick
Nevada, and the construction of the third shaft at Turquoise
Ridge. Minesite sustaining capital expenditures decreased
mainly due to the completion of several initiatives occurring
in the prior year, including the Goldstrike underground
cooling and ventilation project; digitization initiatives; the
autoclave thiosulfate water treatment plant conversion at
the Goldstrike autoclaves; the optimization of development
sequencing at Turquoise Ridge; and the construction of
phases 4B and 5B of the leach pad expansion at Veladero.
Safety
Our safety vision is “Every person going home safe and
healthy every day.” In 2018, we operated with zero fatalities
and continued to improve our total reportable injury
frequency rate5 (“TRIFR”) year over year, decreasing our
rate across all operations by 9% – from 0.35 to 0.32. We
have achieved a 44% improvement in the TRIFR (from 0.58
in 2014) over the past 5 years.
Barrick is fully committed to the safety, health and
well-being of our people, their families and the communities
in which we operate. In late 2018, the weekly Business
Plan Review meetings transitioned to a weekly Executive
Committee Review which is now the main forum for senior
management to review our current safety performance,
share lessons learned and communicate best practices
across our business. Our safety metrics demonstrate
improvements in performance and we will continue our
efforts to further reduce injury occurrences.
Strong safety leadership, transparency and an
engaged, knowledgeable workforce provide the foundation
for Barrick’s safety culture. To provide our people with the
data and information needed to perform their work safely,
we have implemented a new enterprise-wide Health,
Safety, and Environmental (“HSE”) and Risk Management
software system. This was achieved through a collaborative
effort that involved personnel from all Barrick sites and
regional offices.
Planning and implementation workshops were carried
out this year with a cross section of personnel from all
sites and regional offices to review and improve our fatality
prevention controls. Outputs from these efforts include
updated workforce engagement and hazard control
evaluation tools, along with a renewed management
commitment to identify and reinforce actions that will
promote the safest and healthiest workplaces possible.
Internal management system assurance reviews were
also carried out this year to promote continuous
improvement of hazard controls associated with mobile
equipment and fire protection/prevention systems.
TOTAL REPORTABLE INJURY FREQUENCY
0.58
0.46
0.40
0.35
720
to
770
0.32
2014
2015
2016
2017
2018
Environment
Barrick continues to rebuild our reputation for environmental
excellence and aims to become the world’s most valued
gold mining business by delivering sustainable returns for
our owners and partners, including the host communities
and countries in which we operate. In 2018, our operations
made progress on developing and implementing the ICMM
Critical Control Management Plans for reliable environmental
performance within our operations. The results of these
efforts are demonstrated by a sustained reduction of
environmental incidents over the past 5 years. Globally,
Barrick has achieved an 87% reduction in Reportable
Environmental Incidents between 2014 and 2018. There
were zero Significant Environmental Incidents in 2018.
REPORTABLE ENVIRONMENTAL INCIDENTS
53
29
720
to
770
13
8
7
2014
2015
2016
2017
2018
27
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Barrick Gold Corporation | Financial Report 2018MANAGEMENT’S DISCUSSION AND ANALYSIS Climate Change
Climate change, including shifts in temperature and
precipitation and more frequent severe weather events,
could affect the mining industry in a range of possible ways.
Volatile climatic conditions can affect the stability and
effectiveness of infrastructure and equipment; potentially
impact environmental protection and site closure practices;
lead to changes in the regulatory environment, including
increased carbon tax regimes; and potentially impact the
stability and cost of water and energy supplies. We
therefore view climate change as a company, community,
and global concern. In 2018, we continued to implement
the climate change strategy we developed in 2017, which is
aligned with our overall business strategy to grow free cash
flow per share through safe and responsible mining.
Barrick’s climate change strategy has three pillars:
understand and mitigate the risks associated with climate
change; reduce our impacts on climate change; and
improve our disclosure on climate change. Action taken
on each pillar in 2018 is described below.
Understand and mitigate the risks associated
with climate change
In 2018, climate change was incorporated into Barrick’s
formal risk assessment process, whereby sites included
climate-related factors into their risk assessment process
(e.g., by considering the impact of increased precipitation,
drought, or severe storms on operations as well as on
communities near our operations). This followed the
risk and opportunity assessment we conducted in 2017,
where we identified three primary climate-related risks
and opportunities for our business: an increase in extended
duration extreme precipitation events; an increase in
climate change regulations to limit greenhouse gas (“GHG”)
emissions; and increased global investment in innovation
and low carbon technologies.
Reduce the Company’s impact on climate change
Mining is an energy-intensive business, and we understand
the important link between energy use and GHG emissions.
By effectively managing our energy use, we can reduce our
draw from local energy grids, reduce our GHG emissions,
achieve more efficient production, and save direct mining
costs. In 2018, a tangible example of this was the
announcement of our plan to convert the Quisqueya I
power generation facility in the Dominican Republic from
heavy fuel oil to natural gas in 2019. Converting the
facility is expected to reduce GHG emissions associated
with Pueblo Viejo by approximately 260 thousand
CO2 equivalent tonnes per year and reduce costs, which
are reflected in our guidance.
28
Overall, our GHG emissions in 2018 were 4.0 million
CO2 equivalent tonnes (MT CO2e), which is consistent with
our shorter-term GHG emissions management goals.
Improve our disclosure on climate change
In 2018, we published our 2017/18 Climate report, which
describes our climate change strategy, identified climate-
related risks and opportunities, and reported on emissions
for all operating facilities and power plants. Publishing this
report reflects our commitment to the voluntary disclosure
of our emissions.
Throughout 2018, the Board’s Corporate Responsibility
Committee, which met quarterly, was responsible for
overseeing Barrick’s policies, programs, and performance
relating to the environment, including climate change.
The Risk Committee assisted the Board in overseeing the
Company’s management of enterprise risks as well as the
implementation of policies and standards for monitoring
and mitigating such risks. Climate change is built into our
formal risk management process, outputs of which were
reviewed by the Risk Committee throughout 2018 (as of
January 1, 2019, this Committee has been combined with
the Audit Committee). In addition, the Audit Committee
reviewed the Company’s approach to climate change in
the context of Barrick’s public disclosure.
Throughout 2018, at the management level, our
Climate Change Committee, comprised of senior members
of our management team, provided strategic oversight and
governance over key decisions related to Barrick’s Climate
Change Strategy. In 2018, the Climate Change Committee
focused on site-level assessment and mitigation of climate-
related risk; monitoring progress against GHG emissions
targets; providing guidance on external disclosures; and
initiating a climate change scenario analysis project.
Further to the specific focus of the Climate Change
Committee, regular review meetings throughout 2018
allowed for the discussion of opportunities and risks that
may help or hinder the Company from achieving its
objectives, including climate-related risks (e.g., spring snow
melts, hurricanes, flooding, and mud slides). Additionally,
during mine site optimization reviews undertaken in the
fourth quarter, each site presented for review their life of
mine energy and GHG reduction plans.
We expect climate change activities to continue into
2019 and beyond. Site-level climate-related risks and
mitigation plans will continue to be reviewed in the context
of the company-wide risk assessment, and site-level plans
to reduce energy and GHG emissions will be strengthened.
We also expect to sustain our climate-related disclosure.
Overall, based on the work completed in 2018, Barrick
continues to build resilience to withstand the potential
20163_BARRICK_AR18_MDA_MAR 8.indd 28
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Barrick Gold Corporation | Financial Report 2018MANAGEMENT’S DISCUSSION AND ANALYSIS impacts of climate change and leverage potential
opportunities as the global economy transitions to a
low-carbon future.
Following the merger between Barrick and Randgold on
January 1, 2019, we are reviewing how climate-related
risks and opportunities will be governed in the new company.
Reserves and Resources
Barrick’s 2018 reserves were calculated using a gold price
assumption of $1,200 per ounce, consistent with 2017.
As of December 31, 2018, Barrick’s proven and probable
gold reserves were 62.3 million ounces6, compared to
64.4 million ounces at the end of 2017.9 While 5.4 million
ounces of reserves were depleted through mining and
processing, the Company added 3.2 million ounces of
reserves at an average grade of 4.7 grams per tonne,
significantly higher than our overall reserve grade of
1.56 grams per tonne. Reserves at our underground
operations, where the majority of the Company’s future
production will come from, were replaced, with additions
at Turquoise Ridge, Goldstrike, Hemlo and Porgera.
In 2018, measured, indicated, and inferred gold
resources were calculated using a gold price assumption
of $1,500 per ounce, consistent with 2017. Measured and
indicated gold resources increased slightly to 88.8 million
ounces6, compared to 88.6 million ounces at the end
of 2017.9 Inferred gold resources also increased to
33.5 million ounces at the end of 20186, compared to
30.8million ounces at the end of 2017.9
Approximately 1.25 million ounces of proven and
probable reserves, 1.3 million ounces of measured and
indicated resources, and 1.2 million ounces of inferred
resources (Barrick’s 63.9 percent share) were removed
at Acacia’s Bulyanhulu operation following a review by
Acacia of the mine’s geological and mineral resource
models, and other optimization work.6
Copper reserves and resources for 2018 were
calculated using a copper price of $2.75 per pound and
$3.50 per pound, respectively, consistent with 2017. As of
December 31, 2018, proven and probable copper reserves
were 10.6 billion pounds6, compared to 11.2 billion pounds
at the end of 2017.9 Measured and indicated copper
resources, including copper contained within measured
and indicated gold resources, were 11.6 billion pounds6,
compared to 11.7 billion pounds at the end of 2017.9
Inferred copper resources were 2.8 billion pounds as of
December 31, 2018, compared to 3.0 billion pounds at
the end of 2017.9
GOLD RESERVES AND RESOURCES (millions of ounces)
30.7
75.2
86.0
2016
596
30.8
88.6
64.4
2017
33.5
88.8
62.3
2018
P&P Reserves
M&I Resources
Inferred Resources
COPPER RESERVES AND RESOURCES (billions of pounds)
3.1
9.7
11.1
2016
3.0
11.7
11.2
2017
596
2.8
11.6
10.6
2018
P&P Reserves
M&I Resources
Inferred Resources
Key Business Developments
Randgold Merger
On September 24, 2018, we announced an agreement on
the terms of a recommended share-for-share merger of
Barrick and Randgold. The transaction closed on January 1,
2019, with Barrick acquiring 100% of the issued and
outstanding Randgold shares. Each Randgold shareholder
received 6.1280 common shares of Barrick for each
Randgold share, which resulted in the issuance of
583,669,178 Barrick common shares. After this share
issuance, Barrick shareholders owned 66.7%, while former
Randgold shareholders owned 33.3%, of the shares of
the combined company. We have determined that this
transaction represents a business combination with Barrick
identified as the acquirer. Based on the December 31, 2018
closing share price of Barrick’s common shares, the total
consideration of the acquisition is $7.9 billion. We began
consolidating the operating results, cash flows and net
assets of Randgold from January 1, 2019. Randgold was a
publicly traded mining company with ownership interests in
the following gold mines: Kibali in the Democratic Republic
of Congo; Tongon in Côte d’Ivoire; Loulo-Gounkoto and
Morila in Mali; and the Massawa project in Senegal.
29
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Barrick Gold Corporation | Financial Report 2018MANAGEMENT’S DISCUSSION AND ANALYSIS Hemlo Royalty Acquisition
In July 2018, Barrick acquired a 2.5% Gross Revenue
Royalty for $14.9 million on certain surface and mineral
lands adjacent to the Hemlo property in Ontario which
was originally granted to Newmont Mining Corporation as
part of the land acquisition in 2015. The royalty covers
approximately 37% of Barrick’s overall land holding at
Hemlo and includes large highly prospective areas
immediately west of the current operation. Drilling up to
800m beyond the limits of the existing resource has partly
validated that ore grade mineralization is continuous. The
area covered by the royalty could represent potentially
significant mine life extensions given the more favorable
economics without the royalty.
Investment in Midas Gold
In May 2018, we announced the acquisition of 46.55 million
common shares, representing approximately 19.9 percent
of issued and outstanding common shares of Midas Gold
Corporation in a non-brokered private placement for total
consideration of $38 million. Upon acquisition of the shares,
we accounted for our interest as an available-for-sale
financial asset presented in other non-current assets
with future changes in fair value recorded in other
comprehensive income.
Bald Mountain Exploration JV Disposition
In October 2018, Barrick sold its remaining interest in the
Bald Mountain Exploration Joint Venture to an affiliate
of Kinross Gold Corporation, which was formed as part
of the sale of the Bald Mountain asset in January 2016.
In consideration for its interest, Barrick received
US$15.5 million in cash and a 1.25% NSR on the property.
Debt Management
In July 2018, Barrick completed a make-whole repurchase
of the approximately $629 million of outstanding principal
amount of the 4.40% Notes due 2021 and incurred a
related loss on debt extinguishment of $29 million in the
third quarter of 2018. The debt repayment is expected to
result in an annualized interest saving of approximately
$28 million.
Management Structure Refinements
Barrick now has a new management team, effective
January 1, 2019. Mark Bristow is now President and Chief
Executive Officer of Barrick. Mark was formerly the Chief
Executive Officer of Randgold, a position he held since its
incorporation in 1995. Graham Shuttleworth is now Senior
Executive Vice-President and Chief Financial Officer
of Barrick, having formerly served as Randgold‘s Chief
Financial Officer. Kevin Thomson, Senior Executive
Vice-President, Strategic Matters, continues in the role to
which he was appointed at Barrick in October 2014.
In addition, Barrick will be managed by three regional
Chief Operating Officers, each of whom report to the
President and CEO. Mark Hill, formerly Barrick’s Chief
Investment Officer, was appointed Chief Operating Officer,
LATAM and Australia Pacific. Willem Jacobs, formerly
Randgold’s General Manager East and Central Africa, was
appointed Chief Operating Officer, Africa and Middle East.
Catherine Raw, formerly Barrick’s Chief Financial Officer,
was appointed to Chief Operating Officer, North America.
Kelvin Dushnisky, formerly Barrick’s President, left
Barrick at the end of August 2018.
Board Renewal & Appointments
Following the closing of the Randgold merger, Barrick’s
Board of Directors was reconstituted with the following nine
directors: John Thornton (executive chairman), Mark Bristow,
María Ignacia Benítez, Gustavo Cisneros, Christopher
Coleman, Michael Evans, Brian Greenspun, Brett Harvey
(lead independent director), and Andrew Quinn.
Investment in Shandong Gold Mining
In September 2018, we entered into a mutual investment
agreement with Shandong Gold Group Co., Ltd. (“Shandong
Gold”), further strengthening Barrick’s partnership with one
of China’s leading mining companies. Under the agreement,
Shandong Gold will purchase up to $300 million of Barrick
shares, and Barrick will invest an equivalent amount in
shares of Shandong Gold Mining Co., Ltd., a publicly listed
company controlled by Shandong Gold. Shares will be
purchased in the open market and purchases made by
Barrick will be accounted for as an available-for-sale
financial asset presented in other non-current assets with
future changes in fair value recorded in other comprehensive
income. As at December 31, 2018, Shandong Gold had
purchased approximately $198 million of shares of Barrick
and Barrick had purchased approximately $120 million of
shares of Shandong Gold Mining Co., Ltd., which had a fair
value of $168 million as of February 6, 2019.
30
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Barrick Gold Corporation | Financial Report 2018MANAGEMENT’S DISCUSSION AND ANALYSIS Outlook for 2019
Operating Unit Guidance
Our 2018 gold and copper production, cost of sales, cash costs1, all-in sustaining costs1 and 2019 forecast gold and
copper production, cost of sales, cash costs1 and all-in sustaining costs1 ranges by operating unit are as follows:
2018
production
(000s ozs)
2018
cost of
sales1
($/oz)
2018
cash
costs2
($/oz)
2018
all-in
sustaining
costs2
($/oz)
2019
forecast
production
(000s ozs)
2019
forecast
cost
of sales1
($/oz)
2019
forecast
cash
costs2
($/oz)
2019
forecast
all-in
sustaining
costs2 ($/oz)
Operating Unit
Gold
Barrick Nevada3
Pueblo Viejo (60%)
Loulo-Gounkoto (80%)4,5
Kibali (45%)4,5
Kalgoorlie (50%)
Turquoise Ridge (75%)
Tongon (89.7%)4,5
Porgera (47.5%)
Veladero (50%)
Hemlo
Acacia (63.9%)
Other Sites6
2,100
581
$ 818
750
$ 507
465
314
268
204
278
171
334
277
899
783
732
678
996
1,112
1,157
876
1,387
796
629
1,046
680
590
857
756
$ 649 1,750 – 1,900
550 – 600
623
520 – 570
330 – 350
280 – 300
270 – 310
250 – 270
240 – 260
230 – 250
200 – 220
320 – 350
190 – 250
1,083
1,154
1,318
905
778
$ 920 – $ 970
780 – 830
800 – 850
890 – 940
920 – 970
655 – 705
945 – 995
980 – 1,030
1,250 – 1,350
890 – 940
920 – 970
1,075 – 1,165
$ 640 –$ 690
465 – 510
575 – 625
555 – 605
740 – 790
550 – 600
710 – 760
800 – 850
770 – 820
765 – 815
665 – 710
895 – 945
$ 850 – $ 900
610 – 650
810 – 850
670 – 730
920 – 960
680 – 730
780 – 820
985 – 1,025
1,150 – 1,250
1,100 – 1,200
860 – 920
1,055 – 1,115
Total Consolidated Barrick5,7,8,9 4,527
$ 892
$ 588
$ 806 5,100 – 5,600
$ 880 – $ 940
$ 650 – $ 700
$ 870 – $ 920
2018
production
(millions lbs)
2018
cost of
sales1
($/lb)
2018
C1
cash
costs2
($/lb)
2018
all-in
sustaining
costs2
($/lb)
2019
forecast
production
(millions lbs)
2019
forecast cost
2019
forecast
of sales1 C1 cash costs2
($/lb)
($/lb)
2019
forecast
all-in
sustaining
costs2 ($/lb)
Copper
Lumwana
Zaldívar (50%)
Jabal Sayid (50%)
224 $ 2.51
2.55
104
1.73
55
$ 2.08
1.97
1.53
$ 3.08
2.47
1.92
210 – 240 $ 2.25 – $ 2.50
2.40 – 2.70
120 – 130
2.00 – 2.30
45 – 60
$ 1.80 – $ 2.10
1.65 – 1.85
1.60 – 1.90
$ 2.75 – $ 3.15
2.00 – 2.20
1.60 – 1.90
Total Copper9
383 $ 2.40
$ 1.97
$ 2.82
375 – 430 $ 2.30 – $ 2.70
$ 1.70 – $ 2.00
$ 2.40 – $ 2.90
1. 2018 cost of sales applicable to gold per ounce is calculated using cost of sales applicable to gold on an attributable basis (removing the non-controlling
interest of 40% Pueblo Viejo, 36.1% Acacia and 40% South Arturo from cost of sales), divided by attributable gold ounces sold. 2019 cost of sales applicable
to gold per ounce also removes the non-controlling interest of 20% Loulo-Gounkoto and 10.3% of Tongon from cost of sales. Cost of sales applicable to
copper per pound is calculated using cost of sales applicable to copper including our proportionate share of cost of sales attributable to equity method
investments (Zaldívar and Jabal Sayid), divided by consolidated copper pounds sold (including our proportionate share of copper pounds sold from our equity
method investments).
2. Cash costs, all-in sustaining costs and C1 cash costs are non-GAAP financial performance measures with no standardized meaning under IFRS and therefore
may not be comparable to similar measures of performance presented by other issuers. For further information and a detailed reconciliation of the non-GAAP
measures used in this section of the MD&A to the most directly comparable IFRS measures, please see pages 67 to 82 of this MD&A.
3. Reflects production and sales from Goldstrike, Cortez, and South Arturo on a 60% basis, which reflects our equity share.
4. These sites were acquired as a result of the merger with Randgold on January 1, 2019, and therefore no 2018 figures are provided.
5. 2019 forecast cost of sales does not include the impact of the Randgold purchase price allocation.
6. Other sites for 2018 includes Lagunas Norte and Golden Sunlight. 2019 also includes Morila on a 40% basis, which was acquired as a result of the merger
with Randgold on January 1, 2019.
7. Total gold cash costs and all-in sustaining costs per ounce include the impact of hedges and/or costs allocated to non-operating sites.
8. Operating unit guidance ranges reflect expectations at each individual operating unit, and may not add up to the company-wide guidance range total.
The company-wide 2018 results and guidance ranges exclude Pierina which is mining incidental ounces as it enters closure.
9. Includes corporate administration costs.
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31
Barrick Gold Corporation | Financial Report 2018MANAGEMENT’S DISCUSSION AND ANALYSIS
Operating Unit, Consolidated Expense and Capital Guidance
Our 2018 gold and copper production, cost of sales, cash costs1, all-in sustaining costs1, consolidated expenses and capital
expenditures and forecast gold and copper production, cost of sales, cash costs1, all-in sustaining costs1, consolidated
expenses and capital expenditures for 2019 are as follows:
($ millions, except per ounce/pound data)
Gold production and costs
Production (millions of ounces)
Gold unit production costs
Cost of sales – gold ($ per oz)2
Cash costs ($ per oz)1
Depreciation ($ per oz)2
All-in sustaining costs ($ per oz)1
Copper production and costs
Production (millions of pounds)
Copper unit production costs
Cost of sales – copper ($ per lb)
C1 cash costs ($ per lb)1
Depreciation ($ per lb)
Copper all-in sustaining costs ($ per lb)1
Exploration and project expenses
Exploration and evaluation
Project expenses
General and administrative expenses
Corporate administration
Stock-based compensation3
Acacia4
Other expense (income)
Finance costs, net5
Attributable capital expenditures:
Attributable minesite sustaining
Attributable project
Total attributable capital expenditures6
2018 Original
guidance
Q3 2018
Guidance
2018 Actual
2019 Guidance
4.50 – 5.00
4.50 – 5.00
4.53
5.10 – 5.60
810 – 850
540 – 575
240 – 260
765 – 815
810 – 850
540 – 575
240 – 260
765 – 815
385 – 450
345 – 410
1.80 – 2.10
1.55 – 1.75
0.40 – 0.50
2.30 – 2.60
2.00 – 2.30
1.80 – 2.00
0.40 – 0.50
2.55 – 2.85
325 – 405
185 – 225
140 – 180
~340
~275
~30
~35
80 – 100
500 – 550
325 – 405
185 – 225
140 – 180
~300
~235
~30
~35
80 – 100
500 – 550
892
588
248
806
383
2.40
1.97
0.65
2.82
383
166
217
265
212
27
26
90
545
880 – 940
650 – 700
215 – 235
870 – 920
375 – 430
2.30 – 2.70
1.70 – 2.00
0.60 – 0.70
2.40 – 2.90
280 – 340
160 – 170
120 – 150
~200
~140
~40
~20
80 – 100
500 – 550
950 – 1,100
450 – 550
950 – 1,100
450 – 550
1,400 – 1,600 1,400 – 1,600
946
467
1,413
1,100 – 1,300
300 – 400
1,400 – 1,700
1. Cash costs, all-in sustaining costs and C1 cash costs are non-GAAP financial performance measures with no standardized meaning under IFRS and
therefore may not be comparable to similar measures of performance presented by other issuers. For further information and a detailed reconciliation of
the non-GAAP measures used in this section of the MD&A to the most directly comparable IFRS measures, please see pages 67 to 82 of this MD&A.
2. 2019 guidance does not include the impact of the Randgold purchase price allocation.
3. 2018 actual based on US$13.54 and 2019 guidance based on a three month trailing average ending December 31, 2018 of US$12.40 per share
and excludes Acacia.
4. Acacia general and administrative expenses is substantially comprised of stock-based compensation.
5. 2018 actual includes a net loss on debt extinguishment of $29 million.
6. Attributable capital expenditures are presented on the same basis as guidance, which includes our 60% share of Pueblo Viejo and South Arturo, our 80%
share of Loulo-Gounkoto, our 89.7% share of Tongon, our 63.9% share of Acacia and our 50% share of Zaldívar and Jabal Sayid.
2019 Guidance Analysis
Estimates of future production, cost of sales, and cash
costs1 presented in this MD&A are based on mine plans
that reflect the expected method by which we will mine
reserves at each site. Actual gold and copper production
and associated costs may vary from these estimates due to
a number of operational and non-operational risk factors
(see the “Cautionary Statement on Forward-Looking
Information” on page 18 of this MD&A for a description of
certain risk factors that could cause actual results to differ
materially from these estimates).
Production
We expect 2019 gold production to be in the range of 5.1 to
5.6 million ounces with production in the second half of the
year to be slightly higher than the first half. As the merger
between Barrick and Randgold was effective on January 1,
2019, gold production in 2019 is expected to be higher than
2018 as a result of inclusion of a full year of production
from our 80% interest in Loulo-Gounkoto, our 45% interest
in Kibali, our 89.7% interest in Tongon and our 40% interest
in Morila. Offsetting the inclusion of these additional
production sources, production from Barrick Nevada is
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Barrick Gold Corporation | Financial Report 2018MANAGEMENT’S DISCUSSION AND ANALYSIS
expected to be lower in 2019 relative to 2018 primarily due
to the cessation of Cortez Hills open pit operations in the
first half of 2019. Production at Pueblo Viejo and Turquoise
Ridge in 2019 is expected to be in line with 2018 production
levels. At Veladero, we expect 2019 production to be lower
than 2018 production levels as a result of lower grades
from the mine in 2019.
Cost of Sales
On a per ounce basis, cost of sales applicable to gold4,
after removing the portion related to non-controlling
interests, is expected to be in the range of $880 to $940
per ounce, higher than the prior year. The projected
increase is mainly due to higher cash costs per ounce1 at
Barrick Nevada. We are planning to mitigate those rising
costs with a continued focus on lowering our other direct
mining costs by improving operating efficiencies and
lowering labor and contractor costs.
Cash Costs per ounce1
Cash costs per ounce1 are expected to be in the range of
$650 to $700, higher than the prior year due to increases
at Barrick Nevada, offset by lower cash costs at Turquoise
Ridge and the inclusion of lower cost production from
Loulo-Gounkoto and Kibali.
We expect Barrick Nevada to have higher cash costs
per ounce1 than 2018 driven primarily by the cessation
of the comparatively high-grade, low cost Cortez Hills open
pit in the first half of 2019, which negatively impacts Barrick
Nevada’s overall production, sales mix and open pit
costs from the continuing lower grade Cortez operations.
This is expected to be partly offset by an increase in
bulk mining rates at both Goldstrike and Cortez Hills
underground operations.
We expect lower cash costs per ounce1 at Turquoise
Ridge in 2019 compared to the prior year due to lower
mining unit costs.
The inclusion of lower cost production from Loulo-
Gounkoto and Kibali as a result of the merger with
Randgold and lower mining unit costs at Turquoise Ridge
is expected to partially offset these impacts on Barrick’s
consolidated cash costs per ounce1.
All-In Sustaining Costs per ounce1
All-in sustaining costs per ounce1 are expected to be in
the range of $870 to $920 for gold, higher than the $806
per ounce in 2018, driven primarily by the higher expected
cash costs per ounce1 as well as an increase in minesite
sustaining capital expenditures on a per ounce basis.
In 2019, we expect to incur lower corporate administration
expense. We will also continue to focus on reducing
mining costs.
Exploration and Project Expenses
We expect to incur approximately $160 to $170 million of
exploration and evaluation expenditures in 2019 with
approximately 80 percent allocated to the Americas. Our
exploration programs balance high-quality brownfield
projects, greenfield exploration, and new discoveries that
we believe may have the potential to become profitable
mines. Exploration plans for North America in 2019 are
heavily weighted to the Cortez District where deep drilling
will continue to add resources, as well as test open
mineralization, extensions, and concepts farther afield.
Consolidation of the Goldrush and Fourmile geology
models is a top priority and in progress. We anticipate that
Fourmile and Goldrush will be integrated and developed
as a single project.
We expect to incur approximately $120 to $150 million
of project expenses in 2019, compared to $217 million in
2018. In 2019, project expenses include the Pascua-Lama
ongoing site costs, costs associated with our Donlin Gold
Project and Norte Abierto (our joint venture with Goldcorp
containing Cerro Casale and Caspiche) projects.
General and Administrative Expenses
In 2019, we expect corporate administration costs to be
approximately $140 million, a decrease of $72 million
compared to 2018. This reflects the impact of severance
costs incurred in 2018 as a result of the decentralized
operating model implementation in the second quarter
of 2018, and the workforce reduction following the
merger with Randgold. This is partially offset by integration
costs in 2019.
Finance Costs, Net
Finance costs of $500 to $550 million primarily represent
interest expense on long-term debt, non-cash interest
expense relating to gold and silver streaming agreements,
and accretion, net of finance income. We expect net
finance costs in 2019 to be in line with 2018 finance costs
of $545 million due in part to lower interest expense in 2019
following $0.7 billion of debt repayments in 2018. This is
expected to be offset by an increase in interest expense
as a result of implementing IFRS 16 Leases, which requires
all leases with a few exceptions, to be accounted for as
finance leases beginning on January 1, 2019. 2018
net finance costs included a $29 million net loss on the
33
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Barrick Gold Corporation | Financial Report 2018MANAGEMENT’S DISCUSSION AND ANALYSIS extinguishment of debt, and further debt repurchases could
lead to additional losses on extinguishment that could
cause an increase to forecasted 2019 finance costs.
Capital Expenditures
Total attributable capital expenditures for 2019 are expected
to be in the range of $1,400 to $1,700 million. We continue
to focus on the delivery of our project capital pipeline and
we expect attributable project capital expenditures to be in
the range of $300 to $400 million.
Approximately three quarters of our project capital
expenditures in 2019 relates to building our next expected
Tier One Gold Assets at Goldrush and Turquoise Ridge as
well as the underground expansion and Crossroads project
at Cortez. The remainder of project capital expenditure is
associated with Zaldívar and Pascua-Lama.
Attributable minesite sustaining capital expenditures
are expected to be in the range of $1,100 to $1,300 million
compared to $946 million in 2018. The increase is primarily
a result of the addition of the acquired Randgold sites
with expected minesite sustaining expenditures in the range
of $150 to $200 million as we expect minesite sustaining
capital expenditures for all other sites to be in line with
2018 actuals.
Effective Income Tax Rate
At a gold price of $1,250/oz, our expected effective tax rate
range for 2019 is between 40% to 50%. The rate is
sensitive to relative sales in high versus low tax jurisdictions
(i.e., sales mix), the proportion of income from our equity
accounted investments and the level of non-tax affected
costs in countries where we generate net losses.
Outlook Assumptions and Economic Sensitivity Analysis
2019 Guidance
Hypothetical
assumption
change
Impact on
revenue
(millions)
Impact on cost
Impact on
of sales
(millions)
all-in
sustaining costs1
Gold revenue, net of royalties
Copper revenue, net of royalties
$ 1,250/oz
$ 2.75/lb
+/- $ 100/oz
+/- $ 0.50/lb
+/- $ 535
+/- $ 201
+/- $ 17
+/- $ 18
+/- $ 3/oz
+/- $ 0.04/lb
1. All-in sustaining costs is a non-GAAP financial performance measure with no standardized definition under IFRS. For further information and a detailed
reconciliation, please see pages 67 to 82 of this MD&A.
Risks and Risk Management
Overview
The ability to deliver on our vision, strategic objectives and
operating guidance depends on our ability to understand
and appropriately respond to the uncertainties or “risks” we
face that may prevent us from achieving our objectives.
In order to achieve this we:
n Maintain a framework that permits us to manage
risk effectively and in a manner that creates the
greatest value;
n Integrate a process for managing risk into all our
important decision-making processes so that we reduce
the effect of uncertainty on achieving our objectives;
n Actively monitor key controls we rely on to achieve the
Company’s objectives so that they remain in place and
are effective at all times; and
n Provide assurance to the executives and relevant
Committees of the Board of Directors on the
effectiveness of key control activities.
Board and Committee Oversight
We maintain strong risk oversight practices, with
responsibilities outlined in the Board’s and related
committees’ mandates. The Board’s mandate makes clear
its responsibility for reviewing and discussing with
34
management the processes used to assess and manage
risk, including the identification by management of the
principal risks of the business, and the implementation of
appropriate systems to deal with such risks.
The Audit & Risk Committee of the Board of Directors
assists the Board in overseeing the Company’s management
of principal risks as well as the implementation of policies
and standards for monitoring and modifying such risks, and
monitoring and reviewing the Company’s financial position
and financial risk management programs generally. The
Corporate Governance & Nominating Committee assists
the Board in overseeing the Company’s environmental,
safety and health, corporate social responsibility, and
human rights programs, policies and performance.
Management Oversight
In late 2018, the weekly Business Plan Review meetings
transitioned to a weekly Executive Committee Review
which is now the main forum for senior management to
raise and discuss risks facing the operations and
organization more broadly. At regularly scheduled meetings,
the Board and the Audit & Risk Committee are provided
with updates on issues identified by management at these
weekly sessions.
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Barrick Gold Corporation | Financial Report 2018MANAGEMENT’S DISCUSSION AND ANALYSIS
Principal Risks
The following subsections describe some of our key
sources of uncertainty and most important risk modification
activities. The risks described below are not the only ones
facing Barrick. Our business is subject to inherent risks in
financial, regulatory, strategic and operational areas. For
a more comprehensive discussion of those inherent risks,
see “Risk Factors” in our most recent Form 40-F/Annual
Information Form on file with the SEC and Canadian
provincial securities regulatory authorities. Also see the
“Cautionary Statement on Forward-Looking Information”
on page 18 of this MD&A.
Financial position and liquidity
Our liquidity profile, level of indebtedness and credit ratings
are all factors in our ability to meet short- and long-term
financial demands. Barrick’s outstanding debt balances
impact liquidity through scheduled interest and principal
repayments and the results of leverage ratio calculations,
which could influence our investment grade credit ratings
and ability to access capital markets. In addition, our ability
to draw on our credit facility is subject to meeting its
covenants. 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. The ability of our
operations to deliver projected future cash flows, 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.
Key risk modification activities:
n Continued focus on generating positive free cash
flow by improving the underlying cost structures of
our operations in a sustainable manner;
n Disciplined capital allocation criteria for all investments,
to ensure a high degree of consistency and rigor is
applied to all capital allocation decisions based on a
comprehensive understanding of risk and reward;
n Preparation of budgets and forecasts to understand
the impact of different price scenarios on liquidity,
and formulate appropriate strategies;
n Reduced notional and lengthened average tenor of
our outstanding debt through liability management
activities; and
n Other options available to the Company to enhance
liquidity include drawing on our $3.0 billion undrawn
credit facility, asset sales, joint ventures, or issuance
of debt or equity securities.
Improving free cash flow1 and costs
Our ability to improve productivity, drive down operating
costs and reduce working capital remains a focus in 2019
and is subject to several sources of uncertainty. This
includes our ability to achieve and maintain industry-leading
margins by improving the productivity and efficiency of our
operations through automation. We also recognize that
effective cybersecurity is of high importance to address the
ongoing threat of cyberattacks and have acted to improve
our cybersecurity posture.
Key risk modification activities:
n Formal project management protocols are established
around these business transformation programs. The
status of these projects is reviewed regularly to ensure
the timely identification of key risk exposures that may
affect their successful delivery;
n Ongoing implementation of a digitization program
to unlock the potential of digital mining including a
cybersecurity strategy and program based on strong risk
management principles; and
n Business improvement initiatives established, and site
owned to deliver the full potential of our mines and
encompassing:
n A standardized, performance-oriented measurement
scorecard linking top operational and economic
measures;
n Technology enablers driven from site, targeting site
specific requirements driving value to the business; and
n Asset integrity program to improve availability of
critical infrastructure.
Social license to operate
At Barrick, we are committed to building, operating, and
closing our mines in a safe and responsible manner. To do
this, we seek to build trust-based partnerships with host
governments and local communities to drive shared
long-term value while working to minimize the social and
environmental impacts of our activities. Geopolitical risks
such as resource nationalism and incidents of corruption
are inherent for a company operating globally. Past
environmental incidents in the extractive industry highlight
the hazards (e.g., water management, tailings storage
facilities, etc.) and the potential consequences to both the
environment and community health and safety. Barrick also
recognizes climate change as an area of risk requiring
specific focus. Our ability to maintain compliance with
regulatory and community obligations in order to protect the
environment and our host communities alike remains one
of our top priorities.
35
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Barrick Gold Corporation | Financial Report 2018MANAGEMENT’S DISCUSSION AND ANALYSIS Key risk modification activities:
n Our Corporate Governance & Nominating Committee
assists the Board in overseeing the Company’s
environmental, safety and health, corporate social
responsibility, and human rights programs, policies
and performance;
n Our commitment to responsible mining is supported
by a robust governance framework, setting out the
Company’s expectations of our people, suppliers, and
contractors in the conduct of their daily work;
n At the core of this framework is the Code of Business
Conduct and Ethics and Barrick’s management systems,
programs, and policies. These provide a common
standard by which all sites are expected to operate –
from community, health, environmental, safety, security,
human rights, and ethical perspectives;
n We take a partnership approach with our home and host
governments. This means we work to balance our own
interests and priorities with those of our government
partners, working to ensure that everyone derives real
value from our operations;
n We open our social and environmental performance to
third-party scrutiny, including through the ISO 14001
re-certification process, International Cyanide
Management Code audits, and annual human rights
impact assessments; and
n We continually review and update our closure plans and
cost estimates to plan for environmentally responsible
closure and monitoring of operations.
Resources and reserves and production outlook
Like any mining company, we face the risk that we are
unable to discover or acquire new resources or that we do
not convert resources into production. As we move into
2019 and beyond, our overriding objective of growing free
cash flow per share is underpinned by a strong pipeline of
organic projects and minesite expansion opportunities in
our core regions. Uncertainty related to these and other
opportunities exists (potentially both favorable and
unfavorable) due to the speculative nature of mineral
exploration and development as well as the potential for
increased costs, delays, suspensions and technical
challenges associated with the construction of
capital projects.
36
Key risk modification activities:
n Focus on responsible mineral resource management,
continuously improve ore body knowledge, and add to
and upgrade reserves and resources;
n Grow and invest in a portfolio of Tier One Gold Assets,
Tier Two Gold Assets and Strategic Assets with an
emphasis on organic growth; and
n Invest in exploration across extensive land positions in
many of the world’s most prolific gold districts.
Market Overview
The market prices of gold, and, to a lesser extent, copper
are the primary drivers of our profitability and our ability to
generate free cash flow for our shareholders.
Gold
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 2018, the gold
price ranged from $1,160 per ounce to $1,366 per ounce.
The average market price for the year of $1,268 per ounce
represented an increase of 1% versus 2017.
AVERAGE MONTHLY SPOT GOLD PRICES
(dollars per ounce)
1,400
1,300
1,200
1,100
1,000
2014
2015
2016
2017
2018
The price of gold generally fell over the course of mid-2018
before rising in the fourth quarter, experiencing its low in
August and ending the year above the annual average.
In the middle of the year, the gold price was negatively
impacted by US dollar strength, rising US dollar interest
rates, strong equity markets that reached record highs, and
weakness in Chinese and Indian currencies. In the fourth
quarter, the gold price was positively impacted by a
downturn in equity markets coupled with an increase in
volatility, and a reduction in US interest rates.
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Barrick Gold Corporation | Financial Report 2018MANAGEMENT’S DISCUSSION AND ANALYSIS Copper
During 2018, London Metal Exchange (“LME”) copper
prices traded in a range of $2.62 to $3.33 per pound,
averaged $2.96 per pound, and closed the year at $2.71
per pound. Copper prices are significantly influenced by
physical demand from emerging markets, especially China.
The price of copper traded up to four-year highs in
June 2018, benefiting from strong global economic data,
increases in the prices of other base metals, and concerns
over potential supply disruptions from labor actions. Copper
prices subsequently fell to the lows of the year due to a
strengthening US dollar, a weakening Chinese yuan, and
concerns over global trade due to tariff actions. A dearth of
new projects scheduled to enter production in the coming
years could positively impact prices should physical
demand continue to grow.
AVERAGE MONTHLY SPOT COPPER PRICES
(dollars per pound)
3.5
3.0
2.5
2.0
2014
2015
2016
2017
2018
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,
2018, we recorded 51 million pounds of copper sales
subject to final settlement at an average provisional price
of $2.71 per pound. The impact to net income before
taxation of a 10% movement in the market price of copper
would be approximately $14 million, holding all other
variables constant.
In 2018, we recorded hedge gains in earnings of
$10 million relating to our option collar strategies (2017:
$4 million loss and 2016: $nil). There are no copper collars
remaining as at December 31, 2018.
Currency Exchange Rates
The results of our mining operations outside of the United
States are affected by US dollar exchange rates. Although
we have made dispositions, we continue to have exposure
to the Australian and Canadian dollars through a combination
of mine operating and corporate administration costs, as
well as exposure to the Argentine peso through operating
costs at our Veladero mine, and peso denominated VAT
receivable balances. In addition, we have exposure to
the Chilean peso, Papua New Guinea kina, Peruvian sol,
Zambian kwacha, Tanzanian shilling, Dominican peso,
Communautè Financière Africaine franc, Euro, South
African rand, and British pound through mine operating
and capital costs.
Fluctuations in the US dollar increase the volatility of
our costs reported in US dollars, subject to positions put in
place through our currency hedging program. In 2018, the
Australian dollar traded in a range of $0.70 to $0.81 against
the US dollar, while the US dollar against the Canadian
dollar and Argentine peso ranged from $1.22 to $1.37 and
ARS 17.41 to ARS 41.58, respectively. During the year,
the US dollar traded strongly and Treasury yields
increased. Along with inflation pressures in Argentina and
concerns by foreign investors about the country’s level of
debt, this led to a continued weakening of the Argentine
peso during the year. During 2018, we did not have any
currency hedge positions, and are unhedged against
foreign exchange exposures as at December 31, 2018
beyond spot requirements.
Fuel
For 2018, the price of West Texas Intermediate (“WTI”)
crude oil traded in a wide range between $42 and $77 per
barrel, with an average market price of $65 per barrel,
and closed the year at $45 per barrel. During 2018, the
price of crude oil rose to its highest levels since 2014 in
early October before falling significantly over the remainder
of the fourth quarter, reaching year-to-date lows in late
December due to global economic concerns, financial
market volatility, a strong US dollar, and increased US
crude oil supply.
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37
Barrick Gold Corporation | Financial Report 2018MANAGEMENT’S DISCUSSION AND ANALYSIS AVERAGE MONTHLY SPOT CRUDE OIL PRICE (WTI)
(dollars per barrel)
$120
$100
$80
$60
$40
$20
2014
2015
2016
2017
2018
In 2018, we recorded hedge losses in earnings of $4 million
on our fuel hedge positions (2017: $32 million loss and
2016: $47 million loss). A significant portion of these losses
has 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,
Barrick’s fuel hedges qualified for hedge accounting and
unrealized gains and losses began being recorded in Other
Comprehensive Income.
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
the range for its benchmark rate to between 0% and 0.25%.
The benchmark was kept at this level until December 2015,
when the range was increased by 25 basis points.
The range was raised by an additional 25 basis points in
December 2016, 75 basis points over the course of 2017,
and 100 basis points over the course of 2018. Further
changes to short-term rates in 2019 are expected to be
dependent on economic data as the US benchmark rate
has gotten closer to an assumed neutral level.
At present, our interest rate exposure mainly relates
to interest receipts on our cash balances ($1.6 billion at
December 31, 2018); the mark-to-market value of derivative
instruments; the fair value of and ongoing payments under
US dollar interest-rate swaps; the carrying value of certain
long-lived assets and liabilities; and the interest payments
on our variable-rate debt ($0.1 billion at December 31,
2018). Currently, the amount of interest expense recorded
in our consolidated statement of income is not materially
impacted by changes in interest rates, because the majority
of debt was issued at fixed interest rates. The relative
amounts of variable-rate financial assets and liabilities
may change in the future, depending on the amount of
operating cash flow we generate, as well as the level
of capital expenditures and our ability to borrow on
favorable terms using fixed rate debt instruments. Changes
in interest rates affect the accretion expense recorded on
our provision for environmental rehabilitation and therefore
would affect our net earnings.
38
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Barrick Gold Corporation | Financial Report 2018MANAGEMENT’S DISCUSSION AND ANALYSIS Review of Annual Financial Results
Revenue
($ millions, except per ounce/pound
data in dollars)
For the years ended December 31
Gold
000s oz sold1
000s oz produced1
Market price2
Realized price2,3
Revenue
Copper
millions lbs sold1
millions lbs produced1
Market price2
Realized price2,3
Revenue
Other sales
Total revenue
2018
2017
2016
5,503
5,302
4,544
4,527
5,517
5,323
$ 1,268 $ 1,257 $ 1,251
1,267
1,248
1,258
$ 6,600 $ 7,631 $ 7,908
405
413
382
383
405
415
$ 2.96 $ 2.80 $ 2.21
2.29
466
184
$ 7,243 $ 8,374 $ 8,558
2.88
512
131
2.95
608
135
1. Includes our equity share of gold ounces from Acacia and Pueblo Viejo
and copper pounds from Zaldívar and Jabal Sayid.
2. Per ounce/pound weighted average.
3. Realized price is a non-GAAP financial performance measure with no
standardized meaning under IFRS and therefore may not be comparable
to similar measures of performance presented by other issuers. For further
information and a detailed reconciliation of each non-GAAP measure used
in this section of the MD&A to the most directly comparable IFRS measure,
please see pages 67 to 82 of this MD&A.
In 2018, gold revenues were down 14% compared to the
prior year primarily due to a decrease in gold sales volume,
partially offset by higher realized gold prices1. The average
realized gold price1 for 2018 was up $9 per ounce
compared to the prior year reflecting the higher market
gold prices in 2018, which averaged $11 per ounce higher
than 2017.
In 2018, gold production was 796 thousand ounces or
15% lower than the prior year. Excluding the impact of the
50% divestment of the Veladero mine on June 30, 2017,
gold production decreased by 13% or 685 thousand ounces
compared to the prior year, mainly due to lower grades
and recoveries across most operations as per previous
guidance, lower throughput at Acacia as a result of reduced
operations at Bulyanhulu, and lower tonnage processed at
Lagunas Norte.
GOLD PRODUCTION VARIANCE (thousands of ounces)
Year ended December 31, 2018
2017
Barrick Nevada
Acacia (63.9%)
Veladero (50%)
Lagunas Norte
Other Mines
Pueblo Viejo (60%)
Turquoise Ridge
2018
5,323
212
157
154
142
119
69
57
4,527
0
1000 2000 3000 4000 5000 6000 7000
Copper revenues for 2018 were down 16% compared to
the prior year due to lower copper sales volume, combined
with lower realized copper prices1. In 2018, the realized
copper price1 was down $0.07 per pound compared
to 2017, while the market copper price increased by
$0.16 compared to the prior year. The realized copper
price1 was lower than the market copper price as a result of
the impact of negative provisional pricing adjustments
recorded in the first quarter of 2018.
Copper production for 2018 was 30 million pounds
lower than the prior year. The decrease is mainly a result of
lower production at Lumwana of 32 million pounds or 13%
compared to the prior year, primarily due to mill shutdowns,
crusher availability issues, and lower head grade and
recoveries. This was combined with lower production at
Zaldívar of 10 million pounds or 9% compared to the prior
year, attributed to lower throughput, which was partially
mitigated by higher grades and recoveries. This was
partially offset by an increase in production at Jabal Sayid
of 12 million pounds or 28% compared to the prior year,
due to higher mined grade and throughput as the site was
still ramping up in the prior year.
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39
Barrick Gold Corporation | Financial Report 2018MANAGEMENT’S DISCUSSION AND ANALYSIS
Production Costs
($ millions, except per ounce/pound
data in dollars)
For the years ended December 31
Gold
Direct mining costs
Depreciation
Royalty expense
Community relations
Cost of sales
Cost of sales (per oz)1
Cash costs2,3
All-in sustaining costs2,3
Copper
Direct mining costs
Depreciation
Royalty expense
Community relations
Cost of sales
Cost of sales (per lb)1
C1 cash costs2,3
All-in sustaining costs2,3
2018
2017
2016
$ 3,130 $ 3,063 $ 3,215
1,504
1,529
1,253
224
206
196
37
38
42
$ 4,621 $ 4,836 $ 4,980
798
546
730
794
526
750
892
588
806
$ 344 $ 274 $ 228
45
41
5
170
39
5
83
38
4
$ 558 $ 399 $ 319
1.41
1.49
$ 2.82 $ 2.34 $ 2.05
2.40
1.97
1.77
1.66
1. Cost of sales applicable to gold per ounce is calculated using cost of sales
applicable to gold on an attributable basis (removing the non-controlling
interest of 40% Pueblo Viejo, 36.1% Acacia and 40% South Arturo from
cost of sales), divided by attributable gold ounces sold. Cost of sales
applicable to copper per pound is calculated using cost of sales applicable
to copper including our proportionate share of cost of sales attributable
to equity method investments (Zaldívar and Jabal Sayid), divided by
consolidated copper pounds sold (including our proportionate share of
copper pounds sold from our equity method investments).
2. Per ounce/pound weighted average.
3. Cash costs, all-in sustaining costs and C1 cash costs are non-GAAP
financial performance measures with no standardized meaning under IFRS
and therefore may not be comparable to similar measures of performance
presented by other issuers. For further information and a detailed
reconciliation of each non-GAAP measure used in this section of the
MD&A to the most directly comparable IFRS measure, please see
pages 67 to 82 of this MD&A.
In 2018, cost of sales applicable to gold was 4% lower than
the prior year primarily due to a decrease in sales volume
driving lower depreciation costs and royalty expenses, and
the divestment of 50% of the Veladero mine on June 30,
2017. This was partially offset by an inventory impairment
of $166 million at Lagunas Norte. On a per ounce basis,
cost of sales applicable to gold4 after removing the portion
related to non-controlling interests, was 12% higher than
the prior year primarily due to the impact of lower grades
and recoveries across most operations as per previous
guidance, combined with higher direct mining costs. The
increase in direct mining costs was mainly due to higher
energy prices and consumption.
In 2018, gold all-in sustaining costs1 were up $56 per
ounce or 7% compared to the prior year primarily due to
higher cost of sales, excluding the Lagunas Norte inventory
impairment, and minesite sustaining capital expenditures
on a per ounce basis.
In 2018, cost of sales applicable to copper was 40%
higher than the prior year. The increase in direct mining
costs is mainly attributed to higher maintenance costs due
to mill shutdowns and crusher availability issues, higher
energy consumption to truck ore to the crusher and tire
costs due to road conditions at Lumwana. Depreciation
expense was higher mainly as a result of the impairment
reversal recorded in the fourth quarter of 2017 relating to
Lumwana, resulting in higher non-current asset values to
depreciate compared to the prior year. Our 50% interests
in Zaldívar and Jabal Sayid are equity accounted for and
therefore we do not include their cost of sales in our
consolidated copper cost of sales. On a per pound basis,
cost of sales applicable to copper 4, after including our
proportionate share of cost of sales at our equity method
investees, increased by 36% compared to the prior year
primarily due to the impact of lower sales volume at
Lumwana and Zaldívar, higher direct mining costs and
depreciation expense at Lumwana as discussed above,
and lower capitalized stripping as phase 6B was completed
in the prior year at Zaldívar. This was slightly offset by the
impact of higher sales volume at Jabal Sayid.
Copper all-in sustaining costs1, which have been
adjusted to include our proportionate share of equity
method investments, were 21% higher than the prior year
primarily reflecting the higher cost of sales applicable to
copper combined with higher minesite sustaining capital
expenditures at Lumwana and Zaldívar.
40
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Barrick Gold Corporation | Financial Report 2018MANAGEMENT’S DISCUSSION AND ANALYSIS
2018
2017
2016
General and Administrative Expenses
($ millions)
For the years ended December 31
2018
2017
2016
$ 975 $ 1,109 $ 944
175
–
273
–
459
9
Corporate administration1
Stock-based compensation2
Acacia
$ 212 $ 201 $ 159
42
55
26
21
27
26
General & administrative expenses
$ 265 $ 248 $ 256
1. For the year ended December 31, 2018, corporate administration costs
include approximately $63 million of severance costs (2017: $3 million;
2016: $9 million).
2. Based on US$13.54 share price as at December 31, 2018
(2017: US$14.47; 2016: US$15.98) and excludes Acacia.
General and administrative expenses were $17 million
higher than the prior year mainly due to higher severance
costs as a result of the implementation of a number of
organizational reductions, including the decentralized
operating model in the second and third quarter of 2018
and the workforce reduction resulting from the merger with
Randgold, partially offset by lower corporate administration
expenses resulting from these reductions.
Exploration, Evaluation and Project Costs
($ millions)
For the years ended December 31
2018
2017
2016
Global exploration and evaluation
Advanced project costs:
Pascua-Lama
Other
Corporate development
Business improvement and innovation
Global exploration and evaluation
and project expense
Minesite exploration and evaluation
$ 121 $ 126 $
88
77
36
60
44
122
14
13
32
59
17
14
15
$ 338 $ 307 $ 193
44
47
45
Total exploration, evaluation and
project expenses
$ 383 $ 354 $ 237
Capital Expenditures1
($ millions)
For the years ended December 31
Minesite sustaining2
Project capital expenditures3,4
Capitalized interest
Total consolidated
capital expenditures
$ 1,443 $ 1,382 $ 1,119
Attributable capital expenditures5
$ 1,413 $ 1,364 $ 1,053
1. These amounts are presented on a 100% accrued basis, except
for attributable consolidated capital expenditures.
2. Includes both minesite sustaining and mine development.
3. Project capital expenditures are included in our calculation of all-in costs,
but not included in our calculation of all-in sustaining costs.
4. Includes both minesite expansion and projects.
5. These amounts are presented on the same basis as our guidance, which
include our 60% share of Pueblo Viejo and South Arturo, our 63.9% share
of Acacia and our 50% share of Zaldívar and Jabal Sayid.
In 2018, total consolidated capital expenditures increased
by 4% compared to the prior year primarily due to an
increase in project capital expenditures, partially offset by
a decrease in minesite sustaining capital expenditures.
Project capital expenditures increased by 68% primarily
as a result of increased spending at Crossroads, the Cortez
Range Front declines, Goldrush, and the Deep South
Expansion at Barrick Nevada and construction of the third
shaft at Turquoise Ridge. As at December 31, 2018, we
have spent $37 million (including $4 million in the fourth
quarter of 2018) out of a total estimated capital cost of
$1.0 billion on Goldrush, $33 million (including $2 million in
the fourth quarter of 2018) out of a total estimated capital
cost of $106 million on the Deep South Expansion, and
$62 million (including $3 million in the fourth quarter of
2018) out of an estimated capital cost of $300–$325 million
(100% basis) on the construction of the third shaft at
Turquoise Ridge. Capitalized interest for the year relates
to the Cortez Range Front declines.
Minesite sustaining capital expenditures decreased
by 12% mainly due to the completion of several initiatives
occurring in the prior year, including the Goldstrike
underground cooling and ventilation project; digitization
initiatives; the autoclave thiosulfate water treatment plant
conversion at the Goldstrike autoclaves; the optimization
of development sequencing at Turquoise Ridge; and the
construction of phases 4B and 5B of the leach pad
expansion at Veladero.
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41
Barrick Gold Corporation | Financial Report 2018MANAGEMENT’S DISCUSSION AND ANALYSIS
Exploration, evaluation and project costs for 2018 increased
by $29 million compared to the prior year. The increase is
primarily due to higher corporate development costs of
$47 million primarily as a result of $37 million in transaction
costs related to the merger with Randgold, and an increase
in other advanced project costs of $22 million mainly
attributed to the Pueblo Viejo plant expansion. This was
partially offset by a decrease in advanced project costs at
Pascua-Lama of $45 million.
Finance Costs, Net
($ millions)
For the years ended December 31
Interest expense1
Accretion
Loss on debt extinguishment
Other finance costs
Interest capitalized
Finance income
2018
2017
2016
$ 452
87
29
1
(9)
(15)
$ 511
67
127
–
–
(14)
$ 591
50
129
18
–
(13)
Finance costs, net
$ 545
$ 691
$ 775
1. For the year ended December 31, 2018, interest expense includes
approximately $98 million of non-cash interest expense relating to the gold
and silver streaming agreements with Wheaton Precious Metals Corp.
and Royal Gold, Inc. (2017: $101 million; 2016: $100 million).
In 2018, net finance costs were $146 million lower than the
prior year primarily due to a $98 million reduction in debt
extinguishment costs and lower interest expense of
$59 million, both attributed to debt reductions we made in
2018 and 2017, although a larger amount was repaid in
the prior year. The loss on debt extinguishment in 2018
relates to the make-whole repurchase in July 2018 of the
remaining $629 million of principal on the 4.40% notes
due 2021. For 2017, the loss on debt extinguishment
relates primarily to the make-whole repurchase of the
remaining $279 million of principal on the 6.95% notes due
2019 and the make-whole repurchase of the remaining
$731 million of principal on the 4.10% notes due 2023.
Additional Significant Statement of Income Items
($ millions)
For the years ended December 31
2017
2018
2016
Impairment charges (reversals)
Loss on currency translation
Other expense/(income)
$ 900
$ 136
$ 90
$ (212) $ (250)
$ 72
$ 199
$ (799) $ 60
Impairment Charges (Reversals)
For the years ended December 31
2018
2017
2016
($ millions)
Asset impairments (reversals)
Lagunas Norte
Veladero
Equity method investments
Acacia exploration sites
Barrick Nevada
Pascua-Lama
Cerro Casale
Bulyanhulu
Lumwana
Golden Sunlight
Exploration sites
Other
Total asset impairment
charges (reversals)
Goodwill
Veladero
Total goodwill impairment charges
Post-tax Post-tax Post-tax
(our
share)
(our
share)
(our
share)
$ 405
160
30
17
11
(7)
–
–
–
–
–
29
$
2
–
–
–
–
407
(518)
350
(259)
2
8
1
$ (20)
(179)
49
–
–
1
–
–
–
–
–
3
$ 645
$
(7) $ (146)
$ 154
$ 154
$
$
–
–
$
$
–
–
Tax effects and NCI
101
(205)
(104)
Total impairment charges
(reversals) (100%)
$ 900
$ (212) $ (250)
In 2018, we recognized $645 million (net of tax and
non-controlling interests) of net impairments for non-current
assets mainly at Lagunas Norte as the project to treat
refractory sulphide ore does not meet our investment
criteria. In addition, we recognized impairments of
$160 million (net of tax) of non-current assets and
$154 million of goodwill at Veladero, reflecting an increase
in the cost structure related to increasing government
imposts coupled with higher energy costs. This compares
to non-current asset impairment reversals of $7 million
(net of tax and non-controlling interests) in the prior year
primarily as a result of impairment reversals at the Cerro
Casale project upon reclassification of the project’s net
assets as held-for-sale as at March 31, 2017, combined
with impairment reversals at Lumwana due to an increase
in reserves. These were largely offset by an impairment
taken at Acacia’s Bulyanhulu mine related to the continued
challenges experienced in the operating environment in
Tanzania and net impairments taken at Pascua-Lama,
mainly attributable to the reclassification of open-pit
reserves to resources after receiving a closure order from
the Chilean regulators. Refer to note 21 to the Financial
Statements for a full description of impairment charges,
including pre-tax amounts and sensitivity analysis.
42
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Barrick Gold Corporation | Financial Report 2018MANAGEMENT’S DISCUSSION AND ANALYSIS
Loss on Currency Translation
Loss on currency translation for 2018 increased by
$64 million compared to the prior year primarily due an
increase in unrealized foreign currency translation losses
related to the Argentine peso, which depreciated
significantly in the current year period, and devalued our
peso denominated VAT receivable balances. During the
year, the US dollar traded strongly and Treasury yields
increased. Along with inflation pressures in Argentina and
concerns by foreign investors about the country’s level
of debt, this led to a continued weakening of the Argentine
peso during the year.
Other Expense (Income)
Other expense was $90 million in 2018 compared to income
of $799 million in the prior year. In 2018, we recognized
$68 million of litigation fees, which primarily consists of
legal fees at Acacia, and the settlement of a dispute
regarding a historical supplier contract acquired as part of
the Equinox acquisition in 2011; $51 million of write-offs,
which relates primarily to the write-off of a Western
Australia long-term stamp duty receivable; and $13 million
related to an insurance payment to our Porgera JV. This
was partially offset by a $45 million gain on the sale of
a non-core royalty asset at Acacia, and $24 million of
insurance proceeds received at Kalgoorlie. In 2017, we
recorded gains of $718 million connected to the sale of a
50% interest in the Veladero mine and $193 million related
to the sale of a 25% interest in the Cerro Casale project.
For a further breakdown of other expense (income),
refer to note 9 to the Financial Statements.
Income Tax Expense
Income tax expense was $1,198 million in 2018. The
underlying effective tax rate for ordinary income in 2018 was
52% after adjusting for the impact of the de-recognition of
deferred tax assets; the net impact of foreign currency
translation losses on deferred tax balances; the impact of
impairment charges (reversals); the impact of debt
extinguishment costs; the impact of asset sales and
non-hedge derivatives; the impact of non-deductible foreign
exchange losses; the credit impact of the United States
adjustment to the one-time toll charge; the impact of
the Dominican Republic tax audit; the credit impact of US
withholding taxes; and the impact of other expense
adjustments. The unadjusted tax rate for income in 2018
was 505% of the loss before income taxes.
We record deferred tax charges or credits if changes
in facts or circumstances affect the estimated tax basis
of assets and therefore the amount of deferred tax assets
or liabilities to reflect changing expectations in our ability
to realize deferred tax assets. The interpretation of tax
regulations and legislation and their application to our
business is complex and subject to change. We have
significant amounts of deferred tax assets, including tax
loss carry forwards, and also deferred tax liabilities.
Potential changes of any of these amounts, as well as our
ability to realize deferred tax assets, could significantly
affect net income or cash flow in future periods.
Reconciliation to Canadian Statutory Rate
($ 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
Non-taxable gains on sales of long-lived assets
Impairment charges not recognized in deferred
tax assets
Goodwill impairment charges not tax deductible
Net currency translation losses on deferred
tax balances
Tax impact of profits from equity
accounted investments
Current year tax losses not recognized
in deferred tax assets
United States tax reform
De-recognition of deferred tax assets
United States adjustment to one-time toll charge
Adjustments in respect of prior years
Increase to income tax related
contingent liabilities
Dominican Republic tax audit
United States withholding taxes
Other withholding taxes
Mining taxes
Other items
2018
2017
(63) $ 728
(59)
(4)
74
–
(96)
215
24
(241)
168
54
41
66
–
10
(15)
(7)
100
–
814
(49)
3
21
(203)
–
–
(6)
–
42
(107)
14
184
1
172
–
252
18
266
12
Income tax expense
$ 1,198 $ 1,231
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 2018 and 2017 include the following:
Currency Translation
Deferred tax balances are subject to remeasurement for
changes in currency exchange rates each period. The most
significant balances are Argentine deferred tax liabilities. In
2018 and 2017, tax expense of $41 million and $10 million,
respectively, primarily arose from translation losses due to
the weakening of the Argentine peso against the US dollar.
These translation losses are included within deferred tax
expense (recovery).
43
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Barrick Gold Corporation | Financial Report 2018MANAGEMENT’S DISCUSSION AND ANALYSIS
De-recognition of Deferred Tax Assets
In fourth quarter of 2018, we recorded a deferred tax
expense of $673 million related to de-recognition of the
deferred tax asset in Canada, and a deferred tax expense
of $141 million related to de-recognition of the deferred
tax asset in Peru. The de-recognition of the deferred tax
asset in Canada follows the merger with Randgold and
management’s focus on growing the business globally,
particularly on Tier One Gold Assets outside of Canada.
This required us to re-assess the level of repatriated
earnings expected in Canada, and Canadian income
thereon to support the deferred tax asset. The de-recognition
of the deferred tax asset does not constrain our ability to
use Canadian carry forward tax losses against future
income in Canada; however, we do not currently expect to
be able to use these losses in the foreseeable future as a
result of the change in strategy in the fourth quarter. The
de-recognition of the deferred tax asset in Peru follows
management’s review of expected future earnings and the
associated impairment of inventory at Lagunas Norte and
is driven by a fourth quarter change in our expected
approach to financing future reclamation activities in Peru.
Based on these reviews in Canada and Peru it was
determined that the realizability of these deferred tax
assets was no longer probable.
United States Tax Reform
On December 22, 2017, Tax Reform was enacted in
the United States. The significant changes include:
(i) a reduction from 35% to 21% in the corporate income
tax rate effective January 1, 2018, which resulted in a
deferred tax recovery of $343 million on our net deferred
tax liability in the US, (ii) a repeal of the corporate
alternative minimum tax (“AMT”) effective January 1, 2018,
(iii) the mandatory repatriation of earnings and profits of
specified foreign corporations effective December 31, 2017,
which resulted in an estimated one-time 2017 toll charge of
$228 million, offset by (iv) the recognition of our previously
unrecognized deferred tax asset on AMT credits in the
amount of $88 million.
In the third quarter of 2018, during the process of
completing the 2017 United States income tax returns, the
calculation of the one-time 2017 toll charge was finalized
and revised, resulting in a decrease of $49 million to the
one-time toll charge, with a corresponding reduction to
current income tax expense.
44
Dominican Republic Tax Audit
In the first quarter of 2018, current tax expense of $5 million
and deferred tax expense of $37 million were recorded,
resulting from a tax audit of Pueblo Viejo in the Dominican
Republic. The deferred tax expense relates to additional tax
deductions included in the audit that reduced deferred tax
assets but did not reduce tax expense due to the application
of annual minimum tax in certain taxation years.
United States Withholding Taxes
Prior to the fourth quarter 2017, we had not previously
recorded withholding tax related to the undistributed
earnings of our United States subsidiaries because
our intention was to reinvest our current and future
undistributed earnings of our United States subsidiaries
indefinitely. During the fourth quarter of 2017, we
reassessed our intentions regarding those undistributed
earnings. As a result of our reassessment, we concluded
that it was no longer our intent to indefinitely reinvest our
current and future undistributed earnings of our United
States subsidiaries, and therefore in the fourth quarter
of 2017, we recognized an increase in our income tax
provision in the amount of $252 million, representing
withholding tax on the undistributed United States earnings.
Accordingly, $150 million was recorded in the tax charge
for the year, and $102 million was recorded as deferred
tax expense. Of the $150 million, $122 million has been
recorded in other non-current liabilities (see note 29)
and $28 million of withholding tax was paid in 2018.
In the fourth quarter of 2018, primarily due to
restructuring associated with the merger with Randgold,
we concluded that going forward, we would reinvest our
future undistributed earnings of our United States
subsidiaries indefinitely. As a result of our reassessment,
we recorded a deferred tax recovery of $107 million.
Proposed Framework for Acacia Operations in Tanzania
and the Increase to Income Tax Related Contingent
Liabilities in Tanzania
The terms of the Proposed Framework for Acacia Mining
Operations in Tanzania were announced on October 19,
2017. The Proposed Framework indicates that in support
of ongoing efforts to resolve outstanding tax claims, Acacia
would make a payment of $300 million to the government
of Tanzania, on terms to be settled by a working group.
A tax provision of $128 million had been recorded prior to
December 31, 2016 in respect of tax disputes related to
Acacia. Of this amount, $70 million was recorded in 2016.
In the third quarter of 2017, an additional amount of
$172 million was recorded as current tax expense. See
note 36 for further information with respect to these matters.
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Barrick Gold Corporation | Financial Report 2018MANAGEMENT’S DISCUSSION AND ANALYSIS Financial Condition Review
Summary Balance Sheet and Key Financial Ratios
($ millions, except ratios and share amounts)
As at December 31
Total cash and equivalents
Current assets
Non-current assets
Total Assets
Current liabilities excluding short-term debt
Non-current liabilities excluding long-term debt1
Debt (current and long-term)
Total Liabilities
Total shareholders’ equity
Non-controlling interests
Total Equity
Total common shares outstanding (millions of shares)2
Key Financial Ratios:
Current ratio3
Debt-to-equity4
2018
2017
2016
$ 1,571
2,407
18,653
$ 2,234
2,450
20,624
$ 2,389
2,485
20,390
$ 22,631
$ 25,308
$ 25,264
$ 1,625
5,883
5,738
$ 1,688
6,130
6,423
$ 1,676
5,344
7,931
$ 13,246
$ 14,241
$ 14,951
$ 7,593
1,792
$ 9,286
1,781
$ 7,935
2,378
$ 9,385
$ 11,067
$ 10,313
1,168
1,167
1,166
2.38:1
0.61:1
2.68:1
0.58:1
2.68:1
0.77:1
1. Non-current financial liabilities as at December 31, 2018 were $6,201 million (2017: $6,844 million; 2016: $8,002 million).
2. Total common shares outstanding do not include 0.8 million stock options.
3. Represents current assets (excluding assets held-for-sale) divided by current liabilities (including short-term debt and excluding liabilities held-for-sale)
as at December 31, 2018, December 31, 2017 and December 31, 2016.
4. Represents debt divided by total shareholders’ equity (including minority interest) as at December 31, 2018, December 31, 2017, and December 31,2016.
Balance Sheet Review
Total assets were $22.6 billion at December 31, 2018,
approximately $2.7 billion lower than at December 31,
2017, primarily reflecting a decrease in property, plant
and equipment mainly due to the asset impairments of
Lagunas Norte and Veladero. This was further impacted
by a decrease in deferred income tax assets as a result of
the de-recognition of our Canadian and Peruvian deferred
tax assets, combined with a lower cash balance as a result
of the debt repayment made in July 2018. 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 growth through acquisitions. Other significant
assets include production inventories, indirect taxes
recoverable and receivable, concentrate sales receivables,
other government transaction and joint venture related
receivables, and cash and equivalents.
Total liabilities at December 31, 2018 were $13.2 billion,
approximately $1.0 billion lower than at December 31, 2017,
mainly reflecting the $0.6 billion debt repayment made
during the third quarter and a reduction in our provision for
environmental rehabilitation, which was primarily due to
an increase in the discount rate. Our liabilities are primarily
comprised of debt, other non-current liabilities such
as provisions and deferred income tax liabilities, and
accounts payable.
Shareholders’ Equity
As at February 5, 2019
Common shares
Stock options
Number of shares
1,751,981,799
741,253
As a result of the January 1, 2019 merger with Randgold,
583,669,178 Barrick common shares were issued to the
former Randgold shareholders.
Financial Position and Liquidity
Total cash and cash equivalents as at December 31, 2018
were $1.6 billion3. As discussed on page 29, on January 1,
2019, we completed the merger with Randgold. As at
December 31, 2018, Randgold had $0.7 billion of cash and
cash equivalents, which would bring the cash position of
the combined company to $2.3 billion from January 1,
2019. Our capital structure comprises a mix of debt and
shareholders’ equity. As at December 31, 2018, our total
45
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Barrick Gold Corporation | Financial Report 2018MANAGEMENT’S DISCUSSION AND ANALYSIS
debt was $5.7 billion (debt net of cash and equivalents was
$4.2 billion) and our debt-to-equity ratio was 0.61:1. This
compares to debt as at December 31, 2017 of $6.4 billion
(debt net of cash and equivalents was $4.2 billion), and a
debt-to-equity ratio of 0.58:1. As at December 31, 2018,
Randgold had no debt outstanding.
On July 17, 2018, we completed a make-whole
repurchase of the outstanding $629 million of principal of
the 4.40% notes due 2021.
On September 24, 2018 we entered into a mutual
investment agreement to purchase up to $300 million
of shares in Shandong Gold Mining Co., Ltd. To date, we
have purchased approximately $120 million of shares
of Shandong Gold Mining Co., Ltd.
We currently have less than $50 million2 in debt due
before 2020, and approximately $5 billion of our outstanding
debt matures after 2032. In November 2018, we amended
the credit and guarantee agreement (the “Credit Facility”)
with certain lenders, reducing the size of the facility from
$4.0 billion to $3.0 billion or the equivalent amount in
Canadian dollars. The Credit Facility currently has an
interest rate of London Interbank Offered Rate (“LIBOR”)
plus 1.25% on drawn amounts, and a commitment rate of
0.175% on undrawn amounts. The termination date was
extended from January 2023 to January 2024.
In 2019, we have capital commitments of $69 million
and expect to incur attributable sustaining and project
capital expenditures of approximately $1,400 – $1,700
million in 2019 based on our guidance range on page 31.
In 2019, we have $333 million in interest payments and
other amounts as detailed in the table on page 63. As at
December 31, 2018, Barrick and Randgold had dividends
declared and unpaid of $82 million and $254 million,
respectively, which were settled in January. Barrick has
targeted a quarterly dividend of $0.04 per share,
commencing with the dividend we anticipate declaring
in April 2019 in respect of the first quarter of 2019. In
addition, we have contractual obligations and commitments
of $517 million in purchase obligations for supplies and
consumables and $3 million in derivative liabilities which
will form part of operating costs, excluding those of
Randgold. Updated commitments, including those of the
acquired Randgold sites, will be provided in the first quarter
of 2019. We expect to fund these commitments through
operating cash flow, which is our primary source of liquidity,
as well as existing cash balances.
Our operating cash flow is dependent on the ability of
our operations to deliver projected future cash flows. The
market prices of gold and, to a lesser extent, copper are the
primary drivers of our operating cash flow. Other options to
enhance liquidity include further portfolio optimization and
the creation of new joint ventures and partnerships;
issuance 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; and drawing the
$3.0 billion available under our undrawn credit facility
(subject to compliance with covenants and the making
of certain representations and warranties, this facility is
available for drawdown as a source of financing).
Many factors, including but not limited to general
market conditions and then prevailing metals prices, could
impact our ability to issue securities on acceptable terms,
as could our credit ratings. In March 2018, Moody’s and
S&P each upgraded their ratings on our long-term debt,
from Baa3 to Baa2 and from BBB- to BBB, respectively.
Moody’s and S&P have each referred to Barrick’s
acquisition of Randgold as credit positive. If we were to
borrow under our credit facility, the applicable interest rate
on the amounts borrowed would be based, in part, on our
credit ratings at the time. The key financial covenant in our
undrawn credit facility requires Barrick to maintain a net
debt to total capitalization ratio of less than 0.60:1. Barrick’s
net debt to total capitalization ratio was 0.31:1 as at
December 31, 2018 (0.27:1 as at December 31, 2017).
Summary of Cash Inflow (Outflow)
($ millions)
For the years ended December 31
2018
2017
Net cash provided by operating activities $ 1,765
$ 2,065
Investing activities
Capital expenditures
Divestitures
Other
$ (1,400)
–
(94)
$ (1,396)
990
69
Total investing inflows/(outflows)
$ (1,494)
$
(337)
Financing activities
Net change in debt1
Dividends2
Other
$
(687)
(125)
(113)
$ (1,533)
(125)
(228)
Total financing inflows/(outflows)
$
(925)
$ (1,886)
Effect of exchange rate
(9)
3
Increase/(decrease) in cash
and equivalents
$
(663)
$
(155)
1. The difference between the net change in debt on a cash basis and the
net change on the balance sheet is due to changes in non-cash charges,
specifically the unwinding of discounts and amortization of debt issue costs.
2. In 2018, we declared dividends in US dollars totaling $0.19 per share and
paid $0.12 per share (2017: declared and paid $0.12 per share; 2016:
declared and paid $0.08 per share).
46
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Barrick Gold Corporation | Financial Report 2018MANAGEMENT’S DISCUSSION AND ANALYSIS
In 2018, we generated $1,765 million in operating cash
flow, compared to $2,065 million in the prior year. The
decrease of $300 million was due to lower gold sales as
a result of lower grade and recoveries across most
operations as disclosed in previous guidance, combined
with higher direct mining costs and the divestment of
50% of the Veladero mine on June 30, 2017. This was
further impacted by lower throughput at Acacia as a
result of reduced operations at Bulyanhulu, lower tonnage
processed at Lagunas Norte, and higher government
imposts at Veladero. This was partially offset by a
favorable movement in working capital, mainly as a result
of increased drawdown of inventory and the timing
of payments and changes in other current assets
and liabilities.
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.
Cash outflows from investing activities in 2018
amounted to $1,494 million compared to $337 million in the
prior year. The increase of $1,157 million compared to 2017
is primarily due to $990 million of proceeds received in the
prior year from the divestiture of 50% of the Veladero mine in
2017, and the investment in Shandong Gold Mining Co., Ltd.
of $120 million.
Net financing cash outflows for 2018 amounted to
$925 million, compared to $1,886 million in the prior year.
The lower outflows are primarily related to lower debt
repayments in 2018, combined with a decrease in debt
extinguishment costs.
Summary of Financial Instruments1
As at December 31, 2018
Financial
Instrument
Cash and equivalents
Accounts receivable
Other investments
Accounts payable
Debt
Restricted share units
Deferred share units
Principal/
Notional Amount
Associated
Risks
n Interest rate
$ 1,571 million
n Credit
n Credit
$ 248 million
n Market
n Market
$ 209 million
n Liquidity
$ 1,101 million
n Liquidity
$ 5,767 million
n Interest rate
$ 39 million
n Market
$ 11 million
n Market
Derivative instruments – currency contracts
PGK 23 million
n Market/liquidity
Derivative instruments – interest rate contracts
Receive float interest rate swaps
$ 42 million
n Market/liquidity
1. Refer to note 25 to the Financial Statements for more information regarding financial instruments.
Operating Segments Performance
Review of Operating Segments Performance
During 2018, Barrick’s business was organized into eleven
individual minesites, one grouping of two minesites, one
publicly traded company and one project. Barrick’s Chief
Operating Decision Maker (“CODM”) reviews the operating
results, assesses performance and makes capital allocation
decisions at the minesite, grouping, Company and/or
project level. During the third quarter of 2018, Barrick’s
president, who was our CODM, resigned from the
Company. Three members of our executive management
team, our Executive Vice President and Chief Financial
Officer, Chief Investment Officer and Senior Vice President,
Operational and Technical Excellence, together assumed
the role of CODM through December 31, 2018. Following
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47
Barrick Gold Corporation | Financial Report 2018MANAGEMENT’S DISCUSSION AND ANALYSIS
completion of the merger with Randgold on January 1,
2019, Mark Bristow, as President and Chief Executive
Officer, has assumed this role. Each individual minesite,
with the exception of Barrick Nevada, Acacia and the
Pascua-Lama project, is an operating segment for financial
reporting purposes. Our presentation of our reportable
operating segments is four individual gold mines (Pueblo
Viejo, Lagunas Norte, Veladero and Turquoise Ridge),
Barrick Nevada, Acacia and our Pascua-Lama project.
The remaining operating segments, our remaining gold and
copper mines, have been grouped into an “other” category
and will not be reported on individually. Segment
performance is evaluated based on a number of measures
including operating income before tax, production levels
and unit production costs. Certain costs are managed on
a consolidated basis and are therefore not reflected in
segment income.
Barrick Nevada1, Nevada USA
Summary of Operating and Financial Data
For the years ended December 31
2018
2017
% Change
2016
Total tonnes mined (000s)
Open pit
Underground
Average grade (grams/tonne)
Open pit mined
Underground mined
Processed
Ore tonnes processed (000s)
Oxide mill
Roaster
Autoclave
Heap leach
Gold produced (000s oz)
Oxide mill
Roaster
Autoclave
Heap leach
Gold sold (000s oz)
Segment revenue ($ millions)
Cost of sales ($ millions)
Segment income ($ millions)
Segment EBITDA ($ millions)2
Capital expenditures ($ millions)
Minesite sustaining
Project
Cost of sales (per oz)
Cash costs (per oz)2
All-in sustaining costs (per oz)2
All-in costs (per oz)2
181,534
178,565
2,969
2.96
9.98
3.20
25,076
4,527
5,104
4,734
10,711
2,100
590
1,120
229
161
2,097
$ 2,655
1,715
890
1,539
564
252
312
818
507
649
801
$
211,090
208,240
2,850
2.73
10.58
3.50
23,894
4,562
4,902
4,258
10,172
2,312
957
929
248
178
2,357
$ 2,961
1,869
1,052
1,845
584
360
224
792
455
624
722
$
(14%)
(14%)
4%
8%
(6%)
(9%)
5%
(1%)
4%
11%
5%
(9%)
(38%)
21%
(8%)
(10%)
(11%)
(10%)
(8%)
(15%)
(17%)
(3%)
(30%)
39%
3%
11%
4%
11%
192,753
189,941
2,812
1.74
11.39
2.62
32,473
4,197
4,789
3,503
19,984
2,155
569
1,115
242
229
2,162
$ 2,703
1,896
771
1,578
328
217
111
876
502
618
$ 678
1. Includes Goldstrike, Cortez, and our 60% share of South Arturo.
2. These are non-GAAP financial performance measures with no standardized meaning under IFRS and therefore may not be comparable to similar measures
presented by other issuers. For further information and a detailed reconciliation of each non-GAAP measure used in this section of the MD&A to the most
directly comparable IFRS measure, please see pages 67 to 82 of this MD&A.
48
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Barrick Gold Corporation | Financial Report 2018MANAGEMENT’S DISCUSSION AND ANALYSIS
Financial Results
Barrick Nevada’s segment income for 2018 was 15% lower
than the prior year primarily due to a decrease in sales
volume, partially offset by a decrease in cost of sales and
higher realized gold prices1.
SEGMENT INCOME AND SEGMENT EBITDA1
1,251
1,578
1,257
1,845
1,268
1,539
production at the roaster due to increased ore from CHOP
and Cortez Hills Underground (“CHUG”), primarily due
to higher over the road haulage and higher refractory
grades processed from CHOP. Roaster production further
benefited from higher grades processed at the Goldstrike
open pit, which was primarily in a stripping phase in the
prior year, as well as throughput improvements due to
blend optimization, all partially offset by lower grades from
CHUG as mining advances deeper into the mine, and
a reduction of ore processed from the higher-grade
South Arturo phase 2 as mining of this phase ended in the
fourth quarter of 2017.
771
1,052
890
546
PRODUCTION
(000s ounces)
2016
2017
2018
Segment Income ($ millions)
Segment EBITDA ($ millions)
Market Price ($/oz)
In 2018, gold production was 9% lower than the prior year
primarily as a result of lower production at the Cortez oxide
mill. This was caused by lower grades and higher sulfide
ores from Cortez Hills open pit (“CHOP”), combined with
harder ores reducing throughput rates compared to the
prior year. As CHOP nears the end of its life (scheduled in
2019), the pit has transitioned from primarily oxide material
to a mix of refractory and oxide ore as mining advances
deeper into the pit. This increase in refractory ore in the
current year negatively impacted production because it is
processed at the Goldstrike roaster and therefore is limited
by over the road haulage rates. This compares to the prior
year where most of the ore out of CHOP was processed
through the Cortez oxide mill. In addition, production
from the autoclave was lower year on year, due to lower
recoveries resulting from the processing of a higher
proportion of alkaline ores through the thiosulfate circuit
relative to the prior year, which was partially offset by
increased throughput. The decrease in overall production
for Barrick Nevada was partially offset by increased
2,500
1,250
0
2,312
2,100
1,750
to
1,900
2017
2018
2019 (est)
Cost of sales per ounce4 for 2018 was $26 per ounce
higher than the prior year primarily due to the impact of
lower grades and recoveries, combined with higher direct
mining costs. The increase in direct mining costs was
mainly due to higher energy prices and consumption, and
lower capitalized stripping at Goldstrike open pit as the 3rd
northwest layback stripping ended in the second quarter
of 2017. This was further impacted by lower Goldstrike
underground and CHUG capitalized development,
dewatering at CHOP being expensed in the current year
versus capitalized in the prior year as CHOP entered its
last full year of mining, and increased transportation
costs resulting from the increase in over the road haulage
from CHOP to the Goldstrike roaster.
In 2018, all-in sustaining costs1 increased by $25 per
ounce from the prior year primarily due to the impact of
lower grades and recoveries, and higher direct mining
costs. This was partially offset by lower minesite sustaining
capital expenditures.
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49
Barrick Gold Corporation | Financial Report 2018MANAGEMENT’S DISCUSSION AND ANALYSIS Outlook
At Barrick Nevada we expect gold production in 2019 to
be in the range of 1,750 to 1,900 thousand ounces, which
is lower than 2018 production levels. Lower production is
due to the cessation of CHOP operations in the first half
of 2019. This is partially offset by an expected increase in
bulk mining at both CHUG and Goldstrike underground
operations, an increase in leach production due to a ramp
up of Crossroads, and an increase in autoclave production
as we have transitioned from an alkaline/acid blend to an
all acid blend.
In 2019, we expect cost of sales per ounce4 to be in
the range of $920 to $970 per ounce, driven primarily by
the cessation of the comparatively high-grade, low cost
CHOP operations in the first half of 2019, which negatively
impacts Barrick Nevada’s overall production, sales mix
and open pit costs from the continuing lower grade Cortez
operations. We expect cash costs per ounce1 to be in
the range of $640 to $690, which is higher than 2018 due
to lower CHOP ounces produced, partially offset by lower
overall expected cost per tonne mined in 2019 resulting
from increased bulk mining at CHUG and Goldstrike
underground operations. All-in sustaining costs per ounce1
are expected to be in the range of $850 to $900, which is
higher than 2018 due to lower CHOP ounces produced,
combined with higher sustaining capital expenditures for
leach pad construction and Crossroads expansion stripping
transitioning to production phase stripping.
COST OF SALES, CASH COSTS1
AND AISC1 ($ per ounce)
792
818
624
455
649
507
546
920
to
970
850
to
900
640
to
690
2017
2018
2019 (est)
Cash Costs
AISC
Cost of Sales
In 2018, capital expenditures decreased by 3% from
the prior year, mainly due to lower sustaining capital
expenditures, partially offset by higher project capital
expenditures. A decrease of $108 million in minesite
sustaining capital expenditures relative to the prior year
relates primarily to a reduction in expenditure on the
following projects: Goldstrike open pit stripping and
underground development, due to lower capitalized waste
tonnes mined; Goldstrike underground dewatering, cooling
and ventilation projects to allow mining below a 3,600 foot
elevation; digitization initiatives, such as short interval
control, at CHUG; tailings expansions at Cortez and
Goldstrike; and the autoclave thiosulfate water treatment
plant; partially offset by an increase relating to the state
roads project completed in the third quarter of 2018 to
facilitate the increased ore haul from Cortez to Goldstrike.
Higher project capital expenditures are attributed to higher
capitalized stripping at Crossroads, the Cortez Range Front
declines, the Goldrush exploration declines, and the Deep
South Expansion. As at December 31, 2018, we have
spent $37 million (including $4 million in the fourth quarter
of 2018) out of a total estimated capital cost of $1.0 billion
on Goldrush, and $33 million (including $2 million in the
fourth quarter of 2018) out of a total estimated capital cost
of $106 million on the Deep South Expansion.
50
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Barrick Gold Corporation | Financial Report 2018MANAGEMENT’S DISCUSSION AND ANALYSIS Turquoise Ridge (75% basis), Nevada USA
Summary of Operating and Financial Data
For the years ended December 31
Underground tonnes mined (000s)
Average grade (grams/tonne)
Underground mined
Gold produced (000s oz)
Gold sold (000s oz)
Segment revenue ($ millions)
Cost of sales ($ millions)
Segment income ($ millions)
Segment EBITDA ($ millions)1
Capital expenditures ($ millions)
Minesite sustaining
Project
Cost of sales (per oz)
Cash costs (per oz)1
All-in sustaining costs (per oz)1
All-in costs (per oz)1
2018
670
15.00
268
262
$ 331
206
126
154
62
20
40
783
678
756
$ 916
2017
% Change
643
15.45
211
222
$ 280
159
119
147
36
32
4
715
589
733
$ 753
4%
(3%)
27%
18%
18%
30%
6%
5%
72%
(38%)
950%
10%
15%
3%
22%
2016
598
16.85
266
257
$322
155
166
193
32
32
–
603
498
625
$ 625
1. These are non-GAAP financial performance measures with no standardized meaning under IFRS and therefore may not be comparable to similar measures
presented by other issuers. For further information and a detailed reconciliation of each non-GAAP measure used in this section of the MD&A to the most
directly comparable IFRS measure, please see pages 67 to 82 of this MD&A.
Financial Results
Turquoise Ridge’s segment income for 2018 was 6% higher
than the prior year, mainly due to higher sales volume,
partially offset by higher cost of sales.
SEGMENT INCOME AND SEGMENT EBITDA1
1,251
1,257
1,268
In 2018, gold production was 27% higher than the prior
year primarily due to the higher organic carbon content in
the ore mined in the first quarter of 2017, which delayed
processing in the prior year. The increase is also attributed
to streamlining the ore delivery to Newmont’s Twin Creeks
facility for processing in the current year. The direct
shipping of ore when mined, rather than holding an extra
month of stockpile in inventory, eliminated the double
handling of ore and one month of stockpiled material.
193
166
147
119
154
126
PRODUCTION
(000s ounces)
2016
2017
2018
Segment Income ($ millions)
Segment EBITDA ($ millions)
Market Price ($/oz)
300
150
0
211
268
270
to
310
2017
2018
2019 (est)
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51
Barrick Gold Corporation | Financial Report 2018MANAGEMENT’S DISCUSSION AND ANALYSIS
Outlook
At Turquoise Ridge, we expect 2019 production to be in
the range of 270 to 310 thousand ounces (Barrick’s share),
which is in line with 2018 production levels. Mining rates
and grade will be similar to 2018, with the focus on
reducing unit costs.
Cost of sales per ounce4 in 2019 is expected to be
in the range of $655 to $705 per ounce which is lower
than 2018, mainly driven by lower mining costs and steady
stockpile inventory. We expect cash costs1 to be in the
range of $550 to $600 per ounce, also lower than 2018
mainly due to lower mining unit costs. All-in sustaining
costs1 are expected to be in the range of $680 to $730 per
ounce, in line with 2018. We also expect higher minesite
sustaining capital expenditures in 2019 as we prepare
for the completion of the third shaft.
Cost of sales per ounce4 in 2018 was $68 per ounce
higher than the prior year mainly reflecting an increase in
processing costs attributed to the new toll milling
agreement for the processing of ore at Newmont’s Twin
Creeks facility, partially offset by lower mining costs.
In 2018, all-in sustaining costs1 increased by $23 per
ounce compared to the prior year primarily reflecting the
higher cost of sales per ounce4, partially offset by lower
minesite sustaining capital expenditures.
COST OF SALES, CASH COSTS1
AND AISC1 ($ per ounce)
715
733
589
783
756
678
680
to
730
550
to
600
655
to
705
2017
2018
2019 (est)
Cash Costs
AISC
Cost of Sales
In 2018, capital expenditures increased by 72% compared
to the prior year. The increase was due to higher project
capital expenditures relating to the construction of the
third shaft, of which we have spent $47 million to date
(including $3 million in the fourth quarter of 2018) out of an
estimated capital cost of $225–$245 million (75% basis).
This was partially offset by lower minesite sustaining capital
expenditures as a result of the completion of the work in
the prior year to optimize development sequencing.
52
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Barrick Gold Corporation | Financial Report 2018MANAGEMENT’S DISCUSSION AND ANALYSIS
Pueblo Viejo (60% basis)1, Dominican Republic
Summary of Operating and Financial Data
For the years ended December 31
Open pit tonnes mined (000s)
Average grade (grams/tonne)
Open pit mined
Processed
Autoclave ore tonnes processed (000s)
Gold produced (000s oz)
Gold sold (000s oz)
Segment revenue ($ millions)
Cost of sales ($ millions)
Segment income ($ millions)
Segment EBITDA ($ millions)2
Capital expenditures ($ millions)
Minesite sustaining
Project
Cost of sales (per oz)
Cash costs (per oz)2
All-in sustaining costs (per oz)2
All-in costs (per oz)2
2018
2017
% Change
2016
24,063
23,430
3%
23,278
2.78
4.04
5,008
581
590
$ 798
443
342
457
87
87
–
750
465
623
$ 623
3.07
4.57
4,791
650
637
$ 850
445
395
538
69
69
–
699
405
525
$ 525
(9%)
(12%)
5%
(11%)
(7%)
(6%)
–
(13%)
(15%)
26%
26%
–
7%
15%
19%
19%
3.13
5.29
4,527
700
700
$ 925
395
528
621
61
61
–
564
395
490
$ 490
1. Pueblo Viejo is accounted for as a subsidiary with a 40% non-controlling interest. The results in the table and the discussion that follows are based
on our 60% share only.
2 These are non-GAAP financial performance measures with no standardized meaning under IFRS and therefore may not be comparable to similar measures
presented by other issuers. For further information and a detailed reconciliation of each non-GAAP measure used in this section of the MD&A to the most
directly comparable IFRS measure, please see pages 67 to 82 of this MD&A.
Financial Results
Pueblo Viejo’s segment income for 2018 was 13% lower
than the prior year primarily due to a decrease in sales
volume, partially offset by higher realized gold prices1 and
higher by-product sales volume. Cost of sales was in line
with the prior year.
SEGMENT INCOME AND SEGMENT EBITDA1
In 2018, gold production was 11% lower than the prior year
primarily due to the expected decline in ore grades for the
period and mining in areas of the Moore Pit that contain a
higher proportion of carbonaceous ore, which has lower
recoveries. This was partially offset by record throughput
for the year, resulting from continued optimization of
autoclave operations.
1,251
1,257
1,268
PRODUCTION
(000s ounces)
800
400
0
650
581
550
to
600
2017
2018
2019 (est)
621
528
538
395
457
342
546
2016
2017
2018
Segment Income ($ millions)
Segment EBITDA ($ millions)
Market Price ($/oz)
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53
Barrick Gold Corporation | Financial Report 2018MANAGEMENT’S DISCUSSION AND ANALYSIS
Cost of sales per ounce4 in 2018 was $51 per ounce higher
than the prior year primarily due to the impact of lower
grades and recoveries, and higher energy prices. This was
further impacted by higher costs attributed to higher
throughput, and higher costs due to planned autoclave,
mill and electrical maintenance.
In 2018, all-in sustaining costs1 increased by $98 per
ounce compared to the prior year due to higher cost of
sales per ounce4, and an increase in minesite sustaining
capital expenditures. This was partially offset by higher
by-product credits from increased silver sales volume and
the sale of excess power generated by our power plant
to third parties.
COST OF SALES, CASH COSTS1
AND AISC1 ($ per ounce)
699
750
525
405
623
465
780
to
830
610
to
650
465
to
510
2017
2018
2019 (est)
Cash Costs
AISC
Cost of Sales
In 2018, capital expenditures increased by 26% compared
to the prior year primarily as a result of capitalized stripping
costs associated with commencing Moore Pit phases 5, 6
and 7, and the ongoing construction of the El Llagal tailings
storage facility.
Outlook
At Pueblo Viejo, we expect our equity share of 2019 gold
production to be in the range of 550 to 600 thousand
ounces, in line with 2018 production levels, driven by
increased throughput and recoveries, offset by declining
ore grades.
In 2019, we expect cost of sales per ounce4 to be
in the range of $780 to $830 per ounce, cash costs1 to be
in the range of $465 to $510 per ounce, and all-in
sustaining costs1 to be in the range of $610 to $650 per
ounce. All three measures are expected to be largely
in line with 2018.
Pueblo Viejo and its power generation partner, AES
Corporation, made significant progress in 2018, securing all
necessary permits and commencing construction of a
new 50-kilometer gas pipeline to the Quisqueya I power
generation facility. Completion and first delivery of natural
gas is expected to occur in the fourth quarter of 2019.
Conversion of the power plant to natural gas from heavy
fuel oil is anticipated to reduce both greenhouse gas
emissions and power costs.
54
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Barrick Gold Corporation | Financial Report 2018MANAGEMENT’S DISCUSSION AND ANALYSIS
Veladero1, Argentina
Summary of Operating and Financial Data
For the years ended December 31
Open pit tonnes mined (000s)
Average grade (grams/tonne)
Open pit mined
Processed
Heap leach ore tonnes processed (000s)
Gold produced (000s oz)
Gold sold (000s oz)
Segment revenue ($ millions)
Cost of sales ($ millions)
Segment income ($ millions)
Segment EBITDA ($ millions)2
Capital expenditures ($ millions)
Minesite sustaining
Project
Cost of sales (per oz)
Cash costs (per oz)2
All-in sustaining costs (per oz)2
All-in costs (per oz)2
2018
2017
% Change
2016
35,646
48,376
(26%)
62,227
0.78
0.85
13,547
278
280
$
366
310
53
174
143
143
–
1,112
629
1,154
$ 1,154
1.00
1.02
21,190
432
458
$
$
591
410
173
292
173
173
–
897
598
987
987
(22%)
(17%)
(36%)
(36%)
(39%)
(38%)
(24%)
(69%)
(40%)
(17%)
(17%)
–
24%
5%
17%
17%
0.82
0.82
28,028
544
532
$ 685
464
220
338
95
95
–
872
582
769
$ 769
1. We sold 50% of Veladero on June 30, 2017; therefore, these represent results on a 100% basis from January 1 to June 30, 2017 and on a 50% basis
from July 1, 2017 onwards.
2 These are non-GAAP financial performance measures with no standardized meaning under IFRS and therefore may not be comparable to similar measures
presented by other issuers. For further information and a detailed reconciliation of each non-GAAP measure used in this section of the MD&A to the most
directly comparable IFRS measure, please see pages 67 to 82 of this MD&A.
Financial Results
Veladero’s segment income for 2018 was 69% lower than
the prior year primarily due to the impact of the divestment
of 50% of the Veladero mine as at June 30, 2017. Excluding
the impact of the divestment, segment income was 53%
lower than the prior year mainly due to lower sales volume,
with cost of sales remaining in line with the prior year. Cost
of sales was impacted by the export tax announced in
September by the Argentine government as described
further below. Segment income was also impacted by an
increase in depreciation expense as a result of the fair
value increments applied to our remaining 50% interest,
which was required to be fair valued as a result of the
divestment, partially offset by higher realized gold prices1.
SEGMENT INCOME AND SEGMENT EBITDA1
1,251
1,257
1,268
338
220
292
173
528
174
53
2016
2017
2018
Segment Income ($ millions)
Segment EBITDA ($ millions)
Market Price ($/oz)
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55
Barrick Gold Corporation | Financial Report 2018MANAGEMENT’S DISCUSSION AND ANALYSIS
In 2018, gold production was 36% lower compared to the
prior year. Excluding the impact of the divestment, gold
production decreased by 13% in the current year mainly
due to lower head grade and tonnage processed as a result
of delays in phase 5 of the open pit, combined with lower
heap permeability as a result of the severe winter and
higher stacking of the leach pad. This was partially offset
by several initiatives to decrease leach pad inventories,
and improved solution management.
PRODUCTION1
(000s ounces)
600
300
0
432
278
230
to
250
2017
2018
2019 (est)
1. We sold 50% of Veladero on June 30, 2017; therefore, these represent
results on a 100% basis from January 1 to June 30, 2017 and on a 50%
basis from July 1, 2017 onwards.
In 2018, cost of sales per ounce4 increased by $215 per
ounce compared to the prior year primarily due to higher
depreciation expense as a result of the impact of the fair
value increments relating to the revaluation of our
remaining 50% of the Veladero mine. This was combined
with the impact of lower grades, an increase in power and
energy prices, and the export duties re-established by the
Argentine government starting in September. This was
partially offset by the significant weakening of the Argentine
peso and lower direct mining costs as a result of business
improvement initiatives.
All-in sustaining costs1 in 2018 were $167 per ounce
higher than the prior year primarily due to an increase in
cost of sales per ounce4, combined with higher minesite
sustaining capital expenditures on a per ounce basis.
COST OF SALES, CASH COSTS1
AND AISC1 ($ per ounce)
897
987
598
1,112
1,154
629
546
1,250
to
1,350
1,150
to
1,250
770
to
820
2017
2018
2019 (est)
Cash Costs
AISC
Cost of Sales
In 2018, capital expenditures decreased by 17% compared
to the prior year. Excluding the impact of the divestment,
capital expenditures increased by 23% due to higher
capitalized stripping expenditures related to higher waste
tonnage capitalized. This was further impacted by the
funding of a power transmission line in Argentina as a
result of an agreement made with the Provincial Power
Regulatory Body of San Juan (“EPRE”). This was partially
offset by a decrease resulting from the completion of
the construction of phases 4B and 5B of the leach
pad expansion and lower purchases of components and
mine equipment.
Outlook
At Veladero, we expect 2019 production to be in the range
of 230 to 250 thousand ounces (Barrick’s share), lower than
2018 production levels. The decrease is due to lower
grades, partially offset by increased throughput, higher
efficiencies resulting from the availability and utilization of
equipment, and the optimization of stacking and leaching.
Cost of sales per ounce4 is expected to be in the range
of $1,250 to $1,350 per ounce which is higher than 2018,
mainly due to the impact of lower grades. We expect
cash costs1 in 2019 to be in the range of $770 to $820 per
ounce, higher than 2018 primarily due to the export duty.
All-in sustaining costs1 are expected to be between
$1,150 and $1,250 per ounce, in line with 2018.
Since the second quarter of 2018, we have noted that
inflation in Argentina has been accelerating and is now
considered to be hyperinflationary. Our accounting for
Veladero will be unaffected by this situation as it has a
US dollar functional currency.
56
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Barrick Gold Corporation | Financial Report 2018MANAGEMENT’S DISCUSSION AND ANALYSIS
In the third quarter of 2018, the Argentine government
re-established customs duties for all exports from Argentina.
Effective for the period of September 2018 to December 31,
2020, exports of doré are subject to a 12% duty, capped at
ARS 4.00 per USD exported. The Company is currently
reviewing these changes in the context of the existing tax
stability benefit granted to Veladero, and is engaging in
discussions with the federal government to clarify its impact
of the export duty on Veladero’s operations. Notwithstanding
these discussions, Veladero has been paying this export
duty and this cost is included in cost of sales.
On April 6, 2017, we announced the sale to Shandong
Gold of a 50% interest in the Veladero mine, which reflects
the first step in our strategic partnership with Shandong.
The transaction closed on June 30, 2017 and we received
total cash consideration of $990 million, which reflected
working capital adjustments of $30 million in the fourth
quarter of 2017. Refer to note 4 to the Financial Statements
for more information.
On October 24, 2018, the San Juan Provincial mining
authority issued a resolution approving the sixth and
seventh updates to the Veladero mine’s environmental
impact study, which authorized the Valley Leach Facility
expansion project for phase 6. All required sectoral permits
have been received, and construction of phase 6 has now
commenced. Approval for the construction and operation
of phases 7 to 9 remains subject to ongoing administrative
review by the San Juan Provincial mining authority and
other sectoral authorities.
Releases of Process Solution
Minera Andina del Sol SRL (“MAS”) (formerly, Minera
Argentina Gold SRL) is the subject of a consolidated
regulatory proceeding by the San Juan Provincial mining
authority in respect of operational incidents that occurred
in March 2017 and September 2016 involving the release
of gold-bearing process solution. On January 23, 2018, MAS
paid an administrative fine of approximately $5.6 million
(calculated at the prevailing exchange rate on December 31,
2017) in respect of these incidents and filed a request for
reconsideration with the San Juan Provincial mining
authority. This request was rejected on March 28, 2018,
and a further appeal will be heard and decided by
the Governor of San Juan. This fine was in addition to the
administrative fine of approximately $10 million (at the
then applicable exchange rate) paid by MAS in connection
with a process solution release that occurred in
September 2015.
The operational incidents noted above have resulted
in additional regulatory and legal proceedings. A federal
judge in Buenos Aires is investigating the alleged actions
and omissions of former federal officials in connection with
the enforcement of the Argentine glacier legislation and
maintenance of environmental controls. On June 29, 2018,
the federal judge ordered additional environmental studies
to be conducted in communities downstream from the
Veladero mine as part of the investigation into the alleged
failure of three former federal government officials to
maintain adequate environmental controls. On July 6, 2018,
the Province of San Juan challenged this order on
jurisdictional grounds. On August 9, 2018, the Federal
Court ordered additional studies. One of the defendants
appointed an expert to monitor the sampling and analysis
required to perform such studies. The Federal Court
rejected the jurisdictional challenge, which resulted in an
appeal to the Federal Supreme Court on August 24, 2018
to determine jurisdiction. To date, the studies have not
been performed.
On August 6, 2018, the case related to the enforcement
of the national glacier legislation was assigned to a federal
trial judge. On October 16, 2018, the investigation into the
alleged failure of three former federal government officials
to maintain adequate environmental controls was
concluded and the case was sent to trial.
In total, six former federal officials have now been
indicted under the Federal Investigation and the Glacier
Investigation (one of whom has been indicted on two
separate charges) and will face trial. Refer to note 36 to
the Financial Statements for more information regarding
this matter.
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57
Barrick Gold Corporation | Financial Report 2018MANAGEMENT’S DISCUSSION AND ANALYSIS Lagunas Norte, Peru
Summary of Operating and Financial Data
For the years ended December 31
Open pit tonnes mined (000s)
Average grade (grams/tonne)
Open pit mined
Processed
Heap leach ore tonnes processed (000s)
Gold produced (000s oz)
Gold sold (000s oz)
Segment revenue ($ millions)
Cost of sales ($ millions)
Segment income ($ millions)
Segment EBITDA ($ millions)1
Capital expenditures ($ millions)
Minesite sustaining
Project
Cost of sales (per oz)
Cash costs (per oz)1
All-in sustaining costs (per oz)1
All-in costs (per oz)1
2018
2017
% Change
2016
31,357
32,859
(5%)
40,847
1.35
0.91
8,837
245
251
$
332
337
(13)
33
22
20
2
1,342
448
636
644
$
1.41
1.05
17,874
387
397
$
$
514
245
259
327
25
20
5
617
405
483
497
(4%)
(13%)
(51%)
(37%)
(37%)
(35%)
38%
(105%)
(90%)
(12%)
–
(60%)
118%
11%
32%
30%
1.18
1.12
17,253
435
425
$
$
548
276
260
356
56
51
5
651
383
529
540
1. These are non-GAAP financial performance measures with no standardized meaning under IFRS and therefore may not be comparable to similar measures
presented by other issuers. For further information and a detailed reconciliation of each non-GAAP measure used in this section of the MD&A to the most
directly comparable IFRS measure, please see pages 67 to 82 of this MD&A.
Financial Results
Lagunas Norte’s segment income for 2018 was 105% lower
than the prior year primarily due to a $166 million inventory
impairment charge, which is reflected in cost of sales, and
lower sales volumes. This was partially offset by higher
realized gold prices1 and lower cost of sales, excluding the
inventory impairment. In the fourth quarter, we concluded
that the project related to the processing of carbonaceous
material (“CMOP”) does not currently meet our investment
criteria. We will continue to study the project to attempt
to improve the economics, but have impaired the
carbonaceous material inventory that had been stockpiled
in anticipation of this project. As such, an inventory
impairment charge of $166 million was recorded
at December 31, 2018 to reduce the carrying value of
the CMOP ounces in inventory to nil.
In 2018, gold production was 37% lower than the
prior year primarily due to lower ore tonnage placed on the
leach pad, in line with expectations as the mine matures,
combined with changes in mine sequencing. This
was partially offset by improvements in the leach pad
irrigation systems.
Cost of sales per ounce4 for 2018 was $725 per ounce
higher than the prior year mainly due to the $166 million
inventory impairment charge, combined with the impact of
lower sales volume. In 2018, all-in sustaining costs1
increased by $153 per ounce compared to the prior year
primarily reflecting higher rehabilitation accretion and
amortization, as the provision for environmental
rehabilitation was increased at the end of 2017, combined
with the impact of lower sales volume on both cost of
sales and minesite sustaining capital expenditures on a
per unit basis.
In 2018, capital expenditures decreased by 12%
compared to the prior year due to lower project capital
expenditures relating to ongoing studies for the mine
life extension project and lower capitalized stripping
expenditures as the oxide pit is in its final planned year
of mining. This was partially offset by higher minesite
sustaining capital expenditures as a result of the
replacement of the ancillary fleet and the investment in
the dry screening process, combined with capitalized
drilling targeting new open pit oxide opportunities.
In 2019, we no longer expect Lagunas Norte to be
presented as a reportable operating segment.
58
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Barrick Gold Corporation | Financial Report 2018MANAGEMENT’S DISCUSSION AND ANALYSIS
Acacia Mining plc (100% basis), Africa
Summary of Operating and Financial Data
For the years ended December 31
Total tonnes mined (000s)
Open pit
Underground
Average grade (grams/tonne)
Open pit mined
Underground mined
Processed1
Ore tonnes processed (000s)
Gold produced (000s oz)
Gold sold (000s oz)
Segment revenue ($ millions)
Cost of sales ($ millions)
Segment income ($ millions)
Segment EBITDA ($ millions)2
Capital expenditures ($ millions)
Minesite sustaining
Project
Cost of sales (per oz)
Cash costs (per oz)2
All-in sustaining costs (per oz)2
All-in costs (per oz)2
2018
2017
% Change
2016
17,413
16,214
1,199
1.99
7.80
2.00
9,272
522
520
$
$
664
456
171
260
93
81
12
876
680
905
929
32,728
30,667
2,061
1.45
8.32
3.00
8,719
768
593
$
$
751
469
191
298
148
137
11
791
587
875
894
(47%)
(47%)
(42%)
37%
(6%)
(33%)
6%
(32%)
(12%)
(12%)
(3%)
(10%)
(13%)
(37%)
(41%)
9%
11%
16%
3%
4%
39,540
37,141
2,399
1.48
9.62
3.00
9,818
830
817
$ 1,045
719
299
465
191
190
1
880
640
958
960
$
1. Includes processing of tailings retreatment.
2. These are non-GAAP financial performance measures with no standardized meaning under IFRS and therefore may not be comparable to similar measures
presented by other issuers. For further information and a detailed reconciliation of each non-GAAP measure used in this section of the MD&A to the most
directly comparable IFRS measure, please see pages 67 to 82 of this MD&A.
Barrick holds a 63.9 percent equity interest in Acacia Mining
plc, a publicly traded company listed on the London Stock
Exchange that is operated independently of Barrick.
Financial Results
Acacia’s segment income for 2018 was 10% lower than
the prior year primarily due to lower sales volume,
partially offset by higher realized gold prices1 and
lower cost of sales.
SEGMENT INCOME AND SEGMENT EBITDA1
1,251
1,257
1,268
465
299
298
191
260
171
2016
2017
2018
Segment Income ($ millions)
Segment EBITDA ($ millions)
Market Price ($/oz)
20163_BARRICK_AR18_MDA_MAR 8.indd 59
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59
Barrick Gold Corporation | Financial Report 2018MANAGEMENT’S DISCUSSION AND ANALYSIS
In 2018, gold production was 32% lower than the prior year
primarily due to Bulyanhulu being transitioned to reduced
operations in the third quarter of 2017 and transitioning
Buzwagi to a lower grade stockpile processing operation,
partially offset by higher average grades at the Nyabirama
open pit at North Mara.
PRODUCTION (100%)
(000s ounces)
1,000
500
0
768
522
500
to
550
2017
2018
2019 (est)
Cost of sales per ounce4 in 2018 was 11% higher than
the prior year primarily reflecting increased drawdown of
ore stockpiles at Buzwagi, and the impact of the buildup
in inventory in the prior year due to the ban on concentrate
exports. This was further impacted by lower capitalized
underground development costs at Bulyanhulu and lower
waste stripping at North Mara’s Nyabirama pit, combined
with the impact of lower grades. This was partially offset
by lower direct mining costs as a result of Buzwagi
transitioning to a stockpile processing operation and
Bulyanhulu being on reduced operations. All-in sustaining
costs1 were 3% higher than the prior year due to higher
cost of sales per ounce4, partially offset by a decrease in
minesite sustaining capital expenditures.
COST OF SALES, CASH COSTS1
AND AISC1 ($ per ounce)
791
875
587
876
905
680
920
to
970
860
to
920
665
to
710
2017
2018
2019 (est)
Cash Costs
AISC
Cost of Sales
60
In 2018, capital expenditures decreased by 37% com-
pared to the prior year primarily due to lower capitalized
development costs at Bulyanhulu and North Mara.
Outlook
At Acacia, we expect 2019 production to be in the range of
320 to 350 thousand ounces (Barrick’s share), in line with
2018 levels, as we expect Bulyanhulu to remain on reduced
operations, Buzwagi to continue processing stockpiles, and
North Mara to be fully operational.
We expect cost of sales per ounce4 to be in the range
of $920 to $970, cash costs per ounce1 of $665 to $710,
and all-in sustaining costs per ounce1 to be $860 to $920.
All three measures are expected to be largely in line
with 2018.
Concentrate Export Ban and Related Disputes
with the Government of Tanzania
On March 3, 2017, the Tanzanian Government announced
a general ban on the export of metallic mineral concentrates
(the “Ban”) following a directive made by the President to
promote the creation of a domestic smelting industry.
Following the directive, Acacia ceased all exports of its
gold/copper concentrate (“concentrate”) including containers
previously approved for export prior to the Ban which are
located in Dar es Salaam.
The prevention of exports impacts Bulyanhulu and
Buzwagi which produce gold in both doré and in concentrate
form due to the mineralogy of the ore. North Mara is
unaffected due to 100% of its production being doré.
Since the Ban was imposed, impacting approximately
25% of 2017 production, Acacia has seen a buildup
of approximately 186,000 ounces of gold, 12.1 million
pounds of copper and 159,000 ounces of silver contained
in the unsold concentrate. As a result of the transition
to a reduced operations program at Bulyanhulu, and the
changes to the process flowsheet at Buzwagi, all of
Acacia’s mines are now solely producing doré and, as
such, will not see a further buildup of concentrate inventory.
During the second quarter of 2017, investigations were
conducted on behalf of the Tanzanian Government by two
Tanzanian Government Presidential Committees, which
have resulted in allegations of historical undeclared
revenue and unpaid taxes being made against Acacia and
its predecessor companies. Acacia considers these findings
to be implausible and has fully refuted the findings of both
Presidential Committees. Acacia has requested copies of
the reports issued by the two Presidential Committees and
called for independent verification of the findings, but has
not yet received a response to these requests.
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Barrick Gold Corporation | Financial Report 2018MANAGEMENT’S DISCUSSION AND ANALYSIS
On July 4, 2017, Acacia’s subsidiaries, Bulyanhulu
Gold Mine Limited (“BGML”), the owner of the Bulyanhulu
mine, and Pangea Minerals Limited (“PML”), the owner
of the Buzwagi mine, each commenced international
arbitrations against the Government of Tanzania in
accordance with the dispute resolution processes agreed
by the Government of Tanzania in the Mineral Development
Agreements (“MDAs”) with BGML and PML. These
arbitrations remain ongoing.
In July 2017, Acacia received adjusted assessments
for the tax years 2000–2017 from the Tanzania Revenue
Authority (the “TRA”) for a total amount of approximately
$190 billion for alleged unpaid taxes, interest and penalties,
apparently issued in respect of alleged and disputed
under-declared export revenues, and appearing to follow
on from the announced findings of the First and Second
Presidential Committees. These assessments are being
disputed and the underlying allegations are included in the
matters that have been referred to international arbitration.
In addition, following the end of the third quarter,
Acacia was served with notices of conflicting adjusted
corporate income tax and withholding tax assessments
for tax years 2005 to 2011 with respect to Acacia’s former
Tulawaka joint venture, and demands for payment,
for a total amount of approximately $3 billion. Interest
and penalties represent the vast majority of the new
assessments. The TRA has not provided Acacia with any
explanations or reasons for the adjusted assessments,
or with the TRA’s position on how the assessments have
been calculated or why they have been issued. Acacia
disputes these assessments and has requested supporting
calculations, which have not yet been received. Acacia is
objecting to these assessments and defending this matter
through the Tanzanian tax appeals process.
In addition to the Ban, new and amended legislation
was passed in Tanzania in early July 2017, including
various amendments to the 2010 Mining Act and a new
Finance Act. The amendments to the 2010 Mining Act
increased the royalty rate applicable to metallic minerals
such as gold, copper and silver to 6% (from 4%), and the
new Finance Act imposes a 1% clearing fee on the value of
all minerals exported from Tanzania from July 1, 2017.
In January 2018, new Mining Regulations were announced
by the Tanzanian Government introducing, among other
things, local content requirements, export regulations and
mineral rights regulations, the scope and effect of which
remain under review by Acacia. Acacia continues to monitor
the impact of all new legislation in light of its MDAs with
the Government of Tanzania. However, to minimize further
disruptions to its operations Acacia will, in the interim,
satisfy the requirements imposed as regards the increased
royalty rate in addition to the recently imposed 1% clearing
fee on exports. Acacia is making these payments under
protest, without prejudice to its legal rights under its MDAs.
Acacia has been looking to address all issues in
respect of the Ban along with other ongoing disputes
through dialogue with the Tanzanian Government. Acacia
remains of the view that a negotiated resolution is the
preferable outcome to the current disputes and Acacia will
continue to work to achieve this. During the third quarter of
2017, Barrick and the Government of Tanzania engaged in
discussions for the potential resolution of the disputes.
Acacia did not participate directly in these discussions as
the Government of Tanzania had informed Barrick that it
wished to continue dialogue solely with Barrick.
On October 19, 2017, Barrick announced that it had
agreed with the Government of Tanzania on a proposed
framework for a new partnership between Acacia and
the Government of Tanzania. Barrick and the Government
of Tanzania also agreed to form a working group that will
focus on the resolution of outstanding tax claims against
Acacia. Key terms of the proposed framework announced
by Barrick and the Government of Tanzania include (i) the
creation of a new Tanzanian company to manage Acacia’s
Bulyanhulu, Buzwagi and North Mara mines and all
future operations in the country with key officers located
in Tanzania and Tanzanian representation on the board
of directors; (ii) maximization of local employment of
Tanzanians and procurement of goods and services within
Tanzania; (iii) economic benefits from Bulyanhulu, Buzwagi
and North Mara to be shared on a 50/50 basis, with the
Government’s share delivered in the form of royalties,
taxes and a 16% free carry interest in Acacia’s Tanzanian
operations; and (iv) in support of the working group’s
ongoing efforts to resolve outstanding tax claims, Acacia
would make a payment of $300 million to the Government
of Tanzania, staged over time, on terms to be settled by
the working group. Barrick and the Government of
Tanzania are also reviewing the conditions for the lifting of
the Ban. Negotiations concerning the proposed framework
remain ongoing and the definitive terms of any final
proposal for the implementation of the framework remain
outstanding. Such terms would be subject to review
and approval by Acacia.
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61
Barrick Gold Corporation | Financial Report 2018MANAGEMENT’S DISCUSSION AND ANALYSIS Pascua-Lama, Argentina/Chile
The Pascua-Lama project, located on the border between
Chile and Argentina, contains 21.3 million ounces of
measured and indicated gold resources6.
Since temporarily suspending the project in 2013,
Barrick has been studying the optimization of the Pascua-
Lama project. Work to date on the prefeasibility study for a
potential underground project indicates that while the
concept may be feasible from a technical standpoint, it
does not currently meet Barrick’s investment criteria. Based
on this, and taking into consideration other risks, the
Company has suspended work on the prefeasibility study,
and will focus on adjusting the project closure plan for
surface infrastructure on the Chilean side of the project, in
line with legal requirements. Studying and progressing
surface closure at Pascua does not prevent Barrick from
developing a future mine. Barrick will continue to evaluate
opportunities to de-risk the project while maintaining
Pascua-Lama as an option for development in the future if
economics improve and related risks can be mitigated.
As part of the Strategic Cooperation Agreement
between Barrick and Shandong Gold, Shandong Gold will
carry out an independent evaluation of the potential to
develop a mining project at Lama in Argentina, including
a high-level evaluation of potential synergies between
Lama and the nearby Veladero operation. Following the
completion of this study, Barrick and Shandong may
agree to conduct additional studies and technical work to
evaluate a number of development options.
SMA Regulatory Sanctions
On June 8, 2016, the SMA consolidated the two adminis tra-
tive proceedings against Compañía Minera Nevada (“CMN”)
into a single proceeding encompassing both the reconsid-
eration of the original resolution issued by the SMA in May
2013 in accordance with the decision of the Environmental
Court and the alleged deviations from the Project’s
environmental approval notified by the SMA in April 2015.
On January 17, 2018, CMN received the revised
resolution (the “Revised Resolution”) from the SMA, in
which the environmental regulator reduced the original
administrative fine from approximately $16 million to
$11.5 million and ordered the closure of existing surface
facilities on the Chilean side of the Project in addition to
certain monitoring activities. The Revised Resolution does
not revoke the Project’s environmental approval. CMN filed
an appeal of the Revised Resolution on February 3, 2018
with the First Environmental Court of Antofagasta (the
“Antofagasta Environmental Court”).
On October 12, 2018, the Antofagasta Environmental
Court issued an administrative ruling ordering review of
62
the significant sanctions ordered by the SMA. CMN was
not a party to this process. In its ruling, the Antofagasta
Environmental Court rejected four of the five closure orders
contained in the Revised Resolution and remanded the
related environmental infringements back to the SMA for
further consideration. A new resolution from the SMA
with respect to the sanctions for these four infringements
could include a range of potential sanctions, including
additional fines, as provided in the Chilean legislation.
The Antofagasta Environmental Court upheld the SMA’s
decision to order the closure of the Chilean side of the
Project for the fifth infringement.
As noted above, CMN has appealed the Revised
Resolution and this appeal remains in place. A hearing on
the appeal was held on November 6, 2018, and CMN
continues to evaluate all of its legal options. A decision of
the Environmental Court on the remaining appeals is still
pending. Refer to note 36 to the Financial Statements for
more information regarding this matter.
Water Quality Review
CMN initiated a review of the baseline water quality of the
Rio Estrecho in August 2013 as required by a July 15, 2013
decision of the Court of Appeals of Copiapo, Chile. The
purpose of the review was to establish whether the water
quality baseline has changed since the Pascua-Lama project
received its environmental approval in February 2006 and,
if so, to require CMN to adopt the appropriate corrective
measures. As a result of that study, CMN requested certain
modifications to its environmental permit water quality
requirements. On June 6, 2016, the responsible agency
approved a partial amendment of the environmental permit
to better reflect the water quality baseline from 2009. That
approval was appealed by certain water users and indige-
nous residents of the Huasco Valley. On October 19, 2016,
the Chilean Committee of Ministers for the Environment,
which has jurisdiction over claims of this nature, voted to
uphold the permit amendments. On January 27, 2017, the
Environmental Court agreed to consider an appeal of the
Chilean Committee’s decision brought by CMN and the
water users and indigenous residents. A hearing took place
on July 25, 2017. On December 12, 2017, the water users
withdrew their appeal. The Environmental Court dismissed
that appeal on January 5, 2018. On December 10, 2018,
the Environmental Court rejected the remaining challenges
and upheld the environmental permit amendment. On
December 29, 2018, the indigenous residents appealed the
Environmental Court’s decision to the Chilean Supreme
Court. The Chilean Supreme Court has not yet accepted
this appeal. Refer to note 36 to the Financial Statements for
more information regarding this matter.
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Barrick Gold Corporation | Financial Report 2018MANAGEMENT’S DISCUSSION AND ANALYSIS Commitments and Contingencies
Litigation and Claims
We are currently subject to various litigation proceedings
as disclosed in note 36 to the 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.
Contractual Obligations and Commitments
In the normal course of business, we enter into contracts
that give rise to commitments for future minimum
payments. The following table summarizes the remaining
contractual maturities of our financial liabilities
and operating and capital commitments shown on
an undiscounted basis:
($ millions)
Debt2
Repayment of principal
Capital leases
Interest
$
Provisions for environmental rehabilitation3
Operating leases
Restricted share units
Pension benefits and other post-retirement benefits
Derivative liabilities4
Purchase obligations for supplies and consumables5
Capital commitments6
Social development costs7
Payments due
as at December 31, 20181
2019
2020
2021
2022
2023
2024 and
thereafter
Total
32
11
333
112
60
20
8
3
517
69
41
$ 263
4
324
109
50
10
8
–
328
6
33
$
7
1
318
183
24
9
9
–
232
4
4
$
337
1
311
157
21
–
8
–
141
3
1
$
–
1
304
166
10
–
8
–
121
–
1
$ 5,108
2
4,738
2,352
2
–
145
–
633
–
47
$ 5,747
20
6,328
3,079
167
39
186
3
1,972
82
127
Total
$ 1,206
$ 1,135
$
791
$
980
$ 611
$ 13,027
$ 17,750
1. Excludes payments relating to Randgold as the merger was completed on January 1, 2019.
2. 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. 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, 2018.
Interest is calculated on our long-term debt obligations using both fixed and variable rates.
3. Provisions for environmental rehabilitation – Amounts presented in the table represent the undiscounted uninflated future payments for the expected cost
of provisions for environmental rehabilitation.
4. Derivative liabilities – Amounts presented in the table relate to derivative contracts disclosed under note 25c to the Financial Statements. Payments related
to derivative contracts may be subject to change given variable market conditions.
5. 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.
6. Capital commitments – Purchase obligations for capital expenditures include only those items where binding commitments have been entered into.
7. Social development costs – Includes a commitment of $69 million ($27.5 million in 2019, $27.5 million in 2020 and $14 million in 2024 and thereafter)
related to the funding of a power transmission line in Argentina.
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63
Barrick Gold Corporation | Financial Report 2018MANAGEMENT’S DISCUSSION AND ANALYSIS
Review of Quarterly Results
Quarterly Information1
($ millions, except where indicated)
Q4
Q3
Q2
Q1
Q4
Q3
Q2
Q1
2018
2017
Revenues
Realized price per ounce – gold2
Realized price per pound – copper2
Cost of sales
Net earnings (loss)
Per share (dollars)3
Adjusted net earnings2
Per share (dollars)2,3
Operating cash flow
Cash capital expenditures
Free cash flow2
1,216
2.76
1,315
1,313
3.11
1,176
$ 1,904 $ 1,837 $ 1,712 $ 1,790
1,332
1,223
2.98
2.76
1,152
1,577
158
(1,197)
0.14
(1.02)
170
69
0.15
0.06
507
411
326
374
37 $ 319 $ (172) $ 181
(412)
(0.35)
89
0.08
706
387
(94)
(0.08)
81
0.07
141
313
$
1,274
3.05
1,270
$ 2,228 $ 1,993 $ 2,160 $ 1,993
1,220
1,280
2.76
3.34
1,342
1,411
679
0.58
162
0.14
495
334
43 $ 161
1,258
2.60
1,277
(11) 1,084
0.93
261
0.22
448
405
(314)
(0.27)
253
0.22
590
350
(0.01)
200
0.17
532
307
$ 240 $ 225 $
1. Sum of all the quarters may not add up to the annual total due to rounding.
2. Realized price, adjusted net earnings, adjusted net earnings per share and free cash flow are non-GAAP financial performance measures with no standardized
meaning under IFRS and therefore may not be comparable to similar measures of performance presented by other issuers. For further information and
a detailed reconciliation of each non-GAAP measure used in this section of the MD&A to the most directly comparable IFRS measure, please see pages 67 to 82
of this MD&A.
3. Calculated using weighted average number of shares outstanding under the basic method of earnings per share.
Our recent financial results reflect our emphasis on cost
control and growing operating cash flow and free cash
flow1. The positive free cash flow1 generated, combined
with the proceeds from various divestitures, have allowed
us to strengthen our balance sheet over the past two years.
In the fourth quarter of 2018, we recorded $319 million
(net of tax effects and non-controlling interests) of net
asset impairments primarily relating to impairments
of $160 million of non-current assets and $154 million of
goodwill at the Veladero mine. We also recorded an
inventory impairment of $166 million at Lagunas Norte,
which was included in cost of sales. In the third quarter of
2018, we recorded a $405 million impairment charge
resulting from an asset impairment at Lagunas Norte. In
the fourth quarter of 2017, we recorded $521 million (net
of tax effects and non-controlling interest) of net asset
impairments primarily relating to impairments at the
Pascua-Lama project and Acacia’s Bulyanhulu mine,
partially offset by an impairment reversal at Lumwana. In
the third quarter of 2017, we recognized a $172 million tax
provision relating to the impact of the proposed framework
for Acacia operations in Tanzania. In the second quarter of
2017, we recorded $858 million (net of tax effects) of gains
on the disposition of 50% of the Veladero mine and a
25% interest in the Cerro Casale project. In the first quarter
of 2017, we recorded a net asset impairment reversal of
$522 million (net of tax effects and non-controlling interest)
primarily relating to impairment reversals at the Cerro
Casale project.
Fourth Quarter Results
In the fourth quarter of 2018, we reported a net loss of
$1,197 million and adjusted net earnings1 of $69 million,
compared to a net loss of $314 million and adjusted net
earnings1 of $253 million in the fourth quarter of 2017.
The net loss in the fourth quarter of 2018 reflects higher
income tax expense mainly attributed to the de-recognition
of our Canadian and Peruvian deferred tax assets,
combined with an inventory impairment of $166 million
at Lagunas Norte. This was further impacted by lower
gold sales volume and higher cost of sales, partially offset
by higher realized gold prices1. In the fourth quarter of
2018, we recorded $319 million (net of tax effects and
non-controlling interests) in net impairment charges, mainly
relating to $160 million (net of tax) of non-current assets
and $154 million of goodwill at Veladero, compared to
64
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Barrick Gold Corporation | Financial Report 2018MANAGEMENT’S DISCUSSION AND ANALYSIS
$521 million (net of tax effects and non-controlling interests)
recorded in the fourth quarter of 2017. The decrease
in adjusted net earnings1 primarily reflects a decrease
in gold sales volume, and lower realized gold prices1,
combined with higher cost of sales compared to the fourth
quarter of 2017.
In the fourth quarter of 2018, gold and copper
sales were 1.23 million ounces and 109 million pounds,
respectively, compared to 1.37 million ounces and
107 million pounds, respectively, in the fourth quarter of
2017. The decrease in gold sales was primarily due to
lower tonnage processed at Lagunas Norte, lower grades
at Kalgoorlie due to the ongoing impact of the pit wall slips,
lower grades processed and lower tonnage at Veladero,
partially offset by higher tonnage processed and higher
grades at Barrick Nevada. Revenues in the fourth quarter
of 2018 were lower than the same prior year period,
reflecting lower gold sales volume, and lower market prices
for gold and copper.
In the fourth quarter of 2018, cost of sales was
$1.6 billion, an increase of $166 million compared to the
same prior year period, primarily reflecting an inventory
impairment of $166 million at Lagunas Norte. This was
combined with higher direct mining costs mainly due to
higher energy prices and consumption, offset by the impact
of lower sales volume driving lower depreciation costs and
royalty expenses. Cost of sales per ounce4 was $980 per
ounce, an increase of $179 per ounce, primarily due to the
impact of lower grade and recovery. Cost of sales per
pound4 was $2.85, an increase of $1.06 per pound from the
same prior year period due to higher direct mining costs
relating to higher maintenance costs and higher equipment
usage, combined with higher depreciation expense at
Lumwana. This was further impacted by lower capitalized
stripping as phase 6B was completed in the prior year
at Zaldívar, and partially offset by higher sales volume
at Jabal Sayid.
In the fourth quarter of 2018, operating cash flow was
$411 million, compared to $590 million in the same prior
year period. The decrease in operating cash flow primarily
reflects lower gold sales volume and higher cost of sales.
In the fourth quarter of 2018, free cash flow1 was
$37 million, lower than the $240 million in the same prior
year period. The decrease was caused by lower operating
cash flow generated in the fourth quarter of 2018 compared
to the same prior year period, combined with slightly higher
cash capital expenditures of $374 million, compared to
$350 million in the fourth quarter of 2017.
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
for external purposes 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 provide reasonable assurance 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
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65
Barrick Gold Corporation | Financial Report 2018MANAGEMENT’S DISCUSSION AND ANALYSIS information relating to the Company, including its
consolidated subsidiaries, is made known to management
by others within those entities to allow timely decisions
regarding required disclosure.
Together, the internal control over financial reporting
and disclosure controls and procedures frameworks provide
internal control over financial reporting and disclosure.
Due to its inherent limitations, internal control over financial
reporting and disclosure may not prevent or detect all
misstatements. Further, the effectiveness of internal control
is subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of
compliance with policies or procedures may change.
As described on page 29 of this report, the Company’s
management structure is being refined as part of the
merger with Randgold. These changes have a minimal
impact on the internal control over financial reporting and
disclosure framework for 2018 but it is reasonable to
conclude that they will impact the frameworks in the
upcoming year.
The management of Barrick, at the direction of our
President and Chief Executive Officer and Senior Executive
Vice-President, 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 of the Treadway Commission (COSO).
Based on that evaluation, management concluded that the
Company’s internal control over financial reporting was
effective as at December 31, 2018.
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, 2018
will be included in Barrick’s 2018 Annual Report and its
2018 Form 40-F/Annual Information Form on file with the
US Securities and Exchange Commission and Canadian
provincial securities regulatory authorities.
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 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 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. Our significant accounting judgments, estimates
and assumptions are disclosed in note 3 of the
accompanying Financial Statements.
66
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Barrick Gold Corporation | Financial Report 2018MANAGEMENT’S DISCUSSION AND ANALYSIS 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 Acquisition/disposition gains/losses;
n Foreign currency translation gains/losses;
n Significant tax adjustments;
n Unrealized gains/losses on non-hedge
derivative instruments; and
n Tax effect and non-controlling interest of
the above items.
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. Management
believes that adjusted net earnings is a useful measure
of our performance because impairment charges,
acquisition/disposition gains/losses and significant tax
adjustments do not reflect the underlying operating
performance of our core mining business and are not
necessarily indicative of future operating results.
Furthermore, foreign currency translation gains/losses
and unrealized gains/losses from non-hedge derivatives
are not necessarily reflective of the underlying operating
results for the reporting periods presented. The tax effect
and non-controlling interest of the adjusting items are
also excluded to reconcile the amounts to Barrick’s share
on a post-tax basis, consistent with net earnings.
As noted, we use this measure for internal purposes.
Management’s internal budgets and forecasts and public
guidance do not reflect the types of items we adjust for.
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.
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67
Barrick Gold Corporation | Financial Report 2018MANAGEMENT’S DISCUSSION AND ANALYSIS Reconciliation of Net Earnings to Net Earnings per Share, Adjusted Net Earnings and Adjusted Net Earnings per Share
For the years
ended Dec. 31
For the three months
ended Dec. 31
($ millions, except per share amounts in dollars)
2018
2017
2016
2018
2017
Net earnings (loss) attributable to equity holders of
the Company
Impairment charges (reversals) related to
long-lived assets1
Acquisition/disposition (gains)/losses2
Foreign currency translation (gains)/losses
Significant tax adjustments3
Other expense adjustments4
Unrealized gains/(losses) on non-hedge
derivative instruments
Tax effect and non-controlling interest5
$ (1,545)
$1,438
$
655
$ (1,197)
$ (314)
900
(68)
136
742
366
1
(123)
(212)
(911)
72
244
178
(1)
68
(250)
42
199
43
114
(32)
47
408
(19)
(16)
719
261
1
(88)
916
(29)
12
61
17
5
(415)
Adjusted net earnings
$ 409
$ 876
$
818
$
69
$ 253
Net earnings (loss) per share6
Adjusted net earnings per share6
(1.32)
0.35
1.23
0.75
0.56
0.70
(1.02)
0.06
(0.27)
0.22
1. Net impairment charges for the current year primarily relate to non-current asset impairments at Lagunas Norte during the third quarter of 2018, and
non-current asset and goodwill impairments at Veladero during the fourth quarter of 2018.
2. Disposition gains for the current year primarily relate to the gain on the sale of a non-core royalty asset at Acacia.
3. Significant tax adjustments for the current year primarily relate to the de-recognition of our Canadian and Peruvian deferred tax assets.
4. Other expense adjustments for the current year primarily relate to the inventory impairment charge at Lagunas Norte, the write-off of a Western Australia
long-term stamp duty receivable, costs associated with the merger with Randgold, debt extinguishment costs, and the settlement of a dispute regarding
a historical supplier contract acquired as part of the Equinox acquisition in 2011.
5. Tax effect and non-controlling interest for the current year primarily relates to the impairment charges related to long-lived assets.
6. Calculated using weighted average number of shares outstanding under the basic method of earnings per share.
Free Cash Flow
Free cash flow is a measure that deducts capital
expenditures from net cash provided by operating activities.
Management believes this to be a useful indicator of our
ability to operate without reliance on additional borrowing
or usage of existing cash.
Free cash flow 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 measure is not
necessarily indicative of operating profit or cash flow from
operations as determined under IFRS. Other companies
may calculate this measure differently. The following table
reconciles this non-GAAP measure to the most directly
comparable IFRS measure.
Reconciliation of Net Cash Provided by Operating Activities to Free Cash Flow
($ millions)
Net cash provided by operating activities
Capital expenditures
Free cash flow
For the years
ended Dec. 31
2018
2017
2016
$ 1,765
(1,400)
$ 2,065
(1,396)
$ 2,640
(1,126)
$ 365
$ 669
$ 1,514
For the three months
ended Dec. 31
2018
$ 411
(374)
$ 37
2017
$ 590
(350)
$ 240
68
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Cash costs per ounce, All-in sustaining costs per
ounce, All-in costs per ounce, C1 cash costs per
pound and All-in sustaining costs per pound
Cash costs per ounce, all-in sustaining costs per ounce and
all-in costs per ounce are non-GAAP financial measures
which are calculated based on the definition published by
the World Gold Council (“WGC”) (a market development
organization for the gold industry comprised of and funded
by 26 gold mining companies from around the world,
including Barrick). The WGC is not a regulatory
organization. Management uses these measures to monitor
the performance of our gold mining operations and their
ability to generate positive cash flow, both on an individual
site basis and an overall company basis.
Cash costs starts with our cost of sales related to gold
production and removes depreciation, the non-controlling
interest of cost of sales and includes by-product credits.
All-in sustaining costs start with cash costs and include
sustaining capital expenditures, general and administrative
costs, minesite exploration and evaluation costs and
reclamation cost accretion and amortization. These
additional costs reflect the expenditures made to maintain
current production levels.
All-in costs starts with all-in sustaining costs and adds
additional costs that reflect the varying costs of producing
gold over the life-cycle of a mine, including: project capital
expenditures (capital expenditures at new projects and
discrete projects at existing operations intended to increase
production capacity and will not benefit production for at
least 12 months) and other non-sustaining costs (primarily
exploration and evaluation costs, community relations
costs and general and administrative costs that are not
associated with current operations). These definitions
recognize 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 cash costs, all-in sustaining
costs 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
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 and therefore 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.
Cash costs per ounce, 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.
C1 cash costs per pound and all-in sustaining costs
per pound are non-GAAP financial measures related to
our copper mine operations. We believe that C1 cash costs
per pound enables investors to better understand the
performance of our copper operations 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.
All-in sustaining costs per pound is similar to the gold all-in
sustaining costs metric and management uses this to
better evaluate the costs of copper production. We believe
this measure enables investors to better understand the
operating performance of our copper mines as this
measure reflects all of the sustaining expenditures incurred
in order to produce copper. All-in sustaining costs per
pound includes C1 cash costs, corporate general and
administrative costs, minesite exploration and evaluation
costs, royalties, environmental rehabilitation costs and
write-downs taken on inventory to net realizable value.
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69
Barrick Gold Corporation | Financial Report 2018MANAGEMENT’S DISCUSSION AND ANALYSIS Reconciliation of Gold Cost of Sales to Cash Costs, All-in Sustaining Costs and All-in Costs, including on a per ounce basis
For the years
ended Dec. 31
For the three months
ended Dec. 31
($ millions, except per ounce information in dollars)
Footnote
2018
2017
2016
2018
2017
Cost of sales applicable to gold production
Depreciation
By-product credits
Realized (gains)/losses on hedge and non-hedge derivatives
Non-recurring items
Other
Non-controlling interests (Pueblo Viejo and Acacia)
Cash costs
General & administrative costs
Minesite exploration and evaluation costs
Minesite sustaining capital expenditures
Rehabilitation – accretion and amortization (operating sites)
Non-controlling interest, copper operations and other
$ 4,621
(1,253)
(131)
3
(172)
(87)
(313)
$ 4,836
(1,529)
(135)
23
–
(106)
(299)
$ 4,980
(1,504)
(184)
89
24
(44)
(358)
$ 1,353
(346)
(26)
3
(155)
(27)
(80)
$ 1,292
(404)
(30)
4
–
(35)
(81)
$ 2,668
$ 2,790
$ 3,003
$ 722
$ 746
265
45
975
81
(374)
248
47
1,109
64
(273)
256
44
944
59
(287)
53
14
276
18
(118)
62
8
279
13
(74)
1
2
3
4
5
6
7
8
9
All-in sustaining costs
$ 3,660
$ 3,985
$ 4,019
$ 965
$ 1,034
Project exploration and evaluation and project costs
Community relations costs not related to current operations
7
Project capital expenditures
Rehabilitation – accretion and amortization (non-operating sites) 8
9
Non-controlling interest and copper operations
6
338
4
459
33
(21)
307
4
273
20
(21)
193
8
175
11
(42)
110
2
127
8
(5)
90
1
81
4
(9)
All-in costs
$ 4,473
$ 4,568
$ 4,364
$ 1,207
$ 1,201
Ounces sold – equity basis (000s ounces)
10
4,544
5,302
5,503
1,232
1,372
Cost of sales per ounce
Cash costs per ounce
Cash costs per ounce (on a co-product basis)
All-in sustaining costs per ounce
All-in sustaining costs per ounce (on a co-product basis)
All-in costs per ounce
All-in costs per ounce (on a co-product basis)
1 By-product credits
11,12
12
12,13
12
12,13
12
12,13
$
$
$
$
$
892
588
607
806
825
985
$
$ 1,004
$
$
$
$
$
$
$
794
526
544
750
768
860
878
$
$
$
$
$
$
$
798
546
569
730
753
792
815
$ 980
$ 801
$ 588
$ 602
$ 788
$ 802
$ 985
$ 999
$ 545
$ 561
$ 756
$ 772
$ 882
$ 898
Revenues include the sale of by-products for our gold and copper mines for the three months ended December 31, 2018 of $26 million
(2017: $30 million) and the year ended December 31, 2018 of $131 million (2017: $135 million; 2016: $151 million) and energy sales
from the Monte Rio power plant at our Pueblo Viejo mine for the three months ended December 31, 2018 of $nil (2017: $nil) and the year
ended December 31, 2018 of $nil (2017: $nil; 2016: $33 million) up until its disposition on August 18, 2016.
2 Realized (gains)/losses on hedge and non-hedge derivatives
Includes realized hedge losses of $2 million and $4 million for the three months and year ended December 31, 2018, respectively
(2017: $5 million and $27 million, respectively; 2016: $73 million), and realized non-hedge losses of $1 million and gains of $1 million
for the three months and year ended December 31, 2018, respectively (2017: gains of $1 million and $4 million, respectively; 2016:
losses of $16 million). Refer to note 5 of the Financial Statements for further information.
3 Non-recurring items
These gains/costs are not indicative of our cost of production and have been excluded from the calculation of cash costs. Non-recurring
items for the current year mainly relate to inventory impairment of $166 million at Lagunas Norte.
70
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4 Other
Other adjustments include adding the net margins related to power sales at Pueblo Viejo of $nil and $nil, respectively, for the three
months and year ended December 31, 2018 (2017: $nil and $nil, respectively; 2016: $5 million), adding the cost of treatment and refining
charges of $nil and $nil, respectively, for the three months and year ended December 31, 2018 (2017: $nil and $1 million, respectively;
2016: $16 million), and the removal of cash costs associated with our Pierina mine, which is mining incidental ounces as it enters closure,
of $27 million and $87 million for the three months and year ended December 31, 2018, respectively (2017: $35 million and $108 million,
respectively; 2016: $66 million).
5 Non-controlling interests (Pueblo Viejo and Acacia)
Non-controlling interests include non-controlling interests related to gold production of $114 million and $453 million, respectively, for the
three months and year ended December 31, 2018 (2017: $137 million and $454 million, respectively; 2016: $508 million). Refer to note 5
of the Financial Statements for further information.
6 Exploration and evaluation costs
Exploration, evaluation and project expenses are presented as minesite if it supports current mine operations and project if it relates
to future projects. Refer to page 41 of this MD&A.
7 Capital expenditures
Capital expenditures are related to our gold sites only and are presented on a 100% accrued basis. They are split between minesite
sustaining and project capital expenditures. Project capital expenditures are distinct projects designed to increase the net present value
of the mine and are not related to current production. Significant projects in the current year are Crossroads, the Cortez Range Front
declines, Goldrush, and the Deep South Expansion at Barrick Nevada and construction of the third shaft at Turquoise Ridge. Refer to
page 41 of this MD&A.
8 Rehabilitation – accretion and amortization
Includes depreciation on the assets related to rehabilitation provisions of our gold operations and accretion on the rehabilitation provisions
of our gold operations, split between operating and non-operating sites.
9 Non-controlling interest and copper operations
Removes general & administrative costs related to non-controlling interests and copper based on a percentage allocation of revenue.
Also removes exploration, evaluation and project costs, rehabilitation costs and capital expenditures incurred by our copper sites and
the non-controlling interest of our Acacia and Pueblo Viejo operating segments and South Arturo at Barrick Nevada. Figures remove the
impact of Pierina, which is mining incidental ounces as it enters closure. The impact is summarized as the following:
($ millions)
Non-controlling interest, copper operations and other
General & administrative costs
Minesite exploration and evaluation costs
Rehabilitation – accretion and amortization (operating sites)
Minesite sustaining capital expenditures
For the years
ended Dec. 31
$
2018
(104)
(3)
(6)
(261)
$
2017
(21)
(12)
(10)
(230)
$
2016
(36)
(9)
(9)
(233)
For the three months
ended Dec. 31
2018
2017
$
(36)
(2)
(2)
(78)
$
(8)
1
(2)
(65)
All-in sustaining costs total
$
(374)
$
(273)
$
(287)
$
(118)
$
(74)
Project exploration and evaluation and project costs
Project capital expenditures
(16)
(5)
(17)
(4)
(12)
(30)
All-in costs total
10 Ounces sold – equity basis
$
(21)
$
(21)
$
(42)
$
(3)
(2)
(5)
(8)
(1)
$
(9)
Figures remove the impact of Pierina, which is mining incidental ounces as it enters closure.
11 Cost of sales per ounce
Figures remove the cost of sales impact of Pierina of $32 million and $116 million, respectively, for the three months and year ended
December 31, 2018 (2017: $55 million and $174 million, respectively; 2016: $82 million), which is mining incidental ounces as it enters
closure. Cost of sales per ounce excludes non-controlling interest related to gold production. Cost of sales related to gold per ounce
is calculated using cost of sales on an attributable basis (removing the non-controlling interest of 40% Pueblo Viejo, 36.1% Acacia and
40% South Arturo from cost of sales), divided by attributable gold ounces sold.
12 Per ounce figures
Cost of sales per ounce, cash costs per ounce, all-in sustaining costs per ounce and all-in costs per ounce may not calculate based
on amounts presented in this table due to rounding.
71
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Barrick Gold Corporation | Financial Report 2018MANAGEMENT’S DISCUSSION AND ANALYSIS
13 Co-product costs per ounce
Cash costs per ounce, all-in sustaining costs per ounce and all-in costs per ounce presented on a co-product basis remove the impact
of by-product credits of our gold production (net of non-controlling interest) calculated as:
For the years
ended Dec. 31
For the three months
ended Dec. 31
($ millions)
By-product credits
Non-controlling interest
2018
2017
2016
$ 131
(45)
$ 135
(30)
$ 184
(53)
By-product credits (net of non-controlling interest)
$ 86
$ 105
$ 131
2018
$ 26
(10)
$ 16
2017
$ 30
(6)
$ 24
Reconciliation of Gold Cost of Sales to Cash costs, All-in sustaining costs and All-in costs, including on a per ounce basis,
by operating segment
Barrick Turquoise Pueblo
Lagunas
Golden
Footnote Nevada
Ridge
Viejo Veladero
Norte Acacia
Hemlo Sunlight Porgera Kalgoorlie
For the three months ended Dec. 31, 2018
($ millions, except per ounce
information in dollars)
Cost of sales applicable to
gold production
Depreciation
By-product credits
Non-recurring items
Other
Non-controlling interests
Cash costs
General & administrative costs
Minesite exploration and
evaluation costs
Minesite sustaining
capital expenditures
Rehabilitation – accretion and
amortization (operating sites)
Non-controlling interests
All-in sustaining costs
Project exploration and
evaluation and project costs
Project capital expenditures
Non-controlling interests
All-in costs
Ounces sold – equity
basis (000s ounces)
1
2
3
4
5
6
4
5
$ 472
(186)
–
–
–
–
$ 54 $ 192 $
(7)
–
–
–
–
(53)
(17)
(2)
1
(49)
98
(32)
(2)
(4)
–
–
$ 208 $ 114 $
(10)
(3)
(166)
–
–
(23)
(1)
–
–
(33)
52 $
(7)
–
–
–
–
14 $
–
–
–
–
–
54
(14)
–
17
–
–
$
64
(10)
(1)
–
–
–
$ 286
$ 47 $ 72 $
60
$ 29 $ 57 $
45 $
14 $
57
$
53
–
5
57
9
(4)
–
–
7
–
–
–
–
–
1
35
59
3
(15)
–
–
–
1
7
2
–
8
–
–
–
16
17
1
(9)
1
–
–
–
1
1
–
–
–
17
(1)
–
–
2
9
1
–
$ 353
$ 54 $ 95 $ 120
$ 39 $ 73 $
63 $
16 $
73
$
65
3
76
–
–
13
–
–
–
–
–
–
–
–
–
–
–
3
(1)
–
–
–
–
–
–
–
–
–
–
–
–
$ 432
$ 67 $ 95 $ 120
$ 39 $ 75 $
63 $
16 $
73
$
65
595
66
170
74
50
86
48
10
72
61
Cost of sales per ounce
7,8
$ 792
$ 802 $ 686 $ 1,352
$ 4,186 $ 852 $ 1,083 $ 1,423 $ 733
$ 1,022
Cash costs per ounce
Cash costs per ounce
8
$ 479
$ 701 $ 425 $ 823
$ 607 $ 651 $ 932 $ 1,430 $ 786
$ 857
(on a co-product basis)
8,9
$ 480
$ 701 $ 482 $ 848
$ 653 $ 658 $ 935 $ 1,448 $ 796
$ 863
All-in sustaining costs per ounce
All-in sustaining costs per ounce
8
$ 591
$ 798 $ 559 $ 1,648
$ 796 $ 857 $ 1,311 $ 1,586 $ 1,018
$ 1,054
(on a co-product basis)
8,9
$ 592
$ 798 $ 616 $ 1,673
$ 842 $ 864 $ 1,314 $ 1,604 $ 1,028
$ 1,060
All-in costs per ounce
All-in costs per ounce
8
$ 723
$ 993 $ 560 $ 1,648
$ 800 $ 878 $ 1,311 $ 1,586 $ 1,018
$ 1,054
(on a co-product basis)
8,9
$ 724
$ 993 $ 617 $ 1,673
$ 846 $ 885 $ 1,314 $ 1,604 $ 1,028
$ 1,060
72
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($ millions, except per ounce
information in dollars)
Cost of sales applicable to
gold production
Depreciation
By-product credits
Non-recurring items
Other
Non-controlling interests
Cash costs
General & administrative costs
Minesite exploration and
evaluation costs
Minesite sustaining
capital expenditures
Rehabilitation – accretion and
amortization (operating sites)
Non-controlling interests
All-in sustaining costs
Project exploration and evaluation
and project costs
Project capital expenditures
Non-controlling interests
Barrick Turquoise Pueblo
Footnote Nevada
Ridge
Viejo Veladero
For the three months ended December 31, 2017
Acacia
Hemlo Sunlight Porgera Kalgoorlie
Golden
Lagunas
Norte
$ 428
(155)
(1)
–
–
(1)
$ 55
(10)
–
–
–
–
$ 241
(107)
(14)
–
–
(49)
$ 108
(33)
(5)
–
–
–
$ 75
(18)
(4)
–
–
–
$ 114
(25)
–
–
1
(31)
$ 53 $
(8)
–
–
–
–
14
–
–
–
–
–
$ 69
(12)
(1)
–
–
–
$ 79
(16)
–
–
–
–
$ 271
$ 45
$ 71
$ 70
$ 53
$ 59
$ 45 $
14
$ 56
$ 63
–
4
94
4
–
–
–
8
–
–
–
–
–
–
30
39
3
(13)
–
–
–
–
8
1
–
9
–
–
–
18
10
1
(12)
1
–
–
–
–
–
–
–
1
16
(1)
–
–
3
8
–
–
$ 373
$ 53
$ 91
$ 109
$ 62
$ 75
$ 56 $
14
$ 72
$ 74
4
63
–
–
4
–
–
–
–
–
–
–
–
–
–
–
3
(1)
–
–
–
–
–
–
–
–
–
–
–
–
1
2
3
4
5
6
4
5
All-in costs
$ 440
$ 57
$ 91
$ 109
$ 62
$ 77
$ 56 $
14
$ 72
$ 74
Ounces sold – equity
basis (000s ounces)
539
81
182
114
114
94
64
11
80
93
Cost of sales per ounce
7,8
$ 794
$ 672
$ 795
$ 953
$ 659
$ 774
$ 831 $ 1,221
$ 864
$ 850
Cash costs per ounce
Cash costs per ounce
8
$ 506
$ 550
$ 388
$ 609
$ 461
$ 581
$ 690 $ 1,218
$ 705
$ 675
(on a co-product basis)
8,9
$ 507
$ 550
$ 490
$ 618
$ 508
$ 587
$ 695 $ 1,228
$ 715
$ 680
All-in sustaining costs per ounce
All-in sustaining costs per ounce
8
$ 696
$ 638
$ 498
$ 950
$ 547
$ 779
$ 864 $ 1,262
$ 897
$ 796
(on a co-product basis)
8,9
$ 697
$ 638
$ 600
$ 959
$ 594
$ 785
$ 869 $ 1,272
$ 907
$ 801
All-in costs per ounce
All-in costs per ounce
8
$ 818
$ 692
$ 498
$ 950
$ 553
$ 803
$ 878 $ 1,267
$ 897
$ 796
(on a co-product basis)
8,9
$ 819
$ 692
$ 600
$ 959
$ 600
$ 809
$ 883 $ 1,277
$ 907
$ 801
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73
Barrick Gold Corporation | Financial Report 2018MANAGEMENT’S DISCUSSION AND ANALYSIS
($ millions, except per ounce
information in dollars)
Cost of sales applicable to
gold production
Depreciation
By-product credits
Non-recurring items
Other
Non-controlling interests
Barrick Turquoise Pueblo
Lagunas
Golden
Footnote Nevada
Ridge
Viejo Veladero
Norte Acacia
Hemlo Sunlight Porgera Kalgoorlie
For the year ended December 31, 2018
$ 1,715
(649)
(2)
–
–
–
1
2
3
$ 206 $ 732 $ 310 $ 337 $ 456 $ 195 $
(28)
–
–
–
–
(185)
(90)
(2)
2
(183)
(121)
(8)
(4)
–
–
(46)
(13)
(166)
–
–
(89)
(4)
–
–
(131)
(18)
(1)
–
–
–
53 $ 213
(42)
(2)
–
–
–
–
–
–
–
–
$ 288
(52)
(2)
–
–
–
Cash costs
$ 1,064
$ 178 $ 274 $ 177 $ 112 $ 232 $ 176 $
53 $ 169
$ 234
General & administrative costs
Minesite exploration and
evaluation costs
Minesite sustaining
capital expenditures
Rehabilitation – accretion and
amortization (operating sites)
Non-controlling interests
4
5
6
–
19
–
–
–
–
–
2
260
20
145
143
30
(10)
1
–
10
(62)
1
–
–
2
20
25
–
26
–
–
–
81
42
4
(40)
4
–
–
–
3
3
–
–
–
62
(1)
–
–
10
26
4
–
All-in sustaining costs
$ 1,363
$ 199 $ 367 $ 323 $ 159 $ 303 $ 222 $
59 $ 230
$ 274
Project exploration and
evaluation and project costs
Project capital expenditures
Non-controlling interests
4
5
6
312
–
–
42
–
–
–
–
–
–
–
–
2
–
–
12
(4)
–
–
–
–
–
–
–
–
–
–
–
–
All-in costs
$ 1,681
$ 241 $ 367 $ 323 $ 161 $ 311 $ 222 $
59 $ 230
$ 274
Ounces sold – equity
basis (000s ounces)
2,097
262
590
280
251
333
168
30
213
320
Cost of sales per ounce
7,8 $ 818
$ 783 $ 750 $ 1,112 $ 1,342 $ 876 $ 1,157 $ 1,755 $ 996
$ 899
Cash costs per ounce
Cash costs per ounce
8 $ 507
$ 678 $ 465 $ 629 $ 448 $ 680 $ 1,046 $ 1,762 $ 796
$ 732
(on a co-product basis)
8,9 $ 508
$ 678 $ 553 $ 654 $ 499 $ 687 $ 1,050 $ 1,772 $ 810
$ 737
All-in sustaining costs per ounce
All-in sustaining costs per ounce
8 $ 649
$ 756 $ 623 $ 1,154 $ 636 $ 905 $ 1,318 $ 1,954 $ 1,083
$ 857
(on a co-product basis)
8,9 $ 650
$ 756 $ 711 $ 1,179 $ 687 $ 912 $ 1,322 $ 1,964 $ 1,097
$ 862
All-in costs per ounce
All-in costs per ounce
8 $ 801
$ 916 $ 623 $ 1,154 $ 644 $ 929 $ 1,320 $ 1,954 $ 1,083
$ 857
(on a co-product basis)
8,9 $ 802
$ 916 $ 711 $ 1,179 $ 695 $ 936 $ 1,324 $ 1,964 $ 1,097
$ 862
74
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($ millions, except per ounce
information in dollars)
Cost of sales applicable to
gold production
Depreciation
By-product credits
Non-recurring items
Other
Non-controlling interests
Barrick Turquoise Pueblo
Footnote Nevada
Ridge
Viejo Veladero
Lagunas
Norte
For the year ended December 31, 2017
Acacia
Hemlo Sunlight Porgera Kalgoorlie
Golden
$ 1,869
(793)
(3)
–
–
(1)
1
2
3
$ 159
(28)
–
–
–
–
$ 730 $ 410
(119)
(229)
(17)
(72)
–
–
–
–
–
(171)
$ 245
(68)
(16)
–
–
–
$ 469 $ 193 $
(107)
(7)
–
1
(27)
(1)
–
–
–
(127)
55 $ 239
(39)
(3)
(3)
–
–
–
–
–
–
–
$ 292
(58)
(2)
–
–
–
Cash costs
$ 1,072
$ 131
$ 258 $ 274
$ 161
$ 229 $ 165 $
52 $ 197
$ 232
General & administrative costs
Minesite exploration and
evaluation costs
Minesite sustaining
capital expenditures
Rehabilitation – accretion and
amortization (operating sites)
Non-controlling interests
4
5
6
–
16
–
–
–
–
–
3
–
4
21
–
–
–
360
32
114
173
20
137
44
25
(3)
1
–
13
(51)
2
–
7
–
6
(61)
5
–
–
–
–
2
–
–
1
–
9
55
20
(2)
–
3
–
All-in sustaining costs
$ 1,470
$ 164
$ 334 $ 452
$ 192
$ 332 $ 214 $
54 $ 251
$ 264
Project exploration and
evaluation and project costs
Project capital expenditures
Non-controlling interests
4
5
8
224
–
–
4
–
–
–
–
–
–
–
–
5
–
–
11
(4)
–
5
–
–
1
–
–
–
–
–
–
–
All-in costs
$ 1,702
$ 168
$ 334 $ 452
$ 197
$ 339 $ 219 $
55 $ 251
$ 264
Ounces sold – equity
basis (000s ounces)
2,357
222
637
458
397
379
196
41
253
362
Cost of sales per ounce
7,8 $ 792
$ 715
$ 699 $ 897
$ 617
$ 791 $ 986 $ 1,334 $ 944
$ 806
Cash costs per ounce
Cash costs per ounce
8 $ 455
$ 589
$ 405 $ 598
$ 405
$ 587 $ 841 $ 1,265 $ 781
$ 642
(on a co-product basis)
8,9 $ 456
$ 589
$ 475 $ 636
$ 446
$ 598 $ 846 $ 1,270 $ 791
$ 647
All-in sustaining costs per ounce
All-in sustaining costs per ounce
8 $ 624
$ 733
$ 525 $ 987
$ 483
$ 875 $ 1,092 $ 1,329 $ 993
$ 729
(on a co-product basis)
8,9 $ 625
$ 733
$ 595 $ 1,025
$ 524
$ 886 $ 1,097 $ 1,334 $ 1,003
$ 734
All-in costs per ounce
All-in costs per ounce
8 $ 722
$ 753
$ 525 $ 987
$ 497
$ 894 $ 1,119 $ 1,349 $ 993
$ 729
(on a co-product basis)
8,9 $ 723
$ 753
$ 595 $ 1,025
$ 538
$ 905 $ 1,124 $ 1,354 $ 1,003
$ 734
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Barrick Gold Corporation | Financial Report 2018MANAGEMENT’S DISCUSSION AND ANALYSIS
($ millions, except per ounce
information in dollars)
Cost of sales applicable to
gold production
Depreciation
By-product credits
Non-recurring items
Other
Non-controlling interests
Barrick Turquoise Pueblo
Footnote Nevada
Ridge
Viejo Veladero
Lagunas
Norte
For the year ended December 31, 2016
Acacia
Hemlo Sunlight Porgera Kalgoorlie
Golden
$ 1,896
(807)
(2)
–
–
–
1
2
3
$ 155
(27)
–
–
–
–
$ 644
(147)
(90)
34
5
(170)
$ 464
(118)
(27)
(10)
–
–
$ 276
(96)
(17)
–
–
–
$ 719
(166)
(39)
–
8
(188)
$ 188 $
(26)
(1)
–
–
–
54 $ 203
(34)
(5)
(2)
–
–
–
–
–
–
–
$ 289
(56)
(2)
–
7
–
Cash costs
$ 1,087
$ 128
$ 276
$ 309
$ 163
$ 334
$ 161 $
49 $ 167
$ 238
General & administrative costs
Minesite exploration and
evaluation costs
Minesite sustaining
capital expenditures
Rehabilitation – accretion and
amortization (operating sites)
Non-controlling interests
4
5
6
–
10
–
–
–
–
–
1
–
2
55
3
–
–
217
32
101
95
51
190
37
26
(4)
1
–
10
(44)
4
–
8
–
6
(88)
1
–
–
–
2
2
–
–
1
–
5
43
21
(2)
–
4
–
All-in sustaining costs
$ 1,336
$ 161
$ 343
$ 409
$ 224
$ 500
$ 199 $
53 $ 209
$ 268
Project exploration and evaluation
and project costs
Project capital expenditures
Non-controlling interests
4
5
19
141
(30)
–
–
–
–
–
–
–
–
–
–
5
–
–
1
–
–
–
–
–
–
–
–
–
–
–
–
–
All-in costs
$ 1,466
$ 161
$ 343
$ 409
$ 229
$ 501
$ 199 $
53 $ 209
$ 268
Ounces sold – equity
basis (000s ounces)
2,162
257
700
532
425
522
237
36
243
380
Cost of sales per ounce
7,8 $ 876
$ 603
$ 564
$ 872
$ 651
$ 880
$ 795 $ 1,512 $ 836
$ 762
Cash costs per ounce
Cash costs per ounce
8 $ 502
$ 498
$ 395
$ 582
$ 383
$ 640
$ 679 $ 1,376 $ 689
$ 627
(on a co-product basis)
8,9 $ 503
$ 498
$ 473
$ 632
$ 423
$ 677
$ 683 $ 1,385 $ 697
$ 615
All-in sustaining costs per ounce
All-in sustaining costs per ounce
8 $ 618
$ 625
$ 490
$ 769
$ 529
$ 958
$ 839 $ 1,493 $ 858
$ 706
(on a co-product basis)
8,9 $ 619
$ 625
$ 568
$ 819
$ 569
$ 995
$ 843 $ 1,502 $ 866
$ 694
All-in costs per ounce
All-in costs per ounce
8 $ 678
$ 625
$ 490
$ 769
$ 540
$ 960
$ 839 $ 1,493 $ 858
$ 706
(on a co-product basis)
8,9 $ 679
$ 625
$ 568
$ 819
$ 580
$ 997
$ 843 $ 1,502 $ 866
$ 694
1 By-product credits
Revenues include the sale of by-products for our gold mines and energy sales from the Monte Rio power plant at our Pueblo Viejo mine
for the three months ended December 31, 2018 of $nil (2017: $nil) and the year ended December 31, 2018 of $nil (2017: $nil; 2016:
$33 million) up until its disposition on August 18, 2016.
2 Non-recurring items
These gains/costs are not indicative of our cost of production and have been excluded from the calculation of cash costs. Non-recurring
items for the current year mainly relate to inventory impairment of $166 million at Lagunas Norte.
3 Other
Other adjustments include adding the net margins related to power sales at Pueblo Viejo of $nil and $nil, respectively, for the three
months and year ended December 31, 2018 (2017: $nil and $nil, respectively; 2016: $5 million) and adding the cost of treatment
and refining charges of $nil and $nil, respectively, for the three months and year ended December 31, 2018 (2017: $1 million and
$1 million, respectively; 2016: $9 million).
4 Exploration and evaluation costs
Exploration, evaluation and project expenses are presented as minesite if it supports current mine operations and project if it relates
to future projects. Refer to page 41 of this MD&A.
76
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5 Capital expenditures
Capital expenditures are related to our gold sites only and are presented on a 100% accrued basis. They are split between minesite sustaining
and project capital expenditures. Project capital expenditures are distinct projects designed to increase the net present value of the mine
and are not related to current production. Significant projects in the current year are Crossroads, the Cortez Range Front declines, Goldrush,
and the Deep South Expansion at Barrick Nevada and construction of the third shaft at Turquoise Ridge. Refer to page 41 of this MD&A.
6 Rehabilitation – accretion and amortization
Includes depreciation on the assets related to rehabilitation provisions of our gold operations and accretion on the rehabilitation
provisions of our gold operations, split between operating and non-operating sites.
7 Cost of sales per ounce
Cost of sales related to gold per ounce is calculated using cost of sales on an attributable basis (removing the non-controlling interest
of 40% Pueblo Viejo, 36.1% Acacia and 40% South Arturo from cost of sales), divided by attributable gold ounces sold.
8 Per ounce figures
Cost of sales per ounce, cash costs per ounce, all-in sustaining costs per ounce and all-in costs per ounce may not calculate based
on amounts presented in this table due to rounding.
9 Co-product costs per ounce
Cash costs per ounce, all-in sustaining costs per ounce and all-in costs per ounce presented on a co-product basis remove the impact
of by-product credits of our gold production (net of non-controlling interest) calculated as:
For the three months ended Dec. 31, 2018
($ millions)
Barrick Turquoise
Ridge
Nevada
Pueblo
Viejo
Veladero
Lagunas
Norte
By-product credits
Non-controlling interest
$ –
–
$
–
–
$ 17
(7)
$ 2
–
$ 3
–
Acacia
$ 1
–
Golden
Hemlo Sunlight
Porgera Kalgoorlie
$ –
–
$ –
–
$ –
–
$ 1
–
By-product credits (net of
non-controlling interest)
$ –
$
–
$ 10
$ 2
$ 3
$ 1
$ –
$ –
$ –
$ 1
($ millions)
Barrick
Nevada
Turquoise
Ridge
Pueblo
Viejo
Veladero
Lagunas
Norte
Acacia
Hemlo
Golden
Sunlight
Porgera
Kalgoorlie
By-product credits
Non-controlling interest
$ 1
–
$
–
–
$ 14
(6)
$ 5
–
$ 4
–
$ –
–
$ –
–
$ –
–
$ 1
–
$ –
–
By-product credits (net of
non-controlling interest)
$ 1
$
–
$ 8
$ 5
$ 4
$ –
$ –
$ –
$ 1
$ –
For the three months ended Dec. 31, 2017
($ millions)
Barrick Turquoise
Ridge
Nevada
Pueblo
Viejo
Veladero
Lagunas
Norte
Acacia
Golden
Hemlo Sunlight
Porgera Kalgoorlie
By-product credits
Non-controlling interest
$ 2
–
$
–
–
$ 90
(37)
$ 8
–
$ 13
–
$ 4
(1)
$ 1
–
$ –
–
$ 2
–
$ 2
–
By-product credits (net of
non-controlling interest)
$ 2
$
–
$ 53
$ 8
$ 13
$ 3
$ 1
$ –
$ 2
$ 2
For the year ended Dec. 31, 2018
($ millions)
Barrick
Nevada
Turquoise
Ridge
Pueblo
Viejo
Veladero
Lagunas
Norte
Acacia
Hemlo
Golden
Sunlight
Porgera
Kalgoorlie
By-product credits
Non-controlling interest
$ 3
–
$
–
–
$ 72
(28)
$ 17
–
$ 16
–
$ 7
(3)
$ 1
–
$ –
–
$ 3
–
$ 2
–
By-product credits (net of
non-controlling interest)
$ 3
$
–
$ 44
$ 17
$ 16
$ 4
$ 1
$ –
$ 3
$ 2
For the year ended Dec. 31, 2017
($ millions)
Barrick
Nevada
Turquoise
Ridge
Pueblo
Viejo
Veladero
Lagunas
Norte
Acacia
Hemlo
Golden
Sunlight
Porgera
Kalgoorlie
By-product credits
Non-controlling interest
$ 2
–
$
–
–
$ 90
(39)
$ 27
–
$ 17
–
$ 39
(14)
$ 1
–
$ –
–
$ 2
–
$ 2
–
By-product credits (net of
non-controlling interest)
$ 2
$
–
$ 51
$ 27
$ 17
$ 25
$ 1
$ –
$ 2
$ 2
For the year ended Dec. 31, 2016
77
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Reconciliation of Copper Cost of Sales to C1 cash costs and All-in sustaining costs, including on a per pound basis
For the years
ended Dec. 31
For the three months
ended Dec. 31
($ millions, except per pound information in dollars)
2018
2017
2016
2018
2017
Cost of sales
Depreciation/amortization
Treatment and refinement charges
Cash cost of sales applicable to equity method investments
Less: royalties and production taxes
By-product credits
Other
C1 cash cost of sales
General & administrative costs
Rehabilitation – accretion and amortization
Royalties and production taxes
Minesite exploration and evaluation costs
Minesite sustaining capital expenditures
Inventory write-downs
All-in sustaining costs
$ 558
(170)
144
281
(44)
(6)
(11)
$ 399
(83)
157
245
(38)
(5)
–
$ 319
(45)
167
203
(41)
–
–
$ 210
(84)
41
78
(15)
(2)
(11)
$ 107
(24)
41
75
(11)
(1)
–
$ 752
$ 675
$ 603
$ 217
$ 187
28
16
44
4
220
11
12
12
38
6
204
–
14
7
41
–
169
–
$ 1,075
$ 947
$ 834
5
3
15
2
67
11
$ 320
109
$ 2.85
$ 1.98
$ 2.95
3
3
11
1
67
–
$ 272
107
$ 1.79
$ 1.72
$ 2.51
Pounds sold – consolidated basis (millions pounds)
382
405
405
Cost of sales per pound1,2
C1 cash cost per pound1
All-in sustaining costs per pound1
$ 2.40
$ 1.77
$ 1.41
$ 1.97
$ 1.66
$ 1.49
$ 2.82
$ 2.34
$ 2.05
1. Cost of sales per pound, C1 cash costs per pound and all-in sustaining costs per pound may not calculate based on amounts presented in this table due to rounding.
2. Cost of sales per pound related to copper is calculated using cost of sales including our proportionate share of cost of sales attributable to equity method
investments (Zaldívar and Jabal Sayid), divided by consolidated copper pounds sold (including our proportionate share of copper pounds sold from our equity
method investments).
Reconciliation of Copper Cost of Sales to C1 cash costs and All-in sustaining costs, including on a per pound basis, by operating site
For the three months ended December 31
2018
2017
($ millions, except per pound information in dollars)
Zaldívar Lumwana Jabal Sayid
Zaldívar
Lumwana Jabal Sayid
Cost of sales
Depreciation/amortization
Treatment and refinement charges
Less: royalties and production taxes
By-product credits
Other
C1 cash cost of sales
Rehabilitation – accretion and amortization
Royalties and production taxes
Minesite exploration and evaluation costs
Minesite sustaining capital expenditures
Inventory write-downs
All-in sustaining costs
$ 77
(19)
–
–
–
–
$ 210
(84)
36
(11)
–
(11)
$ 23
(3)
5
(4)
(2)
–
$ 73
(16)
–
–
–
–
$ 104
(24)
37
(11)
–
–
$ 23
(5)
4
–
–
–
$ 58
$ 140
$ 19
$ 57
$ 106
$ 22
–
–
2
16
–
3
11
–
47
11
–
4
–
4
–
–
–
1
21
–
3
11
–
43
–
–
–
–
3
–
$ 76
$ 212
$ 27
$ 79
$ 163
$ 25
Pounds sold – consolidated basis (millions pounds)
30
65
Cost of sales per pound1,2
C1 cash cost per pound1
$ 2.55
$ 3.22
$ 1.91
$ 2.12
14
$ 1.70
$ 1.48
32
65
10
$ 2.29
$ 1.60
$ 2.15
$ 1.78
$ 1.63
$ 2.05
All-in sustaining costs per pound1
$ 2.50
$ 3.26
$ 2.04
$ 2.45
$ 2.52
$ 2.41
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($ millions, except per pound
information in dollars)
Cost of sales
Depreciation/amortization
Treatment and
refinement charges
Less: royalties and
production taxes
By-product credits
Other
2018
2017
2016
Zaldívar
Lumwana
Jabal
Sayid
Zaldívar
Lumwana
Jabal
Sayid
Zaldívar
Lumwana
Jabal
Sayid
$ 261
(59)
$ 558
(170)
$ 98
(19)
$ 243
(55)
$ 396
(83)
$ 75
(17)
$ 221
(44)
$ 319
(45)
$ 33
(6)
For the years ended December 31
–
–
–
–
125
19
(39)
–
(11)
(5)
(6)
–
–
–
–
–
144
14
(38)
–
–
–
(5)
–
–
–
–
–
161
(41)
–
–
6
–
–
–
C1 cash cost of sales
$ 202
$ 463
$ 87
$ 188
$ 419
$ 67
$ 177
$ 394
$ 33
Rehabilitation – accretion
and amortization
Royalties and
production taxes
Minesite exploration and
evaluation costs
Minesite sustaining
capital expenditures
Inventory write-downs
–
–
2
49
–
16
39
2
154
11
–
5
–
17
–
–
–
4
58
–
12
38
2
123
–
–
–
–
23
–
–
–
–
56
–
7
41
–
96
–
–
–
–
17
–
All-in sustaining costs
$ 253
$ 685
$ 109
$ 250
$ 594
$ 90
$ 233
$ 538
$ 50
Pounds sold – consolidated
basis (millions pounds)
103
222
57
113
253
39
114
274
17
Cost of sales per pound1,2
$ 2.55
$ 2.51
$ 1.73
$ 2.15
$ 1.57
$ 1.90
$ 1.93
$ 1.16
$ 1.98
C1 cash cost per pound1
$ 1.97
$ 2.08
$ 1.53
$ 1.66
$ 1.66
$ 1.70
$ 1.55
$ 1.44
$ 1.97
All-in sustaining costs
per pound1
$ 2.47
$ 3.08
$ 1.92
$ 2.21
$ 2.35
$ 2.30
$ 2.05
$ 1.97
$ 2.98
1. Cost of sales per pound, C1 cash costs per pound and all-in sustaining costs per pound may not calculate based on amounts presented in this table due to rounding.
2. Cost of sales per pound applicable to copper is calculated using cost of sales including our proportionate share of cost of sales attributable to equity method
investments (Zaldívar and Jabal Sayid), divided by consolidated copper pounds sold (including our proportionate share of copper pounds sold from our equity
method investments).
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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.
other stakeholders of Barrick in better understanding our
ability to generate liquidity from operating cash flow, by
excluding these amounts from the calculation as they are
not indicative of the performance of our core mining
business and not necessarily reflective of the underlying
operating results for the periods presented.
Starting in the fourth quarter of 2018, we amended
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; acquisition/disposition gains/losses; foreign
currency translation gains/losses; other expense
adjustments; and unrealized gains on non-hedge derivative
instruments. We believe these items provide a greater
level of consistency with the adjusting items included in our
Adjusted Net Earnings reconciliation, with the exception
that these amounts are adjusted to remove any impact
on finance costs/income, income tax expense and/or
depreciation as they do not affect EBITDA. We believe this
additional information will assist analysts, investors and
our calculation of Adjusted EBITDA to remove the impact
of the income tax expense, finance costs, finance income
and depreciation incurred in our equity method accounted
investments. The prior periods have been restated to reflect
the change in presentation. We believe this change will
assist analysts, investors and other stakeholders of Barrick
in better understanding the ability of our full business,
including equity method investments, to generate liquidity
from operating cash flow.
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 are not necessarily indicative of operating profit
or cash flow from operations as determined under IFRS.
Other companies may calculate EBITDA and adjusted
EBITDA differently.
80
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Barrick Gold Corporation | Financial Report 2018MANAGEMENT’S DISCUSSION AND ANALYSIS Reconciliation of Net Earnings to EBITDA and Adjusted EBITDA
($ millions)
Net earnings (loss)
Income tax expense
Finance costs, net1
Depreciation
EBITDA
Impairment charges (reversals) of long-lived assets2
Acquisition/disposition (gains)/losses3
Foreign currency translation (gains)/losses
Other expense adjustments4
Unrealized gains on non-hedge derivative instruments
Income tax expense, net finance costs1, and depreciation
from equity investees
Adjusted EBITDA
For the years
ended Dec. 31
For the three months
ended Dec. 31
2018
2017
2016
2018
2017
$ (1,435)
1,198
458
1,457
$ 1,678
900
(68)
136
336
1
$ 1,516
1,231
624
1,647
$ 5,018
(212)
(911)
72
51
(1)
$
861
917
725
1,574
$ 4,077
(250)
42
199
(15)
(32)
$
97
$
98
$
63
$ 3,080
$ 4,115
$ 4,084
$ (467)
51
115
434
$ 133
916
(29)
12
17
5
$ (1,165)
776
95
441
147
408
(19)
(16)
261
1
$
$
$
24
$
29
806
$ 1,083
1. Finance costs exclude accretion.
2. Net impairment charges for the current year primarily relate to non-current asset impairments at Lagunas Norte during the third quarter of 2018, and
non-current asset and goodwill impairments at Veladero during the fourth quarter of 2018.
3. Disposition gains for the current year primarily relate to the gain on the sale of a non-core royalty asset at Acacia.
4. Other expense adjustments for the current year primarily relate to the inventory impairment charge at Lagunas Norte, the write-off of a Western Australia
long-term stamp duty receivable, costs associated with the merger with Randgold, and the settlement of a dispute regarding a historical supplier
contract acquired as part of the Equinox acquisition in 2011.
Reconciliation of Segment Income to Segment EBITDA
For the year ended Dec. 31, 2018
($ millions)
Segment Income
Depreciation
Segment EBITDA
($ millions)
Segment Income
Depreciation
Segment EBITDA
($ millions)
Segment Income
Depreciation
Segment EBITDA
Barrick Turquoise
Ridge
Nevada
$ 890
649
$ 126
28
Pueblo
Viejo
(60%)
$ 342
115
$ 1,539
$ 154
$ 457
Barrick
Nevada
Turquoise
Ridge
$ 1,052
793
$ 119
28
Pueblo
Viejo
(60%)
$ 395
143
$ 1,845
$ 147
$ 538
Veladero
Lagunas
Norte
Acacia
(100%)
$ 171
89
$ (13)
46
$ 53
121
$ 174
$ 33
$ 260
For the year ended Dec. 31, 2017
Veladero
$ 173
119
$ 292
Lagunas
Norte
$ 259
68
Acacia
(100%)
$ 191
107
$ 327
$ 298
For the year ended Dec. 31, 2016
Barrick
Nevada
Turquoise
Ridge
$ 771
807
$ 166
27
Pueblo
Viejo
(60%)
$ 528
93
$ 1,578
$ 193
$ 621
Veladero
$ 220
118
$ 338
Lagunas
Norte
$ 260
96
Acacia
(100%)
$ 299
166
$ 356
$ 465
81
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Barrick Gold Corporation | Financial Report 2018MANAGEMENT’S DISCUSSION AND ANALYSIS
Realized Price
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;
n Treatment and refining charges; and
n Export duties.
This measure is intended to enable Management to better
understand the price realized in each reporting period for
gold and copper sales because unrealized mark-to-market
values of non-hedge gold and copper derivatives are
subject to change each period due to changes in market
factors such as market and forward gold and copper prices,
so that prices ultimately realized may differ from those
recorded. The exclusion of such unrealized mark-to-market
gains and losses from the presentation of this performance
measure enables investors to understand performance
based on the realized proceeds of selling gold and
copper production.
The gains and losses on non-hedge derivatives and
receivable balances relate to instruments/balances that
mature in future periods, at which time the gains and losses
Reconciliation of Sales to Realized Price per ounce/pound
will become realized. The amounts of these gains and
losses reflect fair values based on market valuation
assumptions at the end of each period and do not
necessarily represent the amounts that will become
realized on maturity. We also exclude export duties that
are paid upon sale and netted against revenues as well as
treatment and refining charges that are paid to the refiner
on gold and copper concentrate sales that are 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 Company’s past performance and
is a better indicator of its expected performance in
future periods.
The realized price measure is intended to provide
additional information, and does not have any standardized
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.
Gold
Copper
For the years ended Dec. 31
($ millions, except per ounce/pound information in dollars)
2018
2017
2016
2018
2017
2016
Sales
Sales applicable to non-controlling interests
Sales applicable to equity method investments1,2
Realized non-hedge gold/copper derivative (losses) gains
Sales applicable to Pierina3
Treatment and refinement charges
Export duties
$ 6,600
(734)
–
2
(111)
1
(1)
$ 7,631
(810)
–
3
(153)
1
–
$ 7,908
(948)
–
(2)
(112)
16
2
$ 512
–
442
–
–
144
–
$ 608
–
427
–
–
157
–
$ 466
–
293
–
–
167
–
Revenues – as adjusted
$ 5,757
$ 6,672
$ 6,864
$ 1,098
$ 1,192
$ 926
Ounces/pounds sold (000s ounces/millions pounds)3
4,544
5,302
5,503
382
405
405
Realized gold/copper price per ounce/pound4
$ 1,267
$ 1,258
$ 1,248
$ 2.88
$ 2.95
$ 2.29
1 Represents sales of $300 million for the year ended December 31, 2018 (2017: $325 million; 2016: $259 million) applicable to our 50% equity method
investment in Zaldívar and $161 million (2017: $116 million; 2016: $40 million) applicable to our 50% equity method investment in Jabal Sayid.
2. Sales applicable to equity method investments are net of treatment and refinement charges.
3. Figures exclude Pierina from the calculation of realized price per ounce, which is mining incidental ounces as it enters closure.
4. Realized price per ounce/pound may not calculate based on amounts presented in this table due to rounding.
82
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Barrick Gold Corporation | Financial Report 2018MANAGEMENT’S DISCUSSION AND ANALYSIS
Technical Information
The scientific and technical information contained in
this MD&A has been reviewed and approved by Rick Sims,
Registered Member SME, Vice President, Reserves
and Resources of Barrick; Geoffrey Locke, P. Eng.,
Manager, Metallurgy of Barrick; and Mike Tsafaras, P. Eng.,
Manager, Value Realization of Barrick who are each
a “Qualified Person” as defined in National Instrument
43-101 – Standards of Disclosure for Mineral Projects.
Following the completion of the merger with Randgold,
the designation of Qualified Persons for the combined
company will be reviewed and may be updated for
future reporting.
Endnotes
1
2
3
4
5
These are non-GAAP financial performance measures
with no standardized meaning under IFRS and
therefore may not be comparable to similar measures
presented by other issuers. For further information and
a detailed reconciliation of each non-GAAP measure to
the most directly comparable IFRS measure, please
see pages 67 to 82 of this MD&A.
Amount excludes capital leases and includes Acacia
(100% basis).
Includes $146 million cash primarily held at Acacia,
which may not be readily deployed.
Cost of sales applicable to gold per ounce is calculated
using cost of sales applicable to gold on an attributable
basis (removing the non-controlling interest of 40%
Pueblo Viejo, 36.1% Acacia and 40% South Arturo from
cost of sales), divided by attributable gold ounces
sold. Cost of sales applicable to copper per pound is
calculated using cost of sales applicable to copper
including our proportionate share of cost of sales
attributable to equity method investments (Zaldívar and
Jabal Sayid), divided by consolidated copper pounds
sold (including our proportionate share of copper
pounds sold from our equity method investments).
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.
6
Estimated in accordance with National Instrument
43-101 as required by Canadian securities regulatory
authorities. Estimates are as of December 31, 2018,
unless otherwise noted. Proven reserves of
344.6 million tonnes grading 2.15 g/t, representing
23.9 million ounces of gold, and 169.2 million tonnes
grading 0.59%, representing 2.195 billion pounds of
copper. Probable reserves of 0.9 billion tonnes grading
1.33 g/t, representing 38.4 million ounces of gold, and
452.7 million tonnes grading 0.55%, representing
5.454 billion pounds of copper. Measured resources of
405.3 million tonnes grading 0.93 g/t, representing
12.2 million ounces of gold, and 129.7 million tonnes
grading 0.36%, representing 1.034 billion pounds of
copper. Indicated resources of 1.6 billion tonnes
grading 1.52 g/t, representing 76.7 million ounces of
gold, and 585.9 million tonnes grading 0.49%,
representing 6.367 billion pounds of copper. Inferred
resources of 852.9 million tonnes grading 1.22 g/t,
representing 33.5 million ounces of gold, and
141.3 million tonnes grading 0.42%, representing
1.323 billion pounds of copper. Pascua-Lama
measured resources of 42.8 million tonnes grading
1.86 g/t representing 2.6 million ounces of gold, and
indicated resources of 391.7 million tonnes grading
1.49 g/t, representing 18.8 million ounces of gold.
Complete mineral reserve and mineral resource data
for all mines and projects referenced in this MD&A,
including tonnes, grades, and ounces, can be found on
pages 86–93 of Barrick’s Annual Report 2018.
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83
Barrick Gold Corporation | Financial Report 2018MANAGEMENT’S DISCUSSION AND ANALYSIS 7
8
Compared to the continued use of heavy fuel oil and
based on an oil price assumption of $70 per barrel and
a natural gas price assumption of $3.75/MMbtu.
A Tier One Gold Asset is a mine with a stated life in
excess of 10 years with 2017 production of at least
500,000 ounces of gold and 2017 total cash cost per
ounce within the bottom half of Wood Mackenzie’s cost
curve tools (excluding state-owned and privately-owned
mines). For purposes of determining Tier One Gold
Assets, Total cash cost per ounce is based on data
from Wood Mackenzie as of August 31, 2018. The
Wood Mackenzie calculation of Total cash cost per
ounce may not be identical to the manner in which
Barrick calculates comparable measures. Total cash
cost per ounce is a non-GAAP financial performance
measure with no standardized meaning under IFRS
and therefore may not be comparable to similar
measures presented by other issuers. Total cash cost
per ounce should not be considered by investors as an
alternative to operating profit, net profit attributable to
shareholders, or to other IFRS measures. Barrick
believes that Total cash cost per ounce is a useful
indicator for investors and management of a mining
company’s performance as it provides an indication of
a company’s profitability and efficiency, the trends in
cash costs as the company’s operations mature, and a
benchmark of performance to allow for comparison
against other companies. Wood Mackenzie is an
independent third party research and consultancy firm
that provides data for, among others, the metals and
mining industry. Wood Mackenzie does not have any
affiliation to Barrick.
9
Estimated in accordance with National Instrument
43-101 as required by Canadian securities regulatory
authorities. Estimates are as of December 31, 2017,
unless otherwise noted. Proven reserves of
398.2 million tonnes grading 1.91 g/t, representing
24.4 million ounces of gold, and 170.7 million tonnes
grading 0.556%, representing 2.095 billion pounds of
copper. Probable reserves of 0.9 billion tonnes grading
1.39 g/t, representing 40.0 million ounces of gold,
and 456.7 million tonnes grading 0.592%, representing
5.956 billion pounds of copper. Measured resources
of 400.0 million tonnes grading 0.92 g/t, representing
11.8 million ounces of gold, and 90.9 million tonnes
grading 0.401%, representing 803.1 million pounds of
copper. Indicated resources of 1.6 billion tonnes
grading 1.54 g/t, representing 76.8 million ounces of
gold, and 581.2 million tonnes grading 0.506%,
representing 6.484 billion pounds of copper. Inferred
resources of 795.4 million tonnes grading 1.21 g/t,
representing 30.8 million ounces of gold, and
125.4 million tonnes grading 0.482%, representing
1.331 billion pounds of copper. Pascua-Lama
measured resources of 42.8 million tonnes grading
1.86 g/t representing 2.6 ounces of gold, and
indicated resources of 391.7 tonnes grading 1.49 g/t,
representing 18.8 ounces of gold. Complete 2017
mineral reserve and mineral resource data for all mines
and projects referenced in this MD&A, including tonnes,
grades, and ounces, can be found on pages 30–39 of
Barrick’s Annual Information Form/Form 40-F for the
year ended December 31, 2017 on file with Canadian
provincial securities regulatory authorities and the
U.S. Securities and Exchange Commission.
10 Assets, which in the opinion of Barrick, have the
potential to deliver significant unrealized value in
the future.
11 Currently consists of Barrick’s Lumwana mine and
Zaldívar and Jabal Sayid copper joint ventures.
84
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Barrick Gold Corporation | Financial Report 2018MANAGEMENT’S DISCUSSION AND ANALYSIS Glossary of Technical Terms
ALL-IN SUSTAINING COSTS: A measure of cost per ounce/pound
for gold/copper. Refer to page 70 of this MD&A for further
information and a reconciliation of the measure.
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.
C1 CASH COSTS: A measure of cost per pound for copper.
Refer to page 78 of this MD&A for further information and a
reconciliation of the measure.
CASH COSTS: A measure of cost per ounce for gold. Refer
to page 70 of this MD&A for further information and a
reconciliation of the measure.
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
loss of ounces not able to be recovered by the applicable
metallurgical process.
DEVELOPMENT: Work carried out for the purpose of gaining
access to an ore body. 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: drilling closer spaced holes in 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.
FREE CASH FLOW: A measure that reflects our ability to
generate cash flow. Refer to page 68 of this MD&A for
a definition.
GRADE: The amount of metal in each tonne of ore, expressed
as grams per tonne for precious metals and as a percentage
for most other metals.
Cut-off grade: the minimum metal grade at which an ore
body can be economically mined (used in the calculation
of ore reserves).
Mill-head grade: metal content of per tonne of ore going into
a mill for processing. (g/t)
Reserve grade: estimated metal content of an ore body, based
on reserve calculations.
HEAP LEACHING: A process whereby gold/copper is extracted
by “heaping” broken ore on sloping impermeable pads
and continually applying to the heaps a weak cyanide
solution/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.
MERRILL-CROWE PROCESS: A separation technique for
removing gold from a cyanide solution.
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.
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 ounce is a unit of measure used for weighing
gold at 999.9 parts per thousand purity and is equivalent
to 31.1035g.
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 valuable material recovered compared to the total
material originally contained.
REFINING: The final stage of metal production in which
impurities are removed from the molten metal.
STRIPPING: Removal of overburden or waste rock overlying
an ore body in preparation for mining by open pit methods.
TAILINGS: The material that remains after all economically
and technically recoverable precious metals have been
removed from the ore during processing.
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Barrick Gold Corporation | Financial Report 2018MANAGEMENT’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 sufficient to
86
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 2018MINERAL RESERVES AND MINERAL RESOURCES Gold Mineral Reserves1,2
As at December 31, 2018
Based on attributable ounces
North America
Goldstrike Open Pit
Goldstrike Underground
Goldstrike Property Total
Pueblo Viejo (60.00%)
Cortez
Goldrush
Turquoise Ridge (75.00%)
South Arturo (60.00%)
Hemlo
Golden Sunlight
South America
Norte Abierto (50.00%)3
Veladero (50.00%)4
Lagunas Norte
Australia Pacific
Porgera (47.50%)
Kalgoorlie (50.00%)
Africa
Bulyanhulu (63.90%)
North Mara (63.90%)
Buzwagi (63.90%)
Other
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)
50,281
5,233
55,514
61,630
17,642
–
9,018
2,257
1,425
263
114,851
15,508
23,630
1,170
20,825
1,542
1,461
6,817
11,087
2.85
11.32
3.65
2.56
2.01
–
13.62
3.20
4.17
1.06
0.65
0.66
2.50
7.90
1.23
11.01
4.51
0.90
0.23
4,609
1,904
6,513
5,071
1,138
–
3,950
232
191
9
2,391
327
1,896
297
825
546
212
197
82
8,706
3,675
12,381
15,111
127,412
6,399
7,373
2,006
22,677
103
483,950
91,068
21,256
3.78
8.07
5.05
3.05
1.86
9.69
12.16
2.79
2.38
3.32
0.59
0.76
3.01
1,058
954
2,012
1,481
7,599
1,993
2,883
180
1,733
11
9,232
2,211
2,056
58,987
8,908
67,895
76,741
145,054
6,399
16,391
4,263
24,102
366
598,801
106,576
44,886
2.99
9.98
3.91
2.66
1.87
9.69
12.97
3.01
2.48
1.70
5,667
2,858
8,525
6,552
8,737
1,993
6,833
412
1,924
20
0.60 11,623
2,538
0.74
3,952
2.74
12,074
75,563
4.64
1.16
1,803
2,826
13,244
96,388
4.93
1.18
2,100
3,651
5,063
15,312
–
2,469
7.38
2.40
–
0.28
1,201
1,183
–
22
6,605
16,773
6,817
13,556
8.23
2.59
0.90
0.24
1,747
1,395
197
104
Total
344,640
2.15 23,877
900,217
1.33 38,426
1,244,857
1.56 62,303
Copper Mineral Reserves1
As at December 31, 2018
Proven
Probable
Total
Based on attributable pounds
Zaldívar (50.00%)
Lumwana
Jabal Sayid (50.00%)
Tonnes
(000s)
Contained
lbs
(millions)
Grade
(%)
Tonnes
(000s)
Contained
lbs
(millions)
Grade
(%)
Tonnes
(000s)
Contained
lbs
(millions)
Grade
(%)
126,390
31,707
11,087
0.461 1,283.9
317.4
0.454
593.5
2.428
107,352
342,889
2,469
0.467 1,105.0
0.560 4,230.1
118.6
2.178
233,742
374,596
13,556
0.464 2,388.9
0.551 4,547.6
712.1
2.383
Total
169,184
0.588 2,194.8
452,710
0.546 5,453.7
621,894
0.558 7,648.6
1. See accompanying endnote #1.
2. See accompanying endnote #2.
3. See accompanying endnote #3.
4. See accompanying endnote #4.
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Barrick Gold Corporation | Financial Report 2018MINERAL RESERVES AND MINERAL RESOURCES
Gold Mineral Resources1,2
As at December 31, 2018
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
Goldrush3
Turquoise Ridge (75.00%)
South Arturo (60.00%)
Hemlo
Golden Sunlight
Donlin Gold (50.00%)
South America
Norte Abierto (50.00%)4
Pascua-Lama
Veladero (50.00%)5
Lagunas Norte
Alturas
Australia Pacific
Porgera (47.50%)
Kalgoorlie (50.00%)
Africa
Bulyanhulu (63.90%)
North Mara (63.90%)
Buzwagi (63.90%)
Other
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)
1,243
2,329
3,572
7,613
3,353
–
2,983
3,596
592
120
3,865
321,528
42,809
3,361
1,136
–
50
5,343
362
1,247
–
3,790
1.40
9.60
6.75
2.39
1.84
–
7.70
1.06
3.10
1.56
2.52
0.56
1.86
0.50
1.07
–
4.98
1.42
13.49
2.29
–
3.59
56
719
775
585
198
–
738
122
59
6
1,768
2,824
4,592
93,739
53,374
30,942
2,439
10,229
36,878
2,777
313 266,803
5,766 528,596
2,564 391,734
67,611
15,814
–
54
39
–
59
1.04
798
8.79
857
5.80
7,442
2.47
2,971
1.73
9,353
9.40
645
8.23
342
1.04
1,515
1.28
1.77
158
2.24 19,190
0.44
7,540
1.49 18,783
1,263
0.58
576
1.13
–
–
115
1,517
1,632
8,027
3,169
9,353
1,383
464
1,574
164
19,503
13,306
21,347
1,317
615
–
2.18
214
8.91
1,603
8.11
1,817
2.43
27,598
1.67
13,158
11,867
9.31
1,872 11.93
1.31
1,140
3.37
6,023
1.63
1,604
2.02
46,108
346,770
15,400
35,872
1,546
261,265
0.35
1.74
0.48
1.35
1.06
15
459
474
2,152
705
3,552
718
48
653
84
2,997
3,916
863
555
67
8,865
8
244
157
92
–
438
11,667
25,455
4.73
1.51
1,773
1,235
1,781
1,479
11,329
9,402
3.99
2.33
1,455
704
4,720
6,901
2,878
10,902
7.97
2.59
–
3.33
1,210
574
96
1,166
1,367
666
96
1,604
9,587 11.76
4.87
2,835
0.77
31,898
1.73
15,764
3,625
444
790
878
Total
405,320
0.93 12,158 1,568,051
1.52 76,689
88,847
852,855
1.22 33,545
Copper Mineral Resources1,2
As at December 31, 2018
Measured (M)
Indicated (I)
(M) + (I)
Inferred
Based on attributable pounds
Zaldívar (50.00%)
Lumwana
Jabal Sayid (50.00%)
Tonnes
(000s)
Contained
lbs
(millions)
Grade
(%)
Tonnes
(000s)
Contained
lbs
(millions)
Grade
(%)
Contained
lbs
(millions)
101,841
26,755
1,127
0.342
0.384
1.627
767.2
51,856
226.2 532,408
1,603
40.4
0.333
380.3
0.503 5,909.5
77.0
2.178
1,147.4
6,135.8
117.4
Tonnes Grade
(%)
(000s)
Contained
lbs
(millions)
21,875 0.255
122.9
119,060 0.452 1,187.2
13.0
357 1.646
Total
129,723
0.361 1,033.8 585,867
0.493 6,366.7
7,400.6
141,292 0.425 1,323.1
1. Resources which are not reserves do not have demonstrated economic viability.
2. See accompanying endnote #1.
3. See accompanying endnote #5.
4. See accompanying endnote #3.
5. See accompanying endnote #4.
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Barrick Gold Corporation | Financial Report 2018MINERAL RESERVES AND MINERAL RESOURCES
Summary Gold Mineral Reserves and Mineral Resources1,2,3,4
For the years ended December 31
2018
2017
Based on attributable ounces
North America
Goldstrike Open Pit
Goldstrike Underground
Goldstrike Property Total
Pueblo Viejo (60.00%)
Cortez
Goldrush
Turquoise Ridge (75.00%)
South Arturo (60.00%)
Hemlo
Golden Sunlight
Donlin Gold (50.00%)
South America
Norte Abierto (50.00%)5
Pascua-Lama
Veladero (50.00%)6
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)
1. Resources which are not reserves do not have demonstrated economic viability.
2. See accompanying endnote #1.
3. Measured plus indicated resources.
4. See accompanying endnote #2.
5. See accompanying endnote #3.
6. See accompanying endnote #4.
Tonnes
(000s)
Grade Ounces
(000s)
(gm/t)
Tonnes
(000s)
Grade Ounces
(000s)
(gm/t)
58,987
3,011
8,908
5,153
67,895
8,164
76,741
101,352
145,054
56,727
6,399
30,942
16,391
5,422
4,263
13,825
24,102
37,470
366
2,897
–
270,668
598,801
850,124
–
434,543
106,576
70,972
44,886
16,950
2.99
1.19
9.98
9.16
3.91
6.22
2.66
2.46
1.87
1.74
9.69
9.40
12.97
7.93
3.01
1.04
2.48
1.31
1.70
1.76
–
5,667
115
2,858
1,517
8,525
1,632
6,552
8,027
8,737
3,169
1,993
9,353
6,833
1,383
412
464
1,924
1,574
20
164
–
2.24 19,503
–
0.60 11,623
0.49 13,306
–
1.53 21,347
2,538
0.74
1,317
0.58
3,952
2.74
615
1.13
59,211
5,604
8,581
3,898
67,792
9,502
81,359
101,686
167,920
31,423
5,671
31,519
11,771
5,106
3,824
11,292
24,928
41,339
452
3,134
–
270,668
598,801
850,124
–
434,543
113,914
70,095
55,430
30,942
5,654
2.97
505
2.80
2,765
10.02
1,077
8.59
8,419
3.86
1,582
5.18
7,224
2.76
8,054
2.46
1.87 10,086
1,868
1.85
1,481
8.12
9,398
9.27
5,878
15.53
1,506
9.17
365
2.97
413
1.14
1,774
2.21
1,858
1.40
30
2.06
179
1.78
–
–
2.24 19,503
–
0.60 11,623
0.49 13,306
–
1.53 21,347
2,816
0.77
1,276
0.57
4,005
2.25
950
0.95
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Barrick Gold Corporation | Financial Report 2018MINERAL RESERVES AND MINERAL RESOURCES
Summary Gold Mineral Reserves and Mineral Resources1,2,3,4
For the years ended December 31
2018
2017
Based on attributable ounces
Australia Pacific
Porgera (47.50%)
Kalgoorlie (50.00%)
Africa
Bulyanhulu (63.90%)
North Mara (63.90%)
Buzwagi (63.90%)
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)
Tonnes
(000s)
Grade Ounces
(000s)
(gm/t)
Tonnes
(000s)
Grade Ounces
(000s)
(gm/t)
13,244
11,717
96,388
30,798
6,605
5,082
16,773
8,148
6,817
2,878
13,556
14,692
4.93
4.73
1.18
1.49
8.23
8.37
2.59
2.54
0.90
1.04
0.24
3.40
2,100
1,781
3,651
1,479
1,747
1,367
1,395
666
197
96
104
1,604
13,255
12,465
99,060
15,286
12,580
9,208
16,926
7,813
9,108
2,891
11,838
15,140
4.78
4.62
1.21
1.16
7.42
9.04
2.73
2.75
0.92
1.04
0.23
2.95
2,038
1,853
3,858
571
3,001
2,676
1,488
690
269
97
89
1,438
1,244,857
1,973,371
1.56 62,303
1.40 88,847
1,294,629
1,954,176
1.55 64,444
1.41 88,565
1. Resources which are not reserves do not have demonstrated economic viability.
2. See accompanying endnote #1.
3. Measured plus indicated resources.
4. See accompanying endnote #2.
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Barrick Gold Corporation | Financial Report 2018MINERAL RESERVES AND MINERAL RESOURCES
Contained Silver Within Reported Gold Reserves1
For the year ended
December 31, 2018
In proven
gold reserves
In probable
gold reserves
Total
Based on attributable ounces
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)
North America
Pueblo Viejo (60.00%)
South America
Norte Abierto (50.00%)2 114,851
Lagunas Norte
23,630
Veladero (50.00%)3
Africa
Bulyanhulu (63.90%)4
1,542
61,630 17.59
1.91
5.47
9,175 12.79
34,857
15,111 14.81
7,195
76,741 17.04
42,052
76.9%
7,043
4,152
3,774
1.43
483,950
21,256
7.01
91,068 14.05
22,300
4,788
41,131
598,801
44,886
1.52
6.19
100,243 13.93
29,343
8,940
44.905
69.0%
35.6%
9.4%
8.90
441
3,336
6.19
664
4,878
7.05
1,105
65.0%
Total
210,828
7.42
50,267
614,721
3.85
76,078
825,549
4.76 126,345
48.1%
1. Silver is accounted for as a by-product credit against reported or projected gold production costs.
2. See accompanying endnote #3.
3. See accompanying endnote #4.
4. See accompanying endnote #6.
Contained Copper Within Reported Gold Reserves1
For the year ended
December 31, 2018
In proven
gold reserves
In probable
gold reserves
Based on attributable pounds
(000s)
Tonnes Grade
Contained
lbs
(%) (millions)
Tonnes Grade
(%)
(000s)
Contained
lbs
(millions)
Total
Tonnes Grade
(%)
(000s)
Contained Process
lbs recovery
%
(millions)
South America
Norte Abierto (50.00%)2 114,851
Africa
Bulyanhulu (63.90%)3
Buzwagi (63.90%)
–
0.190
480.9
483,950
0.226
2,408.8
598,801
0.219
2,889.7
87.4%
1,542 0.528
–
17.9
–
3,336 0.555
–
–
40.8
–
4,878 0.547
–
–
58.8
–
90.0%
–
Total
116,393 0.194
498.8
487,286 0.228
2,449.7
603,679 0.222
2,948.5
87.5%
1. Copper is accounted for as a by-product credit against reported or projected gold production costs.
2. See accompanying endnote #3.
3. See accompanying endnote #6.
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Barrick Gold Corporation | Financial Report 2018MINERAL RESERVES AND MINERAL RESOURCES
Contained Silver Within Reported Gold Resources1
For the year ended December 31, 2018
Measured (M)
Indicated (I)
(M) + (I)
Inferred
Based on attributable ounces
North America
Pueblo Viejo (60.00%)
South America
Norte Abierto (50.00%)2
Pascua-Lama
Lagunas Norte
Veladero (50.00%)3
Africa
Bulyanhulu (63.90%)
Tonnes
(000s)
Contained
ounces
(000s)
Grade
(gm/t)
Tonnes
(000s)
Contained
ounces
(000s)
Grade
(gm/t)
Ounces
(000s)
Tonnes
(000s)
Contained
ounces
(000s)
Grade
(gm/t)
7,613
14.28
3,496
93,739
13.60 40,978
44,474
27,598
10.80
9,584
321,528
42,809
1,136
3,361
1.20 12,417 528,596
57.21 78,747 391,734
15,814
103
67,611
962
2.82
8.90
1.17 19,804
52.22 657,718
1,371
2.70
11.92 25,918
32,221 346,770
15,400
1,546
35,872
736,465
1,474
26,880
1.00
17.83
5.23
11.64
11,162
8,830
260
13,427
362
10.40
121
4,720
5.38
816
937
9,587
9.01
2,778
Total
376,809
7.91 95,846 1,102,214
21.07 746,605
842,451 436,773
3.28
46,041
1. Resources which are not reserves do not have demonstrated economic viability.
2. See accompanying endnote #3.
3. See accompanying endnote #4.
Contained Copper Within Reported Gold Resources1,2
For the year ended December 31, 2018
In measured (M)
gold resources
In indicated (I)
gold resources
(M) + (I)
Inferred
Based on attributable pounds
South America
Norte Abierto (50.00%)3
Pascua-Lama
Africa
Bulyanhulu (63.90%)
Buzwagi (63.90%)
Tonnes
(000s)
Contained
lbs
(millions)
Grade
(%)
Tonnes
(000s)
Contained
lbs
(millions)
Grade
(%)
Contained
lbs
(millions)
Tonnes
(000s)
Contained
lbs
(millions)
Grade
(%)
288,578
42,809
0.226 1,438.5 500,796
391,734
95.7
0.101
0.176 1,940.2
704.6
0.082
3,378.6 345,520
15,400
800.3
0.171 1,305.5
16.5
0.049
362
0.609
–
–
4.9
–
4,720
2,878
0.337
0.109
35.1
6.9
40.0
9,587
6.9
31,898
0.618
0.081
130.6
56.9
Total
331,749
0.210 1,539.0 900,128
0.135 2,686.8
4,225.8 402,405
0.170 1,509.6
1. Resources which are not reserves do not have demonstrated economic viability.
2. See accompanying endnote #7.
3. See accompanying endnote #3.
Nickel Mineral Resources1
For the year ended December 31, 2018
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)
Contained
lbs
(millions)
Grade
(%)
6,905
2.490
379.0
11,705
2.720
702.0
1,081.0
10,500
2.596
601.0
1. Resources which are not reserves do not have demonstrated economic viability.
92
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Barrick Gold Corporation | Financial Report 2018MINERAL RESERVES AND MINERAL RESOURCES
Mineral Reserves and Resources Endnotes
1. Mineral reserves (“reserves”) and mineral resources (“resources”) have been estimated as at December 31, 2018 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 currently recognize such terms. Canadian standards differ significantly from the current 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. However, the SEC has adopted amendments to its disclosure rules to modernize
the mineral property disclosure requirements for issuers whose securities are registered with the SEC under the Securities and Exchange Act of 1934, as
amended. These amendments will become effective February 25, 2019, and will replace the historical property disclosure requirements for mining registrants
in SEC Industry Guide 7, which will be rescinded as of that date. As a result of the adoption of the SEC Modernization Rules, the SEC will recognize estimates
of “measured”, “indicated” and “inferred” mineral resources. 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, Vice President, Resources and Reserves, of
Barrick, Geoffrey Locke, Manager, Metallurgy, of Barrick and Mike Tsafaras, P. Eng., Manager, Value Realization of Barrick, of Barrick. Except as noted below,
reserves have been estimated based on an assumed gold price of US$1,200 per ounce, an assumed silver price of US$16.50 per ounce, and an assumed
copper price of US$2.75 per pound and long-term average exchange rates of 1.25 CAD/US$ and 0.75 US$/AUD. Reserves at Kalgoorlie assumed a gold
price of AUD$1,600 and Bulyanhulu, North Mara and Buzwagi assumed a gold price of US$1,200. Reserve estimates 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. Verification procedures include industry-standard quality
control practices. Resources as at December 31, 2018 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 estimating Barrick’s reserves and resources, see Barrick’s most recent Annual Information Form/Form 40-F on file with
Canadian provincial securities regulatory authorities and the U.S. Securities and Exchange Commission.
2. In confirming our annual reserves for each of our mineral properties, projects, and operations, we conduct a reserve test on December 31 of each year to
verify that the future undiscounted cash flow from reserves is positive. The cash flow ignores all sunk costs and only considers future operating and closure
expenses as well as any future capital costs.
3. On June 9, 2017, the Company sold 25% of its interest in Cerro Casale to Goldcorp Inc. (“Goldcorp”). Goldcorp concurrently purchased Kinross Gold
Corporation’s 25% interest in Cerro Casale, resulting in Barrick and Goldcorp each holding a 50% interest in the joint operation. In connection with this
transaction, Goldcorp also acquired the Caspiche Project from Exeter Resource Corporation, which was also contributed to the joint operation. Moving
forward, the joint venture will be referred to as the Norte Abierto project, which includes the Cerro Casale, Caspiche and Luciano deposits. For additional
information, see page 121 of Barrick’s Annual Report 2018.
4. On June 30, 2017, the Company sold 50 percent of its interest in the Veladero mine to Shandong Gold Group Co., Ltd. For additional information regarding
this matter, see page 120 of Barrick’s Annual Report 2018.
5. Inferred resource contains approximately 1.2 million tonnes, containing approximately 0.7 million ounces at 18.58g/t, attributable to Fourmile.
6. Silver and copper probable reserve tonnage at the Bulyanhulu mine is less than the gold probable reserve tonnage because the gold reserve includes
1.7 million tonnes of tailings material which are being separately reprocessed for recovery of gold only.
7. Contained copper has been removed from Pueblo Viejo’s reserves and resources as at December 31, 2018, following a decision to suspend marginally
economic copper production at the mine. The change is not expected to have any material impact on Pueblo Viejo’s cash flows. For additional information
on the contained copper reported for Pueblo Viejo as at December 31, 2017, see pages 34-35 of Barrick’s Annual Information Form/Form 40-F for the year
ended December 31, 2017, on file with Canadian provincial securities regulatory authorities and the U.S. Securities and Exchange Commission.
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93
Barrick Gold Corporation | Financial Report 2018MINERAL 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 Professional
Accountants. Their report outlines the scope of their examination and opinion on the consolidated financial statements.
Graham Shuttleworth
Senior Executive Vice President
and Chief Financial Officer
Toronto, Canada
February 12, 2019
94
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MANAGEMENT’S RESPONSIBILITYBarrick Gold Corporation | Financial Report 2018 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, 2018. Barrick’s Management used the Internal Control – Integrated Framework (2013) as issued by the
Committee of Sponsoring Organizations of the Treadway Commission (COSO) 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, 2018.
The effectiveness of the Company’s internal control over financial reporting as at December 31, 2018 has been
audited by PricewaterhouseCoopers LLP, Chartered Professional Accountants, as stated in their report which is located
on pages 96–97 of Barrick’s 2018 Annual Financial Statements.
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95
Barrick Gold Corporation | Financial Report 2018 INDEPENDENT AUDITOR’S REPORT
Independent Auditor’s Report
Independent Auditor’s Report
To the Board of Directors and Shareholders of Barrick Gold Corporation
Opinions on the Financial Statements and Internal Control over Financial Reporting
We have audited the accompanying consolidated balance sheets of Barrick Gold Corporation and its subsidiaries, (together,
the company) as of December 31, 2018 and 2017, and the related consolidated statements of income, comprehensive
income, cash flow and changes in equity for the years then ended, including the related notes (collectively referred to as
the consolidated financial statements). We also have audited the company’s internal control over financial reporting
as of December 31, 2018, based on criteria established in Internal Control – Integrated Framework (2013) issued by the
Committee of Sponsoring Organizations of the Treadway Commission (COSO).
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the
financial position of the company as of December 31, 2018 and 2017, and its financial performance and its cash flows for
the years then ended in conformity with International Financial Reporting Standards as issued by the International
Accounting Standards Board (IFRS). Also in our opinion, the company maintained, in all material respects, effective internal
control over financial reporting as of December 31, 2018, based on criteria established in Internal Control – Integrated
Framework (2013) issued by the COSO.
Basis for Opinions
The company’s management is responsible for these consolidated financial statements, 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. Our responsibility is to
express opinions on the company’s consolidated financial statements and on the company’s internal control over financial
reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight
Board (United States) (PCAOB) and are required to be independent with respect to the company in accordance with
the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and
the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and
perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material
misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained
in all material respects.
96
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Barrick Gold Corporation | Financial Report 2018 Our audits of the consolidated financial statements included performing procedures to assess the risks of material
misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond
to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the
consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates
made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of
internal control over financial reporting included obtaining an understanding of internal control over financial reporting,
assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness
of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered
necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.
Definition and Limitations 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.
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.
Chartered Professional Accountants, Licensed Public Accountants
Toronto, Canada
February 12, 2019
We have served as the company’s auditor since at least 1982. We have not been able to determine the specific year we
began serving as auditor of the company.
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97
INDEPENDENT AUDITOR’S REPORTBarrick Gold Corporation | Financial Report 2018 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 11)
Exploration, evaluation and project expenses (notes 5 and 8)
Impairment charges (reversals) (note 10)
Loss on currency translation (note 9b)
Closed mine rehabilitation (note 27b)
Income from equity investees (note 16)
Gain on non-hedge derivatives (note 25e)
Other expense (income) (note 9a)
Income before finance items and income taxes
Finance costs, net (note 14)
Loss (income) before income taxes
Income tax expense (note 12)
Net (loss) income
Attributable to:
Equity holders of Barrick Gold Corporation
Non-controlling interests (note 32)
2018
2017
$ 7,243
$ 8,374
5,220
265
383
900
136
(13)
(46)
–
90
308
(545)
(237)
(1,198)
5,300
248
354
(212)
72
55
(76)
(6)
(799)
3,438
(691)
2,747
(1,231)
$ (1,435)
$ 1,516
$ (1,545)
$
110
$ 1,438
78
$
Earnings (loss) per share data attributable to the equity holders of Barrick Gold Corporation (note 13)
Net (loss) income
Basic
Diluted
$
$
(1.32)
(1.32)
$
$
1.23
1.23
The accompanying notes are an integral part of these consolidated financial statements.
98
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FINANCIAL STATEMENTSBarrick Gold Corporation | Financial Report 2018
Consolidated Statements
of Comprehensive Income
Barrick Gold Corporation
For the years ended December 31 (in millions of United States dollars)
Net (loss) income
Other comprehensive income (loss), net of taxes
Items that may be reclassified subsequently to profit or loss:
Unrealized gains (losses) on derivatives designated as cash flow hedges, net of tax ($12) and $3
Realized (gains) losses on derivatives designated as cash flow hedges, net of tax $3 and ($9)
Currency translation adjustments, net of tax $nil and $nil
Items that will not be reclassified to profit or loss:
Actuarial gain (loss) on post-employment benefit obligations, net of tax $nil and ($6)
Net change on equity investments, net of tax $nil and $nil
Total other comprehensive income
Total comprehensive (loss) income
Attributable to:
Equity holders of Barrick Gold Corporation
Non-controlling interests
The accompanying notes are an integral part of these consolidated financial statements.
2018
2017
$ (1,435)
$ 1,516
8
(2)
(9)
(2)
16
11
(16)
23
9
18
4
38
$ (1,424)
$ 1,554
$ (1,534)
$
110
$ 1,476
78
$
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99
FINANCIAL STATEMENTSBarrick Gold Corporation | Financial Report 2018
Consolidated Statements of Cash Flow
Barrick Gold Corporation
For the years ended December 31 (in millions of United States dollars)
Operating Activities
Net (loss) income
Adjustments for the following items:
Depreciation
Finance costs (note 14)
Impairment charges (reversals) (note 10)
Income tax expense (note 12)
Loss on currency translation (note 9b)
Gain on sale of non-current assets/investments (note 9a)
Change in working capital (note 15)
Other operating activities (note 15)
Operating cash flows before interest and income taxes
Interest paid
Income taxes paid
Net cash provided by operating activities
Investing Activities
Property, plant and equipment
Capital expenditures (note 5)
Sales proceeds
Divestitures (note 4)
Investment purchases
Net funds (invested) received from equity method investments
Net cash used in investing activities
Financing Activities
Debt (note 25b)
Repayments
Dividends (note 31)
Funding from non-controlling interests (note 32)
Disbursements to non-controlling interests (note 32)
Debt extinguishment costs
Net cash used in financing activities
Effect of exchange rate changes on cash and equivalents
Net decrease in cash and equivalents
Cash and equivalents at beginning of year (note 25a)
Cash and equivalents at the end of year
The accompanying notes are an integral part of these consolidated financial statements.
2018
2017
$ (1,435)
$ 1,516
1,457
560
900
1,198
136
(68)
(173)
(62)
2,513
(350)
(398)
1,765
(1,400)
70
–
(159)
(5)
(1,494)
(687)
(125)
24
(108)
(29)
(925)
(9)
(663)
2,234
1,647
705
(212)
1,231
72
(911)
(590)
(319)
3,139
(425)
(649)
2,065
(1,396)
28
990
(7)
48
(337)
(1,533)
(125)
13
(139)
(102)
(1,886)
3
(155)
2,389
$ 1,571
$ 2,234
100
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FINANCIAL STATEMENTSBarrick Gold Corporation | Financial Report 2018
Consolidated Balance Sheets
Barrick Gold Corporation
(in millions of United States dollars)
Assets
Current assets
Cash and equivalents (note 25a)
Accounts receivable (note 18)
Inventories (note 17)
Other current assets (note 18)
Total current assets
Non-current assets
Non-current portion of inventory (note 17)
Equity in investees (note 16)
Property, plant and equipment (note 19)
Intangible assets (note 20a)
Goodwill (note 20b)
Deferred income tax assets (note 30)
Other assets (note 22)
Total assets
Liabilities and Equity
Current liabilities
Accounts payable (note 23)
Debt (note 25b)
Current income tax liabilities
Other current liabilities (note 24)
Total current liabilities
Non-current liabilities
Debt (note 25b)
Provisions (note 27)
Deferred income tax liabilities (note 30)
Other liabilities (note 29)
Total liabilities
Equity
Capital stock (note 31)
Deficit
Accumulated other comprehensive loss
Other
Total equity attributable to Barrick Gold Corporation shareholders
Non-controlling interests (note 32)
Total equity
Contingencies and commitments (notes 2, 17, 19 and 36)
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
J. Brett Harvey, Director
As at
As at
December 31, December 31,
2017
2018
$ 1,571
248
1,852
307
3,978
1,696
1,234
12,826
227
1,176
259
1,235
$ 22,631
$ 1,101
43
203
321
1,668
5,695
2,904
1,236
1,743
13,246
20,883
(13,453)
(158)
321
7,593
1,792
9,385
$ 2,234
239
1,890
321
4,684
1,681
1,213
13,806
255
1,330
1,069
1,270
$ 25,308
$ 1,059
59
298
331
1,747
6,364
3,141
1,245
1,744
14,241
20,893
(11,759)
(169)
321
9,286
1,781
11,067
$ 22,631
$ 25,308
101
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FINANCIAL STATEMENTSBarrick Gold Corporation | Financial Report 2018
Consolidated Statements
of Changes in Equity
Attributable to equity holders of the Company
Barrick Gold Corporation
(in millions of United States dollars)
Common Shares
Retained
Accumulated
other
earnings comprehensive
(in thousands) Capital stock
(deficit)
income (loss)1 Other2
Total equity
attributable to
shareholders
Non-
controlling
interests
Total
equity
At December 31, 2017
1,166,577
$ 20,893 $ (11,759)
$ (169) $ 321
$ 9,286
$ 1,781 $ 11,067
Impact of adopting IFRS 15 on
January 1, 2018 (note 2y)
–
–
64
–
–
64
–
64
At January 1, 2018 (restated)
1,166,577
$ 20,893 $ (11,695)
$ (169) $ 321
$ 9,350
$ 1,781 $ 11,131
Net (loss) income
Total other comprehensive income
Total comprehensive (loss) income
Transactions with owners
Dividends
Issued on exercise of stock options
Dividend reinvestment plan
Funding from non-controlling interests
Other decrease in non-controlling interests
Other3
–
–
–
–
20
1,250
–
–
–
–
–
(1,545)
–
–
11
$
– $ (1,545)
$
11 $
(199)
–
(14)
–
–
–
–
14
–
–
(24)
–
–
–
–
–
–
Total transactions with owners
1,270
$
(10) $
(213)
$
– $
–
–
–
–
–
–
–
–
–
–
(1,545)
110
(1,435)
11
–
11
$ (1,534) $ 110 $ (1,424)
(199)
–
–
–
–
(24)
–
–
–
24
(123)
–
(199)
–
–
24
(123)
(24)
$
(223) $
(99) $
(322)
At December 31, 2018
1,167,847
$ 20,883 $ (13,453)
$ (158) $ 321
$ 7,593
$ 1,792 $ 9,385
At January 1, 2017
1,165,574
$ 20,877 $ (13,074)
$ (189) $ 321
$ 7,935
$ 2,378 $ 10,313
Net Income
Total other comprehensive income
Total comprehensive income
Transactions with owners
Dividends
Dividend reinvestment plan
Decrease in non-controlling
interests (note 4d)
Funding from non-controlling interests
Other decrease in non-controlling interests
–
–
–
–
1,003
–
–
–
–
–
1,438
18
–
20
$
– $ 1,456
$ 20 $
–
16
(125)
(16)
–
–
–
–
–
–
–
–
–
–
–
Total transactions with owners
1,003
$
16 $
(141)
$
– $
–
–
–
–
–
–
–
–
–
1,438
38
78
–
1,516
38
$ 1,476
$
78 $ 1,554
(125)
–
–
–
–
–
–
(493)
13
(195)
(125)
–
(493)
13
(195)
$
(125) $ (675) $
(800)
At December 31, 2017
1,166,577
$ 20,893 $ (11,759)
$ (169) $ 321
$ 9,286
$ 1,781 $ 11,067
1. Includes cumulative translation adjustments as at December 31, 2018: $82 million loss (2017: $73 million loss).
2. Includes additional paid-in capital as at December 31, 2018: $283 million (December 31, 2017: $283 million) and convertible borrowings – equity component
as at December 31, 2018: $38 million (December 31, 2017: $38 million).
3. Represents a reversal of a previously recognized deferred tax asset, which was originally recognized in capital stock.
The accompanying notes are an integral part of these consolidated financial statements.
102
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FINANCIAL STATEMENTSBarrick Gold Corporation | Financial Report 2018
Notes to Consolidated Financial Statements
Barrick Gold Corporation. Tabular dollar amounts in millions of United States dollars, unless otherwise shown. References to A$, ARS,
C$, CLP, DOP, EUR, GBP, PGK, SAR, TZS, ZAR, and ZMW are to Australian dollars, Argentine pesos, Canadian dollars, Chilean pesos,
Dominican pesos, Euros, British pound sterling, Papua New Guinea kina, Saudi riyal, Tanzanian shillings, South African rand, and
Zambian kwacha, respectively.
1 Corporate Information
Barrick Gold Corporation (“Barrick”, “we” or the “Company”)
is a corporation governed by the Business Corporations Act
(British Columbia). The Company’s head office is located at
Brookfield Place, TD Canada Trust Tower, 161 Bay Street,
Suite 3700, Toronto, Ontario, M5J 2S1. The Company’s
registered office is 925 West Georgia Street, Suite 1600,
Vancouver, British Columbia, V6C 3L2. 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, and the Dominican
Republic and our producing copper mine is in Zambia. We
hold a 50% interest in Veladero, a gold mine located in
Argentina, a 50% interest in Kalgoorlie, a gold mine located
in Australia, and a 50% equity interest in Barrick Niugini
Limited (“BNL”), which owns a 95% interest in Porgera,
a gold mine located in Papua New Guinea. We also hold a
63.9% equity interest in Acacia Mining plc (“Acacia”),
a company listed on the London Stock Exchange that owns
gold mines and exploration properties in Africa. We have
a 50% interest in Zaldívar, a copper mine located in Chile
and a 50% interest in Jabal Sayid, a copper mine located
in Saudi Arabia. We also have various projects located
throughout the Americas and Africa. We sell our gold and
copper production into the world market. On January 1, 2019,
we closed the merger of Barrick and Randgold Resources
Limited (“Randgold”). Refer to note 37 for further details.
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. These consolidated financial statements
were approved for issuance by the Board of Directors on
February 12, 2019.
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 or loss 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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103
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation | Financial Report 2018 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 investments in JVs are
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 on the underlying
balance sheet at the date of acquisition; dividends; cash
contributions; and our share of post-acquisition movements
in Other Comprehensive Income (“OCI”).
Outlined below is information related to our joint arrangements and entities other than 100% owned Barrick subsidiaries
at December 31, 2018:
Place of business
Entity type
Economic interest1
Method2
Acacia Mining plc3
Pueblo Viejo3
South Arturo3
Norte Abierto Project4
Donlin Gold Project
Kalgoorlie Mine
Porgera Mine5
Turquoise Ridge Mine5
Veladero6
GNX7,8
Jabal Sayid7
Kabanga Project7,8
Zaldívar7
Tanzania
Dominican Republic
United States
Chile
United States
Australia
Papua New Guinea
United States
Argentina
Chile
Saudi Arabia
Tanzania
Chile
Subsidiary, publicly traded
Subsidiary
Subsidiary
JO
JO
JO
JO
JO
JO
JV
JV
JV
JV
63.9%
60%
60%
50%
50%
50%
47.5%
75%
50%
50%
50%
50%
50%
Consolidation
Consolidation
Consolidation
Our share
Our share
Our share
Our share
Our share
Our share
Equity Method
Equity Method
Equity Method
Equity Method
1. Unless otherwise noted, all of our joint arrangements are funded by contributions made by the parties sharing joint control 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 consolidate our interests in Acacia, Pueblo Viejo and South Arturo and record a non-controlling interest for the 36.1%, 40% and 40%, respectively,
that we do not own.
4. We divested 25% of Cerro Casale on June 9, 2017, bringing our ownership down to 50%. As part of that transaction, we formed a joint operation with
Goldcorp. The joint operation, which is now referred to as the Norte Abierto project, includes the Cerro Casale, Caspiche and Luciano deposits.
5. We have joint control given that decisions about relevant activities require unanimous consent of the parties to the joint operation.
6. We divested 50% of Veladero on June 30, 2017, bringing our ownership down to 50%.
7. Barrick has commitments of $307 million relating to its interest in the joint ventures.
8. These JVs are early stage exploration projects and, as such, do not have any significant assets, liabilities, income, contractual commitments or contingencies.
Expenses are recognized through our equity pick-up (loss). Refer to note 16 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 12 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 cost of the acquisition exceeds the fair
value of the identifiable net assets acquired, the difference
is recorded as goodwill. If the fair value attributable to
Barrick’s share of the identifiable net assets exceeds the
cost of acquisition, the difference is recognized as a gain
in the consolidated statement of income.
Non-controlling interests represent the fair value of net
assets in subsidiaries, as at the date of acquisition, that are
not held by Barrick and are presented in the equity section
of the consolidated balance sheet.
104
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation | Financial Report 2018
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 HFS, property, plant and equipment are no longer
amortized. The assets and liabilities are presented as HFS
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 and represents a major line of business
or geographic area, 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 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;
Fair value through other comprehensive income
(“FVOCI”) equity investments using the closing
exchange rate as at the balance sheet date with
translation gains and losses permanently recorded in
Other Comprehensive Income (“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 on the date of sale 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.
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.
The above revenue recognition policy is applicable to
contracts where revenue transactions were completed in
2017, with any contracts where revenue transactions were
105
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation | Financial Report 2018 completed or entered into in 2018 accounted for in
accordance with IFRS 15 Revenue from Contracts with
Customers (“IFRS 15”) as disclosed in Note 2y of these
consolidated financial statements.
g) Exploration and Evaluation
Exploration expenditures are the costs incurred in the initial
search for mineral deposits with economic potential or in
the process of obtaining more information about existing
mineral deposits. Exploration expenditures typically include
costs associated with prospecting, sampling, mapping,
diamond drilling and other work involved in searching for ore.
Evaluation expenditures are the costs incurred to
establish the technical and commercial viability of 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 the Canadian Securities
Administrators’ 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 and Equipment, as described in note 2n.
h) 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.
106
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.
i) 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 reflects 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 that have an
exercise price 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.
j) 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
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation | Financial Report 2018 In respect of taxable temporary differences associated
with investments in subsidiaries and interests in joint
arrangements, where the timing of the reversal of
the temporary differences can be controlled and it is
probable that the temporary differences will not reverse
in the foreseeable future.
Deferred income tax assets are recognized for all
deductible temporary differences and the carry forward of
unused tax assets and unused tax losses, to the extent that
it is probable that taxable profit will be available against
which the deductible temporary differences and the carry
forward of unused tax assets and unused tax losses can
be utilized, except:
Where the deferred income tax asset relating to the
deductible temporary difference arises from the initial
recognition of an asset or liability in an acquisition that
is not a business combination and, at the time of the
acquisition, affects neither the accounting profit nor
taxable profit or loss; and
In respect of deductible temporary differences
associated with investments in subsidiaries and
interests in joint arrangements, 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.
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 royalties 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.
k) Other Investments
Investments in publicly quoted equity securities that are
neither subsidiaries nor associates are categorized as
FVOCI pursuant to the irrevocable election available in
IFRS 9 for these instruments. FVOCI equity investments
(referred to as “other investments”) are recorded at fair
value with all realized and unrealized gains and losses
recorded permanently in OCI.
l) 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.
Metal 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 general and administrative costs. As ore is
removed for processing, costs are removed based on the
average cost per ounce/pound in the stockpile. Net
realizable value is determined with reference to relevant
market prices less applicable variable selling and
processing costs.
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. Provisions are recorded to reduce mine operating
supplies to net realizable value, which is generally
calculated by reference to its salvage or scrap value,
107
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation | Financial Report 2018 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.
m) 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. Royalty expense is
recorded on completion of the production or sales process
in cost of sales. 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.
n) Property, Plant and Equipment
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
2 – 29 years
4 – 7 years
2 – 10 years
1 – 10 years
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.
108
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.
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 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 life of
mine (“LOM”) plan that benefit from the development and
are considered probable of economic extraction.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation | Financial Report 2018 iii) Open Pit Mine Development Costs
In open pit mining operations, it is necessary to remove
overburden and other waste materials to access ore
from which minerals can be extracted economically. The
process of mining overburden and waste materials is
referred to as stripping. Stripping costs incurred in order
to provide initial access to the ore body (referred to
as pre-production stripping) are capitalized as open pit
mine development costs.
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 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.
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: (1) improves access to a component of the ore
body to be mined in the future; (2) increases the fair value
of the mine (or pit) as access to future mineral reserves
becomes less costly; and (3) 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 that benefit from the development and are considered
probable of economic extraction.
Construction-in-Progress
Assets under construction are capitalized as construction-
in-progress until the asset is available for use. 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.
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. Assets acquired via a finance
lease 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.
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
109
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation | Financial Report 2018 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 insurance the amount recoverable
is only recognized when receipt is virtually certain, as
supported by notification of a minimum or proposed
settlement amount from the insurance adjuster.
o) Impairment (and Reversals of Impairment)
of Non-Current Assets
We review and test the carrying amounts of PP&E and
intangible assets with finite lives when an indicator of
impairment is considered to exist. Impairment assessments
on PP&E and intangible assets are conducted at the level
of the cash generating unit (“CGU”), which is the lowest
level for which identifiable cash flows are largely
independent of the cash flows of other assets and includes
most 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
Value in Use (“VIU”) and Fair Value Less Costs of Disposal
(“FVLCD”). We have determined that the FVLCD is greater
than the VIU amounts and is therefore used as the
recoverable amount for impairment testing purposes.
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
An assessment is made at each reporting date to determine
whether there is an indication that previously recognized
impairment losses may no longer exist or may have
110
decreased. A previously recognized impairment loss is
reversed only if there has been a change in the assumptions
used to determine the CGU’s recoverable amount since
the last impairment loss was recognized. 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. We have determined that the FVLCD is
greater than the VIU amounts and is therefore used as the
recoverable amount for impairment testing purposes.
p) 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.
We also have water rights associated with our mineral
properties. Upon acquisition, they are measured at
initial cost and are depreciated when they are being used.
They are also subject to impairment testing when an
indicator of impairment is considered to exist.
q) 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 for impairment in the fourth
quarter and also when there is an indicator of impairment.
At the date of acquisition, goodwill is assigned to the 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 are our individual minesites
and corresponds to the level at which goodwill is internally
monitored by the Chief Operating Decision Maker (“CODM”).
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation | Financial Report 2018 The recoverable amount of an operating segment is
When a derivative designated as a cash flow hedge
the higher of VIU and 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.
r) 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 statements of income over
the period to maturity using the effective interest method.
s) 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 forecasted 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 statements 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.
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.
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.
t) 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.
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.
Abnormal 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 new legal or constructive obligation
is determined. When the extent of disturbance increases
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation | Financial Report 2018 over the life of an operation, the provision is increased
accordingly. The major parts of the carrying amount of
provisions relate to closure/rehabilitation of tailings ponds,
heap leach pads and waste dumps; 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, the amount and
timing of the associated cash flows and the period over
which we estimate those 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; changes in Barrick’s
closure policies; 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 statements
of income. In the case of closed sites, changes in estimates
and assumptions are recognized immediately in the
consolidated statements 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. 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 evaluates 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.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation | Financial Report 2018 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
We recognize the expense related to these plans over the
vesting period, beginning once the grant has been approved
and announced to the beneficiaries.
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. Barrick offers 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 for stock options, 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 or general and administrative) and the corresponding
entry is recorded in equity. Equity-settled awards are not
remeasured subsequent to the initial grant date. Barrick
offers equity-settled (Employee Stock Option Plan
(“ESOP”), Employee Share Purchase Plan (“ESPP”),
Global Employee Share Plan (“GESP”) and Barrick Share
Purchase Plan (“BSPP”)) awards to certain employees,
officers and directors of the Company.
We use the accelerated method (also referred to as
‘graded’ vesting) for attributing stock option expense
over the vesting period. Stock option expense incorporates
an expected forfeiture rate. The expected forfeiture rate
is estimated based on historical forfeiture rates and
expectations of future forfeiture rates. We make adjustments
if the actual forfeiture rate differs from the expected rate.
Employee Stock Option Plan
Under Barrick’s ESOP, certain officers and key employees
of the Corporation may purchase common shares at an
exercise price that is equal to the closing share price on the
day before the grant of the option. The grant date is the
date when the details of the award, including the number of
options granted to the individual and the exercise price, are
approved. Stock options vest 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
Under our RSU plan, selected employees are granted
RSUs where each RSU has a value equal to one Barrick
common share. RSUs generally vest within three years
and upon vesting the employee will receive either cash or
common shares, depending on the terms of the grant.
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.
Deferred Share Units
Under our DSU plan, Directors must receive at least 75% of
their basic annual retainer in the form of DSUs or cash to
purchase common shares that cannot be sold, transferred
or otherwise disposed of until the Director leaves the Board.
Each DSU has the same value as one Barrick common
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation | Financial Report 2018 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. We also allow
granting of DSUs to other officers and employees at the
discretion of the Board Compensation Committee.
Performance Restricted Share Units
Under our PRSU plan, selected employees are granted
PRSUs, where each PRSU has a value equal to
one Barrick common share. PRSUs vest at the end of
a three-year period and are settled in cash on the
third anniversary of the grant date. Additional PRSUs are
credited to reflect dividends paid on Barrick common
shares over the vesting period. 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 share units 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
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, or if the grant date occurs during a blackout
period, by the greater of (i) the closing price of Barrick
common shares on the day prior to the grant date and
(ii) the closing price of Barrick Common Shares on the first
day following the expiration of the blackout. Upon vesting,
the after-tax value of the award is used to purchase
common shares and generally 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.
Employee Share Purchase Plan
Under our ESPP plan, certain 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
C$5,000 per year.
Both Barrick and the employee make the contributions
on a semi-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 semi-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.
Barrick Share Purchase Plan
Under our BSPP plan, certain Barrick employees can
purchase Company shares through payroll deduction. Each
year, employees may contribute 1%–10% of their combined
base salary and annual short-term incentive, and Barrick
will match 100% of the contribution, up to a maximum
of C$5,000 or US$4,000 per year.
Both Barrick and the employee make the contributions
on a semi-monthly basis with the funds being transferred to
a custodian who purchases Barrick Common Shares in the
open market. Shares purchased with employee and Barrick
contributions have no vesting requirement.
Barrick recognizes the expense when Barrick
contributions are made and has no ongoing liability.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation | Financial Report 2018 Global Employee Share Plan
Under our GESP plan, Barrick employees are awarded
Company Common Shares. These shares vest immediately,
but must be held until the employee ceases to be employed
by the Company. Barrick recognizes the expense when the
award is announced and has no ongoing liability.
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 employee’s 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.
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 OCI 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
assumptions 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 Effective in 2018
Impact of Adoption of IFRS 15 Revenue from
Contracts with Customers
We have adopted the requirements of IFRS 15 Revenue
from Contracts with Customers (“IFRS 15”) as of January 1,
2018. IFRS 15 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. We elected to apply IFRS 15 using a modified
retroactive approach by recognizing the cumulative effect
of initially adopting IFRS 15 as an adjustment to the
opening balance sheet through equity at January 1, 2018.
Therefore, the comparative information has not been
restated and continues to be reported under IAS 18
Revenue (“IAS 18”). The details of accounting policy
changes and the quantitative impact of these changes
are described below.
Gold Bullion Sales
IFRS 15 requires that revenue from contracts with
customers be recognized upon the transfer of control over
goods or services to the customer. The recognition of
revenue upon transfer of control to the customer is
consistent with our revenue recognition policy as set out in
note 2f of these consolidated financial statements, as the
condition is generally satisfied when title transfers to the
customer. As such, upon adoption, this requirement under
IFRS 15 resulted in no impact to our financial statements
as the timing of revenue recognition on our gold bullion
sales is unchanged.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation | Financial Report 2018 Concentrate Sales
We assessed all of our existing concentrate sales
agreements and determined that there is no change in the
timing of revenue recognition, as control transfers to the
smelting companies at the time of shipment, consistent with
our current accounting policy as set out in note 2f of these
consolidated financial statements. Although IFRS15
identifies the shipping component associated with
concentrate sales as a separate performance obligation,
requiring a portion of the revenue to be deferred and only
recognized once the shipment has reached the destination
port, we have determined that the deferred revenue would
be insignificant and thus have not accounted for the
shipping component as a separate performance obligation.
IFRS 15 does not consider provisional price adjustments
associated with concentrate sales to be revenue from
contracts with customers as they arise from changes in
market gold and copper prices between the shipment
date and settlement date. As such, we have separately
presented provisional price adjustments in note 6
of these consolidated financial statements in line with
the requirements of IFRS 15.
Streaming Agreements
IFRS 15 requires that for contracts containing variable
consideration, the transaction price be continually updated
and re-allocated to the transferred goods and services. As
a result, we have updated our accounting policy for revenue
earned on streaming agreements such that we will treat the
deferred revenue component as variable, requiring an
adjustment to the transaction price per unit each time there
is a change in the underlying production profile of a mine
(typically in the fourth quarter of each year). The change
in the transaction price per unit results in a retroactive
adjustment to revenue in the period in which the change is
made, reflecting the new production profile expected to be
delivered under the streaming agreement. A corresponding
retroactive adjustment is made to accretion expense,
reflecting the impact of the change in the deferred revenue
balance. The impact of the initial adoption of this change
in accounting policy was an adjustment to reduce the
opening deficit on January 1, 2018 of $64 million with a
corresponding adjustment to reduce the deferred revenue
balance. There was no impact to net income for the period.
If in 2018 we had continued to recognize revenue on
streaming agreements in accordance with IAS 18, the
amounts recognized for revenue, deferred revenue and
interest expense would have been insignificantly different
from those recognized in accordance with IFRS 15.
z) New Accounting Standards Issued But
Not Yet Effective
IFRS 16 Leases
In January 2016, the IASB issued IFRS 16 Leases, which
requires lessees to recognize assets and liabilities for most
leases. Application of the standard is mandatory for annual
reporting periods beginning on or after January 1, 2019.
We expect that IFRS 16 will result in an increase in assets
and liabilities as fewer leases will be expensed as
payments are made. We expect an increase in depreciation
and interest expenses, a decrease in operating expense
and an increase in cash flow from operating activities as
these lease payments will be recorded as financing
outflows in our cash flow statement. We have developed
a full implementation plan to determine the impact on
our financial statements and internal controls. In the fourth
quarter of 2017, we formed an IFRS 16 working group
and began the process of compiling all of our existing
operating leases and service contracts. In the first quarter
of 2018, we began reviewing the relevant agreements to
identify which of the operating leases and service contracts
are in scope for IFRS 16. In the second quarter of 2018,
we had largely completed our review of existing service
contracts for embedded leases and had identified all
operating leases. In the third quarter of 2018, we continued
our review of existing service contracts for embedded
leases, began developing a valuation approach to discount
our population of leases, and evaluated various leasing
software tools to assist with the increased accounting and
disclosure requirements arising from the new leasing
standard. In the fourth quarter of 2018, we performed
a completeness test to validate the population of service
contracts in scope for IFRS 16 resulting in an increase
in the population of contracts for review. In addition, we
developed a lease valuation tool for measurement of our
leases, completed the design of the controls surrounding
the identification of leases in service contracts, and
developed our policy governing the accounting for leases.
While we have not yet completed our lease review of the
service contracts identified as part of the completeness
test, our expectation continues to be that most of the
impact upon transition to IFRS 16 will be derived from our
operating leases, which will be recognized on our balance
sheet effect January 1, 2019. We will use the modified
retrospective approach of adoption resulting in no
restatement of prior year comparatives. The quantitative
impact of adopting IFRS 16 will be provided in our first
2019 quarterly report.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation | Financial Report 2018 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.
Life of Mine (“LOM”) Plans and 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.
In certain cases, these LOM plans have made assumptions
about our ability to obtain the necessary permits required
to complete the planned activities. 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. To calculate our gold reserves, as
at December 31, 2018 we have used a per ounce gold
price of $1,200, consistent with the prior year. To calculate
our measured, indicated, and inferred gold resources,
as at December 31, 2018 we have used a gold price
assumption of $1,500 per ounce, consistent with the prior
year. Refer to notes 19 and 21.
Inventory
The measurement of inventory including the determination
of its net realizable value, especially as it relates to ore in
stockpiles, involves the use of estimates. Net realizable
value is determined with reference to relevant market prices
less applicable variable selling expenses. Estimation is also
required in determining the tonnage, recoverable gold and
copper contained therein, and in determining the remaining
costs of completion to bring inventory into its saleable form.
Judgment also exists in determining whether to recognize
a provision for obsolescence on mine operating supplies,
and estimates are required to determine salvage or scrap
value of supplies.
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).
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 or reversal of
impairment, and in the case of goodwill annually during the
fourth quarter, for all of our operating segments. We
consider both external and internal sources of information
for indications that non-current assets and/or goodwill are
impaired. External sources of information we consider
include changes in the market, economic and legal
environment in which the CGU operates that are not within
its control and affect the recoverable amount of mining
interests and goodwill. Internal sources of information we
consider include the manner in which mining properties and
plant and equipment are being used or are expected to be
used and indications of economic performance of the
assets. Calculating the FVLCD of CGUs for non-current
asset and goodwill impairment tests requires management
to make estimates and assumptions with respect to future
production levels, operating, capital and closure 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 notes
2o, 2q and 21 for further information.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation | Financial Report 2018 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 27 for further information.
Under the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980 (“CERCLA”) and
its state law equivalents, present or past owners of a
property may be held jointly and severally liable for cleanup
costs or forced to undertake remedial actions in response
to unpermitted releases of hazardous substances at
such property, in addition to, among other potential
consequences, potential liability to governmental entities
for the cost of damages to natural resources, which may
be substantial. These subject properties are referred to
as “superfund” sites. In addition to properties that have
previously been designated as such, there is a chance
that our current or legacy operations in the U.S. could be
designated as a superfund site in the future, exposing
Barrick to potential liability under CERCLA. The U.S.
Environmental Protection Agency recently announced it is
considering listing on the CERCLA National Priorities List a
322 square mile site in the San Mateo basin in New Mexico
(“San Mateo Site”) due to alleged surface and ground water
contamination from past uranium mining. The San Mateo
Site includes legacy operations of our wholly owned
subsidiary Homestake Mining Company of California.
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, as well as 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 notes 2j, 12 and 30
for further information.
Contingencies
Contingencies can be either possible assets or possible
liabilities arising from past events which, by their nature, will
only be resolved when one or more future events not wholly
within our control occur or fail to occur. The assessment of
such contingencies inherently involves the exercise of
significant judgment and estimates of the outcome of future
events. In assessing loss contingencies related to legal
proceedings that are pending against us or unasserted
claims that may result in such proceedings or regulatory or
government actions that may negatively impact our
business or operations, the Company 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 36 for more information.
Pascua-Lama
The Pascua-Lama project received $443 million as at
December 31, 2018 ($484 million as at December 31,
2017) in value added tax (“VAT”) refunds in Chile relating
to the development of the Chilean side of the project.
Under the current arrangement this amount plus interest
of $340 million (2017: $313 million) must be repaid if the
project does not evidence exports for an amount of
$3,538 million within a term that expires on December 31,
2026. The terms of the current VAT arrangement in Chile
118
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation | Financial Report 2018 are applicable to either an open pit or an underground mine
design. In addition, we have recorded $112 million in VAT
recoverable in Argentina as at December 31, 2018
($221 million as at December 31, 2017) relating to the
development of the Argentinean side of the project. These
amounts may not be recoverable if the project does not
enter into production and are subject to foreign currency
risk as the amounts are recoverable in Argentine pesos.
Streaming Transactions
The upfront cash deposit received from Royal Gold on the
gold and silver streaming transaction for production linked
to Barrick’s 60% interest in the Pueblo Viejo mine has
been accounted for as deferred revenue since we have
determined that it is not a derivative as it will be satisfied
through the delivery of non-financial items (i.e., gold and
silver) rather than cash or financial assets. It is our intention
to settle the obligations under the streaming arrangement
through our own production and if we were to fail to settle
the obligations with Royal Gold through our own production,
this would lead to the streaming arrangement becoming
a derivative. This would cause a change to the accounting
treatment, resulting in the revaluation of the fair value of
the agreement through profit and loss on a recurring basis.
Refer to note 29 for further details.
Our silver sale agreement with Wheaton Precious
Metals Corp. (“Wheaton”) (formerly Silver Wheaton Corp.)
requires us to deliver 25% of the life of mine silver
production from the Pascua-Lama project once it is
constructed and required delivery of 100% of our silver
production from Lagunas Norte, Pierina and Veladero
mines until March 31, 2018. The completion date for
Pascua-Lama was originally December 31, 2015 but was
subsequently extended to June 30, 2020. Per the terms
of the amended silver purchase agreement, if the
requirements of the completion guarantee have not been
satisfied by June 30, 2020, the agreement may be
terminated by Wheaton, in which case, they will be entitled
to the return of the upfront cash consideration paid less
credit for silver delivered up to the date of that event.
The cash liability at December 31, 2018 is $253 million.
The deferred revenue component of our streaming
agreements is considered variable and is subject to
retroactive adjustment when there is a change in the timing
of the delivery of ounces or in the underlying production
profile of the relevant mine. The impact of such a change
in the timing or quantity of ounces to be delivered under
a streaming agreement will result in retroactive adjustments
to both the deferred revenue recognized and the accretion
recorded prior to the date of the change. There was
a $12 million retroactive adjustment recorded in 2018 in
addition to the adjustment recorded to reflect the initial
adoption of IFRS 15 as outlined in note 2y. Refer to
note 2y for further details on our accounting for
Streaming Transactions.
Refer to note 28 for a summary of our key
financial risks.
Zambian Tax Matters
The mining taxes assessed to the Lumwana Mine have
contradicted the Development Agreement that was finalized
between Lumwana Mining Company Limited (“LMC”) and
the Government of Zambia on December 16, 2005. In
2015, the Company began to take steps to preserve its
rights under the Development Agreement and started to
engage in formal discussions with the government to
redress historical tax issues relating to the Development
Agreement. On October 3, 2018, a deed of settlement was
signed by the Government of Zambia and LMC. The deed
provides that, within 30 days of the deed, LMC shall file tax
returns for 2012 through 2017, and the government shall
have the right to conduct and complete an audit of the
returns within 60 days of the deed. LMC has filed the tax
returns for 2012 through 2017 and the audit of these tax
returns by the Zambian tax authority is expected to be
completed in the first quarter of 2019.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation | Financial Report 2018 Other Notes to the Financial Statements
4 Acquisitions and Divestitures
Acquisitions and divestitures
Segment information
Revenue
Cost of sales
Exploration, evaluation and project expenses
Other expense (income)
Impairment charges (reversals)
General and administrative expenses
Income tax expense
Earnings (loss) per share
Finance costs, net
Cash flow – other items
Investments
Inventories
Accounts receivable and other current assets
Property, plant and equipment
Goodwill and other intangible assets
Impairment and reversal of 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
Subsequent events
Note
Page
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5
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12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
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122
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125
126
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132
132
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149
152
152
155
156
158
158
160
160
162
163
175
For the years ended December 31
2018
2017
Gross cash proceeds on divestiture
Veladero
$
$
–
–
$ 990
$ 990
a) Investment in Shandong Gold Mining
On September 24, 2018, we entered into a mutual
investment agreement with Shandong Gold Group Co., Ltd.
(“Shandong Gold”), further strengthening Barrick’s
partnership with one of China’s leading mining companies.
Under the agreement, Shandong Gold will purchase up to
$300 million of Barrick shares, and Barrick will invest an
equivalent amount in shares of Shandong Gold Mining Co.,
Ltd., a publicly listed company controlled by Shandong
Gold. Shares will be purchased in the open market and
purchases made by Barrick will be accounted for as other
investments with changes in fair value recorded in OCI.
As at December 31, 2018, Barrick has purchased
approximately $120 million of shares of Shandong Gold
Mining Co., Ltd.
b) Investment in Midas Gold
On May 9, 2018, we announced the acquisition of
46.55 million common shares, representing approximately
19.9 percent of issued and outstanding common shares of
Midas Gold Corporation in a non-brokered private placement
for total consideration of $38 million. Upon acquisition of
the shares, we accounted for our interest as other
investments with changes in fair value recorded in OCI.
c) Sale of 50% of Veladero
On April 6, 2017, we announced a strategic cooperation
agreement with Shandong Gold where Shandong Gold
agreed to acquire 50 percent of Barrick’s Veladero mine in
Argentina. The transaction closed on June 30, 2017 and we
received total cash consideration of $990 million, which
includes working capital adjustments of $30 million received
in the fourth quarter of 2017. The transaction resulted in a
gain of $718 million, partially on the sale of 50 percent to
Shandong Gold and partially upon remeasurement of our
remaining interest in Veladero. We have accounted for our
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation | Financial Report 2018
remaining 50 percent interest as a joint operation and
consolidated our proportionate share of the assets and
liabilities. We have recognized our share of the revenue
and expenses of Veladero starting July 1, 2017.
In accordance with the acquisition method of
accounting, the acquisition cost has been allocated to the
underlying assets acquired and liabilities assumed. We
completed the purchase price allocation in the fourth
quarter of 2017 and recognized a deferred tax liability for
the difference between the fair values and the tax base of
those assets and now have an updated goodwill balance of
$154 million, which is not deductible for tax purposes.
d) Sale of 25% of Cerro Casale
On March 28, 2017, we announced an agreement with
Goldcorp Inc. (“Goldcorp”) to form a new partnership at the
Cerro Casale Project in Chile. The transaction closed on
June 9, 2017. Under the terms of the agreement, Goldcorp
agreed to purchase a 25 percent interest in Cerro Casale
from Barrick. This transaction, coupled with the concurrent
purchase by Goldcorp of Kinross Gold Corporation’s
(“Kinross”) 25 percent interest in Cerro Casale, resulted in
Barrick and Goldcorp each holding a 50 percent interest in
the newly formed Cerro Casale joint operation. This
ownership change, coupled with the specific terms of the
agreement, caused a change in control of the Cerro Casale
Project, and we remeasured our retained interest in the
joint operation at fair value at the date control was lost.
The total consideration received by Barrick and Kinross
implies a fair value of $1.2 billion for 100 percent of Cerro
Casale, which resulted in a reversal of impairment of
$1.12 billion in the first quarter of 2017. Refer to note 21
for further details of the impairment reversal. We are
accounting for our remaining 50 percent interest as a joint
operation and consolidate our proportionate share of
the assets, liabilities, revenue and expenses of Cerro
Casale. We recognized a gain of $193 million due
to the deconsolidation of the non-controlling interest
in Cerro Casale in the second quarter of 2017.
As consideration for the 25 percent interest acquired
from Barrick, Goldcorp will fund Barrick’s first $260 million
of expenditures on the project and will spend an equivalent
amount on its own behalf for a total project investment
commitment of $520 million. Under the agreement,
Goldcorp must spend a minimum of $60 million in the
two-year period following closing, and then $80 million
in each successive two-year period. The outstanding
funding commitment will accrue interest at an annual rate
of 4.75 percent. In the event that Goldcorp does not spend
the minimum amount in any two-year period, 50 percent
of any shortfall will be paid directly to Barrick in cash.
In addition, Goldcorp also funded Cerro Casale’s
acquisition of a 100 percent interest in the adjacent
Quebrada Seca property from Kinross upon closing.
Upon a construction decision Goldcorp will pay Barrick
$40 million in cash and Barrick will receive a 1.25 percent
royalty on 25 percent of the gross revenues derived from
metal production from both Cerro Casale and Quebrada
Seca. The contingent consideration payable to Barrick has
been recorded at its estimated fair value in other
long-term assets.
Goldcorp entered into a separate agreement for the
acquisition of Exeter Resource Corporation, whose sole
asset is the Caspiche Project, located approximately
10 kilometers north of Cerro Casale. The acquisition of
100 percent of Exeter was completed in the third quarter of
2017 and Goldcorp contributed the Caspiche Project into
the joint venture at a total acquisition cost of approximately
$157 million. The acquisition costs incurred by Goldcorp
have been deducted from the $520 million total project
investment commitment, but will not count towards the
minimum expenditures for the initial two-year period. We
have recorded a receivable of $163 million, split $20 million
as short-term and $143 million as long-term, in other
current assets and other long-term assets, respectively.
This joint venture is now referred to as Norte Abierto and
includes the Cerro Casale, Caspiche and Luciano deposits.
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121
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation | Financial Report 2018 e) Investment in Reunion Gold
On December 1, 2017, we announced the acquisition of
48 million common shares, representing approximately
15 percent of issued and outstanding common shares of
Reunion Gold Corporation (“Reunion”), in a non-brokered
private placement for total consideration of C$9 million.
Subsequent to acquisition of the shares, we accounted for
our interest as other investments with changes in fair
value recorded in OCI. On February 3, 2019, we entered
into a Strategic Alliance Agreement to form a 50-50 alliance
to jointly explore for, develop and mine certain mineral
projects in the Guiana Shield. We also purchased
33.15 million common shares for total consideration of
C$4.97 million, increasing our interest in Reunion to
approximately 19.9% of Reunion’s issued and outstanding
common shares.
f) Acquisition of Robertson Property in Nevada
On June 7, 2017, we completed the acquisition of the
Robertson Property in Nevada from Coral Gold Resources.
Consideration paid by Barrick consisted of $16 million,
the return of 4.15 million shares (approximate value of
$1 million) held by Barrick and a sliding scale royalty
on any future production from the Robertson Property.
5 Segment Information
Barrick’s business is organized into eleven individual
minesites, one grouping of two minesites, one publicly
traded company and one project. Barrick’s CODM reviews
the operating results, assesses performance and makes
capital allocation decisions at the minesite, grouping,
Company and/or project level. During the third quarter of
2018, Barrick’s president, who was our CODM, resigned
from the Company. Three members of our executive
management team, our Executive Vice President and Chief
Financial Officer, Chief Investment Officer and Senior Vice
President, Operational and Technical Excellence, together
assumed the role of CODM through December 31, 2018.
Following completion of the merger with Randgold on
January 1, 2019, Mark Bristow, as President and Chief
Executive Officer, has assumed this role. Each individual
minesite, with the exception of Barrick Nevada, Acacia
and the Pascua-Lama project, are operating segments for
financial reporting purposes. Our presentation of our
reportable operating segments is four individual gold mines
(Pueblo Viejo, Lagunas Norte, Veladero and Turquoise
Ridge), Barrick Nevada, Acacia and our Pascua-Lama
project. The remaining operating segments, our remaining
gold and copper mines, have been grouped into an “other”
category and will not be reported on individually. Segment
performance is evaluated based on a number of measures
including operating income before tax, production levels
and unit production costs. Certain costs are managed on
a consolidated basis and are therefore not reflected in
segment income.
122
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation | Financial Report 2018 Consolidated Statements of Income Information
Cost of sales
Direct mining,
royalties and
community
For the year ended December 31, 2018
Barrick Nevada
Turquoise Ridge
Pueblo Viejo2
Veladero
Lagunas Norte
Acacia2
Pascua-Lama
Other Mines3
Revenue
$ 2,655
331
1,333
366
332
664
–
1,562
relations Depreciation
$ 1,066
178
547
189
291
367
–
1,117
$ 649
28
185
121
46
89
11
305
$ 7,243
$ 3,755
$ 1,434
Consolidated Statements of Income Information
Cost of sales
Direct mining,
royalties and
community
For the year ended December 31, 2017
Barrick Nevada
Turquoise Ridge
Pueblo Viejo2
Veladero
Lagunas Norte
Acacia2
Pascua-Lama
Other Mines3
Revenue
$ 2,961
280
1,417
591
514
751
–
1,860
relations Depreciation
$ 1,076
131
501
291
177
362
–
1,086
$ 793
28
229
119
68
107
8
267
$ 8,374
$ 3,624
$ 1,619
Exploration,
evaluation and
project
expenses
Exploration,
evaluation and
project
expenses
Other
expenses
(income)1
Segment
income
(loss)
$ 14
(1)
1
1
6
37
7
30
$ 890
126
579
53
(13)
171
(95)
98
$ 95
$ 1,809
Other
expenses
(income)1
Segment
income
(loss)
$ 16
2
16
5
6
91
(10)
31
$ 1,052
119
671
173
259
191
(123)
464
$ 157
$ 2,806
$ 36
–
21
2
2
–
77
12
$ 150
$ 24
–
–
3
4
–
125
12
$ 168
1. Includes accretion expense, which is included with finance costs in the consolidated statements of income. For the year ended December 31, 2018,
accretion expense was $74 million (2017: $55 million).
2. Includes non-controlling interest portion of revenues, cost of sales and segment income for the year ended December 31, 2018, for Pueblo Viejo, $535 million,
$289 million, $237 million (2017: $567 million, $285 million, $276 million) and Acacia, $240 million, $164 million, $63 million (2017: $271 million, $169 million,
$69 million).
3. Includes cost of sales of Pierina for the year ended December 31, 2018 of $116 million (2017: $174 million).
Reconciliation of Segment Income to Income from Continuing Operations Before Income Taxes
For the years ended December 31
2018
2017
Segment income
Other cost of sales/amortization1
Exploration, evaluation and project expenses not attributable to segments
General and administrative expenses
Other (expense) income not attributable to segments
Impairment charges (reversals)
Loss on currency translation
Closed mine rehabilitation
Income from equity investees
Finance costs, net (includes non-segment accretion)2
Gain on non-hedge derivatives3
$ 1,809
(31)
(233)
(265)
(69)
(900)
(136)
13
46
(471)
–
$ 2,806
(57)
(186)
(248)
901
212
(72)
(55)
76
(636)
6
Income before income taxes
$ (237)
$ 2,747
1. Includes realized hedge losses of $4 million (2017: $27 million losses).
2. Includes debt extinguishment losses of $29 million (2017: $127 million losses).
3. Includes unrealized non-hedge losses of $1 million (2017: $1 million gains).
123
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation | Financial Report 2018
Geographic Information
Non-current assets
Revenue1
United States
Dominican Republic
Argentina
Chile
Tanzania
Peru
Australia
Zambia
Papua New Guinea
Saudi Arabia
Canada
Unallocated
Total
As at Dec. 31, As at Dec. 31,
2017
2018
2018
2017
$ 6,768
3,460
1,721
2,500
1,045
145
395
735
348
408
432
696
$ 6,641
3,480
2,217
2,469
1,129
734
463
787
351
371
625
1,357
$ 3,025
1,334
366
–
664
449
408
502
269
–
226
–
$ 3,299
1,417
591
–
751
676
456
612
322
–
250
–
$ 18,653
$ 20,624
$ 7,243
$ 8,374
1. Presented based on the location from which the product originated.
Capital Expenditures Information
Segment capital expenditures1
As at
As at
December 31, December 31,
2017
2018
Barrick Nevada
Turquoise Ridge
Pueblo Viejo
Veladero
Lagunas Norte
Acacia
Pascua-Lama
Other Mines
Segment total
Other items not allocated to segments
Total
$ 581
62
145
143
22
93
39
314
$ 1,399
44
$ 1,443
$ 585
36
114
173
25
148
6
259
$ 1,346
36
$ 1,382
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 2018, cash expenditures were $1,400 million (2017: $1,396 million) and the increase in accrued
expenditures was $43 million (2017: $14 million decrease).
124
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation | Financial Report 2018
6 Revenue
For the years ended December 31
2018
2017
Gold sales1
Spot market sales
Concentrate sales
Provisional pricing adjustments
Copper sales1
Copper concentrate sales
Provisional pricing adjustments
Other sales2
Total
$ 6,575
25
–
$ 7,566
64
1
$ 6,600
$ 7,631
$
$
$
549
(37)
512
131
$
$
$
608
–
608
135
$ 7,243
$ 8,374
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, 2018 to the impact of
movements in market commodity prices for provisionally
priced sales is set out in the following table:
Volumes subject to
final pricing
Copper (millions)
Impact on net
income before
taxation of 10%
movement in
market price US$
1. Revenues include amounts transferred from OCI to earnings for commodity
cash flow hedges (see note 25d).
As at December 31
2018
2017
2018
2017
2. Revenues include the sale of by-products from our gold and copper mines.
Copper pounds
51
57
$ 14
$ 19
Principal Products
All of our gold mining operations produce gold in doré form,
except Porgera, which produces 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 and Jabal Sayid mines produce a concentrate
that primarily contains copper. Incidental revenues from
At December 31, 2018, our provisionally priced copper
sales subject to final settlement were recorded at average
prices of $2.71/lb (2017: $3.29/lb). At December 31, 2018
and December 31, 2017, there were no provisionally priced
gold sales subject to final settlement. The sensitivities in the
above table 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
Gold
Copper
Other4
Total
For the years ended December 31
2018
2017
Direct mining cost1,2,3
Depreciation
Royalty expense
Community relations
Total
$ 3,130
1,253
196
42
$ 3,063
1,529
206
38
$ 4,621
$ 4,836
2018
$ 344
170
39
5
$ 558
2017
$ 274
83
38
4
$ 399
2018
$ 7
34
–
–
$ 41
2017
$ 28
35
–
2
2018
2017
$ 3,481
1,457
235
47
$ 3,365
1,647
244
44
$ 65
$ 5,220
$ 5,300
1. Direct mining cost related to gold and copper includes charges to reduce the cost of inventory to net realizable value of $199 million (2017: $21 million).
Refer to note 17.
2. Direct mining cost related to gold includes the costs of extracting by-products and export duties paid in Argentina.
3. Includes employee costs of $1,001 million (2017: $1,051 million).
4. Other includes realized hedge gains and losses and corporate amortization.
20163_Barrick_AR18_FINANCIALS_E_MAR 8.indd 125
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125
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation | Financial Report 2018
8 Exploration, Evaluation and Project Expenses
10 Impairment Charges (Reversals)
For the years ended December 31
Minesite exploration and evaluation1
Global exploration and evaluation1
Advanced project costs:
Pascua-Lama
Other
Corporate development2
Business improvement and innovation
Total exploration, evaluation and
project expenses
2018
$ 45
121
77
36
60
44
2017
For the years ended December 31
2018
2017
$ 47
126
122
14
13
32
Impairment charges (reversals)
of long-lived assets1
Impairment of intangibles1
Impairment of goodwill1
Total
1. Refer to note 21 for further details.
$ 722
24
154
$ 900
$ (224)
12
–
$ (212)
$ 383
$ 354
11 General and Administrative Expenses
1. Approximates the impact on operating cash flow.
2. 2018 includes $37 million in transaction costs related to the merger
with Randgold.
9 Other Expense (Income)
a) Other Expense (Income)
For the years ended December 31
Other Expense:
Litigation1
Write-offs2
Bulyanhulu reduced operations
program costs3
Bank charges
Insurance payment to Porgera
Acacia – other
Other
Total other expense
For the years ended December 31
2018
2017
Corporate administration1
Operating segment administration
Total2
$ 239
26
$ 227
21
$ 265
$ 248
2018
2017
1. Includes $63 million (2017: $3 million) related to one-time
severance payments.
2. Includes employee costs of $156 million (2017: $98 million).
$ 68
51
$ 24
11
12 Income Tax Expense
For the years ended December 31
2018
2017
29
22
13
11
28
53
23
–
20
23
$ 222
$ 154
Tax on profit
Current tax
Charge for the year
Adjustment in respect of prior years
Other Income:
Gain on sale of long-lived assets4
Insurance proceeds related to Kalgoorlie
Interest Income
Other
Total other income
Total
Deferred tax
Origination and reversal of temporary
differences in the current year
Adjustment in respect of prior years
$ (911)
–
(17)
(25)
$ (953)
Income tax expense
$ (799)
Tax expense related to continuing operations
$ (68)
(24)
(22)
(18)
$ (132)
$ 90
1. Primarily consists of Acacia legal fees, and a settlement dispute regarding
a historical supplier contract acquired as part of the Equinox acquisition
in 2011.
2. 2018 primarily relates to a $43 million write-off of a Western Australia
long-term stamp duty receivable.
3. Primarily consists of severance, contractor and inventory write-down costs.
4. 2018 includes a gain of $45 million from the sale of a royalty asset at
Acacia. 2017 includes gains of $718 million from the 50% sale of Veladero
and $193 million from the 25% sale of Cerro Casale.
Current
Canada
International
Deferred
Canada
International
b) Loss on Currency Translation
For the years ended December 31
Currency translation losses released as
a result of the disposal and reorganization
of entities
Foreign currency translation losses
Total
126
2018
2017
Income tax expense
–
$
136
$ 136
$ 11
61
$ 72
$ 423
45
$ 1,125
–
$ 468
$ 1,125
$ 821
(91)
$
112
(6)
$ 730
$ 106
$ 1,198
$ 1,231
$
–
468
$
7
1,118
$ 468
$ 1,125
$ 628
102
$
(97)
203
$ 730
$ 106
$ 1,198
$ 1,231
20163_Barrick_AR18_FINANCIALS_E_MAR 8.indd 126
2019-03-08 4:20 PM
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation | Financial Report 2018
Reconciliation to Canadian Statutory Rate
For the years ended December 31
2018
2017
$
At 26.5% statutory rate
Increase (decrease) due to:
Allowances and special tax deductions1
Impact of foreign tax rates2
Expenses not tax deductible
Non-taxable gains on sales of long-lived assets
Impairment charges not recognized
in deferred tax assets
Goodwill impairment charges not tax deductible
Net currency translation losses on deferred
tax balances
Tax impact of profits from equity
accounted investments
Current year tax losses not recognized
in deferred tax assets
United States tax reform
De-recognition of deferred tax assets
United States adjustment to one-time toll charge
Adjustments in respect of prior years
Increase to income tax related
contingent liabilities
Dominican Republic tax audit
United States withholding taxes
Other withholding taxes
Mining taxes
Other items
(63)
$ 728
(59)
(4)
74
–
168
54
41
(15)
100
–
814
(49)
3
–
42
(107)
14
184
1
(96)
215
24
(241)
66
–
10
(7)
21
(203)
–
–
(6)
172
–
252
18
266
12
Income tax expense
$ 1,198
$ 1,231
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.
Currency Translation
Deferred tax balances are subject to remeasurement
for changes in currency exchange rates each period. The
most significant balances are Argentine deferred tax
liabilities. In 2018 and 2017, tax expense of $41 million and
$10 million, respectively, primarily arose from translation
losses due to the weakening of the Argentine peso against
the US dollar. These translation losses are included within
deferred tax expense (recovery).
De-recognition of Deferred Tax Assets
In fourth quarter of 2018, we recorded a deferred tax
expense of $673 million related to de-recognition of
the deferred tax asset in Canada, and a deferred tax
expense of $141 million related to de-recognition of the
deferred tax asset in Peru. The de-recognition of the
deferred tax asset in Canada follows the merger with
Randgold and management’s focus on growing the
business globally outside of Canada. This required us to
reassess the level of repatriated earnings expected in
Canada, and Canadian income thereon to support the
deferred tax asset. The de-recognition of the deferred tax
asset does not constrain our ability to use Canadian
carry forward tax losses against future income in Canada;
however, we do not currently expect to be able to use
these losses in the foreseeable future as a result of the
change in strategy in the fourth quarter. The de-recognition
of the deferred tax asset in Peru follows management’s
review of expected future earnings and the associated
impairment of inventory at Lagunas Norte and is driven by
a fourth quarter change in our expected approach to
financing future reclamation activities in Peru. Based on
these reviews in Canada and Peru it was determined
that the realizability of these deferred tax assets was no
longer probable.
United States Tax Reform
On December 22, 2017, Tax Reform was enacted in
the United States. The significant changes include:
(i) a reduction from 35% to 21% in the corporate income
tax rate effective January 1, 2018, which resulted in a
deferred tax recovery of $343 million on our net deferred
tax liability in the US, (ii) a repeal of the corporate
alternative minimum tax (“AMT”) effective January 1, 2018,
(iii) the mandatory repatriation of earnings and profits of
specified foreign corporations effective December 31, 2017,
which resulted in an estimated one-time 2017 toll charge of
$228 million, offset by (iv) the recognition of our previously
unrecognized deferred tax asset on AMT credits in the
amount of $88 million.
In the third quarter of 2018, during the process of
completing the 2017 United States income tax returns, the
calculation of the one-time 2017 toll charge was finalized
and revised, resulting in a decrease of $49 million to
the one-time toll charge, with a corresponding reduction
to current income tax expense.
20163_Barrick_AR18_FINANCIALS_E_MAR 8.indd 127
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127
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation | Financial Report 2018
Dominican Republic Tax Audit
In the first quarter of 2018, current tax expense of $5 million
and deferred tax expense of $37 million were recorded,
resulting from a tax audit of Pueblo Viejo in the Dominican
Republic. The deferred tax expense relates to additional
tax deductions included in the audit that reduced deferred
tax assets but did not reduce tax expense due to the
application of annual minimum tax in certain taxation years.
United States Withholding Taxes
Prior to the fourth quarter 2017, we had not previously
recorded withholding tax related to the undistributed
earnings of our United States subsidiaries because our
intention was to reinvest our current and future
undistributed earnings of our United States subsidiaries
indefinitely. During the fourth quarter of 2017, we
reassessed our intentions regarding those undistributed
earnings. As a result of our reassessment, we concluded
that it was no longer our intent to indefinitely reinvest our
current and future undistributed earnings of our United
States subsidiaries, and therefore in the fourth quarter of
2017, we recognized an increase in our income tax
provision in the amount of $252 million, representing
withholding tax on the undistributed United States earnings.
Accordingly, $150 million was recorded in the tax charge
for the year, and $102 million was recorded as deferred tax
expense. Of the $150 million, $122 million has been
recorded in other non-current liabilities (see note 29) and
$28 million of withholding tax was paid in 2018.
In the fourth quarter of 2018, primarily due to
restructuring associated with the merger with Randgold, we
concluded that going forward, we would reinvest our future
undistributed earnings of our United States subsidiaries in
the foreseeable future. As a result of our reassessment, we
recorded a deferred tax recovery of $107 million.
Proposed Framework for Acacia Mining Operations
in Tanzania and the Increase to Income Tax Related
Contingent Liabilities in Tanzania
The terms of the Proposed Framework for Acacia Mining
Operations in Tanzania were announced on October 19,
2017. The Proposed Framework indicates that in support
of ongoing efforts to resolve outstanding tax claims, Acacia
would make a payment of $300 million to the government
of Tanzania, on terms to be settled by a working group.
A tax provision of $128 million had been recorded prior
to December 31, 2016 in respect of tax disputes related
to Acacia. Of this amount, $70 million was recorded in
2016. In the third quarter of 2017, an additional amount
of $172 million was recorded as current tax expense.
See note 36 for further information with respect to
these matters.
128
20163_Barrick_AR18_FINANCIALS_E_MAR 8.indd 128
2019-03-08 4:20 PM
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation | Financial Report 2018 13 Earnings (Loss) per Share
For the years ended December 31
($ millions, except shares in millions and per share amounts in dollars)
Net (loss) income
Net income attributable to non-controlling interests
2018
2017
Basic
Diluted
Basic
Diluted
$ (1,435)
(110)
$ (1,435) $ 1,516
(78)
(110)
$ 1,516
(78)
Net (loss) income attributable to the equity holders of Barrick Gold Corporation
$ (1,545)
$ (1,545) $ 1,438
$ 1,438
Weighted average shares outstanding
1,167
1,167
1,166
1,166
Basic and diluted earnings (loss) per share data attributable to the equity holders
of Barrick Gold Corporation
$
(1.32)
$
(1.32) $
1.23
$
1.23
14 Finance Costs, Net
15 Cash Flow – Other Items
For the years ended December 31
2018
2017
Interest1
Amortization of debt issue costs
Amortization of discount (premium)
Gain on interest rate hedges
Interest capitalized2
Accretion
Loss on debt extinguishment3
Finance income
$ 452
5
(1)
(3)
(9)
87
29
(15)
$
511
5
1
(6)
–
67
127
(14)
Total
$ 545
$ 691
1. Interest in the consolidated statements of cash flow is presented on a cash
basis. In 2018, cash interest paid was $350 million (2017: $425 million).
2. For the year ended December 31, 2018, the general capitalization rate was
6.10% (2017: 6.00%).
3. 2018 loss arose from a make-whole repurchase of the outstanding principal
on the 4.40% notes due 2021. 2017 loss arose from partial repayment
of several notes during the year (4.10% notes due 2023, 6.95% notes due
2019, and Pueblo Viejo Project Financing).
Operating Cash Flows – Other Items
For the years ended December 31
2018
2017
Adjustments for non-cash income statement items:
Gain on non-hedge derivatives (note 25e)
$
Stock-based compensation expense
–
33
$
(6)
80
Income from investment in
equity investees (note 16)
Change in estimate of rehabilitation costs
at closed mines
Net inventory impairment charges (note 17)
Change in other assets and liabilities
Settlement of rehabilitation obligations
(46)
(76)
(13)
199
(169)
(66)
55
21
(334)
(59)
Other operating activities
$ (62)
$ (319)
Cash flow arising from changes in:
Accounts receivable
Inventory
Other current assets
Accounts payable
Other current liabilities
$
(9)
(111)
(109)
19
37
$
8
(372)
(278)
103
(51)
Change in working capital
$ (173)
$ (590)
20163_Barrick_AR18_FINANCIALS_E_MAR 8.indd 129
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129
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation | Financial Report 2018
16 Investments
Equity Accounting Method Investment Continuity
Kabanga
Jabal Sayid
Zaldívar
GNX
Total
At January 1, 2017
$ 30
$ 180
$ 974
Equity pick-up (loss) from equity investees
Funds invested
Dividend
At December 31, 2017
Equity pick-up (loss) from equity investees
Funds invested
Impairment charges
At December 31, 2018
Publicly traded
Summarized Equity Investee Financial Information
For the years ended December 31
Revenue
Cost of sales (excluding depreciation)
Depreciation
Finance expense
Other expense (income)
Income from continuing operations before tax
Income tax expense
Income from continuing operations after tax
Total comprehensive income
Summarized Balance Sheet
For the years ended December 31
Cash and equivalents
Other current assets1
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
(1)
1
–
$ 30
–
–
(30)
$ –
No
26
–
–
61
–
(60)
$ 206
$ 975
39
–
–
$ 245
No
14
–
–
$ 989
No
$ 1,185
76
12
(60)
$ 1,213
46
5
(30)
$ 1,234
$ 1
(10)
11
–
$ 2
(7)
5
–
$ –
No
Jabal Sayid
Zaldívar
2018
$ 296
158
39
2
9
$ 88
(10)
$ 78
$ 78
2017
$ 214
116
33
3
2
$ 60
(8)
$ 52
$ 52
2018
2017
$ 599
$ 649
404
118
–
25
52
(24)
28
28
$
$
$
375
111
1
–
$ 162
(40)
$ 122
$ 122
Jabal Sayid
Zaldívar
2018
$ 128
68
$ 196
482
$ 678
$ 48
41
$ 89
331
14
$ 345
$ 434
$ 244
2017
$ 50
70
$ 120
485
$ 605
$ 12
35
$ 47
379
13
$ 392
$ 439
$ 166
2018
2017
$ 129
602
$ 731
1,927
$ 2,658
$
18
85
$ 103
12
546
$ 558
$ 661
$ 1,997
$
72
563
$ 635
1,582
$ 2,217
$
19
110
$ 129
20
99
$ 119
$ 248
$ 1,969
1. Zaldívar other current assets include inventory of $533 million (2017: $451 million).
The information above reflects the amounts presented in the financial information of the joint venture adjusted for
differences between IFRS and local GAAP.
130
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation | Financial Report 2018
Reconciliation of Summarized Financial Information to Carrying Value
Opening net assets
Income for the period
Dividend
Closing net assets, December 31
Barrick’s share of net assets (50%)
Equity earnings adjustment
Goodwill recognition
Carrying value
Jabal Sayid1
Zaldívar
$ 166
78
–
$ 244
122
–
123
$ 245
$ 1,969
28
–
$ 1,997
999
(10)
–
$ 989
1. A $165 million non-interest bearing shareholder loan due from the Jabal Sayid JV is presented as part of Other Assets (see note 22).
17 Inventories
Raw materials
Ore in stockpiles
Ore on leach pads
Mine operating supplies
Work in process
Finished products
Non-current ore in stockpiles1
Gold
Copper
As at
Dec. 31,
2018
$ 2,106
405
496
146
176
As at
Dec. 31,
2017
$ 2,125
405
515
174
168
$ 3,329
$ 3,387
(1,696)
(1,681)
As at
Dec. 31,
2018
As at
Dec. 31,
2017
$ 151
–
66
–
2
$ 219
–
$ 102
–
79
–
3
$ 184
–
$ 1,633
$ 1,706
$ 219
$ 184
1. Ore that we do not expect to process in the next 12 months is classified within other long-term assets.
Inventory Impairment Charges
For the years ended December 31
Lagunas Norte
Lumwana
Golden Sunlight
Pierina
Porgera
Inventory impairment charges1
2018
$ 166
18
10
4
1
$ 199
2017
$ –
–
6
11
4
$ 21
1. Impairment charges in 2018 primarily relate to stockpiles at Lagunas Norte
(refer to note 21). Impairment charges in 2017 primarily relate to leach pad
inventories at Pierina.
Ore in Stockpiles
Gold
Barrick Nevada
Pueblo Viejo
Kalgoorlie
Buzwagi
North Mara
Lagunas Norte
Veladero
Porgera
Turquoise Ridge
Other
Copper
Lumwana
As at
Dec. 31,
2018
As at
Dec. 31,
2017
$ 1,083
603
125
83
70
49
39
37
13
4
$ 1,040
538
138
109
47
147
22
55
26
3
151
102
$ 2,257
$ 2,227
131
20163_Barrick_AR18_FINANCIALS_E_MAR 8.indd 131
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation | Financial Report 2018
Ore on Leach Pads
18 Accounts Receivable and Other Current Assets
Gold
Lagunas Norte
Veladero
Nevada
Pierina
As at
Dec. 31,
2018
As at
Dec. 31,
2017
$ 168
138
81
18
$ 143
145
105
12
$ 405
$ 405
Purchase Commitments
At December 31, 2018, we had purchase obligations for
supplies and consumables of approximately $1,972 million
(2017: $1,147 million).
19 Property, Plant and Equipment
At January 1, 2018
Net of accumulated depreciation
Additions4
Capitalized interest
Disposals
Depreciation
Impairment charges
Transfers5
At December 31, 2018
At December 31, 2018
Accounts receivable
Amounts due from concentrate sales
Other receivables
Other current assets
Derivative assets (note 25f)
Goods and services taxes recoverable1
Prepaid expenses
Other
As at
Dec. 31,
2018
As at
Dec. 31,
2017
$
76
172
$ 110
129
$ 248
$ 239
$
2
182
72
51
$
2
167
68
84
$ 307
$ 321
1. Primarily includes VAT and fuel tax recoverables of $67 million in
Tanzania, $60 million in Zambia, $22 million in Argentina, $2 million
in Chile, $12 million in the Dominican Republic, and $7 million in
Peru (Dec.31, 2017: $32 million, $31 million, $49 million, $3 million,
$19 million and $8 million, respectively).
Mining
property
costs
subject to
Mining
property
costs not
subject to
depreciation1,3 depreciation1,2
Total
Buildings, plant
and equipment
$ 4,213
$ 6,522
$ 3,071
$ 13,806
(21)
–
(7)
(790)
(394)
599
199
–
–
(772)
(178)
487
1,050
9
–
–
(76)
(1,086)
1,228
9
(7)
(1,562)
(648)
–
$ 3,600
$ 6,258
$ 2,968
$ 12,826
Cost
Accumulated depreciation and impairments
$ 14,750
(11,150)
$ 21,624
(15,366)
$ 14,610
(11,642)
$ 50,984
(38,158)
Net carrying amount – December 31, 2018
$ 3,600
$ 6,258
$ 2,968
$ 12,826
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 include construction-in-progress, projects and acquired mineral resources and exploration potential at operating minesites
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. Additions include revisions to the capitalized cost of closure and rehabilitation activities.
5. Primarily relates to long-lived assets that are transferred to PP&E once they are placed into service.
132
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation | Financial Report 2018
At January 1, 2017
Cost
Accumulated depreciation and impairments
Mining
property
costs
subject to
Mining
property
costs not
subject to
depreciation1,3 depreciation1,2
Total
Buildings, plant
and equipment
$ 14,111
(9,555)
$ 20,778
(13,584)
$ 14,634
(12,281)
$ 49,523
(35,420)
Net carrying amount – January 1, 2017
$ 4,556
$ 7,194
$ 2,353
$14,103
Additions4
Disposals
Depreciation
Impairment reversals (charges)
Transfers5
At December 31, 2017
At December 31, 2017
158
(72)
(878)
(102)
551
219
(194)
(819)
(359)
481
1,966
(931)
–
715
(1,032)
2,343
(1,197)
(1,697)
254
–
$ 4,213
$ 6,522
$ 3,071
$ 13,806
Cost
Accumulated depreciation and impairments
$ 14,209
(9,996)
$ 20,938
(14,416)
$ 14,637
(11,566)
$ 49,784
(35,978)
Net carrying amount – December 31, 2017
$ 4,213
$ 6,522
$ 3,071
$ 13,806
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 includes 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. Additions include revisions to the capitalized cost of closure and rehabilitation activities.
5. Primarily relates to long-lived assets that are transferred to PP&E once they are placed into service.
a) Mineral Property Costs Not Subject to Depreciation
Construction-in-progress1
Acquired mineral resources and
exploration potential
Projects
Pascua-Lama
Norte Abierto
Donlin Gold
Carrying
amount at
Dec. 31,
2018
Carrying
amount at
Dec. 31,
2017
$ 786
$ 640
124
186
1,245
639
174
1,467
612
166
$ 2,968
$ 3,071
1. Represents assets under construction at our operating minesites.
b) Changes in Gold and Copper Mineral Life
of Mine Plan
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 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 2018 was
an $85 million decrease (2017: $91 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 $82 million at December 31, 2018 (2017:
$118 million) for construction activities at our sites
and projects.
Operating leases are recognized as an operating cost
in the consolidated statements of income on a straight-line
basis over the lease term. At December 31, 2018, we
have operating lease commitments totaling $167 million, of
which $60 million is expected to be paid within a year,
$105 million is expected to be paid within two to five years
and the remaining amount to be paid beyond five years.
20163_Barrick_AR18_FINANCIALS_E_MAR 8.indd 133
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133
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation | Financial Report 2018
20 Goodwill and Other Intangible Assets
a) Intangible Assets
Opening balance January 1, 2017
$ 87
$ 11
$ 14
$ 160
$ 272
Water
rights1 Technology2
Supply
contracts3
Exploration
potential4
Total
Additions
Disposals
Amortization
Closing balance December 31, 2017
Amortization and impairment losses5
Closing balance December 31, 2018
Cost
Accumulated amortization and impairment losses
Net carrying amount December 31, 2018
–
(16)
–
–
–
(2)
–
–
(3)
16
–
(12)
16
(16)
(17)
$ 71
$ 9
$ 11
$ 164
$ 255
–
$ 71
$ 71
–
$ 71
(1)
$ 8
$ 17
(9)
(3)
$ 8
$ 39
(31)
(24)
(28)
$ 140
$ 227
$ 298
(158)
$ 425
(198)
$ 8
$ 8
$ 140
$ 227
1. Relates to water rights in South America, and will be amortized through cost of sales when we begin using these in the future.
2. The amount is 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.
5. Exploration potential impairment losses relate to Acacia’s Nyanzaga project in Tanzania.
b) Goodwill
Barrick Nevada
Veladero
Turquoise Ridge
Hemlo
Kalgoorlie
Total
Closing balance
December 31,
2017
Closing balance
December 31,
2018
Impairments
$ 514
154
528
63
71
$
–
(154)
–
–
–
$
514
–
528
63
71
$ 1,330
$
(154)
$ 1,176
On a total basis, the gross amount and accumulated impairment losses are as follows:
Cost
Accumulated impairment losses December 31, 2018
Net carrying amount December 31, 2018
$ 8,618
(7,442)
$ 1,176
134
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation | Financial Report 2018
21 Impairment and Reversal of Non-Current Assets
Summary of Impairments (Reversals)
For the year ended December 31, 2018, we recorded net
impairments of $746 million (2017: impairment reversals of
$212 million) for non-current assets and $154 million (2017:
$nil) for goodwill, as summarized in the following table:
For the years ended December 31
2018
2017
Lagunas Norte
Veladero
Equity method investments
Acacia exploration sites
Barrick Nevada
Pascua-Lama
Cerro Casale
Lumwana
Bulyanhulu
Other
Total impairment losses (reversals)
of long-lived assets
$ 405
246
30
24
14
(7)
–
–
–
34
$
3
–
–
12
–
407
(1,120)
(259)
740
5
$ 746
$
(212)
Veladero goodwill
154
Total goodwill impairment losses
$ 154
$
–
–
Total impairment losses (reversals)
$ 900
$
(212)
2018 Indicators of Impairment/Reversal
Third and Fourth Quarter 2018
In the fourth quarter of 2018, as per our policy, we performed
our annual goodwill impairment test and identified an
impairment at our Veladero mine. Also in the fourth quarter,
we reviewed the updated LOM plans for our other operating
minesites for indicators of impairment or reversal. We
noted an indicator of impairment at Acacia and at our
Lagunas Norte and Lumwana mines and no indicators of
impairment reversal.
Veladero
In the third quarter of 2018, the Argentine government
re-established customs duties for all exports from Argentina.
Effective for the period of September 2018 to December 31,
2020, exports of doré are subject to a 12% duty, capped at
ARS 4.00 per USD exported. Based on our initial analysis
performed in the third quarter of 2018, the re-establishment
of the customs duties was not expected to have a
significant adverse effect on the long-term fair value of
the mine and the Company was engaged in ongoing
discussions with the federal government to clarify the
impact of the export duty on Veladero’s operations given
the existing tax stability agreement . As such, no indicator
of impairment was identified in the third quarter of 2018.
Upon the finalization of Veladero’s updated LOM plan
in the fourth quarter of 2018, we observed a decrease in
the mine’s cash flows reflecting a higher cost structure
related to increasing government imposts (including new
conditions associated with the heap leach permits that
require the contribution of 1.5% of the mine’s revenues
towards a trust commencing when Phase 6 of the leach
pad begins production and the re-establishment of the
export duties for all exports from Argentina effective
September 2018), country risk and increasing energy
costs. Upon performing our goodwill impairment test in
the fourth quarter of 2018, we identified that the mine’s
carrying value exceeded its FVLCD and we recorded
a goodwill impairment of $154 million and a non-current
asset impairment of $246 million, based upon a FVLCD
of $674 million.
Lagunas Norte
In the third quarter of 2018, we updated a feasibility study
for proposed projects relating to the processing of
carbonaceous materials (“CMOP”) and the treatment of
refractory sulphide ore (“PMR”) at Lagunas Norte in Peru.
Based upon the findings of the feasibility study, it was
determined not to proceed with the PMR project
at September 30, 2018. As a result, an impairment
assessment was undertaken and a non-current asset
impairment of $405 million was recognized in the third
quarter of 2018, as we identified that Lagunas Norte’s
carrying value exceeded its FVLCD of $150 million.
The key assumptions and estimates used in determining
the FVLCD are short-term and long-term gold prices of
$1,200 per ounce, NAV multiple of 1.1–1.2 and a weighted
average cost of capital (“WACC”) of 3.8%.
In the fourth quarter of 2018, we determined that the
proposed project relating to CMOP at Lagunas Norte in Peru
was not feasible in its current form and that more detailed
studies and analysis are required before proceeding with the
project. As such, a decision was made to not proceed with
the CMOP project at this time and an inventory impairment
of $166 million was recorded at December 31, 2018 to
reduce the carrying value of the CMOP ounces in inventory
to nil. The decision to not proceed with the CMOP project
was considered an indicator of impairment at December 31,
2018 and an impairment assessment was performed using
the fourth quarter 2018 gold price assumption of $1,250 per
ounce. No further impairment was identified for the CGU as
the carrying value of the mine subsequent to the inventory
impairment was nil and no impairment reversal was identified
as the mine’s FVLCD was negative.
135
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation | Financial Report 2018
Lumwana
On September 28, 2018, as part of their 2019 budget, the
Zambian government introduced changes to the current
mining tax regime. The changes include an increase in
royalty rates by 1.5%, the introduction of a 10% royalty on
copper production if the copper price increases above a
certain price, the imposition of a 5% import duty on copper
concentrates, the non-deductibility of mineral royalties paid
or payable for income tax purposes, and the replacement
of the VAT with a non-refundable sales tax, although any
outstanding VAT claims will be settled through the current
refund mechanism. The new mining tax regime had a
proposed effective date of January 1, 2019; however,
discussions were ongoing with the Zambian government
in an effort to mitigate some of the impact prior to the
proposed changes being enacted. However, based upon
our initial analysis, it was our expectation that Lumwana
would remain cash flow positive at current copper prices
even if a positive outcome was not reached through the
discussions with the government. Given the uncertainty
over the final outcome of the tax changes and the need to
assess the full impact to the life of mine plan once those
tax changes have been finalized, no indicator of impairment
was identified in the third quarter of 2018.
In the fourth quarter of 2018, the Zambian government
finalized the changes to the current tax regime, which are
effective January 1, 2019, with the exception of the changes
to the non-refundable sales tax, which are expected to be
finalized in the first quarter of 2019 and effective April 1,
2019. The finalization of the changes to the mining tax
regime was considered an indicator of impairment in
the fourth quarter of 2018 and as such an impairment
assessment was performed for Lumwana. Although the
increase in the royalty rates negatively impacted the cash
flows of the mine, this impact was largely offset by
improvements in Lumwana’s cost structure arising primarily
from the re-negotiation of contracts with suppliers under
more favorable terms. As a result, no impairment was
identified as the FVCLD exceeded the carrying value. We
will reassess the impact of the non-refundable sales tax
on the mine’s cash flows once the outcome is finalized.
Acacia
In the fourth quarter of 2018, potential indicators of
impairment were identified in relation to Acacia, specifically
the ongoing uncertainty surrounding a potential resolution
of the dispute between Acacia and the Government of
Tanzania (“GoT”), the revised Bulyanhulu business model,
the updated geological models at North Mara and
Bulyanhulu as well as the decline in Acacia’s market
capitalization below its carrying value throughout 2018.
As a result, an impairment assessment was undertaken in
the fourth quarter, with no impairment loss identified.
The assessment assumed the resumption of
concentrate sales and of operations at Bulyanhulu will
occur in the first quarter of 2020 and in late 2020,
respectively, which is a further six month delay from the
assumptions used in the impairment assessment carried
out in the second quarter of 2018. The assessment also
reflected the targeted outcome for a negotiated resolution
in line with the proposed framework as reflected in the
most recent LOM, and that VAT refunds will recommence
and historic carried forward tax losses will continue to
be available to offset against future taxable profits from
January 1, 2020.
Second Quarter 2018
Acacia
In the second quarter of 2018, potential indicators of
impairment were identified in relation to Acacia, specifically
the ongoing uncertainty surrounding a potential resolution
between Barrick and the GoT as well as the sustained
decline in Acacia’s market capitalization below its carrying
value over the first half of 2018. As a result, an impairment
assessment was undertaken in the second quarter, with
no impairment loss identified.
The assessment assumed that the resumption of
concentrate sales and of operations at Bulyanhulu will
occur in the second quarter of 2019 and in late 2019,
respectively. The assessment also reflected the targeted
outcome for a negotiated resolution in line with the
proposed framework as reflected in the most recent LOM.
The key assumptions and estimates used in
determining the FVLCD are short- and long-term gold
prices of $1,200 per ounce and a WACC of 11%, consistent
with the rate used for the impairment assessment completed
at December 31, 2017 in the calculation of FVLCD. FVLCD
is most sensitive to changes in these key assumptions and
to the timing of resolution of the export ban; therefore, a
sensitivity analysis was performed based on a decrease in
the long-term gold price of $100 per ounce and an increase
in the WACC of 1%, and a further six month delay in the
resolution of the export ban. A $100 per ounce decrease in
the long-term gold price would result in the recognition of a
non-current asset impairment at Bulyanhulu of $98 million,
net of tax. A 1% increase in the WACC and a further delay
of six months in the resolution of the export ban would not
result in the recognition of an impairment. However, should
136
20163_Barrick_AR18_FINANCIALS_E_MAR 8.indd 136
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation | Financial Report 2018 a negotiated resolution not eventuate, the recoverable
value of Bulyanhulu may be further impacted, resulting in
a review at such time.
Subsequent to the second quarter close, OreCorp,
which is Acacia’s joint venture partner in the Nyanzaga
project in Tanzania, executed its option under the earn-in
agreement to increase its ownership in the project to 51%
through a $3 million payment to Acacia. Furthermore,
Acacia signed a conditional agreement to sell its remaining
49% interest in the project to OreCorp for $7 million and a
net smelter royalty capped at $15 million based on future
production. As a result of the agreement, and Acacia’s
commitment to a sale, Acacia expects to recover the value
of the asset through sale and not value in use and as such
has valued the asset at FVLCD of $10 million, resulting
in the recognition of an impairment loss of US$24 million in
the second quarter of 2018.
Kabanga
In January 2018, new mining regulations relating to mineral
rights were issued in Tanzania. These regulations canceled
all retention licenses and declared that they no longer have
legal effect and any previous holder, along with any third
party, of a retention license would need to apply for a new
prospecting or mining license for that area. Our 50%
interest in the Kabanga project (a joint venture between
Barrick and Glencore) was affected by these changes.
While we have now submitted our application for a
prospecting license, the operating environment for mining
projects in Tanzania remains challenging and we have
determined that our carrying amount for the project is not
recoverable under the current circumstances. As such, we
considered this an indicator of impairment, resulting in the
recognition of a $30 million impairment in the second
quarter of 2018, which is equal to the full carrying value
of our equity method investment in the Kabanga JV.
2017 Indicators of Impairment/Reversal
Fourth Quarter 2017
In the fourth quarter 2017, as per our policy, we performed
our annual goodwill impairment test. No impairments were
identified. Also in the fourth quarter, we reviewed the
updated LOM plans for our other operating minesites
for indicators of impairment or reversal. We noted no
indicators of impairment, but did note one indicator of
potential impairment reversal. Additionally, as a result of
events that occurred in the fourth quarter, we identified
indicators of impairment at Acacia and Pascua-Lama
as discussed below.
Also as a result of an increase in proven and probable
reserves, we have observed an increase in the FVLCD of
our Lumwana copper mine in Zambia that has resulted in
a partial reversal of the non-current asset impairment loss
recorded in 2014. An impairment reversal in the amount
of $259 million was recorded in the fourth quarter of 2017.
The recoverable amount, based on the mine’s FVLCD
was $747 million.
Pascua-Lama
As described in note 36, on January 17, 2018, the Pascua-
Lama project received a revised notice from the Chilean
environmental regulators, which reduced the administrative
fine and ordered the closure of existing surface facilities
on the Chilean side of the project in addition to certain
monitoring activities. Given the impact on our ability to
advance the project as an open pit operation and the
subsequent reclassification of Pascua-Lama’s open-pit
reserves to resources, this was determined to be an
indicator of impairment in the fourth quarter of 2017 as
it was the resolution of a condition that existed at
December 31, 2017. We identified that the carrying value
of Pascua-Lama exceeded the FVLCD and we recorded
a non-current asset impairment of $429 million, based on
a FVLCD of $850 million.
Acacia
On March 3, 2017, the GoT announced a general ban
on the export of metallic mineral concentrates (“Ban”),
impacting Acacia’s Bulyanhulu and Buzwagi mines.
Subsequently, during the second quarter of 2017, two
Presidential Committees reported their findings, following
investigations, that Acacia and its predecessor companies
have historically under-declared the contents of the
exports of concentrate, resulting in a significant under-
declaration of taxes. Acacia has refuted the findings of
these committees, affirming that it has declared everything
of commercial value that it has produced since it started
operating in Tanzania and has paid all appropriate
royalties and taxes on all of the payable minerals that it
has produced.
In July 2017, new and amended legislation was passed
in Tanzania, including various amendments to the 2010
Mining Act and a new Finance Act. The amendments to the
2010 Mining Act increased the royalty rate applicable to
metallic minerals such as gold, copper and silver to 6%
(from 4%), and the new Finance Act imposed a 1% clearing
fee on the value of all minerals exported from Tanzania
from July 1, 2017.
137
20163_Barrick_AR18_FINANCIALS_E_MAR 8.indd 137
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation | Financial Report 2018 At the beginning of September 2017, as a result of the
ongoing concentrate export ban, Bulyanhulu commenced
a program to reduce operational activity and expenditure
in order to preserve the viability of the mine over the long
term. This decision was identified by management as a
potential indicator of impairment in the third quarter of 2017.
On October 19, 2017, Barrick announced that it had
agreed on a framework with the Government of Tanzania
for a new partnership between Acacia and the Government
of Tanzania. Barrick and the Government of Tanzania also
agreed to form a working group that will focus on the
resolution of outstanding tax claims against Acacia. Barrick
and the Government of Tanzania are also reviewing the
conditions for the lifting of the Ban. In the fourth quarter
of 2017, the key terms of the proposed framework were
reviewed by Acacia management and independent board
members. Acacia has not yet been provided with a detailed
proposal for a decision around the ongoing discussions
between Barrick and the Government of Tanzania.
In the fourth quarter of 2017, Barrick identified several
indicators of impairment, including but not limited to,
the continued challenges experienced in the operating
environment in Tanzania, the announcement of new
legislation by the GoT in respect of the natural resources
sector and the resulting decision to reduce operations
at Bulyanhulu.
As a result of the updated LOM plan, which reflects
the targeted outcome for a negotiated resolution in line with
the proposed framework, we identified that the carrying
value of Bulyanhulu exceeded the FVLCD and we recorded
a non-current asset impairment of $740 million, based on
a FVLCD of $600 million (100% basis). Refer to note 36 for
further details of the proposed framework.
Impairment assessments were also performed in
the second and third quarters of 2017 and no impairment
charges were recorded.
First Quarter 2017
Cerro Casale
As noted in note 4d, on March 28, 2017, we announced the
sale of a 25% interest in the Cerro Casale Project in Chile
(now known as the Norte Abierto project), which would
result in Barrick retaining a 50% interest in the Project and
this was deemed to be an indicator of impairment reversal
in the first quarter of 2017. As such, in first quarter 2017,
we recognized a partial reversal of the non-current asset
impairment recorded in the fourth quarter of 2014 in the
amount of $1.12 billion. The recoverable amount, based on
the fair value less cost to dispose as implied by the
transaction price, was $1.2 billion.
138
Key Assumptions
The recoverable amount has been determined based on its
estimated FVLCD, which has been determined to be
greater than the VIU amounts. 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, evidence of value from current year disposals
and for our projects the expected start of production. In
addition, assumptions are 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 where a recoverable amount was
required to be determined, FVLCD 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 exclude a
material portion of total reserves and resources, we assign
value to reserves and resources not considered in these
models. Based on observable market or publicly available
data, including 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 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 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.
Copper
For our copper operating segments, 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
20163_Barrick_AR18_FINANCIALS_E_MAR 8.indd 138
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation | Financial Report 2018 LOM plans (level 3 of the fair value hierarchy). 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 are discounted using a WACC depending on the
location and market risk factors for each mine.
Assumptions
Our gold price assumption used in our fourth quarter
2018 impairment testing is $1,250 per ounce. Our gold
price assumption used in our 2017 impairment testing
was $1,200 per ounce. The increase in the gold price
assumption in 2018 was not considered an indicator of
impairment reversal as the increased price would not have
resulted in the identification of an impairment reversal
at our mines with reversible impairments. The other
key assumptions used in our impairment testing, based
on the CGUs tested in each year, are summarized in the
table below:
change in our gold price assumptions or a +/- $0.25 per
pound change in copper price assumptions, while holding
all other assumptions constant. We then assumed a+/- 1%
change in our WACC, independent from the change in
gold or copper prices, while holding all other assumptions
constant. These sensitivities help to determine the
theoretical impairment losses or impairment reversals that
would be recorded with these changes in gold or copper
prices and WACC. If the gold price per ounce was
decreased by $100, a further non-current asset impairment
of $186 million would be recognized for Veladero, with
a similar increase in the gold price per ounce resulting in
a reduction in the impairment of $184 million. If the copper
price was decreased by $0.25 per pound, a non-current
asset impairment of $426 million would be recognized
at Lumwana, while a $0.25 per pound increase in
the copper price would result in a partial reversal of
$573 million of the non-current asset impairment recorded
at Lumwana in 2014.
Other results of the sensitivity analysis are as follows:
Copper price per lb (long-term)
WACC – gold (range)
WACC – gold (avg)
WACC – copper
NAV multiple – gold (avg)
LOM years – gold (avg)
Value per ounce of gold
Value per ounce of silver
2018
2017
$2.85
4%–11%
7%
10%
1.05
15
n/a
n/a
$2.75
3%–11%
6%
9%
1.2
17
$30–$55
$0.41–$0.76
Sensitivities
Should there be a significant increase or 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 be affected
by these changes and 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 a sensitivity analysis on each CGU
that was tested as part of the goodwill impairment test, as
well as those CGUs which have had an impairment or
impairment reversal in recent years. We flexed the gold
and copper prices and the WACC, which are the most
significant assumptions that impact the impairment
calculations. We first assumed a +/- $100 per ounce
Operating Segment
Pueblo Viejo1
Kalgoorlie
Hemlo
(Impairment)/reversal
based on
Gold price
+$100
Gold price
-$100
$ 607
–
–
$ (791)
(230)
(139)
1. The impairment reversal represents a full reversal of the impairment taken
in 2015 and does not consider any depreciation that would have been
recognized since 2015. As such, any impairment reversal recognized would
be net of depreciation and would be a lower amount.
We also performed a sensitivity analysis on our WACC,
which is another key input that impacts the impairment
calculations. We assumed a+/- 1% change in the WACC,
while holding all other assumptions constant, to determine
the impact on impairment losses recorded, and whether
any additional operating segments would be impacted.
The results of this analysis are as follows:
A 1% decrease in the WACC would result in a partial
reversal of $540 million and $132 million of the non-current
asset impairment recorded in 2015 at Pueblo Viejo and in
2014 at Lumwana, respectively. It would also result in a
reduction of $42 million in the non-current asset impairment
at Veladero, while a 1% increase in the WACC would result
in an increase of similar value in the impairment recognized
at Veladero.
20163_Barrick_AR18_FINANCIALS_E_MAR 8.indd 139
2019-03-08 4:20 PM
139
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation | Financial Report 2018
The carrying value of the CGUs that are most sensitive
23 Accounts Payable
to changes in the key assumptions used in the FVLCD
calculation are:
As at December 31, 2018
Carrying value
Pueblo Viejo1
Veladero2
Lumwana3,4
Bulyanhulu5
Lagunas Norte6
Accounts payable
Accruals
$ 2,863
667
735
588
–
1. This CGU had an impairment loss in 2015. As there have been no indicators
of impairment or impairment reversal in 2018, the carrying value would
remain sensitive to the key assumptions in the FVLCD model from 2015.
2. As a result of the impairment recorded in 2018, this CGU was remeasured
to fair value and is sensitive to changes, both positive and negative, in
the key assumptions used to calculate the FVLCD.
3. This CGU had an impairment loss in 2012 and 2014 and a partial impairment
reversal in 2017. While there was an indicator of impairment in 2018, no
impairment was identified; however, the carrying value remains sensitive to
the key assumptions in the FVLCD models from 2012 and 2014.
4. This CGU had an impairment reversal in 2017. There was no indicator of
impairment reversal identified in 2018; however, the carrying value remains
sensitive to the key assumptions in the FVLCD model from 2017.
5. These CGUs had an impairment loss in 2017. As there have been no
indicators of impairment or impairment reversal in 2018, their carrying
values would remain sensitive to the key assumptions in their FVLCD
model from 2017.
6. Due to the long-lived asset and inventory impairments recorded in 2018,
the carrying value of the CGU is nil.
24 Other Current Liabilities
Provision for environmental
rehabilitation (note 27b)
Derivative liabilities (note 25f)
Deposit on Pueblo Viejo gold and silver
streaming agreement
Share-based payments (note 34b)
Deposit on Pascua-Lama silver
sale agreement
Other
22 Other Assets
25 Financial Instruments
As at
Dec. 31,
2018
$ 744
357
As at
Dec. 31,
2017
$ 760
299
$ 1,101
$ 1,059
As at
Dec. 31,
2018
As at
Dec. 31,
2017
$ 111
3
$ 152
30
83
30
–
94
85
17
7
40
$ 321
$ 331
Derivative assets (note 25f)
Goods and services taxes recoverable1
Notes receivable2
Restricted cash3
Prepayments
Norte Abierto JV Partner Receivable
Other investments
Other
As at
Dec. 31,
2018
As at
Dec. 31,
2017
$
1
271
285
121
37
143
209
168
$
1
398
279
119
42
166
33
232
$ 1,235
$ 1,270
1. Includes VAT and fuel tax receivables of $110 million in Argentina,
$111 million in Tanzania and $50 million in Chile (Dec. 31, 2017:
$220 million, $132 million and $46 million, respectively). The VAT in
Argentina is recoverable once Pascua-Lama enters production.
2. Primarily represents the interest bearing promissory note due from NovaGold
and 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. Represents cash balance at Pueblo Viejo that is contractually restricted to
the disbursements for environmental rehabilitation that are expected
to occur near the end of Pueblo Viejo’s mine life.
140
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 18); restricted share units (note 34b).
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,
2018
$ 842
477
252
As at
Dec. 31,
2017
$ 662
427
1,145
$ 1,571
$ 2,234
Of total cash and cash equivalents as of December 31,
2018, $383 million (2017: $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.
20163_Barrick_AR18_FINANCIALS_E_MAR 8.indd 140
2019-03-08 4:20 PM
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation | Financial Report 2018
b) Debt and Interest1
4.4%/5.7% notes3,9
3.85%/5.25% notes
5.80% notes4,9
6.35% notes5,9
Other fixed rate notes6,9
Capital leases7
Other debt obligations
5.75% notes8,9
Acacia credit facility10
Less: current portion11
4.4%/5.7% notes3,9
3.85%/5.25% notes
5.80% notes4,9
6.35% notes5,9
Other fixed rate notes6,9
Project financing
Capital leases7
Other debt obligations
4.10%/5.75% notes8,9
Acacia credit facility10
Less: current portion11
Closing
balance
Dec. 31, 2017
$ 1,468
1,079
395
593
1,326
46
603
842
71
$ 6,423
(59)
$ 6,364
Closing
balance
Dec. 31, 2016
$ 1,467
1,078
395
593
1,607
400
114
609
1,569
99
$ 7,931
(143)
$ 7,788
Amortization
Closing
balance
and other2 Dec. 31, 2018
Proceeds Repayments
$ –
–
–
–
–
–
–
–
–
$ –
–
$ –
$
$
(629)
–
–
–
–
(27)
(3)
–
(28)
(687)
–
$
(687)
Proceeds Repayments
$ –
–
–
–
–
–
–
–
–
–
$ –
–
$ –
$
–
–
–
–
(279)
(423)
(68)
(4)
(731)
(28)
$ (1,533)
–
$ (1,533)
Amortization
Closing
balance
and other2 Dec. 31, 2017
$ 3
–
–
1
–
–
(2)
–
–
$ 2
–
$ 2
842
$
1,079
395
594
1,326
19
598
842
43
$ 5,738
(43)
$ 5,695
$ 1
1
–
–
(2)
23
–
(2)
4
–
$ 25
–
$ 25
$ 1,468
1,079
395
593
1,326
–
46
603
842
71
$ 6,423
(59)
$ 6,364
1. The agreements that govern our long-term debt each contain various provisions which are not summarized herein. These provisions allow Barrick, at its
option, to 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 (decreases) in capital leases.
3. Consists of $nil (2017: $629 million) of our wholly-owned subsidiary Barrick North America Finance LLC (“BNAF”) notes due 2021 and $850 million
(2017: $850 million) of BNAF notes due 2041.
4. Consists of $400 million (2017: $400 million) of 5.80% notes which mature in 2034.
5. Consists of $600 million (2017: $600 million) of 6.35% notes which mature in 2036.
6. Consists of $1.3 billion (2017: $1.3 billion) in conjunction with our wholly-owned subsidiary BNAF and our wholly-owned subsidiary Barrick (PD) Australia
Finance Pty Ltd. (“BPDAF”). This consists of $248 million (2017: $248 million) of BPDAF notes due 2020, $250 million (2017: $250 million) of BNAF notes
due 2038 and $850 million (2017: $850 million) of BPDAF notes due 2039.
7. Consists primarily of capital leases at Pascua-Lama, $9 million and Lagunas Norte, $7 million (2017: $13 million and $27 million, respectively).
8. Consists of $850 million (2017: $850 million) in conjunction with our wholly-owned subsidiary BNAF.
9. We provide an unconditional and irrevocable guarantee on all BNAF, BPDAF, Barrick Gold Finance Company (“BGFC”), and Barrick (HMC) Mining (“BHMC”)
notes and generally provide such guarantees on all BNAF, BPDAF, BGFC, and BHMC notes issued, which will rank equally with our other unsecured and
unsubordinated obligations.
10. Consists of an export credit backed term loan facility.
11. The current portion of long-term debt consists of other debt obligations ($4 million; 2017: $4 million), capital leases ($11 million; 2017: $27 million) and Acacia
credit facility ($28 million; 2017: $28 million).
20163_Barrick_AR18_FINANCIALS_E_MAR 8.indd 141
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141
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation | Financial Report 2018
1.75%/2.9%/4.4%/5.7% Notes
In June 2011, 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 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 of the
$1.1 billion of 2.9% notes. During 2015, the remainder
($229 million) of the $1.1 billion of 2.9% notes was repaid.
During 2016, $721 million of the $1.35 billion of the
4.4% notes was repaid. During 2018, the remaining
$629 million of the 4.4% notes was repaid.
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. During 2015, $913 million of the
3.85% notes was repaid.
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%. We also provide an unconditional
and irrevocable guarantee of these payments, which rank
equally with our other unsecured and unsubordinated
obligations. During 2016, $152 million of the $400 million
of the 4.95% notes was repaid.
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 rank equally with our other
unsecured, unsubordinated obligations. During 2015,
$275 million was repaid. During 2016, an additional
$196 million was repaid. During 2017, the remaining
$279 million was repaid.
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%. 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. During 2016, the entire
balance ($500 million) of the 10-year notes with a coupon
rate of 6.8% 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 was non-recourse subject
to guarantees provided by Barrick and Goldcorp for their
proportionate share which would 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 had been met, resulting in termination
of the guarantees. The lending syndicate was comprised
of international financial institutions including export
development agencies and commercial banks.
We had drawn the entire $1.035 billion. During 2017,
the remaining principal balance of the Pueblo Viejo
Financing Agreement was fully repaid.
142
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation | Financial Report 2018 Amendment and Refinancing of the Credit Facility
In November 2018, we amended a credit and guarantee
agreement (the “Credit Facility”) with certain Lenders, which
requires such Lenders to make available to us a credit
facility of $3.0 billion or the equivalent amount in Canadian
dollars. The Credit Facility, which is unsecured, currently
has an interest rate of London Interbank Offered Rate
(“LIBOR”) plus 1.25% on drawn amounts, and a commitment
rate of 0.175% on undrawn amounts. Also in November
2018, the termination date of the Credit Facility was
extended from January 2023 to January 2024. The Credit
Facility is undrawn as at December 31, 2018.
2.50%/4.10%/5.75% Notes
On May 2, 2013, we issued an aggregate of $3 billion in
notes through Barrick and our wholly-owned indirect
subsidiary BNAF consisting of $650 million of 2.50% notes
that matured in 2018, $1.5 billion of 4.10% notes that mature
in 2023 and $850 million of 5.75% notes issued by BNAF
that mature in 2043. $2 billion of the net proceeds from this
offering were used to repay amounts outstanding under
our revolving credit facility at that time. We provided an
unconditional and irrevocable guarantee on the $850 million
of 5.75% notes issued by BNAF, which will rank equally
with our other unsecured and unsubordinated obligations.
During 2013, $398 million of the $650 million 2.50%
notes was repaid. During 2015, $769 million of 4.10% notes
and $129 million of 2.5% notes were repaid. During 2016,
the remainder ($123 million) of the $650 million
of the 2.50% notes was repaid. During 2017, the remaining
$731 million of the 4.10% notes was 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 was put in place
to fund a substantial portion of the construction costs of the
CIL circuit at the process plant at the Bulyanhulu Project.
The Facility 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 was drawn. During 2015,
$14 million was repaid. During 2016, $29 million was
repaid. During 2017, $28 million was repaid. During 2018,
$28 million was repaid.
For the years ended December 31
4.4%/5.7% notes
3.85%/5.25% notes
5.80% notes
6.35% notes
Other fixed rate notes
Project financing
Capital leases
Other debt obligations
4.10%/5.75% notes
Acacia credit facility
Deposits on Pascua-Lama silver sale agreement (note 29)
Deposits on Pueblo Viejo gold and silver streaming agreement (note 29)
Less: interest capitalized
2018
2017
Interest
cost
Effective
rate1
Interest
cost
Effective
rate1
$ 63
53
23
39
83
–
2
38
49
5
65
33
$ 453
(9)
$ 444
5.25%
4.87%
5.85%
6.41%
6.16%
–
6.18%
6.55%
5.79%
3.59%
8.25%
6.41%
$
77
53
23
38
93
14
3
31
72
6
66
35
$ 511
–
$ 511
5.23%
4.87%
5.85%
6.41%
6.38%
7.04%
3.60%
6.55%
5.12%
3.59%
8.37%
6.14%
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.
20163_Barrick_AR18_FINANCIALS_E_MAR 8.indd 143
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143
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation | Financial Report 2018
Scheduled Debt Repayments1
4.95% notes3
7.31% notes2
3.85% notes
7.73% notes2
7.70% notes2
7.37% notes2
8.05% notes2
6.38% notes2
5.80% notes
5.80% notes
6.45% notes2
6.35% notes
7.50% notes3
5.95% notes3
5.70% notes
5.25% notes
5.75% notes
Other debt obligations2
Acacia credit facility
Issuer
BPDAF
BGC
BGC
BGC
BGC
BGC
BGC
BGC
BGC
BGFC
BGC
BHMC
BNAF
BPDAF
BNAF
BGC
BNAF
Maturity
Year
2019
2020
2021
2022
2023
2024 and
thereafter
Total
$
2020
2021
2022
2025
2025
2026
2026
2033
2034
2034
2035
2036
2038
2039
2041
2042
2043
$
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
4
28
$ 248
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
1
14
$ 32
$ 263
$
–
7
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
7
$
$
–
–
337
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
$ 337
$
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
$
– $ 248
–
7
337
–
6
6
5
5
32
32
15
15
200
200
200
200
200
200
300
300
600
600
250
250
850
850
850
850
750
750
850
850
5
–
42
–
$ 5,108 $ 5,747
Minimum annual payments
under capital leases
$ 11
$
4
$
1
$
1
$
1
$
2 $
20
1. This table illustrates the contractual undiscounted cash flows, and may not agree with the amounts disclosed in the consolidated balance sheet.
2. Included in Other debt obligations in the Long-Term Debt table.
3. Included in Other fixed rate notes in the Long-Term Debt table.
144
20163_Barrick_AR18_FINANCIALS_E_MAR 8.indd 144
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation | Financial Report 2018
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
derivatives 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”.
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
General and administration,
exploration and evaluation
costs
Capital expenditures
Non-US dollar capital
expenditures
Currency exchange rates –
US dollar versus A$, ARS,
C$, CLP, DOP, EUR,
PGK, TZS, ZAR, and ZMW
Currency exchange
rates – US dollar versus
A$, ARS, C$, CLP, DOP,
GBP, PGK, TZS, ZAR,
and ZMW
Currency exchange
rates – US dollar
versus A$, ARS, C$,
CLP, DOP, 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
20163_Barrick_AR18_FINANCIALS_E_MAR 8.indd 145
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145
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation | Financial Report 2018 d) Summary of Derivatives at December 31, 2018
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
Currency contracts
PGK:US$ contracts (PGK millions)
Commodity contracts
Copper bought floor contracts (millions of pounds)
Fuel contracts (thousands of barrels)1
$ 28
$ 14
$ –
$ 42
$ 42
23
–
114
–
–
–
–
–
–
23
–
114
–
–
–
$ –
23
–
114
$ 1
–
2
(3)
1. Fuel contracts represent a combination of WTI swaps and Brent options. These derivatives hedge physical supply contracts based on the price of fuel across
our operating minesites plus a spread. WTI represents West Texas Intermediate and Brent represents Brent Crude Oil.
Fair Values of Derivative Instruments
Asset derivatives
Liability derivatives
Balance
Fair value Fair value
as at
as at
sheet Dec. 31, Dec. 31,
2017
2018
classification
Balance
Fair value Fair value
as at
as at
sheet Dec. 31, Dec. 31,
2017
2018
classification
Derivatives designated as
hedging instruments
US dollar interest rate contracts
Commodity contracts
Total derivatives classified as
hedging instruments
Derivatives not designated as
hedging instruments
Commodity contracts
Total derivatives not designated as
hedging instruments
Total derivatives
Other assets
Other assets
$ 1
2
$ 1
–
Other liabilities
Other liabilities
$ –
2
$ –
25
$ 3
$ 1
$ 2
$ 25
Other assets
$ –
$ 2
Other liabilities
$ 1
$ 7
$ –
$ 3
$ 2
$ 3
$ 1
$ 3
$ 7
$ 32
146
20163_Barrick_AR18_FINANCIALS_E_MAR 8.indd 146
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation | Financial Report 2018
Non-hedge Derivatives
During the year, Acacia entered into a contract to purchase
72 thousand barrels of Brent to economically hedge our
exposure to forecasted fuel purchases for expected
consumption at our mines. As at December 31, 2018,
Acacia has 114 thousand barrels of Brent swaps
outstanding that economically hedge our exposure to
forecasted fuel purchases at our mines.
Metals Contracts
Cash Flow Hedges
During 2018, we purchased 44 million pounds of copper
collars, of which nil remain outstanding at December 31,
2018. These contracts were designated as cash flow
hedges, with the effective portion and the changes in time
value of the hedge recognized in OCI and the ineffective
portion recognized in non-hedge derivative gains (losses).
During 2015, we early terminated 65 million ounces
of silver hedges. We realized net cash proceeds of
approximately $190 million with $nil remaining crystallized
in OCI at December 31, 2018, which was 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 and copper sales. During the year,
Acacia purchased gold put options of 205 thousand
ounces, of which 35 thousand ounces remain outstanding
at December 31, 2018.
As of December 31, 2018, we had 12 counterparties to our
derivative positions. We proactively manage our exposure
to individual counterparties in order to mitigate both credit
and liquidity risks. We have five counterparties with which
we hold a net asset position of $2 million, and seven
counterparties with which we are in a net liability position,
for a total net liability of $2 million. On an ongoing basis,
we monitor our exposures and ensure that none of the
counterparties with which we hold outstanding contracts
has declared insolvency.
US Dollar Interest Rate Contracts
Cash Flow Hedges
At December 31, 2018, Acacia has $42 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, no currency contracts have been
designated against forecasted non-US dollar denominated
expenditures. As at December 31, 2018, there are no
outstanding currency contracts designated as cash flow
hedges of our anticipated operating, administrative and
sustaining capital spend.
Commodity Contracts
Diesel/Propane/Electricity/Natural Gas
Cash Flow Hedges
During 2015, 8,040 thousand barrels of WTI contracts
designated against forecasted fuel consumption at our
mines were designated as hedging instruments as a result
of adopting IFRS 9 and did not qualify for hedge accounting
prior to January 1, 2015. As at December 31, 2018, there
are no outstanding WTI contracts designated as cash flow
hedges of our exposure to forecasted fuel purchases at
our mines.
20163_Barrick_AR18_FINANCIALS_E_MAR 8.indd 147
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147
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation | Financial Report 2018 Cash Flow Hedge Gains (Losses) in Accumulated Other Comprehensive Income (“AOCI”)
Commodity
price hedges
Gold/Silver
Copper
At January 1, 2017
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
At December 31, 2017
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
$ 9
–
(7)
–
$ 2
–
(2)
–
$ –
$ –
(11)
4
–
$ (7)
17
(10)
–
$ –
Interest rate
hedges
Long-term
debt
$ (20)
–
3
–
$ (17)
(1)
3
–
Fuel
$ (32)
(8)
27
5
$ (8)
4
4
–
Total
$ (43)
(19)
27
5
$ (30)
20
(5)
–
$ –
$ (15)
$ (15)
At December 31, 2018
Hedge gains/losses classified within
Portion of hedge gain (loss)
expected to affect 2019 earnings2
Gold/Silver
sales
Copper
sales
Cost of
sales
Interest
expense
Total
$ –
$ –
$ –
$ –
$ –
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, 2018.
Cash Flow Hedge Gains (Losses) at December 31
Derivatives in cash flow
hedging relationships
Amount of gain
(loss) recognized
in OCI
2018
2017
Location of gain (loss)
transferred from OCI
into income/PP&E
(effective portion)
Amount of gain
(loss) transferred
from OCI into income
(effective portion)
2018
2017
Interest rate contracts
$ (1)
$ (1)
Finance income/
finance costs
$ (3)
$ (3)
Commodity contracts
21
(18)
Revenue/cost of sales
8
(24)
Total
$ 20
$ (19)
$ 5
$ (27)
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
2018
2017
$ –
$ –
–
(5)
$ –
$ (5)
148
20163_Barrick_AR18_FINANCIALS_E_MAR 8.indd 148
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation | Financial Report 2018
e) Gains (Losses) on Non-hedge Derivatives
2018
For the years ended December 31
Commodity contracts
Gold
Silver1
Copper
Fuel
Currency contracts
Hedge ineffectiveness
1. Relates to the amortization of crystallized OCI.
$
$
$
–
2
–
1
(3)
–
–
–
2017
$
4
7
(1)
–
1
$ 11
(5)
$
6
f) Derivative Assets and Liabilities
At January 1
Derivatives cash (inflow) outflow
Operating activities
Change in fair value of:
Non-hedge derivatives
Cash flow hedges:
Effective portion
Ineffective portion
Excluded from effectiveness changes
2018
2017
$ (29)
$ (76)
11
(2)
20
–
–
62
4
(19)
5
(5)
At December 31
$
–
$ (29)
Classification:
Other current assets
Other long-term assets
Other current liabilities
Other long-term obligations
$
2
1
(3)
–
$
2
1
(30)
(2)
$
–
$ (29)
26 Fair Value Measurements
Fair value is the price that would be received to sell an
asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date.
The fair value hierarchy establishes three levels to classify
the inputs to valuation techniques used to measure fair
value. Level 1 inputs are quoted prices (unadjusted) in
active markets for identical assets or liabilities. Level 2
inputs are quoted prices in markets that are not active,
quoted prices for similar assets or liabilities in active
markets, inputs other than quoted prices that are
observable for the asset or liability (for example, interest
rate and yield curves observable at commonly quoted
intervals, forward pricing curves used to value currency and
commodity contracts and volatility measurements used to
value option contracts), or inputs that are derived principally
from or corroborated by observable market data or other
means. Level 3 inputs are unobservable (supported by little
or no market activity). The fair value hierarchy gives
the highest priority to Level 1 inputs and the lowest priority
to Level 3 inputs.
20163_Barrick_AR18_FINANCIALS_E_MAR 8.indd 149
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149
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation | Financial Report 2018
a) Assets and Liabilities Measured at Fair Value on a Recurring Basis
Fair Value Measurements
At December 31, 2018
Cash and equivalents
Other investments
Derivatives
Receivables from provisional copper and gold sales
Fair Value Measurements
At December 31, 2017
Cash and equivalents
Other investments
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)
Significant
other
observable
inputs
(Level 2)
Significant
unobservable
inputs
(Level 3)
$ 1,571
209
–
–
$ 1,780
$
–
–
–
76
$ 76
$ –
–
–
–
$ –
Quoted prices
in active
markets for
identical assets
(Level 1)
Significant
other
observable
inputs
(Level 2)
Significant
unobservable
inputs
(Level 3)
$ 2,234
33
–
–
$ 2,267
$
–
–
(29)
110
$ 81
$ –
–
–
–
$ –
Aggregate
fair value
$ 1,571
209
–
76
$ 1,856
Aggregate
fair value
$ 2,234
33
(29)
110
$ 2,348
Financial assets
Other assets1
Other investments2
Derivative assets
Financial liabilities
Debt3
Derivative liabilities
Other liabilities
At Dec. 31, 2018
At Dec. 31, 2017
Carrying
amount
Estimated
fair value
Carrying
amount
Estimated
fair value
$
559
209
3
$
559
209
3
$
572
33
3
$
572
33
3
$
771
$
771
$
608
$
608
$ 5,738
3
297
$ 6,183
3
297
$ 6,423
32
252
$ 7,715
32
252
$ 6,038
$ 6,483
$ 6,707
$ 7,999
1. Includes restricted cash and amounts due from our partners.
2. Recorded at fair value. Quoted market prices are used to determine fair value.
3. 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.
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c) Assets Measured at Fair Value on a Non-Recurring Basis
Other assets1
Property, plant and equipment2
Intangible assets3
Goodwill4
Quoted prices
in active
markets for
identical assets
(Level 1)
Significant
other
observable
inputs
(Level 2)
$ –
–
–
–
$ –
–
–
–
Significant
unobservable
inputs
(Level 3)
$ 190
801
10
–
Aggregate
fair value
$ 190
801
10
–
1. Other assets were written down by $74 million, which was included in earnings in this period.
2. Property, plant and equipment were written down by $648 million, which was included in earnings in this period.
3. Intangibles were written down by $24 million, which was included in earnings in this period, to their fair value less costs of disposal of $10 million.
4. Goodwill was fully written down at Veladero by $154 million, which was included in earnings in this period.
Valuation Techniques
Cash Equivalents
The fair value of our cash equivalents is classified within
Level 1 of the fair value hierarchy because they are valued
using quoted market prices in active markets. Our cash
equivalents are comprised of U.S. Treasury bills and money
market securities that are invested primarily in U.S.
Treasury bills.
Other Investments
The fair value of other investments 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 other investments 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 (“CDS”) 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 credit default swap 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.
Other Long-Term Assets
The fair value of property, plant and equipment, goodwill,
intangibles and other assets 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 21 for disclosure of inputs used
to develop these measures.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation | Financial Report 2018
27 Provisions
a) Provisions
Environmental rehabilitation
(“PER”)
Post-retirement benefits
Share-based payments
Other employee benefits
Other
b) Environmental Rehabilitation
At January 1
PERs divested during the year
Closed Sites
Impact of revisions to expected
cash flows recorded in earnings
Settlements
Cash payments
Settlement gains
Accretion
Operating Sites
PER revisions in the year
Settlements
Cash payments
Settlement gains
Accretion
At December 31
Current portion (note 24)
As at
Dec. 31,
2018
As at
Dec. 31,
2017
$ 2,726
42
26
22
88
$ 2,944
48
37
27
85
$ 2,904
$ 3,141
2018
2017
$ 3,096
–
$ 2,246
(31)
(30)
(48)
(2)
13
46
(41)
(1)
12
(247)
836
(18)
(1)
74
(18)
(1)
48
$ 2,837
$ 3,096
(111)
(152)
$ 2,726
$ 2,944
The eventual settlement of substantially all PERs estimated
is expected to take place between 2019 and 2058.
The total PER has decreased in the fourth quarter of
2018 by $109 million primarily due to changes in discount
rates combined with changes in cost estimates at our
Pascua-Lama, Pierina, Veladero, Hemlo and Golden
Sunlight properties. For the year ended December 31,
2018, our PER balance decreased by $259 million primarily
due to changes in discount rates. A 1% increase in
the discount rate would result in a decrease in PER by
$322 million and a 1% decrease in the discount rate
would result in an increase in PER by $398 million, while
holding the other assumptions constant.
28 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 personnel.
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
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operating and free cash flow. Our corporate treasury group
implements hedging strategies on an opportunistic basis
to protect us from downside price risk on our gold and
copper production. Acacia has 35 thousand ounces of gold
positions outstanding at December 31, 2018. Our remaining
gold and copper production is subject to market prices.
Fuel
On average we consume approximately 4 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 all of our
operating segments 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 general and administrative costs; and to the
Papua New Guinea kina, Peruvian sol, Chilean peso,
Argentine peso, Dominican Republic peso and Zambian
kwacha through mine operating costs. Consequently,
fluctuations in the US dollar exchange rate against these
currencies increase the volatility of cost of sales, general
and administrative costs and overall net earnings, when
translated into US dollars.
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
($1.6 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 ($0.1 billion
at December 31, 2018).
The effect on net earnings and equity of a 1% change
in the interest rate of our financial assets and liabilities
as at December 31 is approximately $16 million (2017:
$10 million).
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 countries, which
are countries rated BBB- or higher by S&P and include
Canada, Chile, Australia and Peru. 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,
2018
$ 1,571
248
As at
Dec. 31,
2017
$ 2,234
239
2
2
$ 1,821
$ 2,475
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
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation | Financial Report 2018
refinancing risk and by monitoring of forecasted and actual
cash flows. Details of the undrawn credit facility are
included in note 25.
Our capital structure comprises a mix of debt and
shareholders’ equity. As at December 31, 2018, our total
debt was $5.7 billion (debt net of cash and equivalents
was $4.2 billion) compared to total debt as at December 31,
2017 of $6.4 billion (debt net of cash and equivalents was
$4.2 billion).
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. Our primary source of liquidity is our operating
cash flow. Other options to enhance liquidity include
drawing the $3.0 billion available under our 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 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 Credit Facility (undrawn as at December 31,
2018) requires Barrick to maintain a net debt to total
capitalization ratio, as defined in the agreement, of 0.60:1
or lower (Barrick’s net debt to total capitalization ratio was
0.31:1 as at December 31, 2018).
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 presented in the table are the contractual
undiscounted cash flows, these balances may not agree
with the amounts disclosed in the balance sheet.
Less than 1 year
1 to 3 years
3 to 5 years Over 5 years
Total
$ 1,571
248
2
1,101
43
3
59
$
–
–
1
–
275
–
80
$
–
–
–
–
339
–
21
$
–
–
–
–
5,110
–
137
$ 1,571
248
3
1,101
5,767
3
297
Less than 1 year
1 to 3 years
3 to 5 years Over 5 years
Total
$ 2,234
239
2
1,059
59
30
30
$
–
–
1
–
311
2
67
$
–
–
–
–
975
–
4
$
–
–
–
–
5,111
–
151
$ 2,234
239
3
1,059
6,456
32
252
As at December 31, 2018
(in $ millions)
Cash and equivalents
Accounts receivable
Derivative assets
Trade and other payables
Debt
Derivative liabilities
Other liabilities
As at December 31, 2017
(in $ millions)
Cash and equivalents
Accounts receivable
Derivative assets
Trade and other payables
Debt
Derivative liabilities
Other liabilities
154
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation | Financial Report 2018
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 in note 28c.
29 Other Non-Current Liabilities
Deposit on Pascua-Lama silver
sale agreement1
Deposit on Pueblo Viejo gold and
silver streaming agreement1
Long-term income tax payable
Derivative liabilities (note 25f)
Provision for offsite remediation
Other
As at
Dec. 31,
2018
As at
Dec. 31,
2017
$ 811
$ 805
426
270
–
57
179
459
259
2
45
174
$ 1,743
$ 1,744
1. Revenues of $76 million were recognized in 2018 (2017: $94 million)
through the draw-down of our streaming liabilities relating to contracts
in place at Pueblo Viejo and Pascua-Lama.
Silver Sale Agreement
Our silver sale agreement with Wheaton Precious Metals
Corp. (“Wheaton”) (formerly Silver Wheaton Corp.) requires
us to deliver 25 percent of the life of mine silver production
from the Pascua-Lama project and required delivery of
100 percent of silver production from the Lagunas Norte,
Pierina and Veladero mines (“South American mines”)
until March 31, 2018. In return, we were entitled to an
upfront cash payment of $625 million payable over three
years from the date of the agreement, as well as ongoing
payments in cash of the lesser of $3.90 (subject to an
annual inflation adjustment of 1 percent 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.
Gold and Silver Streaming Agreement
On September 29, 2015, we closed a gold and silver
streaming transaction with Royal Gold, Inc. (“Royal Gold”)
for production linked to Barrick’s 60 percent interest in
the Pueblo Viejo mine. Royal Gold made an upfront
cash payment of $610 million and will continue to make
cash payments for gold and silver delivered under the
agreement. The $610 million upfront payment is not
repayable and Barrick is obligated to deliver gold and
silver based on Pueblo Viejo’s production. We have
accounted for the upfront payment as deferred revenue
and will recognize it in earnings, along with the ongoing
cash payments, as the gold and silver is delivered to
Royal Gold. We will also be recording accretion expense
on the deferred revenue balance as the time value of
the upfront deposit represents a significant component
of the transaction.
Under the terms of the agreement, Barrick will sell gold
and silver to Royal Gold equivalent to:
7.5 percent of Barrick’s interest in the gold produced
at Pueblo Viejo until 990,000 ounces of gold have been
delivered, and 3.75 percent thereafter.
75 percent of Barrick’s interest in the silver produced
at Pueblo Viejo until 50 million ounces have been
delivered, and 37.5 percent thereafter. Silver will be
delivered based on a fixed recovery rate of 70 percent.
Silver above this recovery rate is not subject to
the stream.
Barrick will receive ongoing cash payments from Royal
Gold equivalent to 30 percent of the prevailing spot prices
for the first 550,000 ounces of gold and 23.1 million ounces
of silver delivered. Thereafter payments will double to
60 percent of prevailing spot prices for each subsequent
ounce of gold and silver delivered. Ongoing cash payments
to Barrick are tied to prevailing spot prices rather than fixed
in advance, maintaining exposure to higher gold and silver
prices in the future.
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30 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, equity
and goodwill based on the source of the change.
Current income taxes of $211 million and deferred
income taxes of $47 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 $5,861 million as at December 31, 2018.
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
Other working capital
Derivative instruments
Other
Deferred tax liabilities
Property, plant and equipment
Inventory
Classification:
Non-current assets
Non-current liabilities
As at
Dec. 31,
2018
As at
Dec. 31,
2017
$ 537
37
292
–
$ 926
–
594
175
27
1
32
–
12
49
40
23
74
21
$ 938
$ 1,902
(1,412)
(503)
(1,571)
(507)
$
(977)
$
(176)
$ 259
(1,236)
$ 1,069
(1,245)
$
(977)
$
(176)
The deferred tax asset of $259 million includes
$242 million expected to be realized in more than one
year. The deferred tax liability of $1,236 million includes
$1,211 million expected to be realized in more than
one year.
Expiry Dates of Tax Losses
Non-capital tax losses1
Canada
Argentina
Barbados
Chile
Tanzania
Zambia
Other
2019
2020
2021
2022
2023+
$
–
–
1,843
–
–
–
–
$
–
–
435
–
–
–
–
$
–
69
26
–
–
12
–
$
–
–
524
–
–
404
–
$ 2,305
–
1,177
–
–
–
–
No
expiry
date
$
–
–
–
1,141
1,555
–
645
Total
$ 2,305
69
4,005
1,141
1,555
416
645
$ 1,843
$
435
$ 107
$ 928
$ 3,482
$ 3,341
$ 10,136
1. Represents the gross amount of tax loss carry forwards translated at closing exchange rates at December 31, 2018.
156
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The non-capital tax losses include $8,327 million of losses
which are not recognized in deferred tax assets. Of these,
$1,843 million expire in 2019, $435 million expire in 2020,
$107 million expire in 2021, $590 million expire in 2022,
$3,483 million expire in 2023 or later, and $1,869 million
have no expiry date.
Recognition of Deferred Tax Assets
We recognize deferred tax assets taking into account
the effects of local tax law. Deferred tax assets are fully
recognized when we conclude that sufficient positive
evidence exists to demonstrate that it is probable that a
deferred tax asset will be realized. The main factors
considered are:
Historic and expected future levels of taxable income;
Tax plans that affect whether tax assets can be
realized; and
The nature, amount and expected timing of reversal
of taxable temporary differences.
Levels of future income are mainly affected by: market gold,
copper and silver prices; forecasted future costs and
expenses to produce gold and copper reserves; quantities
of proven and probable gold and copper reserves; market
interest rates; and foreign currency exchange rates.
If these factors or other circumstances change, we record
an adjustment to the recognition of deferred tax assets to
reflect our latest assessment of the amount of deferred
tax assets that is probable will be realized.
A deferred tax asset totaling $83 million (December 31,
2017: $98 million) has been recorded in a foreign
subsidiary. This deferred tax asset primarily arose from
a realized loss on internal restructuring of subsidiary
corporations. 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. In the fourth quarter
of 2018, the deferred tax assets in Canada and Peru
were de-recognized. Refer to note 12 for further details.
Deferred Tax Assets Not Recognized
Australia
Canada
Peru
Chile
Argentina
Barbados
Tanzania
Zambia
Saudi Arabia
As at
Dec. 31,
2018
As at
Dec. 31,
2017
$ 154
1,087
310
1,028
174
40
156
24
70
$ 158
388
–
993
515
66
209
50
70
$ 3,043
$ 2,449
Deferred Tax Assets Not Recognized relate to: non-capital
loss carry forwards of $1,134 million (2017: $690 million),
capital loss carry forwards with no expiry date of $447 million
(2017: $452 million), and other deductible temporary
differences with no expiry date of $1,462 million (2017:
$1,307 million).
Source of Changes in Deferred Tax Balances
For the years ended December 31
2018
2017
Temporary differences
Property, plant and equipment
Environmental rehabilitation
Tax loss carry forwards
Inventory
Derivatives
Other
Intraperiod allocation to:
Income from continuing operations
before income taxes
Cerro Casale disposition
Veladero disposition
Income tax payable
Equity
OCI
$ (15)
(302)
(389)
5
(74)
(26)
$ 295
(45)
191
26
(16)
(84)
$ (801)
$ 367
$ (730)
–
–
(38)
(24)
(9)
$ (106)
469
16
–
–
(12)
$ (801)
$ 367
157
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Income Tax Related Contingent Liabilities
31 Capital Stock
At January 1
Net additions based on uncertain tax
positions related to prior years
At December 311
2018
2017
$ 306
$ 128
–
$ 306
178
$ 306
1. If reversed, the total amount of $306 million would be recognized as a
benefit to income taxes on the income statement, and therefore would
impact the reported effective tax rate.
Tax Years Still Under Examination
Canada
United States
Dominican Republic
Peru
Chile
Argentina
Australia
Papua New Guinea
Saudi Arabia
Tanzania
Zambia
2015–2018
2018
2015–2018
2009, 2011–2013, 2015–2018
2014–2018
2012–2018
2014–2018
2006–2018
2007–2018
All years open
2010–2018
32 Non-Controlling Interests
a) Non-Controlling Interests Continuity
Authorized Capital Stock
Our authorized capital stock is composed of an unlimited
number of common shares (issued 1,167,846,910 common
shares as at December 31, 2018). Prior to November 28,
2018 our authorized capital stock also included an unlimited
number of first preferred shares issuable in series and
an unlimited number of second preferred shares issuable
in series; however, on Barrick’s continuance into British
Columbia, the first and second preferred shares were
eliminated. Our common shares have no par value.
On January 1, 2019, we issued 583,669,178 common
shares to Randgold shareholders as a result of the
merger completed with Randgold. Refer to note 37 for
further details.
Dividends
In 2018, we declared dividends in US dollars totaling
$199 million (2017: $125 million) and paid $125 million
(2017: $125 million).
The Company’s dividend reinvestment plan resulted in
$14 million (2017: $16 million) reinvested into the Company.
NCI in subsidiary at December 31, 2018
40%
36.1%
25%
Various
Pueblo Viejo
Acacia Cerro Casale
Other
Total
At January 1, 2017
Share of income (loss)
Cash contributed
Decrease in non-controlling interest
Disbursements
At December 31, 2017
Share of income (loss)
Cash contributed
Disbursements
At December 31, 2018
$ 1,311
118
–
–
(139)
$ 1,290
89
–
(108)
$ 1,271
$ 704
(211)
–
–
(13)
$ 480
22
–
–
$ 502
$ 319
173
1
(493)
–
$
$
–
–
–
–
–
$ 44
(2)
12
–
(43)
$ 11
(1)
24
(15)
$ 19
$ 2,378
78
13
(493)
(195)
$ 1,781
110
24
(123)
$ 1,792
158
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation | Financial Report 2018
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
Total liabilities
Pueblo Viejo
Acacia
As at
Dec. 31,
2018
$ 520
3,469
$ 3,989
720
402
As at
Dec. 31,
2017
$ 488
3,489
$ 3,977
907
248
As at
Dec. 31,
2018
$ 555
1,261
$ 1,816
206
246
As at
Dec. 31,
2017
$ 464
1,333
$ 1,797
212
280
$ 1,122
$ 1,155
$ 452
$ 492
Summarized Statements of Income
Pueblo Viejo
Acacia
For the years ended December 31
2018
2017
2018
2017
Revenue
Income (loss) from continuing operations after tax
Other comprehensive income (loss)
Total comprehensive income (loss)
Dividends paid to NCI
Summarized Statements of Cash Flows
For the years ended December 31
Net cash provided by (used in) operating activities
Net cash used in investing activities
Net cash used in financing activities
$ 1,333
206
–
$ 206
$
–
$ 1,417
293
–
$ 293
$
–
$ 664
59
–
$
$
59
–
$ 751
(630)
–
$ (630)
$
13
Pueblo Viejo
Acacia
2018
2017
2018
$ 272
(144)
(108)
$ 283
(112)
(539)
$ 123
(45)
(28)
$
2017
(15)
(160)
(62)
Net increase (decrease) in cash and cash equivalents
$
20
$ (368)
$
50
$ (237)
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159
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation | Financial Report 2018
33 Remuneration of Key Management Personnel
Compensation expense for RSUs was a $29 million
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
Salaries and short-term employee benefits1
Post-employment benefits2
Termination benefits
Share-based payments and other3
2018
$ 19
3
1
11
$ 34
2017
$ 20
3
–
12
$ 35
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 DSU, RSU and PRSU grants and other compensation.
34 Stock-Based Compensation
a) Global Employee Share Plan (GESP)
In 2016, Barrick launched a Global Employee Share Plan.
This is a plan awarded to all eligible employees. During
2018, Barrick contributed and expensed $12 million to
this plan.
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
years 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, 2018, the weighted
average remaining contractual life of RSUs was
0.93 years (2017: 1.19 years).
charge to earnings in 2018 (2017: $42 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 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 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 (Number of Units in Thousands)
DSUs
Fair
value
RSUs
At January 1, 2017
Settled for cash
Forfeited
Granted
Credits for dividends
Change in value
At December 31, 2017
Settled for cash
Forfeited
Granted
Credits for dividends
Change in value
573
–
–
152
–
–
725
(143)
–
182
–
–
$ 9.2 6,452
– (3,610)
(121)
–
2.5 1,760
56
–
–
(0.1)
–
$ 11.6 4,537
(1.9) (3,089)
(731)
2.3 2,974
60
–
–
(0.8)
Fair
value
$ 58.6
(62.5)
(2.3)
32.7
0.9
10.3
$ 37.7
(34.6)
(7.9)
35.3
0.8
4.7
At December 31, 2018
764
$ 11.2 3,751
$ 36.0
At December 31, 2018, Acacia Mining plc had $nil of DSUs
outstanding (2017: $nil) and $2 million of RSUs outstanding
(2017: $2 million).
160
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation | Financial Report 2018
c) 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, 2018, 3,024 thousand units had been
granted at a fair value of $18 million (2017: 2,174 thousand
units at a fair value of $14 million).
d) Employee Share Purchase Plan (ESPP)
In 2008, Barrick launched an Employee Share Purchase
Plan. This plan enables Barrick employees to purchase
Company shares through payroll deduction. During 2018,
Barrick contributed and expensed $0.1 million to this plan
(2017: $0.4 million). This plan was replaced by the Barrick
Share Purchase Plan in 2018.
e) Barrick Share Purchase Plan (BSPP)
In 2018, Barrick launched a Barrick Share Purchase Plan.
This plan encourages Barrick employees to purchase
Company shares by matching their contributions one to one
up to an annual maximum. During 2018, Barrick contributed
and expensed $2 million to this plan.
f) 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,
2018, 0.8 million (2017: 1.0 million) stock options
were outstanding.
Compensation expense for stock options was $nil
in 2018 (2017: $nil), 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 had no impact on earnings
per share for 2018 and 2017.
Total intrinsic value relating to options exercised in
2018 was $nil (2017: $nil).
Employee Stock Option Activity (Number of Shares in Millions)
2018
2017
Shares Average price
Shares Average price
C$ options
At January 1
Granted
Exercised
Cancelled/expired
At December 31
US$ options
At January 1
Forfeited
Cancelled/expired
At December 31
0.3
–
–
–
0.3
0.7
(0.1)
(0.1)
0.5
$ 13
–
10
–
$ 13
$ 40
34
49
$ 37
0.3
–
–
–
0.3
1.8
(0.7)
(0.4)
0.7
$ 13
–
–
–
$ 13
$ 42
40
45
$ 40
161
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation | Financial Report 2018
Stock Options Outstanding (Number of Shares in Millions)
Range of exercise prices
Shares
Outstanding
Exercisable
Average
price
Average
life (years)
Intrinsic
value1
($ millions)
Average
price
Intrinsic
value1
($ millions)
Shares
C$ options
$ 9 – $ 17
$ 18 – $ 21
US$ options
$ 32 – $ 41
$ 42 – $ 55
0.2
0.1
0.3
0.4
0.1
0.5
$ 10
18
$ 13
$ 32
48
$ 37
3.6
1.6
2.9
1.0
0.1
0.8
$ 2
–
$ 2
$ –
–
$ –
0.1
0.1
0.2
0.4
0.1
0.5
$ 10
18
$ 13
$ 32
48
$ 37
$ 1
–
$ 1
$ –
–
$ –
1. Based on the closing market share price on December 31, 2018 of C$18.43 and US$13.54.
As at December 31, 2018, there was $nil (2017: $nil) of total unrecognized compensation cost relating to unvested stock options.
35 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
2018
2017
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
$ 36
6
$ 42
$ 1
–
$ 1
$ (4)
–
$ (4)
$ 42
6
$ 48
$ 1
–
$ 1
$ 23
–
$ 23
The amounts recognized in the balance sheet are
determined as follows:
For the years ended December 31
2018
2017
Present value of funded obligations
Fair value of plan assets
(Surplus) deficit of funded plans
Present value of unfunded obligations
Total deficit of defined benefit pension plans
Impact of minimum funding requirement/
asset ceiling
$ 57
(65)
$
(8)
44
$ 122
(134)
$ (12)
54
$ 36
$ 42
–
–
Liability in the balance sheet
$ 36
$ 42
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 2018
The significant actuarial assumptions were as follows:
As at December 31
Discount rate
Pension Plans 2018
Benefits 2018 Pension Plans 2017
Other Post-Retirement
Other Post-Retirement
Benefits 2017
3.75–4.65%
4.45%
2.90–3.95%
3.75%
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 weighted
average duration of the defined benefit obligation is
14 years (2017: 10 years).
Pension benefits
Other post-retirement benefits
At December 31, 2017
Pension benefits
Other post-retirement benefits
At December 31, 2018
Less than
a year
Between
1–2 years
Between
2–5 years Over 5 years
$ 14
1
$ 15
7
1
$ 14
1
$ 15
7
1
$ 8
$ 8
$ 39
2
$ 41
22
2
$ 24
$ 200
5
$ 205
139
5
$ 144
Total
$ 267
9
$ 276
175
9
$ 184
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 $35 million
in 2018 (2017: $33 million).
36 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.
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, evaluates 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 (Veladero)
On May 10, 2017, Shepard Broadfoot, a purported
shareholder of Barrick Gold Corporation, filed suit in
the United States District Court for the Southern
District of New York (“SDNY”) against the Company,
Kelvin Dushnisky, Catherine Raw, Richard Williams and
Jorge Palmes. The complaint asserted claims against
the defendants arising from allegedly false and misleading
statements concerning production estimates and
environmental risks at the Veladero mine, and seeks
unspecified damages and other relief. On May 19, 2017,
a second and substantially identical purported class action
complaint was filed in the SDNY. On October 4, 2017,
the Court consolidated the actions and appointed the lead
plaintiff and lead counsel. The plaintiffs’ amended
consolidated complaint was filed on December 4, 2017.
The Company filed a motion to dismiss the complaint on
February 2, 2018, and briefing on that was completed
on April 18, 2018. The Company’s motion to dismiss was
granted, with prejudice, on September 20, 2018, and
the matter is now closed.
Proposed Canadian Shareholder Class Action (Veladero)
On July 28, 2018, Peter Gradja, a purported shareholder of
Barrick Gold Corporation, commenced a proposed class
action against the Company in the Ontario Superior Court
20163_Barrick_AR18_FINANCIALS_E_MAR 8.indd 163
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation | Financial Report 2018
of Justice. The action seeks unspecified damages and
other relief, purportedly on behalf of anyone who purchased
Barrick shares during the period from February 15, 2017 to
April 24, 2017 and held some or all of those shares at
the close of trading on April 24, 2017. It is alleged that
Barrick made false and misleading statements concerning
production estimates and environmental risks at the
Veladero mine.
The action is in its earliest stages, and the plaintiff has
not yet brought a motion for the orders required for the
action to proceed. The Company believes that the claims
made in the action are without merit and intends to defend
the action vigorously. No amounts have been recorded for
any potential liability arising from the proposed class action,
as the Company cannot reasonably predict the outcome.
Proposed Canadian Securities Class Actions
(Pascua-Lama)
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 Canadian proceedings alleged that the Company
made false and misleading statements to the investing
public relating (among other things) to the capital costs
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 and certain
accounting-related matters.
The first Ontario and Alberta actions were commenced
by Statement of Claim on April 15 and 17, 2014, respectively.
The same law firm acted for the plaintiffs in these two
proceedings, and the Statements of Claim were largely
identical. Aaron Regent, Jamie Sokalsky and Ammar
Al-Joundi were also named as defendants in the two
actions. Both actions purported 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
sought $4.3 billion in general damages and $350 million
in special damages for alleged misrepresentations in the
Company’s public disclosure. The first Ontario action
was subsequently consolidated with the fourth Ontario
action, as discussed below. The first Alberta action was
discontinued by plaintiffs’ counsel on June 26, 2015.
The second Ontario action was commenced on
April 24, 2014. Aaron Regent, Jamie Sokalsky, Ammar
Al-Joundi and Peter Kinver were also named as
defendants. Following a September 8, 2014 amendment
to the Statement of Claim, this action purported to be
on behalf of anyone who acquired Barrick securities during
the period from October 29, 2010 to October 30, 2013, and
sought $3 billion in damages for alleged misrepresentations
in the Company’s public disclosure. The amended claim
also reflected the addition of a law firm that previously
acted as counsel in a third Ontario action, which was
commenced by Notice of Action on April 28, 2014 and
included similar allegations but was never served or
pursued. As a result of the outcome of the carriage motion
and appeals described below, the second Ontario action
was subsequently stayed.
The Quebec action was commenced 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 on May 23,
2014. Aaron Regent, Jamie Sokalsky, Ammar Al-Joundi
and Peter Kinver were also named as defendants. This
action purported to be on behalf of any person who
acquired Barrick securities during the period from May 7,
2009 to November 1, 2013, and sought $6 billion in
damages for alleged misrepresentations in the Company’s
public disclosure. The action was dismissed on consent
on June 19, 2017.
The Saskatchewan action was commenced by
Statement of Claim on May 26, 2014. Aaron Regent, Jamie
Sokalsky, Ammar Al-Joundi and Peter Kinver were also
named as defendants. This action purported to be on behalf
of any person who acquired Barrick securities during the
period from May 7, 2009 to November 1, 2013, and sought
$6 billion in damages for alleged misrepresentations in the
Company’s public disclosure. The action was discontinued
by plaintiffs’ counsel on December 19, 2016.
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
164
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation | Financial Report 2018 May 7, 2009 to November 1, 2013 in Canada, and seeks
$3 billion in damages plus an unspecified amount 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 was acting as counsel in the first Ontario action
referred to above and the other of which no longer exists.
In January 2018, plaintiffs’ counsel delivered a consolidated
Statement of Claim in this action. The Statement of Claim
was amended again in May 2018.
In November 2014, an Ontario court heard a motion
to determine which of the competing counsel groups would
take the lead in the Ontario litigation. The court issued a
decision in December 2014 in favor of the counsel group
that commenced the first and fourth Ontario actions, which
were then consolidated in a single action. The lower court’s
decision was subsequently affirmed by the Divisional
Court in May 2015 and the Court of Appeal for Ontario in
July 2016 following appeals by the losing counsel group.
The losing counsel group sought leave to appeal to the
Supreme Court of Canada but later discontinued the
application after reaching an agreement with the counsel
group that commenced the first and fourth Ontario actions.
The proposed representative plaintiffs in the Quebec
and Ontario actions have brought motions seeking: (i) leave
to proceed with statutory misrepresentation claims pursuant
to provincial securities legislation; and (ii) orders certifying
the actions as class actions. In August 2018, the Company
and Aaron Regent, Jamie Sokalsky, Ammar Al-Joundi and
Peter Kinver delivered their Statement of Defence in the
Ontario action. No defence is required to be delivered in
the Quebec action at this time. The Quebec motions are
scheduled to be heard in May 2019, while the Ontario
motions are scheduled to be heard in July 2019.
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 Sanctions
In May 2013, Compañía Minera Nevada (“CMN”), Barrick’s
Chilean subsidiary that holds the Chilean portion of the
Project, received a Resolution (the “Original Resolution”)
from Chile’s environmental regulator (the Superintendencia
del Medio Ambiente, or “SMA”) that requires CMN to
complete the water management system for the Project in
accordance with the Project’s environmental permit before
resuming construction activities in Chile. The Original
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 Original Resolution. The studies were
suspended in the second half of 2015 as a result of CMN’s
decision to file a temporary and partial closure plan for the
Project. The review of the Project’s water management
system may require a new environmental approval and the
construction of additional water management facilities.
In June 2013, a group of local farmers and indigenous
communities challenged the Original Resolution. The
challenge, which was brought in the Environmental Court
of Santiago, Chile (the “Environmental Court”), claimed
that the fine was inadequate and requested more severe
sanctions against CMN including the revocation of the
Project’s environmental permit. The SMA presented its
defense of the Original Resolution in July 2013. On
August 2, 2013, CMN joined as a party to this proceeding
and vigorously defended the Original Resolution. On
March 3, 2014, the Environmental Court annulled the
Original Resolution and remanded the matter back to the
SMA for further 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 recalculated the amount of the
fine to be paid by CMN using a different methodology and
addressed certain other errors it identified in the Original
Resolution. The Environmental Court did not annul the
portion of the Original 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, on April 22, 2015, the SMA reopened the
administrative proceeding against CMN in accordance
with the Environmental Court Decision.
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165
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation | Financial Report 2018 On April 22, 2015, CMN was notified that the SMA
As previously noted, CMN has appealed the Revised
had initiated a new administrative proceeding for alleged
deviations from certain requirements of the Project’s
environmental approval, including with respect to the
Project’s environmental impact and a series of monitoring
requirements. In May 2015, CMN submitted a compliance
program to address certain of the allegations and presented
its defense to the remainder of the alleged deviations. The
SMA rejected CMN’s proposed compliance program on
June 24, 2015, and denied CMN’s administrative appeal of
that decision on July 31, 2015. On December 30, 2016,
the Environmental Court rejected CMN’s appeal and CMN
declined to challenge this decision.
On June 8, 2016, the SMA consolidated the two
administrative proceedings against CMN into a single
proceeding encompassing both the reconsideration of
the Original Resolution in accordance with the decision
of the Environmental Court and the alleged deviations
from the Project’s environmental approval notified by
the SMA in April 2015.
On January 17, 2018, CMN received the revised
resolution (the “Revised Resolution”) from the SMA, in
which the environmental regulator reduced the original
administrative fine from approximately $16 million to
$11.5 million and ordered the closure of existing surface
facilities on the Chilean side of the Project in addition to
certain monitoring activities. The Revised Resolution does
not revoke the Project’s environmental approval. CMN
filed an appeal of the Revised Resolution on February 3,
2018 with the First Environmental Court of Antofagasta
(the “Antofagasta Environmental Court”).
On October 12, 2018, the Antofagasta Environmental
Court issued an administrative ruling ordering review of
the significant sanctions ordered by the SMA. CMN was
not a party to this process. In its ruling, the Antofagasta
Environmental Court rejected four of the five closure orders
contained in the Revised Resolution and remanded the
related environmental infringements back to the SMA for
further consideration. A new resolution from the SMA
with respect to the sanctions for these four infringements
could include a range of potential sanctions, including
additional fines, as provided in the Chilean legislation.
The Antofagasta Environmental Court upheld the SMA’s
decision to order the closure of the Chilean side of the
Project for the fifth infringement.
Resolution and this appeal remains in place. A hearing
on the appeal was held on November 6, 2018, and CMN
continues to evaluate all of its legal options. A decision
of the Environmental Court on the remaining appeals
is still pending.
Following the issuance of the Revised Resolution,
the Company reversed the estimated amount previously
recorded for any additional proposed administrative fines
in this matter. In addition, the Company reclassified
Pascua-Lama’s proven and probable gold reserves as
measured and indicated resources and recorded a pre-tax
impairment of $429 million in the fourth quarter of 2017.
No additional amounts have been recorded for any
potential liability arising from the Antofagasta Environmental
Court’s October 12, 2018 ruling and subsequent review by
the SMA, as the Company cannot reasonably predict any
potential losses and the SMA has not issued any additional
proposed administrative fines. The Company intends to
vigorously defend this matter. See note 21 of these Annual
Financial Statements for information related to impairment
losses arising from this matter.
Pascua-Lama – Water Quality Review
CMN initiated a review of the baseline water quality of the
Rio Estrecho in August 2013 as required by a July 15, 2013
decision of the Court of Appeals of Copiapo, Chile. The
purpose of the review was to establish whether the water
quality baseline has changed since the Pascua-Lama
project received its environmental approval in February
2006 and, if so, to require CMN to adopt the appropriate
corrective measures. As a result of that study, CMN
requested certain modifications to its environmental permit
water quality requirements. On June 6, 2016, the
responsible agency approved a partial amendment of the
environmental permit to better reflect the water quality
baseline from 2009. That approval was appealed by certain
water users and indigenous residents of the Huasco Valley.
On October 19, 2016, the Chilean Committee of Ministers
for the Environment, which has jurisdiction over claims
of this nature, voted to uphold the permit amendments.
On January 27, 2017, the Environmental Court agreed to
consider an appeal of the Chilean Committee’s decision
brought by CMN and the water users and indigenous
residents. A hearing took place on July 25, 2017.
166
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation | Financial Report 2018 On December 12, 2017, the water users withdrew their
appeal. The Environmental Court dismissed that appeal
on January 5, 2018. On December 10, 2018, the
Environmental Court rejected the remaining challenges
and upheld the environmental permit amendment.
On December 29, 2018, the indigenous residents appealed
the Environmental Court’s decision to the Chilean Supreme
Court. The Chilean Supreme Court has not yet accepted
this appeal. No amounts have been recorded for any
potential liability arising from this matter, as the Company
cannot reasonably predict any potential losses.
Veladero – September 2015 Release of Cyanide-Bearing
Process Solution
San Juan Provincial Regulatory Sanction Proceeding
On September 13, 2015, a valve on a leach pad pipeline at
the Company’s Veladero mine in San Juan Province,
Argentina failed, resulting in a release of cyanide-bearing
process solution into a nearby waterway through a
diversion channel gate that was open at the time of the
incident. Minera Andina del Sol SRL (formerly, Minera
Argentina Gold SRL) (“MAS”), Barrick’s Argentine subsidiary
that operates the Veladero mine, notified regulatory
authorities of the situation. Environmental monitoring was
conducted by MAS and independent third parties following
the incident. The Company believes this monitoring
demonstrates that the incident posed no risk to human
health at downstream communities. A temporary restriction
on the addition of new cyanide to the mine’s processing
circuit was lifted on September 24, 2015, and mine
operations returned to normal. Monitoring and inspection
of the mine site continued in accordance with a court order
until November 28, 2018 when that order was rescinded.
On October 9, 2015, the San Juan Provincial mining
authority initiated an administrative sanction process
against MAS for alleged violations of the mining code
relating to the valve failure and release of cyanide-bearing
process solution. On March 15, 2016, MAS was formally
notified of the imposition of an administrative fine in
connection with the solution release. On April 6, 2016, MAS
sought reconsideration of certain aspects of the decision
but paid the administrative fine of approximately $10 million
(at the then-applicable Argentine peso to U.S. dollar
exchange rate) while the request for reconsideration was
pending. On July 11, 2017, the San Juan government
rejected MAS’ administrative appeal of this decision.
On September 5, 2017, the Company commenced a
legal action to continue challenging certain aspects
of the decision before the San Juan courts. MAS has
implemented a remedial action plan at Veladero in
response to the incident, as required by the San Juan
Provincial mining authority.
Criminal Matters
Provincial Action
On March 11, 2016, a San Juan Provincial Court laid
criminal charges based on alleged negligence against nine
current and former MAS employees in connection with the
solution release (the “Provincial Action”). On August 15,
2017, the Court of Appeals confirmed the indictment
against eight of the nine individuals that had been charged
with alleged negligence in connection with the solution
release. MAS is not a party to the Provincial Action. On
August 23, 2018, the eight defendants in the Provincial
Action were granted probation. The terms of the probation
do not require the defendants to recognize any wrongdoing.
If the defendants comply with good behavior and
community service requirements for one year, the
Provincial Action will be dismissed.
Federal Investigation
In addition, a federal criminal investigation was initiated
by a Buenos Aires federal court based on the alleged
failure of certain current and former federal and provincial
government officials and individual directors of MAS to
prevent the solution release (the “Federal Investigation”).
The federal judge overseeing the Federal Investigation
admitted a local group in San Juan Province as a party.
In March 2016, this group requested an injunction against
the operations of the Veladero mine. The federal judge
ordered technical studies to assess the solution release
and its impact and appointed a committee to conduct
a site visit, which occurred in late April 2016.
On May 5, 2016, the National Supreme Court of
Argentina limited the scope of the Federal Investigation to
the potential criminal liability of the federal government
officials, ruling that the Buenos Aires federal court does not
have jurisdiction to investigate the solution release. As a
result of this decision, the investigation into the incident
continued to be conducted by the San Juan Provincial
judge in the Provincial Action.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation | Financial Report 2018 On April 11, 2018, the federal judge indicted three
former federal officials alleging breach of duty in connection
with their actions and omissions related to the failure to
maintain adequate environmental controls. After an appeal
process, on July 10, 2018, the Court of Appeals confirmed
the indictments. On October 16, 2018, the investigation into
the alleged failure of three former federal government
officials to maintain adequate environmental controls during
2015 was concluded and the case was sent to trial.
On June 29, 2018, the federal judge ordered additional
environmental studies to be conducted in communities
downstream from the Veladero mine as part of the
investigation into the alleged failure of three former federal
government officials to maintain adequate environmental
controls. On July 6, 2018, the Province of San Juan
challenged this order on jurisdictional grounds. On
August 9, 2018, the Federal Court ordered additional
studies. One of the defendants appointed an expert to
monitor the sampling and analysis required to perform
such studies. The Federal Court rejected the jurisdictional
challenge, which resulted in an appeal to the Federal
Supreme Court on August 24, 2018 to adjudicate
jurisdiction. To date, the studies have not been performed.
Glaciers Investigation
On October 17, 2016, a separate criminal investigation
as initiated by the federal judge overseeing the Federal
Investigation based on the alleged failure of federal
government officials to regulate the Veladero mine under
Argentina’s glacier legislation (the “Glacier Investigation”)
(see “Argentine Glacier Legislation and Constitutional
Litigation” below). On June 16, 2017, MAS submitted a
motion to challenge the federal judge’s decision to assign
this investigation to himself. MAS also requested to be
admitted as a party to the proceeding in order to present
evidence in support of MAS. On September 14, 2017, the
Court of Appeals ordered the federal judge to consolidate
the two investigations and allowed MAS to participate in the
consolidated Federal Investigation. On November 21, 2017,
the Court of Appeals clarified that MAS is not a party to
the case and therefore did not have standing to seek the
recusal of the federal judge. The Court recognized MAS’
right to continue to participate in the case without clarifying
the scope of those rights.
On November 27, 2017, the federal judge indicted
four former federal government officials, alleging abuse of
authority in connection with their actions and omissions
related to the enforcement of Argentina’s national glacier
legislation including the methodology used to complete
the national inventory of glaciers, a portion of which was
published on October 3, 2016, and also requiring the
National Ministry of the Environment and Sustainable
Development to determine if there has been any
environmental damage to glaciers since the glacier law
went into effect in light of his decision. On December 12,
2017, the National Ministry of the Environment and
Sustainable Development clarified that it does not have
jurisdiction to audit environmental damage to glaciers,
as this is the responsibility of the Provincial authorities.
On March 5, 2018, the Court of Appeals confirmed the
indictment against the four former federal officials in relation
to the Glacier Investigation. On August 6, 2018, the case
related to the enforcement of the national glacier legislation
was assigned to a federal trial judge. No hearings have
been scheduled for this matter to date.
In total, six former federal officials have now been
indicted under the Federal Investigation and the Glacier
Investigation (one of whom has been indicted on two
separate charges) and will face trial.
No amounts have been recorded for any potential
liability arising from these matters, as the Company cannot
reasonably predict any potential losses.
Veladero – September 2016 Release of Crushed Ore
Saturated with Process Solution
Temporary Suspension of Operations and Regulatory
Infringement Proceeding
On September 8, 2016, ice rolling down the slope of the
leach pad at the Veladero mine damaged a pipe carrying
process solution, causing some material to leave the leach
pad. This material, primarily crushed ore saturated with
process solution, was contained on the mine site and
returned to the leach pad. Extensive water monitoring in
the area conducted by MAS has confirmed that the incident
did not result in any environmental impacts. A temporary
suspension of operations at the Veladero mine was ordered
by the San Juan Provincial mining authority and a
San Juan Provincial court on September 15, 2016 and
September 22, 2016, respectively, as a result of this
incident. On October 4, 2016, following, among other
matters, the completion of certain urgent works required by
the San Juan Provincial mining authority and a judicial
inspection of the mine, the San Juan Provincial court lifted
the suspension of operations and ordered that mining
activities be resumed.
168
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation | Financial Report 2018 On September 14, 2016, the San Juan Provincial
mining authority commenced an administrative proceeding
in connection with this incident that included, in addition
to the issue of the suspension order, an infringement
proceeding against MAS. On December 2, 2016, the
San Juan Provincial mining authority notified MAS of two
charges under the infringement proceeding for alleged
violations of the Mining Code. A new criminal judicial
investigation has also been commenced by the Provincial
prosecutor’s office in the same San Juan Provincial court
that is hearing the Provincial Action. The court in this
proceeding issued the orders suspending and resuming
the operations at the Veladero mine described above.
On September 14, 2017, the San Juan Provincial
mining authority consolidated the administrative proceeding
into a single proceeding against MAS encompassing both
the September 2016 incident and the March 2017 incident
described below (see “Veladero – March 2017 Release of
Gold-bearing Process Solution” below).
On December 27, 2017, MAS received notice of a
resolution from the San Juan Provincial mining authority
requiring payment of an administrative fine of approximately
$5.6 million (calculated at the prevailing exchange rate on
December 31, 2017) encompassing both the September
2016 incident and the March 2017 incident described
below. On January 23, 2018, in accordance with local
requirements, MAS paid the administrative fine and filed a
request for reconsideration with the San Juan Provincial
mining authority. On March 28, 2018, MAS was notified that
the San Juan Provincial mining authority had rejected
the request for reconsideration. A further appeal was filed
on April 20, 2018 and will be heard and decided by the
Governor of San Juan.
Veladero – Cyanide Leaching Process Civil Action
On December 15, 2016, MAS was served notice of a
lawsuit by certain persons who claim to be living in Jachal,
Argentina and to be affected by the Veladero mine and, in
particular, the Valley Leach Facility (“VLF”). In the lawsuit,
which was filed in the San Juan Provincial court, the
plaintiffs have requested a court order that MAS cease
leaching metals with cyanide solutions, mercury and other
similar substances at the Veladero mine and replace that
process with one that is free of hazardous substances, that
MAS implement a closure and remediation plan for the VLF
and surrounding areas, and create a committee to monitor
this process. The lawsuit is proceeding as an ordinary civil
action. MAS replied to the lawsuit on February 20, 2017.
On March 31, 2017, the plaintiffs supplemented their
original complaint to allege that the risk of environmental
damage had increased as a result of the March 28, 2017
release of gold-bearing process solution incident described
below (see “Veladero – March 2017 Release of Gold-bearing
Process Solution” below). The Company responded to the
new allegations and intends to continue defending this
matter vigorously. No amounts have been recorded for any
potential liability or asset impairment under this matter, as
the Company cannot reasonably predict the outcome.
Veladero – March 2017 Release of Gold-bearing
Process Solution
Regulatory Infringement Proceeding and Temporary
Suspension of Addition of Cyanide
On March 28, 2017, the monitoring system at the
Company’s Veladero mine detected a rupture of a pipe
carrying gold-bearing process solution on the leach pad.
This solution was contained within the operating site; no
solution reached any diversion channels or watercourses.
All affected soil was promptly excavated and placed on the
leach pad. The Company notified regulatory authorities of
the situation, and San Juan provincial authorities inspected
the site on March 29, 2017.
On March 29, 2017, the San Juan Provincial mining
authority issued a violation notice against MAS in
connection with the incident and ordered a temporary
restriction on the addition of new cyanide to the leach pad
until corrective actions on the system were completed. The
mining authority lifted the suspension on June 15, 2017,
following inspection of corrective actions.
On March 30, 2017, the San Juan Mining Minister
ordered the commencement of a regulatory infringement
proceeding against MAS as well as a comprehensive
evaluation of the mine’s operations to be conducted by
representatives of the Company and the San Juan
provincial authorities. The Company filed its defense to
the regulatory infringement proceeding on April 5, 2017.
On September 14, 2017, the San Juan Provincial mining
authority consolidated this administrative proceeding into
a single proceeding against MAS encompassing both
the September 2016 incident described above and the
March 2017 incident. On October 10, 2017, the San Juan
Provincial mining authority notified MAS of two charges
under the infringement proceeding for alleged violations of
the Mining Code in connection with the March 2017 incident.
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169
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation | Financial Report 2018 On December 27, 2017, MAS received notice of a
resolution from the San Juan Provincial mining authority
requiring payment of an administrative fine of approximately
$5.6 million (calculated at the prevailing exchange rate on
December 31, 2017) encompassing both the September
2016 incident described above and the March 2017
incident. On January 23, 2018, in accordance with local
requirements, MAS paid the administrative fine and filed
a request for reconsideration with the San Juan Provincial
mining authority. On March 28, 2018, MAS was notified
that the San Juan Provincial mining authority had rejected
the request for reconsideration. A further appeal will be
heard and decided by the Governor of San Juan.
Provincial Amparo Action
On March 30, 2017, MAS was served notice of a lawsuit,
called an “amparo” protection action, filed in the Jachal
First Instance Court (the “Jachal Court”) by individuals who
claimed to be living in Jachal, Argentina, seeking the
cessation of all activities at the Veladero mine. The plaintiffs
sought an injunction as part of the lawsuit, requesting,
among other things, the cessation of all activities at the
Veladero mine or, alternatively, a suspension of the
leaching process at the mine. On March 30, 2017, the
Jachal Court rejected the request for an injunction to cease
all activities at the Veladero mine, but ordered, among other
things, the suspension of the leaching process at the
Veladero mine and for MAS and the San Juan Provincial
mining authority to provide additional information to the
Jachal Court in connection with the incident.
The Company filed a defense to the provincial amparo
action on April 7, 2017. The Jachal Court lifted the
suspension on June 15, 2017, after the San Juan Provincial
mining authority provided the required information and a
hydraulic assessment of the leach pad and process plant
was implemented. Further developments in this case are
pending a decision by the Argentine Supreme Court as
to whether the Federal Court or Provincial Court has
jurisdiction to assess the merits of the amparo remedy
(see “Veladero – Release of Gold-bearing Process
Solution – Federal Amparo Action” below). No amounts
have been recorded for any potential liability or asset
impairment under this matter, as the Company cannot
reasonably predict the outcome.
Federal Amparo Action
On April 4, 2017, the National Minister of Environment of
Argentina filed a lawsuit in the Buenos Aires federal court
(the “Federal Court”) in connection with the March 2017
incident described above. The amparo protection action
sought a court order requiring the cessation and/or
suspension of activities at the Veladero mine. MAS
submitted extensive information to the Federal Court about
the incident, the then-existing administrative and provincial
judicial suspensions, the remedial actions taken by the
Company and the lifting of the suspensions as described
above. MAS also challenged the jurisdiction of the Federal
Court and the standing of the National Minister of
Environment of Argentina and requested that the matter be
remanded to the Jachal Court. The Province of San Juan
also challenged the jurisdiction of the Federal Court in this
matter. On June 23, 2017, the Federal Court decided that
it was competent to hear the case, and referred the case to
the Court of Appeals to determine whether the Federal
Court or Provincial Court in the case described above has
the authority to assess the merits of the amparo remedy.
On July 5, 2017, the Provincial Court issued a request for
the Supreme Court of Argentina to resolve the jurisdictional
dispute. On July 30, 2017, the Court of Appeals referred
the jurisdictional dispute to the Supreme Court and a
decision on the matter is pending. No amounts have been
recorded for any potential liability or asset impairment
under this matter, as the Company cannot reasonably
predict the outcome.
Veladero – Tax Assessment and Criminal Charges
On December 26, 2017, MAS received notice of a tax
assessment (the “Tax Assessment”) for 2010 and 2011,
amounting to ARS 543 million (approximately $14.1 million
at the prevailing exchange rate at December 31, 2018),
plus interest and fines. The Tax Assessment primarily
claims that certain deductions made by MAS were not
properly characterized, including that (i) the interest and
foreign exchange on loans borrowed between 2002 and
2006 to fund Veladero’s construction should have been
classified as equity contributions, and (ii) fees paid for
intercompany services were not for services related to
the operation of the Veladero mine.
On June 21, 2018, the Argentinean Federal Tax
Authority (“AFIP”) confirmed the Tax Assessment, which
MAS appealed to the Federal Tax Court on July 31, 2018.
A hearing for the appeal has not yet been scheduled.
In November 2018, MAS received notice that AFIP filed
criminal charges against current and former employees
serving on its board of directors when the 2010 and 2011
tax returns were filed (the “Criminal Tax Case”). Hearings
for the Criminal Tax Case are scheduled for March 2019.
170
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation | Financial Report 2018 The Company believes that the Tax Assessment and
the Criminal Tax Case are without merit and intends to
defend the proceedings vigorously. No amounts have been
recorded for any potential liability arising from the Tax
Assessment or the Criminal Tax Case, as the Company
cannot reasonably predict the outcome.
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 banned new mining exploration and
exploitation activities on glaciers and in the “peri-glacial”
environment, and subjected ongoing mining activities to an
environmental audit. If the 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 Argentinean side of 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. On October 3, 2016, federal
authorities published a partial national inventory of glaciers,
which included the area where the Veladero mine and
Pascua-Lama Project are located. The Company has
analyzed the national inventory in the area where Veladero
and Pascua-Lama are located and has concluded that this
inventory is consistent with the provincial inventory that the
Province of San Juan used in connection with its January
2013 environmental audit. On June 11, 2018, the federal
authorities published the complete national inventory of
glaciers; the complete inventory is consistent with the
partial national inventory of glaciers published previously in
the area where Veladero and Pascua-Lama are located.
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. 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.
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 June 25, 2015, the Trial Court
rejected the Petitioner’s amparo action, finding that the
Petitioner failed to produce evidence to support his
allegations. The Petitioner appealed the Trial Court’s
decision to the Constitutional Court on July 21, 2015.
On July 28, 2015, PVDC filed a motion to challenge the
timeliness of this appeal as it was submitted after the
expiration of the applicable filing deadline. 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.
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
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171
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation | Financial Report 2018 River, and the Mogpog River. Placer Dome Inc., which was
acquired by the Company in 2006, had been a minority
indirect shareholder of the Marcopper mine. 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. By Order dated
November 9, 2011, the Court granted a motion to suspend
the proceedings filed by the plaintiffs. It is not known when
these motions or the outstanding motions to dismiss will be
decided by the Court. To date neither the plaintiffs nor the
Company has advised the Court of an intention to resume
the proceedings. 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 “Petitioners”). 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 within ten (10) days of
service and referred the case to the Court of Appeal for
hearing. The Petition alleges that Placer Dome Inc. violated
the petitioners’ constitutional right to a balanced and
healthful ecology as a result of, among other things,
the discharge of tailings into Calancan Bay, the 1993
Maguila-Guila dam break, the 1996 Boac River tailings
spill and failure of Marcopper to properly decommission the
Marcopper mine. The petitioners have pleaded that the
Company is liable for the alleged actions and omissions
of Placer Dome Inc., which was a minority indirect
shareholder of Marcopper at all relevant times, and is
seeking orders requiring the Company to environmentally
remediate the areas in and around the mine site that are
alleged to have sustained environmental impacts. The
petitioners purported to serve the Company 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. By resolution
dated October 12, 2011 the Court of Appeals granted the
Petitioners’ October 4, 2011 motion to suspend proceedings
to permit the Petitioners to explore the possibility of a
settlement. The proceedings are suspended pending
further notice from the Petitioners. 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.
In December 2016, the Petitioners notified the Court of
Appeals that settlement negotiations did not resolve the
action. In March 2017, the Court of Appeals required the
Petitioners to advise whether they intend to pursue the
action. Without responding to the court, Petitioners’ counsel
advised the Court of Appeals in July 2017 of their
withdrawal as counsel for the Petitioners and informed the
Court of Appeals of the death of one of the Petitioners. The
Court of Appeals issued a resolution in November 2017
requiring the Petitioners to notify the Court whether they
have engaged new counsel. Petitioners’ new counsel filed
an entry of appearance in December 2017 with the Court.
The Petitioners served a Motion to Lift Order of Suspension
of Proceedings dated September 12, 2018 to have the
proceedings resume. In September 2018 the Company
filed an Opposition to this motion in which it requested
that the suspension of proceedings not be lifted and the
proceedings instead be dismissed for unreasonable
delay and Petitioners’ failure to comply with a direction
of the Court.
No amounts have been recorded for any potential
liability under this matter, as the Company cannot
reasonably predict the outcome.
Acacia Mining plc – Tanzanian Revenue
Authority Assessments
The Tanzanian Revenue Authority (“TRA”) has issued a
number of tax assessments to the Acacia Mining plc
group (“Acacia”) related to past taxation years from
2002–onwards. Acacia believes that the majority of these
172
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation | Financial Report 2018 assessments are incorrect and has filed objections and
appeals accordingly in an attempt to resolve these matters
by means of discussions with the TRA or through the
Tanzanian appeals process. Overall, it is Acacia’s current
assessment that the relevant assessments and claims by
the TRA are without merit.
The claims include an assessment issued to Acacia in
the amount of $41.3 million for withholding tax on certain
historic offshore dividend payments paid by Acacia to its
shareholders from 2010 to 2013. Acacia is appealing this
assessment on the substantive grounds that, as an English
incorporated company, it is not resident in Tanzania for
taxation purposes. The appeal is currently pending at the
Court of Appeal. Accordingly, no amounts have been
recorded for any potential liability and Acacia intends to
continue to defend this action vigorously.
Further TRA assessments were issued to Acacia in
January 2016 in the amount of $500.7 million, based on an
allegation that Acacia is resident in Tanzania for corporate
and dividend withholding tax purposes. The corporate tax
assessments have been levied on certain of Acacia’s net
profits before tax. Acacia is in the process of appealing
these assessments at the TRA Board level. Acacia’s
substantive grounds of appeal are based on the correct
interpretation of Tanzanian permanent establishment
principles and law, relevant to a non-resident English
incorporated company.
In addition, the TRA issued adjusted tax assessments
totaling approximately $190 billion for alleged unpaid taxes,
interest and penalties, apparently issued in respect of
alleged and disputed under-declared export revenues, and
appearing to follow on from the announced findings of the
First and Second Presidential Committees. For more
information about these adjusted tax assessments, see
“Acacia Mining plc – Concentrate Export Ban and Related
Disputes” below.
See note 12 of these Financial Statements for
information related to income tax expenses recorded with
respect to these matters.
Acacia Mining plc – Concentrate Export Ban and
Related Disputes
On March 3, 2017, the Tanzanian Ministry of Energy and
Minerals imposed a general ban on the export of metallic
concentrates (the “Ban”). This includes gold/copper
concentrate exported by Acacia’s Bulyanhulu and Buzwagi
mines. Following the imposition of the Ban, Acacia
immediately ceased all exports of its gold/copper
concentrate, including 27 containers previously approved
for export prior to the Ban.
During the second quarter of 2017, investigations were
conducted on behalf of the Tanzanian Government by two
Tanzanian Government Presidential Committees, which
have resulted in allegations of historical undeclared
revenue and unpaid taxes being made against Acacia and
its predecessor companies. Acacia considers these findings
to be implausible and has fully refuted the findings of both
Presidential Committees. Acacia has requested copies of
the reports issued by the two Presidential Committees and
called for independent verification of the findings, but has
not yet received a response to these requests.
On July 4, 2017, Acacia’s subsidiaries, Bulyanhulu
Gold Mine Limited (“BGML”), the owner of the Bulyanhulu
mine, and Pangea Minerals Limited (“PML”), the owner
of the Buzwagi mine, each commenced international
arbitrations against the Government of Tanzania in
accordance with the dispute resolution processes agreed
by the Government of Tanzania in the Mineral Development
Agreements (“MDAs”) with BGML and PML. These
arbitrations remain ongoing.
In July 2017, Acacia received adjusted assessments
for the tax years 2000–2017 from the Tanzania Revenue
Authority (the “TRA”) for a total amount of approximately
$190 billion for alleged unpaid taxes, interest and penalties,
apparently issued in respect of alleged and disputed
under-declared export revenues, and appearing to follow
on from the announced findings of the First and Second
Presidential Committees. These assessments are being
disputed and the underlying allegations are included in the
matters that have been referred to international arbitration.
In addition, following the end of the third quarter,
Acacia was served with notices of conflicting adjusted
corporate income tax and withholding tax assessments for
tax years 2005 to 2011 with respect to Acacia’s former
Tulawaka joint venture, and demands for payment,
for a total amount of approximately $3 billion. Interest
and penalties represent the vast majority of the new
assessments. The TRA has not provided Acacia with any
explanations or reasons for the adjusted assessments, or
with the TRA’s position on how the assessments have been
calculated or why they have been issued. Acacia disputes
these assessments and has requested supporting
calculations, which have not yet been received. Acacia is
objecting to these assessments and defending this matter
through the Tanzanian tax appeals process.
In addition to the Ban, new and amended legislation
was passed in Tanzania in early July 2017, including
various amendments to the 2010 Mining Act and a new
Finance Act. The amendments to the 2010 Mining Act
increased the royalty rate applicable to metallic minerals
173
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation | Financial Report 2018 such as gold, copper and silver to 6% (from 4%), and the
new Finance Act imposes a 1% clearing fee on the value of
all minerals exported from Tanzania from July 1, 2017. In
January 2018, new Mining Regulations were announced by
the Tanzanian Government introducing, among other
things, local content requirements, export regulations and
mineral rights regulations, the scope and effect of which
remain under review by Acacia. Acacia continues to monitor
the impact of all new legislation in light of its MDAs with
the Government of Tanzania. However, to minimize further
disruptions to its operations Acacia will, in the interim,
satisfy the requirements imposed as regards the increased
royalty rate in addition to the recently imposed 1% clearing
fee on exports. Acacia is making these payments under
protest, without prejudice to its legal rights under its MDAs.
Acacia has been looking to address all issues in
respect of the Ban along with other ongoing disputes
through dialogue with the Tanzanian Government. Acacia
remains of the view that a negotiated resolution is the
preferable outcome to the current disputes and Acacia will
continue to work to achieve this. During the third quarter of
2017, Barrick and the Government of Tanzania engaged in
discussions for the potential resolution of the disputes.
Acacia did not participate directly in these discussions as
the Government of Tanzania had informed Barrick that it
wished to continue dialogue solely with Barrick.
On October 19, 2017, Barrick announced that it had
agreed with the Government of Tanzania on a proposed
framework for a new partnership between Acacia and the
Government of Tanzania. Barrick and the Government of
Tanzania also agreed to form a working group that will
focus on the resolution of outstanding tax claims against
Acacia. Key terms of the proposed framework announced
by Barrick and the Government of Tanzania include (i) the
creation of a new Tanzanian company to manage Acacia’s
Bulyanhulu, Buzwagi and North Mara mines and all future
operations in the country with key officers located in
Tanzania and Tanzanian representation on the board of
directors; (ii) maximization of local employment of
Tanzanians and procurement of goods and services
within Tanzania; (iii) economic benefits from Bulyanhulu,
Buzwagi and North Mara to be shared on a 50/50 basis,
with the Government’s share delivered in the form of
royalties, taxes and a 16% free carry interest in Acacia’s
Tanzanian operations; and (iv) in support of the working
group’s ongoing efforts to resolve outstanding tax claims,
Acacia would make a payment of $300 million to the
Government of Tanzania, staged over time, on terms to be
settled by the working group. Barrick and the Government
of Tanzania are also reviewing the conditions for the lifting
of the Ban. Negotiations concerning the proposed
framework remain ongoing and the definitive terms of any
final proposal for the implementation of the framework
remain outstanding. Such terms would be subject to review
and approval by Acacia.
See note 12 of these Financial Statements for
information related to income tax expenses recorded
with respect to these matters and note 21 of these
Financial Statements for impairment losses arising from
these matters.
174
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation | Financial Report 2018 37 Subsequent Events
Randgold Resources Limited Merger
On September 24, 2018, we announced an agreement on
the terms of a recommended share-for-share merger of
Barrick and Randgold. The transaction closed on January 1,
2019, with Barrick acquiring 100% of the issued and
outstanding Randgold shares. Each Randgold shareholder
received 6.1280 common shares of Barrick for each
Randgold share, which resulted in the issuance of
583,669,178 Barrick common shares. After this share
issuance, Barrick shareholders owned 66.7%, while former
Randgold shareholders owned 33.3%, of the shares of
the combined company. We have determined that this
transaction represents a business combination with
Barrick identified as the acquirer. Based on the
December 31, 2018 closing share price of Barrick’s
common shares, the total consideration of the acquisition
is $7.9 billion. We began consolidating the operating
results, cash flows and net assets of Randgold from
January 1, 2019.
Randgold was a publicly traded mining company
with ownership interests in the following gold mines:
Kibali in the Democratic Republic of Congo; Tongon in
Côte d’Ivoire; Loulo-Gounkoto and Morila in Mali; and
the Massawa project in Senegal. The following table
includes the joint arrangement and entities other than
100% owned subsidiaries.
Loulo
Gounkoto
Tongon
Massawa Project
Kibali
Morila
Place of business
Mali
Mali
Côte d’Ivoire
Senegal
Democratic Republic of Congo
Mali
Entity type
Subsidiary
Subsidiary
Subsidiary
Subsidiary
JV
JV
Economic interest1
Method
80%
80%
89.7%
83.3%
45%
40%
Consolidation
Consolidation
Consolidation
Consolidation
Equity Method
Equity Method
1. Unless otherwise noted, all of our joint arrangements are funded by contributions made by the parties sharing joint control in proportion to their
economic interest.
As the transaction closed in January 2019, the initial
allocation of the purchase price to the assets and liabilities
acquired is not complete. The main areas under
consideration are the values attributable to the mineral
interests of each of the gold mines acquired and
the calculation and allocation of goodwill arising from
the transaction. We will disclose a preliminary purchase
price allocation in our first quarter 2019 interim
financial statements.
Acquisition related costs of approximately $37 million
have been expensed and are presented as part of
corporate development costs in exploration, evaluation
& project expense.
20163_Barrick_AR18_FINANCIALS_E_MAR 8.indd 175
2019-03-08 4:21 PM
175
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation | Financial Report 2018
SHAREHOLDER INFORMATION
Shareholder Information
Shares are traded on two stock exchanges
New York
Toronto
Ticker Symbol
NYSE: GOLD (previously ABX prior to January 2, 2019)
TSX: ABX
Number of Registered Shareholders at
December 31, 2018
15,805
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
2018 Dividend per Share
US$0.16 (paid in respect of the 2018 financial year)
Common Shares
(millions)
Outstanding at December 31, 2018
Weighted average 2018
Basic
Fully diluted
1,168
1,167
1,167
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, 2018
NYSE
TSX
2018
2017
3,315
782
3,027
751
US$13.54
C$18.43
Share Trading Information
New York Stock Exchange
Quarter
First
Second
Third
Fourth
Toronto Stock Exchange
Quarter
First
Second
Third
Fourth
176
Share Volume
(millions)
High
Low
2018
632
1,223
887
573
3,315
2017
2018
2017
2018
2017
US$14.04
14.08
13.59
13.80
US$20.78
20.36
18.35
16.83
US$11.52
11.06
9.53
12.34
US$15.87
15.51
15.26
13.28
993
800
636
598
3,027
Share Volume
(millions)
High
Low
2018
2017
2018
2017
2018
2017
190
132
173
287
782
244
217
147
143
751
C$19.49
17.72
17.83
18.99
C$27.19
27.03
22.70
21.03
C$14.26
15.84
12.54
14.18
C$21.31
20.43
19.25
17.07
20163_Barrick_AR18_FINANCIALS_E_MAR 15.indd 176
2019-03-18 11:52 AM
Barrick Gold Corporation | Financial Report 2018
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 2017, the Company paid an aggregate cash dividend
of $0.12 per share – $0.03 on March 15, $0.03 on June 15,
$0.03 on September 15, and $0.03 on December 15. In
2018, Barrick paid an aggregate cash dividend of $0.12 per
common share – $0.03 on March 15, $0.03 on June 15,
$0.03 on September 17 and $0.03 on December 17. A
dividend of $0.07 per share was declared on December 17,
2018 for payment on January 14, 2019 to shareholders of
Barrick prior to the completion of the merger with Randgold
Resources Limited. This resulted in an annual dividend of
$0.16 per common share paid to the shareholders of
Barrick in respect of the 2018 financial year.
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
AST Trust Company (Canada)
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@astfinancial.com
Website: www.astfinancial.com/ca-en
Auditors
PricewaterhouseCoopers LLP
Toronto, Canada
Annual Meeting
The Annual Meeting of Shareholders will be held on
Tuesday, May 7, 2019 at 10:00 a.m. (Toronto time)
in the Tim Hortons Theatre of the
Hockey Hall of Fame Museum,
Brookfield Place,
30 Yonge Street,
Toronto, Ontario.
20163_Barrick_AR18_FINANCIALS_E_MAR 8.indd 177
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Barrick Gold Corporation | Financial Report 2018 177
Cautionary Statement on Forward-Looking Information
Certain information contained or incorporated by reference in this Annual
Report 2018, 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”,
“plan”, “assume”, “intend”, “project”, “continue”, “budget”, “estimate”, “potential”,
“may”, “will”, “can”, “should”, “could”, “would”, and similar expressions
identify forward-looking statements. In particular, this Annual Report 2018
contains forward-looking statements including, without limitation, with
respect to: (i) Barrick’s forward-looking production guidance; (ii) estimates
of future cost of sales per ounce for gold and per pound for copper,
all-in-sustaining costs per ounce/pound, cash costs per ounce, and
C1 cash costs per pound; (iii) projected capital, operating, and exploration
expenditures; (iv) targeted debt and cost reductions; (v) mine life and
production rates; (vi) the benefits expected from the Randgold merger
and Barrick’s expectations regarding the assets it acquired in its merger
with Randgold; (vii) potential mineralization, including with respect to
Cortez, Goldrush, Fourmile and Turquoise Ridge, and metal or mineral
recoveries; (viii) anticipated gold production from the Deep South Project,
and the third shaft project at Turquoise Ridge; (ix) the potential for plant
expansion at Pueblo Viejo to increase throughput by 50% and convert
resources to reserves; (x) the potential benefits of integrating the Goldrush
and Fourmile operations as a single project; (xi) the development of
potential Tier One gold assets to become Tier One gold assets; (xii) our
pipeline of high confidence projects at or near existing operations;
(xiii) the potential to identify new reserves and resources, and our ability
to convert resources into reserves, including our pipeline of greenfield
projects; (xiv) the combined Company’s future plans, growth potential,
financial strength, investments and overall strategy; (xv) asset sales, joint
ventures, and partnerships; and (xvi) expectations regarding future price
assumptions, financial performance, and other outlook or guidance.
Forward-looking statements are necessarily based upon a number of
estimates and assumptions including material estimates and assumptions
related to the factors set forth below that, while considered reasonable by
the Company as at the date of this Annual Report 2018 in light of
management’s experience and perception of current conditions and
expected developments, 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, and undue reliance should
not be placed on such statements and information. 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, natural
gas, and electricity); the speculative nature of mineral exploration and
development; changes in mineral production performance, exploitation,
and exploration successes; the benefits expected from recent transactions
being realized, in particular, the Randgold merger; the duration of the
Tanzanian ban on mineral concentrate exports; the ultimate terms of any
definitive agreement between Acacia and the Government of Tanzania to
resolve a dispute relating to the imposition of the concentrate export ban
and allegations by the Government of Tanzania that Acacia under-
declared the metal content of concentrate exports from Tanzania; the
status of certain tax reassessments by the Tanzanian government; the
manner in which amendments to the 2010 Mining Act (Tanzania)
increasing the royalty rate applicable to metallic minerals such as gold,
copper and silver to 6% (from 4%), the new Finance Act (Tanzania)
imposing a 1% clearing fee on the value of all minerals exported from
Tanzania from July 1, 2017 and the new Mining Regulations announced
by the Government of Tanzania in January 2018 will be implemented and
the impact of these and other legislative changes on Acacia; whether
Barrick will successfully negotiate an agreement with respect to the
dispute between Acacia and the Government of Tanzania and whether
Acacia will approve the terms of any such final agreement; diminishing
quantities or grades of reserves; increased costs, delays, suspensions
and technical challenges associated with the construction of capital
projects; operating or technical difficulties in connection with mining or
development activities, including geotechnical challenges and disruptions
in the maintenance or provision of required infrastructure and information
178
technology systems; 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; uncertainty whether some or all of the
Company’s targeted investments and projects will meet the Company’s
capital allocation objectives and internal hurdle rates; risks associated
with the fact that certain business improvement initiatives are still in the
early stages of evaluation, and additional engineering and other analysis
is required to fully assess their impact; risks associated with the ongoing
implementation of Barrick’s automation initiatives, and the ability of the
projects under this initiative to meet the Company’s capital allocation
objectives; 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 ratings; the
impact of inflation; fluctuations in the currency markets; changes in U.S.
dollar interest rates; risks arising from holding derivative instruments;
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, and other
jurisdictions in which the Company or its affiliates do or may carry on
business in the future; lack of certainty with respect to foreign legal
systems, corruption and other factors that are inconsistent with the rule
of law; damage to the Company’s reputation due to the actual or
perceived occurrence of any number of events, including negative
publicity with respect to the Company’s handling of environmental matters
or dealings with community groups, whether true or not; the possibility
that future exploration results will not be consistent with the Company’s
expectations; risks that exploration data may be incomplete and
considerable additional work may be required to complete further
evaluation, including but not limited to drilling, engineering and
socioeconomic studies and investment; risk of loss due to acts of war,
terrorism, sabotage and civil disturbances; litigation and legal and
administrative proceedings; 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; risks associated with the fact that certain
of the initiatives described in this Annual Report 2018 are still in the early
stages and may not materialize; our ability to successfully integrate
acquisitions or complete divestitures; risks associated with working with
partners in jointly controlled assets; employee relations including loss of
key employees; increased costs and physical risks, including extreme
weather events and resource shortages, related to climate change;
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 2018 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 more detailed discussion
of some of the factors underlying forward-looking statements and the
risks that may affect Barrick’s ability to achieve the expectations set forth
in the forward-looking statements contained in this Annual Report 2018.
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.
20163_Barrick_AR18_FINANCIALS_E_MAR 8.indd 178
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Barrick Gold Corporation | Financial Report 2018 The New
Value
Champion
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www.barrick.com
Barrick Gold Corporation
Corporate Office:
Brookfield Place
TD Canada Trust Tower
161 Bay Street, Suite 3700
P.O. Box 212
Toronto, Canada M5J 2S1
Tel: +1 416 861-9911
Toll-free throughout North America:
1 800 720-7415
Email: investor@barrick.com
Creating a
New Champion
for long-term value creation.
■ Committed to creating long-term value
for all shareholders
■ Five of the world’s top 10 Tier One gold assets1
■ Geology driven business focused on
exploration and resource management
■ Team with proven record of delivery
■ Focus on disciplined growth and
sustainable profitability
Contents
Connect with us
Barrick Gold Corporation
Annual Report 2018
Message from the Executive Chairman 6 / Message from the President and Chief Executive Officer 9
Board of Directors 16 / Management’s Discussion and Analysis 18 / Mineral Reserves and Resources 86
Financial Statements 98 / Notes to Financial Statements 103 / Shareholder Information 176