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Best Returns
Barrick Gold Corporation
An nu al Report 2019
Our vision is to be the world’s most valued gold
mining business by finding, developing and
operating the best assets with the best people to
deliver the best returns, on a sustainable basis,
to our owners and partners. We are committed to
partnering with our host countries and communities
to transform their natural resources into tangible
benefits and mutual prosperity.
CONTENTS
2 2019: A Year of Delivery
26 Gold Market Overview
152 Financial Statements
4 Our Business at a Glance
28 North America
157 Notes to the Financial
6 Best Assets
8 Best People
10 Best Returns
30 Latin America and Asia Pacific
Statements
32 Africa and Middle East
34 Reserves & Resources
216 Shareholder Information
218 Cautionary Statement on
Forward-Looking Information
12 Key Performance Indicators
36 Exploration
14 Message from the
Executive Chairman
16 Board of Directors
18 Message from the
President and CEO
22 Executive Committee
40 Sustainability Review
45 Endnotes
46 Financial Report
47 Management Discussion and
Analysis
138 Mineral Reserves and Mineral
24 Financial Review
Resources
Unless otherwise indicated, all amounts are expressed in US dollars.
Barrick Gold Corporation
www.barrick.com(cid:3)
(cid:3) (cid:3) (cid:3) (cid:53)(cid:64)(cid:58)(cid:44)(cid:3) (cid:33)(cid:3) (cid:46)(cid:54)(cid:51)(cid:43)(cid:3) (cid:2094)(cid:3) (cid:59)(cid:58)(cid:63)(cid:3) (cid:33)(cid:3) (cid:40)(cid:41)(cid:63)
On January 1, 2019, a new Barrick was born out
of the merger between Barrick Gold Corporation
and Randgold Resources. Its shares trade on
the New York Stock Exchange under the symbol
GOLD and on the Toronto Stock Exchange under
the symbol ABX.
The merger created a sector-leading gold company
which owned five of the industry’s Top 10 Tier Onei
gold assets – Cortez and Goldstrike in Nevada USA
(both 100%), Loulo-Gounkoto in Mali (80%), Kibali in
the Democratic Republic of Congo (45%) and Pueblo
Viejo in the Dominican Republic (60%) – as well as
two with Tier One potential – Turquoise Ridge and the
Goldrush/Fourmile project, both in Nevada USA.
On July 1, 2019, Barrick combined its Nevada assets
with those of Newmont to create Nevada Gold Mines
(61.5% owned and operated by Barrick) resulting in
Turquoise Ridge becoming the sixth Tier One mine in
the Barrick portfolio. And in September it bought out
the minority shareholders in Acacia and took over
the management of its Tanzanian assets.
Barrick has gold and copper mining operations and
projects in 13 countries in North and South America,
Africa, Papua New Guinea and Saudi Arabia. Its
diversified portfolio spans many of the world’s
prolific gold districts and is focused on high-margin,
long-life assets.
Annual Report 2019
1
2019: A YEAR OF DELIVERY
On January 1, the merger between
Barrick Gold Corporation and
Randgold Resources became
official. Shares in the new
company start trading on the
NYSE under the symbol GOLD
and remain on the TSX as ABX.
In a historic accord, Barrick
and Newmont agree to merge
their Nevada assets. Previous
negotiations over two decades to
capture synergies had all failed to
achieve this.
President and chief executive
Mark Bristow meets Papua New
Guinea’s new prime minister
James Marape to discuss a
20-year extension to Porgera’s
special mining lease.
2019
Jan
Feb
Mar
Apr
May
Jun
The restructuring process starts.
The corporate office is downsized
and management decentralized.
Regional executive teams and site
mineral resource management
established.
An inaugural resource estimate
for Fourmile was declared,
demonstrating the prospectivity
and continuing growth potential of
the Cortez property.
The new Barrick’s strong start is
reflected in its Q1 results, which
show gold production, net cash
from operations and earnings per
share significantly up and debt
net of cash down – trends which
will continue though the following
three quarters.
Executive chairman John L Thornton
and newly elected Democratic
Republic of Congo president Felix
Tshisekedi meet in Washington and
confirm their mutual commitment
to developing the country’s mineral
potential.
Barrick presents a proposal
for a buy-out of the minority
shareholders in Acacia, to end
the long and paralyzing dispute
between that company and the
Tanzanian government.
2
Barrick Gold Corporation Nevada Gold Mines is launched.
The world’s largest gold
production complex is majority-
owned and operated by Barrick.
Dividend per share for Q3 2019
increased by 25% to $0.05,
followed by a 40% increase to
$0.07 for Q4 2019.
The disposal of non-core assets
starts with the sale of Barrick’s
stake in the Kalgoorlie mine in
Australia for $750 million.
Jul
Aug
Sep
Oct
Nov
Dec
Dec
The Acacia deal becomes effective
and Barrick teams immediately
move into Tanzania to restore its
license to operate. On the same
day, Barrick announces a major
discovery at Fourmile in Nevada.
Mark Bristow meets Senegalese
president Macky Sall to negotiate
a joint approach to bringing the
Massawa project to account. Also
on this day, US Secretary of the
Interior David Bernhardt visits
Nevada Gold Mines. Nevada
governor Steve Sisolak and US
senator Catherine Cortez Masto
will later follow suit, demonstrating
Barrick's strong partnership with the
state and federal governments.
Barrick and its Senegalese JV
partner agree to a transaction to
combine the Massawa gold project,
in which they have a 90% stake,
with Teranga Gold Corporation’s
Sabodala gold mine. Barrick will
participate in the upside of the
combined asset through the 11%
interest it acquires in Teranga. The
transaction closed in Q1 2020.
Barrick and Acacia’s
boards agree on the
acquisition by Barrick of
the Acacia minority
shareholder interest.
Barrick and the government of
Tanzania announce that all past
disputes between the two parties
have been resolved. A jointly
owned company, Twiga Minerals,
is formed to manage the mines
and Barrick agrees to a 50/50
benefit-sharing deal with the
government.
Barrick announces that the
Quisqueya 1 power plant for
Pueblo Viejo will receive its first
natural gas shipment in Q1 2020,
lowering costs, in line with its
clean and efficient energy strategy.
3
Annual Report 2019 OUR BUSINESS AT A GLANCE
Donlin Gold
Barrick ownership: 50%
Golden Sunlight
Barrick ownership: 100%
Nevada Gold Mines1
Barrick ownership: 61.5%
Turquoise Ridge2
2019 production: 504koz3
Carlin2
2019 production: 1.3Moz3
Cortez2
2019 production: 963koz3
Goldrush
Barrick ownership: 61.5%
Fourmile
Barrick ownership: 100%
Lagunas Norte
Barrick ownership: 100%
Zaldívar
Barrick ownership: 50%
2019 production: 256Mlb3
Gold producing
Projects
Copper producing
In closure
Care and maintenance
Corporate office
4
Hemlo
Barrick ownership: 100%
2019 production: 213koz
Corporate office, Toronto
Pueblo Viejo 2
Barrick ownership: 60%
2019 production: 983koz3
Pascua-Lama
Barrick ownership: 100%
Veladero
Barrick ownership: 50%
2019 production: 548koz3
Pierina
Barrick ownership: 100%
Norte Abierto
Barrick ownership: 50%
Alturas
Barrick ownership: 100%
Barrick Gold Corporation Loulo-Gounkoto2
Barrick ownership: 80%
2019 production: 715koz3
Morila
Barrick ownership: 40%
Tongon
Barrick ownership: 89.7%
2019 production: 273koz3
Jabal Sayid
Barrick ownership: 50%
2019 production: 132Mlb3
Kibali2
Barrick ownership: 45%
2019 production: 813koz3
Massawa
Barrick ownership: 83.25%4
North Mara
Barrick ownership: 84%5
2019 production: 334koz3
Bulyanhulu
Barrick ownership: 84%5
2019 production: 37koz3
Buzwagi
Barrick ownership: 84%5
2019 production: 115koz3
Lumwana
Barrick ownership: 100%
2019 production: 238Mlb
Porgera
Barrick ownership: 47.5%
2019 production: 597koz3
1
2
3
4
5
The Nevada Gold Mines joint venture was formed on July 1, 2019. Barrick's Goldstrike and Newmont's Carlin operation were contributed to the joint
venture and are now collectively referred to as Carlin. Additionally, Barrick's Turquoise Ridge and Newmont's Twin Creeks operation were contributed
to the joint venture and are now collectively referred to as Turquoise Ridge. As a result, amounts presented for Carlin on a 100% basis for 2019 include
Goldstrike results for the full year ended December 31, 2019 (including South Arturo) as well as results for the legacy Carlin operation contributed by
Newmont from July 1, 2019 onwards. Similarly, amounts presented for Turquoise Ridge on a 100% basis for 2019 include the legacy Barrick Turquoise
Ridge operation for the full year ended December 31, 2019 as well as results from the legacy Twin Creeks operation contributed by Newmont from
July 1, 2019 onwards.
Tier One mine.
Production is presented on a 100% basis.
In Q1 2020, Barrick sold its stake in Massawa to Teranga Gold Corporation and retained an 11% equity interest in Teranga.
The expected effective date of our 84% ownership interest is January 1, 2020.
5
Annual Report 2019 BEST
ASSETS
In line with its commitment to finding, developing
and operating the best assets, Barrick is focused
on high-margin, long-life operations and projects
clustered in the world’s most prospective gold
districts, and supporting these with a robust
copper businessii. Barrick already operates six
Tier One gold assets. To qualify for Tier One status,
a mine has to have annual production in excess
of 500,000 ounces, a life of at least 10 years, and
total cash costs in the bottom half of the industry
range. Continuing brownfields exploration is
designed to support and where possible to extend
the production rate as well as the Life of Mine.
The company also owns mines and projects with
the potential for promotion to Tier One, and its
greenfields exploration teams are hunting for the
next world-class discovery across Barrick’s global
holdings.
6
Barrick Gold Corporation TIER ONE MINES
Carlin
Carlin
Cortez
Cortez
2019 Production1
1.3Moz
2019 Production1
963koz
Carlin (including the former Goldstrike operation) consists of
multiple open pit and underground mines and several processing
facilities, including two roasters, an autoclave and an oxide mill.
The Carlin trend is the most significant ore-controlling fault in
Nevada and will be a key exploration focus at Barrick for many
years.
Cortez consists of the Pipeline open pit complex and the Cortez
Hills underground operation. Processing at Cortez consists of
an oxide mill and heap leach pads. Pouring its first gold over
150 years ago, Cortez is expected to continue producing long
into the future through projects such as Deep South, Goldrush
and potentially Fourmile.
Kibali
Kibali
Loulo-Gounkoto
Loulo-Gounkoto
2019 Production1
813koz
2019 Production1
715koz
Kibali is one of the largest gold mines in Africa, consisting of
an open pit and underground operation, as well as a 7.2Mtpa
processing plant. First gold was poured in 2013 from open
pit operations, while full underground commissioning was
completed at the end of 2017. The successful Kalimva-Ikamva
open pit prefeasibility study will enhance production flexibility
and extend Kibali's life well beyond 10 years.
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 greenfields discovery, poured first gold in 2011 with ore
processed at Loulo. Development of the complex's third
underground mine is scheduled to start in Q4 2020.
Pueblo Viejo
Pueblo Viejo
Turquoise Ridge
Turquoise Ridge
2019 Production1
983koz
2019 Production1
504koz
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 and an additional
tailings facility that would allow the mine to maintain average
annual gold production of 800koz after 2022 (100% basis)2.
Turquoise Ridge (including the former Twin Creeks operation)
consists of multiple open pit and underground mines as well as
an autoclave and oxide mill. The high-grade Turquoise Ridge
underground mine is the value driver of the complex and construction
of a third shaft at the operation is on schedule and within budget.
1
2
Production is presented on a 100% basis. Nevada Gold Mines is owned 61.5% by Barrick (the operator) and 38.5% by Newmont. Kibali is owned 45%
by Barrick (the operator), 45% by AngloGold Ashanti and 10% by SOKIMO. Loulo-Gounkoto is owned 80% by Barrick (the operator) and 20% by the
Government of Mali. Pueblo Viejo is owned 60% by Barrick (the operator) and 40% by Newmont.
For additional detail regarding Pueblo Viejo, see the Technical Report on the Pueblo Viejo mine, Sanchez Ramirez Province, Dominican Republic, dated
March 19, 2018, and filed on SEDAR at www.sedar.com and EDGAR at www.sec.gov on March 23, 2018.
7
Annual Report 2019
BEST
PEOPLE
Barrick is committed to attracting, retaining
and training the best people and developing
them into multi-faceted management teams,
who are capable of not only handling
complex corporate transactions but also
running some of the world’s most remote and
operationally-challenging mines. Barrick’s
policy of employing host country nationals
and upskilling them to world-class operational
and managerial standards has equipped the
company with a workforce and management
team ranking among the finest in the global
mining industry. Additionally, thanks to mining
digitalization and automation, as well as
mentorships and internship programs, Barrick
has opened new opportunities for women and
young people to excel in a career in mining.
NATIONAL WORKFORCE1
%
100
80
60
40
20
0
95%
97%
76%
76%
2018
2019
Employees
Senior management
1
Percentage of workforce that are host country nationals.
8
Barrick Gold Corporation
People make a business
To build a modern mining business at the top of its field,
you need best-in-class people to run its portfolio of best-
in-class assets. That is why Barrick promotes a culture of
inclusion across the organization and at every level. Barrick
has flattened its corporate structure to create a larger
ownership base, it’s sharing its strategic vision with all
employees and the roll-out of team effectiveness programs
is reinforcing their understanding of and commitment to
Barrick’s high-performance ethos. An on-going recruitment
drive is successfully filling Barrick’s pipeline of future talent
with people who come from a broad range of backgrounds
but who all have the desire and the ability to buy into the
company’s DNA.
Prioritizing local recruitment
Barrick prioritizes local recruitment and training and provided
jobs for more than 21,869 host country nationals in 2019. The
jobs it creates provide valuable training and employment in
regions where opportunities are often scarce. The company
recruits wherever possible from the communities nearest
its mines. If it is unable to find staff with the appropriate
skills or qualifications in the community, Barrick looks to the
wider region and neighbouring provinces and states before
considering national employees or expatriates. All its mines
are required to develop localization plans that identify, create
and maximize work opportunities for local people.
Developing a new generation of
leaders
Barrick’s human capital focus is on the young people
who will serve as its future leaders. Many of Barrick’s
current executives are the product of Barrick’s university
and vocational training bursaries and have been with the
company since completing their studies. Barrick looks to
identify and develop emerging talent from leading universities
and technical institutes. This approach is now being
extended to a secondary school level to ensure a robust
pipeline of top talent is developed and maintained. Barrick is
being built into a model of what a modern mining business
should be, and its flexible, agile management style requires
the injection of fresh blood.
Talent management and training
A commitment to on-going training is critical to Barrick’s
continued success and the company provides a wide range
of development programs to build and maintain a high-
performance organization with the right skills to deliver its
business strategy. These include on-the-job development,
such as skills shadowing and technical training for specific job
functions; formal training and development programs, such
as its Management Development training at the University of
Cape Town and Finance for Non-Financial Managers training
course; and ongoing educational opportunities through
apprenticeships, tuition assistance, and scholarships to
universities and technical schools. Apprenticeships and on-
the-job training at Barrick’s operations offer opportunities for
many local people to gain skills and find gainful employment
at our mines or in other industries.
9
Annual Report 2019 BEST
RETURNS
Since the announcement of the merger with
Randgold Resources, Barrick’s share price
increased by 78% – outperforming its peers,
comparable indices and spot gold – in a year
w h i c h s a w t h e m e r g e r w i t h R a n d g o l d
consummated, the Nevada joint venture with
Newmont established, the long-running dispute
between Acacia and the government of Tanzania
amicably resolved, and the integration of that
company’s assets into Barrick’s portfolio. At the
same time, Barrick has improved its cashflow,
increased its dividend three times in 2019 and
almost halved its net debt to $2.2 billion – its
lowest level since 2007. It is also well advanced
in realizing $1.5 billion through the sale of
non-core assets. Believing that its success
and growth should be shared equitably with
all its stakeholders, Barrick paid $6.7 billion1
to its employees, its host countries and local
suppliers in 2019.
1 On a 100% basis.
10
Barrick Gold Corporation 2019 HIGHLIGHTS
GROUP GOLD PRODUCTION
NET EARNINGS
DEBT, NET OF CASH
%
21
5.5MOZ
357%
$3,969 MILLION
QUARTERLY DIVIDEND
PER SHARE1
ADJUSTED NET EARNINGS
PER SHAREiii
133%
TO $0.07
46%
$0.51
47%
$2,222 MILLION
NET CASH PROVIDED BY
OPERATING ACTIVITIES
%
61
$2,833 MILLION
FREE CASH FLOWiii
ENVIRONMENTAL INCIDENTS
SHARE PRICE2
210
%
$1,132 MILLION
ZERO
CLASS 1vi
1
2
From Q3 2018.
Since the Barrick and Randgold merger was announced on September 24, 2018.
78%
GOLD PROVEN AND
PROBABLE RESERVES
14.5%
71MOZix
11
Annual Report 2019
KEY PERFORMANCE
INDICATORS
GOLD PRODUCTION
GOLD COST OF SALESv
$/oz
1,050
1,000
950
900
5.5
4.5
Moz
6.0
5.0
4.0
3.0
2.0
1.0
0
GOLD TOTAL CASH
COSTSiii
$/oz
700
650
600
1,005
671
GOLD AISCiii
$/oz
1,000
800
600
400
200
0
894
806
2018
2019
850
892
550
588
2018
2019
800
2018
2019
500
2018
2019
COPPER PRODUCTION
COPPER COST OF
SALESv
COPPER C1 CASH
COSTSiii
COPPER AISCiii
Mlb
450
425
400
$/lb
2.50
2.40
2.30
432
2.40
2.20
375
383
350
2018
2019
2.10
2.00
2.14
2018
2019
$/lb
2.00
1.90
1.80
1.70
1.60
1.50
1.97
1.69
2018
2019
$/lb
2.85
2.75
2.65
2.55
2.45
2.35
2.82
2.52
2018
2019
12
Barrick Gold Corporation Targeted for
2020
GROUP GOLD PRODUCTION: 4.8 - 5.2Moz
COST OF SALESv:
TOTAL CASH COSTSiii:
$980 - $1,030/oz
$650 - $700/oz
$920 - $970/oz
AISCiii:
TOTAL ATTRIBUTABLE CAPEXx: $1,600 - $1,900 million
EPS
$
2.50
2.00
1.50
1.00
0.50
0
-0.50
-1.00
-1.50
ADJUSTED EPSiii
NET CASH PROVIDED BY
OPERATING ACTIVITIES
FREE CASH FLOWiii
$
0.60
0.50
0.40
0.30
2.26
$ million
3,000
2,500
2,000
1,500
0.51
$ million
1,200
1,000
800
2,833
600
1,132
0.20
0.35
1,000
1,765
400
-1.32
2018
2019
0.10
0
2018
2019
500
0
200
365
2018
2019
0
2018
2019
DIVIDEND PER SHARE1
DEBT, NET OF CASH
GROUP SAFETY PERFORMANCE
$
0.25
0.20
0.15
0.10
0.05
0.20
0.16
0
2018
2019
1
Paid in respect of the 2018 or
2019 fiscal year.
$ million
4,500
3,750
3,000
2,250
4,167
1,500
750
0
2,222
2018
2019
250
200
150
100
50
0
3.00
2.50
2.00
1.50
1.00
0.50
0
0
2.12
200
0.46
43
0
2.24
219
0.50
49
2018
2019
Lost Time Injuries
Reportable Injuries
Fatalities
LTIFR
TRIFRiv
13
Annual Report 2019 MESSAGE
FROM THE
EXECUTIVE
CHAIRMAN
When I wrote to you last year, it was about the transformational
merger with Randgold Resources and about the targets we had set
ourselves in pursuit of Barrick’s new goal of becoming the world’s
most valued gold company by owning the best assets, managed by
the best people, to produce the industry’s best results.
At that time, none of us could have foreseen the recent
outbreak of the Covid-19 pandemic, a global disaster which
is changing the way we live and work in a radically disruptive
process with currently no clear end in sight. Barrick is fully
engaged in managing the impact of Covid-19 on our business
and our people, and emergency response measures have
been rolled out at all our sites and operations. Our new
leadership’s experience in managing pandemics and major
crises, combined with Barrick’s financial muscle and its long-
established culture of caring for the welfare of its employees
and communities, have placed us in a strong position to
contend with this challenge.
Turning now to the year under review, I am very pleased
to report that under the leadership of Mark Bristow, who
was appointed as President and Chief Executive Officer
of the merged company, the new Barrick has made
enormous progress in delivering on that promise in a year
of intense activity. This achievement is directly attributable
to a strengthened management team with clear strategic
objectives, a fit for purpose structure, a renewed commitment
to partnership and strictly defined investment criteria.
Following the merger, this team moved quickly to conceive and
consummate three additional value-creating transactions. In
the first, Barrick and Newmont merged their Nevada assets
in a new joint venture, Nevada Gold Mines, which is majority-
owned and operated by Barrick. This business is already
more than living up to our expectations.
Then Barrick acquired the minority shares in Acacia Mining
plc, integrated its mines into our operations, resolved
its legacy issues with the Tanzanian government and
established Twiga Minerals Corporation, a joint venture with
the government, to manage our assets in that country and
cement our partnership.
Thirdly, in line with our policy of selling non-core assets,
we sold our non-operated stake in Kalgoorlie Consolidated
Gold Mines and banked $750 million at the end of November
2019 and sold our interest in the Massawa project in early
March of this year for proceeds of up to $430 million. This
strategic process is continuing.
14
Barrick Gold Corporation Internally, the new corporate executive team is supported by
a slimmed-down but agile and highly competent technical,
financial, commercial, communication and administration staff,
and can exercise full oversight of our business and operations.
Our global business was refocused into three geographical
regions – North America, Latin America and Asia Pacific, and
Africa and Middle East – where senior executive teams were
installed in line with our policy of moving people and skills out
of the corporate office and into the operations. We have made
sure that each site has the geological, operational and technical
abilities to meet its business objectives and introduced a system
of parallel work streams that are integrated both laterally and
vertically for optimum efficiency.
At the same time, we are upgrading and combining the digital
and information systems throughout the group to provide
managers with real-time data for decision-making and planning.
The impact of these measures is evident in the results for 2019,
which delivered gold production at the top of the guidance
range and copper above its range; adjusted net earnings per
shareiii rose by 46%; net debt was halved to $2.2 billion; and
the year ended with another increase in the quarterly dividend.
Barrick’s focus on operational excellence is matched by a
commitment to protecting the health and safety of our people
and minimizing the effect of our operations on the environment.
There were no fatalities or major environmental events across
the group in 2019 but these are areas in which there is no
room for complacency, and our sights are set on a zero-harm
workplace target.
There are also other goals yet to be achieved, but Barrick has
already moved a long way towards building a modern gold
mining business capable of sustainably producing around five
million ounces of gold per year and delivering significant free
cash flow. Our robust balance sheet and substantial liquidity
will enable us to invest in our future, regardless of capital market
vagaries.
Our journey ahead is rich in value-creating opportunities,
particularly in Nevada and Latin America, while Africa remains
a place to find world-class deposits to add to our portfolio of
Tier One mines. We are also looking closely at expanding our
copper base, given that copper co-exists with and complements
gold. We are strongly placed to take full advantage of these
prospects under the leadership of Mark Bristow, who in 2019
clearly demonstrated that he is the right person to take Barrick
to the next level.
Following the merger with Randgold Resources, the Board
of Directors was streamlined, and three of its standing
committees – Audit & Risk, Corporate Governance & Nominating
and Compensation – were reconstituted to enhance dialogue
and promote accountability. Consistent with our commitment
to increasing the Board’s diversity, in August 2019 we appointed
Ms Loreto Silva, the former Chilean Minister of Public Works,
to the Board and we are well advanced in our search for a
second highly qualified female candidate who will enhance the
mix of skills and perspectives the Board needs to address the
challenges and opportunities facing the business today.
BARRICK: A STAND OUT VALUE PROPOSITION
Indexed performance of gold against other asset classes1,2,3
John L Thornton
Executive Chairman
200
175
150
125
100
75
50
Sep-18
+78%
+50%
+26%
+10%
+8%
+2%
(4%)
(14%)
Dec-18
Mar-19
Jun-19
Sep-19
Dec-19
Source: Bloomberg Financial Markets.
Barrick
Other senior gold producers
Spot gold
S&P 500
US Agg. Bond index
US Dollar index (DXY)
Spot copper
WTI oil
Market data at December 31, 2019. Indexed (base = 100) at September 21, 2018, one working day before the Barrick Randgold transaction was announced.
1
2 Other Senior Gold Producers include Agnico Eagle, Newcrest, and Newmont, weighted by market capitalization.
3
US Aggregate Bond Index based on “Bloomberg Barclays Global-Aggregate Total Return Index”.
15
Annual Report 2019 BOARD OF DIRECTORS
Director since February 2012
Nationality: American
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.
John L Thornton
NON-INDEPENDENT,
EXECUTIVE
CHAIRMAN OF
BARRICK
Director since December 2005
Nationality: American
Chair of the Audit & Risk
Committee, Audit Committee
Financial Expert
Member of the Compensation
Committee
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 CEO from June 2010 to May
2014, and CEO from January
1998 to June 2010.
J Brett Harvey
INDEPENDENT AND
LEAD DIRECTOR
Director since January 2019
Nationality: South African
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. He joined
Barrick in his current position with
the merger in January 2019.
Mark Bristow
NON-INDEPENDENT,
PRESIDENT AND
CHIEF EXECUTIVE
OFFICER OF
BARRICK
Gustavo A Cisneros
INDEPENDENT
DIRECTOR
Director since September 2003
Nationality: Venezuelan and
Spanish
Chair of the Corporate
Governance & Nominating
Committee
Member of the Compensation
Committee
Mr Cisneros is the Chairman
of Cisneros, a privately-
held media, entertainment,
telecommunications, and
consumer products organization.
He is a member of Barrick’s
International Advisory Board. He
is also a senior advisor to RRE
Ventures LLC, a venture capital
firm.
16
Barrick Gold Corporation
Christopher L Coleman
INDEPENDENT
DIRECTOR
Brian L Greenspun
INDEPENDENT
DIRECTOR
Loreto Silva
INDEPENDENT
DIRECTOR
Director since January 2019
Nationality: British
Chair of the Compensation
Committee
Member of the Corporate
Governance & Nominating
Committee
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.
Director since July 2014
Nationality: American
Member of the Corporate
Governance & Nominating
Committee
Member of the Compensation
Committee
Mr Greenspun is the Publisher
and Editor of the Las Vegas Sun.
He is also Chairman and CEO
of Greenspun Media Group. He
has been appointed to two US
Presidential Commissions.
Director since August 2019
Nationality: Chilean
Member of the Corporate
Governance & Nominating
Committee
Ms Silva serves as a partner at
the Chilean law firm Bofill Escobar
Silva Abogados and is the current
chairwoman of the board of
ENAP, Chile’s national petroleum
company. In 2010, she was
appointed Vice Minister of Public
Works and became Minister of the
department at the end of 2012.
Ms Silva has been named one of
Chile's 100 woman leaders on
four occasions.
Director since July 2014
Nationality: Canadian
Member of the Audit & Risk
Committee, Audit Committee
Financial Expert
Mr Evans is the President of
Alibaba Group Holding Ltd,
a position he has held since
August 2015. Prior to becoming
President, he was an independent
director and member of the audit
committee of Alibaba Group
Holding Ltd.
J Michael Evans
INDEPENDENT
DIRECTOR
Director since January 2019
Nationality: British
Member of the Audit & Risk
Committee
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.
Andrew J Quinn
INDEPENDENT
DIRECTOR
17
Annual Report 2019
MESSAGE
FROM THE
PRESIDENT
AND CEO
This is the first set of full-year results Barrick is publishing since its
merger with Randgold Resources, and it is gratifying to report not only
that we have delivered a strong, expectation-exceeding performance
but also that we have made significant progress towards our goal of
becoming the world’s most valued gold company.
It’s been interesting in this regard to note that some analysts
measure value by its narrowest metric: that of market
capitalization. Barrick’s definition of value is far more wide-
ranging. It encompasses the economic benefits we deliver
to all our stakeholders; the care with which we treat our
people, communities and environments; our creation of
opportunities for advancement in countries that lack them;
our strategic focus on long-term sustainability; and, of
course, the returns we generate for our investors.
The past year has also seen the marked rise of environmental,
social and governance (ESG) as a key investment criterion.
Cynics have questioned the sincerity of big business’s
belated conversion to a kinder form of capitalism, terming
it “woke-washing”. Barrick cannot speak for other mining
companies but the principles of ESG have for many years
been embedded in the DNA of both legacy companies. Our
long-term strategy recognizes that we operate in a changing
world where business is expected to meet the highest
standards of behavior, and where ethical issues have become
commercial considerations with serious consequences. We
call this our social license and it is a core part of all our
operations.
18
A year of delivery
In 2019, there was a strong performance across the group,
led by Kibali, Veladero and Porgera, with North America,
Loulo-Gounkoto and Pueblo Viejo also producing creditable
results. Collectively, our copper assets beat their production
guidance and costs were at the lower end of the range.
The only exceptions were Tongon, which just missed its
guidance, Kalgoorlie Consolidated Gold Mines, which we’ve
sold, and Lagunas Norte, which is in care and maintenance
while we consider its future.
joint venture
The Nevada Gold Mines
the
combination and integration of complex assets and was
successfully achieved in a remarkably short time. In its first
six months of operation, the new business delivered within
its production and cost guidances. It also gave Barrick its
sixth Tier One gold mine.
involved
In line with our focus on Tier One assets, we continued to
rationalize our portfolio, consolidating the Tanzanian mines,
selling our stake in Kalgoorlie and agreeing to the sale of the
Massawa project which closed in the first quarter of 2020.
Barrick Gold Corporation These divestments collectively generated gross proceeds
of approximately $1.2 billion and, as this strategic process
continues, we expect it to have earned Barrick $1.5 billion
by the end of this year.
At a time when the global gold industry is at or near peak
production, it is worth noting that in 2019 Barrick succeeded
in replacing all of our gold reserves depleted by mining, and
at a higher grade. This was achieved net of all changes,
including the Randgold merger and Nevada joint venture,
the minority buyout of Acacia Mining plc, the disposal of
our interest in Kalgoorlie, the reclassification of Lagunas
Norte to mineral resources and the removal of the Phase 6
pit pushback at Hemlo from our proven and probable gold
reserves statement.
establishing
Behind the scenes, as John Thornton noted in his message,
we have made the business fit for purpose by flattening the
corporate structure, reducing general and administrative
costs,
executive
empowered
management teams and moving responsibility for the
orebodies back to the operations. We have also introduced
a strong geological and mineral resource management
capacity throughout the organization to ensure that we
optimize our existing assets.
regional
Overview of the operations
Nevada Gold Mines is the value foundation of Barrick’s
business. Already the world’s largest gold mining complex,
it holds enormous potential for growth. The Carlin trend
is the most significant ore-controlling structural corridor in
Nevada, with open mineralization at many points, and it is
going to be one of our main hunting grounds in 2020 and
beyond. Further afield, we have already identified new areas
of interest, ranging from walk-up drill targets to large areas
that are known to contain prospective stratigraphy and
geological features but are largely unexplored. Our fresh
geology-focused approach of integrating exploration and
mineral resource management is leading directly to a host
of new target areas.
Cortez was one of the stand-out performers of the last
quarter of 2019 as it continued its transition to a mainly
underground operation. Its Deep South project is on track
to start contributing later in 2020. The feasibility study on the
Goldrush project is expected in 2021 and, together with the
Fourmile project, it will eventually be included in the Cortez
complex, securing Cortez’s future as a Tier One asset.
Turquoise Ridge was another big driver of Nevada
Gold Mines’ performance and also delivered more than
$100 million in synergy savings in the first six months of
operations following the establishment of the joint venture.
Construction of a third shaft at Turquoise Ridge is on
schedule and within budget.
Hemlo has been upgraded to the strategic category by
modernizing and refocusing the operation, phasing out
the open pit and transitioning to underground contract
mining. There has been an encouraging turnaround in its
performance and there are indications that its Life of Mine
could be extended.
Pueblo Viejo had a very good year but the main excitement
there is a plant and tailings expansion project which will turn
what is already one of the world’s largest gold mines into an
operation capable of maintaining an annual production of
more than 800,000 ounces on a 100% basis well into the
future. A long-life Pueblo Viejo is obviously good for Barrick
and it’s even more beneficial for the Dominican Republic –
the mine provides more than 20% of the country’s corporate
tax revenue.
Veladero also did well after struggling for years, thanks to the
work we put into redesigning and replanning the operation.
Its Life of Mine has been extended beyond 2030 by a pit
pushback, and a project to link the mine to clean grid power
across the border in Chile is scheduled for commissioning in
the second half of 2020.
The El Indio Belt extends from Veladero in the north to Alturas
in the south and straddles the border between Argentina
and Chile. The El Indio Belt is in a particularly well-endowed
gold province which has already yielded 50 million ounces
and holds the potential for much more. Barrick controls
permits over a distance of 100 kilometres with significant
known targets, including the giant Pascua-Lama project in
the north as well as almost nine million ounces of inferred
resources in the Alturas/Del Carmen complex in the south.
Porgera in Papua New Guinea has Tier One potential but
faces many challenges in the form of legacy issues and an
unruly neighborhood. Despite these, Porgera exceeded its
production guidance for the year on the back of a particularly
strong fourth quarter of 2019, and brownfields exploration
has identified a significant potential upside to the Life of
Mine. We are negotiating a 20-year extension to Porgera’s
lease with the government.
to shine with a
Kibali continued
record-breaking
performance for the third consecutive year. Gold production
was well above the top end of guidance and costs were in
the lower half of the range. The successful Kalimva-Ikamva
prefeasibility study prepares the way for an open pit project
which will enhance production flexibility and potentially
extend Kibali’s life well beyond 10 years.
Twiga Joint Venture is a new company jointly owned by
Barrick and the Tanzanian government formed as part of
an agreement to settle Acacia Mining plc’s dispute with
the authorities and to manage our assets in Tanzania. This
included a benefits-sharing deal designed to secure a
genuine partnership between Barrick and the state. Since
consolidating the Tanzanian mines after the minority buy-out
of Acacia Mining plc, we have restarted normal operations
at North Mara, where there is a lot of potential and we
are focused on identifying opportunities for performance
enhancement as well as resource growth. Elsewhere in the
Lake Victoria goldfields, Bulyanhulu is running on tailings
while we plan its restart. Buzwagi is expected to enter care
and maintenance in 2021.
19
Annual Report 2019 Loulo-Gounkoto performed very well and exceeded its
production guidance. Its solar power project – Barrick’s
first – is on track to add 20 megawatts to its power grid,
reducing operating costs and cutting carbon emissions by
40,000 tonnes per year. Development of the complex’s third
underground mine is scheduled to start in the fourth quarter
of 2020, while ongoing drilling points to further growth in the
complex’s asset base.
Following the establishment of our Nevada Gold Mines joint
venture, our Nevada exploration is well underway and early
versions of unified geological models have already identified
new areas of interest, from walk-up drill targets to vast tracts
of land that are known to contain prospective stratigraphy
and geological features but have had little to no drilling.
While it’s early days, we are excited about the potential for
further orebody extensions as well as new discoveries.
Tongon has about two-and-a-half years of life left but
remains a strong cash producer and we continue to look for
additional resources that could extend its life of mine.
The copper mines had a very good year and collectively
exceeded their production guidance. Their performance
was led by Lumwana, where cost-reduction initiatives in
conjunction with improvements in plant availability and
mining efficiency drove a big turnaround.
Taking tech to the next level
Barrick is intent on being at the leading edge of digitalization
and automation in the mining industry, and trials and projects
designed to make our operations more efficient as well as
safer are driving the increased use of technology across the
group.
Centres of excellence have been established to advance
autonomous applications for both surface and underground
operations and to eliminate the need for a range of sites
trialing different systems. In Nevada, the first stage of a
project designed to enable the retrofitting of an autonomous
system for Carlin’s fleet has been completed successfully.
At Kibali, which remains a world leader in underground
automation, multiple autonomous machines can operate on
the same haulage level. A trial to utilize this technology on
the production levels has been completed successfully and a
single operator can now control up to three machines acting
semi-autonomously in different zones. An additional system
which will provide real-time visibility of the underground
operations, including personnel and equipment tracking, is
currently being commissioned.
With the rapid development of electric vehicles, we have
introduced a battery-powered development drill at Hemlo as
a first step towards establishing the potential of this new
technology. We are doing the same with a similar trial of an
underground haul truck at Turquoise Ridge.
Investing in our future
While exploration creates value, embedding our unique
mineral resource management model as a core part of our
operating culture ensures the responsible and sustainable
stewardship of our orebodies to optimize and deliver their
value. In the first year following the merger, our focus has
been on the fundamentals: optimizing and augmenting
our geology
teams, enhancing our mines’ geological
databases, increasing our orebody knowledge through
extensive relogging campaigns, improving grade control and
reconciliation practices, and generating significantly more
robust resource models.
Likewise, we also have extensive land positions in many of
the world’s most prolific gold districts outside Nevada such
as the Andean trend in South America, the West African
Birimian goldfields, the East African Congo Craton and the
Pacific Rim. Our global footprint has expanded with the
addition of exploration programs in Tanzania, the Guiana
Shield and more recently in Japan, and we continue to
search for opportunities to enhance our pipeline of quality
prospects. We won’t rest in our relentless pursuit of Tier
One discoveries, wherever they may be, confident in our
ability to continue to make discoveries and generate value
for our investors and stakeholders.
While 2019 was a year of building the foundations, I believe
that we are now well placed to resume investing in our future
through focused greenfields exploration driven by the clear
understanding that it is exploration that ultimately drives our
value train.
Health, safety and the
environment
During the past year, ESG management has become an
increasingly important factor in investment decisions, as it is a
critical measure of the sustainability of a business. I have long
argued that a good business should also be a good citizen.
Particularly in emerging countries, mining companies have a
moral obligation as well as a commercial motivation to minimize
their impact on the environment, help develop economies and
uplift communities through opportunity creation, skills transfer
and quality of life improvement. If the mining industry is to
survive in a changing world, it has to recognize society’s new
value priorities and adapt to behavioral expectations that go
beyond profitability. Acknowledging that the value mining
creates should be shared with all stakeholders is an important
step in that direction.
Caring for the well-being of our employees is a top priority
and a key component of Barrick’s ESG programs. We are
currently engaged in managing the impacts of the coronavirus
pandemic on our people and our business. Our financial
strength, established prevention practices and procedures,
and the experience we gained from dealing with two Ebola
pandemics around our African operations, have placed us in
a very strong position to cope with this new challenge.
We constantly strive for the improvement of our health and
safety record and have made some progress, but still have
some distance to go. At the time of the merger, all the Randgold
sites held the ISO 45001 health and safety certification but all
the Barrick operations did not. We are addressing this and by
the end of 2021, all our sites will be certified under ISO 45001.
20
Barrick Gold Corporation While much has been achieved, much remains to be done, and
2020 will be another busy year. The work we did in 2019 has
equipped us well to take Barrick to the next level.
We stand on the strong foundation of our enormous organic
growth potential, which will support a positive production
profile and a very robust business, capable of generating a
substantial cash flow for at least the next decade. There are
also opportunities for growth outside our current ambit which
we continue to explore. All in all, I am confident that we are
more than capable of delivering on our promise: to build the
world’s most valued gold company.
Mark Bristow
President and Chief Executive Officer
There were no major environmental incidents at our sites in 2019.
All but four of our mines have the ISO 14001 environmental
certification and by the end of 2020, all of our mines will have
that certification. All the operations, apart from the recently
consolidated Tanzanian mines, have community development
programs and these will be implemented in Tanzania in the
course of this year. In addition, biodiversity action plans are
being rolled out at those sites that do not already have them.
There are some environmental legacy issues that remain to be
addressed, notably in Latin America, but on this front, too, we
are making steady progress.
Building the world’s most valued
gold company
We started 2019 with a long and challenging to-do list and I am
happy to report that by the end of 2019 we had ticked all the
boxes, and then some. This achievement would not have been
possible without the support and guidance of John Thornton
and the Board of Directors; the many people from both legacy
companies who created a new Barrick by uniting in one team
with one mission; our host countries and communities who grant
us our social license and value us as a partner; our business
associates across the globe; and, of course, our investors. You
are all stakeholders in Barrick, and the reason we go to work
each day is to create sustainable value for you.
10-YEAR GOLD PRODUCTION PLAN
Moz
6,000
5,000
4,000
3,000
2,000
1,000
0
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
North America
Latin America and Asia Pacific
Africa and Middle East
Barrick's 10-year gold production profile is based on its current operating asset portfolio, sustaining projects in progress and exploration/mineral resource
management initiatives in execution. Additional asset optimization, further exploration growth, new project initiatives and divestitures are not included. This
10-year outlook is subject to change and is based on the same assumptions as the current five-year outlook detailed in endnote (viii) for the initial five years.
The subsequent five years is also subject to change and assumes attributable production from Fourmile (starting in 2028) as well as exploration and mineral
resource management projects in execution at Nevada Gold Mines, Hemlo and Porgera.
Barrick is closely monitoring the global COVID-19 pandemic and Barrick’s guidance may be impacted if the operation or development of our mines and
projects is disrupted due to efforts to slow the spread of the virus.
21
Annual Report 2019 EXECUTIVE COMMITTEE
Mark Bristow
Barrick President
and Chief Executive
Officer
Mark Bristow was appointed
President and Chief Executive
Officer of Barrick in January 2019,
following the merger with
Randgold Resources. Previously,
he was the Chief Executive
Officer of Randgold following his
pioneering exploration work in
West Africa. He subsequently
led Randgold’s growth through
the discovery and development
of high quality assets into a
major international gold mining
business. He played a pivotal
role in promoting the emergence
of a sustainable mining industry
in Africa, and has a proven track
record of delivering significant
shareholder value. He holds a
Doctorate in Geology from the
University of KwaZulu-Natal.
Graham Shuttleworth
Senior Executive
Vice-President, Chief
Financial Officer
Catherine Raw is the executive
responsible for the North America
region. She was formerly Chief
Financial Officer of Barrick. She
joined the company in May 2015
as Executive Vice-President,
Business Performance, and
was previously co-manager of
BlackRock’s flagship mining
funds.
Kevin Thomson
Senior Executive
Vice-President,
Strategic Matters
Catherine Raw
Chief Operating
Officer, North America
Mark Hill is the executive
responsible for the Latin America
and Asia Pacific region. He was
formerly Chief Investment Officer
of Barrick, chairing its investment
committee and has more than 25
years of experience in the mining
industry.
Willem Jacobs
Chief Operating
Officer, Africa and
Middle East
Graham Shuttleworth is a
chartered accountant with over
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. He became the Senior
Executive Vice-President and
CFO of Barrick with the merger in
January 2019.
Kevin 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.
Willem Jacobs is the executive
responsible for the Africa and
Middle East region. He joined
Randgold in 2010 and was
responsible for the establishment
of Randgold’s activities in Central
and East Africa, specifically in the
Democratic Republic of Congo.
He was appointed COO, Africa
and Middle East after the merger
in January 2019.
Mark Hill
Chief Operating
Officer, Latin America
and Asia Pacific
22
Barrick Gold Corporation Rod Quick is a geologist with an
MSc and 24 years’ experience
in the gold mining industry. He
joined Randgold in 1996, and
was involved in the exploration,
evaluation and production phases
of all of Randgold’s projects since
Morila. Rod was appointed to
his current position following the
merger in January 2019.
With over 30 years’ experience
in geology and exploration,
Rob 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, Fourmile, Gounkoto,
Massawa and Alturas.
Darian Rich, who has more
than 25 years' experience in
human resource management,
was appointed Executive Vice-
President, Talent Management, in
July 2014, when he was tasked
with attracting, retaining and
developing exceptional people.
Greg Walker has been the
Executive Managing Director of
Nevada Gold Mines since the
JV was formed in July 2019.
Prior to leading Nevada Gold
Mines, he was Barrick’s Senior
Vice-President, Operational and
Technical Excellence, responsible
for driving transformational
business improvement across
Barrick’s operations.
Lois Wark
Group Corporate
Communications and
Investor Relations
Executive
Grant Beringer
Group Sustainability
Executive
John Steele
Metallurgy,
Engineering and
Capital Projects
Executive
Rich Haddock
General Counsel
Lois 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.
Grant Beringer oversees all
sustainability related aspects for
the company and is a member
of the environmental and social
oversight committee. He
holds an MSc in environmental
management and has over
15 years' experience in the
environmental and social
consulting industry.
John 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.
Rich Haddock joined Barrick
in 1997 and after progressing
through various legal and other
roles, was appointed General
Counsel in 2014. Non-legal
roles at Barrick included Vice-
President, Environment and
Regional President, North
America. With prior legal roles
in the mining industry and as a
partner in a major law firm, he
has over 35 years’ experience.
Rod Quick
Mineral Resource
Management and
Evaluation Executive
Rob Krcmarov
Executive Vice-
President, Exploration
and Growth
Darian Rich
Human Resources
Executive
Greg Walker
Executive Managing
Director, Nevada Gold
Mines
23
Annual Report 2019 FINANCIAL
REVIEW
The 2019 year was a year of transformation for Barrick and this was
borne out in our financial results. Four quarters of consistently solid
operational performance resulted in a strong set of financial results for
the year in every respect. Although the higher gold price was a key
part of this, it was our operational delivery and stability which ensured
that this benefit was fully captured and delivered to the bottom line.
Net earnings was $4.0 billion in 2019 and net cash provided
by operating activities increased by 61% to $2.8 billion
from the previous year. The significant improvement in our
free cash flow to $1.1 billion represents an increase of
210% year on year with our adjusted EBITDA margin
increasing from 43% to 50%iii. Importantly, our gold
AISC and total cash cost metrics were in the lower half of
the guidance ranges highlighting that this outcome was
achieved through the disciplined delivery of our plansiii.
This strong cash flow outcome allowed us to almost halve
our net debt to $2.2 billion in the space of 12 months and
to increase our quarterly dividend to 7 cents per share,
an increase of 75% relative to the Q1 dividend of 4 cents.
After considering the early repayment of another tranche
of our public market debt in January 2020, we are now
in the enviable position of having less than $100 million
of public debt maturities falling due before 2033. Quite
a remarkable turnaround from the position six years ago
when net debt was over $13 billion.
In terms of the increase in our dividend, this is consistent
with our stated commitment to growing shareholder returns
while we continue to invest in the business and maintain a
strong balance sheet. Divestment proceeds expected in the
near term will further improve our flexibility to maintain strong
shareholder returns while continuing to grow the business
through the execution of our pipeline of growth projects and
exploration.
With a cash balance of $3.3 billion at year end and another
$3.0 billion accessible from our undrawn credit facility,
our total liquidity at year end was $6.3 billion. Along with
forecast free cash flow generation in 2020, this will allow
Barrick to fund our immediate growth plans unencumbered
by the vagaries of the capital markets.
At an individual site level, there were many stand-out
performers with Loulo-Gounkoto, Kibali, Porgera, Veladero,
Long Canyon and Jabal Sayid all exceeding the top end of
their production guidance ranges for 2019 and many more
at the top end of their guidance range.
24
Barrick Gold Corporation The transformation of the business was also evident in a
significantly lower corporate administration cost. Relative to
our original guidance for the 2018 year of $275 million, we
have now more than halved our spend with an outcome of
$130 million for 2019 (excluding severance costs). This was
partly achieved through the closure of satellite corporate
offices in Tucson, San Francisco and Buenos Aires with
substantial reductions in other offices such as Toronto and
Santiago in keeping with our mantra of putting the execution
of our mine plans in the hands of the people closest to the
mine site and eliminating waste and inefficiency. In addition,
we eliminated redundant entities in the group which has the
benefit of further simplifying our business.
The final element of our transformation has been in relation
to our Enterprise Resource Planning (ERP) and consolidation
systems environment. Our initial focus was to bring the
former Randgold entities into the Barrick consolidation
system to facilitate our quarterly reporting.
Following the combination of our Nevada operations with
Newmont’s to create Nevada Gold Mines, we also added
those systems to our integration roadmap. Going forward,
we will be using SAP as our transactional system for the
group and we have progressed the design and testing
phases of this major two-year project according to plan.
This will give us better insights into our business, allowing us
to capture further productivity efficiencies and enable timely
decision-making.
BARRICK 5-YEAR PLANviii
Gold production (attributable) koz
Gold capital expenditure1 (attributable)x $ million
6,000
5,000
4,000
3,000
2,000
1,000
0
Dealing with risk effectively is a source for sustainable
business and is an integral part of how we protect and
create value. During 2019, we made progress with our
risk management capabilities to ensure ownership of risk
was embedded in our business at the operations across
the group. We implemented new procedures in risk
management and updated operational risk registers to focus
on a risk aware culture allowing risks to be managed within
agreed thresholds in a proactive and effective manner. We
also introduced a combined group risk register to allow for a
top down view of key risks facing the business and to ensure
that we deal with risk effectively in all our decision-making.
While 2019 has been a transformative year, we will be the
first to acknowledge that more value is on the horizon and
we will continue our unrelenting focus on the capture of this
upside in order to maintain our position as the world’s most
valued gold mining company.
Graham Shuttleworth
Senior Executive Vice-President, Chief Financial Officer
Cost of sales, Total cash costs and AISC $/oz
1,200
1,000
800
600
400
200
0
2020
2021
2022
2023
2024
North America
Cost of salesv
Latin America and Asia Pacific
AISCiii
Total cash costsiii
Africa and Middle East
Total capital expenditure
1
Gold capital expenditure includes project and sustaining capital expenditure across all gold operations but does not include capital expenditure related
to the copper operations.
Barrick is closely monitoring the global COVID-19 pandemic and Barrick’s guidance may be impacted if the operation or development of our mines and
projects is disrupted due to efforts to slow the spread of the virus.
25
Annual Report 2019
GOLD MARKET
OVERVIEW
The gold price had a strong and sustained positive
performance in 2019 on the back of increasing investor
interest due to geopolitical uncertainties, reductions in
interest rates in large economies, and a search for investment
alternatives as many global equity markets traded at or near
all-time highs. The extension of these macroeconomic
themes into 2020 continues to provide a backdrop for robust
gold price performance.
The average price of gold in 2019 was $1,393/oz, a 10%
increase over the $1,268/oz average in 2018. $1,393/oz was
the highest annual average price since 2013 and represented
the fourth straight year of average price increases.
The gold price reached a six-year high of $1,557/oz in
September 2019 – a price that has been exceeded in early
2020. Gold prices ended 2019 at $1,515/oz, representing
an increase of 18% since the end of 2018.
A reduction in global interest rates, including three 25-basis-
point benchmark rate cuts by the US Federal Reserve in
2019 and a return to negative 10-year yields in parts of
Europe, helped to increase the gold price by reducing the
opportunity cost of holding gold. At the beginning of 2019,
the market expectation was for US benchmark rates to
increase over the course of the year, so the resulting series
of rate cuts had an especially positive impact on gold prices
despite a US dollar that remained strong.
An increase in geopolitical tensions, including an escalation
of hostilities between the US and Iran; trade disputes,
including tariffs put in place by the US and China; and
economic uncertainties, including concerns over the pace of
growth in China and Europe, have also seen buyers turn to
gold as a safe haven and store of value.
Investor demand for gold was very strong in 2019, with
the World Gold Council reporting that collective ETF gold
holdings grew by over 400 tonnes during the year and
reached an all-time high of approximately 2,900 tonnes in the
fourth quarter of 2019. COMEX net longs also reached an
all-time high during 2019, a significant reversal of sentiment
from the net short position that existed in late 2018.
While there was strong appetite for gold from the investment
community, overall demand for gold fell modestly in 2019,
as rising prices in non-US currencies, including the Euro,
Pound sterling, Japanese yen, Indian rupee and Chinese
yuan, reduced consumer demand for jewelry, bars and
coins. In particular, global jewelry demand was down 6%
compared to 2018, with China and India – responsible for
over half the world’s jewelry demand – down 7% and 9%,
respectively. However, despite the decrease in the volume
of jewelry demand, the overall amount spent on jewelry in US
dollar terms actually increased due to the year-on-year rise
in the gold price.
Gold demand for electronics and other industrial uses fell by
a modest 2% in 2019 as trade tensions weighed on global
demand and production. An increase in demand for 5G
infrastructure could help to reverse this trend going forward.
Central bank purchases of gold were once again substantial
in 2019, totaling approximately 650 tonnes. This was a slight
decrease of 1% year-on-year but 2019 still represented the
second-largest year of net central bank purchases in the last
50 years, with Turkey, Russia, China, and Poland leading the
way. Central banks have now been net purchasers of gold
for 10 straight years as they look to it as a source of reserve
diversification.
Overall supply of gold in 2019 increased by 2%, mainly
attributable to a rise in recycled gold. Global mine production
was down by 1%, representing the first annual decline in
mine supply since 2008 and potentially signaling that the
mining industry has reached peak gold production for the
foreseeable future. As gold prices have increased and
capital has become more readily available in recent years,
there is evidence of increased spending on exploration by
mining companies, but the costs of mine construction and
the time required for environmental studies and permitting
activities before reaching the production stage means that
a return to sustained global production growth could be
delayed.
The supply of recycled gold, which historically has correlated
positively with the gold price, increased by 11% in 2019 as
rising prices inspired sellers to bring their holdings to the
market.
26
Barrick Gold Corporation
OFFICIAL SECTOR NET PURCHASES AND GOLD PRICES
Tonnes, net
700
600
500
400
300
200
100
0
79.2
2010
569.2
629.5
601.1
579.6
480.8
656.2
650.3
394.9
378.6
2011
2012
2013
2014
2015
2016
2017
2018
2019
Central banks and other institutions (tonnes, net)
LBMA gold price ($/oz)
ANNUAL MINE PRODUCTION
Tonnes
4,000
3,500
3,000
2,500
2,000
1,500
1,000
500
0
2,748
2,857
2,929
3,110
3,203
3,301
3,398
3,455
3,509
3,464
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
ANNUAL DEMAND - ETFs & SIMILAR PRODUCTS
Tonnes, net
800
600
400
200
0
-200
-400
-600
-800
-1,000
384
256
245
541
271
76
401
153
129
875
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
Source: Metals Focus, Refinitiv GFMS, ICE Benchmark Administration, World Gold Council.
$/oz
1,800
1,600
1,400
1,200
1,000
800
600
400
200
0
27
Annual Report 2019 NORTH AMERICA
Nevada Gold Mines in Nevada, USA, is the single largest gold-mining
complex in the world, producing approximately 3.5 million ounces
a year. Owned 61.5% and operated by Barrick, it comprises three of
the company’s Tier One assets, namely Carlin, Cortez and Turquoise
Ridge, while the development of Barrick’s Goldrush-Fourmile project
will secure Cortez’s Tier One status well into the future. Completing
Barrick’s portfolio in the North America region is Hemlo in Ontario,
Canada, which is being modernized and refocused to ensure its
continued viability.
2019 NORTH AMERICA PRODUCTION1: 2.4Moz
USA
Donlin Gold
Barrick ownership: 50%
Golden Sunlight
Barrick ownership: 100%
Nevada Gold Mines2
Barrick ownership: 61.5%
Turquoise Ridge3
2019 production: 504koz4
Carlin3
2019 production: 1.3Moz4
Cortez3
2019 production: 963koz4
Goldrush
Barrick ownership: 61.5%
Fourmile
Barrick ownership: 100%
CANADA
USA
Hemlo
Barrick ownership: 100%
2019 production: 213koz
Corporate office, Toronto
Gold producing
Projects
Care and maintenance
Corporate office
1
2
3
4
Attributable gold production excludes the impact of Golden Sunlight, which was placed on care and maintenance during 2019.
The Nevada Gold Mines joint venture was formed on July 1, 2019. Barrick's Goldstrike and Newmont's Carlin operation were contributed to the joint
venture and are now collectively referred to as Carlin. Additionally, Barrick's Turquoise Ridge and Newmont's Twin Creeks operation were contributed
to the joint venture and are now collectively referred to as Turquoise Ridge. As a result, amounts presented for Carlin on a 100% basis for 2019 include
Goldstrike results for the full year ended December 31, 2019 (including South Arturo) as well as results for the legacy Carlin operation contributed by
Newmont from July 1, 2019 onwards. Similarly, amounts presented for Turquoise Ridge on a 100% basis for 2019 include the legacy Barrick Turquoise
Ridge operation for the full year ended December 31, 2019 as well as results from the legacy Twin Creeks operation contributed by Newmont from
July 1, 2019 onwards.
Tier One mine.
Production is presented on a 100% basis.
28
Barrick Gold Corporation “The formation, integration and operational delivery at Nevada Gold
Mines was the crowning achievement for North America in 2019.”
Catherine Raw, COO North America
5-YEAR GOLD PRODUCTION FORECASTviii
Gold production (attributable) koz
Gold capital expenditure (attributable)x $ million
Cost of sales, Total cash costs and AISC $/oz
3,000
2,500
2,000
1,500
1,000
500
0
1,200
1,000
800
600
400
200
0
2020
2021
2022
2023
2024
Hemlo
Goldrush
Other NGM
Turquoise Ridge
Cortez
Carlin
Total cost of salesv
AISCiii
Total cash costsiii
Total capital expenditure
Barrick is closely monitoring the global COVID-19 pandemic and Barrick’s guidance may be impacted if the operation or development of our mines and
projects is disrupted due to efforts to slow the spread of the virus.
ATTRIBUTABLE MINERAL
RESOURCES AND RESERVES1,ix
ATTRIBUTABLE PRODUCTION2
COST OF SALES, TOTAL CASH
COSTS AND AISC2
Moz
80
70
60
50
40
30
20
10
0
70
31
11
Inferred
resources
Measured
and
indicated
resources
Proven
and
probable
reserves
000oz
2,500
2,000
1,500
1,000
500
0
2,431
2,300
to
2,450
2019
2020 (est)
$/oz
1,000
800
600
400
200
0
851
655
943
900
to
950
660
to
710
970
to
1,020
2019
2020 (est)
Total cash costsiii
AISCiii
Cost of salesv
1
Mineral resources are inclusive of
mineral reserves.
2
Excludes the impact of Golden
Sunlight, which was placed on care and
maintenance during 2019.
29
Annual Report 2019 LATIN AMERICA AND
ASIA PACIFIC
While Nevada is Barrick’s value foundation, Latin America promises
it growth. Pueblo Viejo in the Dominican Republic, another Tier
One asset, offers enormous upside through an ambitious plant and
tailings expansion project, while Veladero in Argentina has had its life
extended by a pit pushback at Cuatro Esquinas. This region holds the
potential for further world-class discoveries and Barrick’s exploration
teams are hard at work in Argentina, Chile and Peru as well as in
the Dominican Republic. Across the Pacific Ocean in Papua New
Guinea, Barrick is in the process of negotiating a 20-year mining lease
extension for Porgera, where there is lots of scope for Life of Mine
extensions.
2019 LATIN AMERICA AND ASIA PACIFIC
PRODUCTION1: 1.4Moz
Gold producing
Projects
Copper producing
In closure
Care and maintenance
Lagunas Norte
Barrick ownership: 100%
PERU
Pierina
Barrick ownership: 100%
Norte Abierto
Barrick ownership: 50%
DOMINICAN REPUBLIC
Pueblo Viejo 2
Barrick ownership: 60%
2019 production: 983koz3
Zaldívar
Barrick ownership: 50%
2019 production: 256Mlb3
Pascua-Lama
Barrick ownership: 100%
Veladero
Barrick ownership: 50%
2019 production: 548koz3
Porgera Joint Venture
Barrick ownership: 47.5%
2019 production: 597koz3
PAPUA
NEW
GUINEA
CHILE
ARGENTINA
Alturas
Barrick ownership: 100%
1
2
3
Attributable gold production excludes the impact of Lagunas Norte, which was placed in care and maintenance during the year. Barrick also sold its
interest in Kalgoorie in 2019.
Tier One mine.
Production is presented on a 100% basis.
North Mara
Barrick ownership: 84%
2019 production: 334,000oz2
Bulyanhulu
Barrick ownership: 84%
2019 production: 37,000oz2
Buzwagi
Barrick ownership: 84%
2019 production: 115,000oz2
30
Barrick Gold Corporation “2019 was a transformational year in the newly formed Latin America
and Asia Pacific region where the new operating model was
implemented with immediate positive results.”
Mark Hill, COO Latin America and Asia Pacific
5-YEAR GOLD PRODUCTION FORECASTviii
Gold production (attributable) koz
Gold capital expenditure1 (attributable)x $ million
1,400
1,200
1,000
800
600
400
200
0
Cost of sales, Total cash costs and AISC $/oz
1,400
1,200
1,000
800
600
400
200
0
2020
2021
2022
2023
2024
Porgera
Total cost of salesv
Veladero
Pueblo Viejo
AISCiii
Total cash costsiii
Total capital expenditure
1
Gold capital expenditure includes project and sustaining capital expenditure across the Latin America and Asia Pacific region but does not include
capital expenditure related to Zaldívar.
Barrick is closely monitoring the global COVID-19 pandemic and Barrick’s guidance may be impacted if the operation or development of our mines and
projects is disrupted due to efforts to slow the spread of the virus.
ATTRIBUTABLE MINERAL
RESOURCES AND RESERVES2,ix
ATTRIBUTABLE PRODUCTION3
Moz
80
70
60
50
40
30
20
10
0
71
18
Inferred
resources
22
Measured
and
indicated
resources
Proven
and
probable
reserves
2
Mineral resources are inclusive of
mineral reserves.
000oz
1,500
1,200
900
600
300
0
1,354
1,000
to
1,100
2019
2020 (est)
COST OF SALES, TOTAL CASH
COSTS AND AISC3
$/oz
1,000
800
600
400
200
0
874
664
937
890
to
940
610
to
660
930
to
980
2019
2020 (est)
Total cash costsiii
AISCiii
Cost of salesv
3
Excludes the impact of Lagunas
Norte, which was placed on care and
maintenance during 2019. Barrick also
sold its interest in Kalgoorie in 2019.
31
Annual Report 2019 AFRICA AND MIDDLE EAST
Africa is the world’s largest gold producer with 22% of global
production. Barrick is Africa’s largest gold miner and its assets on the
continent continue to be a significant contributor to the company’s
free cash flow. The Loulo-Gounkoto complex in Mali and Kibali in the
Democratic Republic of Congo are both Tier One assets, and ongoing
exploration work at Tongon in Côte d’Ivoire is aimed at extending
that mine’s life. North Mara, Bulyanhulu and Buzwagi in Tanzania are
the latest additions to Barrick’s African endowment and these assets
are being swiftly brought back into full production under a benefit-
sharing agreement with the Tanzanian government.
2019 AFRICA AND MIDDLE EAST PRODUCTION1:
1.5Moz
Gold producing
Projects
Copper producing
Care and maintenance
Loulo-Gounkoto2
Barrick ownership: 80%
2019 production: 715koz3
Morila
Barrick ownership: 40%
MALI
Jabal Sayid
Barrick ownership: 50%
2019 production: 132Mlb3
SAUDI
ARABIA
Kibali2
Barrick ownership: 45%
2019 production: 813koz3
North Mara
Barrick ownership: 84%5
2019 production: 334koz3
TANZANIA
ZAMBIA
Bulyanhulu
Barrick ownership: 84%5
2019 production: 37koz3
Buzwagi
Barrick ownership: 84%5
2019 production: 115koz3
CÔTE
D’IVOIRE DRC
Tongon
Barrick ownership: 89.7%
2019 production: 273koz3
Massawa
Barrick ownership: 83.25%4
Lumwana
Barrick ownership: 100%
2019 production: 238Mlb
1
2
3
4
5
Attributable gold production excludes the impact of Morila, which was placed in care and maintenance during the year.
Tier One mine.
Production is presented on a 100% basis.
In Q1 2020, Barrick sold its stake in Massawa to Teranga Gold Corporation and retained an 11% equity interest in Teranga.
The expected effective date of our 84% ownership interest is January 1, 2020.
32
Barrick Gold Corporation
“We succeeded in returning Lumwana to profitability and integrating
the former Acacia’s Tanzanian assets into our portfolio, beating our
guidance and providing strong cash flows from both gold and copper
production.”
Willem Jacobs, COO Africa and Middle East
Cost of sales, Total cash costs and AISC $/oz
5-YEAR GOLD PRODUCTION FORECASTviii
Gold production (attributable) koz
Gold capital expenditure1 (attributable)x $ million
1,800
1,500
1,200
900
600
300
0
1,200
1,000
800
600
400
200
0
2020
2021
2022
2023
2024
Tongon
Buzwagi
Bulyanhulu
North Mara
Kibali
Loulo-Gounkoto
Total cost of salesv
AISCiii
Total cash costsiii
Total capital expenditure
1
Gold capital expenditure includes project and sustaining capital expenditure across the Africa and Middle East region but does not include capital
expenditure related to Lumwana or Jabal Sayid.
Barrick is closely monitoring the global COVID-19 pandemic and Barrick’s guidance may be impacted if the operation or development of our mines and
projects is disrupted due to efforts to slow the spread of the virus.
ATTRIBUTABLE MINERAL
RESOURCES AND RESERVES2,ix
ATTRIBUTABLE PRODUCTION3
COST OF SALES, TOTAL CASH
COSTS AND AISC3
Moz
30
25
20
15
10
5
0
27
18
10
Inferred
resources
Measured
and
indicated
resources
Proven
and
probable
reserves
2
Mineral resources are inclusive of
mineral reserves.
000oz
2,000
1,500
1,000
500
0
1,544
1,450
to
1,600
2019
2020 (est)
$/oz
1,200
1,000
800
600
400
200
0
1,126
834
673
1,040
to
1,090
870
to
920
640
to
690
2019
2020 (est)
Total cash costsiii
AISCiii
Cost of salesv
3
Excludes the impact of Morila, which
was placed on care and maintenance
during 2019.
33
Annual Report 2019 RESERVES & RESOURCES
Barrick’s reserves and resources for 2019 shows an attributable
gold mineral reserve increase of approximately 15% in ounces at
an 8% higher grade after depletion from mining, reflecting a busy
year which included the incorporation of Randgold Resources, the
formation of the Nevada Gold Mines joint venture with Newmont and
the disposal of Kalgoorlie. Attributable reserves now stand at 1,300Mt
at 1.68g/t for 71Moz of goldix. This reflects reserve additions greater
than mining depletion at a number of the principal assets including
Kibali, Loulo-Gounkoto, Veladero, Porgera, Goldstrike underground,
the Leeville/Portal underground mines, Turquoise Ridge’s Mega pit,
Turquoise Ridge underground and Phoenix. This was achieved through
the refocus on geology as a core discipline within the business and
cost improvements at the Nevada JV, which allowed for the lowering
of cut-off grades and the increase in reserves.
GLOBAL ATTRIBUTABLE CONTAINED GOLD
RESERVES1,ix
GLOBAL ATTRIBUTABLE CONTAINED COPPER
RESERVES1,ix
6.0
5.9
4.5
13.4
62
71
Moz
80
70
60
50
40
30
20
10
0
Blb
16
14
12
10
8
6
4
2
0
0.1
2.9
0.6
0.6
10.6
13.5
Acquisitions/
disposal
2018
total P&P
mineral
reserves
Depletion
(at
year end)
Change
gains
Change
losses
2019
total P&P
mineral
reserves
Acquisitions/
disposal
2018
total P&P
mineral
reserves
Depletion
(at
year end)
Change
gains
Change
losses
2019
total P&P
mineral
reserves
1
The year-on-year changes are stated up to one decimal point, which differs to the rounding applied to our year-end 2019 gold and copper reserve and
resource statement (refer to endnote ix).
34
Barrick Gold Corporation Global attributable mineral resources also increased net of
depletion with significant inferred mineral resource additions
at Robertson and Fourmile in the Cortez district of Nevada,
moving these new projects up the resource triangle.
Goldrush, Robertson and Pueblo Viejo contain significant
indicated and inferred mineral resources not currently in
reserves and are the three growth projects from which further
reserve growth can be expected in the near future, upon
completion of feasibility studies. Total attributable measured
and indicated mineral resources, now reported inclusive of
reserves and at a $1,500/oz gold price, stand at 3,400Mt
@ 1.55g/t for 170Moz, with a further 940Mt @ 1.30g/t for
39Moz in the inferred category, highlighting the potential for
growth in a higher gold price environmentix. All underground
mineral resources are now reported within $1,500/oz stope
optimizer shells and as such have shown significant growth
in ounces albeit at a lower grade, which better reflects the
opportunity at higher gold prices.
The group gold mineral reserve reconciliation on the previous
page explains the changes that occurred during the year.
Acquisition and disposal includes the net change to Barrick’s
reserves from the Randgold merger, the formation of the
Nevada joint venture, the Acacia minorities’ acquisition and
the disposal of Kalgoorlie. Total depletion includes depletion
from mining which was offset by gains due to extensions to
mineral reserves through drilling and cut-off grade changes.
Losses incurred comprise primarily the reclassification of
Lagunas Norte's mineral reserves to mineral resources and
the removal of the Phase Six pit pushback at Hemlo.
All assets are optimized on the full value of the deposit and
as such copper and silver are reported as dedicated mineral
resources and reserves for all assets where copper or silver
is produced and sold as a primary product or by-product.
Total attributable copper mineral reserves now stand at
1,600Mt @ 0.38% for 13 billion pounds of contained copperix.
The growth of copper mineral reserves was primarily driven
by Lumwana, due to the reclassification and remodeling of
the Chimiwungo pit and cost improvements, with a small
additional contribution from Zaldívar.
Total attributable silver mineral reserves are 900Mt @ 5.03g/t
for 150Moz of contained silverix.
Geologists at Kibali inspecting rock samples.
35
Annual Report 2019
EXPLORATION
Successful exploration is the lifeline for any mining company, being
to mining what R&D is to the pharmaceutical industry. Both Barrick
and Randgold were built on pioneering exploration success as well as
significant reserve additions that followed key acquisitions.
2020 REGIONAL EXPLORATION TRIANGLE
Reserve definition
3
15
26
Measured & indicated resources
21
Inferred resources
18
Advanced targets
16
Follow-up targets
7
Identified targets
14
14
18
19
14
6
16
17
18
13
Mines
Reserve and resource definition
Exploration targets
48
Identified geological anomalies
Total
79
Latin America and
Asia Pacific
85
North America
139
Africa and
Middle East
Strategy and portfolio
management
Barrick’s strategy is to:
Consolidate and secure dominant land positions in its favored
operating districts and expand beyond current jurisdictions
into emerging new prospective geological domains.
Focus on economically feasible Tier One discoveries.
Collaborate closely with Mineral Resource Managers to
optimize and deliver value from existing orebodies and mining
operations.
Establish and develop motivated and highly agile discovery
driven teams.
Barrick’s exploration portfolio is managed through the resource
triangle. Projects must pass a set of filters to advance, otherwise
they are eliminated. Barrick aims to ensure it is continually
replenishing the resource triangle at all stages and keeping it
balanced.
The company is already in many of the world’s most prospective
gold districts, but it continues to look for emerging new gold
districts wherever they may be.
The first half of 2019, in many instances, was spent focused
on improving Barrick’s mine geological databases, borehole
logging as well as geological and grade control models. This
has laid the foundations for improved geology models which
are critical for more reliable resource models to help optimize
mine planning. Barrick is now well placed to resume investing in
its future through focused greenfields exploration, driven by the
clear understanding that it is exploration that ultimately drives
the company’s value chain.
Barrick has active reconnaissance teams scouting for new
Tier One opportunities in Canada, the Guiana Shield, and
more recently in Japan and Tanzania. Its teams conduct
close surveillance of competitor activity to identify emerging
new discoveries and projects where the full potential to yield a
discovery has not yet been realized.
The relationship and integration with the company’s unique
mineral resource management (MRM) model as a core part of
its operating culture, introduces responsible and sustainable
stewardship of its valuable orebodies to optimize and deliver
that value. Every site has an exploration and MRM lead
who work together to ensure Barrick updates and improves
its geological models and look to immediate opportunities to
identify brownfields potential for resource and ultimately, reserve
additions. Over the past year, the company appointed new
leaders that embrace its values and culture at all sites.
36
Barrick Gold Corporation
NORTH AMERICA
The Nevada Gold Mines joint venture controls more than
two million acres surrounding the mines. A reinvigorated
exploration effort targeting the newly consolidated land
holdings is well timed to leverage experience and skills
honed at Fourmile, the latest in a string of high-grade and
concealed deposits discovered within the Cortez district.
Teams of discovery-driven explorers have been established
or reinforced at the three main mining centres. Unifying
geology models of the newly consolidated mining districts
is a top priority to ensure a solid geological foundation for
target delineation and testing and will carry forward to all
aspects of the value chain following discovery. The models
reflect extensive data sets from decades of diligent field
work and interpretation. Multiple walk-up drill targets have
been identified in addition to highlighting extensive areas of
prospective stratigraphy and geological features with little to
no drilling. Barrick is confident that the JV will continue to
extend mine life and make meaningful new discoveries in the
years to come.
At Fourmile, geological modeling became progressively
more sophisticated as drilling advanced and the controls to
mineralization were understood. An improved understanding
of the vectors to mineralization means targeting is becoming
increasingly predictive, and therefore will lead to the next
discovery faster.
During 2019, the inferred resource at Fourmile increased
by over 170% to 1.9Moz. Targeting a projected structural
intersection delivered a new discovery more than 1km from
the resource and that discovery was validated with another
exceptional high-grade hole.
The Carlin Trend remains a target rich environment. The 2019
program focused on merging massive datasets in support
of geological modeling. Drilling was initiated to test highly
ranked target concepts as well as establish a geological
framework in priority areas lacking drill information. Looking
forward, the Carlin Trend will become the most active
exploration area in Barrick’s portfolio.
At Turquoise Ridge, unification of the district geology was
the focus following consolidation of the mining camp. The
work to date has successfully closed knowledge gaps
between Turquoise Ridge and Twin Creeks. As with other
districts, targets will be identified from high quality geological
modeling to maximize the opportunity for success.
North American geology
NORTH AMERICA EXPLORATION FOCUSES ON NEVADA
N
Allochthon
ell
d
h
n
e t c
T r e
G
Turquoise Ridge
Twin Creeks
Carbonate
windows
South Arturo
Carlin
Winnemucca
Goldstrike
Elko
Lone
Tree
Phoenix
Battle
Mountain
B
T
r
M
e
E
n
d
Robertson
Pipeline
Cortez Hills
Fourmile
Goldrush
C
a
rli
n
T
r
e
n
d
Carbonate
windows
Autochthon
20km
Wells
Long Canyon
Archean - Superior province
focus area
Proterozoic sequences
Paleozoic - Platformal sequences
in the East and partly covered
platformal sequences in
Western US
Mesozoic - North American
Cordillera
Cenozoic
37
Annual Report 2019
LATIN AMERICA AND ASIA PACIFIC
Much of the group’s 2019 exploration focus was on rebuilding
reliable fact-based geology models which are forming the
foundations for higher confidence resource models. The new
insights on the controls to mineralization garnered from this
work have led to the generation of new district scale targets.
The number of drill targets in our resource triangle tripled by
year-end. The exploration focus is now pivoting to grow and
replenish the resource triangle with new high-quality projects
through generative and new business activities.
Drilling and successfully validating new conceptual targets
at Veladero has the potential to unlock and rejuvenate the
district. In the mining-friendly Salta Province of northern
Argentina, Barrick is establishing a foothold in this poorly
explored gold-silver-copper district, and continues
to
evaluate properties in the province, with the view to
establishing a large high-quality portfolio.
is confirming
the newly
At Pueblo Viejo, drilling
interpreted high-grade controls to mineralization. In parallel,
exploration efforts have begun for the first time beyond
the bounds of the Pueblo Viejo JV permit. Barrick has
consolidated and initiated exploration on new greenfields
properties across the island.
At Lagunas Norte, the company’s focus has been to drill out
and update the PMR (refractory sulphide) orebody model and
evaluate four prospective satellite oxide targets to establish
whether it can add enough value to restart the mine and add
additional infrastructure to process the refractory sulphide
ore or sell it.
to
recognize
The El Indio Belt has been a prolific generator of world
class discoveries, totaling some 50Moz gold over the last
40 years. Deposits were mostly discovered through classic
prospecting and exploration techniques and leveraged
remote sensing,
large alteration zones
associated with hydrothermal systems. However, the next
generation of discoveries will be partly or wholly concealed
by post mineral cover rocks. Barrick is embarking on a new
wave of modern exploration, applying its evolved knowledge
through four decades of discoveries and development and
the advanced technologies available today, and is optimistic
in its belief that there are more world-class discoveries to be
made at El Indio.
On the Alturas-Del Carmen project, drilling of four satellite
targets around the 8.9Moz Alturas discovery is underway to
contribute to an updated study in 2020.
LATAM EXPLORATION FOCUS
El Indio Belt: Prolific endowment and barely scratched the surface
An exploration re-evaluation of Porgera concluded that there
are some excellent growth opportunities which are being
accelerated to establish a long-term vision for the mine.
Pascua-
Lama
Veladero
N
Lagunas Norte
CHILE
ARGENTINA
El Indio
Barrick deposits
Area of interest
Favorable alteration zones
Cover rocks
Pascua-Lama
Veladero
Alturas
10km
38
Archean
Proterozoic
Paleozoic
Mesozoic
Cenozoic
Au deposit size
< 1 Moz
1-3 Moz
3-5 Moz
5-10 Moz
>10 Moz
Barrick Gold Corporation
Archean
Proterozoic
Paleozoic
Mesozoic
Cenozoic
AFRICA AND MIDDLE EAST
In Senegal, field-work has restarted on the Bambadji permit
which is part of the 20Moz Loulo district. Weathered and alluvial
material can mask underlying mineralization. An auger program
to test structural corridors has confirmed the extension of in-
situ anomalism beneath the weathered material and connected
a number of existing isolated soil anomalies. The program
identified the Gefa-Maliki anomalous corridor over a 12km strike
and initial RC drilling returned early, strong results. This is an
exciting development.
Across the border in Mali, brownfields work at Loulo-Gounkoto
successfully extended the high-grade mineralization at Yalea,
Gounkoto and Loulo 3, where work continues to define the
potential for additional underground ounces. In particular, the
transfer zone at Yalea has been extended over 300m, which will
contribute high-grade tonnes to the Yalea underground mine.
New greenfield targets were generated along the Yalea structure
and the domain boundary to the south of Gounkoto with follow-
up planned during 2020.
At Kibali, the Kalimva-Ikamva prefeasibility study was
successfully completed, adding new open pit reserves and
extending the open pit mine life to 2030. Oere has also
been an area of focus for ounce delivery along the KZ
North structure. Drilling has also confirmed high-grade
underground potential at the old Gorumbwa mine and
exploration continues along the KZ structure.
In Tanzania, an updated geological model for Gokona at North
Mara has identified significant upside along strike in both
directions and in the footwall of the deposit, where previous
drilling was sub-parallel to folded lithological contacts. This
new model is being extended east to cover the Nyabigena
deposit. New targets have also been generated along the
highly-prospective +20km long Gokona mineralized trend.
Central and East Africa exploration focus
CENTRAL AFRICAN
REPUBLIC
SOUTH SUDAN
In Côte d’Ivoire, following the completion of resource conversion
drilling at Djinni, optimization work on the updated model returned
positive results with the deposit adding 139koz @ 2.30g/t to
indicated resources and 92koz @ 2.4g/t to inferred resources1
(on a 100% basis) and extending the Tongon Life of Mine by
almost a year. The Boundiali mineralization is currently under
review as a potential satellite feed supply for the Tongon mine.
Kibali
Ngayu
Belt
DEMOCRATIC
REPUBLIC OF
CONGO
AFRICA EXPLORATION FOCUS
West Africa exploration focus
Silicalstic rocks
Siliclastic and volcanic rocks
Plutonic and volcanic rocks
Saraya batholith
Faleme batholith
Barrick permits
Exploration focus
SENEGAL
N
Gold deposits
Exploration focus
Greenstone belt
Archean granitoid
Phanerozoic
Proterozoic
Archean gneiss
MALI
Loulo Complex
Massawa2
Main Transcurrent SZ
50km
Yalea Corridor
Sansamba - Tolou
Faraba Complex
KB
Gefa
Bambadji and
Bakolobi Permits
Kenieba–Kedougou Inlier: A Tier One gold district
1
Djinni includes 1.8Mt at 2.30g/t Au for 139koz of indicated mineral
resources and 1.2Mt at 2.4g/t Au for 92koz of inferred mineral resources.
In Q1 2020, Barrick sold its stake in Massawa to Teranga Gold Corporation
and retained an 11% equity interest in Teranga.
2
UGANDA
Lake
Victoria
RWANDA
BURUNDI
KENYA
North Mara
Bulyanhulu
Buzwagi
TANZANIA
East African Rift
500km
West
African
mobile
zone
West
African
Craton
East Saharan
Metacraton
Congo
Craton
2,000km
East
African
orogenic
zone
Uganda
Craton
Tanzania
Craton
Kaapvaal
Craton
39
Annual Report 2019
SUSTAINABILITY
REVIEW
It has been a significant year for Barrick. Following
the completion of our merger with Randgold
Resources we gained full control of new assets
in Tanzania and the US and brought all of Barrick
behind a new vision for sustainability. Our vision
puts our contributions to social and economic
development, health and safety, human rights
and the environment at the heart of our business.
through deep and genuine
We deliver
partnerships with our stakeholders, including host
governments, communities and our workforce.
this
“We recognize that we must be a trusted long-term partner to be
sustainable — and we must be sustainable to be successful.”
Mark Bristow, President and CEO
40
Barrick Gold Corporation +$9 billion
economic value distributed in 20191
Approximately
$4 billion
to national
suppliers1
Zero Class 1vi
(high significance)
environmental incidents
97% of employees
from host countries
2%2
Water reused
and recycled
to 73%
Zero
fatalities
21,869 jobs
provided to host
country nationals
Community development
investment for 2019
$22.9 million
Committed to
reducing GHG
by at least
10% by 2030
1 On a 100% basis.
2 Compared with 2018.
WATER AT OPERATIONS
REUSED AND RECYCLED
%
100
80
60
40
20
0
73
67
20183
2019
TOTAL ECONOMIC VALUE
CONTRIBUTED4
$ billion
GROUP ENVIRONMENTAL
INCIDENTS
10
8
6
4
2
0
9.0
8.7
2018
2019
35
28
21
14
7
0
Class 1vi
Class 2vii
30
13
0
0
20183
2019
3
4
Consolidated figures for legacy Barrick and legacy Randgold in 2018. In July 2019, we formed and took operational control of Nevada Gold Mines, a
joint venture with Newmont that combined our mining assets in Nevada. In September 2019, we took control of the mining assets of Acacia Mining plc.
Accordingly, data from 2019 reflects performance from these assets starting July 1 and October 1, respectively. Therefore, data year-on-year may not
be directly comparable.
Amount distributed to both host country and international stakeholders ($) (includes total payments to employees, total purchases, payments to
governments and community investments). Figures are rounded and unaudited.
41
Annual Report 2019
OUR PRINCIPLES
To translate our sustainability ambitions into practical steps on
the ground we have identified seven key sustainability principles
that guide our actions every day, at every site. We have also put
governance in place to entrench the sound management of material
environmental, social and governance issues in all our business
decision-making.
We put safety first
Everyone on our mines, from a General Manager on a safety walk around
to employees exercising their Stop Unsafe Work Authority, is part of an
organization-wide goal of continuous improvement towards a zero-harm
workplace.
We conduct our business with integrity,
transparency and fairness
Our Code of Business Conduct and Ethics applies to all staff and
contractors. We have zero tolerance of bribery and corruption in all forms.
We transparently report on our sustainability performance and impacts.
We build and maintain genuine
partnerships
We constantly work to form and maintain mutually beneficial and sustainable
partnerships with our core stakeholders including governments, local
communities, shareholders and suppliers.
We prioritize local hiring and buying
We build the skills and capacity of host country workers and vendors, to
multiply our positive impact on local, regional and national economies.
We empower local communities
We invest in social and economic opportunities including education, water
and healthcare and we form locally elected Community Development
Committees to help host communities shape and deliver sustainable
development on the ground.
We reduce our environmental impacts
Every site is expected to minimize energy and water use, manage waste
and land safely and be a responsible steward of its natural environment.
We plan for closure at all stages
We rehabilitate our mine sites as we go and we invest in economic and
environmental projects that can be sustained beyond the life of a mine.
42
Barrick Gold Corporation
Bottom-up sustainability
governance
Given the different social and environmental contexts of
each mine, we put day-to-day ownership of sustainability
risks and opportunities in the hands of individual sites. Just
as each site must manage its geological, operational and
technical capabilities to meet our business objectives, it
must also manage its own sustainability performance. To
incentivize performance in sustainability, in 2020, 25% of
the long-term incentives at Barrick will be tied to sustainability-
related indicators.
from generally poor
In September, when we took operational control, the mine
suffered
relations with surrounding
communities, so we prioritized the establishment of a CDC to
oversee local community investment and start the long road to
rebuilding trust between the mine and its surrounding residents.
Acacia Mining plc, the previous owner of North Mara, was also
locked in a dispute over taxes with the Tanzanian government.
Since then, Barrick’s team has reached an agreement with
the government for the resolution of all disputes and gives the
authorities full visibility of, and participation in, the benefits of the
mine. By showing our commitment to creating shared value,
we are helping rebuild stakeholder relations in Tanzania.
The Environmental and Social (E&S) Oversight Committee,
one of our most senior management-level bodies, holds
quarterly meetings to review our sustainability performance and
compliance with sustainability policies. The President and Chief
Executive Officer, as chair of the E&S committee, connects site-
level ownership of sustainability with our Board through quarterly
reviews of the reports of the E&S committee with the Board's
Corporate Governance and Nominating Committee. Sites are
also supported by regular interaction and weekly reporting with
the Group Sustainability Executive and specialist regional leads
in environment, health and safety and community engagement
and development. Our Board of Directors and its committees
oversee our sustainability activities as part of their stewardship
of business strategy and risk management.
Further details of our governance relating to sustainability is
available in our annual Sustainability Report.
Our devolved management model extends beyond our
mine gates, too. We are working to establish Community
Development Committees (CDCs) at each of our mines, to
empower local communities to allocate a community investment
budget to those projects and initiatives they believe are most
needed. Each CDC is elected and is made up of a mix of local
leaders, community members, Barrick representatives and
representatives from local women’s and youth groups.
The success of our sustainability strategy was demonstrated in
late 2019 following the consolidation of our interest in the North
Mara gold mine in Tanzania.
Mark Bristow at a mass community gathering at Loulo-Gounkoto.
1 On a 100% basis.
Catalyzing economic
development
At Barrick, we see our mines’ ability to create jobs and
thriving economies, especially in low income areas, as the
bedrock of our license to operate.
is not only
financial: we prioritize
Barrick distributed over $9 billion in 2019 to our workforce,
suppliers, host communities and beyond1.
And our
contribution
local
recruitment and training, and provided jobs for more than
21,869 host country nationals in 2019. Our support for
local entrepreneurs saw us spend nearly $4 billion on goods
and services from host country businesses in 2019 and we
funded local suppliers to train in best practice standards in a
range of sectors from catering to construction1.
Our investments in health and community-led development
projects also make a tangible impact on people’s lives.
This year, to name but a few, these projects helped tackle
malaria in our Africa and Middle East region, reopened
the Paiam hospital — the only recognized tertiary-level health
care facility in the Porgera Valley in Papua New Guinea—
and improved educational outcomes in all the countries we
operate, including North America through, for example, the
Western Shoshone Scholarship Foundation in Nevada.
Towards a zero harm workplace
The sustainability of our business depends on a strong safety
culture that protects people and nature.
While we operated with zero fatalities in 2019 and saw Lost
Time Injuries reduce in the Africa and Middle East region, our
group-level safety performance was not good enough. Our
Total Reportable Injury Frequency Rate (TRIFRiv) increased
by 5% year-on-year, and our Lost Time Injury Frequency Rate
(LTIFR) rose from 0.46 to 0.50. In analyzing the incidents and
frequencies, the combination of assets into Nevada Gold Mines
in the North America region did impact our performance, and
specific action is being implemented at the Nevada joint venture
to improve its safety performance. In 2020, we aim to take a
significant step towards a zero-harm workplace by working to
certify the safety management systems at all operational mines
to the ISO 45001 standard by the end of 2021. Currently three
sites (Kibali, Tongon and Loulo-Gounkoto) are certified and we
will be launching our Journey to Zero Harm program across the
group.
43
Annual Report 2019 Protecting natural capital
to our mines’
Our safety-first mindset also extends
environmental management. Our mines have dedicated
teams who work to make sure we manage and avoid
any negative environmental impacts from mining. Where
impacts cannot be avoided, we act to minimize and mitigate
them and/or put appropriate rehabilitation measures in place
to help restore the natural environment. By using natural
resources and energy efficiently, recycling waste, and
working to protect and rehabilitate biodiversity, we deliver
significant cost savings to our business, reduce future
liabilities and help build strong stakeholder relationships.
Each mine has a robust Environmental Management System
in place, and we have a target for all these systems to be
certified to the ISO 14001:2015 standard by the end of
2020. 76% of our operational sites are already certified and
during 2019, our Lumwana mine in Zambia received its first
ever certification. The Jabal Sayid mine in Saudi Arabia and
the three former Acacia mines (Buzwagi, Bulyanhulu and
North Mara) in Tanzania are the remaining mines set to be
certified in 2020.
‘Class 2vii’
incidents and 13
We performed well against several key environmental
metrics in 2019. We had zero ‘Class 1vi’ (high significance)
environmental
(medium)
incidents, a 56% decrease on 20181. We also surpassed
our target to recycle or reuse over 70% of the water
withdrawn at our mine sites, achieving 73% for the group.
Managing water responsibly is one of the most critical parts
of our sustainability strategy. By reducing the volume of
fresh water we use and protecting water quality, we reduce
our environmental footprint and maintain community and
stakeholder support.
We understand the important link between energy use
and greenhouse gas (“GHG”) emissions. By effectively
managing our energy use and implementing renewable
energy solutions, we can reduce our draw from local
energy grids, reduce our GHG emissions, achieve more
efficient production and reduce direct mining costs. The
company has updated its GHG emissions reduction target
to achieve reductions of at least 10% by 2030 (against a
2018 baseline that combines legacy Barrick and Randgold
data) while maintaining a steady ounce production profile.
Barrick’s actions to achieve this target include increasing the
proportion of renewable energy sources in the company’s
energy mix and switching to cleaner energy sources.
In 2019, we progressed the conversion of the Quisqueya I
power generation facility in the Dominican Republic from
heavy fuel oil to natural gas. We expect the power plant to
receive its first liquefied natural gas deliveries in Q1 2020. The
conversion will help reduce the mine site’s power generation
costs and GHG emissions by 30%. We also advanced a
power transmission project at Veladero to connect the mine
to clean grid power and started construction of a solar plant
at Loulo-Gounkoto to reduce usage of our site thermal
power generation plant in 2020.
44
In Nevada, we are implementing a plan to convert our coal-
fired TS power plant to natural gas usage to significantly
reduce its carbon footprint. The company continues to work
to identify new opportunities for further reductions, and will
regularly review and update its targets to integrate and reflect
opportunities identified and realized. New solar projects are
currently under consideration in Nevada and in the Dominican
Republic.
The tragic tailings dam collapse at Brumadinho a year ago was
a stark reminder of the catastrophic consequences should
a Tailings Storage Facility (TSF) fail and we have embraced
the industry-wide call for greater transparency of tailings
management. Barrick currently manages 70 TSFs, of which
22 are operating, 47 are closed facilities and one is inactive.
During 2019, we reviewed the technical specifications of all
our TSFs and also undertook independent third-party reviews
of the facilities at our Cortez, Goldstrike, Pueblo Viejo and
Hemlo operations and at our Giant Nickel, Nickel Plate, and
El Indio closure sites. In 2020, independent reviews will be
conducted at our Carlin, Hemlo, Loulo-Gounkoto and Tongon
mines, and again at Pueblo Viejo as well as the Giant Nickel
and Nickel Plate closure sites. We are committed to making
sure our tailings facilities meet global best practices for safety
and will continue to work across the industry and with civil
society to improve global tailings management.
Helping lead the industry on
sustainability
Throughout this noteworthy year,
from the Democratic
Republic of Congo to the Dominican Republic, we have
continued to work to build our reputation as trusted partners
and as an industry leader on mine-level management of
sustainability related risks and opportunities, and we have
collaborated with industry to develop global standards such as
the World Gold Council’s Responsible Gold Mining Principles.
We also continue to be recognized for our sustainability
performance – including being listed on the Dow Jones World
Sustainability Index for the 12th consecutive year.
While many companies are freshly discovering the importance
of ESG consideration for their business, this is business as
usual for Barrick and we have been integrating these factors
into our business decisions for many years. As part of this
work, we have developed a sustainability scorecard this year
to rate our ESG performance including key performance
indicators aligned to priority areas set out in the group's
strategy. We intend to evolve the scoring methodology over
time and rank ourselves regularly against our peers in each
indicator, rolling up our performance to an aggregate score.
We will continue in the year ahead to work towards international
best practices, to minimize our environmental impact and to
maximize our economic contributions.
We invite you to read more in our annual Sustainability
Report.
1
During 2019, we reviewed and reclassified our 2018 environmental
incidents against our new classification system.
Barrick Gold Corporation
ENDNOTES
i
A Tier One Gold Asset is a mine with a stated life in excess of 10 years, annual
production of at least 500,000oz of gold and total cash costs per ounce over the
mine life that are in the lower half of the industry cost curve.
ii
Currently consists of Barrick’s Lumwana mine and Zaldívar and Jabal Sayid
copper joint ventures.
iii
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 107 to 132 of the 2019 Financial Report.
iv
Total Reportable Injury Frequency Rate (“TRIFR”) is a ratio calculated as follows:
number of reportable injuries x 1,000,000 hours divided by the total number of
hours worked. Reportable injuries include fatalities, lost time injuries, restricted
duty injuries, and medically treated injuries.
v
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% Tanzania until September 30, 2019 (not with
standing the completion of the Acacia transaction on September 17, 2019, we
consolidated our interest in Acacia and recorded a non-controlling interest of
36.1% in the income statement for the entirety of the third quarter of 2019 as
a matter of convenience) and 40% South Arturo from cost of sales (63.1% of
South Arturo from July 1, 2019 onwards as a result of its contribution to Nevada
Gold Mines)), divided by attributable gold ounces. The non-controlling interest
of 20% Loulo-Gounkoto and 10.3% of Tongon is also removed from cost of
sales and our proportionate share of cost of sales attributable to equity method
investments (Kibali and Morila) is included commencing January 1, 2019, the
effective date of the Merger. Also removes the non-controlling interest of 38.5%
Nevada Gold Mines from cost of sales from July 1, 2019 onwards. 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 (including our proportionate share of copper pounds from our equity
method investments).
vi
Class 1 - High Significance is defined as an incident that causes significant
negative impacts on human health or the environment or an incident that extends
onto publicly accessible land and has the potential to cause significant adverse
impact to surrounding communities, livestock or wildlife.
vii
Class 2 - Medium Significance is defined as an incident that has the potential to
cause negative impact on human health or the environment but is reasonably
anticipated to result in only localized and short-term environmental or community
impact requiring minor remediation.
viii
Key Assumptions
Gold Price ($/oz)
Copper Price ($/lb)
Oil Price (WTI) ($/barrel)
AUD Exchange Rate (AUD:USD)
ARS Exchange Rate (USD:ARS)
CAD Exchange Rate (USD:CAD)
CLP Exchange Rate (USD:CLP)
EUR Exchange Rate (EUR:USD)
2020
1,350
2.75
65
0.70
65.00
1.30
725
1.20
2021+
1,200
2.75
65
0.75
75.00
1.30
680
1.20
Barrick's five-year indicative outlook is based on our current operating asset
portfolio, sustaining projects in progress and exploration/mineral resource
management initiatives in execution. Additional asset optimization, further
exploration growth, new project initiatives and divestitures are not included. For
the group gold and copper segments, and where applicable for a specific region,
this indicative outlook is subject to change and assumes the following:
The inclusion of synergies identified for Nevada Gold Mines;
Production from Cortez Deep South by 2020, in-line with guidance;
Production ramping-up from the third shaft at Turquoise Ridge by 2022,
in-line with guidance;
Production from Goldrush commencing in 2021, in-line with guidance;
Production from the proposed Pueblo Viejo plant expansion and tailings
project by 2023, in-line with guidance. Our assumptions are subject to
change following the combined feasibility study for the plant expansion and
tailings project;
An 84% ownership interest in North Mara, Bulyanhulu and Buzwagi. At this
time, we assume that Buzwagi will enter care and maintenance in 2021;
A restart of mining operations at Bulyanhulu by the end of 2020;
Tongon will enter care and maintenance during the 2022 year;
A sale of stockpiled concentrate related to the Tanzania assets and
Lumwana by the end of 2020;
Production from the Zaldivar CuproChlor® Chloride Leach Project by 2022.
Antofagasta is the operator of Zaldivar.
This five-year indicative outlook excludes:
Production from Fourmile;
Production from assets currently in care and maintenance including Pierina,
Lagunas Norte, Morila and Golden Sunlight;
Production from long-term greenfield optionality from Donlin, Pascua-Lama,
Norte Abierto or Alturas
Barrick's 10-year gold production profile is also based on its current operating
asset portfolio, sustaining projects in progress and exploration/mineral resource
management initiatives in execution. Additional asset optimization, further
exploration growth, new project initiatives and divestitures are not included. This
10-year outlook is subject to change and is based on the same assumptions
as the current five-year outlook detailed above for the initial five years. The
subsequent five years is also subject to change and assumes attributable
production from Fourmile (starting in 2028) as well as exploration and mineral
resource management projects in execution at Nevada Gold Mines, Hemlo and
Porgera.
ix
Estimated in accordance with National Instrument 43-101 as required by
Canadian securities regulatory authorities. Estimates are as of December 31,
2019, unless otherwise noted. Proven reserves of 280Mt grading 2.42g/t,
representing 22Moz of gold; 420Mt grading 0.4%, representing 3,700Mlb of
copper; and 150Mt grading 4.31g/t, representing 21Moz of silver. Probable
reserves of 1,000Mt grading 1.48g/t, representing 49Moz of gold; 1,200Mt
grading 0.38%, representing 9,800Mlb of copper; and 750Mlb grading 5.18g/t,
representing 120Moz of silver. Measured resources of 530Mt grading 2.21g/t,
representing 37Moz of gold; 660Mt grading 0.38%, representing 5,500Mlb of
copper; and 350Mt grading 12.52g/t, representing 140Moz of silver. Indicated
resources of 2,800Mt grading 1.43g/t, representing 130Moz of gold; 2,400Mt
grading 0.38%, representing 21,000Mlb of copper; and 2,000Mt grading
13.44g/t, representing 870Moz of silver. Inferred resources of 940Mt grading
1.3g/t, representing 39Moz of gold; 430Mt grading 0.2%, representing 2,200Mlb
of copper; and 460Mt grading 3.20g/t, representing 47Moz of silver. Complete
mineral reserve and resource data, including tonnes, grades, and ounces, as well
as the assumptions on which the mineral reserves for Barrick are reported (on an
attributable basis), are set out in page 138 of this annual report.
x
These amounts are presented on the same basis as our guidance and include
our 60% share of Pueblo Viejo and South Arturo (36.9% of South Arturo from
July 1, 2019 onwards as a result of its contribution to Nevada Gold Mines),
our 63.9% share of Tanzania until September 30, 2019 (notwithstanding the
completion of the Acacia transaction on September 17, 2019, we consolidated
our interest in Acacia and recorded a non-controlling interest of 36.1% in the
income statement for the entirety of the third quarter of 2019 as a matter of
convenience) and our 50% share of Zaldívar and Jabal Sayid. Also includes
our 80% share of Loulo-Gounkoto, 89.7% share of Tongon, 45% share of Kibali
and 40% share of Morila commencing January 1, 2019, the effective date of the
Merger. Starting July 1, 2019, it also includes our 61.5% share of Nevada Gold
Mines.
Technical Information
The scientific and technical information contained in this document has been
reviewed and approved by Craig Fiddes, North America Resource Modeling
Manager; Chad Yuhasz, P.Geo, Mineral Resource Manager, Latin America and
Asia Pacific; Simon Bottoms, CGeol, MGeol, FGS, FAusIMM, Mineral Resources
Manager: Africa and Middle East; and Rodney Quick, MSc, Pr. Sci.Nat, Mineral
Resource Management and Evaluation Executive – each a “Qualified Person”
as defined in National Instrument 43-101 – Standards of Disclosure for Mineral
Projects.
Annual Report 2019
45
Financial Report for 2019
Contents
Management’s Discussion and Analysis 47 / Mineral Reserves and Resources 138 / Financial Statements 152
Notes to Financial Statements 157 / Shareholder Information 216
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 20, 2020, should be read in
conjunction with our audited consolidated financial statements
(“Financial Statements”) for the year ended December 31, 2019.
Unless otherwise indicated, all amounts are presented in US dollars.
For the purposes of preparing our MD&A, we consider the
materiality of information. Information is considered material if:
(i) such information results in, or would reasonably be expected to
result in, a significant change in the market price or value of our
shares; (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 138.
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: Barrick’s goal to be the world’s most
valued gold mining business; Barrick’s forward-looking production
guidance and estimates of future costs; cash flow forecasts;
projected capital, operating and exploration expenditures; targeted
debt and cost reductions; mine life and production rates; potential
mineralization and metal or mineral recoveries; our ability to identify,
invest in and develop potential Tier One, Tier Two and Strategic
Assets; our strategies and plans with respect to environmental
matters, including climate change; our future plans, growth potential,
financial strength, investments and overall strategy; our plans and
expected completion and benefits of our growth projects, including
construction of twin exploration declines at Goldrush, the Turquoise
Ridge Third Shaft, Pueblo Viejo plant expansion, Zaldívar chloride
leach project, and Veladero power transmission project; our ability
to convert resources into reserves; asset sales, joint ventures and
partnerships, including expected closing of the sale of our interest in
Massawa; 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 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
projects in the early stages of evaluation and for which additional
engineering and other analysis is required; the Company’s ability
to successfully re-integrate Acacia’s operations; whether benefits
expected from recent transactions are realized; disruption of supply
routes which may cause delays in construction and mining activities
at Barrick’s more remote properties; 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 targeted investments
and projects 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;
47
Financial Report 2019 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; risks associated with illegal and artisanal mining; the risks of
operating in jurisdictions where infectious diseases present major
health care issues; 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; and availability and increased costs associated with mining
inputs and labor. 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.
Merger with Randgold Resources Limited
On January 1, 2019, Barrick acquired 100% of the issued and
outstanding shares of Randgold Resources Limited (“Randgold”) for
$7.9 billion based on the December 31, 2018 closing share price of
Barrick’s common shares (the “Merger”). We began consolidating
the operating results, cash flows and net assets of Randgold from
January 1, 2019 and the results presented in this MD&A reflect that.
Refer to note 4 of the Financial Statements for further details of
this transaction.
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 “total 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 107 to 132.
Each non-GAAP financial performance measure has been annotated
with a reference to an endnote on page 133. 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
Realized Price
Starting with this MD&A, we began adjusting for the cumulative
catch-up adjustment to revenue relating to our streaming
arrangements in our calculation of realized price. The prior periods
have been restated to reflect this change. We believe that this
additional information will assist analysts, investors and other
stakeholders of Barrick to better understand our ability to generate
revenue by excluding non-cash amounts from the calculation as
they are not necessarily reflective of the underlying operating results
for the periods presented.
Total cash costs
Starting from the first quarter of 2019, we have renamed “cash costs”
to “total cash costs” when referring to our gold operations. The
calculation of total cash costs is identical to our previous calculation
of cash costs with only a change in the naming convention of this
non-GAAP measure.
All-in sustaining costs and all-in costs
Starting from the first quarter of 2019, we have included sustaining
capital expenditures and project capital expenditures on a cash basis
instead of an accrual basis. As a result of adopting IFRS 16 Leases,
the full lease amount is included in accrued capital expenditures on
initial recognition. We believe that the change in capital expenditures
from an accrual basis to a cash basis better reflects the timing
of costs associated with our operations. The original World Gold
Council (“WGC”) Guidance Note explicitly excluded certain financing
activities from all-in sustaining costs and all-in costs. As a result
of the new lease accounting standard, the WGC Guidance Note
was updated to include both the principal and interest portion of
the cash lease payment in the all-in sustaining costs and all-in cost
metrics. We have updated our calculation accordingly. Prior periods
have not been restated but would not be materially different.
48
MANAGEMENT’S DISCUSSION AND ANALYSISBarrick Gold Corporation Index
50 Overview
50 Our Vision
50 Our Business
50 Our Strategy
51 Sustainability
52 Financial and Operating Highlights
55 Safety
55 Environment
55 Climate Change
56 Reserves and Resources
57 Key Business Developments
59 Outlook for 2020
62 Risks and Risk Management
63 Market Overview
65 Production and Cost Summary
67 Operating Divisions Performance
68 Nevada Gold Mines
69 Carlin
71 Cortez
73 Turquoise Ridge
75 Other Nevada Gold Mines
76 Pueblo Viejo
78 Loulo-Gounkoto
80 Kibali
82 Veladero
84 Porgera
86 North Mara
88 Other Mines – Gold
89 Other Mines – Copper
90 Growth Projects
91 Exploration
94
Review of Financial Results
94 Revenue
95 Production Costs
97 Capital Expenditures
97 General and Administrative Expenses
98 Exploration, Evaluation and Project Costs
98
98 Additional Significant Statement of Income Items
100
Income Tax Expense
Finance Costs, Net
102 Financial Condition Review
102 Balance Sheet Review
102 Shareholders’ Equity
103 Financial Position and Liquidity
103 Summary of Cash Inflow (Outflow)
104 Summary of Financial Instruments
105 Commitments and Contingencies
106 Review of Quarterly Results
106 Internal Control over Financial Reporting and
Disclosure Controls and Procedures
107 IFRS Critical Accounting Policies and
Accounting Estimates
107 Non-GAAP Financial Performance Measures
132 Technical Information
133 Endnotes
137 Glossary of Technical Terms
138 Mineral Reserves and Mineral Resources
147 Management’s Responsibility
147 Management’s Report on Internal Control Over
Financial Reporting
148 Independent Auditor’s Report
152 Financial Statements
157 Notes to Consolidated Financial Statements
49
MANAGEMENT’S DISCUSSION AND ANALYSISFinancial Report 2019
Our Strategy
Our strategy is to operate as business owners by attracting and
developing world-class people who are informed and involved in
the value chain of the business, act with integrity and are tireless
in their pursuit of excellence. We are focused on returns to our
stakeholders by optimizing free cash flow, 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
n Grow and invest in a portfolio of Tier One Gold Assets1, Tier Two
Gold Assets and Strategic Assets2 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).
n Focus on brownfields opportunities at Nevada Gold Mines LLC
(“Nevada Gold Mines”) following the integration of Barrick’s and
Newmont Corporation’s (“Newmont”) interests in Nevada through
the creation of the joint venture, together with Pueblo Viejo,
Loulo-Gounkoto and Kibali.
n Invest in exploration across extensive land positions in many of
the world’s most prolific gold districts.
n Maximize the long-term value of our strategic Copper Business3.
n Sell non-core assets over time in a disciplined manner.
Operational Excellence
n Strive for zero harm workplaces.
n Operate a flat management structure with a strong ownership
culture.
n Streamline management and operations, and hold management
accountable for the businesses they manage.
n Leverage innovation and technology to drive industry-leading
efficiencies.
n Build trust-based partnerships with host governments, business
partners, and local communities to drive shared long-term value.
Sustainable Profitability
n Follow a disciplined approach to growth, emphasizing long-term
value for all stakeholders.
n Increase returns to shareholders, driven by a focus on return on
capital, internal rate of return and free cash flow.
Overview
Our Vision
We strive to be the world’s most valued gold mining business
by finding, developing and owning the best assets, with the best
people, to deliver sustainable returns for our owners and partners.
Our Business
Barrick is one of the world’s leading gold mining companies with
annual gold production and gold reserves that are among the
largest in the industry. We are principally engaged in the production
and sale of gold and copper, as well as related activities such
as exploration and mine development. We hold interests in fifteen
producing gold mines, including six Tier One Gold Assets1 and a
diversified asset portfolio positioned for growth in many of the world’s
most prolific gold districts. These gold mines are geographically
diversified and are located in Argentina, Canada, Côte d’Ivoire, the
Democratic Republic of Congo, the Dominican Republic, Mali, Papua
New Guinea, Tanzania and the United States. Our copper business
includes a wholly-owned copper mine in Zambia and 50% interests
in copper mines in Chile and Saudi Arabia. We also have exploration
and development 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 shares trade on the New York Stock
Exchange under the symbol GOLD and the Toronto Stock Exchange
under the symbol ABX.
2019 REVENUE ($ millions)
Gold $9,186
Copper $393
Other $138
2019 GOLD PRODUCTION (thousands of ounces)
Americas 4,229
Tanzania 491
Australia 368
Papua New Guinea 235
50
MANAGEMENT’S DISCUSSION AND ANALYSISBarrick Gold Corporation Sustainability
Barrick’s sustainability vision is to create long-term value for all our
stakeholders. We contribute to the social and economic development
of our host countries and communities. We protect the safety and
health of our workforce. We respect human rights. And we manage
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 partnerships with host governments and
communities and by engaging respectfully with all our stakeholders.
Our approach to achieving these four ambitions is set out in
a new overarching Sustainable Development Policy, which commits
us to supporting the socio-economic development of host countries
and communities. We have also published policies in the areas of
Social Performance, which incorporates Community Development
and Engagement, Occupational Health and Safety, and Environment
and Human Rights. All policies meet or exceed the requirements
of host country legislation and international standards such as the
IFC Performance Standards or UN Guiding Principles on Business
and Human Rights. Our updated Code of Conduct sets out the
ethical behavior expected of everyone working at, or with, Barrick.
Day-to-day ownership of sustainability risks and opportunities is
in the hands of individual sites – where our core business is located.
Each operation’s General Manager, supported by dedicated teams
on site, is accountable for putting Barrick’s vision into action at the
site level. This includes maintaining an ISO-certified environmental
and safety management system, building robust community
engagement mechanisms and managing energy and water plans.
We anticipate that the social and environmental expectations
of mining companies will become even higher in the future. We are
clear that our ability to maintain our social license to operate will
depend on our ability to meet these expectations. To meet this
challenge, we will continue to embed environmental, social and
economic considerations into our business decisions, engage
respectfully with stakeholders and act on their concerns and continue
to build deep partnerships with our communities, host governments
and other partners.
51
MANAGEMENT’S DISCUSSION AND ANALYSISFinancial Report 2019 Financial and Operating Highlights
Financial Results ($ millions)
Revenues
Cost of sales
Net earnings (loss)a
Adjusted net earningsb
Adjusted EBITDAb
Adjusted EBITDA marginc
Total minesite sustaining capital expendituresd
Total project capital expendituresd
Total consolidated capital expendituresd,e
Net cash provided by operating activities
Net cash provided by operating activities marginf
Free cash flowb
Net earnings (loss) per share (basic and diluted)
Adjusted net earnings (basic)b per share
Weighted average diluted common
shares (millions of shares)
Operating Results
Gold production (thousands of ounces)g
Gold sold (thousands of ounces)g
Market gold price ($/oz)
Realized gold priceb,g ($/oz)
Gold cost of sales (Barrick’s share)g,h ($/oz)
Gold total cash costsb,g ($/oz)
Gold all-in sustaining costsb,g ($/oz)
Copper production (millions of pounds)i
Copper sold (millions of pounds)i
Market copper price ($/lb)
Realized copper priceb,i ($/lb)
Copper cost of sales (Barrick’s share)i,j ($/lb)
Copper C1 cash costsb,i ($/lb)
Copper all-in sustaining costsb,i ($/lb)
For the three months ended
For the years ended
12/31/2019
9/30/2019 % Change
12/31/19
12/31/18
% Change 12/31/17
2,883
1,987
1,387
300
1,562
54%
394
46
446
875
30%
429
0.78
0.17
2,678
1,889
2,277
264
1,297
48%
406
96
502
1,004
37%
502
1.30
0.15
8%
5%
(39%)
14%
20%
13%
(3%)
(52%)
(11%)
(13%)
(19%)
(15%)
(40%)
13%
9,717
6,911
3,969
902
4,833
50%
1,320
370
1,701
2,833
29%
1,132
2.26
0.51
7,243
5,220
(1,545)
409
3,080
43%
968
425
1,400
1,765
24%
365
(1.32)
0.35
34%
32%
357%
121%
57%
16%
36%
(13%)
22%
61%
21%
210%
271%
46%
8,374
5,300
1,438
876
4,115
49%
1,116
280
1,396
2,065
25%
669
1.23
0.75
1,778
1,756
1%
1,758
1,167
51%
1,166
1,439
1,413
1,481
1,483
1,046
692
923
117
91
2.67
2.76
2.26
1.90
2.82
As at
12/31/19
10%
7%
1%
0%
(2%)
(3%)
(6%)
4%
40%
2%
8%
13%
17%
9%
1,306
1,318
1,472
1,476
1,065
710
984
112
65
2.63
2.55
2.00
1.62
2.58
As at
9/30/19 % Change
5,465
5,467
1,393
1,396
1,005
671
894
432
355
2.72
2.77
2.14
1.69
2.52
4,527
4,544
1,268
1,270
892
588
806
383
382
2.96
2.88
2.40
1.97
2.82
21%
20%
10%
10%
13%
14%
11%
13%
(7%)
(8%)
(4%)
(11%)
(14%)
(11%)
5,323
5,302
1,257
1,258
794
526
750
413
405
2.80
2.95
1.77
1.66
2.34
As at
12/31/18
% Change
As at
12/31/17
Financial Position ($ millions)
Debt (current and long-term)
Cash and equivalents
Debt, net of cash
5,536
3,314
2,222
5,560
2,405
3,155
0%
38%
(30%)
5,738
1,571
4,167
(4%)
111%
(47%)
6,423
2,234
4,189
a. Net earnings (loss) represents net earnings (loss) attributable to the equity holders of the Company.
b. Adjusted net earnings, adjusted EBITDA, free cash flow, adjusted net earnings per share, realized gold price, all-in sustaining costs, total cash costs,
C1 cash costs and realized copper price 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 107 to 132 of this MD&A.
c. Represents adjusted EBITDA divided by revenue.
d. Amounts presented on a consolidated cash basis. Project capital expenditures are included in our calculation of all-in costs, but not included in our calculation
of all-in sustaining costs.
e. Total consolidated capital expenditures also includes capitalized interest.
f. Represents net cash provided by operating activities divided by revenue.
g. Includes Tanzania on a 63.9% basis until September 30, 2019 (notwithstanding the completion of the Acacia transaction on September 17, 2019, we
consolidated our interest in Acacia and recorded a non-controlling interest of 36.1% in the income statement for the entirety of the third quarter of 2019 as a
matter of convenience), Pueblo Viejo on a 60% basis, South Arturo on a 60% basis (36.9% from July 1, 2019 onwards as a result of its contribution to Nevada
Gold Mines), and Veladero on a 50% basis, which reflects our equity share of production and sales. Also 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 reflects our equity share of production and sales, commencing January 1, 2019,
the effective date of the Merger. Also removes the non-controlling interest of 38.5% Nevada Gold Mines from July 1, 2019 onwards.
h. Gold cost of sales (Barrick’s share) is calculated as cost of sales – gold on an attributable basis (excluding sites in care and maintenance) divided by ounces sold.
i. Amounts reflect production and sales from Jabal Sayid and Zaldívar on a 50% basis, which reflects our equity share of production, and Lumwana.
j. Copper cost of sales (Barrick’s share) is calculated as cost of sales – copper plus our equity share of cost of sales attributable to Zaldívar and Jabal Sayid
divided by pounds sold.
52
MANAGEMENT’S DISCUSSION AND ANALYSISBarrick Gold Corporation
OPERATING CASH FLOW AND FREE CASH FLOWa
DEBT, NET OF CASH ($ billions)
$1,257
$1,268
2,065
1,765
669
546
365
$1,393
2,833
1,132
13.4
10.4
7.5
5.5
4.2
4.2
2.2
2017
2018
2019
Q2 2013
2014
2015
2016
2017
2018
2019
Operating Cash Flow ($ millions)
Free Cash Flow ($ millions)
Gold Market Price ($/oz)
GOLD PRODUCTION (thousands of ounces)
5,323
5,465
4,527
4,800
to
5,200
COST OF SALESb, TOTAL CASH COSTSa AND
ALL-IN SUSTAINING COSTSa ($ per ounce)
Cost of sales
Total Cash costs
AISC
794
750
526
892
806
588
1,005
894
671
980
to
1,030
920
to
970
650
to
700
2017
2018
2019
2020 (est)
2017
2018
2019
2020 (est)
COPPER PRODUCTION (millions of pounds)
413
383
432
440
to
500
5000
4000
3000
COST OF SALESb, C1 CASH COSTSa AND
ALL-IN SUSTAINING COSTSa ($ per pound)
Cost of sales
C1 Cash costs
AISC
2.40
2.82
1.97
2.14
2.52
1.69
2.34
1.66
1.77
2.10
to
2.40
2.20
to
2.50
1.50
to
1.80
2000
2017
2018
2019
2020 (est)
2017
2018
2019
2020 (est)
1000
a. 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 107 to 132 of this MD&A.
0
b. 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% Tanzania (notwithstanding the completion of the Acacia transaction on September 17, 2019, we consolidated our interest in Acacia
and recorded a non-controlling interest of 36.1% in the income statement for the entirety of the third quarter of 2019 as a matter of convenience) and 40%
South Arturo from cost of sales (63.1% of South Arturo from July 1, 2019 onwards as a result of its contribution to Nevada Gold Mines)), divided by attributable
gold ounces. The non-controlling interest of 20% Loulo-Gounkoto and 10.3% of Tongon is also removed from cost of sales and our proportionate share of
cost of sales attributable to equity method investments (Kibali and Morila) is included commencing January 1, 2019, the effective date of the Merger. Also
removes the non-controlling interest of 38.5% Nevada Gold Mines from cost of sales from July 1, 2019 onwards. 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 (including our proportionate share of copper pounds from our equity method investments).
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MANAGEMENT’S DISCUSSION AND ANALYSISFinancial Report 2019 Factors affecting net earnings and adjusted net earnings4 –
three months ended December 31, 2019 versus
September 30, 2019
Net earnings attributable to equity holders of Barrick (“net earnings”)
for the three months ended December 31, 2019 were $1,387 million
compared to $2,277 million in the prior quarter. The decrease
was primarily due to a gain of $1.9 billion ($1.5 billion net of taxes)
relating to the remeasurement of Turquoise Ridge to fair value as
a result of its contribution to Nevada Gold Mines and an impairment
reversal of $947 million ($663 million net of taxes) at Lumwana,
both occurring in the prior quarter. In the current quarter, there were
net impairment reversals of $566 million relating to an impairment
reversal at Pueblo Viejo of $865 million ($277 million net of
taxes and non-controlling interest) and an impairment charge at
Pascua-Lama of $296 million (no tax impact). Net earnings in the
current quarter were further impacted by a $628 million gain on the
de-recognition of the deferred revenue liability relating to our silver
sale agreement with Wheaton Precious Metals Corp., a gain of
$408 million resulting from the sale of our 50% interest in Kalgoorlie,
and a gain of $216 million on a settlement of customs duty and
indirect taxes at Lumwana. After adjusting for items that are not
indicative of future operating earnings, adjusted net earnings4 of
$300 million for the three months ended December 31, 2019 were
$36 million higher than the prior quarter, due to an increase in
revenue resulting from higher sales volume and marginally higher
realized prices4, partially offset by higher cost of sales resulting from
the increased sales volume.
Significant adjusting items (pre-tax and excluding non-controlling
interest effects) in the three months ended December 31, 2019 include:
n $845 million in other income adjustments, primarily related to a
$628 million gain on the de-recognition of the deferred revenue
liability relating to our silver sale agreement with Wheaton
Precious Metals Corp. and a gain of $216 million on a settlement
of customs duty and indirect taxes at Lumwana;
n $566 million in net impairment reversals, relating to Pueblo Viejo,
partially offset by impairment charges at Pascua-Lama; and
n $414 million in acquisition/disposition gains, primarily resulting
from the sale of our 50% interest in Kalgoorlie.
Refer to page 108 for a full list of reconciling items between
net earnings and adjusted net earnings4 for the current and
previous periods.
Factors affecting net earnings and adjusted net earnings4 –
year ended December 31, 2019 versus December 31, 2018
Net earnings for the year ended December 31, 2019 were
$3,969 million compared to a loss of $1,545 million in the same prior
year period. The significant increase was mainly due to a gain of
$1.9 billion ($1.5 billion net of taxes) relating to the remeasurement
of Turquoise Ridge to fair value as a result of its contribution to
Nevada Gold Mines and a gain of $408 million resulting from the
sale of our 50% interest in Kalgoorlie. This was combined with
impairment reversals at Lumwana of $947 million ($663 million net of
taxes) and at Pueblo Viejo of $865 million ($277 million net of taxes
and non-controlling interest), partially offset by an impairment charge
at Pascua-Lama of $296 million (no tax impact). In addition to these
impacts, there were significant tax adjustments relating to the
de-recognition of deferred tax assets of $814 million occurring in the
prior year, a $628 million gain on the de-recognition of the deferred
revenue liability relating to our silver sale agreement with Wheaton
Precious Metals Corp., and a gain of $216 million on a settlement
of customs duty and indirect taxes at Lumwana. After adjusting for
items that are not indicative of future operating earnings, adjusted
net earnings4 of $902 million for the year ended December 31, 2019
were $493 million higher than the same prior year period. The
increase in adjusted net earnings was primarily due to higher sales
54
volumes as a result of the Merger and the formation of Nevada Gold
Mines. Excluding the impact of the Merger and the formation of
Nevada Gold Mines, the increase in adjusted net earnings was
primarily due to an increase in realized gold prices4.
Significant adjusting items (pre-tax and excluding non-
controlling interest effects) in the year December 31, 2019 include:
n $2,327 million in acquisition/disposition gains mainly relating to
the remeasurement of Turquoise Ridge to fair value as a result of
its contribution to Nevada Gold Mines and a gain of $408 million
resulting from the sale of our 50% interest in Kalgoorlie;
n $1,423 million in net impairment reversals, relating to Lumwana
and Pueblo Viejo, partially offset by impairments at Pascua-Lama;
and
n $687 million in other income adjustments, primarily related to a
$628 million gain on the de-recognition of the deferred revenue
liability relating to our silver sale agreement with Wheaton
Precious Metals Corp. and a gain of $216 million on a settlement
of customs duty and indirect taxes at Lumwana, partially offset by
severance costs as a result of the implementation of a number of
organizational reductions.
Refer to page 108 for a full list of reconciling items between net earnings
and adjusted net earnings4 for the current and previous periods.
Factors affecting Operating Cash Flow and Free Cash Flow4 –
three months ended December 31, 2019 versus
September 30, 2019
In the three months ended December 31, 2019, we generated
$875 million in operating cash flow, compared to $1,004 million in the
prior quarter. The decrease of $129 million was primarily due to an
increase in interest paid as a result of the timing of interest payments
on our public market debt, partially offset by an increase in gold and
copper sales volumes of 7% and 40%, respectively. This was further
impacted by higher gold and copper realized prices4 of $1,483 per
ounce and $2.76 per pound, respectively, for the three months ended
December 31, 2019, compared to $1,476 per ounce and $2.55 per
pound, respectively, in the prior quarter.
Free cash flow4 for the three months ended December 31, 2019
was $429 million, compared to $502 million in the prior quarter,
reflecting lower operating cash flows, partially offset by lower capital
expenditures. In the three months ended December 31, 2019, capital
expenditures on a cash basis were $446 million compared to
$502 million in the prior quarter primarily due to lower project capital
expenditures with the most significant change related to Cortez due
to decreases at the Cortez Hills Underground Rangefront project.
Factors affecting Operating Cash Flow and Free Cash Flow4 –
year ended December 31, 2019 versus December 31, 2018
For the year ended December 31, 2019, we generated $2,833 million
in operating cash flow, compared to $1,765 million in the same prior
year period. The increase of $1,068 million was primarily due to
higher sales volume as a result of the Merger and the formation of
Nevada Gold Mines. This was combined with higher realized gold
prices4 of $1,396 per ounce in 2019 compared to $1,270 per ounce
in 2018 and, partially offset by higher cost of sales per ounce5.
For 2019, we generated free cash flow4 of $1,132 million
compared to $365 million in 2018. The increase primarily reflects
higher operating cash flows, partially offset by higher capital
expenditures. In 2019, capital expenditures on a cash basis were
$1,701 million compared to $1,400 million in the same prior year
period. Higher capital expenditures of $301 million were primarily
due to an increase in minesite sustaining capital expenditures as a
result of the Merger and the consolidation impact of Nevada Gold
Mines, partially offset by lower project capital expenditures at Cortez
due to decreasing Crossroads dewatering activities and Rangefront
project expenditures.
MANAGEMENT’S DISCUSSION AND ANALYSISBarrick Gold Corporation Safety
Our safety vision is “Every person going home safe and healthy
every day.” In 2019, although we operated with zero fatalities, our
Total Reportable Injury Frequency Rate6 (“TRIFR”) increased by 5%,
from 2.12 to 2.24, year-over-year. In analyzing the incidents and
frequencies, the combination of assets into Nevada Gold Mines in
the North America region did have an impact on our performance.
The Africa and Middle East region improved year-on-year in both
Lost Time Injuries (“LTIs”) and TRIFR.
Barrick is fully committed to the safety, health and well-being of
our people, their families and the communities in which we operate.
We review safety performance and incidents, share lessons learned
and communicate best practices across our business during weekly
Executive Committee Review meetings, the main forum for senior
management to review our current safety performance. We will
continue our efforts to further reduce injury occurrences.
Every site has its own site-specific safety procedures,
management plans and systems in place, in line with international
best practice. Our goal is for the safety management systems at
all operational mines to be certified to the internationally recognized
ISO 45001 standard by the end of 2021.
Our renewed focus on safety and reaffirmed commitment to
prevent fatalities has led to the company-wide roll out of new controls
including our ten Fatality Prevention Commitments to help eliminate
fatalities and serious injuries. Our Fatality Prevention Commitments
align with the International Council on Mining and Metal’s Life Saving
Controls, which are based upon lessons learned from fatal incidents
within the mining industry, including Barrick’s experience. Our
Commitments and Unacceptable Behaviors guideline has also been
implemented, which reaffirms our zero tolerance policy for behavior
such as working on site under the influence of drugs or alcohol.
Environment
Barrick continues to rebuild its 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.
We have set a corporate goal for all sites to have their
Environmental Management System (“EMS”) certified to the
ISO 14001:2015 standard by the end of 2020. Currently, all operations,
except the Jabal Sayid mine in Saudi Arabia and the Tanzanian
assets, are certified to this standard.
In 2019, we introduced a new Environmental Incident Reporting
and Investigation Standard to better define the classification,
reporting, responsibility and investigation of environmental incidents
at Barrick sites. As defined by our new system, we had zero
Class 1 – High Significance7 incidents and 13 Class 2 – Medium
Significance8 incidents in 2019.
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 2019,
following our merger with Randgold and the formation of Nevada
Gold Mines, we reviewed and updated the climate change strategy
developed in 2017.
Barrick’s climate change strategy has three pillars: identify,
understand and mitigate the risks associated with climate change;
measure and reduce our impacts on climate change; and improve
our disclosure on climate change. Action taken on each pillar in 2019
is described below.
Identify, understand and mitigate the risks associated with
climate change
We continue to take steps to identify and manage risks and build
resilience to climate change, as well as to position ourselves for
new opportunities. In 2019, climate change-related factors continued
to be incorporated into Barrick’s formal risk assessment process
(for example, consideration is given to the availability of and access
to water and the impact of increased precipitation, drought, or
severe storms on operations as well as on communities near
our operations). We have identified several climate-related risks
and opportunities for our business: physical impacts of climate
change, such as an increase in extended duration extreme
precipitation events; an increase in regulations that seek to address
climate change; and increased global investment in innovation
and low-carbon technologies.
Measure and reduce the Company’s impact on climate change
Mining is an energy-intensive business, and we understand the
important link between energy use and greenhouse gas (“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 reduce direct mining costs.
In 2019, we progressed the conversion of the Quisqueya I power
generation facility in the Dominican Republic from heavy fuel oil to
natural gas. We expect the power plant to receive its first liquefied
natural gas deliveries in first quarter 2020. The conversion will help
reduce the mine site’s power generation costs and GHG emissions
by 30%. We also advanced a power transmission project at Veladero
to connect the mine to grid power and started construction of a solar
plant at Loulo-Gounkoto. Each of these projects is expected to
reduce the need for diesel generators, thereby reducing our
emissions and power generation costs.
Improve our disclosure on climate change
In 2019, one of our first reporting activities as a merged Company
was to complete the CDP (formerly known as the Carbon Disclosure
Project) emissions questionnaire which makes investor-relevant
climate data widely available.
Throughout 2019, the Board’s Corporate Governance &
Nominating Committee, which met quarterly, was responsible for
overseeing Barrick’s policies, programs, and performance relating
to the environment, including climate change. The Audit & 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 Audit & Risk Committee
throughout 2019. In addition, the Audit & Risk Committee reviewed
the Company’s approach to climate change in the context of
Barrick’s public disclosure.
At the management level, in furtherance of its commitment
to sustainability, Barrick established the Environmental and Social
Oversight (“E&S”) Committee in 2019. The E&S Committee is
chaired by the President and Chief Executive Officer, and includes
each of the regional Chief Operating Officers, Mine General
Managers and health, safety, and environment and closure leads,
as well as the Group Sustainability Executive and an independent
sustainability consultant. The E&S Committee meets each quarter
55
MANAGEMENT’S DISCUSSION AND ANALYSISFinancial Report 2019 to review the Company’s sustainability performance and compliance
with its sustainability policies, as well as to identify concerns and
opportunities at the Company’s operations at an early stage. The
President and Chief Executive Officer reviews the reports of the E&S
Committee with the Corporate Governance & Nominating Committee
on a quarterly basis as part of the Committee’s mandate to oversee
Barrick’s environmental, safety and health, corporate social
responsibility, and human rights programs, policies and performance.
Further to the specific focus of the E&S Committee, regular
Executive Committee review meetings throughout 2019 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).
We expect our climate change activities to continue into 2020
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 continue providing
our climate-related disclosure. Overall, based on the work completed,
Barrick continues to build resilience to withstand the potential impacts
of climate change and leverage potential opportunities as the global
economy transitions to a low-carbon future.
Reserves and Resources
Gold
Barrick’s 2019 reserves were calculated using a gold price assumption
of $1,200 per ounce, consistent with 2018. As of December 31, 2019,
Barrick’s proven and probable gold reserves were 71 million ounces9
at an average grade of 1.68 g/t, compared to 62 million ounces10 at
an average grade of 1.56 g/t in the previous year. Reserve
replenishment was achieved across the majority of Barrick’s Tier
One Assets1, including Kibali, Loulo-Gounkoto, Turquoise Ridge,
together with Goldstrike and Leeville in the Carlin Complex.
There were several significant changes to mineral reserves
year-on-year, including the Merger with Randgold, the formation
of Nevada Gold Mines with Newmont, the acquisition of the minority
interests in Acacia and the divestiture of Kalgoorlie, which had the
net impact of adding 13.4 million ounces to attributable proven and
probable mineral reserves. Successful mineral resource conversion
added 5.9 million ounces to mineral reserves offsetting annual
mining depletion of 6.0 million ounces of mining depletion.
In 2019, the principal addition to mineral reserves was through
the Merger with Randgold, which added 13 million ounces at an
average grade of 4.0 g/t to Barrick’s attributable proven and probable
reserves. The Nevada Gold Mines transaction added a further
3.2 million ounces to attributable proven and probable reserves, net
of the changes in ownership. Barrick’s acquisition of the minorities’
interest in Acacia and subsequent signing of the framework agreement
with the Government of Tanzania (“GoT”), through which the GoT
will acquire a 16% free-carried interest in the former Acacia sites,
resulted in the addition of a further 1 million ounces in Barrick’s 84%
attributable proven and probable reserves for North Mara, Bulyanhulu
and Buzwagi. These additions from acquisition were partially offset
by the removal of 3.7 million ounces of attributable proven and
probable reserves from the divestment of Kalgoorlie.
In 2019, we also added 5.9 million ounces of attributable proven
and probable reserves through the conversion of mineral resources
as summarized below.
The Africa and Middle East region added 2.1 million ounces,
of which Loulo-Gounkoto and Kibali were the primary contributors
adding a combined 1.6 million ounces of attributable proven and
probable reserves. This was principally from high-grade underground
extensions at Yalea and KCD underground, as well as the addition
of the Kalimva-Ikamva open pit at Kibali. Additional contributions
came from an increase in the gold price assumption used to estimate
mineral reserves to $1,200 per ounce (from $1,000 per ounce) for
the acquired Randgold assets. Notably, proven and probable mineral
reserve grades at both Loulo-Gounkoto and Kibali have stayed
relatively consistent year-on-year, highlighting the quality of these
Tier One Assets.
North America added 2.8 million ounces of attributable proven
and probable reserves, principally from high-grade underground
extensions in Carlin and Turquoise Ridge. As expected, the
elimination of the previous Toll Milling Agreement following the
formation of Nevada Gold Mines allowed us to optimize the
underground cut-off grade at Turquoise Ridge and contribute to the
year-on-year increase in reserves. For further information on Goldrush
and Fourmile, please refer to the Projects section of this MD&A.
Supporting their potential to become Tier One Assets, Veladero
and Porgera added a combined 1.0 million ounces of attributable
proven and probable reserves. This was mainly due to the
conversion of mineral resources at Veladero and underground
extensions at Porgera.
The additions described above were partially offset by mining
depletion of 6.0 million ounces of attributable proven and probable
reserves, other losses of 4.5 million ounces, which were primarily
comprised of the removal of the Phase Six pushback at Hemlo and
the reclassification of 3.8 million ounces from mineral reserves at
Lagunas Norte to mineral resources, in line with our decision to put
the property on care and maintenance in 2019.
In 2019, all mineral resources were calculated using a
gold price assumption of $1,500 per ounce, consistent with 2018.
Barrick’s mineral resources for 2019 are now reported on an
inclusive basis, and include all areas that form mineral reserves,
reported at a mineral resource cut-off grade and the assumed
commodity price. All open pit mineral resources are contained
within a Whittle shell, while all underground mineral resources are
contained within stope optimizer shells. As of December 31, 2019,
measured and indicated gold resources were 170 million ounces9
at an average grade of 1.55 g/t and inferred gold resources were
39 million ounces9 at an average grade of 1.3 g/t.
Copper
Copper mineral reserves for 2019 were calculated using a copper
price of $2.75 per pound and mineral resources at $3.50 per
pound, consistent with 2018. As of December 31, 2019, proven
and probable copper reserves were 13 billion pounds9, compared
to 11 billion pounds10 at the end of 2018. The growth of copper
mineral reserves was primarily driven by Lumwana which added
2.2 billion pounds of proven and probable reserves. This was from a
combination of reclassification and remodeling of the Chimiwungo pit
and mine cost optimization. This optimization was a direct outcome
of improved plant throughput and mining efficiency in 2019, resulting
in a reduction of the cut-off grade at Lumwana.
Measured and indicated copper resources were 26 billion
pounds9 at an average grade of 0.38% and inferred copper
resources were 2.2 billion pounds9 at an average grade of 0.2%
as of December 31, 2019. An increase in copper mineral resources
at Zaldívar was driven by the inclusion of leachable primary sulfide
ore. Zaldívar is jointly owned by Antofagasta and Barrick and is
operated by Antofagasta.
The 2019 mineral reserves and mineral resources are
estimated using the combined value of gold, copper and silver.
Accordingly mineral reserves and mineral resources are reported
for all assets where copper or silver is produced and sold as a
primary product or a by-product.
56
MANAGEMENT’S DISCUSSION AND ANALYSISBarrick Gold Corporation Key Business Developments
2019 Highlights
n Successful integration of former Randgold executive team and
establishment of two additional regions modeled on the Africa
regional team after transformational Merger completed on
January 1, 2019
n Negotiation, completion and integration of former Barrick and
Newmont operations in Nevada to form the Nevada Gold Mines
joint venture – the single largest gold complex in the world and
unlocking up to $500 million per annum in synergies
n Acquisition of Acacia minority shareholdings and finalization of
agreement to end dispute with the Government of Tanzania and
restore our license to operate
n Further rationalization of our portfolio to focus on Tier One
Gold Assets1, Tier Two Gold Assets and Strategic Assets2 with
the divestment of Kalgoorlie and pending sale of Massawa
(expected to close in the first quarter of 2020)
n Full year gold production at upper end and copper production
above guidance ranges
n Strengthened balance sheet through positive free cash flow,
dispositions of non-core assets and debt repurchases
n Debt, net of cash, now at $2.2 billion, a 47% decrease from
the prior year and the lowest level since 2007
n Increasing shareholder returns, having raised the quarterly
dividend three times in respect of 2019 performance
Sale of Massawa
On December 10, 2019, Barrick announced that it and its Senegalese
joint venture partner have reached an agreement to sell their
aggregate 90% interest in the Massawa project (“Massawa”)
in Senegal to Teranga Gold Corporation (“Teranga”) for total
consideration of up to $430 million.
The consideration consists of an up-front payment of
$380 million, including a cash payment of approximately $300 million
and Teranga common shares, plus a contingent payment of up
to $50 million which is based upon the average gold price for the
three-year period immediately following closing.
Barrick will receive 92.5% of the total purchase price for its
interest in the Massawa project, with the balance to be received by
Barrick’s local Senegalese partner for its minority interest. Barrick
is providing $25 million of the $225 million syndicated debt financing
secured by Teranga in connection with the transaction.
The transaction is expected to close in the first quarter of 2020
and is subject to receipt of the Massawa exploitation license and
residual exploration license from the Government of Senegal, certain
other acknowledgments from the Government of Senegal and other
customary closing conditions. Refer to note 4 to the Financial
Statements for more information.
Sale of Kalgoorlie
On November 28, 2019, we completed the sale of our 50% interest
in the Kalgoorlie mine in Western Australia to Saracen Mineral
Holdings Limited for total cash consideration of $750 million. The
transaction resulted in a gain of $408 million for the year ended
December 31, 2019.
Pascua-Lama
In the fourth quarter of 2019, we completed a study of the
Pascua-Lama project and concluded that we do not have a plan
that meets our investment criteria under our current assumptions.
This was an indicator of impairment and we concluded that the
carrying value of Pascua-Lama exceeded the Fair Value Less Cost
to Dispose (“FVLCD”) and we recorded a non-current asset
impairment of $296 million, based on a FVLCD of $398 million.
Refer to note 21 to the Financial Statements for more information.
We have also updated the liability for the silver stream
agreement to align with the conclusions from the completion of the
study. The deferred revenue liability was derecognized, and a current
liability was recognized for the residual balance payable to Wheaton
Precious Metals Corp. of $253 million under the agreement. This
adjustment resulted in $628 million recorded in Other Income. Refer
to notes 3 and 9 to the Financial Statements for more information.
In addition, a new closure plan and estimate supported by
feasibility level engineering studies was finalized, which resulted in
a decrease in the provision for environmental rehabilitation liability
of $270 million.
Barrick’s intention is to update our geological understanding of
the orebody and this process is expected to take a number of years
to complete. The focus in 2020 at Pascua-Lama will be on addressing
the gaps identified in the geological and geo-metallurgical
understanding of the orebody, building upon the improved 3D
geology model completed in 2019. This includes a drill program at
the Penelope deposit of Lama, as well as column testing to assess
the amenability of Penelope ore for heap leaching at Veladero.
Refer to the Exploration section of the MD&A for more information.
Acacia Mining plc
On September 17, 2019, Barrick acquired all of the Acacia Mining plc
(“Acacia”) shares we did not already own through a share-for-share
exchange of 0.168 Barrick shares and any Acacia Exploration
Special Dividends for each ordinary share of Acacia. The Acacia
Exploration Special Dividends11 and any deferred cash consideration
dividends (if applicable) will be paid as a consequence of a sales
process to realize value from the sale of certain Acacia exploration
properties to be undertaken during the two-year period following
closing. This transaction resulted in the issuance of 24,836,876
Barrick common shares or approximately 1% of Barrick’s share
capital. As a result, Acacia ceased trading on the London Stock
Exchange and became a wholly-owned subsidiary of Barrick called
Barrick TZ Limited. Refer to note 4 to the Financial Statements for
more information.
Notwithstanding the completion of the Acacia transaction on
September 17, 2019, we consolidated our interest in Acacia and
recorded a non-controlling interest of 36.1% in the income statement
for the entirety of the third quarter of 2019 as a matter of convenience.
As at September 30, 2019, we derecognized the non-controlling
interest on the balance sheet related to our former 63.9% ownership
of Acacia to reflect our 100% interest at that time. The former Acacia
mine sites (Bulyanhulu, North Mara and Buzwagi) will now be
referred to individually in this report.
On January 24, 2020, Barrick announced that the Company
had ratified the creation of Twiga Minerals Corporation (“Twiga”)
at a signing ceremony with the President of Tanzania, formalizing
the establishment of a joint venture between Barrick and the
Government of Tanzania (“GoT”) and resolution of all outstanding
disputes between Barrick and the GoT, including the lifting of the
previous concentrate export ban, effective immediately. The GoT
will receive a free carried shareholding of 16% in each of the former
Acacia mines (Bulyanhulu, Buzwagi and North Mara), and will
receive its half of the economic benefits from taxes, royalties, clearing
fees and participation in all cash distributions made by the mines
and Twiga, after the recoupment of capital investments. Twiga will
provide management services to the mines.
The terms of the signed agreement are consistent with those
previously announced, including the payment of $300 million to settle
all outstanding tax and other disputes (the “Settlement Payment”);
57
MANAGEMENT’S DISCUSSION AND ANALYSISFinancial Report 2019 determine whether the stay on enforcement proceedings should
be extended or lifted while it considers the application for annulment.
No decision on the GOP’s annulment application or the stay on
enforcement proceedings has yet been made.
The proceeds of this award will not be recognized in our
financial statements until any such proceeds have been collected.
Refer to note 36 to the Financial Statements for more information
regarding these and related matters.
Randgold Resources Limited Merger
On January 1, 2019, we acquired 100% of the issued and
outstanding shares of Randgold. 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 was $7.9 billion.
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; the Massawa project in Senegal and various
exploration properties. We began consolidating the operating results,
cash flows and net assets of Randgold from January 1, 2019.
In conjunction with the Merger, Barrick has a new management
team, effective January 1, 2019. Mark Bristow is now President
and Chief Executive Officer of Barrick. He 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 since 2007.
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 is now managed by three regional Chief
Operating Officers, each of whom reports to the President and Chief
Executive Officer. Catherine Raw, formerly Barrick’s Chief Financial
Officer, was appointed Chief Operating Officer, North America. Mark
Hill, formerly Barrick’s Chief Investment Officer, was appointed Chief
Operating Officer, Latin America and Asia Pacific. Willem Jacobs,
formerly Randgold’s General Manager East and Central Africa, was
appointed Chief Operating Officer, Africa and Middle East.
Following the closing of the Merger, Barrick’s Board of Directors
was reconstituted with the following nine Directors: John Thornton
(Executive Chairman), Brett Harvey (Lead Independent Director),
Mark Bristow, María Ignacia Benítez, Gustavo Cisneros, Christopher
Coleman, Michael Evans, Brian Greenspun, and Andrew Quinn.
Regrettably, on February 28, 2019, María Ignacia Benítez passed
away. Barrick’s Corporate Governance & Nominating Committee
initiated a search for an equally compelling and qualified female
candidate to fill the vacant Board position and on August 9, 2019,
we announced the appointment of Loreto Silva to the Board of
Directors as an independent director.
the lifting of the concentrate export ban; the sharing of future
economic benefits from the mines on a 50/50 basis; and a dispute
resolution mechanism that provides for binding international
arbitration. The 50/50 division of economic benefits will be
maintained through an annual true-up mechanism, which will
not account for the Settlement Payment.
Barrick and the GoT continue to fulfill their respective obligations
to satisfy all conditions of the signed agreement, primarily with
respect to the execution and delivery of formal termination documents
for the settlement of all outstanding disputes between the two parties.
Operating results are included at 100% from October 1, 2019
up until the GoT’s 16% free-carried interest is made effective,
which is expected to be as of January 1, 2020, and on an 84%
basis thereafter.
Nevada Gold Mines LLC
On March 10, 2019, we entered into an implementation agreement
with Newmont to create a joint venture, named Nevada Gold Mines,
combining our respective mining operations, assets, reserves and
talent in Nevada, USA. This includes Barrick’s Cortez, Goldstrike,
Turquoise Ridge and Goldrush properties and Newmont’s Carlin,
Twin Creeks, Phoenix, Long Canyon and Lone Tree properties.
On July 1, 2019, the transaction closed and we began consolidating
the operating results, cash flows and net assets of Nevada Gold
Mines from that date forward. Barrick is the operator of the joint
venture and owns 61.5%, with Newmont owning the remaining
38.5% of the joint venture.
As a result of this transaction, Barrick recognized a gain in our
earnings for the third quarter of $1.9 billion on the remeasurement
of our previous 75% interest of Turquoise Ridge. Refer to note 4
to the Financial Statements for more information.
Debt Management
On July 15, 2019, Barrick completed a make-whole repurchase
of the $248 million of outstanding principal on our 4.95% Notes due
2020 and incurred a loss on debt extinguishment of $3 million in the
third quarter of 2019. The debt repayment is expected to result in
an annualized interest saving of $12 million.
Subsequent to year end, on January 31, 2020, Barrick
completed a make-whole repurchase of the $337 million of
outstanding principal on our 3.85% Notes due 2022 and a loss on
debt extinguishment of $15 million will be recorded in the first quarter
of 2020. The debt repayment is expected to result in an annualized
interest saving of $13 million.
Debt, net of cash, has been reduced by 47% from the prior year
to $2.2 billion.
Reko Diq Arbitration
On July 12, 2019, the World Bank International Centre for Settlement
of Investment Disputes (“ICSID”) awarded $5.84 billion in damages
to Tethyan Copper Company Pty Limited (“TCC”), a joint venture
held equally by Barrick and Antofagasta plc, in relation to the
arbitration claims filed against the Government of Pakistan (“GOP”)
following the unlawful denial of a mining lease for the Reko Diq
project in Pakistan in 2011.
Damages include compensation of $4.087 billion in relation to
the fair market value of the Reko Diq project at the time the mining
lease was denied, and interest until the date of the award of
$1.753 billion. Compound interest continues to apply at a rate
of US Prime +1% per annum until the award is paid.
In November 2019, the GOP applied to annul TCC’s damages
award, which resulted in an automatic stay on TCC from pursuing
enforcement action. ICSID has constituted a committee to hear the
annulment application, consisting of a president from South Korea
and additional members from Mexico and Finland. The committee
appointed by ICSID to hear the application for annulment will also
58
MANAGEMENT’S DISCUSSION AND ANALYSISBarrick Gold Corporation Outlook for 2020
Operating Division Guidance
Our 2019 gold and copper production, cost of sales, total cash costs4, all-in sustaining costs4 and 2020 forecast gold and copper production,
cost of sales, total cash costs4 and all-in sustaining costs4 ranges by operating division are as follows:
2019
attributable
production
(000s ozs)
2019
cost of
salesa
($/oz)
2019
total
cash
costsb
($/oz)
2019
all-in
sustaining
costsb
($/oz)
2020
forecast
attributable
production
(000s ozs)
2020
forecast
cost
of salesa
($/oz)
2020
forecast
total
cash costsb
($/oz)
2020
forecast
all-in
sustaining
costsb ($/oz)
Operating Division
Gold
Carlin (61.5%)c,d
Cortez (61.5%)c
Turquoise Ridge
(61.5%)c
Phoenix (61.5%)c
Long Canyon (61.5%)c
Nevada Gold Mines
(61.5%)
Hemlo
North America
Pueblo Viejo (60%)
Veladero (50%)
Porgera (47.5%)
Kalgoorlie (50%)e
968
801
335
56
58
2,218
213
2,431
590
274
284
206
Latin America & Asia Pacific 1,354
572
Loulo-Gounkoto (80%)
366
Kibali (45%)
North Maraf
251
245
Tongon (89.7%)
Bulyanhuluf
27
Buzwagif
83
Africa & Middle East
1,544
1,126
Total Attributable Barrickg,h,i,j 5,465
1,005
1,004
762
846
2,093
1,088
924
1,137
943
747
1,188
994
1,062
937
1,044
1,111
953
1,469
1,207
1,240
746
515
585
947
333
634
904
655
471
734
838
873
664
634
568
646
787
676
1,156
673
671
984
651
1,000 – 1,050
450 – 480
920 – 970
980 – 1,030
760 – 810
640 – 690
1,000 – 1,050
910 – 960
732
1,282
681
828
1,140
851
592
1,105
1,003
1,183
874
886
693
802
844
773
1,178
430 – 460
100 – 120
130 – 150
900 – 950
1,850 – 1,900
910 – 960
540 – 590
700 – 750
240 – 290
690 – 740
920 – 970
450 – 500
2,100 – 2,250
200 – 220
970 – 1,020
960 – 1,010
660 – 710
800 – 850
880 – 930
1,200 – 1,250
2,300 – 2,450
530 – 580
240 – 270
240 – 270
970 – 1,020
840 – 890
1,220 – 1,270
890 – 940
660 – 710
520 – 570
670 – 720
770 – 820
900 – 950
720 – 770
1,250 – 1,300
960 – 1,010
1,000 – 1,100
500 – 540
340 – 370
240 – 270
240 – 260
30 – 50
80 – 100
930 – 980
1,050 – 1,100
1,030 – 1,080
750 – 800
1,390 – 1,440
1,210 – 1,260
850 – 900
610 – 660
620 – 670
600 – 650
570 – 620
680 – 730
790 – 840
820 – 870
890 – 940
970 – 1,020
790 – 840
830 – 880
740 – 790
1,110 – 1,160
850 – 900
834
1,450 – 1,600
1,040 – 1,090
640 – 690
870 – 920
894
4,800 – 5,200
980 – 1,030
650 – 700
920 – 970
a. 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% of Loulo-Gounkoto, 10.3% of Tongon, 36.1% of Tanzania (notwithstanding the completion of the Acacia transaction on September 17,
2019, our results include our 63.9% share up until the end of the third quarter of 2019 as a matter of convenience) and 40% of South Arturo (63.1% of South
Arturo from July 1, 2019 onwards as a result of its contribution to Nevada Gold Mines) from cost of sales and including our proportionate share of cost of sales
attributable to our equity method investments in Kibali and Morila), divided by attributable gold ounces sold. Also removes the non-controlling interest of 38.5%
Nevada Gold Mines from cost of sales from July 1, 2019 onwards. 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 our equity method investments in Zaldívar and Jabal Sayid, divided by consolidated
copper pounds sold (including our proportionate share of copper pounds sold from our equity method investments).
b. Total 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 107 to 132 of this MD&A.
c. These five operations are part of Nevada Gold Mines from July 1, 2019. Amounts include Cortez (100%), Goldstrike (100%) and Turquoise Ridge (75%), also
known collectively as Barrick Nevada, from January 1, 2019 to June 30, 2019, and Cortez, Carlin (which includes Goldstrike), Turquoise Ridge (including Twin
Creeks), Phoenix and Long Canyon on a 61.5% basis from July 1, 2019 onwards as a result of the formation of Nevada Gold Mines with Newmont on July 1, 2019.
d. Includes our 60% share of South Arturo from January 1, 2019 to June 30, 2019 and 36.9% from July 1, 2019 onwards as a result of the formation of Nevada
Gold Mines with Newmont on July 1, 2019.
e. As a result of the sale of our 50% interest in Kalgoorlie on November 28, 2019, there is no guidance for 2020.
f. Formerly known as Acacia Mining plc. On September 17, 2019, Barrick acquired all of the shares of Acacia it did not own. Operating results are included at
100% from October 1, 2019 (notwithstanding the completion of the Acacia transaction on September 17, 2019, we consolidated our interest in Acacia and
recorded a non-controlling interest of 36.1% in the income statement for the entirety of the third quarter of 2019 as a matter of convenience) up until the GoT’s
16% free-carried interest is made effective, which is expected to be January 1, 2020, and on an 84% basis thereafter. As the GoT’s 16% free-carried interest is
expected to be made effective as of January 1, 2020, our 2020 outlook represents our 84% share.
g. Also includes Lagunas Norte, Golden Sunlight, and Morila (40%) and excludes Pierina which is mining incidental ounces as it enters closure. Due to the
planned ramp down of operations, we have ceased to include production or non-GAAP cost metrics for Golden Sunlight or Morila after the second quarter and
Lagunas Norte after the third quarter.
h. Total cash costs and all-in sustaining costs per ounce include costs allocated to non-operating sites.
i. Operating division guidance ranges reflect expectations at each individual operating division, and may not add up to the company-wide guidance range total.
The company-wide 2019 results and guidance ranges exclude Pierina, which is mining incidental ounces as it enters closure, and Golden Sunlight and Morila
after the second quarter of 2019 and Lagunas Norte after the third quarter of 2019 due to the planned ramp down of operations.
j. Includes corporate administration costs.
59
MANAGEMENT’S DISCUSSION AND ANALYSISFinancial Report 2019
2019
attributable
production
(M lbs)
2019
2019
cost of C1 cash
costsb
salesa
($/lb)
($/lb)
2019 all-in
sustaining
costsb
($/lb)
2020 forecast
attributable
production
(M lbs)
2020
forecast cost
of salesa
($/lb)
2020
forecast
C1 cash costsb
($/lb)
2020 forecast
all-in
sustaining
costsb ($/lb)
Copper
Lumwana
Zaldívar (50%)
Jabal Sayid (50%)
Total Copperc
238
128
66
432
2.13
2.46
1.53
2.14
1.79
1.77
1.26
1.69
3.04
2.15
1.51
2.52
250 – 280
120 – 135
60 – 70
2.20 – 2.40
2.40 – 2.70
1.75 – 2.00
1.50 – 1.70
1.65 – 1.85
1.40 – 1.60
2.30 – 2.60
2.30 – 2.60
1.50 – 1.70
440 – 500
2.10 – 2.40
1.50 – 1.80
2.20 – 2.50
a. 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% of Loulo-Gounkoto, 10.3% of Tongon, 36.1% of Tanzania (notwithstanding the completion of the Acacia transaction on September 17,
2019, our results include our 63.9% share up until the end of the third quarter of 2019 as a matter of convenience) and 40% of South Arturo (63.1% of South
Arturo from July 1, 2019 onwards as a result of its contribution to Nevada Gold Mines) from cost of sales and including our proportionate share of cost of sales
attributable to our equity method investments in Kibali and Morila), divided by attributable gold ounces sold. Also removes the non-controlling interest of 38.5%
Nevada Gold Mines from cost of sales from July 1, 2019 onwards. 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 our equity method investments in Zaldívar and Jabal Sayid, divided by consolidated
copper pounds sold (including our proportionate share of copper pounds sold from our equity method investments).
b. Total 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 107 to 132 of this MD&A.
c. Operating division guidance ranges reflect expectations at each individual operating division, and may not add up to the company-wide guidance range total.
The company-wide 2019 results and guidance ranges exclude Pierina, which is mining incidental ounces as it enters closure, and Golden Sunlight and Morila
after the second quarter of 2019 and Lagunas Norte after the third quarter of 2019 due to the planned ramp down of operations.
Operating Division, Consolidated Expense and Capital Guidance
Our 2019 gold and copper production, cost of sales, total cash costs4, all-in sustaining costs4, consolidated expenses and capital expenditures
and 2020 forecast gold and copper production, cost of sales, total cash costs4, all-in sustaining costs4, consolidated expenses and capital
expenditures 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)
Total cash costs ($ per oz)a
Depreciation ($ per oz)
All-in sustaining costs ($ per oz)a
Copper production and costs
Production (millions of pounds)
Copper unit production costs
Cost of sales – copper ($ per lb)
C1 cash costs ($ per lb)a
Depreciation ($ per lb)
Copper all-in sustaining costs ($ per lb)a
Exploration and project expenses
Exploration and evaluation
Project expenses
General and administrative expenses
Corporate administrationb
Stock-based compensationc
Acacia/Tanzaniad
Other expense (income)
Finance costs, nete
Attributable capital expenditures:
Attributable minesite sustaining
Attributable project
Total attributable capital expendituresf
2019 Original
Guidance
Q3 2019
Guidance
2019 Actual
2020 Guidance
5.10 – 5.60
5.10 – 5.60
5.47
4.80 – 5.20
880 – 940
650 – 700
215 – 235
870 – 920
940 – 990
650 – 700
320 – 350
870 – 920
375 – 430
375 – 430
2.30 – 2.70
1.70 – 2.00
0.60 – 0.70
2.40 – 2.90
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
280 – 340
170 – 180
120 – 150
~200
~140
~40
~20
80 – 100
500 – 550
1,100 – 1,300 1,100 – 1,300
300 – 400
1,400 – 1,700 1,400 – 1,700
300 – 400
1,005
671
348
894
432
2.14
1.69
0.28
2.52
342
212
130
212
148
37
27
(3,100)
469
1,176
336
1,512
980 – 1,030
650 – 700
300 – 330
920 – 970
440 – 500
2.10 – 2.40
1.50 – 1.80
0.60 – 0.70
2.20 – 2.50
280 – 320
210 – 230
70 – 90
~170
~130
~40
0
80 – 100
400 – 450
1,300 – 1,500
300 – 400
1,600 – 1,900
a. Total 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 107 to 132 of this MD&A.
b. 2019 actual of $148 million includes $18 million of severance costs.
c. 2019 actual based on US$18.59 and 2020 guidance based on a three-month trailing average ending December 31, 2019 of US$17.51 per share.
d. For 2019, Acacia/Tanzania general and administrative expenses were substantially comprised of stock-based compensation and severance costs related to
Acacia prior to the acquisition of the non-controlling interest in September 2019.
e. 2019 actual includes a net loss on debt extinguishment of $3 million.
f. Attributable capital expenditures are presented on the same basis as guidance, which includes our 61.5% share of Nevada Gold Mines, our 60% share of
Pueblo Viejo, our 80% share of Loulo-Gounkoto, our 89.7% share of Tongon, our 84% share of North Mara, Bulyanhulu and Buzwagi and our 50% share of
Zaldívar and Jabal Sayid. As the GoT’s 16% free-carried interest is expected to be made effective as of January 1, 2020, our 2020 outlook represents our
84% share of North Mara, Bulyanhulu and Buzwagi.
60
MANAGEMENT’S DISCUSSION AND ANALYSISBarrick Gold Corporation
2020 Guidance Analysis
Estimates of future production, cost of sales, and total cash costs4
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 47 of this MD&A for a description of certain
risk factors that could cause actual results to differ materially from
these estimates).
Gold Production
We expect 2020 gold production to be in the range of 4.8 to
5.2 million ounces. As expected, gold production is lower year-over-
year given the depletion of the high-grade Cortez Hills Open Pit
deposit, divestment of Kalgoorlie and the decision to place Lagunas
Norte, Morila and Golden Sunlight in care and maintenance in 2019.
Based on mine sequencing and planned maintenance shutdowns,
we expect gold production in the second half of 2020 to be slightly
higher than the first half.
Gold Cost of Sales per ounce
On a per ounce basis, cost of sales applicable to gold5, after
removing the portion related to non-controlling interests, is expected
to be in the range of $980 to $1,030 per ounce in 2020. This is in line
with the prior year resulting from a full year impact of the higher
depreciation at Nevada Gold Mines offset by lower cost of sales
primarily at Kibali and North Mara.
Gold Total Cash Costs per ounce4
Total cash costs per ounce4 are expected to be in the range of $650
to $700, unchanged from the 2019 range. We expect Cortez to have
higher total cash costs per ounce4 than 2019 driven primarily by the
cessation of the comparatively high-grade, low-cost Cortez Hills
Open Pit in the first half of 2019. We also expect higher total cash
costs per ounce4 at Pueblo Viejo in 2020 due to lower grades
compared to the prior year, in line with the mine plan. Lower costs
year-over-year at Veladero, Porgera, and North Mara are expected
to offset these impacts on Barrick’s total cash costs per ounce4.
Gold All-In Sustaining Costs per ounce4
All-in sustaining costs per ounce4 are expected to be in the range of
$920 to $970 for gold, slightly higher than 2019, and driven primarily
by the increase in minesite sustaining capital expenditures as
discussed below.
Copper Production and Costs
We expect 2020 copper production to be in the range of 440 to
500 million pounds, up from production of 432 million pounds in
2019. This increase is mainly driven by Lumwana following the
sustainable improvements we have made to increase plant efficiency
and availability through 2019. Together with cost rationalization,
these performance improvements have driven a reduction in mining
and processing costs per tonne and increased reserves.
In 2020, cost of sales applicable to copper5 is expected to be
in the range of $2.10 to $2.40 per pound, in line with the $2.14 per
pound outcome for 2019. C1 cash costs per pound4 guidance of
$1.50 to $1.80 per pound for 2020 is also in line with 2019. Notably,
we expect Lumwana C1 cash costs per pound4 of $1.50 to $1.70
to be lower year-over-year partially driven by the plant availability
and efficiency improvements we have implemented at the mine
as discussed earlier. Copper all-in sustaining costs per pound4
guidance of $2.20 to $2.50 for 2020 represents an improvement
from $2.52 in 2019.
Exploration and Project Expenses
We expect to incur approximately $210 to $230 million of exploration
and evaluation expenditures in 2020 which includes 100% of
the expenditure for Nevada Gold Mines for the full year.
We expect to incur approximately $70 to $90 million of
project expenses in 2020, compared to $130 million in 2019.
In 2020, project expenses are mainly related to the ongoing site
costs at Pascua-Lama and advancing the expansion project at
Pueblo Viejo.
General and Administrative Expenses
In 2020, we expect corporate administration costs to be
approximately $130 million, a decrease of $18 million compared to
2019. This mainly reflects the additional severance costs incurred
in 2019 associated with our workforce reduction following the Merger.
This is partially offset by one-off integration costs associated with
Randgold, Nevada Gold Mines and Acacia.
Separately, stock-based compensation expense in 2020 is
expected to be approximately $40 million.
Finance Costs, Net
In 2020, net finance costs of $400 to $450 million primarily represent
interest expense on long-term debt, non-cash interest expense
relating to the gold and silver streaming agreements at Pueblo Viejo,
and accretion, net of finance income. We expect net finance costs
in 2020 to be lower year-over-year from $469 million in 2019 due
in part to lower interest expense following debt repayments of
$248 million in 2019. This is combined with the absence of non-cash
interest expense related to the silver streaming agreement at
Pascua-Lama (refer to notes 3 and 9 to the Financial Statements
for more information). Our 2020 forecast includes the loss on debt
extinguishment of $15 million related to the make-whole repurchase
in January 2020 of $337 million of outstanding principal on our
3.85% Notes due 2022.
Capital Expenditures
Total attributable gold and copper capital expenditures for 2020 are
expected to be in the range of $1,600 to $1,900 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, consistent with 2019.
More than half of our attributable project capital expenditures
in 2020 relate to advancing the expansion project at Pueblo Viejo,
the third shaft project at Turquoise Ridge and construction of the
Goldrush twin exploration declines. The remainder of project capital
expenditure is mainly associated with the Zaldívar Chloride Leach
Project and the restart of mining operations at Bulyanhulu.
Attributable minesite sustaining capital expenditures are
expected to be in the range of $1,300 to $1,500 million compared to
$1,176 million in 2019. The increase is primarily a result of increased
capitalized stripping and underground development at Loulo-Gounkoto,
the Phase 6 leach pad expansion at Veladero, tailings capacity
expansion at Hemlo, plant refurbishment at Bulyanhulu and the
development of the Kalima-Ikamva pit project at Kibali.
Effective Income Tax Rate
At a gold price of $1,350/oz, our expected effective tax rate range
for 2020 is between 30% to 35%. The rate is sensitive to the relative
proportion of sales in high versus low tax jurisdictions, realized
gold and copper prices, the proportion of income from our equity
accounted investments and the level of non-tax affected costs in
countries where we generate net losses.
61
MANAGEMENT’S DISCUSSION AND ANALYSISFinancial Report 2019 Outlook Assumptions and Economic Sensitivity Analysis
Gold revenue, net of royalties
Copper revenue, net of royalties
2020 Guidance
Hypothetical
Assumption
Change
Impact on
EBITDAa
(millions)
Impact on
All-in
Sustaining Costsa
$ 1,350/oz
2.75/lb
$
+/- $ 100/oz
+/- $ 0.50/lb
+/- $ 472
+/- $ 224
+/- $ 4/oz
+/- $ 0.02/lb
a. EBITDA and all-in sustaining costs are non-GAAP financial performance measures with no standardized definition under IFRS. For further information and a
detailed reconciliation, please see pages 107 to 132 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 senior management and relevant
committees of the Board on the effectiveness of key control
activities.
Board and Committee Oversight
We maintain strong risk oversight practices, with responsibilities
outlined in the mandates of the Board and related committees.
The Board’s mandate makes clear its responsibility for reviewing
and discussing with 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
Our weekly Executive Committee Review is 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
the key issues identified by management at these weekly sessions.
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 47 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 amount 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 the issuance of debt or equity securities.
Improving free cash flow 4 and costs
Our ability to improve productivity, drive down operating costs and
reduce working capital remains a focus in 2020 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.
62
MANAGEMENT’S DISCUSSION AND ANALYSISBarrick Gold Corporation
Key risk modification activities:
n Formation of Nevada Gold Mines joint venture to drive free cash
flow through synergies without issuing shares;
n Weekly Executive Committee Review to assess and respond to
risks in a timely manner;
n General and administrative costs halved in 2019 relative to 2018
guidance despite increase in asset base; and
n Implemented a flat, operationally focused, agile management
structure with a tenet in ownership culture.
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 in the business of 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 the environment,
community health and safety. 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. Barrick also recognizes climate change as an area of risk
requiring specific focus.
Key risk modification activities:
n Obtaining full ownership of Acacia and resuming day-to-day
management of the Tanzanian assets;
n Our commitment to responsible mining is supported by a robust
governance framework, including a new overarching Sustainable
Development Policy and refreshed policies in the areas of
Biodiversity, Social Performance, Occupational Health and
Safety, Environment and Human Rights;
n We also updated our Code of Business Conduct and Ethics
which sets out the ethical behavior expected of everyone working
at, or with, Barrick;
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 2020 and beyond, our
overriding objective of growing free cash flow per share continues
to be 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.
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 Assets1, Tier Two
Gold Assets and Strategic Assets2 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 2019, the gold price ranged from
$1,266 per ounce to $1,557 per ounce. The average market price
for the year of $1,393 per ounce represented an increase of
10% versus 2018.
AVERAGE MONTHLY SPOT GOLD PRICES
(dollars per ounce)
1,600
1,500
1,400
1,300
1,200
1,100
1,000
2015
2016
2017
2018
2019
The price of gold rose significantly during the middle part of the year,
reaching a six-year high in early September. During the year, the
gold price was impacted by declining US dollar interest rates, global
trade disputes and geopolitical tensions leading to increased investor
interest.
1600
1500
1400
1300
1200
1100
1000
63
MANAGEMENT’S DISCUSSION AND ANALYSISFinancial Report 2019 Fuel
For 2019, the price of West Texas Intermediate (“WTI”) crude oil
traded in a wide range between $44 and $67 per barrel, with an
average market price of $57 per barrel, and closed the year at
$61 per barrel. Oil prices were impacted by global trade tensions,
geopolitical events, and the US dollar.
AVERAGE MONTHLY SPOT CRUDE OIL PRICE (WTI)
(dollars per barrel)
80
70
60
50
40
30
20
2015
2016
2017
2018
2019
During 2019, we did not have any fuel hedge positions, and are
unhedged against fuel exposures as at December 31, 2019.
US Dollar Interest Rates
After four years of benchmark rate increases by the US Federal
Reserve, the benchmark rate was lowered by 75 basis points over
the course of 2019 to a range of 1.50% to 1.75% in an effort to keep
the economy stable during a period of slowing growth and global
trade uncertainty. Further changes to short-term rates in 2020 are
expected to be dependent on economic data.
At present, our interest rate exposure mainly relates to
80
70
interest income received on our cash balances ($3.3 billion at
December 31, 2019); the mark-to-market value of derivative
instruments; 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, 2019). 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.
40
60
50
30
20
Copper
During 2019, London Metal Exchange (“LME”) copper prices
traded in a range of $2.50 to $3.00 per pound, averaged $2.72 per
pound, and closed the year at $2.79 per pound. Copper prices are
significantly influenced by physical demand from emerging markets,
especially China.
Copper prices fell to the lows of the year in early September
due to a strong US dollar, a weakening Chinese yuan, and concerns
over global trade due to tariff actions before rising into the end
of the year on low global stockpile levels and an easing in trade
tensions between the US and China.
AVERAGE MONTHLY SPOT COPPER PRICES
(dollars per pound)
3.25
3.00
2.75
2.50
2.25
2.00
2015
2016
2017
2018
2019
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, 2019, we recorded
39 million pounds of copper sales still subject to final price settlement
at an average provisional price of $2.80 per pound. The impact to
net income before taxation of a 10% movement in the market price
of copper would be approximately $11 million, holding all other
variables constant.
Currency Exchange Rates
The results of our mining operations outside of the United States
are affected by US dollar exchange rates. We have exposure to the
Argentine peso through operating costs at our Veladero mine, and
peso denominated VAT receivable balances. In addition, we have
AVERAGE MONTHLY SPOT
exposure to the Canadian and Australian dollars, Chilean peso,
COPPER PRICES (dollars per pound)
Papua New Guinea kina, Peruvian sol, Zambian kwacha, Tanzanian
shilling, Dominican peso, West African CFA franc, Euro, South African
rand, and British pound through mine operating and capital costs.
3.5
Fluctuations in the US dollar increase the volatility of our costs
3.0
reported in US dollars. In 2019, the Australian dollar traded in a
range of $0.67 to $0.73 against the US dollar, while the US dollar
against the Canadian dollar, Argentine peso, and CFA franc ranged
from $1.30 to $1.37 and ARS 36.85 to ARS 62.00, and XOF 568
to XOF 664, respectively. During the year, the US dollar traded
strongly. Along with inflation pressures in Argentina and government
actions, this led to a continued weakening of the Argentine peso
during the year. During 2019, we did not have any currency hedge
positions, and are unhedged against foreign exchange exposures
as at December 31, 2019 beyond spot requirements.
2.5
2.0
2007
2008
2009
2010
2011
64
MANAGEMENT’S DISCUSSION AND ANALYSISBarrick Gold Corporation Production and Cost Summary – Gold
For the three months ended
For the years ended
12/31/2019
9/30/2019 % Change
12/31/19
12/31/18 % Change 12/31/17
Nevada Gold Mines (61.5%)a
Gold produced (000s oz)
Cost of sales ($/oz)
Total cash costs ($/oz)b
All-in sustaining costs ($/oz)b
Cortez (61.5%)c
Gold produced (000s oz)
Cost of sales ($/oz)
Total cash costs ($/oz)b
All-in sustaining costs ($/oz)b
Carlin (61.5%)d
Gold produced (000s oz)
Cost of sales ($/oz)
Total cash costs ($/oz)b
All-in sustaining costs ($/oz)b
Turquoise Ridge (61.5%)e
Gold produced (000s oz)
Cost of sales ($/oz)
Total cash costs ($/oz)b
All-in sustaining costs ($/oz)b
Phoenix (61.5%)f
Gold produced (000s oz)
Cost of sales ($/oz)
Total cash costs ($/oz)b
All-in sustaining costs ($/oz)b
Long Canyon (61.5%)f
Gold produced (000s oz)
Cost of sales ($/oz)
Total cash costs ($/oz)b
All-in sustaining costs ($/oz)b
Pueblo Viejo (60%)
Gold produced (000s oz)
Cost of sales ($/oz)
Total cash costs ($/oz)b
All-in sustaining costs ($/oz)b
Loulo-Gounkoto (80%)g
Gold produced (000s oz)
Cost of sales ($/oz)
Total cash costs ($/oz)b
All-in sustaining costs ($/oz)b
Kibali (45%)g
Gold produced (000s oz)
Cost of sales ($/oz)
Total cash costs ($/oz)b
All-in sustaining costs ($/oz)b
Kalgoorlie (50%)h
Gold produced (000s oz)
Cost of sales ($/oz)
Total cash costs ($/oz)b
All-in sustaining costs ($/oz)b
Tongon (89.7%)g
Gold produced (000s oz)
Cost of sales ($/oz)
Total cash costs ($/oz)b
All-in sustaining costs ($/oz)b
Porgera (47.5%)
Gold produced (000s oz)
Cost of sales ($/oz)
Total cash costs ($/oz)b
All-in sustaining costs ($/oz)b
585
1,038
711
944
133
945
681
1,012
276
975
766
965
111
971
625
800
31
2,025
902
1,034
34
1,026
317
657
179
660
422
517
144
1,037
631
917
87
1,205
608
740
36
1,127
940
1,172
61
1,476
803
867
82
909
757
894
535
1,027
693
946
126
829
570
772
278
1,007
775
1,014
82
1,077
622
840
25
2,186
1,010
1,622
24
1,170
353
714
139
807
504
631
153
1,018
630
966
91
1,187
554
703
58
1,037
856
1,170
62
1,396
793
869
75
1,024
868
1,053
9%
1%
3%
0%
6%
14%
19%
31%
(1%)
(3%)
(1%)
(5%)
35%
(10%)
0%
(5%)
24%
(7%)
(11%)
(36%)
42%
(12%)
(10%)
(8%)
29%
(18%)
(16%)
(18%)
(6%)
2%
0%
(5%)
(4%)
2%
10%
5%
(38%)
9%
10%
0%
(2%)
6%
1%
0%
9%
(11%)
(13%)
(15%)
2,218
924
634
828
801
762
515
651
968
1,004
746
984
335
846
585
732
56
2,093
947
1,282
58
1,088
333
681
590
747
471
592
572
1,044
634
886
366
1,111
568
693
206
1,062
873
1,183
245
1,469
787
844
284
994
838
1,003
2,368
814
526
664
1,265
659
351
430
835
1,054
740
983
268
783
678
756
(6%)
13%
20%
25%
(37%)
16%
47%
51%
16%
(5%)
1%
0%
25%
8%
(14%)
(3%)
2,523
786
467
634
1,447
657
300
380
780
1,024
721
1,045
211
715
589
733
581
750
465
623
2%
0%
1%
(5%)
650
699
405
525
314
899
732
857
(34%)
18%
19%
38%
368
806
642
729
204
996
796
1,083
39%
0%
5%
(7%)
235
944
781
993
65
MANAGEMENT’S DISCUSSION AND ANALYSISFinancial Report 2019
Production and Cost Summary – Gold (continued)
For the three months ended
For the years ended
12/31/2019
9/30/2019 % Change
12/31/19
12/31/18 % Change 12/31/17
Veladero (50%)i
Gold produced (000s oz)
Cost of sales ($/oz)
Total cash costs ($/oz)b
All-in sustaining costs ($/oz)b
Hemlo
Gold produced (000s oz)
Cost of sales ($/oz)
Total cash costs ($/oz)b
All-in sustaining costs ($/oz)b
North Mara j
Gold produced (000s oz)
Cost of sales ($/oz)
Total cash costs ($/oz)b
All-in sustaining costs ($/oz)b
Buzwagi j
Gold produced (000s oz)
Cost of sales ($/oz)
Total cash costs ($/oz)b
All-in sustaining costs ($/oz)b
Bulyanhulu j
Gold produced (000s oz)
Cost of sales ($/oz)
Total cash costs ($/oz)b
All-in sustaining costs ($/oz)b
Total Attributable to Barrickk
Gold produced (000s oz)
Cost of sales ($/oz)l
Total cash costs ($/oz)b
All-in sustaining costs ($/oz)b
71
1,138
710
1,142
54
1,632
1,091
1,380
103
1,021
675
830
28
1,235
1,144
1,169
9
1,293
752
909
1,439
1,046
692
923
58
1,243
773
1,142
49
1,083
953
1,280
29
907
603
850
18
1,292
1,202
1,220
6
1,288
729
769
1,306
1,065
710
984
22%
(8%)
(8%)
0%
10%
51%
14%
8%
255%
13%
12%
(2%)
56%
(4%)
(5%)
(4%)
50%
0%
3%
18%
10%
(2%)
(3%)
(6%)
274
1,188
734
1,105
213
1,137
904
1,140
251
953
646
802
83
1,240
1,156
1,178
27
1,207
676
773
5,465
1,005
671
894
278
1,112
629
1,154
171
1,157
1,046
1,318
215
795
603
830
93
939
916
947
26
1,231
650
754
4,527
892
588
806
(1%)
7%
17%
(4%)
25%
(2%)
(14%)
(14%)
17%
20%
7%
(3%)
(11%)
32%
26%
24%
4%
(2%)
4%
3%
21%
13%
14%
11%
432
897
598
987
196
986
841
1,092
207
683
509
773
172
643
600
632
112
1,309
848
1,319
5,323
794
526
750
a. Represents the combined results of Cortez, Goldstrike (including our 60% share of South Arturo) and our 75% interest in Turquoise Ridge until June 30, 2019.
Commencing July 1, 2019, the date Nevada Gold Mines was established, the results represent our 61.5% interest in Cortez, Carlin (including Goldstrike and
60% of South Arturo), Turquoise Ridge (including Twin Creeks), Phoenix and Long Canyon.
b. 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 107 to 132 of this MD&A.
c. On July 1, 2019, Cortez was contributed to Nevada Gold Mines, a joint venture with Newmont. As a result, the amounts presented are on a 100% basis up
until June 30, 2019, and on a 61.5% basis thereafter.
d. On July 1, 2019, Barrick’s Goldstrike and Newmont’s Carlin were contributed to Nevada Gold Mines and are now referred to as Carlin. As a result, the amounts
presented represent Goldstrike on a 100% basis (including our 60% share of South Arturo) up until June 30, 2019, and the combined results of Carlin and
Goldstrike (including our 60% share of South Arturo) on a 61.5% basis thereafter.
e. Barrick owned 75% of Turquoise Ridge through to the end of the second quarter of 2019, with our joint venture partner, Newmont, owning the remaining 25%.
Turquoise Ridge was proportionately consolidated on the basis that the joint venture partners that have joint control have rights to the assets and obligations
for the liabilities relating to the arrangement. The figures presented in this table are based on our 75% interest in Turquoise Ridge until June 30, 2019. On
July 1, 2019, Barrick’s 75% interest in Turquoise Ridge and Newmont’s Twin Creeks and 25% interest in Turquoise Ridge were contributed to Nevada Gold
Mines. Starting July 1, 2019, the results represent our 61.5% share of Turquoise Ridge and Twin Creeks, now referred to as Turquoise Ridge.
f. These sites were acquired as a result of the formation of Nevada Gold Mines on July 1, 2019.
g. These sites did not form a part of the Barrick consolidated results in 2018 and 2017 as these sites were acquired as a result of the Merger.
h. On November 28, 2019, we completed the sale of our 50% interest in Kalgoorlie in Western Australia to Saracen Mineral Holdings Limited for total cash
consideration of $750 million. Accordingly, these represent our 50% interest until November 28, 2019.
i. On June 30, 2017, we sold 50% of Veladero; therefore, these represent results on a 100% basis from January 1 to June 30, 2017 and on a 50% basis
from July 1, 2017 onwards.
j. Formerly known as Acacia Mining plc. On September 17, 2019, Barrick acquired all of the shares of Acacia it did not own. Operating results are included at
100% from October 1, 2019 (notwithstanding the completion of the Acacia transaction on September 17, 2019, we consolidated our interest in Acacia and
recorded a non-controlling interest of 36.1% in the income statement for the entirety of the third quarter of 2019 as a matter of convenience) up until the GoT’s
16% free-carried interest is made effective, which is expected to be January 1, 2020, and on an 84% basis thereafter.
k. With the end of mining at Golden Sunlight and Morila in the second quarter and Lagunas Norte in the third quarter as previously reported, we have ceased to
include production or non-GAAP cost metrics for these sites from July 1, 2019 and October 1, 2019, respectively, onwards although these sites are included
in the Total Attributable to Barrick in the prior period comparatives.
l. Cost of sales per ounce (Barrick’s share) is calculated as cost of sales – gold on an attributable basis (excluding sites in care and maintenance) divided by
gold equity ounces sold.
66
MANAGEMENT’S DISCUSSION AND ANALYSISBarrick Gold Corporation
Production and Cost Summary – Copper
For the three months ended
For the years ended
12/31/2019
9/30/2019 % Change
12/31/19
12/31/18 % Change 12/31/17
Lumwana
Copper production (millions lbs)
Cost of sales ($/lb)
C1 cash costs ($/lb)a
All-in sustaining costs ($/lb)a
Zaldívar (50%)
Copper production (millions lbs)
Cost of sales ($/lb)
C1 cash costs ($/lb)a
All-in sustaining costs ($/lb)a
Jabal Sayid (50%)
Copper production (millions lbs)
Cost of sales ($/lb)
C1 cash costs ($/lb)a
All-in sustaining costs ($/lb)a
Total Copper
Copper production (millions lbs)
Cost of sales ($/lb)b
C1 cash costs ($/lb)a
All-in sustaining costs ($/lb)a
63
2.22
2.10
3.41
36
2.59
1.95
2.56
18
1.47
1.29
1.78
117
2.26
1.90
2.82
65
2.04
1.83
3.66
32
2.18
1.55
1.91
15
1.63
1.42
1.65
112
2.00
1.62
2.58
(3%)
9%
15%
(7%)
13%
19%
26%
34%
20%
(10%)
(9%)
8%
4%
13%
17%
9%
238
2.13
1.79
3.04
128
2.46
1.77
2.15
66
1.53
1.26
1.51
432
2.14
1.69
2.52
224
2.51
2.08
3.08
104
2.55
1.97
2.47
55
1.73
1.53
1.92
383
2.40
1.97
2.82
6%
(15%)
(14%)
(1%)
23%
(4%)
(10%)
(13%)
20%
(12%)
(18%)
(21%)
13%
(11%)
(14%)
(11%)
256
1.57
1.66
2.35
114
2.15
1.66
2.21
43
1.90
1.70
2.30
413
1.77
1.66
2.34
a. 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 107 to 132 of this MD&A.
b. Cost of sales per pound (Barrick’s share) is calculated as cost of sales – copper plus our equity share of cost of sales attributable to Zaldívar and Jabal Sayid
divided by copper pounds sold.
Operating Divisions Performance
Review of Operating Divisions Performance
Following the Merger in the first quarter of 2019 and the events
surrounding Nevada Gold Mines and Acacia in the third quarter
of 2019 (refer to page 58 for further details), our presentation of
reportable operating segments consists of nine gold mines (Cortez,
Carlin, Turquoise Ridge, Pueblo Viejo, Loulo-Gounkoto, Kibali,
Veladero, Porgera and North Mara). The remaining operating
segments, including our remaining gold mines, copper mines and
projects, 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.
67
MANAGEMENT’S DISCUSSION AND ANALYSISFinancial Report 2019
Nevada Gold Mines (61.5% basis)a, Nevada USA
Summary of Operating and Financial Data
For the three months ended
For the years ended
12/31/2019
9/30/2019 % Change
12/31/19
12/31/18 % Change 12/31/17
Total tonnes mined (000s)
Open pit ore
Open pit waste
Underground
Average grade (grams/tonne)
Open pit mined
Underground mined
Processed
Ore tonnes processed (000s)
Oxide mill
Roaster
Autoclave
Heap leach
Recovery rate
Oxide Mill
Roaster
Autoclave
Gold produced (000s oz)
Oxide mill
Roaster
Autoclave
Heap leach
Gold sold (000s oz)
Revenue ($ millions)
Cost of sales ($ millions)
Income ($ millions)
EBITDA ($ millions)b
EBITDA marginc
Capital expenditures ($ millions)d,e
Minesite sustainingd
Projectd
Cost of sales ($/oz)
Total cash costs ($/oz)b
All-in sustaining costs ($/oz)b
All-in costs ($/oz)b
53,267
9,316
42,623
1,328
0.82
10.70
1.96
11,586
3,044
1,344
1,556
5,642
80%
71%
86%
74%
585
76
286
155
68
565
861
573
277
440
51%
145
124
21
1,038
711
944
982
52,528
7,706
43,572
1,250
0.77
9.97
2.02
10,211
3,124
1,309
1,316
4,462
79%
72%
87%
79%
535
76
275
112
72
537
804
552
237
403
50%
164
110
54
1,027
693
946
1,048
1%
21%
(2%)
6%
6%
7%
(3%)
13%
(3%)
3%
18%
26%
1%
(1%)
(1%)
(6%)
9%
0%
4%
39%
(6%)
5%
7%
4%
17%
9%
2%
(12%)
13%
(61%)
1%
3%
0%
(6%)
189,456
26,942
157,868
4,646
182,204
20,605
157,960
3,639
0.93
10.52
2.29
36,724
8,338
5,377
5,656
17,353
82%
76%
87%
74%
2,218
336
1,070
547
265
2,223
3,128
2,035
1,050
1,642
52%
627
380
247
924
634
828
938
2.96
10.96
3.47
25,680
4,527
5,104
5,338
10,711
83%
83%
89%
69%
2,368
590
1,120
497
161
2,359
2,986
1,921
1,011
1,688
57%
626
272
354
814
526
664
814
31%
4% 211,733
17,530
0% 190,710
3,493
28%
(69%)
(4%)
(34%)
43%
84%
5%
6%
62%
(1%)
(8%)
(3%)
8%
(6%)
(43%)
(4%)
10%
65%
(6%)
5%
6%
4%
(3%)
(7%)
0%
40%
(30%)
13%
20%
25%
15%
2.70
10.58
3.45
24,366
4,562
4,902
4,730
10,172
86%
91%
89%
62%
2,523
957
929
459
178
2,579
3,241
2,028
1,169
1,990
61%
620
392
228
786
467
634
726
a. Represents the combined results of Cortez, Goldstrike (including our 60% share of South Arturo) and our 75% interest in Turquoise Ridge until June 30, 2019.
Commencing July 1, 2019, the date Nevada Gold Mines was established, the results represent our 61.5% interest in Cortez, Carlin (including Goldstrike and
60% of South Arturo), Turquoise Ridge (including Twin Creeks), Phoenix and Long Canyon.
b. 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 107 to 132 of this MD&A.
c. Represents EBITDA divided by revenue.
d. Presented on a cash basis as a result of adopting IFRS 16 Leases starting in the first quarter of 2019. Capital expenditures for 2018 and 2017 are presented
on an accrued basis. Please refer to page 48 of this MD&A for more details.
e. Amounts presented exclude capitalized interest.
As discussed on page 58, on July 1, 2019, Nevada Gold Mines
was established which encompasses Barrick’s former Cortez,
Goldstrike, Turquoise Ridge and Goldrush properties and Newmont’s
former Carlin, Twin Creeks, Phoenix, Long Canyon and Lone Tree
properties. Barrick is the operator of the joint venture and owns
61.5%, with Newmont owning the remaining 38.5% of the joint
venture. Refer to the following pages for a detailed discussion of
Cortez, Carlin (including Goldstrike) and Turquoise Ridge (including
Twin Creeks) results.
68
MANAGEMENT’S DISCUSSION AND ANALYSISBarrick Gold Corporation
Carlin (61.5% basis)a, Nevada USA
Summary of Operating and Financial Data
Total tonnes mined (000s)
Open pit ore
Open pit waste
Underground
Average grade (grams/tonne)
Open pit mined
Underground mined
Processed
Ore tonnes processed (000s)
Oxide mill
Roaster
Autoclave
Heap leach
Recovery rate
Roaster
Autoclave
Gold produced (000s oz)
Oxide mill
Roaster
Autoclave
Heap leach
Gold sold (000s oz)
Revenue ($ millions)
Cost of sales ($ millions)
Income ($ millions)
EBITDA ($ millions)b
EBITDA marginc
Capital expenditures ($ millions)d,e
Minesite sustainingd
Projectd
Cost of sales ($/oz)
Total cash costs ($/oz)b
All-in sustaining costs ($/oz)b
All-in costs ($/oz)b
For the three months ended
For the years ended
12/31/2019
9/30/2019 % Change
12/31/19
12/31/18 % Change 12/31/17
13,639
1,832
10,966
841
11,584
1,627
9,145
812
1.84
9.40
3.65
3,156
705
991
892
568
75%
86%
58%
276
11
205
49
11
275
408
268
133
191
47%
51
51
0
975
766
965
965
1.44
8.61
3.33
3,188
663
980
810
735
76%
87%
63%
278
14
213
38
13
272
401
274
121
183
46%
56
56
0
1,007
775
1,014
1,014
18%
13%
20%
4%
28%
9%
10%
(1%)
6%
1%
10%
(23%)
(1%)
(1%)
(9%)
(1%)
(21%)
(4%)
29%
(15%)
1%
2%
(2%)
10%
5%
3%
(9%)
(9%)
0%
(3%)
(1%)
(5%)
(5%)
49,343
4,773
41,978
2,592
2.08
9.09
3.80
10,467
1,368
3,627
4,169
1,303
75%
86%
59%
968
25
694
225
24
967
1,355
971
370
609
45%
211
211
0
1,004
746
984
984
59,605
4,626
53,387
1,592
3.75
9.39
4.32
8,075
n/a
3,341
4,734
n/a
74%
89%
53%
835
n/a
606
229
n/a
842
1,066
886
166
428
40%
186
186
0
1,054
740
983
983
(17%)
3%
(21%)
63%
(44%)
(3%)
(12%)
30%
n/a
9%
n/a
n/a
1%
(2%)
12%
16%
n/a
15%
(2%)
n/a
15%
27%
10%
123%
42%
12%
13%
13%
0%
(5%)
1%
0%
0%
76,587
1,575
73,374
1,638
3.56
8.88
4.20
8,041
n/a
3,783
4,258
n/a
77%
88%
62%
780
n/a
531
248
n/a
868
1,091
889
186
446
41%
263
263
0
1,024
721
1,045
1,045
a. On July 1, 2019, Barrick’s Goldstrike operations and Newmont’s Carlin operations were contributed to Nevada Gold Mines and are now collectively referred
to as Carlin. As a result, the amounts presented represent Goldstrike on a 100% basis (including our 60% share of South Arturo) up until June 30, 2019, and
the combined results of Carlin and Goldstrike (including our 60% share of South Arturo) on a 61.5% basis thereafter.
b. 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 107 to 132 of this MD&A.
c. Represents EBITDA divided by revenue.
d. Presented on a cash basis as a result of adopting IFRS 16 Leases starting in the first quarter of 2019. Capital expenditures for 2018 and 2017 are presented
on an accrued basis. Please refer to page 48 of this MD&A for more details.
e. Amounts presented exclude capitalized interest.
On July 1, 2019, Barrick’s Goldstrike operations and Newmont’s
Carlin operations were contributed to Nevada Gold Mines and
are now collectively referred to as Carlin. As a result, the amounts
presented represent Goldstrike on a 100% basis (including our 60%
share of South Arturo) up until June 30, 2019, and the combined
results of Carlin and Goldstrike (including our 60% share of South
Arturo) on a 61.5% basis thereafter. As a result of this transaction,
there is now a higher proportion of open pit ore mined and,
consequently, the average grade processed is lower, which also aligns
with the inclusion of a heap leach facility contributed by Newmont.
69
MANAGEMENT’S DISCUSSION AND ANALYSISFinancial Report 2019
Safety and Environment
Three LTIs were recorded during the quarter (at Goldstrike surface
and Carlin) with an LTIFR of 1.27 per million hours worked versus
2.05 the previous quarter. Goldstrike underground reported zero LTIs
during the fourth quarter. No Class 1 environmental incidents
occurred during the quarter.
Financial Results
Q4 2019 compared to Q3 2019
Carlin’s income for the fourth quarter of 2019 increased by 10%
primarily due to lower cost of sales per ounce5 and higher sales
volumes resulting from higher grade ore mined and processed.
Gold production in the fourth quarter of 2019 was 1% lower
compared to the prior quarter, mainly due to lower production from
the roasters and oxide mill offset by higher autoclave production.
The higher autoclave production is a result of higher throughput from
processing Carlin stockpiles from Pete open pit, a synergy unlocked
by the creation of Nevada Gold Mines.
Cost of sales per ounce5 and total cash costs per ounce4
in the fourth quarter of 2019 were 3% and 1% lower, respectively,
than the prior quarter mainly due to a higher proportion of lower
cost underground production in the feed mix. In the fourth quarter
of 2019, all-in sustaining costs per ounce4 decreased by 5%
compared to the prior quarter primarily due to lower minesite
sustaining capital expenditures.
Capital expenditures in the fourth quarter of 2019 were 9%
lower than the prior quarter due to lower underground development
and equipment purchases, lower maintenance component
replacements for the open pit and the completion of the autoclave
brick re-line in the third quarter. Capital drilling also decreased due
to the completion of drilling programs for the winter season.
2019 compared to 2018
Carlin’s income for 2019 reflects our 61.5% interest in Nevada Gold
Mines and is inclusive of income from Newmont’s former Carlin
operations and the Goldstrike operations from July 1, 2019. Income
for Carlin for the first six months of 2019 and the twelve months of
2018 represents Barrick’s 100% interest in the Goldstrike operations
(including the 60% interest in South Arturo) prior to the formation
of Nevada Gold Mines. This was the primary driver of the 123%
increase in Carlin’s income compared to 2018.
INCOME AND EBITDA4,a
1,257
1,268
1,393
609
446
428
186
166
370
546
2017
2018
2019
Income ($ millions)
EBITDA ($ millions)
Market Price ($/oz)
a. The results represent Goldstrike on a 100% basis (including our 60%
share of South Arturo) from January 1, 2017 to June 30, 2019 and on
the combined results of Carlin and Goldstrike (including our 60% share
of South Arturo) on a 61.5% basis from July 1, 2019 onwards.
Gold production for 2019 was 16% higher compared to the prior
year, primarily due to the inclusion of Newmont’s former Carlin
operations from July 1, 2019. Production in the first six months of
2019 was also higher due to scheduled roaster maintenance at
Goldstrike in the first six months of 2018. This was partially offset by
the reduction in Barrick’s interest in Goldstrike (including the 60%
interest in South Arturo) from 100% to 61.5% from July 1, 2019.
PRODUCTIONa
(000s ounces)
835
968
1,000
to
1,050
1000
500
0
2018
2019
2020 (est)
a. The results represent Goldstrike (including our 60% share of South Arturo)
on a 100% basis from January 1, 2018 to June 30, 2019 and the
combined results of Carlin and Goldstrike (including our 60% share of
South Arturo) on a 61.5% basis from July 1, 2019 onwards.
Cost of sales per ounce5 was 5% lower than the prior year due to
lower depreciation expense on a per ounce basis. Total cash costs
per ounce4 and all-in sustaining costs per ounce4 were in line with
the prior year.
COST OF SALES5, TOTAL CASH COSTS4
AND AISC4 ($ per ounce)
600
1,054
983
1,004
984
740
746
400
200
0
-200
1,000
to
1,050
760
to
810
920
to
970
546
2018
2019
2020 (est)
-400
Total Cash Costs
AISC
Cost of Sales
-600
Capital expenditures for 2019 increased by 13% from the same prior
year period due to higher minesite sustaining capital expenditures.
Higher minesite sustaining capital expenditures are attributed to the
inclusion of Newmont’s former Carlin operations, partially offset by
the reduction in Barrick’s interest in Goldstrike (including the 60%
interest in South Arturo) from 100% to 61.5% from July 1, 2019.
2019 compared to Outlook
Gold production for 2019 of 968 thousand ounces was within the
guidance range of 960 to 1,020 thousand ounces. Cost of sales per
ounce5 of $1,004 was lower than the guidance range of $1,020 to
$1,080 per ounce. Total cash costs per ounce4 and all-in sustaining
costs per ounce4 of $746 and $984, respectively, were within the
guidance ranges of $740 to $790 per ounce, and $955 to $995 per
ounce, respectively.
1500
750
0
70
5000
4000
3000
2000
1000
0
MANAGEMENT’S DISCUSSION AND ANALYSISBarrick Gold Corporation
Cortez (61.5% basis)a , Nevada USA
Summary of Operating and Financial Data
For the three months ended
For the years ended
12/31/19
9/30/19 % Change
12/31/19
12/31/18 % Change 12/31/17
Total tonnes mined (000s)
Open pit ore
Open pit waste
Underground
Average grade (grams/tonne)
Open pit mined
Underground mined
Processed
Ore tonnes processed (000s)
Oxide mill
Roaster
Heap leach
Recovery rate
Oxide Mill
Roaster
Gold produced (000s oz)
Oxide mill
Roaster
Heap leach
Gold sold (000s oz)
Revenue ($ millions)
Cost of sales ($ millions)
Income ($ millions)
EBITDA ($ millions)b
EBITDA marginc
Capital expenditures ($ millions)d,e
Minesite sustainingd
Projectd
Cost of sales ($/oz)
Total cash costs ($/oz)b
All-in sustaining costs ($/oz)b
All-in costs ($/oz)b
23,422
3,876
19,275
271
23,357
2,158
20,948
251
0.45
11.58
1.29
4,259
638
353
3,268
75%
69%
86%
133
35
81
17
132
194
124
69
105
54%
43
40
3
945
681
1,012
1,039
0.42
11.41
1.54
2,837
654
329
1,854
84%
79%
86%
126
34
62
30
126
185
105
77
109
59%
53
22
31
829
570
772
1,020
0%
80%
(8%)
8%
7%
2%
(16%)
50%
(2%)
7%
76%
(10%)
(13%)
0%
6%
3%
31%
(43%)
5%
5%
19%
(10%)
(4%)
(9%)
(19%)
80%
(89%)
14%
19%
31%
2%
105,949
14,640
90,029
1,280
121,929
15,979
104,573
1,377
0.67
10.66
1.60
17,583
3,462
1,750
12,371
86%
78%
87%
801
253
376
172
798
1,086
608
459
656
60%
255
90
165
762
515
651
854
2.73
10.73
2.67
17,001
4,527
1,763
10,711
87%
83%
91%
1,265
590
514
161
1,255
1,589
828
726
1,112
70%
340
65
275
659
351
430
649
(8%)
(13%) 134,503
15,955
(14%) 117,336
1,212
(7%)
(75%)
(1%)
(40%)
3%
(24%)
(1%)
15%
(1%)
(6%)
(4%)
(37%)
(57%)
(27%)
7%
(36%)
(32%)
(27%)
(37%)
(41%)
(14%)
(25%)
38%
(40%)
16%
47%
51%
31%
2.65
13.28
3.10
15,853
4,562
1,119
10,172
92%
91%
91%
1,447
956
312
178
1,489
1,870
979
873
1,405
75%
294
96
198
657
300
380
512
a. On July 1, 2019, Cortez was contributed to Nevada Gold Mines, a joint venture with Newmont. As a result, the amounts presented are on a 100% basis up
until June 30, 2019, and on a 61.5% basis thereafter.
b. 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 107 to 132 of this MD&A.
c. Represents EBITDA divided by revenue.
d. Presented on a cash basis as a result of adopting IFRS 16 Leases starting in the first quarter of 2019. Capital expenditures for 2018 and 2017 are presented
on an accrued basis. Please refer to page 48 of this MD&A for more details.
e. Amounts presented exclude capitalized interest.
On July 1, 2019, Barrick’s Cortez operations were contributed
to Nevada Gold Mines, a joint venture with Newmont. As a result,
the amounts presented represent Cortez on a 100% basis up until
June 30, 2019 and on a 61.5% basis thereafter.
Safety and Environment
There were no LTIs at Cortez during the quarter which resulted
in an LTIFR of zero per million hours, which is consistent with
the prior quarter. No Class 1 environmental incidents occurred
during the quarter.
Financial Results
Q4 2019 compared to Q3 2019
Cortez’s income for the fourth quarter of 2019 was 10% lower
than the prior quarter primarily due to higher cost of sales per
ounce5, partially offset by higher sales volume resulting from
higher gold production.
Gold production in the fourth quarter of 2019 was 6% higher
compared to the prior quarter, primarily due to increased underground
ore mined and then processed at the Carlin Roasters combined with
higher recoveries, partially offset by lower heap leach production.
The routing of Cortez underground ore through Mill 6 at Carlin was
a synergy unlocked by the creation of Nevada Gold Mines.
71
MANAGEMENT’S DISCUSSION AND ANALYSISFinancial Report 2019
Cost of sales per ounce5 and total cash costs per ounce4 in
the fourth quarter of 2019 were 14% and 19% higher, respectively,
versus the prior quarter primarily due to sales mix and ore routing.
In the third quarter of 2019, the remaining higher grade, low-cost
stockpiles from the Cortez Hills Open Pit (“CHOP”) were processed.
In the fourth quarter of 2019, all-in sustaining costs per ounce4
increased by 31% compared to the prior quarter due to higher
cash costs per ounce4 together with higher minesite sustaining
capital expenditure.
Capital expenditures in the fourth quarter of 2019 decreased
by 19% compared to the prior quarter due to lower project capital
expenditures, partially offset by higher minesite sustaining capital
expenditures. The lower project capital expenditures relative to
the third quarter of 2019 were due to decreases at the Cortez Hills
Underground Rangefront project and the change in classification
of the Crossroads open pit project from project to sustaining capital.
At the Rangefront project, the contractor was removed from site in
the fourth quarter due to sub-standard work and safety performance
and we are in the process of finding a replacement. The Crossroads
open pit project transitioned to production status late in the third
quarter from pre-production in the second quarter. Accordingly,
higher minesite sustaining capital expenditures relative to the third
quarter of 2019 are attributed to this transition.
2019 compared to 2018
Cortez’s income for 2019 reflects our 61.5% interest following the
formation of Nevada Gold Mines as described above. Income for
Cortez for the same prior year period represents Barrick’s 100%
share of the Cortez operations. In addition to this impact, Cortez’s
income was impacted by a decrease in sales volume reflecting lower
gold production and higher cost of sales per ounce5 partially offset
by the higher realized gold price4.
under solution. The lower gold in circuit balances were also related
to the completion of mining at CHOP as the high-grade CHOP ore
in circuit was drawn down by the end of the second quarter of 2019.
PRODUCTIONa
(000s ounces)
1400
700
0
1,265
801
450
to
480
2018
2019
2020 (est)
a. The results are on a 100% basis from January 1, 2017 to
June 30, 2019 and on a 61.5% basis from July 1, 2019 onwards.
Cost of sales per ounce5 for 2019 increased by 16%, due to higher
total cash costs per ounce4 offset slightly by lower depreciation
expense as mined ounce production has dropped significantly with
the transition away from mining predominantly ore in the CHOP pit
to waste stripping at Crossroads. Total cash costs per ounce4 was
47% higher than the prior year due to lower grades as mining from
CHOP was completed in the second quarter of 2019 combined
with increased royalty costs and higher tonnes hauled. Royalties
have increased as production shifts from CHOP to Crossroads,
which carries a higher royalty rate. For 2019, all-in sustaining costs
per ounce4 increased by 51% compared to 2018, due to higher total
cash costs per ounce4 and increased sustaining capital expenditures.
600
INCOME AND EBITDA4,a
COST OF SALES5, TOTAL CASH COSTS4
AND AISC4 ($ per ounce)
400
1,257
1,405
873
1,268
1,112
726
1,393
200
0
659
-200
-400
430
351
762
651
515
546
980
to
1,030
910
to
960
640
to
690
656
546
459
-600
2018
2019
2020 (est)
Total Cash Costs
AISC
Cost of Sales
2017
2018
2019
Income ($ millions)
EBITDA ($ millions)
Market Price ($/oz)
a. The results are on a 100% basis from January 1, 2017 to
June 30, 2019 and on a 61.5% basis from July 1, 2019 onwards.
Gold production for 2019 was 37% lower, primarily due to the
reduction in Barrick’s interest in Cortez from July 1, 2019 combined
with lower grades mined and processed from CHOP as mining was
completed in the second quarter of 2019. This was partially offset by
higher leach production, and a reduction of gold in circuit. Leach
production has increased as mining and placement from Crossroads
ramped up in the current year and additional tonnes were placed
Capital expenditures for 2019 were 25% lower than the prior year
due to the reduction in Barrick’s interest in Cortez from 100% to
61.5% from July 1, 2019. In addition to this, the lower project capital
expenditures were due to decreasing Crossroads dewatering activities
and Rangefront project expenditures. Sustaining capital increased
over the prior year due to Area 30 leach pad expansion work.
2019 compared to Outlook
Gold production for 2019 of 801 thousand ounces was at the high
end of the guidance range of 760 to 810 thousand ounces. Cost
of sales per ounce5 for 2019 was $762, which was lower than the
guidance range of $810 to $850 per ounce. Total cash costs per
ounce4 and all-in sustaining costs per ounce4 of $515 and $651,
respectively, also came in better than guidance, with ranges of
$530 to $580 per ounce and $670 to $710 per ounce, respectively.
72
5000
4000
3000
2000
1000
0
1500
750
0
MANAGEMENT’S DISCUSSION AND ANALYSISBarrick Gold Corporation Turquoise Ridge (61.5%)a , Nevada USA
Summary of Operating and Financial Data
Total tonnes mined (000s)
Open pit ore
Open pit waste
Underground
Average grade (grams/tonne)
Open pit mined
Underground mined
Processed
Ore tonnes processed (000s)
Oxide Mill
Autoclave
Heap leach
Recovery Rate
Oxide Mill
Autoclave
Gold produced (000s oz)
Oxide Mill
Autoclave
Heap leach
Gold sold (000s oz)
Revenue ($ millions)
Cost of sales ($ millions)
Income ($ millions)
EBITDA ($ millions)b
EBITDA marginc
Capital expenditures ($ millions)d
Minesite sustainingd
Projectd
Cost of sales ($/oz)
Total cash costs ($/oz)b
All-in sustaining costs ($/oz)b
All-in costs ($/oz)b
For the three months ended
For the years ended
12/31/19
9/30/19 % Change
12/31/19
12/31/18 % Change 12/31/17
3,819
608
2,995
216
1.80
14.09
4.28
934
114
660
160
86%
87%
86%
111
3
105
3
99
152
95
56
90
59%
24
18
6
971
625
800
863
4,811
732
3,892
187
1.01
13.28
3.78
950
107
506
337
89%
87%
89%
82
5
74
3
96
142
103
38
81
57%
26
18
8
1,077
622
840
927
(21%)
(17%)
(23%)
16%
78%
6%
13%
(2%)
6%
30%
(53%)
(3%)
0%
(3%)
35%
(40%)
42%
(11%)
3%
7%
(8%)
47%
12%
4%
(7%)
1%
(25%)
(10%)
0%
(5%)
(7%)
9,001
1,340
6,887
774
1.37
14.44
5.62
2,201
221
1,483
497
89%
87%
89%
335
8
321
6
356
504
300
201
293
58%
85
50
35
846
585
732
834
670
n/a
n/a
670
n/a
15.00
14.79
604
n/a
604
n/a
93%
n/a
93%
268
n/a
268
n/a
262
331
206
126
154
47%
62
20
42
783
678
756
916
1,243%
n/a
n/a
16%
n/a
(4%)
(62%)
264%
n/a
146%
n/a
(4%)
n/a
(4%)
25%
n/a
20%
n/a
36%
52%
46%
59%
90%
25%
37%
149%
(17%)
8%
(14%)
(3%)
(9%)
643
n/a
n/a
643
n/a
15.45
15.01
472
n/a
472
n/a
92%
n/a
92%
211
n/a
211
n/a
222
280
159
119
147
53%
36
32
4
715
589
733
753
a. Prior to July 1, 2019, Barrick owned 75% of Turquoise Ridge with our joint venture partner, Newmont, owning the remaining 25%. Turquoise Ridge was
proportionately consolidated on the basis that the joint venture partners that have joint control have rights to the assets and obligations for the liabilities relating
to the arrangement. The figures presented in this table are based on our 75% interest in Turquoise Ridge until June 30, 2019. On July 1, 2019, Barrick’s
75% interest in Turquoise Ridge and Newmont’s 100% interest in Twin Creeks and 25% interest in Turquoise Ridge were contributed to Nevada Gold Mines.
Starting July 1, 2019, the results represent our 61.5% share of Turquoise Ridge and Twin Creeks, now collectively referred to as Turquoise Ridge.
b. 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 107 to 132 of this MD&A.
c. Represents EBITDA divided by revenue.
d. Presented on a cash basis as a result of adopting IFRS 16 Leases starting in the first quarter of 2019. Capital expenditures for 2018 and 2017 are presented
on an accrued basis. Please refer to page 48 of this MD&A for more details.
Barrick owned 75% of Turquoise Ridge through to the end of the
second quarter of 2019, with our joint venture partner, Newmont,
owning the remaining 25%. The figures presented in this table are
based on our 75% interest in Turquoise Ridge until June 30, 2019.
On July 1, 2019, Barrick’s 75% interest in Turquoise Ridge and
Newmont’s Twin Creeks and 25% interest in Turquoise Ridge were
contributed to Nevada Gold Mines. Starting July 1, 2019, our results
represent our 61.5% share of Turquoise Ridge and Twin Creeks,
now referred to as Turquoise Ridge.
As a result of this transaction, from July 1, 2019, Turquoise
Ridge includes the Twin Creeks open pit operations resulting in
considerably higher tonnes mined at a lower average grade of ore
processed. It also includes the Twin Creeks processing operations
and heap leach facility contributed by Newmont.
73
MANAGEMENT’S DISCUSSION AND ANALYSISFinancial Report 2019
Safety and Environment
There were two LTIs during the quarter, which resulted in an LTIFR
of 2.57 per million hours worked versus 1.41 the previous quarter.
Site leadership teams continue to focus their field engagements to
reinforce safe work requirements and reduce hand injury occurrences.
No Class 1 environmental incidents occurred during the quarter.
Financial Results
Q4 2019 compared to Q3 2019
Turquoise Ridge’s income for the fourth quarter of 2019 increased
by 47% mainly due to lower cost of sales per ounce5 in conjunction
with higher sales volumes reflecting higher production.
Gold production in the fourth quarter of 2019 was 35% higher
than the prior quarter, primarily due to increased autoclave
throughput in addition to the processing of higher grade ore. The
higher autoclave throughput is due to higher availability following a
planned shutdown in the prior quarter.
Cost of sales per ounce5 in the fourth quarter of 2019 was 10%
lower than the prior quarter. Inventory that was subject to a positive
remeasurement to fair value upon the formation of Nevada Gold
Mines on July 1, 2019 was largely sold and reflected in cost of sales
for the third quarter of 2019.
Total cash costs per ounce4 was in line with the prior quarter.
All-in sustaining costs per ounce4 decreased by 5% compared to the
prior quarter primarily reflecting lower minesite sustaining capital
expenditures on a per ounce sold basis.
Capital expenditures in the fourth quarter of 2019 decreased
by 7% compared to the prior quarter primarily due to lower project
spend on the Third Shaft project.
2019 compared to 2018
Turquoise Ridge’s income for 2019 reflects our 61.5% interest in
Nevada Gold Mines and is inclusive of income from Newmont’s
former Twin Creeks operations and the Turquoise Ridge operations
from July 1, 2019. Income for Turquoise Ridge for the first six months
of 2019 and the twelve months of 2018 represents Barrick’s 75%
interest in the Turquoise Ridge operations prior to the formation of
Nevada Gold Mines. Consequently, this was the primary driver of
the 59% increase in Turquoise Ridge’s income compared to 2018.
INCOME AND EBITDA4,a
1,257
1,268
1,393
293
201
Gold production for 2019 was 25% higher compared to the prior
year, primarily due to the inclusion of Newmont’s former Twin Creeks
operations from July 1, 2019. Production was also higher in the first
six months of 2019 relative to the first six months of 2018 due to
higher ore tonnes mined at better grades. This was partially offset by
the reduction in Barrick’s interest in the Turquoise Ridge operations
from 75% to 61.5% from July 1, 2019.
PRODUCTIONa
(000s ounces)
500
250
0
268
335
430
to
460
2018
2019
2020 (est)
a. The results represent Turquoise Ridge on a 75% basis from January 1,
2017 to June 30, 2019 and the combined results of Turquoise Ridge and
Twin Creeks on a 61.5% basis from July 1, 2019 onwards.
Cost of sales per ounce5 in 2019 was 8% per ounce higher than the
prior year mainly reflecting an increase in depreciation resulting from
the restatement of assets to fair value on the formation of Nevada
Gold Mines as explained above. Total cash costs per ounce4 was
14% lower than the prior year due to more high-grade underground
ore being processed and the elimination of the Toll Milling Agreement
as a result of the formation of Nevada Gold Mines. In 2019, all-in
sustaining costs per ounce4 decreased by 3% compared to the prior
year due to lower total cash costs per ounce4.
COST OF SALES5, TOTAL CASH COSTS4
AND AISC4 ($ per ounce)
600
783
756
678
846
732
585
900
to
950
690
to
740
540
to
590
546
400
200
0
-200
-400
147
119
154
126
546
2018
-600
Total Cash Costs
2019
2020 (est)
AISC
Cost of Sales
2017
2018
2019
Income ($ millions)
EBITDA ($ millions)
Market Price ($/oz)
a. The results represent Turquoise Ridge on a 75% basis from January 1,
2017 to June 30, 2019 and the combined results of Turquoise Ridge
and Twin Creeks on a 61.5% basis from July 1, 2019 onwards.
In 2019, capital expenditures increased by 37% compared to the
prior year. The increase was due to higher minesite sustaining
capital as a result of combining Turquoise Ridge with Twin Creeks,
offset by lower project capital spend for the Third Shaft project.
2019 compared to Outlook
Gold production in 2019 of 335 thousand ounces was within
the guidance range of 330 to 370 thousand ounces. Cost of sales
per ounce5 and total cash costs per ounce4 of $846 and $585,
respectively, were also within the guidance ranges of $800 to $850
per ounce and $550 to $600 per ounce, respectively. All-in sustaining
costs per ounce4 of $732 was slightly over the guidance range of
$680 to $730 per ounce.
74
5000
4000
3000
2000
1000
0
1500
750
0
MANAGEMENT’S DISCUSSION AND ANALYSISBarrick Gold Corporation Other Nevada Gold Mines
Summary of Operating and Financial Data
Gold Cost of
sales
($/oz)
produced
(000s oz)
12/31/19
All-in
Total
cash sustaining
costs
costs
($/oz)a
($/oz)a
For the three months ended
9/30/19
Capital
Expend-
ituresb
Gold
produced
(000s oz)
Cost of
sales
($/oz)
Total
cash
costs
($/oz)a
All-in
sustaining
costs
($/oz)a
Capital
Expend-
ituresb
Phoenix
(61.5%)c
Long Canyon
(61.5%)c
31
2,025
902
1,034
34
1,026
317
657
5
10
25
24
2,186
1,010
1,622
1,170
353
714
9
6
a. 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 107 to 132 of this MD&A.
b. Includes both minesite sustaining and project capital expenditures.
c. These sites were acquired as a result of the formation of Nevada Gold Mines on July 1, 2019.
Phoenix (61.5%)
Gold production in the fourth quarter of 2019 for Phoenix was
24% higher compared to the prior quarter, primarily due to a more
optimized ore blend leading to better mill recoveries. Cost of sales
per ounce5 in the fourth quarter of 2019 was 7% lower than the prior
quarter due to an improvement in production and sales. Third quarter
attributable sales were impacted by the timing of the first gold
concentrate sale following the formation of Nevada Gold Mines.
In the fourth quarter of 2019, all-in sustaining costs per ounce4
decreased by 36% compared to the prior quarter primarily due to the
increase in ounces sold and higher copper by-product credits offset
slightly by increased sustaining capital expenditures. Sustaining
capital expenditures decreased in the fourth quarter of 2019 due
to timing of the tailings damn construction.
Compared to our outlook, gold production of 56 thousand
ounces in 2019 was within the guidance range of 50 to 70 thousand
ounces. Cost of sales per ounce5 of $2,093 was better than the
guidance range of $2,250 to $2,300 per ounce. Total cash costs per
ounce4 of $947 was at the lower end of the guidance range of $940
to $990 per ounce, while all-in sustaining costs per ounce4 of $1,282
was above the guidance range of $1,120 to $1,150 per ounce.
Long Canyon (61.5%)
Gold production for Long Canyon in the fourth quarter of 2019 was
42% higher compared to the third quarter of 2019, primarily due to
additional cells placed under leach, leading to improved recoveries.
Cost of sales per ounce5 in the fourth quarter of 2019 was 12% lower
than the prior quarter, mainly due to higher ounces sold driven by
higher production. All-in sustaining costs per ounce4 decreased by
8% compared to the prior quarter, primarily due to higher production
and sales driving lower total cash costs per ounce4 offset slightly
by increased sustaining capital expenditures. Sustaining capital
expenditures increased in the fourth quarter due to an increase in
capitalized waste mined from Cut 7 of the open pit. Permitting for the
open pit and underground expansions at Long Canyon is underway,
though currently only the open pit is included in the life of mine plan.
Gold production in 2019 of 58 thousand ounces was above
the guidance range of 40 to 50 thousand ounces. Cost of sales per
ounce5 of $1,088 was better than the guidance range of $1,100 to
$1,150 per ounce. Total cash costs per ounce4 of $333 was within
the guidance range of $300 to $350 per ounce, while all-in sustaining
costs per ounce4 of $681 was significantly better than the guidance
range of $920 to $950 per ounce.
75
MANAGEMENT’S DISCUSSION AND ANALYSISFinancial Report 2019
Pueblo Viejo (60% basis)a , Dominican Republic
Summary of Operating and Financial Data
Open pit tonnes mined (000s)
Open pit ore
Open pit waste
Average grade (grams/tonne)
Open pit waste
Processed
Autoclave ore tonnes processed (000s)
Recovery Rate
Gold produced (000s oz)
Gold sold (000s oz)
Revenue ($ millions)
Cost of sales ($ millions)
Income ($ millions)
EBITDA ($ millions)b
EBITDA marginc
Capital expenditures ($ millions)d
Minesite sustainingd
Projectd
Cost of sales ($/oz)
Total cash costs ($/oz)b
All-in sustaining costs ($/oz)b
All-in costs ($/oz)b
For the three months ended
For the years ended
12/31/19
9/30/19 % Change
12/31/19
12/31/18 % Change 12/31/17
5,729
3,083
2,646
2.92
4.20
1,464
89%
179
174
240
114
125
159
66%
14
14
0
660
422
517
525
5,817
1,767
4,050
2.98
4.05
1,182
90%
139
136
213
109
104
133
62%
16
16
0
807
504
631
636
(2%)
74%
(35%)
(2%)
4%
24%
(1%)
29%
28%
13%
5%
20%
20%
6%
(13%)
(13%)
0%
(18%)
(16%)
(18%)
(17%)
24,732
8,085
16,647
2.76
3.91
5,164
89%
590
584
843
435
402
522
62%
64
64
0
747
471
592
600
24,063
9,418
14,645
2.78
4.04
5,008
89%
581
590
798
443
342
457
57%
87
87
0
750
465
623
623
3%
(14%)
14%
23,430
13,514
9,916
(1%)
(3%)
3%
0%
2%
(1%)
6%
(2%)
18%
14%
8%
(26%)
(26%)
0%
0%
1%
(5%)
(4%)
3.07
4.57
4,791
92%
650
637
850
445
395
538
63%
69
69
0
699
405
525
525
a. 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.
b. 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 107 to 132 of this MD&A.
c. Represents EBITDA divided by revenue.
d. Presented on a cash basis as a result of adopting IFRS 16 Leases starting in the first quarter of 2019. Capital expenditures for 2018 and 2017 are presented
on an accrued basis. Please refer to page 48 of this MD&A for more details.
Safety and Environment
There were no LTIs at Pueblo Viejo during the quarter which resulted
in an LTIFR of zero per million hours worked, consistent with the
previous quarter. No Class 1 environmental incidents were reported
during the quarter.
Financial Results
Q4 2019 compared to Q3 2019
Pueblo Viejo’s income for the fourth quarter of 2019 was 20% higher
than the third quarter of 2019 due to higher sales volume and lower
cost of sales per ounce5.
Gold production for the fourth quarter of 2019 was 29% higher
than the prior quarter mainly due to higher throughput following
optimization work resulting in record oxidized sulfur tonnes as well as
the completion of scheduled maintenance that occurred in the third
quarter of 2019.
Cost of sales per ounce5 and total cash costs per ounce4 for
the fourth quarter of 2019 were 18% and 16% lower, respectively,
than the prior quarter primarily reflecting the impact of higher sales
volume that was driven by the increase in grade and throughput.
For the fourth quarter of 2019, all-in sustaining costs per ounce4
decreased by 18% mainly reflecting lower total cash costs per
ounce4 and lower minesite sustaining capital expenditures.
Capital expenditures for the fourth quarter of 2019 decreased
by 13% compared to the prior quarter, primarily due to lower
expenditures at the Llagal Tailings Storage Facility and the completion
of the replacement of oxygen plant motors in the third quarter of 2019.
76
MANAGEMENT’S DISCUSSION AND ANALYSISBarrick Gold Corporation
2019 compared to 2018
Pueblo Viejo’s income for 2019 was 18% higher than the prior year
due to higher realized gold prices4, while sales volume and cost of
sales per ounce5 remained relatively consistent.
INCOME AND EBITDA4
Cost of sales per ounce5 and total cash costs per ounce4 for 2019
were in line and increased by 1%, respectively, compared to the prior
year primarily reflecting the impact of slightly lower sales volume.
For 2019, all-in sustaining costs per ounce4 decreased by 5% mainly
reflecting lower minesite sustaining capital expenditures, partially
offset by slightly higher total cash costs per ounce4.
1,257
1,268
1,393
COST OF SALES5, TOTAL CASH COSTS4
AND AISC4 ($ per ounce)
538
395
522
402
457
342
546
750
747
623
465
592
471
840
to
890
720
to
770
520
to
570
2017
2018
2019
Income ($ millions)
EBITDA ($ millions)
Market Price ($/oz)
Gold production for 2019 was 2% higher than the prior year mainly
due to higher tonnes processed, partially offset by lower grade.
PRODUCTIONa
(000s ounces)
581
590
530
to
580
2018
2019
2020 (est)
600
300
0
5000
4000
3000
2000
600
1000
400
0
200
0
-200
-400
-600
2018
2019
2020 (est)
Total Cash Costs
AISC
Cost of Sales
Capital expenditures for 2019 decreased by 26% compared to the
prior year, primarily due to lower capitalized stripping from the Monte
Negro and Cumba pits compared to a higher proportion of tonnes
mined in the prior year from the Moore pit in accordance with the
mine plan. This was combined with a decrease in tailings storage
facility construction activities during the year.
2019 compared to Outlook
Gold production in 2019 of 590 thousand ounces was at the high
end of the guidance range of 550 to 600 thousand ounces. Cost of
sales per ounce5 of $747 was better than the guidance range of
$780 to $830 per ounce. Total cash costs per ounce4 of $471 was
at the low end of the guidance range of $465 to $510 per ounce.
All-in sustaining costs per ounce4 of $592 was better than the
guidance range of $610 to $650 per ounce.
5000
4000
3000
77
MANAGEMENT’S DISCUSSION AND ANALYSISFinancial Report 2019 Loulo-Gounkoto (80% basis)a , Mali
Summary of Operating and Financial Data
For the three months ended
For the years ended
12/31/19
9/30/19 % Change
12/31/19
12/31/18b % Change 12/31/17b
Total tonnes mined (000s)
Open pit ore
Open pit waste
Underground
Average grade (grams/tonne)
Open pit mined
Underground mined
Processed
Ore tonnes processed (000s)
Recovery rate
Gold produced (000s oz)
Gold sold (000s oz)
Revenue ($ millions)
Cost of sales ($ millions)
Income ($ millions)
EBITDA ($ millions)c
EBITDA margind
Capital expenditures ($ millions)
Minesite sustaining
Project
Cost of sales ($/oz)
Total cash costs ($/oz)c
All-in sustaining costs ($/oz)c
All-in costs ($/oz)c
30,926
3,484
25,278
2,164
3.10
5.10
4.31
4,123
92%
528
534
4%
(22%)
8%
5%
27,972
1,875
23,925
2,172
56%
(8%)
14%
(4%)
0%
8%
8%
4.10
6.20
4.98
3,934
93%
584
579
7,250
1,080
5,566
604
5.69
5.14
5.64
886
89%
144
144
214
149
65
123
58%
38
37
1
1,037
631
917
922
8,115
286
7,244
585
4.06
5.09
5.14
1,013
92%
153
155
230
159
64
125
54%
49
49
0
1,018
630
966
971
(11%)
278%
(23%)
3%
40%
1%
10%
(13%)
(3%)
(6%)
(7%)
(7%)
(7%)
1%
(1%)
6%
(22%)
(24%)
100%
2%
0%
(5%)
(5%)
32,192
2,726
27,183
2,283
4.83
4.67
4.90
3,945
92%
572
575
806
601
190
426
53%
136
133
3
1,044
634
886
891
a. Barrick owns 80% of Société des Mines de Loulo SA and Société des Mines de Gounkoto with the Republic of Mali owning 20%. Loulo-Gounkoto is accounted
for as a subsidiary with a 20% non-controlling interest on the basis that Barrick controls the asset. The results in the table and the discussion that follows are
based on our 80% share inclusive of the impact of the purchase price allocation resulting from the Merger.
b. These results did not form a part of the Barrick consolidated results as this site was acquired as a result of the Merger. As a result, operational statistics are
presented for reference purposes only.
c. 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 107 to 132 of this MD&A.
d. Represents EBITDA divided by revenue.
Safety and Environment
There were no LTIs during the fourth quarter at Loulo-Gounkoto,
which was in line with the previous quarter. No Class 1 environmental
incidents were recorded.
Financial Results
Q4 2019 compared to Q3 2019
Loulo-Gounkoto’s income for the fourth quarter of 2019 was in line
with the prior quarter.
Gold production for the fourth quarter of 2019 was 6% lower
than the prior quarter mainly due to lower plant throughput due
to a girth gear failure, partially offset by higher feed grade from
both Yalea and the Gounkoto South Pit. The girth gear was repaired
in December 2019.
Cost of sales per ounce5 for the fourth quarter of 2019 was
2% higher than the prior quarter primarily due to higher depreciation
per ounce. Total cash costs per ounce4 was in line with the prior
quarter as the impact of lower throughput was largely offset by the
impact of the higher grade processed. For the fourth quarter of 2019,
all-in sustaining costs per ounce4 decreased by 5% compared to
the prior quarter reflecting lower sustaining capital expenditures from
reduced capitalized stripping.
Capital expenditures for the fourth quarter of 2019 decreased
by 22% compared to the prior quarter, primarily due to lower
capitalized stripping costs.
78
MANAGEMENT’S DISCUSSION AND ANALYSISBarrick Gold Corporation
2019
Loulo-Gounkoto’s income for 2019 was $190 million.
Gold production in 2019 was 8% higher compared to the same
prior year period, primarily due to higher feed grade from Yalea and
the Gounkoto South Pit.
PRODUCTIONa
(000s ounces)
600
300
0
572
590
500
to
540
2019
2020 (est)
Cost of sales per ounce5 and total cash costs per ounce4 in 2019
were $1,044 and $634, respectively. Cost of sales per ounce5 and
total cash costs per ounce4 were positively impacted primarily by
the higher feed grade to the mill. For 2019, all-in sustaining costs4
were $886 per ounce.
COST OF SALES5, TOTAL CASH COSTS4
AND AISC4 ($ per ounce)
1,044
886
634
1,050
to
1,100
970
to
1,020
620
to
670
2019
2020 (est)
Total Cash Costs
AISC
Cost of Sales
Capital expenditures in 2019 were $136 million, consisting of
underground development and drilling in Gara and Yalea, as well
as sustaining capital related to our solar power project at Loulo,
capitalized drilling and expansion of the TSF.
2019 compared to Outlook
Gold production in 2019 of 572 thousand ounces was marginally
above the guidance range of 520 to 570 thousand ounces. Cost of
sales per ounce5 of $1,044 was higher than the guidance range
of $880 to $930 per ounce. Total cash costs per ounce4 and all-in
sustaining costs per ounce4 of $634 and $886, respectively, were
also marginally above the guidance ranges of $575 to $625 per
ounce and $810 to $850 per ounce, respectively.
600
400
200
0
-200
-400
-600
1500
750
0
79
MANAGEMENT’S DISCUSSION AND ANALYSISFinancial Report 2019 Kibali (45% basis)a, Democratic Republic of Congo
Summary of Operating and Financial Data
For the three months ended
For the years ended
12/31/19
9/30/19 % Change
12/31/19
12/31/18b % Change 12/31/17b
Total tonnes mined (000s)
Open pit ore
Open pit waste
Underground
Average grade (grams/tonne)
Open pit mined
Underground mined
Processed
Ore tonnes processed (000s)
Recovery rate
Gold produced (000s oz)
Gold sold (000s oz)
Revenue ($ millions)
Cost of sales ($ millions)
Income ($ millions)
EBITDA ($ millions)c
EBITDA margind
Capital expenditures ($ millions)
Minesite sustaining
Project
Cost of sales ($/oz)
Total cash costs ($/oz)c
All-in sustaining costs ($/oz)c
All-in costs ($/oz)c
14,790
2,455
10,709
1,626
2.43
5.06
3.45
3,698
89%
363
370
(17%)
(31%)
(18%)
8%
16,435
2,239
13,275
921
(4%)
1%
10%
(9%)
0%
1%
(2%)
2.39
5.51
2.92
3,429
83%
268
272
3,096
346
2,290
460
2.21
4.68
3.67
839
88%
87
89
130
106
30
82
63%
9
9
0
1,205
608
740
746
3,077
269
2,330
478
2.26
5.17
3.74
852
88%
91
89
133
107
25
82
62%
14
13
1
1,187
554
703
717
1%
29%
(2%)
(4%)
(2%)
(9%)
(2%)
(2%)
0%
(4%)
0%
(2%)
(1%)
20%
0%
2%
(36%)
(31%)
(100%)
2%
10%
5%
4%
12,273
1,693
8,824
1,756
2.32
5.12
3.80
3,381
89%
366
363
505
403
108
304
60%
43
41
2
1,111
568
693
701
a. Barrick owns 45% of Kibali Goldmines SA (Kibali) with the Democratic Republic of Congo (“DRC”) and our joint venture partner, AngloGold Ashanti, owning
10% and 45%, respectively. Kibali is accounted for as an equity method investment on the basis that the joint venture partners that have joint control have
rights to the net assets of the joint venture. The figures presented in this table and the discussion that follows are based on our 45% effective interest in Kibali
inclusive of the impact of the purchase price allocation resulting from the Merger.
b. These results did not form a part of the Barrick consolidated results as this site was acquired as a result of the Merger. As a result, operational statistics are
presented for reference purposes only.
c. 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 107 to 132 of this MD&A.
d. Represents EBITDA divided by revenue.
Safety and Environment
Kibali did not sustain any LTIs during the fourth quarter, in line
with the safety performance of the previous quarter. No Class 1
environmental incidents were recorded.
Financial Results
Q4 2019 compared to Q3 2019
Kibali’s income for the fourth quarter of 2019 was 20% higher than
the third quarter of 2019.
Gold production for the fourth quarter of 2019 was 4% lower
than the prior quarter as grade fed to the plant decreased in
comparison with the prior period, in line with plan, as the restoration
of stockpiles following the second quarter winder failure continued.
Additionally, plant throughput decreased marginally, in line with plan.
Cost of sales per ounce5 and total cash costs per ounce4 for
the fourth quarter of 2019 were 2% and 10% higher, respectively,
than the prior quarter primarily due to the decrease in grade fed
to the plant, increased grade control drilling costs and an increase
in stripping costs that were expensed. This was offset by lower
quarter-on-quarter general and administrative expenditure.
For the fourth quarter of 2019, all-in sustaining costs per ounce4
increased by 5% compared to the prior quarter, reflecting higher
total cash costs per ounce4 offset by lower minesite sustaining
capital expenditures as detailed below, when compared with the
previous period.
Capital expenditures for the fourth quarter of 2019 decreased
by 36% due to lower capitalized stripping and underground
development, although these were in line with plan.
80
MANAGEMENT’S DISCUSSION AND ANALYSISBarrick Gold Corporation
2019
Kibali’s income for 2019 was $108 million.
Gold production in 2019 was 1% higher compared to the same
prior year period, primarily due to increased feed grade in the current
period as a result of blending more higher grade underground
material in line with the mine plan, partially offset by decreased
throughput.
PRODUCTIONa
(000s ounces)
400
200
0
366
590
340
to
370
2019
2020 (est)
Cost of sales per ounce5 and total cash costs per ounce4 in 2019
were $1,111 and $568 per ounce, respectively. Cost of sales includes
the depreciation charge relating to the purchase price allocation fair
value increment. Although total cash costs per ounce4 were impacted
by higher operating expenditures in the first quarter of the year, cost
performance has improved over the remainder of the year. For 2019,
all-in sustaining costs per ounce4 were $693 per ounce.
COST OF SALES5, TOTAL CASH COSTS4
AND AISC4 ($ per ounce)
1,111
693
568
1,030
to
1,080
790
to
840
600
to
650
2019
2020 (est)
Total Cash Costs
AISC
Cost of Sales
Capital expenditures in 2019 were $43 million, consisting
of underground mining development, underground hauling
equipment, capitalized stripping, capitalized drilling and rebuilds
of mobile equipment.
2019 compared to Outlook
Gold production in 2019 of 366 thousand ounces was higher than
the guidance range of 330 to 350 thousand ounces. Cost of sales
per ounce5 of $1,111 was also better than the guidance range of
$1,150 to $1,200 per ounce. Total cash costs per ounce4 and all-in
sustaining costs per ounce4 of $568 and $693, respectively, were
in the lower half of the guidance ranges of $555 to $605 per ounce
and $670 to $730 per ounce, respectively.
600
400
200
0
-200
-400
-600
1500
750
0
81
MANAGEMENT’S DISCUSSION AND ANALYSISFinancial Report 2019 Veladero (50% basis)a,b, Argentina
Summary of Operating and Financial Data
Open pit tonnes mined (000s)
Open pit ore
Open pit waste
Average grade (grams/tonne)
Open pit mined
Processed
Heap leach ore tonnes processed (000s)
Gold produced (000s oz)
Gold sold (000s oz)
Revenue ($ millions)
Cost of sales ($ millions)
Income ($ millions)
EBITDA ($ millions)c
EBITDA margind
Capital expenditures ($ millions)e
Minesite sustaininge
Projecte
Cost of sales ($/oz)
Total cash costs ($/oz)c
All-in sustaining costs ($/oz)c
All-in costs ($/oz)c
For the three months ended
For the years ended
12/31/19
9/30/19 % Change
12/31/19
12/31/18 % Change 12/31/17
10,277
4,828
5,449
0.80
0.88
3,880
71
70
106
82
21
50
47%
28
28
0
1,138
710
1,142
1,142
9,449
3,909
5,540
0.68
0.74
3,463
58
59
89
72
14
39
44%
19
19
0
1,243
773
1,142
1,142
9%
24%
(2%)
18%
19%
12%
22%
19%
19%
14%
50%
28%
8%
47%
47%
0%
(8%)
(8%)
0%
0%
36,758
16,048
20,710
0.71
0.79
13,587
274
271
386
323
57
172
45%
106
91
15
1,188
734
1,105
1,162
35,646
15,718
19,928
0.78
0.85
13,547
278
280
366
310
53
174
48%
143
143
0
1,112
629
1,154
1,154
3%
2%
4%
48,376
21,558
26,818
(9%)
(8%)
0%
(1%)
(3%)
5%
4%
8%
(1%)
(6%)
(26%)
(37%)
0%
7%
17%
(4%)
1%
1.00
1.02
21,190
432
458
591
410
173
292
49%
173
173
0
897
598
987
987
a. Barrick owns 50% of Veladero with our joint venture partner, Shandong Gold, owning the remaining 50%. Veladero is proportionately consolidated on the
basis that the joint venture partners that have joint control have rights to the assets and obligations for the liabilities relating to the arrangement. The figures
presented in this table and the discussion that follows are based on our 50% interest in Veladero inclusive of the impact of remeasurement of our interest
in Veladero following the disposal of a 50% interest on June 30, 2017.
b. On June 30, 2017, we sold 50% of Veladero; 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.
c. 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 107 to 132 of this MD&A.
d. Represents EBITDA divided by revenue.
e. Presented on a cash basis as a result of adopting IFRS 16 Leases starting in the first quarter of 2019. Capital expenditures for 2018 and 2017 are presented
on an accrued basis. Please refer to page 48 of this MD&A for more details.
Safety and Environment
At Veladero, two LTIs were recorded during the quarter resulting
in a LTIFR of 1.24 per million hours worked versus 0.52 the previous
quarter. No Class 1 environmental incidents occurred during
the quarter.
Minera Andina del Sol SRL, the joint venture company
that operates the Veladero mine, is the subject of various regulatory
proceedings related to operational incidents occurring in March
2017, September 2016 and September 2015. Refer to note 36 to
the Financial Statements for more information regarding these and
related matters.
Financial Results
Q4 2019 compared to Q3 2019
Veladero’s income for the fourth quarter of 2019 was 50% higher
than the third quarter of 2019 primarily due to higher sales volume
and lower cost of sales per ounce5.
Gold production in the fourth quarter of 2019 was 22% higher
than the prior quarter, primarily due to higher ore grades and higher
tonnages processed, partially offset by lower leach pad recoveries.
Cost of sales per ounce5 and total cash costs per ounce4
in the fourth quarter of 2019 both decreased by 8%, mainly due to
the impact of higher sales volumes, partially offset by higher direct
mining costs, export duties and royalties from increased realized
gold prices. In the fourth quarter of 2019, all-in sustaining costs
per ounce4 remained in line with the prior quarter as lower total
cash costs per ounce4 were offset by higher minesite sustaining
capital expenditures.
Capital expenditures in the fourth quarter of 2019 increased
by 47% compared to the prior quarter mainly relating to construction
activities for leach pad expansion phases 4B, 5B and 6, combined
with higher capitalized stripping.
82
MANAGEMENT’S DISCUSSION AND ANALYSISBarrick Gold Corporation
2019 compared to 2018
Veladero’s income for 2019 was 8% higher than the prior year primarily
due to higher realized gold prices4, partially offset by lower sales
volumes and higher cost of sales per ounce5.
All-in sustaining costs per ounce4 in 2019 decreased by 4%
compared to the prior year primarily due to a decrease in minesite
sustaining capital expenditures on a per ounce basis, partially offset
by an increase in total cash costs per ounce4.
INCOME AND EBITDA4,a
1,257
292
1,268
1,393
COST OF SALES5, TOTAL CASH COSTS4
AND AISC4 ($ per ounce)
1,112 1,154
1,188
1,105
173
174
172
629
1,220
to
1,270
1,250
to
1,300
670
to
720
734
546
546
53
2018
57
2019
2017
Income ($ millions)
EBITDA ($ millions)
Market Price ($/oz)
a. The results are on a 100% basis from January 1, 2017 to June 30,
2017 and on a 50% basis from July 1, 2017 onwards.
In 2019, gold production exceeded guidance with better than
expected results from leach pad recovery initiatives and improved
solution management. As a result, gold production was relatively
consistent with the prior year as lower ore grades processed were
partially offset by higher leach pad recoveries.
PRODUCTIONa
(000s ounces)
278
274
240
to
270
300
150
0
2018
2019
2020 (est)
a. The results are on a 100% basis from January 1, 2017 to June 30,
2017 and on a 50% basis from July 1, 2017 onwards.
5000
In 2019, cost of sales per ounce5 and total cash costs per ounce4
increased by 7% and 17%, respectively, compared to the prior year
4000
mainly due to higher export duties and royalties resulting from
increased realized gold prices4 and the export tax announced in
3000
September 2018 by the Argentine government. This was partially
offset by the devaluation of the Argentine peso and business
improvement initiatives. Cost of sales per ounce5 was further
2000
impacted by lower depreciation expense.
1000
0
600
400
200
0
-200
-400
-600
2018
2019
2020 (est)
Total Cash Costs
AISC
Cost of Sales
In 2019, capital expenditures decreased by 26% compared to
the prior year mainly due to 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”) occurring in the prior
year, lower capitalized stripping and lower purchases of components
and mine equipment, partially offset by an increase in construction
activities for leach pad expansion phases 4B, 5B, and 6.
2019 compared to Outlook
Gold production in 2019 of 274 thousand ounces exceeded the
guidance range of 230 to 250 thousand ounces. All cost metrics
came in below guidance. Cost of sales per ounce5 was $1,188
compared to the guidance range of $1,250 to $1,350 per ounce.
Total cash costs per ounce4 was $734 compared to $770 to
$820 per ounce, and all-in sustaining costs per ounce4 was
$1,105, compared to $1,150 to $1,250 per ounce.
1500
Regulatory matters
On December 14, 2019, the President of Argentina abolished
the exchange rate limit applied to the calculation of export duties
(previously ARS 4 for each $1). On December 23, 2019, the
Argentine Congress further enacted an emergency law setting
a maximum rate for mining export duties at 8%; however, this
emergency law has not yet entered into force. Barrick is seeking
the immediate implementation of the reduced 8% cap for customs
purposes; however, a decision on this has not yet been made.
750
0
83
MANAGEMENT’S DISCUSSION AND ANALYSISFinancial Report 2019 Porgera (47.5% basis)a, Papua New Guinea
Summary of Operating and Financial Data
Total tonnes mined (000s)
Open pit ore
Open pit waste
Underground
Average grade (grams/tonne)
Open pit mined
Underground mined
Processed
Autoclave ore tonnes processed (000s)
Recovery Rate
Gold produced (000s oz)
Gold sold (000s oz)
Revenue ($ millions)
Cost of sales ($ millions)
Income ($ millions)
EBITDA ($ millions)b
EBITDA marginc
Capital expenditures ($ millions)d
Minesite sustainingd
Projectd
Cost of sales ($/oz)
Total cash costs ($/oz)b
All-in sustaining costs ($/oz)b
All-in costs ($/oz)b
For the three months ended
For the years ended
12/31/19
9/30/19 % Change
12/31/19
12/31/18 % Change 12/31/17
2,880
509
2,124
247
2.07
7.86
3.94
705
92%
82
82
123
75
44
56
46%
11
11
0
909
757
894
894
3,657
495
2,914
248
2.07
5.88
3.33
705
90%
75
75
111
76
35
46
44%
14
14
0
1,024
868
1,053
1,053
(21%)
3%
(27%)
0%
0%
34%
18%
0%
2%
9%
9%
11%
(1%)
26%
22%
4%
(21%)
(21%)
0%
(11%)
(13%)
(15%)
(15%)
13,156
1,825
10,406
925
1.92
6.67
3.44
2,640
91%
284
285
403
284
113
155
38%
45
45
0
994
838
1,003
1,003
9,862
568
8,529
765
2.06
6.93
3.46
2,138
86%
204
213
269
212
56
98
36%
62
62
0
996
796
1,083
1,083
33%
221%
22%
21%
(7%)
(4%)
(1%)
23%
5%
39%
34%
50%
34%
102%
58%
6%
(28%)
(28%)
0%
0%
5%
(7%)
(7%)
11,504
767
9,912
825
1.87
6.57
3.03
2,798
86%
235
253
322
238
83
121
38%
55
55
0
944
781
993
993
a. Barrick owns 47.5% of Porgera with our joint venture partners, Zijin Mining and Mineral Resources Enga, owning the remaining 47.5% and 5%, respectively.
Porgera is proportionately consolidated on the basis that the joint venture partners that have joint control have rights to the assets and obligations for the
liabilities relating to the arrangement. The figures presented in this table and the discussion that follows are based on our 47.5% interest in Porgera.
b. 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 107 to 132 of this MD&A.
c. Represents EBITDA divided by revenue.
d. Presented on a cash basis as a result of adopting IFRS 16 Leases starting in the first quarter of 2019. Capital expenditures for 2018 and 2017 are presented
on an accrued basis. Please refer to page 48 of this MD&A for more details.
Safety and Environment
There were 3 LTIs at Porgera during the quarter which resulted in
an LTIFR of 1.04 per million hours worked versus 1.05 the previous
quarter. No Class 1 environmental incidents were reported during
the quarter.
Financial Results
Q4 2019 compared to Q3 2019
Porgera’s income for the fourth quarter of 2019 was 26% higher
than the third quarter of 2019 primarily due to higher sales volume
reflecting higher gold production and a decrease in cost of sales
per ounce5.
Gold production in the fourth quarter of 2019 was 9% higher
than the prior quarter, primarily due to higher underground ore grade
mined and processed.
Cost of sales per ounce5 and total cash costs per ounce4 in
the fourth quarter of 2019 decreased by 11% and 13%, respectively.
This was mainly due to the higher underground grade processed
and the depletion of historic concentrate stockpiles in the previous
quarter that was included in inventory at higher unit costs.
In the fourth quarter of 2019, all-in sustaining costs per
ounce4 decreased by 15% compared to the prior quarter due to
the decrease in total cash costs per ounce4 and lower minesite
sustaining capital expenditures.
Capital expenditures in the fourth quarter of 2019 decreased by
21% compared to the prior quarter due to lower capitalized stripping
as the mining sequence changed from predominantly waste stripping
to ore production, in line with the mine plan for the quarter.
84
MANAGEMENT’S DISCUSSION AND ANALYSISBarrick Gold Corporation
2019 compared to 2018
Porgera’s income for 2019 was 102% higher than the prior year,
primarily due to an increase in sales volume and higher realized
gold prices4. In 2018, operations at Porgera were impacted by
an earthquake which disrupted power supply for an extended period.
This impacted all of the performance and cost metrics for 2018.
All-in sustaining costs4 in 2019 decreased by 7% compared to
the prior year due to lower minesite sustaining capital expenditures,
partially offset by increased total cash costs per ounce4.
COST OF SALES5, TOTAL CASH COSTS4
AND AISC4 ($ per ounce)
INCOME AND EBITDA4
1,257
1,268
121
83
98
546
56
1,393
155
113
2017
2018
2019
Income ($ millions)
EBITDA ($ millions)
Market Price ($/oz)
In 2019, gold production exceeded the top end of the guidance range
and was 39% higher compared to the prior year, reflecting a strong
finish to the year given better mill availability in the second half of
2019 as well as the impact to operations from the earthquake in the
prior year.
PRODUCTION
(000s ounces)
284
204
240
to
270
300
150
0
2018
2019
2020 (est)
In 2019, cost of sales per ounce5 remained consistent with the prior
year, while total cash costs per ounce4 increased by 5%. Higher total
5000
cash costs per ounce4 were due to increased energy costs related
to power line interruptions during the first half of 2019, higher freight
costs and increased maintenance activities following the deferral
4000
of this work in 2018 due to the earthquake. This was partially offset
by the impact of higher sales volume.
3000
996
1,083
796
994
1,003
838
960
to
1,010
770
to
820
890
to
940
546
2018
2019
2020 (est)
Total Cash Costs
AISC
Cost of Sales
In 2019, capital expenditures decreased by 28% compared to the
prior year primarily due to lower capitalized stripping as the mining
sequence changed from predominantly waste stripping to ore
production, in line with the mine plan.
2019 compared to Outlook
Gold production in 2019 of 284 thousand ounces exceeded the
guidance range of 240 to 260 thousand ounces. All cost metrics were
within guidance. Cost of sales per ounce5 of $994 was in the lower
end of the guidance range of $980 to $1,030 per ounce. Total cash
costs per ounce4 was $838 compared to $800 to $850 per ounce,
and all-in sustaining costs per ounce4 was $1,003, compared to
$985 to $1,025 per ounce.
Regulatory Matters
Porgera’s current Special Mining Lease terminated on August 16,
2019. The company has been working constructively with the
government of Papua New Guinea to negotiate a 20-year extension.
On August 2, 2019, the National Court of Papua New Guinea
ruled that the provisions of the country’s 1992 Mining Act applied
to the Porgera gold mine, thus allowing it to continue operating
while the application to extend its Special Mining Lease is being
considered. The Company expects to reach an agreement with
the government and does not expect interruptions to the operation
while these discussions are ongoing.
1500
750
0
2000
1000
600
0
400
200
0
-200
-400
-600
85
MANAGEMENT’S DISCUSSION AND ANALYSISFinancial Report 2019 North Maraa, Tanzania
Summary of Operating and Financial Data
Total tonnes mined (000s)
Open pit ore
Open pit waste
Underground
Average grade (grams/tonne)
Open pit mined
Underground mined
Processedb
Ore tonnes processed (000s)
Recovery rate
Mining
Gold produced (000s oz)
Gold sold (000s oz)
Revenue ($ millions)
Cost of sales ($ millions)
Income ($ millions)
EBITDA ($ millions)c
EBITDA margind
Capital expenditures ($ millions)e
Minesite sustaininge
Projecte
Cost of sales ($/oz)
Total cash costs ($/oz)c
All-in sustaining costs ($/oz)c
All-in costs ($/oz)c
For the three months ended
For the years ended
12/31/19
9/30/19 % Change
12/31/19
12/31/18 % Change 12/31/17
3,529
1,854
1,288
387
2.12
5.30
4.78
714
94%
94%
103
103
153
105
52
87
57%
16
15
1
1,021
675
830
840
1,780
667
970
143
1.89
6.87
5.58
172
94%
94%
29
36
55
33
20
31
56%
9
8
1
907
603
850
886
98%
178%
33%
170%
12%
(23%)
(14%)
316%
0%
0%
253%
186%
178%
216%
163%
184%
2%
73%
83%
0%
13%
12%
(2%)
(5%)
10,388
3,987
5,532
869
10,821
1,837
8,218
766
(4%)
117%
(33%)
13%
10,469
2,011
7,765
693
2.03
6.82
4.50
1,829
94%
94%
251
248
350
236
112
187
53%
42
36
6
953
646
802
824
2.00
7.79
3.96
1,819
93%
93%
215
212
270
169
94
134
49%
52
47
5
795
603
830
855
2%
(12%)
14%
1%
1%
1%
17%
17%
30%
40%
19%
40%
8%
(19%)
(23%)
20%
20%
7%
(3%)
(4%)
1.73
8.68
3.85
1,815
92%
92%
207
207
261
141
112
148
57%
59
52
7
683
509
773
804
a. Formerly part of Acacia Mining plc. On September 17, 2019, Barrick acquired all of the shares of Acacia it did not own. Refer to note 4 to the Financial
Statements for more information. The results are on a 63.9% basis until September 30, 2019 and on a 100% basis from October 1, 2019 onwards.
b. Includes tailings retreatment.
c. 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 107 to 132 of this MD&A.
d. Represents EBITDA divided by revenue.
e. Presented on a cash basis as a result of adopting IFRS 16 Leases starting in the first quarter of 2019. Capital expenditures for 2018 and 2017 are presented
on an accrued basis. Please refer to page 48 of this MD&A for more details.
Safety and Environment
On January 24, 2020, Barrick announced that the Company
had ratified the creation of Twiga at a signing ceremony with the
President of Tanzania, formalizing the establishment of a joint venture
between Barrick and the Government of Tanzania (“GoT”) and
resolution of all outstanding disputes between Barrick and the GoT.
The GoT will receive a free carried shareholding of 16% in each
of the former Acacia mines (Bulyanhulu, Buzwagi and North Mara),
and will receive its half of the economic benefits from taxes, royalties,
clearing fees and participation in all cash distributions made by
the mines and Twiga, after the recoupment of capital investments.
Twiga will provide management services to the mines. The GoT’s
free-carried interest is expected to be made effective as of
January 1, 2020.
Refer to note 36 to the Financial Statements for more
information regarding this matter.
Financial Results
Q4 2019 compared to Q3 2019
North Mara’s income for the fourth quarter of 2019 was 163%
higher than the third quarter of 2019, mainly due to the impact of
the acquisition of all of the shares that we did not own of Acacia
on September 17, 2019. This resulted in our attributable share of
income being reported at 100% compared to 63.9% in the prior
quarter. This was combined with higher sales volume as the prior
quarter was impacted by a prohibition notice issued by the Tanzanian
National Environment Management Council (“NEMC”) on July 16,
2019 (the “Prohibition Notice”) which resulted in the closure of the
tailings storage facility (“TSF”) and shutdown of the processing plant
for approximately two months. This was partially offset by higher
cost of sales in the fourth quarter of 2019.
In the fourth quarter of 2019, gold production was 253%
higher than the prior quarter, primarily due to the Prohibition Notice
that occurred in the prior quarter, as discussed above and further
below. This was further impacted by the acquisition of all of the
shares that we did not own of Acacia, which resulted in an increase
in our attributable production from 63.9% to 100%.
Cost of sales per ounce5 and total cash costs per ounce4 in
the fourth quarter of 2019 were 13% and 12% higher, respectively,
than the prior quarter primarily due to higher sales-related costs
driven by sales volumes and higher processing consumables
costs, partly offset by lower general and administrative costs as
the third quarter of 2019 included increased provisions for inventory
obsolescence. All-in sustaining costs per ounce4 in the fourth
86
MANAGEMENT’S DISCUSSION AND ANALYSISBarrick Gold Corporation
Cost of sales per ounce5 and total cash costs per ounce4 in 2019
were 20% and 7% higher, respectively, than the prior year mainly
due to higher stripping costs expensed in the current period and
an increase in provisions for supplies obsolescence, partly offset
by the build-up of ore inventory stockpiles. All-in sustaining costs
per ounce4 were 3% lower than the prior year due to a decrease in
minesite sustaining capital expenditures driven by lower capitalized
stripping costs on the back of lower strip ratios, partially offset by
higher total cash costs per ounce4.
COST OF SALES5, TOTAL CASH COSTS4
AND AISC4 ($ per ounce)
795
830
603
953
802
646
750
to
800
830
to
880
570
to
620
2018
2019
2020 (est)
Total Cash Costs
AISC
Cost of Sales
In 2019, capital expenditures decreased by 19% compared
to the prior year mainly due to lower minesite sustaining capital
expenditures. Lower minesite sustaining capital expenditures
were attributed to reduced capitalized stripping costs driven by
a lower strip ratio as mining entered the main ore zone of the
Nyabirama open pit.
2019 compared to Outlook
Overall guidance for 2019 was previously only provided in relation
to Acacia and not at the mine site level.
North Mara Environmental Issues
During 2019, the GoT issued two environmental protection orders
and directions to Acacia’s North Mara mine in relation to alleged
breaches of environmental regulations relating to seepage from and
the discharge of a hazardous substance from the North Mara TSF.
In March 2019, the GoT directed the North Mara mine to resolve
an incident that resulted in the spillage of water into the local
environment. On July 16, 2019, the NEMC issued the Prohibition
Notice to North Mara Gold Mine Limited (the Tanzanian operating
company of the North Mara mine), which ordered the North Mara
mine to suspend operations at its TSF on July 20, 2019. NEMC
cited the North Mara mine’s failure to contain and prevent seepage
from the TSF as grounds for its issuance of the Prohibition Notice.
On September 17, 2019, following the submission of a
detailed action plan to remediate issues related to the TSF and
the implementation of remedial measures to contain the seepage
from the TSF, the Prohibition Notice was lifted and North Mara
was permitted to resume operations at the TSF.
Refer to note 36 to the Financial Statements for more
information regarding this matter.
87
quarter of 2019 were 2% lower than the prior quarter as a result of
lower minesite sustaining capital expenditures on a per ounce sold
basis, partially offset by higher total cash costs per ounce4.
Capital expenditures in the fourth quarter of 2019 were 73%
higher than the third quarter of 2019, mainly due to the 36.1%
increase in our attributable share of capital expenditures combined
with higher minesite sustaining capital expenditures. Higher minesite
sustaining capital expenditures are attributed to the deferral of
capital projects due to the cash flow constraints experienced by
Acacia as a result of the Prohibition Notice in the third quarter and
the implementation of water management measures for the TSF.
2019 compared to 2018
North Mara’s income for 2019 was 19% higher than the prior year
primarily due to the impact of the acquisition of all of the shares that
we did not own of Acacia on September 17, 2019, as income was
included at 100% starting from October 1, 2019. This was combined
with higher realized gold prices4, partially offset by lower sales
volumes and higher cost of sales per ounce5.
INCOME AND EBITDA4,a
1,257
1,268
1,393
187
148
112
134
94
546
112
2017
2018
2019
Income ($ millions)
EBITDA ($ millions)
Market Price ($/oz)
a. The results are on a 63.9% basis from January 1, 2017 to September 30,
2019 and on a 100% basis from October 1, 2019 onwards.
In 2019, gold production was 17% higher than the prior year primarily
due to the 36.1% increase in our shareholding and attributable
production. This was partly offset by lower production due to the
Prohibition Notice which resulted in the closure of the North Mara
TSF and shutdown of the processing plant for most of the third
quarter of 2019.
PRODUCTIONa
(000s ounces)
300
150
0
215
251
240
to
270
2018
2019
2020 (est)
a. The results are on a 63.9% basis from January 1, 2018 to September 30,
2019 and on a 100% basis from October 1, 2019 onwards. As the GoT’s
16% free-carried interest is expected to be made effective as of January 1,
5000
2020, our 2020 outlook represents our 84% share.
4000
3000
2000
1000
0
600
400
200
0
-200
-400
-600
MANAGEMENT’S DISCUSSION AND ANALYSISFinancial Report 2019 Other Mines – Gold
Summary of Operating and Financial Data
Gold Cost of
sales
($/oz)
produced
(000s oz)
12/31/19
All-in
Total
cash sustaining
costs
costs
($/oz)a
($/oz)a
For the three months ended
9/30/19
Capital
Expend-
ituresb
Gold
produced
(000s oz)
Cost of
sales
($/oz)
Total
cash
costs
($/oz)a
All-in
sustaining
costs
($/oz)a
Capital
Expend-
ituresb
Kalgoorlie (50%)c
Tongon (89.7%)
Hemlo
Buzwagid
Bulyanhulud
Lagunas Nortee
36
61
54
28
9
1,127
1,476
1,632
1,235
1,293
940
803
1,091
1,144
752
1,172
867
1,380
1,169
909
6
3
15
0
1
58
62
49
18
6
33
1,037
1,396
1,083
1,292
1,288
1,661
856
793
953
1,202
729
1,327
1,170
869
1,280
1,220
769
1,422
15
4
15
0
1
0
a. 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 107 to 132 of this MD&A.
b. Includes both minesite sustaining and project capital expenditures.
c. On November 28, 2019, we completed the sale of our 50% interest in Kalgoorlie in Western Australia to Saracen Mineral Holdings Limited for total cash
consideration of $750 million. The transaction resulted in a gain of $408 million for the year ended December 31, 2019. The operating results reported for
Kalgoorlie reflect the Company’s attributable share of Kalgoorlie’s results until the date of disposal.
d. Formerly part of Acacia Mining plc. On September 17, 2019, Barrick acquired all of the shares of Acacia it did not own. Refer to note 4 to the Financial
Statements for more information.
e. As previously mentioned, as Lagunas Norte has transitioned to care and maintenance at the end of the third quarter of 2019, we have ceased to include the
immaterial residual ounces in our production or non-GAAP cost metrics for this operation.
Kalgoorlie (50% basis), Australia
Gold production in the fourth quarter of 2019 for Kalgoorlie was 38%
lower compared to the prior quarter, primarily due to the impact of
the sale of our 50% interest in the Kalgoorlie mine on November 28,
2019. This was partially offset by higher recovery and throughput.
Cost of sales per ounce5 in the fourth quarter of 2019 was 9% higher
than the prior quarter mainly due to the impact of lower sales volume.
In the fourth quarter of 2019, all-in sustaining costs per ounce4
was in line with the prior quarter as lower minesite sustaining capital
expenditures was offset by higher total cash costs per ounce4.
Compared to our outlook, gold production in 2019 of
206 thousand ounces was below the guidance range of 260 to
280 thousand ounces, mainly due to the sale of our 50% interest
in November 2019 and the exclusion zones put in place to safely
manage the east and west walls of the pit as advised by Newmont
(the operator during that time). Cost of sales per ounce5 of $1,062
was higher than the guidance range of $920 to $970 per ounce.
Total cash costs per ounce4 and all-in sustaining costs per ounce4
of $873 and $1,183, respectively, were above the guidance
ranges of $740 to $790 per ounce and $1,010 to $1,050 per
ounce, respectively.
Tongon (89.7% basis), Côte d’Ivoire
Gold production for Tongon in the fourth quarter of 2019 was 2%
lower than the prior quarter. Cost of sales per ounce5 in the fourth
quarter of 2019 was 6% higher than the prior quarter as a result of
higher depreciation expense, partially offset by lower direct mining
costs. All-in sustaining costs per ounce4 in the fourth quarter of 2019
was in line with the prior quarter as both minesite sustaining capital
expenditures on a per ounce basis and total cash costs per ounce4
were largely in line with the prior quarter.
Gold production in 2019 of 245 thousand ounces was
slightly below the guidance range of 250 to 270 thousand ounces.
Cost of sales per ounce5 of $1,469 was higher than the guidance
range of $1,300 to $1,350 per ounce. Total cash costs per
ounce4 and all-in sustaining costs per ounce4 of $787 and $844,
respectively, were both slightly above the guidance range of
$710 to $760 per ounce and $780 to $820 per ounce, respectively.
Hemlo, Ontario, Canada
Hemlo’s gold production in the fourth quarter of 2019 was 10%
higher than the prior quarter primarily due to higher mill throughput,
partially offset by lower grade. Cost of sales per ounce5 in the fourth
quarter of 2019 was 51% higher than the prior quarter primarily
due to higher direct mining costs and higher royalties driven by
an increase in realized gold prices4. In the fourth quarter of 2019,
all-in sustaining costs per ounce4 increased by 8% compared
to the prior quarter due to higher total cash costs4 with sustaining
capital expenditures in line with the prior quarter.
Gold production in 2019 of 213 thousand ounces was within the
guidance range of 200 to 220 thousand ounces. Cost of sales per
ounce5 of $1,137 and total cash costs per ounce4 of $904 were both
above the guidance range of $890 to $940 per ounce and $765 to
$815 per ounce, respectively. All-in sustaining costs per ounce4 of
$1,140 was within the guidance range of $1,100 to $1,200 per ounce.
88
MANAGEMENT’S DISCUSSION AND ANALYSISBarrick Gold Corporation
Buzwagi, Tanzania
Gold production for Buzwagi in the fourth quarter of 2019 was 56%
higher compared to the third quarter of 2019, primarily due to the
acquisition of all of the shares that we did not own in Acacia on
September 17, 2019, which resulted in an increase in our attributable
production to 100% (previously 63.9%). Cost of sales per ounce5
in the fourth quarter of 2019 was 4% lower than the prior quarter,
mainly due to lower maintenance and contractor services costs
driven by the timing of process plant maintenance. All-in sustaining
costs per ounce4 decreased by 4% compared to the prior quarter,
primarily due to lower total cash costs per ounce4.
Overall guidance for 2019 was previously only provided in
relation to Acacia and not at the minesite level.
Bulyanhulu, Tanzania
Gold production for Bulyanhulu in the fourth quarter of 2019 was
50% higher compared to the third quarter of 2019, primarily due to
the acquisition of all of the shares that we did not own in Acacia on
September 17, 2019, which resulted in an increase in our attributable
production to 100% (previously 63.9%). Cost of sales per ounce5
in the fourth quarter of 2019 was largely in line with the prior quarter.
All-in sustaining costs per ounce4 increased by 18% compared to
the prior quarter, primarily due to the deferral of minesite sustaining
capital expenditures to the fourth quarter following cash flow
constraints experienced by Acacia in the prior quarter as a result of
the Prohibition Notice at North Mara.
Overall guidance for 2019 was previously only provided in
relation to Acacia and not at the minesite level.
Other Mines – Copper
Summary of Operating and Financial Data
For the three months ended
12/31/19
9/30/19
Copper
production Cost of
sales
(millions of
($/lb)
pounds)
C1
All-in
cash sustaining
costs
costs
($/lb)a
($/lb)a
Capital
Expend-
ituresb
Copper
production
(millions of
pounds)
Cost of
sales
($/lb)
C1
cash
costs
($/lb)a
All-in
sustaining
costs
($/lb)a
Capital
Expend-
ituresb
Lumwana
Zaldívar (50%)
Jabal Sayid (50%)
63
36
18
2.22
2.59
1.47
2.10
1.95
1.29
3.41
2.56
1.78
37
21
7
65
32
15
2.04
2.18
1.63
1.83
1.55
1.42
3.66
1.91
1.65
37
11
4
a. 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 107 to 132 of this MD&A.
b. Includes both minesite sustaining and project capital expenditures.
Lumwana, Zambia
Copper production for Lumwana in the fourth quarter of 2019
was 3% lower than the prior quarter due to a slight decrease in
throughput and grade, in line with plan. As previously announced,
sales continued to be affected by a major refurbishment at one
of the third-party smelters that processes a portion of the mine’s
concentrate. The refurbishment was completed in January 2020.
We are evaluating our opportunities with this third-party smelter
to steadily sell the concentrate stockpiled during the refurbishment
period through the course of the year. Cost of sales per pound5
in the fourth quarter of 2019 was 9% higher than the prior quarter
primarily due to lower capitalized stripping. In the fourth quarter
of 2019, all-in sustaining costs per pound4 decreased by 7%
compared to the prior quarter, primarily due to lower minesite
sustaining capital expenditures on a per ounce basis, partially offset
by higher C1 cash costs per pound4.
Compared to our outlook, copper production in 2019 of
238 million pounds was near the high end of the guidance range of
210 to 240 million pounds. Cost of sales per pound5 and C1 cash
costs per pound4 of $2.13 and $1.79, respectively, were both below
the guidance range of $2.25 to $2.50 per pound and $1.80 to $2.10
per pound, respectively. All-in sustaining costs4 of $3.04 per pound
was within the guidance range of $2.75 to $3.15 per pound.
Zaldívar (50% basis), Chile
Copper production for Zaldívar in the fourth quarter of 2019 was
13% higher than the prior quarter mainly due to higher throughput
and grades as well as operational initiatives implemented to
reduce leach pad lift heights and resting times between irrigation
cycles to accelerate recoveries. Cost of sales per pound5 in
the fourth quarter of 2019 was 19% higher than the prior quarter
primarily due to costs associated with the settlement of labor
contract negotiations and the social unrest offset partially by a
weaker local currency. All-in sustaining costs per pound4 increased
by 34% compared to the prior quarter primarily due to the impact
of higher capitalized stripping and sustaining capital expenditures
corresponding to budgeted purchases of spare parts for mine
equipment and plant components.
Copper production in 2019 of 128 million pounds was close
to the high end of the guidance range of 120 to 130 million pounds.
All cost metrics were within the guidance ranges. Cost of sales
per pound5 was $2.46 compared to $2.40 to $2.70 per pound.
C1 cash costs per pound4 was $1.77, compared to $1.65 to $1.85
per pound, and all-in sustaining costs4 was $2.15, compared to
$2.00 to $2.20 per pound.
89
MANAGEMENT’S DISCUSSION AND ANALYSISFinancial Report 2019
Jabal Sayid (50% basis), Saudi Arabia
Jabal Sayid’s copper production in the fourth quarter of 2019
was 20% higher compared to the prior quarter, primarily due to
an increase in underground mined tonnes after an improvement
in availability from new equipment as well as better grades. Cost
of sales per pound5 in the fourth quarter of 2019 was 10% lower
than the prior quarter as a result of processing material with improved
grade, combined with lower processing as well as general and
administrative expenses. All-in sustaining costs per pound4 in the
fourth quarter of 2019 increased by 8% when compared to the prior
quarter, as lower total cash costs4 was outweighed by increased
minesite sustaining capital expenditures primarily relating to the
concentrate filter expansion project.
Copper production in 2019 of 66 million pounds exceeded
the guidance range of 45 to 60 million pounds. All cost metrics
were below the guidance range. Cost of sales per pound5 was $1.53
compared to $2.00 to $2.30 per pound. C1 cash costs per pound4
was $1.26, compared to $1.60 to $1.90 per pound, and all-in
sustaining costs4 was $1.51, compared to $1.60 to $1.90 per pound.
Growth Project Updates
Goldrush Complex, Nevada, USA
At the Goldrush Complex, updated resource models were completed
for Goldrush and Fourmile and will be used as the basis of the
final feasibility study. No changes to Goldrush mineral reserves
have been declared in 2019; these will be updated in 2020 upon
completion of mine design changes within the feasibility study.
The mineral resources have been updated based on the new models
with Goldrush now reported as part of Cortez underground resources
as it is our intention for the Goldrush mine to be run under Cortez
management once in production. We have standardized our mineral
resource reporting to be inclusive of mineral reserves and all
underground mineral resources are now reported within $1,500
per ounce stope optimized shells. We believe this better reflects
the global underground potential of the deposits at the prescribed
resource gold price and includes internal dilution within these
stope shapes and, as such, there are higher tonnes at lower grade
within the resource declarations. Attributable underground mineral
resources at Goldrush (61.5%) now stands at 26.3 million tonnes
at 7.8 g/t for 6.6 million ounces in the indicated category and
4.8 million tonnes at 7.60 g/t for 1.2 million ounces in the inferred
category. Fourmile (100%) inferred underground mineral resources
increased to 5.4 million tonnes at 10.9 g/t for 1.9 million ounces.
Fourmile resources continue to be reported separately as it has
not yet been contributed to Nevada Gold Mines.
A geotechnical mining rock mass model was also completed
in the fourth quarter of 2019 and this will be used together with
the updated geological and resource models to update stope and
development designs for the feasibility study. Work on a localized
dewatering model commenced in November 2019 and is progressing
well with recommendations expected in the first quarter of 2020.
Construction of the twin exploration declines at Goldrush
continues to progress ahead of schedule and achieved 1,296 meters
of total development, an improvement of 328 meters compared
to the 986 meters that was budgeted for the fourth quarter of 2019.
Overall progress status stands at 61% (from 46% as at the end of
the third quarter of 2019) and the forecast decline completion date is
now November 2020 (previously March 2021). As at December 31,
2019, we have spent $128 million (including $19 million in the fourth
quarter of 2019) on the Goldrush project inclusive of the exploration
declines (100% basis). The current capital estimate for the Goldrush
project is approximately $1.0 billion (100% basis), subject to the
completion of the updated Goldrush feasibility study.
Permitting activities are advancing on-track following
our submission of a Plan of Operations to the Bureau of Land
Management in September 2019. We continue to expect updated
mine and feed schedules by the third quarter of 2020 and the final
Goldrush feasibility study to be completed in the first quarter of 2021.
Turquoise Ridge Third Shaft, Nevada, USA12
Construction of the third shaft at Turquoise Ridge, which has a
hoisting capacity of 5,500 tonnes per day, continues to advance
according to schedule and within budget, with efforts in 2019 focused
on surface civil works and shaft sinking. Major progress in the fourth
quarter of 2019 focused around sinking-plant commissioning and
the commencement of sinking activities. Shaft sinking commenced
in early November and the shaft liner has advanced to a depth
of 149 meters below collar. To date, we have spent $119 million
(including $9 million in the fourth quarter of 2019) out of an estimated
capital cost of approximately $300–$330 million (100% basis).
Pueblo Viejo Plant Expansion Study, Dominican Republic13
Studies remain supportive of a plant expansion at the Pueblo Viejo
mine that could significantly increase throughput, allowing the mine
to maintain average annual gold production of approximately
800,000 ounces after 2022 (100% basis).
Study work completed during the quarter resulted in a flowsheet
adopting the upgrade of the existing autoclaves to “flash” (vaporize)
additional water as the means of dissipating the extra heat from
the higher sulfide feed to the pressure oxidation (POX) circuit.
This involves additional high-pressure slurry pumps and recycle
flash capability with thickening provided through an upgrade
of existing facilities.
This oxidation solution provides for lower capital and operating
costs compared to previously studied options. A new flotation
circuit to enable higher sulfide feed for the oxidation circuit remains
as previously proposed. Additional neutralization, flotation leach,
limestone grinding and water treatment are also included in the
new flowsheet. Fourth quarter debottlenecking studies identified
a requirement for increased oxygen resulting in a revision of
the oxygen plant design to 3,000 tonnes per day.
Block flow diagrams, process design criteria, process
descriptions, process flow diagrams, and process and instrumentation
drawings have been completed as have quantitative risk
assessments during the fourth quarter of 2019. A preliminary
operating and capital expenditure estimate, execution plan and
schedule have been developed.
Work is also well advanced on the concept study for the
management of additional tailings capacity to support the expansion
of the process plant. In line with Pueblo Viejo’s environmental
responsibility, baseline studies continue for the Environmental
Impact Study for the process plant expansion.
Environmental Impact Studies are ongoing for additional
tailings and waste rock management. Based on the advanced
studies completed to date, we continue to progress our engineering
and evaluation work towards a feasibility study for the process
plant expansion and the proposed tailings storage facility.
Zaldívar Chloride Leach Project, Chile
Zaldívar is jointly owned by Antofagasta and Barrick and is operated
by Antofagasta.
In December 2019, the Board of Compañía Minera Zaldívar
approved the Chloride Leach Project. The capital cost of the
project of $189 million (100% basis) consists of the cost of execution
and commissioning as well as a joint venture board-controlled
contingency provision. The project contemplates the construction
of a chloride dosing system, an upgrade of the solvent extraction
plant and the construction of additional washing ponds.
90
MANAGEMENT’S DISCUSSION AND ANALYSISBarrick Gold Corporation Work will begin early in 2020, with 2022 expected to be the
At Turquoise Ridge, work towards unifying the geology model
across this newly consolidated district is in progress. Merging of
all available data is well advanced. Definition of the stratigraphic
framework has prioritized marker unit identification with some
success. A major relogging program will be advanced during the first
quarter of 2020. The work will establish a more robust stratigraphic
framework ahead of shifting focus to interpreting the structural
framework necessary to delineating targets. Several target concepts
have already emerged. These include an area of sparsely drilled
favorable limestone host rock at the crest of a district-scale
antiform cutting across the north end of the Twin Creeks Complex.
The concept is supported by modeled geology and downhole
geochemistry showing a vertically extensive auriferous and
metal-rich plume. There are also several untested intersections
of ore-controlling faults. These emerging targets will be prioritized
together with additional concepts anticipated as the modeling
and exploration effort matures.
Generative activities in Nevada have been reinvigorated with
the consolidation of extensive data covering the Nevada Gold Mines
area of interest. Regional scale modeling to link the major gold
trends will begin early 2020. The effort will focus on delineating the
Roberts Mountains thrust and underlying favorable carbonate rocks
where cover conceals this priority targeting criteria across a vast
area of interest.
Fourmile, Nevada, USA15
The discovery announced in the third quarter of 2019 was
successfully followed up with a hole (FM19-14D) intersecting multiple
discontinuous zones of high-grade mineralization over a vertical
extent of 250 meters including 3.1 meters at 6.24 g/t, 7.5 meters at
9.22 g/t, 3.1 meters at 47.85 g/t, 3.7 meters at 86.19 g/t, 4.8 meters
at 42.48 g/t, and 2.7 meters at 180.36 g/t. The discovery is located
about a kilometer north of Fourmile in an area of sparse, 200 to
400 meter spaced, framework drill holes. Follow-up drilling will
resume in the second quarter of 2020 following the winter break.
Surface mapping and sampling were ongoing during the fourth
quarter of 2019. Fieldwork continues to add value, even with target
depths often exceeding a kilometer, by highlighting structural controls
and geochemical leakage through barren bedrock cover as well
as areas requiring framework drilling. Three widely spaced diamond
drill holes totaling 4,292 meters were completed during the fourth
quarter of 2019.
The focus in 2019 on aggressive advanced target testing
resulted in more than doubling the inferred resource at Fourmile.
To achieve this growth, a total of 43 new diamond drill holes totaling
40,712 meters were incorporated into geologic and resource
models. The most significant addition was found at the intersection
of the steeply west-dipping Anna fault identified from this season’s
advanced targeting from the moderately west-dipping Sadler reverse
fault and associated fold that has been a key targeting criterion
for several seasons. Near this structural intersection, brecciated,
metasomatized carbonate rock hosts high-grade mineralization.
The zone remains open down-dip to the west as well as along
strike. Follow-up drilling will resume in the first quarter of 2020.
These new holes will also provide excellent platforms to continue
building confidence in the resource by directionally drilling
across west-dipping mineralization at a favorable orientation.
first full year of operation. Upon completion, the project is expected
to increase copper recoveries by more than 10 percentage points
through the addition of chlorides to the leach solution and with further
potential upside in recoveries possible depending on the type of ore
being processed. This process is based on a proprietary technology
called CuproChlor ® that was developed by Antofagasta at its
Michilla operation, which had similar ore types to those that are
processed at Zaldívar. Once completed and in full operation,
the project is expected to increase production at Zaldívar by
approximately 10–15 kilotonnes per annum of copper at lower
operating costs over the remaining life of the mine.
Veladero Power Transmission Project, Chile-Argentina
In 2019, we commenced construction of an extension to the existing
Pascua-Lama power transmission line to connect to the Veladero
mine. When completed in the second half of 2020, the power
transmission line will allow Veladero to convert to grid power
exported from Chile and cease operating the current high-cost
diesel generation power plant located at site. A power purchase price
agreement was also executed during the fourth quarter of 2019 to
supply power from renewable energy that will significantly reduce
Veladero’s carbon footprint.
Exploration
Nevada Gold Mines, Nevada, USA14
Nevada Gold Mines land holdings encompass more than two million
acres across some of the best endowed gold trends in North
America. Consolidation of these lands and associated data is being
leveraged to build camp-scale, unified geologic models. In 2019,
significant modeling advances were made with camp-scale models
created for the northern part of the Carlin Trend and Gold Quarry
area. A preliminary geologic model of the consolidated Turquoise
Ridge district was also completed in the fourth quarter of 2019.
During the fourth quarter of 2019, three diamond drill holes
totaling 3,061 meters were completed across the Carlin Trend.
A hole was completed within Little Boulder Basin at the end of the
quarter. The hole intersected significant alteration and is the first
of a series of framework holes to support target delineation in this
area of extensive disturbance and post-mineral cover between
Goldstrike and Leeville. One additional concept was tested to the
south at Richmond Mountain during the quarter. The hole confirmed
the geological interpretation. However, the alteration encountered
was not encouraging.
At the Rain sub-district, noteworthy results from drilling
completed in the second half of the year include two significant
intercepts highlighting open-ended mineralization at two separate
areas on this relatively underexplored portion of the southern Carlin
Trend. The first hole (RAN-2355) intersected 6.1 meters at 8.52 g/t
hosted in 130 meters of thick breccia overprinted by silicification
and sulfidation altering a carbonate rock not traditionally considered
a favorable host. The result validates potential for structurally
controlled high-grade mineralization below the stratigraphic level of
past exploration and production focus. The second hole evaluated
potential along the northwest extension of the Rain fault corridor.
The hole (RAN-2349) intersected 3.5 meters at 7.50 g/t about
600 meters south of the Rain fault and is open to the south and west.
The potential of the Rain sub-district highlighted by these holes is
a promising start to reinvigorating exploration in this target-rich area.
Heading into 2020, the Carlin Trend will become the most
active exploration area in Barrick’s portfolio. Leveraging skills and
knowledge from the recent success at Fourmile to make high-impact
discoveries is the priority. To ensure effective target selection and
testing, the program will continue to focus on building robust geologic
understanding by relogging, mapping, sampling and drilling with
data integrated into scale appropriate models.
91
MANAGEMENT’S DISCUSSION AND ANALYSISFinancial Report 2019 Lagunas Norte, Peru
At Lagunas Norte, we completed structural mapping and deep
penetrating geophysics which is delineating both oxide and sulfide
targets. Encouragingly, the southern extension of the Lagunas
Norte Fault has been redefined and opens up potential for further
mineralization to the south of the deposit. A drill program has
commenced in January 2020 to test this zone.
Drilling was also initiated at the end of the fourth quarter
of 2019 on two targets within the district: La Capilla and Antonio
Chuco. At La Capilla, outcropping oxide mineralization defined
by channel sampling and drilling extends over a 400 m strike.
A potential diatreme feeder has been defined, which may extend
mineralization over a much larger area. Drilling will test the
diatreme concept and delineate the footprint potential of oxide
mineralization. This project is less than 10 km east of Lagunas
Norte and could provide near-term oxide material. At Antonio Chuco,
20 km south of Lagunas Norte, surface sampling has identified
gold mineralization in north-south oriented silicified structures which
may also control the emplacement of breccia bodies.
Pascua-Lama, Chile and Argentina
Barrick’s intention is to update our geological understanding of
the orebody as part of our strategy to bring Pascua-Lama to account.
This process is expected to take a number of years to complete.
The focus in 2020 at Pascua-Lama will be on addressing the
gaps identified in the geological and geo-metallurgical understanding
of the orebody, building upon the improved 3D geology model
completed in 2019. To support this, drilling over the next two summer
seasons is being contemplated, which may drive further desktop
studies. Additionally, a geological and geo-metallurgical drill
program at the Penelope deposit of Lama has been budgeted for
2020. Column testing is also planned to assess the amenability
of Penelope ore for heap leaching at Veladero.
Porgera, Papua New Guinea
Focus during the quarter was on designing a drill program targeting
the potential mineralization expansion of the open pit, into the
Wangima zone. Historical wide-spaced drill results, combined with
preliminary geophysical survey responses and surface sampling,
indicated the possibility of a continuation of stacked structurally
controlled lenses extending along strike within an interpreted
intrusive corridor. Barrick plans to execute an exploratory/infill drill
program from both surface and underground platforms during 2020
and 2021. The program is geologically designed as multi-phase
and will be calibrated as results become available, and the geology
is confirmed. Preliminary results support the extension of both
the intrusive corridor and repetition of stacked structures.
With rapid resource growth and the potential significant
value associated with high-grade mineralization intersected to date,
work supporting geotechnical, geo-metallurgical, hydrological and
other characterizations of Fourmile have been initiated. Exploration
and technical studies are closely coordinated to leverage as
much value as possible from every drill hole. A Fourmile study team
will be organized in the first quarter of 2020 to evaluate and de-risk
the project. The team will ultimately deliver a feasibility study,
key to strategic decisions associated with the project including
its possible inclusion into Nevada Gold Mines.
Hemlo, Ontario, Canada
An airborne magnetic survey and surface trenching program
was completed during the fourth quarter of 2019. Integrating results
from both programs shows a positive correlation between gold
and magnetic susceptibility west of the mine. Follow-up will be an
important aspect of the 2020 exploration program. Drilling the down
plunge extension of the C Zone to assess growth potential was
ongoing through the quarter and will continue into 2020. The C-Zone
represents most of the current resources and underground mill
feed at Hemlo.
Pueblo Viejo, Dominican Republic
Drill testing of targets generated from the first integrated geological
model and a renewed understanding on the controls to mineralization
was the focus for the quarter. To the southeast of Mejita, a structural
control to high grades was established and drill-tested; however,
the favorable horizon has been eroded. To the east and northeast
of Mejita, historic gold in soil anomalies grading +100ppb Au are
in part coincident with the projection of a northeast ore controlling
structure from the Moore Pit in an area coincident with newly
mapped phreatomagmatic breccias. Drill testing intersected favorable
alteration and results are pending. In the first quarter of 2020, we will
be applying geophysical techniques to map potential concentrations
of sulfides associated with mineralization at Arroyo Hondo and
Arroyo del Rey; such surveys were historically successful at mapping
sulfide association with the Monte Negro and Moore ore bodies.
Alturas-Del Carmen, Argentina
At Del Carmen, an updated mineral inventory was calculated for
Rojo Grande which will contribute to further development studies
for the Alturas project in 2020. Mineralization at Rojo Grande is at
or near surface and could provide a source of early ore for potential
development scenarios at Alturas. Finally, drill testing of four
priority litho-structural targets in the Alturas-Del Carmen camp,
incorporating newly defined high-grade controls to mineralization,
has commenced in January 2020.
Veladero, Argentina
At Veladero, a large 3.5 x 2.5 km alteration system has been
delineated at the Coiron prospect, located to the southwest of
the open pits. Mapping and geophysics have identified many
characteristics of our known high sulfidation epithermal deposits and
suggests a dominantly preserved hydrothermal system. Drill testing
has commenced in January 2020. Multiple other brownfields targets
are advancing to delineation and drill testing.
92
MANAGEMENT’S DISCUSSION AND ANALYSISBarrick Gold Corporation Bambadji, Senegal16
At Bambadji, follow-up drilling started testing saprolite anomalies
defined through auger drilling under suppressive regolith along
the multi-kilometer Gefa-Maliki corridor. Preliminary results confirm
bedrock mineralization over the first target tested in the south of
the corridor where drill intercepts from the first two RC lines returned
7.0 meters at 16.72 g/t, 30.0 meters at 1.06 g/t and 13.0 meters
at 1.31 g/t. Mineralization is hosted within brecciated albitite and
fine-medium grained sediments associated with silica, hematite
+/- tourmaline and disseminated or patchy pyrite. Results are
pending for an extra six lines testing three kilometers of strike length
with geological observations suggesting a continuous system past
the Gefa Main target and extending a further five kilometers north
across the Maliki target, where drilling is currently confirming
similar geological findings. Drilling at the Madina target located
on the Gounkoto Domain Boundary extension confirmed weak
mineralization along northeastern structures propagating within
a competent albitite body, but which do not have the potential for
economic mineralization. Auger drilling and IP surveys are underway
in the northern half of the permit to identify new opportunities to
be tested in the second quarter of 2020.
Loulo-Gounkoto, Mali17
At Yalea, step out drilling confirmed the extension of the Transfer
Zone over an additional 320 meters towards the South with
follow-up drilling planned in the first quarter of 2020 to extend
this further. At Loulo 3, resource drilling was completed for the
underground opportunity while exploration progressed to the north
along the gap zone with Loulo 2, where initial observations show
potential for a new open pit. New greenfield targets were generated
along the Yalea structure and at the Yalea Ridge, with follow-up
planned during the first quarter of 2020. At Gounkoto, exploration
in the south of the deposit below the current pit intersected additional
high-grade shoots. Follow-up work is planned in the first quarter
of 2020 to define if they have the potential to be mined from
underground. Exploration on the Faraba Trend has focused on a
newly recognized structure which is thought to control mineralization
over four kilometers across the Faraba complex. Elsewhere in
Mali, generative work is in progress in the Kenieba-Kedougou
Inlier and in Mali South with ground being reviewed.
Tongon, Côte d’Ivoire
At Nielle, drilling focused on testing gaps along the Badenou trend
with limited success in identifying potential for additional satellite
resources. Deeper holes are being drilled at the Mercator target
to test the down-dip and plunge potential of higher grade shoots
beneath the current pit shells. Sub-surface testing of priority targets
in the license area is in progress with follow-up drilling planned in
the first quarter of 2020 on the best targets. Following the completion
of resource conversion drilling at Djinni, optimization work on the
updated model returned positive results with the deposit potentially
extending the Tongon life of mine by almost a year at the current
production rate. A feasibility study is planned at Djinni in 2020 to
bring the deposit into the mining schedule.
Regional Exploration, Côte d’Ivoire
Drilling has been completed across seven priority targets on the
Sissedougou and Mankono permits. Results received to date confirm
low- to medium-grade mineralization related to quartz veining hosted
within or at the contact with intrusives. Auger drilling is planned
to follow potential extensions to some historic targets beneath
suppressive regolith in the north of Sissedougou, while soil sampling
is covering a major structure in the northeast of the permit. At
Boundiali, shallow drilling was completed on the first targets of the
Syama corridor, while two more targets remain to be tested before
drawing definitive conclusions on the corridor. In southeastern
Côte d’Ivoire, stream sampling across the Ketesso area of interest
is expected to be completed early in 2020 allowing for the definition
of anomalous basins for follow-up.
Kibali, Democratic Republic of Congo18
At Kibali, KCD was the center of activities with further testing of the
12000 lode, a review of the 11000 lode for potential up and down-dip
extensions and the start of a deep hole testing the KCD down-plunge
extension. At Pakaka and Ikamva, model updates and optimizations
are being conducted to assess the potential for underground
opportunities following positive drill results received in the third
quarter of 2019. Oere was also an area of focus for ounce delivery
along the KZ North structure with a third phase of drilling currently
in progress to test the potential at depth and along strike. Results to
date indicate the potential of a small satellite resource at Oere.
North Mara and Bulyanhulu, Tanzania
The main focus during the quarter was the delivery of an updated
geologic model for Gokona underground at North Mara. The new
model shows mineralization controlled by rheologic contrasts in the
broadly folded host stratigraphy. Mineralization typically occurs along
volcanic andesite, intermediate dyke and meta-sediment contacts.
Significant upside exists in areas of the system where previous
drilling is sub-parallel to these folded contacts as well as along
strike in both directions and in the footwall of the deposit. Going
forward, takeaways from the new model will be applied to exploration
along the highly prospective +20 km long Gokona mineralized
trend. At Bulyanhulu, an updated geologic interpretation confirmed
the exceptional geologic continuity of this system, as well as
a near-surface target that has potential to host plunging shoots
of higher grade mineralization.
Jabal Sayid, Kingdom of Saudi Arabia
At Jabal Sayid, target generation work continued through integration
and interpretation of historic and new data from the remodeling of
lodes 2 and 4. Drill testing of priority targets has started with the first
hole investigating the extension of lode 4. To date, this hole has
confirmed the continuity of the lithologic and alteration package host
to the mineralization. Other brownfield and greenfield targets are
being advanced to drill stage with priority targets testing planned
for the second quarter of 2020.
93
MANAGEMENT’S DISCUSSION AND ANALYSISFinancial Report 2019
1,413
1,318
5,467
4,544
5,302
Pueblo Viejo (60%)
Review of Financial Results
Revenue
($ millions, except
per ounce/pound
data in dollars)
For the three
months ended
For the years ended
12/31/19 9/30/19 12/31/19 12/31/18 12/31/17
Gold
000s oz solda
000s oz
produceda
Market price
($/oz)
Realized price
($/oz)b
Revenue
Copper
millions lbs solda
millions lbs
produceda
Market price
($/lb)
Realized price
($/lb)b
Revenue
Other sales
Total revenue
1,439
1,306
5,465
4,527
5,323
1,481
1,472
1,393
1,268
1,257
1,483
2,758
1,476
2,585
1,396
9,186
1,270
6,600
1,258
7,631
91
65
355
382
405
117
112
432
383
413
2.67
2.63
2.72
2.96
2.80
2.76
82
43
2,883
2.55
45
48
2,678
2.77
393
138
9,717
2.88
512
131
7,243
2.95
608
135
8,374
a. Includes our equity share of gold ounces from Tanzania until September 30,
2019 (notwithstanding the completion of the Acacia transaction on
September 17, 2019, we consolidated our interest in Acacia and recorded
a non-controlling interest of 36.1% in the income statement for the entirety
of the third quarter of 2019 as a matter of convenience) and Pueblo Viejo
and copper pounds from Zaldívar and Jabal Sayid. Also includes our equity
share of gold ounces from Loulo-Gounkoto, Tongon, Kibali and Morila
commencing January 1, 2019, the effective date of the Merger. Starting
July 1, 2019, it also includes our 61.5% share of Nevada Gold Mines.
b. 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 107 to 132 of this MD&A.
2019 gold production of 5.47 million ounces was at the upper end
of the guidance range of 5.1–5.6 million ounces and 2019 copper
production of 432 million pounds was above the guidance range
of 375–430 million pounds.
Q4 2019 compared to Q3 2019
In the fourth quarter of 2019, gold revenues increased by 7%
compared to the third quarter of 2019 primarily due to higher sales
volume, combined with higher realized gold prices4. The average
market price for the three-month period ended December 31, 2019
was $1,481 per ounce versus $1,472 per ounce for the prior quarter.
During the fourth quarter of 2019, the gold price ranged from $1,446
per ounce to $1,525 per ounce and closed the quarter at $1,515
per ounce. Gold prices in the quarter were influenced by fluctuations
in US Treasury rates and changes in expectations for US benchmark
interest rates; movements in the US dollar; economic concerns as
a result of global trade disputes; and net purchases from investors
and the official sector.
94
ATTRIBUTABLE GOLD PRODUCTION VARIANCE (000s oz)
Q4 2019 Compared to Q3 2019
Q3 2019
North Mara
Turquoise Ridge (61.5%)
Veladero (50%)
Cortez (61.5%)
Porgera (47.5%)
Carlin (61.5%)
Kibali (45%)
Loulo-Gounkoto (80%)
Other
Q4 2019
1,306
74
40
29
13
7
7
2
4
9
22
1,439
In the fourth quarter of 2019, attributable gold production was
133 thousand ounces higher than the prior quarter, primarily due
to the impact of the acquisition of all of the shares that we did not
own of Acacia on September 17, 2019, which resulted in an increase
in attributable production at North Mara, Bulyanhulu and Buzwagi
to 100% (from 63.9%). This was combined with the resumption of
operations at North Mara after the lifting of the Prohibition Notice late
in the third quarter of 2019, higher throughput at Pueblo Viejo due
to record sulfur tonnes oxidized following optimization work, partially
offset by the sale of our 50% interest in Kalgoorlie (included in the
Other category above) on November 28, 2019.
Copper revenues in the fourth quarter of 2019 increased by
82% compared to the prior quarter, primarily due to higher copper
sales volume and higher realized copper prices4. The average
market price in the fourth quarter of 2019 was $2.67 per pound
versus $2.63 per pound in the prior quarter. In the fourth quarter
of 2019, the realized copper price4 was higher than the market
copper price as a result of the impact of positive provisional pricing
adjustments recorded, whereas negative provisional pricing
adjustments were recorded in the prior quarter. During the fourth
quarter of 2019, the copper price ranged from $2.53 per pound
to $2.84 per pound and closed the quarter at $2.79 per pound.
Copper prices in the fourth quarter were positively influenced by
progress on trade negotiations between the US and China and
a further reduction in global stockpiles.
Attributable copper production in the fourth quarter of 2019
increased by 5 million pounds compared to the prior quarter,
primarily due to higher throughput and grades at both Zaldívar and
Jabal Sayid. In spite of a strong quarter on production, sales were
negatively affected by a major refurbishment at one of the third-party
smelters that processes a portion of Lumwana’s concentrate. The
refurbishment was completed in January 2020. We are evaluating
our opportunities with this third-party smelter to steadily sell the
concentrate stockpiled during the refurbishment period through
the course of the year.
1400
1300
1200
1100
1000
0
1000 2000 3000 4000 5000 6000 7000 8000
MANAGEMENT’S DISCUSSION AND ANALYSISBarrick Gold Corporation
2019 compared to 2018
In 2019, gold revenues increased by 39% compared to the prior year
primarily due to the inclusion of production from sites acquired as
part of the Merger and due to the formation of Nevada Gold Mines,
which commenced on July 1, 2019 and is consolidated and included
in revenue at 100%. Excluding the impact of the Merger and the
formation of Nevada Gold Mines, gold revenues were in line with
the prior year as a decrease in gold sales volumes was largely offset
by an increase in realized gold prices4. The average market gold
price for 2019 was $1,393 per ounce versus $1,268 per ounce in
the prior year.
In 2019, attributable gold production was 938 thousand ounces
or 21% higher than the prior year. Excluding the impact of the Merger
and the formation of Nevada Gold Mines, gold production for the
year decreased by 383 thousand ounces or 8%, mainly due to lower
grades mined and processed at Cortez as mining from CHOP was
completed in the second quarter of 2019.
GOLD PRODUCTION VARIANCE (000s oz)
Year ended December 31, 2019
2018
Loulo-Gounkoto (80%)
Kibali (45%)
Other
Carlin (61.5%)
Porgera (47.5%)
Turquoise Ridge (61.5%)
North Mara
Pueblo Viejo (60%)
Veladero (50%)
Cortez (61.5%)
2019
4,527
572
366
143
133
80
67
36
9
4
464
5,465
Copper revenues for 2019 were down 23% compared to the prior
year due to lower realized copper prices4, combined with lower
copper sales volume. Copper sales were adversely impacted by a
major refurbishment at one of the third-party smelters that processes
a portion of Lumwana’s concentrate. In 2019, the realized copper
price4 was higher than the market copper price as a result of positive
provisional pricing adjustments to copper sales that were subject to
finalization in 2019. The 2018 realized copper price4 was lower than
the market copper price as a result of negative provisional pricing
adjustments, the opposite impact from the current year.
Attributable copper production for 2019 was 13% higher than
the prior year, mainly due to the improvements in plant availability
and efficiency implemented at Lumwana, as well as higher grade
and throughput at Zaldívar following crusher and conveyor issues
that occurred in the prior year period.
Production Costs
($ millions, except
per ounce/pound
data in dollars)
For the three
months ended
For the years ended
12/31/19 9/30/19 12/31/19 12/31/18 12/31/17
Gold
Direct mining
costsa
Depreciation
Royalty expense
Community
relations
Cost of sales
Cost of sales
($/oz)b
Total cash costs
($/oz)c
All-in sustaining
costs ($/oz)c
1,252
549
85
1,207
538
79
4,274
1,902
308
3,130
1,253
196
3,063
1,529
206
10
7
30
42
38
1,896
1,831
6,514
4,621
4,836
1,046
1,065
1,005
892
794
692
710
671
588
526
923
984
894
806
750
Copper
Direct mining costs
Depreciation
Royalty expense
Community relations
Cost of sales
Cost of sales
($/lb)b
C1 cash costs
($/lb)c
All-in sustaining
costs ($/lb)c
55
17
8
0
80
30
13
5
1
49
224
100
34
3
361
344
170
39
5
558
274
83
38
4
399
2.26
2.00
2.14
2.40
1.77
1.90
1.62
1.69
1.97
1.66
2.82
2.58
2.52
2.82
2.34
a. Includes mining and processing costs.
b. 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% Tanzania until September 30, 2019
(notwithstanding the completion of the Acacia transaction on September 17,
2019, we consolidated our interest in Acacia and recorded a non-controlling
interest of 36.1% in the income statement for the entirety of the third
quarter of 2019 as a matter of convenience) and 40% South Arturo from
cost of sales (63.1% of South Arturo from July 1, 2019 onwards as a result
of its contribution to Nevada Gold Mines)), divided by attributable gold
ounces. The non-controlling interest of 20% Loulo-Gounkoto and 10.3% of
Tongon is also removed from cost of sales and our proportionate share of
cost of sales attributable to equity method investments (Kibali and Morila)
is included commencing January 1, 2019, the effective date of the Merger.
Also removes the non-controlling interest of 38.5% Nevada Gold Mines
from cost of sales from July 1, 2019 onwards. 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 (including our proportionate share of copper pounds from
our equity method investments).
c. Total cash costs, C1 cash costs and all-in sustaining 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 107 to
132 of this MD&A.
95
1400
1300
1200
1100
1000
0
1000 2000 3000 4000 5000 6000 7000 8000
MANAGEMENT’S DISCUSSION AND ANALYSISFinancial Report 2019
Q4 2019 compared to Q3 2019
In the fourth quarter of 2019, cost of sales applicable to gold was 4%
higher compared to the third quarter of 2019 as a result of increased
sales volume. Our 45% interest in Kibali and 40% interest in Morila
are equity accounted for and therefore we do not include their cost of
sales in our consolidated gold cost of sales. On a per ounce basis,
cost of sales applicable to gold5, after including our proportionate
share of cost of sales at our equity method investees, and total cash
costs4 were 2% and 3% lower, respectively, than the prior quarter
primarily due to the impact of higher grade and throughput at Pueblo
Viejo, partially offset by lower grades at Cortez as the remaining
higher grade, low-cost stockpiles from CHOP were processed in
the third quarter of 2019.
In the fourth quarter of 2019, gold all-in sustaining costs4
decreased by 6% on a per ounce basis compared to the prior
quarter primarily due to lower total cash costs4 as discussed above,
combined with lower general and administrative expenses and
lower minesite sustaining capital expenditures.
In the fourth quarter of 2019, cost of sales applicable
to copper was 63% higher than the prior quarter primarily due
to higher copper sales volume at Lumwana as a result of our
efforts to sell concentrate through other channels while the major
refurbishment at one of the third-party smelters continued. 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 copper5 and C1 cash costs4, after including our proportionate
share of cost of sales at our equity method investees, increased by
13% and 17%, respectively, compared to the prior quarter primarily
due to more stripping expenditures being expensed rather than
capitalized at Zaldívar and Lumwana.
In the fourth quarter of 2019, copper all-in sustaining costs4,
which have been adjusted to include our proportionate share of
equity method investees, were 9% higher per pound than the prior
quarter primarily reflecting higher C1 cash costs4, partially offset
by lower minesite sustaining capital expenditures on a per pound
sold basis.
2019 compared to 2018
2019 cost of sales applicable to gold5 was $1,005 per ounce
compared to our guidance range of $940–$990 per ounce. In 2019,
cost of sales applicable to gold was 41% higher than the prior year
primarily due to increased sales volume resulting from the Merger
and the formation of Nevada Gold Mines. Excluding the impact of
the Merger and Nevada Gold Mines, cost of sales applicable to gold
was 3% lower compared to the prior year, in line with the change in
production after adjusting for the impact of the Merger and Nevada
Gold Mines. On a per ounce basis, cost of sales applicable to gold5,
after including our proportionate share of cost of sales at our equity
method investees, was 13% higher than the prior year primarily
due to higher depreciation on a per ounce basis as a result of the
fair value increments applied to our interests in the legacy Randgold
and Nevada Gold Mines operations. Total cash costs per ounce4
increased by 14% compared to the same prior year period primarily
due to the impact of lower grades processed from Cortez and
higher export duties and royalties at Veladero.
Gold total cash costs4 and all-in sustaining costs4 for 2019
were $671 and $894 per ounce, respectively, both within the guidance
ranges of $650–$700 and $870–$920 per ounce. In 2019, gold
all-in sustaining costs per ounce4 increased by 11% compared
to the prior year primarily due to higher total cash costs4 as
discussed above, combined with higher minesite sustaining capital
expenditures on a per ounce basis, partially offset by lower general
and administrative expenses.
2019 cost of sales applicable to copper5 and C1 cash costs4
were $2.14 and $1.69 per pound, both below our guidance ranges
of $2.30–$2.70 and $1.70–$2.00 per pound, respectively. In 2019,
cost of sales applicable to copper was 35% lower than the prior year,
primarily due to the impact of lower copper sales volume at Lumwana,
as sales were negatively affected by a major refurbishment at one
of the third-party smelters that processes a portion of Lumwana’s
concentrate. The refurbishment was completed in January 2020.
We are evaluating our opportunities with this third-party smelter to
steadily sell the concentrate stockpiled during the refurbishment
period through the course of the 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 copper5
and C1 cash costs4, after including our proportionate share of cost
of sales at our equity method investees, decreased by 11% and
14%, respectively, compared to the prior year primarily due to the
fundamental and sustainable improvements in plant availability
and operational efficiency initiatives implemented at Lumwana.
2019 copper all-in sustaining costs4, which have been adjusted
to include our proportionate share of equity method investments,
were $2.52 per pound, at the lower end of our guidance range
of $2.40–$2.90 per pound. Copper all-in sustaining costs4 were
11% lower than the prior year primarily reflecting the lower total
C1 cash costs4, partially offset by higher minesite sustaining capital
expenditures on a per pound basis.
96
MANAGEMENT’S DISCUSSION AND ANALYSISBarrick Gold Corporation 393
397
1,512
1,363
1,314
($ millions)
For the three
months ended
For the years ended
12/31/19 9/30/19 12/31/19 12/31/18 12/31/17
Capital Expendituresa
($ millions)
For the three
months ended
For the years ended
12/31/19 9/30/19 12/31/19 12/31/18 12/31/17
394
406
1,320
968
1,116
46
6
96
0
370
11
425
7
280
0
446
502
1,701
1,400
1,396
Minesite
sustainingb
Project capital
expendituresc
Capitalized interest
Total
consolidated
capital
expenditures
Attributable
capital
expendituresd
2019 Attributable
capital
expenditures
guidanced
$1,400
to
$1,700
a. These amounts are presented on a 100% cash basis, except for
attributable capital expenditures.
b. Includes both minesite sustaining and mine development.
c. Project capital expenditures (on an accrued basis until December 31, 2018,
and on a cash basis thereafter) are included in our calculation of all-in
costs, but not included in our calculation of all-in sustaining costs.
d. These amounts are presented on the same basis as our guidance and
include our 60% share of Pueblo Viejo and South Arturo (36.9% of South
Arturo from July 1, 2019 onwards as a result of its contribution to Nevada
Gold Mines), our 63.9% share of Tanzania until September 30, 2019
(notwithstanding the completion of the Acacia transaction on September 17,
2019, we consolidated our interest in Acacia and recorded a non-controlling
interest of 36.1% in the income statement for the entirety of the third
quarter of 2019 as a matter of convenience) and our 50% share of Zaldívar
and Jabal Sayid. Also includes our 80% share of Loulo-Gounkoto, 89.7%
share of Tongon, 45% share of Kibali and 40% share of Morila commencing
January 1, 2019, the effective date of the Merger. Starting July 1, 2019, it
also includes our 61.5% share of Nevada Gold Mines.
Q4 2019 compared to Q3 2019
In the fourth quarter of 2019, total consolidated capital expenditures
on a cash basis decreased by 11% compared to the third quarter
of 2019, primarily due to lower project capital expenditures of 52%,
combined with a decrease in minesite sustaining capital expenditures
of 3%. Lower project capital expenditures are mainly attributed to
Cortez due to decreases at the Cortez Hills Underground Rangefront
project and the change in classification of the Crossroads open
pit project. Crossroads transitioned to production status late in the
third quarter of 2019 from pre-production prior to that. As such,
lower project capital expenditures are attributable to this transition
resulting in a change in the classification of capital expenditures
from project to sustaining. The decrease in minesite sustaining
capital expenditures is the result of lower stripping costs capitalized
at Loulo-Gounkoto, partially offset by the change in classification
of the Crossroads open pit project as discussed above.
2019 compared to 2018
In 2019, total consolidated capital expenditures on a cash basis
increased by 22% compared to the prior year, primarily due to the
impact of the sites acquired as part of the Merger and from Nevada
Gold Mines, which commenced on July 1, 2019, and is consolidated
and included at 100%. Excluding the impact of the Merger and
the formation of Nevada Gold Mines, capital expenditures decreased
by 4% mainly due to lower project capital expenditures at Cortez
due to decreasing Crossroads dewatering activities and Rangefront
project expenditures, while minesite sustaining capital expenditures
remained in line with the prior year.
2019 compared to Outlook
Attributable capital expenditures for 2019 of $1,512 million were
at the lower end of the guidance range of $1,400 to $1,700 million.
General and Administrative Expenses
Corporate
administrationa
Share-based
compensationb
Tanzaniac
General &
administrative
expenses
2019 General &
administrative
expenses guidance
26
5
0
39
13
16
148
212
201
37
27
27
26
26
21
31
68
212
265
248
~$200
a. For the three months and year ended December 31, 2019, corporate
administration costs include approximately $nil and $18 million,
respectively, of severance costs (September 30, 2019: $3 million; 2018:
$63 million; 2017: $3 million).
b. Based on US$18.59 share price as at December 31, 2019 (September 30,
2019: US$17.33; 2018: US$13.54; 2017: $14.47) and excludes share-
based compensation relating to Tanzania.
c. Formerly known as Acacia Mining plc. This line includes severance costs
of approximately $13 million and $15 million, for the three months and
year ended December 31, 2019, respectively.
Q4 2019 compared to Q3 2019
In the fourth quarter of 2019, general and administrative expenses
decreased by $37 million compared to the third quarter of 2019
primarily due to severance costs incurred by Tanzania resulting
from the closure of Acacia’s London and Johannesburg offices
that occurred in the prior quarter. This was combined with lower
corporate administration expenses of $13 million mainly due
to cost reductions and lower short-term incentive accruals during
the quarter. This was further impacted by lower share-based
compensation of $8 million mainly resulting from a more modest
increase in our share price during the fourth quarter of 2019
compared to the increase in the prior quarter.
2019 compared to 2018
General and administrative expenses decreased by $53 million
compared to the prior year due to lower corporate administration
expenses attributed to the organizational reductions related to
both the implementation of the decentralized operating model in
the prior year and the Merger in the current period. This was partially
offset by higher share-based compensation resulting from higher
share prices compared to the prior year.
97
MANAGEMENT’S DISCUSSION AND ANALYSISFinancial Report 2019
2019 compared to Outlook
Exclusive of severance costs of $33 million, general and
administrative expenses were lower than guidance of ~$200 million.
Corporate administration expenses of $130 million (excluding
severances of $18 million) were below guidance of ~$140 million,
highlighting the benefit of cost reduction activities during the year
and the implementation of our flat, operationally focused, agile
management structure.
Exploration, Evaluation and Project Costs
($ millions)
For the three
months ended
For the years ended
12/31/19 9/30/19 12/31/19 12/31/18 12/31/17
Global exploration
and evaluation
Advanced project costs:
Pascua-Lama
Other
Corporate
development
Business improvement
and innovation
Minesite exploration
and evaluation
33
11
6
10
0
24
34
13
5
11
1
22
Total exploration,
evaluation and
project expenses
2019 total E&E and
project expenses
guidance
84
86
143
121
126
77
36
60
44
45
122
14
13
32
47
383
354
49
20
51
10
69
342
$280
to
$340
Q4 2019 compared to Q3 2019
Exploration, evaluation and project expenses for the fourth quarter
of 2019 were in line with the prior quarter.
2019 compared to 2018
Exploration, evaluation and project costs for 2019 decreased
by $41 million compared to the prior year. This was due to lower
advanced project costs, primarily at Pascua-Lama, and lower
business improvement and innovation costs as a result of digitization
initiatives occurring in the prior year. This was partially offset by an
increase in minesite exploration and evaluation expenses at Nevada
Gold Mines and higher global exploration and evaluation expenses
mainly due to the expansion project at Pueblo Viejo.
2019 compared to Outlook
Exploration, evaluation and project costs for 2019 were marginally
above the top end of the guidance range of $280 to $340 million.
This was due to higher exploration and evaluation expenditures,
which were above the guidance range of $170 to $180 million,
marginally offset by lower project expenditure, which was at the
lower end of the $120 to $150 million range.
Finance Costs, Net
($ millions)
For the three
months ended
For the years ended
12/31/19 9/30/19 12/31/19 12/31/18 12/31/17
Interest expensea
Accretion
Loss on debt
extinguishment
Interest capitalized
Other finance costs
Finance income
104
16
0
(6)
5
(13)
112
19
3
(3)
(2)
(4)
Finance costs, net
106
125
2019 finance
costs, net
guidance
435
75
3
(14)
1
(31)
469
$500
to
$550
452
87
29
(9)
1
(15)
545
511
67
127
0
0
(14)
691
a. For the three months and year ended December 31, 2019, interest expense
includes approximately $28 million and $103 million, respectively, of non-
cash interest expense relating to the gold and silver streaming agreements
with Wheaton Precious Metals Corp. and Royal Gold, Inc. (September 30,
2019: $25 million; 2018: $98 million; 2017: $101 million).
Q4 2019 compared to Q3 2019
In the fourth quarter of 2019, net finance costs were 15% lower
than the prior quarter, mainly due to an increase in finance income
resulting from the unwinding of the discount related to a prepaid
long-term royalty at Carlin which was recorded at its fair value on
the formation of Nevada Gold Mines.
2019 compared to 2018
In 2019, net finance costs were 14% lower than the prior year
primarily due to a decrease in loss on debt extinguishment and lower
interest expense, both attributable to debt reductions we have made
over the preceding 18 months. The loss on debt extinguishment
in 2019 relates to the make-whole repurchase of the outstanding
$248 million of principal of our 4.95% notes due 2020 in July 2019.
For 2018, the loss on debt extinguishment relates to the make-whole
repurchase of the remaining $629 million of principal on the 4.40%
Notes due 2021 in July 2018, which also resulted in a decrease in
interest expense compared to the prior year.
2019 compared to Outlook
Net finance costs for 2019 were below the guidance range of $500
to $550 million. This was due to higher finance income and lower
accretion expense on our environmental rehabilitation provisions.
Additional Significant Statement of Income Items
($ millions)
For the three
months ended
For the years ended
12/31/19 9/30/19 12/31/19 12/31/18 12/31/17
Impairment
charges
(reversals)
Loss on currency
translation
Other expense
(income)
(566)
(872)
(1,423)
900
(212)
53
40
109
136
72
(1,282)
(1,852)
(3,100)
90
(799)
98
MANAGEMENT’S DISCUSSION AND ANALYSISBarrick Gold Corporation
Impairment Charges (Reversals)
($ millions)
For the three
months ended
For the years ended
12/31/19 9/30/19 12/31/19 12/31/18 12/31/17
Post-tax Post-tax Post-tax Post-tax Post-tax
(our
share)
(our
share)
(our
share)
(our
share)
(our
share)
Asset impairments
(reversals)
Lumwana
Pueblo Viejo
Pascua-Lama
Nevada Gold Mines
Lagunas Norte
Veladero
Equity method
investments
Acacia exploration
sites
Cerro Casale
Bulyanhulu
Golden Sunlight
Exploration sites
Other
0
(277)
296
0
0
0
(663)
0
0
46
11
0
(663)
(277)
296
48
12
2
0
0
0
0
0
0
3
0
0
0
0
0
0
4
0
0
0
0
0
0
14
0
0
(7)
11
405
160
30
17
0
0
0
0
29
(259)
0
407
0
2
0
0
0
(518)
350
2
8
1
Total asset impairment
charges (reversals)
Goodwill
Veladero
Total goodwill
impairment charges
22
(602)
(568)
645
(7)
0
0
0
0
0
0
154
154
101
0
0
(205)
Tax effects and NCI
(588)
(270)
(855)
Total impairment
charges
(reversals)
(566)
(872)
(1,423)
900
(212)
Impairment Charges (Reversals)
Q4 2019 compared to Q3 2019
In the fourth quarter of 2019, net impairment charges were
$22 million (net of tax and non-controlling interests) compared to
reversals of $602 million (net of tax and non-controlling interests)
in the prior quarter. The net impairment charge in the fourth quarter
of 2019 mainly relates to a charge of $296 million (no tax impact)
at Pascua-Lama, as we completed a study of the Pascua-Lama
project and concluded that we do not have a plan that meets our
investment criteria under our current assumptions. This was partially
offset by net impairment reversals at Pueblo Viejo of $277 million
net of tax and non-controlling interest ($865 million pre-tax and
non-controlling interest), reflecting the progression of our engineering
and evaluation work on the process plant expansion and additional
tailings facility. In conjunction with the increase in the long-term gold
price assumption, this has resulted in an improvement in the life of
mine cash flows for the mine site. In the third quarter of 2019, the net
impairment reversal relates to a reversal at Lumwana of $663 million
net of tax ($947 million pre-tax), partially offset by impairments
of land holdings and CHOP infrastructure assets at Cortez.
2019 compared to 2018
In 2019, we recognized $568 million (net of tax and non-controlling
interests) of net impairment reversals for non-current assets.
This was mainly at Lumwana: $663 million net of tax ($947 million
pre-tax) as a result of significant reductions achieved in the current
year in unit mining costs and improvements in plant availability
reflected in our updated life of mine plan, combined with an increase
in our long-term copper price assumption of $3.00 per pound from
$2.85 per pound. In addition, we recognized $277 million net of tax
and non-controlling interest ($865 million pre-tax and non-controlling
interest) of net impairment reversals at Pueblo Viejo, reflecting the
progression of our engineering and evaluation work on the process
plant expansion and additional tailings facility in conjunction with the
increase in the long-term gold price assumption. This was partially
offset by net impairment charges of $296 million (no tax impact) at
Pascua-Lama, as we completed a study of the Pascua-Lama project
and concluded that we do not have a plan that meets our investment
criteria under our current assumptions.
Refer to note 21 to the Financial Statements for a full
description of impairment charges, including pre-tax amounts
and sensitivity analysis.
Loss on Currency Translation
Q4 2019 compared to Q3 2019
Loss on currency translation in the fourth quarter of 2019 was
$53 million compared to $40 million in the prior quarter. The increase
was primarily due to the revaluation of a Zambian tax settlement,
partially offset by lower unrealized foreign currency translation losses
resulting from a modest depreciation of the Argentine peso in the
current quarter versus a significant depreciation in the prior quarter.
This currency depreciation resulted in the revaluation of our peso
denominated value-added tax receivable balances. During the fourth
quarter of 2019, the Argentine peso continued to weaken versus
the US dollar due in part to high inflation.
2019 compared to 2018
Loss on currency translation for 2019 decreased by $27 million
compared to the prior year. The decrease was primarily due
to continued unrealized foreign currency translation losses relating
to the Argentine peso, but from a lower asset base in 2019 versus
2018. The peso has significantly depreciated in both periods and
has revalued our peso denominated value-added tax receivable
balances. After modest appreciation of the Argentine peso in
the second quarter of 2019, the impact of inflation and political
uncertainty in Argentina experienced in the third and fourth quarters
of 2019 has driven a return to the general trend in recent years
of a weakening peso versus the US dollar.
Other Expense (Income)
Q4 2019 compared to Q3 2019
In the fourth quarter of 2019, other income was $1,282 million
compared to $1,852 million in the prior quarter. Other income in
the fourth quarter of 2019 mainly relates to a $628 million gain
on the de-recognition of the deferred revenue liability relating to
our silver sale agreement with Wheaton Precious Metals Corp.
Refer to note 29 to the Financial Statements for more information.
Other income in the fourth quarter of 2019 also includes a gain of
$408 million resulting from the sale of our 50% interest in Kalgoorlie,
and a gain of $216 million on a settlement of customs duty and
indirect taxes at Lumwana. Other income in the third quarter of 2019
mainly related to the gain on the remeasurement of Barrick’s 75%
interest in Turquoise Ridge to fair value as a result of its contribution
to Nevada Gold Mines. Refer to note 4 to the Financial Statements
for more information.
99
MANAGEMENT’S DISCUSSION AND ANALYSISFinancial Report 2019
2019 compared to 2018
Other income was $3,100 million in 2019 compared to an expense
of $90 million in the prior year. In 2019, we recognized a gain of
$1,886 million relating to the remeasurement of Barrick’s 75%
interest in Turquoise Ridge to fair value as a result of its contribution
to Nevada Gold Mines, and a $628 million gain on the de-recognition
of the deferred revenue liability relating to our silver sale agreement
with Wheaton Precious Metals Corp. This was further impacted
by a gain of $408 million resulting from the sale of our 50% interest
in Kalgoorlie, and a gain of $216 million on a settlement of customs
duty and indirect taxes at Lumwana. 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.
For a further breakdown of other expense (income), refer to
note 9 to the Financial Statements.
Income Tax Expense
Income tax expense was $1,783 million in 2019. The underlying
effective tax rate for ordinary income in 2019 was 34% after adjusting
for the impact of the change in accounting for the Wheaton Precious
Metals Corp. silver streaming agreement; the accounting gain on
disposal of Turquoise Ridge; the profit on sale of Kalgoorlie; 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 impact of accruing for US withholding tax;
and the impact of other expense adjustments. The unadjusted tax
rate for income in 2019 was 28% 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. We have
significant amounts of unrecognized deferred tax assets (e.g. for
tax losses in Canada). 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
For the years ended
At 26.5% statutory rate
Increase (decrease) due to:
Allowances and special tax deductionsa
Impact of foreign tax ratesb
Expenses not tax deductible
Impairment charges not recognized in
deferred tax assets
Goodwill impairment charges not
tax deductible
Net currency translation losses on
deferred tax balances
Tax impact from pass-through entities
and equity accounted investments
Current year tax losses not recognized
in deferred tax assets
Sale of 50% interest in Kalgoorlie
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
Impact of tax rate changes
United States withholding taxes
Other withholding taxes
Mining taxes
Other items
12/31/19 12/31/18
1,684
(63)
(129)
(264)
78
(59)
(4)
74
45
168
0
43
54
41
(140)
(15)
8
12
4
0
(13)
21
0
(35)
30
24
412
3
100
0
814
(49)
3
0
42
0
(107)
14
184
1
Income tax expense
1,783
1,198
a. We are able to claim certain allowances and tax deductions unique to
extractive industries that result in a lower effective tax rate.
b. 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 2019
and 2018 include the following:
Currency Translation
Deferred tax balances are subject to remeasurement for
changes in currency exchange rates each period. This is required
in countries where tax is paid in local currency and accounts
are prepared in local GAAP. The most significant balances are
Argentine deferred tax liabilities. In 2019 and 2018, tax expense
of $75 million and $41 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). In 2019, deferred tax balances
for legacy Randgold assets in Mali and Côte d’Ivoire required
remeasurement at year end.
100
MANAGEMENT’S DISCUSSION AND ANALYSISBarrick Gold Corporation
The terms of the signed agreement are consistent with
those previously announced, including the payment of $300 million
to settle all outstanding tax and other disputes (the “Settlement
Payment”); the lifting of the concentrate export ban; the sharing
of future economic benefits from the mines on a 50/50 basis;
and a dispute resolution mechanism that provides for binding
international arbitration. The 50/50 division of economic benefits
will be maintained through an annual true-up mechanism, which
will not account for the Settlement Payment.
The Settlement Payment will be paid in installments, with
an initial payment of $100 million to the GoT following the resumption
of mineral concentrate exports. Five subsequent annual payments
of $40 million each will be made, starting on the first anniversary of
the fulfillment of all conditions of the signed agreement, subject to
certain cash flow conditions.
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 to the Financial Statements for
further information with respect to these matters.
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 provided 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. The audit of these tax returns
by the Zambian tax authority was completed in the fourth quarter
of 2019 and we recorded a $50 million asset reflecting the final
settlement of this matter. We also released historical accruals related
to customs duty and indirect taxes resulting in a total of $216 million
recognized in Other Income in 2019 (refer to note 9 to the Financial
Statements for more information).
De-recognition of Deferred Tax Assets
In the 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 and
management’s focus on growing the business globally, particularly
on our Tier One Gold Assets1 which are 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 did
not expect to be able to use these losses in the foreseeable future
as a result of the change in strategy in the fourth quarter of 2018.
The de-recognition of the deferred tax asset in Peru in the fourth
quarter of 2018 follows management’s review of expected future
earnings. The associated impairment of inventory at Lagunas Norte
was also driven by the change in the fourth quarter of 2018 in our
expected approach to financing future reclamation activities in Peru.
Based on these reviews in Canada and Peru, it was determined that
the realization of these deferred tax assets was no longer probable.
United States Withholding Taxes
In the fourth quarter of 2018, primarily due to restructuring associated
with the Merger, 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.
In 2019, we reassessed our intentions on the current and
future undistributed earnings of our United States subsidiaries due
to the formation of Nevada Gold Mines. Based on the free cash
flow that we expect Nevada Gold Mines to generate, together with
other factors, we concluded that it was no longer our intent to
indefinitely reinvest our current and future undistributed earnings
of our United States subsidiaries. Therefore in the fourth quarter of
2019, we recognized an increase in our income tax provisions in the
amount of $30 million, representing withholding tax on undistributed
United States earnings.
Framework for former Acacia Operations in Tanzania
On October 20, 2019, Barrick announced that it had reached
an agreement with the Government of Tanzania (“GoT”) to settle
all disputes between the GoT and the mining companies formerly
operated by Acacia but now managed by Barrick. The final
agreements were submitted to the Tanzanian Attorney General
for review and legalization.
On January 24, 2020, Barrick announced that the Company
had ratified the creation of Twiga at a signing ceremony with the
President of Tanzania, formalizing the establishment of a joint
venture between Barrick and the GoT and resolution of all outstanding
disputes between Barrick and the GoT, including the lifting of the
previous concentrate export ban, effective immediately.
101
MANAGEMENT’S DISCUSSION AND ANALYSISFinancial Report 2019 Financial Condition Review
Summary Balance Sheet and Key Financial Ratios
($ 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 debta
Debt (current and long-term)
Total Liabilities
Total shareholders’ equity
Non-controlling interests
Total Equity
Total common shares outstanding (millions of shares)b
Key Financial Ratios:
Current ratioc
Debt-to-equityd
2019
2018
2017
3,314
3,573
37,505
1,571
2,407
18,653
2,234
2,450
20,624
44,392
22,631
25,308
2,001
7,028
5,536
1,625
5,883
5,738
1,688
6,130
6,423
14,565
13,246
14,241
21,432
8,395
7,593
1,792
9,286
1,781
29,827
9,385
11,067
1,778
1,168
1,167
2.9:1
2.38:1
2.68:1
0.19:1
0.61:1
0.58:1
a. Non-current financial liabilities as at December 31, 2019 were $5,559 million (2018: $6,201 million; 2017: $6,844 million).
b. Total common shares outstanding do not include 0.3 million stock options.
c. 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, 2019, December 31, 2018 and December 31, 2017.
d. Represents debt divided by total shareholders’ equity (including minority interest) as at December 31, 2019, December 31, 2018, and December 31, 2017.
Shareholders’ Equity
As at 2/4/2020
Common shares
Stock options
Number of shares
1,777,926,611
277,732
As a result of the Merger, 583,669,178 Barrick common shares were
issued to the former Randgold shareholders. On September 17,
2019, we issued 24,836,670 common shares to the minority
shareholders of Acacia in exchange for their shares in Acacia.
Balance Sheet Review
Total assets were $44.4 billion at December 31, 2019, approximately
$21.8 billion higher than at December 31, 2018, primarily reflecting
the impact of the sites acquired and asset values restated to fair
value in connection with the formation of Nevada Gold Mines on
July 1, 2019. These sites are consolidated at 100%. The increase
in total assets also reflects the $7.9 billion Merger. Refer to note 4
to the Financial Statements for a summary of the purchase price
allocations in relation to these transactions.
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, 2019 were $14.6 billion,
approximately $1.3 billion higher than at December 31, 2018, also
reflecting the impact of the formation of Nevada Gold Mines and the
Merger. This was combined with the resulting increase in deferred
income tax liabilities. Our liabilities are primarily comprised of debt,
other non-current liabilities such as provisions and deferred income
tax liabilities, and accounts payable.
102
MANAGEMENT’S DISCUSSION AND ANALYSISBarrick Gold Corporation
Financial Position and Liquidity
Total cash and cash equivalents as at December 31, 2019
were $3.3 billion. Our capital structure comprises a mix of debt,
non-controlling interest (primarily at Nevada Gold Mines) and
shareholders’ equity. As at December 31, 2019, our total debt was
$5.5 billion (debt net of cash and equivalents was $2.2 billion) and
our debt-to-equity ratio was 0.19:1. This compares to debt as
at December 31, 2018 of $5.7 billion (debt net of cash and cash
equivalents was $4.2 billion), and a debt-to-equity ratio of 0.61:1.
On January 31, 2020, we completed a make-whole repurchase
of the outstanding $337 million of principal of the 3.85% notes due
2022, which has reduced our total debt to approximately $5.2 billion
subsequent to year end.
We currently have less than $40 million in debt due before
2021, and approximately $5 billion of our outstanding debt matures
after 2032. In November 2019, we amended and restated the
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 0.15% on undrawn amounts.
As part of the amendment and restatement, the termination date
of the Credit Facility was extended from January 2024 to January
2025. The Credit Facility is undrawn as at December 31, 2019.
In 2020, we have capital commitments of $155 million and
expect to incur attributable sustaining and project capital
expenditures of approximately $1,600 to $1,900 million in 2020
based on our guidance range on page 60. In 2020, we have
$323 million in interest payments and other amounts as detailed in
the table on page 105. In addition, we have contractual obligations
and commitments of $473 million in purchase obligations for supplies
and consumables. 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 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; issuance of long-term debt securities in the
public markets or to private investors (Moody’s and S&P currently
rate Barrick’s outstanding long-term debt as investment grade,
with ratings of Baa2 and BBB, respectively); and drawing on the
$3.0 billion available under our undrawn Credit Facility (subject to
compliance with covenants and the making of certain representations
and warranties, this facility is available for drawdown as a source of
financing). The key financial covenant in our undrawn Credit Facility
requires Barrick to maintain a net debt to total capitalization ratio of
less than 0.60:1. Barrick’s net debt to total capitalization ratio was
0.07:1 as at December 31, 2019 (0.31:1 as at December 31, 2018).
Summary of Cash Inflow (Outflow)
($ millions)
For the three
months ended
For the years ended
12/31/19 9/30/19 12/31/19 12/31/18 12/31/17
Net cash provided
by operating
activities
Investing activities
Capital expenditures
Cash acquired
in Merger
Divestitures
Cash received from
equity method
investments
Other
Total investing
875
1,004
2,833
1,765
2,065
(446)
(502)
(1,701)
(1,400)
(1,396)
0
750
113
(55)
0
0
72
47
751
750
217
33
0
0
0
0
0
(94)
0
1,059
inflows (outflows) 362
(383)
50
(1,494)
(337)
Financing activities
Net change in debta
Dividendsb
Net (disbursements)
funding to
non-controlling
interests
Other
Total financing
(6)
(87)
(269)
(67)
(309)
(548)
(687)
(125)
(1,533)
(125)
(236)
1
(31)
(2)
(281)
(1)
(84)
(29)
(126)
(102)
inflows (outflows)
(328)
(369)
(1,139)
(925)
(1,886)
Effect of
exchange rate
Increase (decrease)
in cash and
equivalents
0
0
(1)
(9)
3
909
252
1,743
(663)
(155)
a. 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.
b. For the three months ended December 31, 2019, we declared and paid
dividends in US dollars totaling $0.05 per share. For the year ended
December 31, 2019, we declared and paid $0.13 and $0.20 per share to
Barrick shareholders, respectively (September 30, 2019: declared and
paid $0.04 per share; 2018: declared $0.19 per share and paid $0.12 per
share; 2017: declared and paid $0.12 per share). Dividends paid for the
year ended December 31, 2019 also includes $2.69 per share to Randgold
shareholders (2018: nil; 2017: nil).
103
MANAGEMENT’S DISCUSSION AND ANALYSISFinancial Report 2019
Q4 2019 compared to Q3 2019
In the fourth quarter of 2019, we generated $875 million in
operating cash flow, compared to $1,004 million in the prior quarter.
The decrease of $129 million was primarily due to an increase in
interest paid as a result of the timing of payments on our long-term
debt (generally paid semi-annually). This was partially offset by an
increase in gold and copper sales volumes, higher gold and copper
realized prices4, and lower gold cost of sales per ounce5.
Cash inflows from investing activities in the fourth quarter of
2019 were $362 million, compared to cash outflows of $383 million
in the prior quarter. The increase was primarily due to the sale of
our 50% interest in Kalgoorlie for cash consideration of $750 million.
Net financing cash outflows for the fourth quarter of 2019
amounted to $328 million, compared to $369 million in the prior
quarter. The decrease of $41 million is primarily due to the
make-whole repurchase of our 4.95% notes due 2020 in July
2019 occurring in the prior quarter. This was partially offset by
an increase in disbursements to non-controlling interests.
2019 compared to 2018
In 2019, we generated $2,833 million in operating cash flow,
compared to $1,765 million in the prior year. The increase of
$1,068 million was primarily due to higher gold sales volume and
higher gold realized prices4, partially offset by higher gold cost of
sales per ounce5.
Summary of Financial Instrumentsa
As at December 31, 2019
Cash inflows from investing activities for 2019 were
$50 million compared to an outflow of $1,494 million in the prior year.
The increase was primarily due to cash acquired of $751 million
as a result of the Merger and total cash consideration received
of $750 million relating to the sale of our 50% interest in Kalgoorlie.
This was combined with dividends received and shareholder
loan repayments from equity method investments of $217 million,
and lower investment purchases of $155 million. The investing
inflows more than offset an increase in capital expenditures in
the current year.
Net financing cash outflows for 2019 amounted to
$1,139 million, compared to $925 million in the prior year. The higher
outflows are primarily due to increased dividend payments. This
was due to the first quarter 2019 payment of dividends declared
in the fourth quarter of 2018 by Barrick and Randgold of $67 million
and $256 million, respectively. This was combined with an increase
in dividends declared starting in the first quarter of 2019, reflecting
Barrick’s profitability and financial strength and is in line with the
commitment to shareholder returns when the Merger was announced.
Net financing cash outflows were also impacted by an increase in
disbursements to non-controlling interests, partially offset by lower
debt repayments during the year.
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
$ 3,314 million
n Credit
n Credit
$ 363 million
n Market
n Market
$ 258 million
n Liquidity
$ 1,155 million
n Liquidity
$ 5,564 million
n Interest rate
$ 43 million
n Market
$ 9 million
n Market
a. Refer to notes 25, 26 and 28 to the Financial Statements for more information regarding financial instruments, fair value measurements and financial
risk management, respectively.
104
MANAGEMENT’S DISCUSSION AND ANALYSISBarrick Gold Corporation
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)
Debta
Repayment of principalb
Capital leases
Interest
Provisions for environmental rehabilitationc
Restricted share units
Pension benefits and other post-retirement benefits
Minimum royalty paymentsd
Purchase obligations for supplies and consumablese
Capital commitmentsf
Social development costsg
Deposit on Pascua-Lama silver sale agreementh
14
25
323
169
28
27
27
473
155
30
253
Payments due
as at December 31, 2019
2020
2021
2022
2023
2024
2025 and
thereafter
7
15
321
174
11
7
1
229
111
8
0
884
337
12
314
193
3
7
1
142
37
7
0
1,053
0
8
307
176
0
7
1
142
27
3
0
671
0
5
306
143
0
6
1
142
31
6
0
5,109
32
4,445
2,103
0
99
0
553
22
53
0
Total
5,467
97
6,016
2,958
42
153
31
1,681
383
107
253
Total
1,524
640
12,416
17,188
a. 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, 2019.
Interest is calculated on our long-term debt obligations using both fixed and variable rates.
b. Repayment of principal – On January 31, 2020, we completed a make-whole repurchase of the outstanding $337 million of principal of the 3.85% notes due
2022. The $337 million of principal is included in the table above.
c. Provisions for environmental rehabilitation – Amounts presented in the table represent the undiscounted uninflated future payments for the expected cost of
provisions for environmental rehabilitation.
d. Minimum royalty payments are related to continuing operations and are presented net of recoverable amounts.
e. 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.
f. Capital commitments – Purchase obligations for capital expenditures include only those items where binding commitments have been entered into.
g. Social development costs – Includes a commitment of $42 million ($28 million in 2020 and $14 million in 2025 and thereafter) related to the funding of a power
transmission line in Argentina.
h. Deposit on Pascua-Lama silver sale agreement – Relates to our silver sale agreement with Wheaton Precious Metals Corp. Refer to note 24 to the Financial
Statements for more information.
105
MANAGEMENT’S DISCUSSION AND ANALYSISFinancial Report 2019
Review of Quarterly Results
Quarterly Informationa
2019
2018
($ millions, except where indicated)
Q4
Q3
Q2
Q1
Q4
Q3
Q2
Q1
Revenues
Realized price per ounce – goldb
Realized price per pound – copperb
Cost of sales
Net earnings (loss)
Per share (dollars)c
Adjusted net earningsb
Per share (dollars)b,c
Operating cash flow
Cash capital expenditures
Free cash flowb
2,883
1,483
2.76
1,987
1,387
0.78
300
0.17
875
446
429
2,678
1,476
2.55
1,889
2,277
1.30
264
0.15
1,004
502
502
2,063
1,317
2.62
1,545
194
0.11
154
0.09
434
379
55
2,093
1,307
3.07
1,490
111
0.06
184
0.11
520
374
146
1,904
1,223
2.76
1,577
(1,197)
(1.02)
69
0.06
411
374
37
1,837
1,216
2.76
1,315
1,712
1,313
3.11
1,176
(94)
(0.08)
81
0.07
141
313
(172)
1,790
1,332
2.98
1,152
158
0.14
170
0.15
507
326
181
(412)
(0.35)
89
0.08
706
387
319
a. Sum of all the quarters may not add up to the annual total due to rounding.
b. 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 107 to 132 of this MD&A.
c. 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 discipline
and growing operating cash flow. The positive free cash flow4
generated, combined with the proceeds from various divestitures,
have allowed us to continually strengthen our balance sheet over
the past two years.
In the fourth quarter of 2019, we recorded $22 million (net of
tax and non-controlling interests) of net impairment charges, mainly
relating to a charge at Pascua-Lama of $296 million, partially offset
by a net impairment reversal at Pueblo Viejo of $277 million. We also
recorded a $628 million gain on the de-recognition of the deferred
revenue liability relating to our silver sale agreement with Wheaton
Precious Metals Corp., a gain of $408 million resulting from the sale
of our 50% interest in Kalgoorlie, and a gain of $216 million on a
settlement of customs duty and indirect taxes at Lumwana. In the
third quarter of 2019, net earnings and cash flows were impacted by
the formation of Nevada Gold Mines and the commencement of the
contribution of its operations to Barrick’s net earnings and cash
flows. Net earnings in the third quarter of 2019 includes a $1.5 billion
(net of tax effects) gain on remeasurement of Turquoise Ridge as
a result of its contribution to Nevada Gold Mines and a $663 million
(net of tax effects) impairment reversal at Lumwana. Starting in the
first quarter of 2019, we had an increase in sales volume due to
the Merger and the commencement of the contribution of Randgold’s
operations to Barrick’s net earnings and cash flows. 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 in the fourth
quarter of 2018 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.
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
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.
106
MANAGEMENT’S DISCUSSION AND ANALYSISBarrick Gold Corporation
There were no changes in the Company’s internal control
over financial reporting during the fourth quarter of 2019 that have
materially affected, or are reasonably likely to materially affect,
the Company’s internal control over financial reporting.
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, 2019.
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)
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, 2019 will be included in Barrick’s
2019 Annual Report and its 2019 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 to the Financial Statements, including
a summary of current and future changes in accounting policies.
Non-GAAP Financial Performance Measures
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 to the accompanying
Financial Statements.
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.
107
MANAGEMENT’S DISCUSSION AND ANALYSISFinancial Report 2019 Reconciliation of Net Earnings to Net Earnings per Share, Adjusted Net Earnings and Adjusted Net Earnings per Share
For the three months ended
For the years ended
($ millions, except per share amounts in dollars)
12/31/19
9/30/19
12/31/19
12/31/18
12/31/17
Net earnings (loss) attributable to equity holders
of the Company
Impairment charges (reversals) related to
long-lived assetsa
Acquisition/disposition (gains) lossesb
(Gain) loss on currency translation
Significant tax adjustmentsc
Other (income) expense adjustmentsd
Unrealized gains (losses) on non-hedge
derivative instruments
Tax effect and non-controlling intereste
Adjusted net earnings
Net earnings (loss) per sharef
Adjusted net earnings per sharef
1,387
2,277
3,969
(1,545)
1,438
(566)
(414)
53
74
(845)
0
611
300
0.78
0.17
(872)
(1,901)
40
35
53
1
631
264
1.30
0.15
(1,423)
(2,327)
109
34
(687)
0
1,227
902
2.26
0.51
900
(68)
136
742
366
1
(123)
409
(1.32)
0.35
(212)
(911)
72
244
178
(1)
68
876
1.23
0.75
a. Net impairment reversals for the current year primarily relate to non-current asset reversals at Pueblo Viejo, partially offset by impairment charges at
Pascua-Lama in the fourth quarter of 2019. This was further impacted by non-current asset reversals at Lumwana in the third quarter of 2019. Net impairment
charges for 2018 primarily relate to non-current asset impairments at Lagunas Norte and non-current asset and goodwill impairments at Veladero.
b. Acquisition/disposition gains for the current year primarily relate to the gain on the sale of our 50% interest in Kalgoorlie in the fourth quarter of 2019 and the
gain on the remeasurement of Turquoise Ridge to fair value as a result of its contribution to Nevada Gold Mines in the third quarter of 2019.
c. Significant tax adjustments in 2018 primarily relate to the de-recognition of our Canadian and Peruvian deferred tax assets.
d. Other expense adjustments for the current year primarily relate to the gain on the de-recognition of the deferred revenue liability relating to our silver sale agreement
with Wheaton Precious Metals Corp. and the gain on a settlement of customs duty and indirect taxes at Lumwana, both occurring in the fourth quarter of 2019.
e. Tax effect and non-controlling interest for the current year primarily relates to the impairment charges related to long-lived assets.
f. 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)
12/31/19
9/30/19
12/31/19
12/31/18
12/31/17
Net cash provided by operating activities
Capital expenditures
Free cash flow
875
(446)
429
1,004
(502)
2,833
(1,701)
1,765
(1,400)
2,065
(1,396)
502
1,132
365
669
For the three months ended
For the years ended
108
MANAGEMENT’S DISCUSSION AND ANALYSISBarrick Gold Corporation
Total 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
Total 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 (a market development organization for the gold industry
comprised of and funded by 25 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 its ability to generate
positive cash flow, both on an individual site basis and an overall
company basis.
Total cash costs start 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 total cash costs and include sustaining capital
expenditures, sustaining leases, 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.
Starting from the first quarter of 2019, we have renamed “cash
costs” to “total cash costs” when referring to our gold operations.
The calculation of total cash costs is identical to our previous
calculation of cash costs with only a change in the naming
convention of this non-GAAP measure.
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 non-sustaining leases, 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.
Starting from the first quarter of 2019, we have included
sustaining capital expenditures and project capital expenditures
on a cash basis instead of an accrual basis. As a result of adopting
IFRS 16 Leases, the full lease amount is included in accrued
capital expenditures on initial recognition. We believe that the
change in capital expenditures from an accrual basis to a cash basis
better reflects the timing of costs associated with our operations.
The original World Gold Council (“WGC”) Guidance Note explicitly
excluded certain financing activities from all-in sustaining costs and
all-in costs. As a result of the new lease accounting standard, the
WGC Guidance Note was updated to include both the principal and
interest portion of the cash lease payment in the all-in sustaining
costs and all-in cost metrics. We have updated our calculation
accordingly. Prior periods have not been restated but would not
be materially different.
We believe that our use of total 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.
Total 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 production taxes 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, sustaining capital expenditures, sustaining leases,
general and administrative costs, minesite exploration and evaluation
costs, royalties and production taxes, reclamation cost accretion
and amortization and write-downs taken on inventory to net
realizable value.
109
MANAGEMENT’S DISCUSSION AND ANALYSISFinancial Report 2019 Reconciliation of Gold Cost of Sales to Total cash costs, All-in sustaining costs and All-in costs, including on a per ounce basis
For the three months ended
For the years ended
($ millions, except per ounce information in dollars)
Footnote
12/31/19
9/30/19
12/31/19
12/31/18
12/31/17
Cost of sales applicable to gold production
Depreciation
Cash cost of sales applicable to equity method investments
By-product credits
Realized (gains) losses on hedge and non-hedge derivatives
Non-recurring items
Other
Non-controlling interests
Total cash costs
General & administrative costs
Minesite exploration and evaluation costs
Minesite sustaining capital expenditures
Sustaining leases
Rehabilitation – accretion and amortization (operating sites)
Non-controlling interest, copper operations and other
1,896
(549)
57
(43)
1
(22)
(37)
(326)
1,831
(538)
45
(48)
1
(4)
(19)
(339)
6,514
(1,902)
226
(138)
1
(55)
(102)
(878)
4,621
(1,253)
0
(131)
3
(172)
(87)
(313)
4,836
(1,529)
0
(135)
23
0
(106)
(299)
977
31
24
394
4
7
(135)
929
3,666
2,668
2,790
68
22
406
5
28
(184)
212
69
1,320
27
65
(470)
265
45
975
0
81
(374)
248
47
1,109
0
64
(273)
a
b
c
d
e
f
g
h
All-in sustaining costs
1,302
1,274
4,889
3,660
3,985
Project exploration and evaluation and project costs
Community relations costs not related to current operations
Project capital expenditures
f
Rehabilitation – accretion and amortization (non-operating sites) g
h
Non-controlling interest and copper operations and other
e
60
0
46
3
(28)
64
1
96
5
(46)
273
2
370
22
(105)
338
4
459
33
(21)
307
4
273
20
(21)
All-in costs
1,383
1,394
5,451
4,473
4,568
Ounces sold – equity basis (000s ounces)
i
1,413
1,318
5,467
4,544
5,302
Cost of sales per ounce
Total cash costs per ounce
Total 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)
j,k
k
k,l
k
k,l
k
k,l
1,046
1,065
1,005
692
712
923
943
976
996
710
735
984
1,009
1,074
1,099
671
689
894
912
996
1,014
985
1,004
892
588
607
806
825
794
526
544
750
768
860
878
a. Realized (gains) losses on hedge and non-hedge derivatives
Includes realized hedge losses of $nil and $nil for the three months and year ended December 31, 2019, respectively (September 30,
2019: $nil; 2018: $4 million; 2017: $27 million), and realized non-hedge losses of $1 million and $1 million for the three months and year
ended December 31, 2019, respectively (September 30, 2019: $1 million; 2018: gains of $1 million; 2017: gains of $4 million). Refer to
note 5 to the Financial Statements for further information.
b. Non-recurring items
Non-recurring items in 2019 relate to organizational restructuring. These costs are not indicative of our cost of production and have been
excluded from the calculation of total cash costs.
c. Other
Other adjustments for the three months and year ended December 31, 2019 include the removal of total cash costs and by-product
credits associated with our Pierina mine, Golden Sunlight and Morila starting in the third quarter of 2019, and Lagunas Norte starting
in the fourth quarter of 2019, which all are mining incidental ounces as they enter closure, of $35 million and $92 million, respectively
(September 30, 2019: $19 million; 2018: $87 million; 2017: $108 million).
110
MANAGEMENT’S DISCUSSION AND ANALYSISBarrick Gold Corporation
d. Non-controlling interests
Non-controlling interests include non-controlling interests related to gold production of $477 million and $1,306 million, respectively,
for the three months and year ended December 31, 2019 (September 30, 2019: $506 million; 2018: $453 million; 2017: $454 million).
Non-controlling interests include Pueblo Viejo and Tanzania until September 30, 2019 (notwithstanding the completion of the Acacia
transaction on September 17, 2019, we consolidated our interest in Acacia and recorded a non-controlling interest of 36.1% in the income
statement for the entirety of the third quarter of 2019 as a matter of convenience). Starting January 1, 2019, the effective date of the
Merger, non-controlling interests also include Loulo-Gounkoto and Tongon and starting July 1, 2019, it also includes Nevada Gold Mines.
Refer to note 5 to the Financial Statements for further information.
e. 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 98 of this MD&A.
f.
Capital expenditures
Capital expenditures are related to our gold sites only and are presented on a 100% cash basis starting from January 1, 2019 and
on a 100% accrued basis for 2018 and 2017. 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 stripping at Rangefront declines, Cortez Crossroads, the Goldrush exploration declines, the
Deep South Expansion, and construction of the third shaft at Turquoise Ridge. Refer to page 97 of this MD&A.
g. 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.
h. 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 expenses, rehabilitation costs and capital expenditures incurred by our copper sites
and the non-controlling interest of our Tanzania operations until September 30, 2019 (notwithstanding the completion of the Acacia
transaction on September 17, 2019, we consolidated our interest in Acacia and recorded a non-controlling interest of 36.1% in the income
statement for the entirety of the third quarter of 2019 as a matter of convenience) and Pueblo Viejo and South Arturo (63.1% of South
Arturo from July 1, 2019 onwards as a result of its contribution to Nevada Gold Mines). Also removes the non-controlling interest of our
Loulo-Gounkoto and Tongon operating segments commencing January 1, 2019, the effective date of the Merger, and of Nevada Gold
Mines starting July 1, 2019. It also includes capital expenditures applicable to equity method investments. Figures remove the impact
of Pierina, Golden Sunlight and Morila starting in the third quarter of 2019, and Lagunas Norte starting in the fourth quarter of 2019.
The impact is summarized as the following:
($ millions)
For the three months ended
For the years ended
Non-controlling interest, copper operations and other
12/31/19
9/30/19
12/31/19
12/31/18
12/31/17
General & administrative costs
Minesite exploration and evaluation costs
Rehabilitation – accretion and amortization (operating sites)
Minesite sustaining capital expenditures
All-in sustaining costs total
Project exploration and evaluation and project costs
Project capital expenditures
All-in costs total
(3)
(6)
(1)
(125)
(135)
(14)
(14)
(28)
(22)
(9)
(10)
(143)
(184)
(12)
(34)
(46)
(58)
(16)
(13)
(383)
(470)
(54)
(51)
(105)
(104)
(3)
(6)
(261)
(374)
(16)
(5)
(21)
(21)
(12)
(10)
(230)
(273)
(17)
(4)
(21)
i.
Ounces sold – equity basis
Figures remove the impact of Pierina, Golden Sunlight and Morila starting in the third quarter of 2019, and Lagunas Norte starting in the
fourth quarter of 2019, which are mining incidental ounces as the sites enter closure.
111
MANAGEMENT’S DISCUSSION AND ANALYSISFinancial Report 2019
j.
Cost of sales per ounce
Figures remove the cost of sales impact of Pierina of $14 million and $113 million, respectively, for the three months and year ended
December 31, 2019 (September 30, 2019: $28 million; 2018: $116 million; 2017: $174 million); starting in the third quarter of 2019,
Golden Sunlight of $nil and $1 million, respectively, for the three months and year ended December 31, 2019 (September 30, 2019:
$1 million; 2018: $nil; 2017: $nil) and Morila of $13 million and $23 million, respectively, for the three months and year ended December 31,
2019 (September 30, 2019: $10 million; 2018: $nil; 2017: $nil); and starting in the fourth quarter of 2019, Lagunas Norte of $26 million
and $26 million, respectively, for the three months and year ended December 31, 2019 (September 30, 2019: $nil; 2018: $nil; 2017: $nil),
which are mining incidental ounces as these sites enter closure. Cost of sales per ounce excludes non-controlling interest related to
gold production. Cost of sales applicable to gold per ounce is calculated using cost of sales on an attributable basis (removing the
non-controlling interest of 40% Pueblo Viejo, 36.1% Tanzania until September 30, 2019 (notwithstanding the completion of the Acacia
transaction on September 17, 2019, we consolidated our interest in Acacia and recorded a non-controlling interest of 36.1% in the income
statement for the entirety of the third quarter of 2019 as a matter of convenience) and 40% South Arturo from cost of sales (63.1% of
South Arturo from July 1, 2019 onwards as a result of its contribution to Nevada Gold Mines)), divided by attributable gold ounces. The
non-controlling interest of 20% Loulo-Gounkoto and 10.3% of Tongon is also removed from cost of sales and our proportionate share
of cost of sales attributable to equity method investments (Kibali and Morila) is included commencing January 1, 2019, the effective date
of the Merger. Also removes the non-controlling interest of 38.5% Nevada Gold Mines from cost of sales from July 1, 2019 onwards.
k. Per ounce figures
Cost of sales per ounce, cash costs per ounce, all-in sustaining costs per ounce and all-in costs per ounce may not calculate based on
amounts presented in this table due to rounding.
l.
Co-product costs per ounce
Cash costs per ounce, all-in sustaining costs per ounce and all-in costs per ounce presented on a co-product basis remove the impact of
by-product credits of our gold production (net of non-controlling interest) calculated as:
($ millions)
For the three months ended
For the years ended
By-product credits
Non-controlling interest
By-product credits (net of non-controlling interest)
12/31/19
9/30/19
12/31/19
12/31/18
12/31/17
43
(17)
26
48
(16)
32
138
(48)
90
131
(45)
86
135
(30)
105
112
MANAGEMENT’S DISCUSSION AND ANALYSISBarrick Gold Corporation
Reconciliation of Gold Cost of Sales to Total cash costs, All-in sustaining costs and All-in costs, including on a per ounce basis,
by operating segment
($ millions, except per ounce information in dollars)
For the three months ended 12/31/19
Footnote
Carlina Cortezb
Ridgec Canyond Phoenixd Gold Minese Hemlo Viejo Veladero
Turquoise
Long
Nevada
Pueblo
Cost of sales applicable to gold production
Depreciation
By-product credits
Non-recurring items
Other
Non-controlling interests
Total cash costs
General & administrative costs
Minesite exploration and evaluation costs
Minesite sustaining capital expenditures
Sustaining leases
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)
Cost of sales per ounce
Total cash costs per ounce
Total 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)
f
g
h
i
g
h
j,k
k
k,l
k
k,l
k
k,l
436
(92)
0
(1)
0
(132)
211
0
8
92
0
202
(58)
0
0
0
(54)
90
0
3
65
0
0
(45)
4
(29)
266
133
0
0
0
266
275
975
766
0
6
(3)
136
132
945
681
155
(55)
(1)
0
0
(38)
61
0
1
29
0
(1)
(9)
81
0
11
(5)
87
99
55
(38)
0
0
0
(7)
10
0
3
17
0
(1)
(7)
22
0
0
0
22
33
86
(22)
(26)
0
0
(14)
24
0
1
8
0
(2)
(4)
27
0
0
0
27
26
934
(265)
(27)
(1)
0
(245)
396
0
16
211
0
87
(7)
0
(21)
0
0
59
0
0
15
1
189
(55)
(12)
(1)
0
(48)
73
0
0
23
0
0
(94)
0
0
4
(11)
529
75
89
0
38
(17)
550
565
0
0
0
6
0
(3)
75
92
53
174
82
(29)
(3)
0
0
0
50
0
1
28
0
1
0
80
0
0
0
80
70
971
1,026
2,025
1,038 1,632
660
1,138
625
317
902
711 1,091
422
710
767
684
965
1,012
966
1,015
965
1,039
632
800
807
863
319
1,504
760 1,094
462
733
657
1,034
944 1,380
517
1,142
659
1,636
993 1,383
557
1,165
657
1,034
982 1,384
525
1,142
966
1,042
870
659
1,636
1,031 1,387
565
1,165
113
MANAGEMENT’S DISCUSSION AND ANALYSISFinancial Report 2019
($ millions, except per ounce information in dollars)
For the three months ended 12/31/19
Footnote
Porgera Kalgoorliem Gounkoto Kibali
Maran Tongon Bulyanhulun Buzwagin
Loulo-
North
75
(12)
(1)
0
0
0
62
0
1
11
1
(1)
0
74
0
0
0
74
82
909
757
765
894
902
894
44
(6)
(1)
0
0
0
37
0
2
6
0
1
0
46
0
0
0
46
39
186
(73)
0
0
0
(22)
91
0
5
46
0
1
(11)
106
(52)
(1)
0
0
0
53
0
2
9
1
0
0
105
(35)
(1)
0
0
0
69
0
0
15
0
1
0
132
65
85
0
1
0
133
144
0
0
0
65
89
0
1
0
86
103
99
(45)
(1)
0
0
(6)
47
0
1
3
1
0
(1)
51
0
0
0
51
59
12
(5)
0
0
0
0
7
0
0
1
0
0
0
8
0
1
0
9
9
31
(2)
0
0
0
0
29
0
0
0
1
0
0
30
0
0
0
30
26
1,127
1,037 1,205 1,021
1,476
1,293
1,235
631
608
675
803
752
1,144
631
611
687
1,172
917
740
830
1,175
1,172
917
743
842
922
746
840
805
867
869
867
805
909
962
935
1,161
1,169
1,186
1,169
940
943
902
1,175
922
749
852
869
988
1,186
Cost of sales applicable to gold production
Depreciation
By-product credits
Non-recurring items
Other
Non-controlling interests
Total cash costs
General & administrative costs
Minesite exploration and evaluation costs
Minesite sustaining capital expenditures
Sustaining leases
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)
Cost of sales per ounce
Total cash costs per ounce
Total 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)
f
g
h
i
g
h
j,k
k
k,l
k
k,l
k
k,l
114
MANAGEMENT’S DISCUSSION AND ANALYSISBarrick Gold Corporation
($ millions, except per ounce information in dollars)
For the three months ended 9/30/19
Footnote
Carlina Cortezb
Ridgec Canyond Phoenixd Gold Minese Hemlo Viejo Veladero
Turquoise
Long
Nevada
Pueblo
Cost of sales applicable to gold production
Depreciation
By-product credits
Non-recurring items
Other
Non-controlling interests
Total cash costs
General & administrative costs
Minesite exploration and evaluation costs
Minesite sustaining capital expenditures
Sustaining leases
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)
Cost of sales per ounce
Total cash costs per ounce
Total 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
f
g
h
i
g
h
j,k
k
k,l
k
k,l
k
445
(101)
(1)
0
0
(133)
210
0
5
102
0
8
(48)
277
0
0
0
277
272
170
(53)
(1)
0
0
(45)
71
0
2
36
0
4
(15)
98
0
49
(18)
129
126
168
(70)
(1)
0
0
(37)
60
0
2
27
1
3
(12)
81
0
13
(5)
89
96
46
(32)
0
0
0
(5)
9
0
3
9
0
1
(5)
17
0
0
0
17
24
68
(14)
(22)
0
0
(13)
19
0
0
14
0
4
(6)
31
0
0
0
31
19
897
(270)
(25)
0
0
(233)
369
0
12
188
1
55
(6)
(1)
(1)
0
0
47
0
0
15
0
181
(48)
(17)
0
0
(48)
68
0
0
27
0
20
(86)
1
0
3
(12)
504
63
86
0
85
(31)
558
537
0
0
0
0
0
0
63
86
50
136
72
(25)
(1)
0
0
0
46
0
1
19
1
1
0
68
0
0
0
68
59
1,007
829
1,077
1,170
2,186
1,027 1,083
807
1,243
775
570
622
353
1,010
693
953
504
773
776
1,014
571
772
1,015
773
1,014
1,020
622
840
840
927
355
1,734
694
956
587
799
714
1,622
946 1,280
631
1,142
716
2,346
947 1,283
714
1,168
714
1,622
1,048 1,280
636
1,142
(on a co-product basis)
k,l
1,015
1,021
927
716
2,346
1,049 1,283
719
1,168
115
MANAGEMENT’S DISCUSSION AND ANALYSISFinancial Report 2019
($ millions, except per ounce information in dollars)
For the three months ended 9/30/19
Footnote
Porgera
Kalgoorliem
Lagunas
Loulo-
Norteo Gounkoto
Kibali
North
Maran
Tongon
Bulyanhulun
Buzwagin
Cost of sales applicable to
gold production
Depreciation
By-product credits
Non-recurring items
Other
Non-controlling interests
Total cash costs
General & administrative costs
Minesite exploration and
evaluation costs
Minesite sustaining
capital expenditures
Sustaining leases
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)
f
g
h
i
g
h
77
(11)
(1)
0
0
0
65
0
0
14
1
(1)
0
79
0
0
0
79
75
60
(10)
0
0
0
0
50
0
2
15
1
0
0
68
0
0
0
54
(5)
(2)
(3)
0
0
44
0
1
0
0
2
0
199
(76)
0
0
0
(25)
107
(57)
0
0
0
0
52
(17)
(1)
0
0
(13)
98
50
21
0
3
60
2
0
(13)
0
0
13
0
0
0
0
0
14
0
1
(5)
102
(44)
0
0
0
(6)
52
0
0
4
1
0
0
47
150
63
31
57
0
0
0
0
1
(1)
0
1
0
0
1
0
68
47
150
64
32
58
33
155
89
36
0
0
0
57
66
11
(5)
0
0
0
(2)
4
0
0
0
0
0
0
4
0
1
0
5
5
35
(2)
0
0
0
(12)
21
0
0
0
0
0
0
21
0
0
0
21
18
795
869
871
869
754
769
794
866
1,210
1,220
1,228
1,220
Cost of sales per ounce
j,k
1,024
1,037
1,661
1,018 1,187
907
1,396
1,288
1,292
k
868
856
1,327
630
554
603
793
729
1,202
Total cash costs per ounce
Total cash costs per ounce
(on a co-product basis)
All-in sustaining costs per ounce
All-in sustaining costs per ounce
k,l
878
859
1,374
630
554
608
k
1,053
1,170
1,422
966
703
850
(on a co-product basis)
k,l
1,063
1,173
1,469
966
703
855
All-in costs per ounce
All-in costs per ounce
k
1,053
1,170
1,422
971
717
886
(on a co-product basis)
k,l
1,063
1,173
1,469
971
717
891
871
891
1,228
116
MANAGEMENT’S DISCUSSION AND ANALYSISBarrick Gold Corporation
($ 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
Total cash costs
General & administrative costs
Minesite exploration and evaluation costs
Minesite sustaining capital expenditures
Sustaining leases
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)
Cost of sales per ounce
Total cash costs per ounce
Total 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)
Footnote
Carlina Cortezb
Turquoise
Long
Ridgec Canyond
For the year ended 12/31/19
Phoenixd Gold Minese Hemlo
Nevada
North
America
f
g
h
i
g
h
j,k
k
k,l
k
k,l
k
k,l
1,310
(312)
(1)
(10)
0
(266)
751
(240)
(1)
0
0
(99)
425
(140)
(2)
0
0
(75)
721
411
208
0
17
307
0
0
8
129
0
0
4
70
1
10
(102)
16
(44)
2
(21)
953
520
264
0
0
0
0
186
(21)
953
685
967
798
1,004
762
746
515
747
516
984
651
985
652
984
854
0
45
(10)
299
356
846
585
588
732
735
834
101
(70)
0
0
0
(12)
19
0
6
26
0
0
(12)
39
0
0
0
39
57
154
(36)
(48)
0
0
(27)
43
0
1
22
0
2
(10)
58
0
0
0
58
45
2,741
(798)
(52)
(10)
0
(479)
247
(27)
(1)
(23)
0
0
2,988
(825)
(53)
(33)
0
(479)
1,402
196
1,598
0
36
554
1
30
(189)
0
1
47
1
2
0
0
37
601
2
32
(189)
1,834
247
2,081
0
295
(48)
2,081
2,223
0
0
0
247
217
1,088
2,093
924
1,137
333
335
681
683
681
947
634
904
1,600
1,282
1,935
1,282
657
907
828
1,140
851
1,143
938
1,141
0
295
(48)
2,328
2,440
943
655
677
851
873
953
985
855
837
683
1,935
961
1,144
975
117
MANAGEMENT’S DISCUSSION AND ANALYSISFinancial Report 2019
($ 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
Total cash costs
General & administrative costs
Minesite exploration and evaluation costs
Minesite sustaining capital expenditures
Sustaining leases
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)
Cost of sales per ounce
Total cash costs per ounce
Total 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)
Footnote
Pueblo Viejo
Veladero
For the year ended 12/31/19
Latin America &
Porgera Kalgoorliem Asia Pacific
721
(196)
(61)
(2)
0
(187)
275
0
0
107
0
10
(47)
345
8
0
(3)
350
584
747
471
536
592
657
600
665
323
(115)
(8)
(1)
0
0
199
0
3
91
2
5
0
284
(42)
(3)
0
0
0
239
0
2
45
3
(2)
0
223
(38)
(1)
0
0
0
184
0
6
52
4
3
0
1,551
(391)
(73)
(3)
0
(187)
897
0
11
295
9
16
(47)
300
287
249
1,181
0
15
0
315
271
1,188
734
759
1,105
1,130
1,162
1,187
0
0
0
287
285
994
838
848
1,003
1,013
1,003
1,013
0
0
0
249
210
1,062
873
876
1,183
1,186
1,183
1,186
8
15
(3)
1,201
1,350
937
664
716
874
926
885
937
f
g
h
i
g
h
j,k
k
k,l
k
k,l
k
k,l
118
MANAGEMENT’S DISCUSSION AND ANALYSISBarrick Gold Corporation
($ millions, except per ounce information in dollars)
For the year ended 12/31/19
Africa &
Footnote Gounkoto Kibali Maran Tongon Bulyanhulun Buzwagin Middle East
North
Loulo-
Cost of sales applicable to gold production
Depreciation
By-product credits
Non-recurring items
Other
Non-controlling interests
Total cash costs
General & administrative costs
Minesite exploration and evaluation costs
Minesite sustaining capital expenditures
Sustaining leases
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)
Cost of sales per ounce
Total cash costs per ounce
Total 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)
f
g
h
i
g
h
j,k
k
k,l
k
k,l
k
k,l
751
(295)
0
0
0
(91)
403 310
(97)
(196)
(2)
(1)
0
0
0
0
(51)
0
402
(186)
(1)
0
0
(23)
365
206 160
192
0
12
165
3
0
3
41
1
0
0
48
0
1
(37)
0
0
3
(13)
0
3
11
2
0
(2)
509
251 198
206
0
4
(1)
0
2
0
0
9
(3)
512
253 204
575
363 248
0
0
0
206
245
45
(19)
(1)
0
0
(7)
18
0
0
2
0
1
(1)
20
0
3
(1)
22
27
138
(8)
(1)
0
0
(36)
2,049
(801)
(6)
0
0
(208)
93
1,034
0
0
0
1
1
0
0
18
267
7
6
(53)
95
1,279
0
0
0
95
81
1,044 1,111 953
1,469
1,207
1,240
634
568 646
787
676
1,156
634
571 654
886
693 802
886
696 810
891
701 824
789
844
846
846
709
773
806
840
1,166
1,178
1,188
1,178
891
704 832
848
873
1,188
0
18
(5)
1,292
1,539
1,126
673
677
834
838
842
846
119
MANAGEMENT’S DISCUSSION AND ANALYSISFinancial Report 2019
($ millions, except per ounce information in dollars)
For the year ended 12/31/18
Footnote Carlina Cortezb
Ridgec Canyond Phoenixd Gold Minese Hemlo Sunlighto
Viejo Veladero
Turquoise
Long
Nevada
Golden Pueblo
Cost of sales applicable to
gold production
Depreciation
By-product credits
Non-recurring items
Other
Non-controlling interests
Total cash costs
General & administrative costs
Minesite exploration and
evaluation costs
Minesite sustaining
capital expenditures
Sustaining leases
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)
f
g
h
i
g
h
886
(262)
(1)
0
0
0
828
(386)
(1)
0
0
0
206
(28)
0
0
0
0
1,921
(677)
(2)
0
0
0
195
(18)
(1)
0
0
0
623
441
178
1,242
176
0
13
195
0
5
(10)
0
6
65
0
25
0
0
0
20
0
1
0
0
19
280
0
31
(10)
0
0
42
0
4
0
53
0
0
0
0
0
53
0
0
3
0
3
0
732
(185)
(90)
(2)
2
(183)
310
(121)
(8)
(4)
0
0
274
177
0
0
145
0
10
(62)
0
2
143
0
1
0
826
537
199
1,562
222
59
367
323
0
0
0
0
276
0
0
42
0
6
354
0
0
0
0
0
0
0
0
0
0
0
0
0
826
813
241
1,922
222
59
367
323
842 1,255
Cost of sales per ounce
j,k 1,054
659
Total cash costs per ounce
Total cash costs per ounce
(on a co-product basis)
All-in sustaining costs per ounce
All-in sustaining costs per ounce
k
740
351
k,l
742
352
k
983
430
(on a co-product basis)
k,l
985
431
All-in costs per ounce
All-in costs per ounce
k
983
649
262
783
678
678
756
756
916
2,359
168
30
590
280
814
1,157
1,755
750
1,112
526
1,046
1,762
465
629
527
1,050
1,772
553
654
664
1,318
1,954
623
1,154
665
1,322
1,964
711
1,179
814
1,320
1,954
623
1,154
(on a co-product basis)
k,l
985
650
916
815
1,324
1,964
711
1,179
120
MANAGEMENT’S DISCUSSION AND ANALYSISBarrick Gold Corporation
($ millions, except per ounce information in dollars)
For the year ended 12/31/18
Footnote Porgera Kalgoorlie Norteo Gounkotop Kibalip Maran Tongonp Bulyanhulun Buzwagin Morilao,p
Lagunas
Loulo-
North
Cost of sales applicable to
gold production
Depreciation
By-product credits
Non-recurring items
Other
Non-controlling interests
Total cash costs
General & administrative costs
Minesite exploration and
evaluation costs
Minesite sustaining
capital expenditures
Sustaining leases
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)
Cost of sales per ounce
Total cash costs per ounce
Total cash costs per ounce
(on a co-product basis)
All-in sustaining costs per ounce
All-in sustaining costs per ounce
f
g
h
i
g
h
213
(42)
(2)
0
0
0
169
0
0
62
0
(1)
0
288 337
(46)
(52)
(13)
(2)
(166)
0
0
0
0
0
234
112
0
10
26
0
4
0
0
2
20
0
25
0
230
274 159
0
0
0
0
0
0
0
2
0
230
274 161
213
996
796
j,k
k
320 251
899 1,342
732 448
k,l
810
737 499
k
1,083
857 636
(on a co-product basis)
k,l
1,097
862 687
All-in costs per ounce
All-in costs per ounce
k
1,083
857 644
(on a co-product basis)
k,l
1,097
862 695
264
(62)
(2)
0
0
(72)
128
0
0
74
0
2
(27)
177
0
8
(3)
182
212
795
603
609
830
836
855
861
53
(24)
(1)
0
0
(10)
18
0
0
3
0
1
(1)
21
0
4
(1)
24
139
(3)
(1)
0
0
(49)
86
0
0
4
0
1
(2)
89
0
0
0
89
27
1,231
94
939
650
916
674
754
778
848
922
947
953
947
872
953
121
MANAGEMENT’S DISCUSSION AND ANALYSISFinancial Report 2019
($ millions, except per ounce information in dollars)
For the year ended 12/31/17
Footnote
Carlina Cortezb
Ridgec Canyond Phoenixd Gold Minese Hemlo Sunlighto Viejo Veladeroq
Turquoise
Long
Nevada
Golden Pueblo
Cost of sales applicable to
gold production
Depreciation
By-product credits
Non-recurring items
Other
Non-controlling interests
Total cash costs
General & administrative costs
Minesite exploration and
evaluation costs
Minesite sustaining
capital expenditures
Sustaining leases
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)
f
g
h
i
g
h
889
(260)
(2)
0
0
(1)
980
(533)
(1)
0
0
0
159
(28)
0
0
0
0
2,028
(821)
(3)
0
0
(1)
193
(27)
(1)
0
0
0
55
(3)
0
0
0
0
730
(229)
(72)
0
0
(171)
410
(119)
(17)
0
0
0
626
446
131
1,203
165
52
258
274
0
10
264
0
10
(3)
0
6
96
0
15
0
0
0
32
0
1
0
0
16
392
0
26
(3)
0
0
44
0
5
0
0
0
0
0
2
0
0
0
114
0
13
(51)
0
3
173
0
2
0
907
563
164
1,634
214
54
334
452
0
0
0
0
198
0
0
4
0
8
228
0
0
5
0
0
1
0
0
0
0
0
0
0
907
761
168
1,870
219
55
334
452
868 1,489
2,579
196
41
637
Cost of sales per ounce
j,k
1,024
657
Total cash costs per ounce
Total cash costs per ounce
(on a co-product basis)
All-in sustaining costs per ounce
All-in sustaining costs per ounce
k
721
300
k,l
723
301
k
1,045
380
(on a co-product basis)
k,l
1,047
381
All-in costs per ounce
All-in costs per ounce
k
1,045
512
222
715
589
589
733
733
753
458
897
786
467
986
1,334
699
841
1,265
405
598
468
846
1,270
475
634
1,092
1,329
525
636
987
635
1,097
1,334
595
1,025
726
1,119
1,349
525
987
(on a co-product basis)
k,l
1,047
513
753
727
1,124
1,354
595
1,025
122
MANAGEMENT’S DISCUSSION AND ANALYSISBarrick Gold Corporation
($ millions, except per ounce information in dollars)
For the year ended 12/31/17
Footnote Porgera Kalgoorlie Norteo Gounkotop Kibalip Maran Tongonp Bulyanhulun Buzwagin Morilao,p
Lagunas
Loulo-
North
Cost of sales applicable to
gold production
Depreciation
By-product credits
Non-recurring items
Other
Non-controlling interests
Total cash costs
General & administrative costs
Minesite exploration and
evaluation costs
Minesite sustaining
capital expenditures
Sustaining leases
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)
Cost of sales per ounce
Total cash costs per ounce
Total cash costs per ounce
(on a co-product basis)
All-in sustaining costs per ounce
All-in sustaining costs per ounce
239
(39)
(3)
0
0
0
197
0
1
55
0
(2)
0
292 245
(68)
(58)
(16)
(2)
0
0
0
0
0
0
232 161
0
9
20
0
3
0
0
4
20
0
7
0
251
264 192
0
0
0
0
0
0
0
5
0
251
264 197
253
944
781
791
993
362 397
806 617
642 405
647 446
729 483
f
g
h
i
g
h
j,k
k
k,l
k
(on a co-product basis)
k,l
1,003
734 524
All-in costs per ounce
All-in costs per ounce
k
993
729 497
(on a co-product basis)
k,l
1,003
734 538
223
(56)
(1)
0
0
(60)
106
0
0
83
0
3
(31)
161
0
10
(4)
167
207
683
509
513
773
777
804
808
142
(47)
(3)
0
1
(33)
104
(4)
(3)
0
0
(34)
60
63
0
0
49
0
2
(18)
93
0
1
0
0
0
5
0
1
(2)
67
0
0
0
94
67
69
1,309
103
643
848
600
872
1,319
1,343
1,330
616
632
648
632
1,354
648
a. On July 1, 2019, Barrick’s Goldstrike and Newmont’s Carlin were contributed to Nevada Gold Mines and are now referred to as Carlin.
As a result, the amounts presented represent Goldstrike on a 100% basis (including our 60% share of South Arturo) up until June 30,
2019, and the combined results of Carlin and Goldstrike (including our 60% share of South Arturo) on a 61.5% basis thereafter.
b. On July 1, 2019, Cortez was contributed to Nevada Gold Mines, a joint venture with Newmont. As a result, the amounts presented are
on a 100% basis up until June 30, 2019, and on a 61.5% basis thereafter.
c. Barrick owned 75% of Turquoise Ridge through to the end of the second quarter of 2019, with our joint venture partner, Newmont, owning
the remaining 25%. Turquoise Ridge was proportionately consolidated on the basis that the joint venture partners that have joint control
have rights to the assets and obligations for the liabilities relating to the arrangement. The figures presented in this table are based on
our 75% interest in Turquoise Ridge until June 30, 2019. On July 1, 2019, Barrick’s 75% interest in Turquoise Ridge and Newmont’s Twin
Creeks and 25% interest in Turquoise Ridge were contributed to Nevada Gold Mines. Starting July 1, 2019, the results represent our
61.5% share of Turquoise Ridge and Twin Creeks, now referred to as Turquoise Ridge.
123
MANAGEMENT’S DISCUSSION AND ANALYSISFinancial Report 2019
d. These sites were acquired as a result of the formation of Nevada Gold Mines on July 1, 2019. The results for 2018 and 2017 did not form
a part of the Barrick consolidated results as these sites were acquired as a result of the formation of Nevada Gold Mines. Therefore, no
comparative figures are provided.
e. Represents the combined results of Cortez, Goldstrike (including our 60% share of South Arturo) and our 75% interest in Turquoise Ridge
until June 30, 2019. Commencing July 1, 2019, the date Nevada Gold Mines was established, the results represent our 61.5% interest
in Cortez, Carlin (including Goldstrike and 60% of South Arturo), Turquoise Ridge (including Twin Creeks), Phoenix and Long Canyon.
f.
Non-recurring items
Non-recurring items in 2019 relate to organizational restructuring. These costs are not indicative of our cost of production and have been
excluded from the calculation of total cash costs.
g. Exploration and evaluation costs
Exploration, evaluation and project expenses are presented as minesite sustaining if it supports current mine operations and project if it
relates to future projects. Refer to page 98 of this MD&A.
h. Capital expenditures
Capital expenditures are related to our gold sites only and are presented on a 100% cash basis starting from January 1, 2019 and
on a 100% accrued basis for 2018 and 2017. 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 stripping at Rangefront declines, Cortez Crossroads, the Goldrush exploration declines, the
Deep South Expansion, and construction of the third shaft at Turquoise Ridge. Refer to page 97 of this MD&A.
i.
j.
Rehabilitation – accretion and amortization
Includes depreciation on the assets related to rehabilitation provisions of our gold operations and accretion on the rehabilitation provision
of our gold operations, split between operating and non-operating sites.
Cost of sales per ounce
Cost of sales applicable 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% Tanzania until September 30, 2019 (notwithstanding the completion of the Acacia transaction on September 17,
2019, we consolidated our interest in Acacia and recorded a non-controlling interest of 36.1% in the income statement for the entirety of
the third quarter of 2019 as a matter of convenience) and 40% South Arturo from cost of sales (63.1% of South Arturo from July 1, 2019
onwards as a result of its contribution to Nevada Gold Mines)), divided by attributable gold ounces. The non-controlling interest of 20%
Loulo-Gounkoto and 10.3% of Tongon is also removed from cost of sales and our proportionate share of cost of sales attributable to
equity method investments (Kibali and Morila) is included commencing January 1, 2019, the effective date of the Merger. Also removes
the non-controlling interest of 38.5% Nevada Gold Mines from cost of sales from July 1, 2019 onwards.
k. Per ounce figures
Cost of sales per ounce, total 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.
l.
Co-product costs per ounce
Total cash costs per ounce, all-in sustaining costs per ounce and all-in costs per ounce presented on a co-product basis removes the
impact of by-product credits of our gold production (net of non-controlling interest) calculated as:
($ millions)
For the three months ended 12/31/19
Carlina
Cortezb
Turquoise
Ridgec
Long
Canyond
Phoenixd
By-product credits
Non-controlling interest
By-product credits (net of
non-controlling interest)
0
0
0
0
0
0
1
(1)
0
0
0
0
Nevada
Gold
Minese
27
(10)
26
(9)
17
17
Hemlo
Pueblo
Viejo
Veladero
0
0
0
12
(6)
6
3
0
3
($ millions)
For the three months ended 12/31/19
Loulo-
Porgera Kalgoorliem Gounkoto
Kibali
North
Maran
Tongon Bulyanhulun
Buzwagin
By-product credits
Non-controlling interest
By-product credits (net of
non-controlling interest)
1
0
1
1
0
1
0
0
0
1
0
1
1
0
1
1
0
1
0
0
0
0
0
0
124
MANAGEMENT’S DISCUSSION AND ANALYSISBarrick Gold Corporation
($ millions)
For the three months ended 9/30/19
Carlina
Cortezb
Turquoise
Ridgec
Long
Canyond
Phoenixd
By-product credits
Non-controlling interest
By-product credits (net of
non-controlling interest)
1
0
1
1
0
1
1
0
1
0
0
0
22
(9)
13
Nevada
Gold
Minese
25
(9)
16
Hemlo
Pueblo
Viejo
Veladero
1
0
1
17
(6)
11
1
0
1
($ millions)
For the three months ended 9/30/19
Porgera
Kalgoorliem
Lagunas
Loulo-
Norteo Gounkoto
Kibali
North
Maran
Tongon Bulyanhulun
Buzwagin
By-product credits
Non-controlling interest
By-product credits (net of
non-controlling interest)
1
0
1
0
0
0
2
0
2
0
0
0
0
0
0
1
0
1
($ millions)
Carlina
Cortezb
Turquoise
Ridgec
Long
Canyond
Phoenixd
By-product credits
Non-controlling interest
By-product credits (net of
non-controlling interest)
1
0
1
1
0
1
2
(1)
1
0
0
0
($ millions)
Nevada
Gold
Minese
52
(19)
48
(18)
30
33
0
0
0
0
0
0
0
0
0
For the year ended 12/31/19
Hemlo
Pueblo
Viejo
Veladero
1
0
1
61
(24)
37
8
0
8
For the year ended 12/31/19
Loulo-
Porgera Kalgoorliem Gounkoto
Kibali
North
Maran
Tongon Bulyanhulun
Buzwagin
By-product credits
Non-controlling interest
By-product credits (net of
non-controlling interest)
3
0
3
1
0
1
0
0
0
1
0
1
2
0
2
1
0
1
1
0
1
1
0
1
($ millions)
For the year ended 12/31/18
Carlina
Cortezb
Turquoise
Ridgec
Long
Canyond
Phoenixd
By-product credits
Non-controlling
interest
By-product credits
(net of non-
controlling
interest)
1
0
1
1
0
1
0
0
0
Nevada
Gold
Minese
2
0
2
Hemlo
Golden
Sunlighto
Pueblo
Viejo
Veladero
1
0
1
0
0
0
90
(37)
53
8
0
8
125
MANAGEMENT’S DISCUSSION AND ANALYSISFinancial Report 2019
($ millions)
For the year ended 12/31/18
Porgera Kalgoorlie
Lagunas
Loulo-
Norteo Gounkotop
Kibalip
By-product credits
Non-controlling
interest
By-product credits
(net of non-
controlling
interest)
2
0
2
($ millions)
2
0
2
13
0
13
Carlina
Cortezb
Turquoise
Ridgec
Long
Canyond
Phoenixd
By-product credits
Non-controlling
interest
By-product credits
(net of non-
controlling
interest)
2
0
2
($ millions)
1
0
1
0
0
0
North
Maran
2
(1)
1
Nevada
Gold
Minese
3
0
3
Tongonp Bulyanhulun
Buzwagin
Morilao,p
1
0
1
1
0
1
For the year ended 12/31/17
Hemlo
Golden
Sunlighto
Pueblo
Viejo
Veladeroq
1
0
1
0
0
0
72
0
17
0
72
17
For the year ended 12/31/17
Porgera Kalgoorlie
Lagunas
Loulo-
Norteo Gounkotop
Kibalip
North
Maran
Tongonp Bulyanhulun
Buzwagin
Morilao,p
By-product credits
Non-controlling
interest
By-product credits
(net of non-
controlling
interest)
3
0
3
2
0
2
16
0
16
1
0
1
3
(1)
3
(2)
2
1
m. On November 28, 2019, we completed the sale of our 50% interest in Kalgoorlie in Western Australia to Saracen Mineral Holdings Limited
for total cash consideration of $750 million. The transaction resulted in a gain of $408 million for the year ended December 31, 2019.
The operating results reported for Kalgoorlie reflect the Company’s attributable share of Kalgoorlie’s results until the date of disposal.
n. Formerly part of Acacia Mining plc. On September 17, 2019, Barrick acquired all of the shares of Acacia it did not own. Refer to note 4
to the Financial Statements for more information. The results are on a 63.9% basis until September 30, 2019 and on a 100% basis from
October 1, 2019 onwards.
o. With the end of mining at Lagunas Norte in the third quarter of 2019 and at Golden Sunlight and Morila in the second quarter of 2019
as previously reported, we have ceased to include production or non-GAAP cost metrics for these sites from October 1, 2019 and
July 1, 2019, respectively, onwards.
p. The results for 2018 and 2017 did not form a part of the Barrick consolidated results as these sites were acquired as a result of
the Merger. Therefore, no comparative figures are provided.
q. On June 30, 2017, we sold 50% of Veladero; therefore, these represent results on a 100% basis from January 1 to June 30, 2017 and
on a 50% basis from July 1, 2017 onwards.
126
MANAGEMENT’S DISCUSSION AND ANALYSISBarrick Gold Corporation
Reconciliation of Copper Cost of Sales to C1 cash costs and All-in sustaining costs, including on a per pound basis
For the three months ended
For the years ended
($ millions, except per pound information in dollars)
12/31/19
9/30/19
12/31/19
12/31/18
12/31/17
Cost of sales
Depreciation/amortization
Treatment and refinement charges
Cash cost of sales applicable to equity method investments
Less: royalties and production taxesa
By-product credits
Other
80
(17)
25
94
(9)
(1)
0
49
(13)
18
59
(5)
(3)
0
C1 cash cost of sales
172
105
General & administrative costs
Rehabilitation – accretion and amortization
Royalties and production taxes
Minesite exploration and evaluation costs
Minesite sustaining capital expenditures
Sustaining leases
Inventory write-downs
All-in sustaining costs
Pounds sold – consolidated basis (millions pounds)
Cost of sales per poundb,c
C1 cash costs per poundb
All-in sustaining costs per poundb
3
7
9
2
60
3
0
256
91
2.26
1.90
2.82
5
2
5
1
48
0
0
166
65
2.00
1.62
2.58
361
(100)
99
288
(35)
(9)
(5)
599
19
15
35
6
215
5
0
894
355
2.14
1.69
2.52
558
(170)
144
281
(44)
(6)
(11)
399
(83)
157
245
(38)
(5)
0
752
675
28
16
44
4
220
0
11
1,075
382
2.40
1.97
2.82
12
12
38
6
204
0
0
947
405
1.77
1.66
2.34
a. For the three months and year ended December 31, 2019, royalties and production taxes include royalties of $8 million and $34 million, respectively
(September 30, 2019: $5 million, 2018: $39 million and 2017: $38 million).
b. Cost of sales per pound, C1 cash costs per pound and all-in sustaining costs per pound may not calculate based on amounts presented in this table due to rounding.
c. Cost of sales per pound related to copper is calculated using cost of sales including our proportionate share of cost of sales attributable to equity method
investments (Zaldívar and Jabal Sayid), divided by consolidated copper pounds sold (including our proportionate share of copper pounds sold from our
equity method investments).
Reconciliation of Copper Cost of Sales to C1 cash costs and All-in sustaining costs, including on a per pound basis, by operating site
12/31/19
9/30/19
For the three months ended
($ 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 taxesa
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
Sustaining leases
Inventory write-downs
All-in sustaining costs
Pounds sold – consolidated basis (millions pounds)
Cost of sales per poundb,c
C1 cash costs per poundb
All-in sustaining costs per poundb
104
(26)
0
0
0
0
78
4
0
2
16
3
0
80
(17)
20
(9)
0
0
74
3
9
0
37
0
0
103
123
40
36
2.59
2.22
1.95
2.10
2.56
3.41
22
(7)
5
0
(1)
0
19
0
0
0
7
0
0
26
15
57
(17)
0
0
0
0
40
0
0
1
7
0
0
48
26
49
(13)
14
(5)
0
0
45
2
5
0
37
0
0
89
24
24
(5)
4
0
(3)
0
20
0
0
0
4
0
0
24
15
1.47
1.29
1.78
2.18
2.04
1.63
1.55
1.83
1.42
1.91
3.66
1.65
127
MANAGEMENT’S DISCUSSION AND ANALYSISFinancial Report 2019
12/31/19
12/31/18
12/31/17
For the years ended December 31
($ millions, except per pound
information in dollars)
Zaldívar
Lumwana
Jabal
Sayid
Zaldívar
Lumwana
Jabal
Sayid
Zaldívar
Lumwana
Jabal
Sayid
Cost of sales
Depreciation/amortization
307
(86)
361
(100)
Treatment and
refinement charges
Less: royalties and
production taxesa
By-product credits
Other
0
0
0
0
80
(35)
0
(5)
C1 cash cost of sales
221
301
Rehabilitation – accretion
and amortization
Royalties and
production taxesa
Minesite exploration and
evaluation costs
Minesite sustaining
capital expenditures
Sustaining leases
Inventory write-downs
5
0
6
34
3
0
All-in sustaining costs
269
10
35
0
166
2
0
514
Pounds sold – consolidated
basis (millions pounds)
125
169
93
(27)
19
0
(9)
0
76
0
0
0
15
0
0
91
61
261
(59)
558
(170)
98
(19)
243
(55)
396
(83)
0
0
0
0
125
19
(39)
0
(11)
(5)
(6)
0
0
0
0
0
144
(38)
0
0
202
463
87
188
419
0
0
2
49
0
0
16
39
2
154
0
11
0
5
0
17
0
0
0
0
4
58
0
0
12
38
2
123
0
0
253
685
109
250
594
75
(17)
14
0
(5)
0
67
0
0
0
23
0
0
90
103
222
57
113
253
39
Cost of sales per poundb,c
2.46
2.13
1.53
2.55
2.51
1.73
2.15
1.57
1.90
C1 cash costs per poundb
1.77
1.79
1.26
1.97
2.08
1.53
1.66
1.66
1.70
All-in sustaining costs
per poundb
2.15
3.04
1.51
2.47
3.08
1.92
2.21
2.35
2.30
a. For the three months and year ended December 31, 2019, royalties and production taxes include royalties of $8 million and $34 million, respectively
(September 30, 2019: $5 million; 2018: $39 million and 2017: $38 million, respectively).
b. Cost of sales per pound, C1 cash costs per pound and all-in sustaining costs per pound may not calculate based on amounts presented in this table
due to rounding.
c. Cost of sales per pound applicable to copper is calculated using cost of sales including our proportionate share of cost of sales attributable to equity method
investments (Zaldívar and Jabal Sayid), divided by consolidated copper pounds sold (including our proportionate share of copper pounds sold from our
equity method investments).
128
MANAGEMENT’S DISCUSSION AND ANALYSISBarrick Gold Corporation
EBITDA and Adjusted EBITDA
EBITDA is a non-GAAP financial measure, which excludes the
following from net earnings:
n Income tax expense;
n Finance costs;
n Finance income; and
n Depreciation.
Management believes that EBITDA is a valuable indicator of our
ability to generate liquidity by producing operating cash flow to fund
working capital needs, service debt obligations, and fund capital
expenditures. Management uses EBITDA for this purpose. EBITDA
is also frequently used by investors and analysts for valuation
purposes whereby EBITDA is multiplied by a factor or “EBITDA
multiple” that is based on an observed or inferred relationship between
EBITDA and market values to determine the approximate total
enterprise value of a company.
Adjusted EBITDA removes the effect of impairment charges;
acquisition/disposition gains/losses; foreign currency translation
gains/losses; other expense adjustments; and unrealized gains on
non-hedge derivative instruments. We also remove the impact of the
income tax expense, finance costs, finance income and depreciation
incurred in our equity method accounted investments. We believe
Reconciliation of Net Earnings to EBITDA and Adjusted EBITDA
($ millions)
Net earnings (loss)
Income tax expense
Finance costs, neta
Depreciation
EBITDA
Impairment charges (reversals) of long-lived assetsb
Acquisition/disposition (gains)/lossesc
Foreign currency translation (gains)/losses
Other (income) expense adjustmentsd
Unrealized gains on non-hedge derivative instruments
Income tax expense, net finance costsa, and depreciation
from equity investees
Adjusted EBITDA
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 other stakeholders of Barrick
in better understanding our ability to generate liquidity from our
full business, including equity method investments, 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.
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.
For the three
months ended
For the years
ended
12/31/19
9/30/19
12/31/19
12/31/18
12/31/17
1,776
784
90
572
3,222
(566)
(414)
53
(845)
0
2,435
791
106
559
3,891
(872)
(1,901)
40
53
1
4,574
1,783
394
2,032
8,783
(1,423)
(2,327)
109
(687)
0
(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)
112
85
378
97
98
1,562
1,297
4,833
3,080
4,115
a. Finance costs exclude accretion.
b. Net impairment reversals for the current year primarily relate to non-current asset reversals at Pueblo Viejo, partially offset by impairment charges at
Pascua-Lama in the fourth quarter of 2019. This was further impacted by non-current asset reversals at Lumwana in the third quarter of 2019. Net impairment
charges for 2018 primarily relate to non-current asset impairments at Lagunas Norte and non-current asset and goodwill impairments at Veladero.
c. Acquisition/disposition gains for the current year primarily relate to the gain on the sale of our 50% interest in Kalgoorlie in the fourth quarter of 2019 and
the gain on the remeasurement of Turquoise Ridge to fair value as a result of its contribution to Nevada Gold Mines in the third quarter of 2019.
d. Other expense adjustments for the current year primarily relate to the gain on the de-recognition of the deferred revenue liability relating to our silver
sale agreement with Wheaton Precious Metals Corp. and the gain on a settlement of customs duty and indirect taxes at Lumwana, both occurring in the
fourth quarter of 2019.
129
MANAGEMENT’S DISCUSSION AND ANALYSISFinancial Report 2019
Reconciliation of Segment Income to Segment EBITDA
($ millions)
Carlin
(61.5%)
133
58
191
Turquoise
Ridge
(61.5%)
Cortez
(61.5%)
69
36
105
56
34
90
Carlin
(61.5%)
Cortez
(61.5%)
Turquoise
Ridge
(61.5%)
121
62
183
77
32
109
38
43
81
Carlinb
(61.5%)
Cortezc
(61.5%)
Turquoise
Ridged
(61.5%)
370
239
609
459
197
656
201
92
293
Carlinb
(61.5%)
Cortezc
(61.5%)
Turquoise
Ridged
(61.5%)
166
262
428
726
386
1,112
126
28
154
Carlinb
(61.5%)
Cortezc
(61.5%)
Turquoise
Ridged
(61.5%)
186
260
446
873
532
1,405
119
28
147
Nevada
Gold
Mines
(61.5%)
277
163
440
Nevada
Gold
Mines
(61.5%)
237
166
403
Nevada
Gold
Minese
(61.5%)
1,050
592
1,642
Nevada
Gold
Minese
(61.5%)
1,011
677
1,688
Nevada
Gold
Minese
(61.5%)
1,169
821
1,990
Income
Depreciation
EBITDA
Income
Depreciation
EBITDA
Income
Depreciation
EBITDA
($ millions)
Income
Depreciation
EBITDA
Income
Depreciation
EBITDA
Pueblo
Loulo-
Viejo Gounkoto
(80%)
(60%)
125
34
159
65
58
123
Pueblo
Viejo
(60%)
Loulo-
Gounkoto
(80%)
104
29
133
64
61
125
Pueblo
Loulo-
Viejo Gounkoto
(80%)
(60%)
402
120
522
190
236
426
For the three months ended 12/31/19
Kibali
(45%)
Veladero
(50%)
Porgera
(47.5%)
North
Maraa
30
52
82
21
29
50
44
12
56
52
35
87
For the three months ended 9/30/19
Kibali
(45%)
Veladero
(50%)
Porgera
(47.5%)
North
Maraa
25
57
82
14
25
39
35
11
46
20
11
31
For the year ended 12/31/19
Kibali
(45%)
Veladero
(50%)
Porgera
(47.5%)
North
Maraa
108
196
304
57
115
172
113
42
155
112
75
187
For the year ended 12/31/18
Pueblo
Viejo
(60%)
342
115
457
Pueblo
Viejo
(60%)
395
143
538
Loulo-
Gounkotof
Kibalif
Veladero
(50%)
Porgera
(47.5%)
53
121
174
56
42
98
North
Maraa
94
40
134
For the year ended 12/31/17
Loulo-
Gounkotof
Kibalif
Veladero
(50%)g
Porgera
(47.5%)
173
119
292
83
38
121
North
Maraa
112
36
148
a. Formerly part of Acacia Mining plc. On September 17, 2019, Barrick acquired all of the shares of Acacia it did not own. Refer to note 4 to the Financial
Statements for more information. The results are on a 63.9% basis until September 30, 2019 and on a 100% basis from October 1, 2019 onwards.
b. On July 1, 2019, Barrick’s Goldstrike and Newmont’s Carlin were contributed to Nevada Gold Mines and are now referred to as Carlin. As a result, the amounts
presented represent Goldstrike on a 100% basis (including our 60% share of South Arturo) up until June 30, 2019, and the combined results of Carlin and
Goldstrike (including our 60% share of South Arturo) on a 61.5% basis thereafter.
c. On July 1, 2019, Cortez was contributed to Nevada Gold Mines, a joint venture with Newmont. As a result, the amounts presented are on a 100% basis up
until June 30, 2019, and on a 61.5% basis thereafter.
d. Barrick owned 75% of Turquoise Ridge through to the end of the second quarter of 2019, with our joint venture partner, Newmont, owning the remaining 25%.
Turquoise Ridge was proportionately consolidated on the basis that the joint venture partners that have joint control have rights to the assets and obligations
for the liabilities relating to the arrangement. The figures presented in this table are based on our 75% interest in Turquoise Ridge until June 30, 2019.
On July 1, 2019, Barrick’s 75% interest in Turquoise Ridge and Newmont’s Twin Creeks and 25% interest in Turquoise Ridge were contributed to Nevada
Gold Mines. Starting July 1, 2019, the results represent our 61.5% share of Turquoise Ridge and Twin Creeks, now referred to as Turquoise Ridge.
130
MANAGEMENT’S DISCUSSION AND ANALYSISBarrick Gold Corporation
e. Represents the combined results of Cortez, Goldstrike (including our 60% share of South Arturo) and our 75% interest in Turquoise Ridge until June 30, 2019.
Commencing July 1, 2019, the date Nevada Gold Mines was established, the results represent our 61.5% interest in Cortez, Carlin (including Goldstrike and
60% of South Arturo), Turquoise Ridge (including Twin Creeks), Phoenix and Long Canyon.
f. The results for 2018 and 2017 did not form a part of the Barrick consolidated results as these sites were acquired as a result of the Merger. Therefore, no
comparative figures are provided.
g. On June 30, 2017, we sold 50% of Veladero; 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.
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;
n Export duties; and
n Cumulative catch-up adjustment to revenue relating to our
streaming arrangements.
Starting with this MD&A, we began adjusting for the cumulative
catch-up adjustment to revenue relating to our streaming
arrangements in our calculation of realized price. The prior periods
have been restated to reflect this change. We believe that this
additional information will assist analysts, investors and other
stakeholders of Barrick to better understand our ability to generate
revenue by excluding non-cash amounts from the calculation as
they are not necessarily reflective of the underlying operating results
for the periods presented.
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 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.
131
MANAGEMENT’S DISCUSSION AND ANALYSISFinancial Report 2019 Reconciliation of Sales to Realized Price per ounce/pound
For the three months ended
For the years ended
($ millions, except per ounce/pound
information in dollars)
Gold
Copper
Gold
Copper
12/31/19
9/30/19 12/31/19
9/30/19 12/31/19 12/31/18
12/31/17 12/31/19 12/31/18 12/31/17
Sales
Sales applicable to
non-controlling
interests
Sales applicable to
equity method
investmentsa,b
Realized non-hedge
gold/copper derivative
(losses) gains
Sales applicable to
sites in care
and maintenancec
Treatment and
refinement charges
Export duties
Otherd
2,758
2,585
82
45
9,186
6,600
7,631
393
512
608
(769)
(748)
0
0
(1,981)
(734)
(810)
0
0
0
139
140
147
100
543
0
0
(56)
(32)
0
0
22
0
0
0
0
0
25
0
0
0
0
18
0
0
0
2
0
3
1
(140)
(111)
(153)
0
0
22
1
(1)
12
1
0
0
492
442
427
0
0
99
0
0
0
0
144
0
0
0
0
157
0
0
Revenues – as adjusted
2,094
1,945
254
163
7,631
5,769
6,672
984
1,098
1,192
Ounces/pounds sold
(000s ounces/
millions pounds)c
Realized gold/copper
price per
ounce/pounde
1,413
1,318
91
65
5,467
4,544
5,302
355
382
405
1,483
1,476
2.76
2.55
1,396
1,270
1,258
2.77
2.88
2.95
a. Represents sales of $130 million and $505 million, respectively, for the three months and year ended December 31, 2019 (September 30, 2019: $133 million;
2018: $nil; 2017: $nil) applicable to our 45% equity method investment in Kibali and $9 million and $39 million, respectively (September 30, 2019: $8 million;
2018: $nil; 2017: $nil) applicable to our 40% equity method investment in Morila for gold. Represents sales of $110 million and $343 million for the three
months and year ended December 31, 2019 (September 30, 2019: $66 million; 2018: $300 million; 2017: $325 million) applicable to our 50% equity method
investment in Zaldívar and $43 million and $168 million, respectively (September 30, 2019: $37 million; 2018: $161 million; 2017: $116 million) applicable
to our 50% equity method investment in Jabal Sayid.
b. Sales applicable to equity method investments are net of treatment and refinement charges.
c. Figures exclude Pierina, Golden Sunlight and Morila starting in the third quarter of 2019, and Lagunas Norte starting in the fourth quarter of 2019 from
the calculation of realized price per ounce, which are mining incidental ounces as they enter closure.
d. Represents cumulative catch-up adjustment to revenue relating to our streaming arrangements. Refer to note 2f to the Financial Statements for more information.
e. Realized price per ounce/pound may not calculate based on amounts presented in this table due to rounding.
Technical Information
The scientific and technical information contained in this MD&A
has been reviewed and approved by Steven Yopps, MMSA,
Manager of Growth Projects, Nevada Gold Mines; Craig Fiddes,
North America Resource Modeling Manager; Chad Yuhasz, P.Geo,
Mineral Resource Manager, Latin America and Australia Pacific;
Simon Bottoms, CGeol, MGeol, FGS, FAusIMM, Mineral Resources
Manager: Africa and Middle East; Rodney Quick, MSc, Pr. Sci.Nat,
Mineral Resource Management and Evaluation Executive;
John Steele, CIM, Metallurgy, Engineering and Capital Projects
Executive; and Rob Krcmarov, FAusIMM, Executive Vice President,
Exploration and Growth – each a “Qualified Person” as defined
in National Instrument 43-101 – Standards of Disclosure for
Mineral Projects.
All mineral reserve and mineral resource estimates are
estimated in accordance with National Instrument 43-101 –
Standards of Disclosure for Mineral Projects. Unless otherwise
noted, such mineral reserve and mineral resource estimates are
as of December 31, 2019.
132
MANAGEMENT’S DISCUSSION AND ANALYSISBarrick Gold Corporation
Endnotes
1
2
3
4
5
6
7
8
A Tier One Gold Asset is a mine with a stated life in excess of
10 years, annual production of at least 500,000 ounces of gold
and total cash costs per ounce over the mine life that are in
the lower half of the industry cost curve.
A Tier Two Gold Asset is a mine with a stated life in excess of
10 years, annual production of at least 250,000 ounces of gold
and total cash costs per ounce over the mine life that are in
the lower half of the industry cost curve. A Strategic Asset is
an asset which, in the opinion of Barrick, has the potential to
deliver significant unrealized value in the future.
Currently consists of Barrick’s Lumwana mine and Zaldívar and
Jabal Sayid copper joint ventures.
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 107 to 132 of this MD&A.
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% Tanzania until September 30, 2019 (notwithstanding the
completion of the Acacia transaction on September 17, 2019,
we consolidated our interest in Acacia and recorded a non-
controlling interest of 36.1% in the income statement for the
entirety of the third quarter of 2019 as a matter of convenience)
and 40% South Arturo from cost of sales (63.1% of South Arturo
from July 1, 2019 onwards as a result of its contribution
to Nevada Gold Mines)), divided by attributable gold ounces.
The non-controlling interest of 20% Loulo-Gounkoto and
10.3% of Tongon is also removed from cost of sales and our
proportionate share of cost of sales attributable to equity
method investments (Kibali and Morila) is included commencing
January 1, 2019, the effective date of the Merger. Also removes
the non-controlling interest of 38.5% Nevada Gold Mines
from cost of sales from July 1, 2019 onwards. 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 (including our proportionate share of copper pounds
from our equity method investments).
Total reportable injury frequency rate (“TRIFR”) is a ratio
calculated as follows: number of reportable injuries x 1,000,000
hours divided by the total number of hours worked. Reportable
injuries include fatalities, lost time injuries, restricted duty
injuries, and medically treated injuries.
Class 1 – High Significance is defined as an incident that
causes significant negative impacts on human health or the
environment or an incident that extends onto publicly accessible
land and has the potential to cause significant adverse impact
to surrounding communities, livestock or wildlife.
Class 2 – Medium Significance is defined as an incident that
has the potential to cause negative impact on human health
or the environment but is reasonably anticipated to result in only
localized and short-term environmental or community impact
requiring minor remediation.
9
10
11
12
13
Estimated in accordance with National Instrument 43-101
as required by Canadian securities regulatory authorities.
Estimates are as of December 31, 2019, unless otherwise
noted. Proven reserves of 280 million tonnes grading 2.42 g/t,
representing 22 million ounces of gold, and 420 million tonnes
grading 0.4%, representing 3,700 million pounds of copper.
Probable reserves of 1,000 million tonnes grading 1.48 g/t,
representing 49 million ounces of gold, and 1,200 million tonnes
grading 0.38%, representing 9,800 million pounds of copper.
Measured resources of 530 million tonnes grading 2.21 g/t,
representing 37 million ounces of gold, and 660 million tonnes
grading 0.38%, representing 5,500 million pounds of copper.
Indicated resources of 2,800 million tonnes grading 1.43 g/t,
representing 130 million ounces of gold, and 2,400 million
tonnes grading 0.38%, representing 21,000 million pounds of
copper. Inferred resources of 940 million tonnes grading 1.3 g/t,
representing 39 million ounces of gold, and 430 million tonnes
grading 0.2%, representing 2,200 million pounds of copper.
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 138 to 146 of
Barrick’s Annual Report 2019.
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 probable reserves
of 0.9 billion tonnes grading 1.33 g/t, representing 38.4 million
ounces of gold. 11 billion pounds of copper reserves were
comprised of proven reserves of 285.6 million tonnes grading
0.43%, representing 2.7 billion pounds of copper and probable
reserves of 940.0 million tonnes grading 0.38%, representing
7.9 billion pounds of copper. Complete 2018 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 35–41 of Barrick’s Annual Information Form/
Form 40-F for the year ended December 31, 2018 on file with
Canadian provincial securities regulatory authorities and the
U.S. Securities and Exchange Commission.
The term “Acacia Exploration Special Dividends” refers to
special dividends potentially payable by Barrick to former
shareholders of Acacia, as a consequence of the sales process
to realize value from the sale (if any) of certain of Acacia’s
exploration assets located in the Republic of Kenya, the
Republic of Mali and Burkina Faso, and excluding the sale
of Acacia’s interests in the Nyanzaga Gold Project in Tanzania
and the South Houndé Project in Burkina Faso, for which
Acacia had already commenced and advanced sales processes.
See the Technical Report on the Turquoise Ridge mine, dated
March 19, 2019, and filed on SEDAR at www.sedar.com and
EDGAR at www.sec.gov on March 23, 2019.
See the Technical Report on the Pueblo Viejo mine, Sanchez
Ramirez Province, Dominican Republic, dated March 19, 2018,
and filed on SEDAR at www.sedar.com and EDGAR at
www.sec.gov on March 23, 2018.
133
MANAGEMENT’S DISCUSSION AND ANALYSISFinancial Report 2019 14 Carlin Trend Exploration Significant Intercepts1
Drill Results from Q4 2019
Drill Hole
Azimuth
RAN-02349
RAN-02355
0
0
Dip
(90)
(90)
Interval (m)
Width (m)2
Au (g/t)
538.0 – 541.5
507.8 – 509.2
516.0 – 516.9
520.6 – 526.7
3.5
1.4
0.9
6.1
7.50
5.33
5.93
8.52
1. All intercepts calculated using a 5 g/t Au cutoff and are uncapped; minimum intercept width is 0.8 m; internal dilution is less than 20% total width.
2. True widths of intercepts are uncertain at this stage, geometry of orebody is unconstrained.
The drilling results for the Carlin Trend exploration area in this MD&A have been prepared in accordance with National Instrument
43-101 – Standards of Disclosure for Mineral Projects. All drill hole assay information has been manually reviewed and approved by
staff geologists and re-checked by the project manager. Sample preparation and analyses are conducted by ALS Minerals. Procedures
are employed to ensure security of samples during their delivery from the drill rig to the laboratory. The quality assurance procedures,
data verification and assay protocols used in connection with drilling and sampling on the Carlin Trend conform to industry accepted
quality control methods.
Drill Hole
Azimuth
Dip
Interval (m)
Width (m)2
Au (g/t)
Historic Drill Results1
DPC-0241
072
(57)
160.9 – 165.5
168.5 – 179.2
199.0 – 200.5
212.8 – 217.5
229.5 – 231.0
243.2 – 244.7
273.7 – 276.8
334.7 – 365.2
369.7 – 396.2
421.5 – 430.6
DSU-00190
105
(60)
379.5 – 388.5
GEN-017033
105
(75)
U12-P05-16
059
(30)
GB-681CM4
0
(90)
U17-M05-02
075
(45)
271.6 – 274.1
296.3 – 297.7
302.1 – 303.0
307.3 – 308.8
316.2 – 320.8
326.8 – 352.5
141.7 – 144.8
370.3 – 371.8
376.4 – 391.7
394.7 – 396.2
397.8 – 400.8
608.1 – 614.2
620.3 – 621.8
661.4 – 662.9
725.4 – 730.0
736.1 – 739.2
740.7 – 742.2
763.5 – 765.0
7.6 – 9.1
13.7 – 21.3
193.6 – 202.7
1. All intercepts are from legacy drilling, completed prior to 2019.
2. True widths of intercepts are uncertain at this stage, geometry of orebody is unconstrained.
3. Interval vs. width discrepancy is due to sub-meter no recovery zone internal to intercept.
4. Laboratory unknown.
134
4.6
10.7
1.5
4.7
1.5
1.5
3.1
30.5
26.5
9.1
9.0
2.5
1.4
0.9
1.5
4.0
24.7
3.1
1.5
15.3
1.5
3.0
6.1
1.5
1.5
4.6
3.1
1.5
1.5
1.5
7.6
9.1
7.48
10.57
6.91
10.82
6.42
5.17
8.75
15.86
11.24
5.89
12.81
8.46
5.47
10.7
5.28
11.08
8.56
8.09
5.93
7.14
5.27
6.15
23.17
17.29
7.19
8.58
6.73
5.99
10.79
5.08
7.82
21.02
MANAGEMENT’S DISCUSSION AND ANALYSISBarrick Gold Corporation
The drilling results for the Carlin Trend exploration area in this MD&A have been prepared in accordance with National Instrument
43-101 – Standards of Disclosure for Mineral Projects. All drill hole assay information has been manually reviewed and approved by
staff geologists and re-checked by the project manager. Sample preparation and analyses are conducted by ALS Minerals. Procedures
are employed to ensure security of samples during their delivery from the drill rig to the laboratory. The quality assurance procedures,
data verification and assay protocols used in connection with drilling and sampling on the Carlin Trend conform to industry accepted
quality control methods.
15 Fourmile Significant Intercepts1
Drill Results from Q4 2019
Drill Hole2
Azimuth
Dip
Interval (m)
Width (m)3
Au (g/t)
FM19-14D
233
(73)
FM19-26D4
65
FM19-40D
173
(75)
(84)
FM19-61D
251
(86)
FM19-64D
FM19-68D
119
166
(85)
(77)
1100.3 – 1103.3
1148.0 – 1155.5
1169.3 – 1162.8
1234.7 – 1236.2
1239.3 – 1242.3
1259.1 – 1260.6
1301.8 – 1303.3
1309.4 – 1310.9
1333.8 – 1337.5
1343.5 – 1345.2
1356.6 – 1361.2
1372.8 – 1375.5
717.8 – 719.2
774.8 – 776.3
870.2 – 871.7
883 – 895.5
904.4 – 926
835.2 – 854.7
863.5 – 872.0
889.7 – 891.5
892.9 – 894.0
898.9 – 901.9
957.1 – 959.5
881.7 – 885.1
1092.1 – 1096.5
3
7.5
1.5
1.5
3
1.5
1.5
1.5
3.7
1.7
4.6
2.7
1.4
1.5
1.5
12.5
21.6
19.5
8.5
1.8
1.1
3.0
2.4
3.4
4.4
6.2
9.2
9.3
7.5
47.8
7.0
20.2
16.3
86.2
29.6
42.5
180.3
5.2
18.5
10.4
31.2
24.9
17.9
10.4
6.5
10.8
6.5
14.8
15.9
18.1
1. All intercepts calculated using a 5 g/t Au cutoff and are uncapped; minimum intercept width is 0.8 m; internal dilution is less than 20% total width.
2. Fourmile drill hole nomenclature: FM (Fourmile) followed by the year (19 for 2019) or GRC (Gold Rush Core) with no designation of the year.
3. True widths of intercepts are uncertain at this stage.
4. Partial results reported in Q2 2019.
The drilling results for the Fourmile property contained in this MD&A have been prepared in accordance with National Instrument
43-101 – Standards of Disclosure for Mineral Projects. All drill hole assay information has been manually reviewed and approved by
staff geologists and re-checked by the project manager. Sample preparation and analyses are conducted by ALS Minerals. Procedures
are employed to ensure security of samples during their delivery from the drill rig to the laboratory. The quality assurance procedures,
data verification and assay protocols used in connection with drilling and sampling on the Fourmile property conform to industry accepted
quality control methods.
135
MANAGEMENT’S DISCUSSION AND ANALYSISFinancial Report 2019
16 Bambadji Significant Intercepts1
Drill Results from Q4 2019
Drill Hole2
GFRC007
GFRC008
GFRC009
GFRC013
GFRC029
GFRC031
Azimuth
90
90
90
90
90
90
Dip
(50)
(50)
(50)
(50)
(50)
(50)
Interval (m)
6.0 – 19.0
22.0 – 52.0
7.0 – 33.0
19.0 – 26.0
26.0 – 30.0
41.0 – 48.0
Width (m)3
Au (g/t)
13.00
30.00
26.00
8.00
4.00
7.00
1.31
1.06
0.55
0.68
5.15
16.72
1. All intercepts calculated using a 0.5 g/t Au cutoff and are uncapped; minimum intercept width is 2 m; internal dilution is less than 2 m total width.
2. Gefa drill hole nomenclature: prospect initial GF (Gefa), followed by type of drilling RC (Reverse Circulation) and DH (Diamond Drilling).
3. True widths of intercepts are uncertain at this stage.
The drilling results for the Bambadji property contained in this MD&A have been prepared in accordance with National Instrument
43-101 – Standards of Disclosure for Mineral Projects. All drill hole assay information has been manually reviewed and approved by
staff geologists and re-checked by the project manager. Sample preparation and analyses are conducted by SGS, an independent
laboratory. Industry accepted best practices for preparation and fire assaying procedures are utilized to determine gold content.
Procedures are employed to ensure security of samples during their delivery from the drill rig to the laboratory. The quality assurance
procedures, data verification and assay protocols used in connection with drilling and sampling on the Bambadji property conform
to industry accepted quality control methods.
See the Technical Report on the Loulo-Gounkoto Gold Mine Complex, Mali, dated September 18, 2018, with an effective date of
December 31, 2017, and filed on SEDAR at www.sedar.com and EDGAR at www.sec.gov on January 2, 2019.
See the Technical Report on the Kibali Gold Mine, Republic of Congo, dated September 18, 2018, with an effective date of December 31,
2017, and filed on SEDAR at www.sedar.com and EDGAR at www.sec.gov on January 2, 2019.
17
18
136
MANAGEMENT’S DISCUSSION AND ANALYSISBarrick Gold Corporation
Glossary of Technical Terms
ALL-IN SUSTAINING COSTS: A non-GAAP measure of cost per ounce/
pound for gold/copper. Refer to page 109 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 non-GAAP measure of cost per pound for
copper. Refer to page 109 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 non-GAAP measure that reflects our ability to
generate cash flow. Refer to page 108 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 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.
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 139 to 140 – Summary
Gold/Copper Mineral Reserves and Mineral Resources.
MINERAL RESOURCE: See pages 141 to 144 – 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.
TOTAL CASH COSTS: A non-GAAP measure of cost per ounce for
gold. Refer to page 109 of this MD&A for further information and
a reconciliation of the measure.
137
MANAGEMENT’S DISCUSSION AND ANALYSISFinancial Report 2019 Mineral Reserves and Mineral Resources
The tables on the next seven pages set forth Barrick’s interest in the total proven and probable gold, silver and copper reserves and in the
total measured, indicated and inferred gold, silver and copper 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 139 to 146. The Company has changed the way it is reporting mineral resources. Barrick’s mineral resources as at December 31, 2019
are now reported on an inclusive basis and include all areas that form mineral reserves, reported at a mineral resource cut-off and
associated commodity price. Barrick’s mineral resources as at December 31, 2018 were reported on an exclusive basis and exclude
all areas that form mineral reserves. As a result, the respective Barrick 2018 mineral resources are not directly comparable to that
of the Barrick 2019 mineral resources.
The Company has carefully prepared and verified the mineral reserve and mineral resource figures and believes that its method
of estimating mineral reserves has been verified by mining experience. These figures are estimates, however, and no assurance can
be given that the indicated quantities of metal will be produced. Metal price fluctuations may render mineral reserves containing relatively
lower grades of mineralization uneconomic. Moreover, short-term operating factors relating to the mineral reserves, such as the need for
orderly development of ore bodies or the processing of new or different ore grades, could affect the Company’s profitability in any particular
accounting period.
Definitions
A mineral resource is a concentration or occurrence of diamonds,
natural solid inorganic material, or natural solid fossilized organic
material including base and precious metals, coal, and industrial
minerals in or on the Earth’s crust in such form and quantity and of
such a grade or quality that it has reasonable prospects for economic
extraction. The location, quantity, grade, geological characteristics
and continuity of a mineral resource are known, estimated or
interpreted from specific geological evidence and knowledge.
Mineral resources are sub-divided, in order of increasing geological
confidence, into inferred, indicated and measured categories.
An inferred mineral resource is that part of a mineral resource
for which quantity and grade or quality can be estimated on the
basis of geological evidence and limited sampling and reasonably
assumed, but not verified, geological and grade continuity.
The estimate is based on limited information and sampling gathered
through appropriate techniques from locations such as outcrops,
trenches, pits, workings and drill holes.
An indicated mineral resource is that part of a mineral resource
for which quantity, grade or quality, densities, shape and physical
characteristics can be estimated with a level of confidence sufficient
to allow the appropriate application of technical and economic
parameters, to support mine planning and evaluation of the
economic viability of the deposit. The estimate is based on detailed
and reliable exploration and testing information gathered through
appropriate techniques from locations such as outcrops, trenches,
pits, workings and drill holes that are spaced closely enough
for geological and grade continuity to be reasonably assumed.
A measured mineral resource is that part of a mineral
resource for which quantity, grade or quality, densities, shape
and physical characteristics are so well established that they
can be estimated with confidence sufficient to allow the appropriate
application of technical and economic parameters, to support
production planning and evaluation of the economic viability of the
deposit. The estimate is based on detailed and reliable exploration,
sampling and testing information gathered through appropriate
techniques from locations such as outcrops, trenches, pits, workings
and drill holes that are spaced closely enough to confirm both
geological and grade continuity.
Mineral resources, which are not mineral reserves, do not have
demonstrated economic viability.
A mineral reserve is the economically mineable part of
a measured or indicated mineral resource demonstrated by at least
a preliminary feasibility study. This study must include adequate
information on mining, processing, metallurgical, economic and
other relevant factors that demonstrate, at the time of reporting,
that economic extraction can be justified.
A mineral reserve includes diluting materials and allowances for
losses that may occur when the material is mined. Mineral reserves
are sub-divided in order of increasing confidence into probable
mineral reserves and proven mineral reserves. A probable mineral
reserve is the economically mineable part of an indicated and, in
some circumstances, a measured mineral resource demonstrated
by 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.
138
Barrick Gold Corporation Gold Mineral Reserves1,2,3
As at December 31, 2019
Based on attributable ounces
Africa and Middle East
Kibali surface
Kibali underground
Kibali (45.00%) total
Loulo-Gounkoto surface
Loulo-Gounkoto underground
Loulo-Gounkoto (80.00%) total
Tongon surface (89.70%)
Massawa surface (83.25%)4
Bulyanhulu surface5,6
Bulyanhulu underground5,6
Bulyanhulu (84.00%) total5,6
North Mara surface6
North Mara underground6
North Mara (84.00%) total6
Buzwagi surface (84.00%)6
Jabal Sayid surface (50.00%)
Proven
Probable
Total
Tonnes
(Mt)
Contained
ounces
(Moz)
Grade
(g/t)
Tonnes
(Mt)
Contained
ounces
(Moz)
Grade
(g/t)
Tonnes
(Mt)
Contained
ounces
(Moz)
Grade
(g/t)
3.5
5.8
9.3
8.4
9.0
17
4.3
–
–
2.0
2.0
0.34
0.77
1.1
–
7.2
2.49
5.13
4.13
2.95
4.64
3.83
1.94
–
–
11.01
11.01
2.63
5.39
4.54
–
0.20
0.28
0.95
1.2
0.80
1.3
2.1
0.27
–
–
0.72
0.72
0.029
0.13
0.16
–
0.046
7.1
14
22
9.7
18
28
4.6
17
1.1
4.4
5.5
15
5.0
20
5.1
5.4
3.14
4.76
4.23
3.56
5.41
4.77
2.33
3.94
1.19
10.56
8.72
1.47
5.40
2.46
0.84
0.29
0.71
2.2
2.9
1.1
3.2
4.3
0.35
2.2
0.041
1.5
1.5
0.70
0.87
1.6
0.14
0.051
11
20
31
18
27
45
8.9
17
1.1
6.4
7.5
15
5.8
21
5.1
13
2.92
4.87
4.20
3.28
5.16
4.41
2.14
3.94
1.19
10.70
9.34
1.49
5.40
2.57
0.84
0.24
0.99
3.2
4.2
1.9
4.5
6.4
0.61
2.2
0.041
2.2
2.2
0.73
1.0
1.7
0.14
0.097
Africa and Middle East Total
41
3.44
4.6
110
3.78
13
150
3.69
18
North America
Hemlo surface
Hemlo underground
Hemlo (100%) total
Long Canyon surface (61.50%)
Phoenix surface (61.50%)
Carlin surface
Carlin underground
Carlin (61.50%) total
Cortez surface
Cortez underground7
Cortez (61.50%) total
Turquoise Ridge surface
Turquoise Ridge underground
Turquoise Ridge (61.50%) total
–
0.91
0.91
0.26
9.4
43
13
56
4.4
0.59
5.0
18
9.8
28
–
4.94
4.94
2.23
0.66
2.70
9.75
4.37
2.40
9.61
3.25
2.02
11.55
5.38
–
0.15
0.15
0.019
0.20
3.7
4.2
7.9
0.34
0.18
0.52
1.2
3.6
4.8
1.6
8.1
9.7
4.6
94
60
5.9
65
53
11
64
16
7.8
23
1.28
4.30
3.81
2.49
0.59
1.75
9.23
2.42
1.26
9.93
2.73
1.86
10.08
4.59
0.066
1.1
1.2
0.37
1.8
3.4
1.7
5.1
2.1
3.4
5.6
0.94
2.5
3.5
North America Total
99
4.25
14
260
2.08
17
Latin America and Asia Pacific
Norte Abierto surface (50.00%)
Pueblo Viejo surface (60.00%)
Veladero surface (50.00%)
Porgera surface
Porgera underground
Porgera (47.50%) total
Latin America and
Asia Pacific Total
Total
110
10
15
–
1.3
1.3
0.65
2.68
0.60
–
6.68
6.68
140
0.84
280
2.42
2.4
0.87
0.30
–
0.29
0.29
3.8
22
480
61
110
8.5
5.3
14
0.59
2.46
0.74
3.63
6.25
4.63
660
0.87
1,000
1.48
9.2
4.8
2.5
0.99
1.1
2.1
19
49
1.6
9.0
11
4.9
100
100
19
120
57
11
69
34
18
51
360
600
71
120
8.5
6.6
15
1.28
4.37
3.90
2.48
0.59
2.15
9.59
3.32
1.35
9.91
2.77
1.95
10.90
5.02
0.066
1.3
1.3
0.39
2.0
7.1
5.9
13
2.5
3.6
6.1
2.1
6.2
8.3
2.68
31
0.60
2.49
0.73
3.63
6.33
4.81
12
5.7
2.8
0.99
1.3
2.3
22
71
810
0.87
1,300
1.68
1. See accompanying Mineral Reserves and Mineral Resources endnote #1.
2. See accompanying Mineral Reserves and Mineral Resources endnote #2.
3. See accompanying Mineral Reserves and Mineral Resources endnote #4.
4. See accompanying Mineral Reserves and Mineral Resources endnote #9.
5. See accompanying Mineral Reserves and Mineral Resources endnote #15.
6. See accompanying Mineral Reserves and Mineral Resources endnote #10.
7. See accompanying Mineral Reserves and Mineral Resources endnote #17.
139
MINERAL RESERVES AND MINERAL RESOURCESFinancial Report 2019
Copper Mineral Reserves1,2,3,4
As at December 31, 2019
Proven
Probable
Total
Based on attributable pounds
Africa and Middle East
Bulyanhulu underground (84.00%)5,6
Lumwana surface (100%)
Jabal Sayid surface
Jabal Sayid underground
Jabal Sayid (50.00%) total
Tonnes
(Mt)
Cu Contained
Cu
(Mlb)
Grade
(%)
Tonnes
(Mt)
Cu Contained
Cu
(Mlb)
Grade
(%)
Tonnes
(Mt)
Cu Contained
Cu
(Mlb)
Grade
(%)
2.0
58
0.079
7.1
7.2
0.53
0.50
3.21
2.44
2.45
24
640
5.6
380
390
4.4
480
–
5.4
5.4
0.56
0.56
–
2.09
2.09
54
6,000
–
250
250
6.4
540
0.079
13
13
0.55
0.56
3.21
2.29
2.29
77
6,600
5.6
630
640
Africa and Middle East Total
67
0.71
1,100
490
0.58
6,300
560
0.59
7,300
North America
Phoenix surface (61.50%)
North America Total
Latin America and Asia Pacific
Zaldívar surface (50.00%)
Norte Abierto surface (50.00%)
27
27
0.19
0.19
120
120
130
0.17
130
0.17
490
490
160
0.18
160
0.18
610
610
220
110
0.43
0.19
2,100
480
69
480
0.42
0.23
640
2,400
280
600
0.43
0.22
2,700
2,900
Latin America and Asia Pacific Total
330
0.35
2,500
550
0.25
3,000
880
0.29
5,600
Total
420
0.4
3,700
1,200
0.38
9,800
1,600
0.38 13,000
1. See accompanying Mineral Reserves and Mineral Resources endnote #1.
2. See accompanying Mineral Reserves and Mineral Resources endnote #2.
3. See accompanying Mineral Reserves and Mineral Resources endnote #7.
4. See accompanying Mineral Reserves and Mineral Resources endnote #4.
5. See accompanying Mineral Reserves and Mineral Resources endnote #15.
6. See accompanying Mineral Reserves and Mineral Resources endnote #10.
Silver Mineral Reserves1,2,3,4
As at December 31, 2019
Based on attributable ounces
Africa and Middle East
Bulyanhulu underground (84.00%)5,6
Africa and Middle East Total
North America
Phoenix surface (61.50%)
North America Total
Latin America and Asia Pacific
Pueblo Viejo surface (60.00%)
Norte Abierto surface (50.00%)
Veladero surface (50.00%)
Proven
Probable
Total
Tonnes
(Mt)
Ag Contained
Ag
(Moz)
Grade
(g/t)
Tonnes
(Mt)
Ag Contained
Ag
(Moz)
Grade
(g/t)
Tonnes
(Mt)
Ag Contained
Ag
(Moz)
Grade
(g/t)
8.91
0.58
8.91
0.58
6.19
0.87
6.19
0.87
6.4
6.4
7.05
7.05
2.0
2.0
9.4
9.4
8.18
8.18
10
110
15
14.45
1.91
12.68
2.5
2.5
4.7
7.0
6.2
18
21
4.4
4.4
94
94
6.99
6.99
61
480
110
16.30
1.43
14.27
650
4.91
750
5.18
1.5
1.5
24
24
37
29
54
120
150
21
21
32
22
48
100
120
100
7.10
100
7.10
71
600
120
16.04
1.52
14.07
790
4.75
900
5.03
Latin America and Asia Pacific Total
140
3.99
Total
150
4.31
1. See accompanying Mineral Reserves and Mineral Resources endnote #1.
2. See accompanying Mineral Reserves and Mineral Resources endnote #2.
3. See accompanying Mineral Reserves and Mineral Resources endnote #7.
4. See accompanying Mineral Reserves and Mineral Resources endnote #4.
5. See accompanying Mineral Reserves and Mineral Resources endnote #15.
6. See accompanying Mineral Reserves and Mineral Resources endnote #10.
140
MINERAL RESERVES AND MINERAL RESOURCESBarrick Gold Corporation
Gold Mineral Resources1,2,3,4
As at December 31, 2019
Measured (M)5,6
Indicated (I)5,7
(M) + (I)5,6,7
Inferred8
Based on attributable ounces
Africa and Middle East
Kibali surface
Kibali underground
Kibali (45.00%) total
Loulo-Gounkoto surface
Loulo-Gounkoto underground
Loulo-Gounkoto (80.00%) total
Tongon surface (89.70%)
Massawa surface9
Massawa underground9
Massawa (83.25%)9
Bulyanhulu surface10
Bulyanhulu underground10
Bulyanhulu (84.00%) total10
North Mara surface10
North Mara underground10
North Mara (84.00%) total10
Buzwagi surface (84.00%)10
Jabal Sayid surface (50.00%)
Tonnes
(Mt)
Contained
ozs
(Moz)
Grade
(g/t)
Tonnes
(Mt)
Contained
ounces
(Moz)
Grade
(g/t)
Contained
ounces
(Moz)
Tonnes Grade
(g/t)
(Moz)
Contained
ounces
(Moz)
5.3
9.2
14
9.9
14
24
4.6
–
–
–
–
3.1
3.1
2.3
0.74
3.1
–
7.6
2.43
4.94
4.02
3.06
4.79
4.09
2.05
–
–
–
–
12.55
12.55
2.37
6.13
3.28
–
0.24
0.42
1.5
1.9
0.98
2.2
3.2
0.31
–
–
–
–
1.3
1.3
0.18
0.15
0.32
–
0.057
15
28
43
15
21
36
11
19
–
19
1.1
9.8
11
27
10
37
7.9
7.1
2.63
3.66
3.30
3.44
5.55
4.69
2.43
4.00
–
4.00
1.19
8.99
8.22
1.73
4.57
2.52
0.99
0.40
1.3
3.3
4.6
1.6
3.8
5.4
0.86
2.5
–
2.5
0.041
2.8
2.9
1.5
1.5
3.0
0.25
0.092
1.7
4.8
6.5
2.6
6.0
8.6
1.2
2.5
–
2.5
0.041
4.1
4.1
1.7
1.7
3.3
0.25
0.15
5.0
7.0
12
3.3
12
15
5.3
3.1
2.2
5.3
–
13
13
1.8
6.3
8.1
20
2.2
2.0
4.1
3.2
2.9
4.1
3.9
2.4
2.2
4.1
3.0
–
11.8
11.8
1.1
4.5
3.7
0.9
0.6
0.32
0.93
1.2
0.31
1.6
1.9
0.41
0.22
0.29
0.51
–
4.8
4.8
0.060
0.91
0.97
0.56
0.041
Africa and Middle East Total
57
3.81
7.0
170
3.52
19
27
81
4.0
10
North America
Carlin surface
Carlin underground
Carlin (61.50%) total
Cortez surface
Cortez underground11
Cortez (61.50%) total
Donlin surface (50.00%)
Hemlo surface
Hemlo underground
Hemlo (100%) total
Long Canyon surface
Long Canyon underground
Long Canyon (61.50%) total
Turquoise Ridge surface
Turquoise Ridge underground
Turquoise Ridge (61.50%) total
Phoenix surface (61.50%)
Fourmile underground (100%)
47
21
68
5.0
0.90
5.9
3.9
–
1.8
1.8
0.65
0.085
0.74
24
14
38
15
–
2.59
8.23
4.35
2.33
8.41
3.26
2.52
–
4.25
4.25
2.79
11.80
3.83
2.06
10.00
4.95
0.60
–
3.9
5.6
9.5
0.38
0.24
0.62
0.31
–
0.25
0.25
0.059
0.032
0.091
1.6
4.4
6.0
0.28
–
130
10
140
75
36
110
270
32
8.6
41
10
1.1
12
32
10
42
180
–
1.48
7.67
1.93
1.33
8.09
3.51
2.24
1.91
3.19
2.18
2.65
9.29
3.29
1.96
9.09
3.72
0.53
–
6.4
2.6
8.9
3.2
9.3
12
19
2.0
0.88
2.9
0.89
0.33
1.2
2.0
3.0
5.0
3.1
–
North America Total
130
4.00
17
800
2.06
53
10
8.2
18
3.6
9.5
13
20
2.0
1.1
3.1
0.95
0.36
1.3
3.6
7.4
11
3.4
–
70
12
3.2
15
43
5.5
49
46
3.0
6.0
9.1
1.6
0.20
1.8
11
1.8
13
12
5.4
1.1
8.0
2.6
0.6
7.7
1.4
2.0
1.0
4.7
3.5
1.6
6.1
2.1
1.6
9.1
2.7
0.4
10.9
0.40
0.82
1.2
0.89
1.4
2.2
3.0
0.096
0.91
1.0
0.083
0.039
0.12
0.57
0.53
1.1
0.15
1.9
150
2.2
11
141
MINERAL RESERVES AND MINERAL RESOURCESFinancial Report 2019
Gold Mineral Resources1,2,3,4
As at December 31, 2019
Measured (M)5,6
Indicated (I)5,7
(M) + (I)5,6,7
Inferred8
Based on attributable ounces
Latin America and Asia Pacific
Pueblo Viejo surface (60.00%)
Norte Abierto surface (50.00%)
Pascua Lama surface (100%)
Veladero surface (50.00%)
Lagunas Norte surface (100%)
Alturas surface (100%)
Porgera surface
Porgera underground
Porgera (47.50%) total
Latin America and
Asia Pacific Total
Total
Tonnes
(Mt)
Contained
ozs
(Moz)
Grade
(g/t)
Tonnes
(Mt)
Contained
ounces
(Moz)
Grade
(g/t)
Contained
ounces
(Moz)
Tonnes Grade
(g/t)
(Moz)
Contained
ounces
(Moz)
80
190
43
18
1.4
–
–
1.5
1.5
2.41
0.63
1.86
0.56
0.94
–
–
6.57
6.57
6.2
3.9
2.6
0.33
0.043
–
–
0.31
0.31
120
1,100
390
180
57
–
15
8.7
24
2.25
0.53
1.49
0.63
2.31
–
3.24
6.16
4.30
9.0
19
19
3.6
4.2
–
1.6
1.7
3.3
340
1.24
530
2.21
13
37
1,900
0.96
58
2,800
1.43
130
15
22
21
4.0
4.3
–
1.6
2.0
3.6
71
170
33
370
15
20
1.4
260
7.1
2.8
9.8
2.1
0.4
1.7
0.7
1.1
1.1
2.6
6.5
3.7
2.2
4.4
0.86
0.42
0.050
8.9
0.58
0.57
1.2
710
0.8
940
1.3
18
39
1. Mineral resources which are not mineral reserves do not have
7. Indicated mineral resources are shown inclusive of probable
demonstrated economic viability.
mineral reserves.
2. See accompanying Mineral Reserves and Mineral Resources endnote #1.
3. See accompanying Mineral Reserves and Mineral Resources endnote #3.
4. See accompanying Mineral Reserves and Mineral Resources endnote #4.
5. See accompanying Mineral Reserves and Mineral Resources endnote #5.
6. Measured mineral resources are shown inclusive of proven
mineral reserves.
8. See accompanying Mineral Reserves and Mineral Resources endnote #6.
9. See accompanying Mineral Reserves and Mineral Resources endnote #9.
10. See accompanying Mineral Reserves and Mineral Resources endnote #10.
11. See accompanying Mineral Reserves and Mineral Resources endnote #17.
142
MINERAL RESERVES AND MINERAL RESOURCESBarrick Gold Corporation
Tonnes Grade
(%)
(Mt)
Contained
lbs
(Mlb)
13
9.6
–
2.2
2.2
24
18
18
0.6
0.5
–
2.1
2.1
0.7
0.2
0.2
170
120
–
100
100
390
62
62
Copper Mineral Resources1,2,3,4,5
As at December 31, 2019
Measured (M)6,7
Indicated (I)7,8
(M) + (I)6,7,8
Inferred9
Based on attributable pounds
Africa and Middle East
Bulyanhulu underground
(84.00%)10
Lumwana surface (100%)
Jabal Sayid surface
Jabal Sayid underground
Jabal Sayid (50.00%) total
Tonnes
(Mt)
Contained
lbs
(Mlb)
Grade
(%)
Tonnes
(Mt)
Contained
lbs
(Mlb)
Grade
(%)
Contained
lbs
(Mlb)
3.1
81
0.079
7.5
7.6
0.54
0.53
3.21
2.66
2.66
37
940
5.6
440
440
9.8
850
–
7.1
7.1
0.44
94
0.65 12,000
–
370
370
–
2.38
2.38
130
13,000
5.6
810
820
Africa and Middle East Total
91
0.71
1,400
860
0.66 13,000
14,000
North America
Phoenix surface (61.50%)
North America Total
Latin America and Asia Pacific
Zaldívar surface (50.00%)
Norte Abierto surface (50.00%)
Latin America and
Asia Pacific Total
Total
43
43
0.18
0.18
170
170
260
0.16
260
0.16
880
880
1,100
1,100
350
170
0.41
0.21
3,200
790
280
1,000
0.38
0.21
2,400
4,700
5,500
5,500
29
360
0.4
0.2
260
1,400
520
0.34
3,900
1,300
0.25
7,100
11,000
390
0.2
1,700
660
0.38
5,500
2,400
0.38 21,000
26,000
430
0.2
2,200
1. Mineral resources which are not mineral reserves do not have
demonstrated economic viability.
2. See accompanying Mineral Reserves and Mineral Resources endnote #1.
3. See accompanying Mineral Reserves and Mineral Resources endnote #3.
4. See accompanying Mineral Reserves and Mineral Resources endnote #4.
5. See accompanying Mineral Reserves and Mineral Resources endnote #7.
6. Measured mineral resources are shown inclusive of proven
mineral reserves.
7. See accompanying Mineral Reserves and Mineral Resources endnote #5.
8. Indicated mineral resources are shown inclusive of probable
mineral reserves.
9. See accompanying Mineral Reserves and Mineral Resources endnote #6.
10. See accompanying Mineral Reserves and Mineral Resources endnote #10.
143
MINERAL RESERVES AND MINERAL RESOURCESFinancial Report 2019
Silver Mineral Resources1,2,3,4,5
As at December 31, 2019
Measured (M)6,7
Indicated (I)7,8
(M) + (I)6,7,8
Inferred9
Tonnes
(Mt)
Ag Contained
Ag
(Moz)
Grade
(g/t)
Tonnes
(Mt)
Ag Contained
ozs
(Moz)
Grade
(g/t)
Contained
ozs
(Moz)
Tonnes Grade
(g/t)
(Mt)
Ag Contained
ozs
(Moz)
Based on attributable pounds
Africa and Middle East
Bulyanhulu underground
(84.00%)10
Africa and Middle East Total
North America
Phoenix surface (61.50%)
North America Total
Latin America and Asia Pacific
Pueblo Viejo surface (60.00%)
Norte Abierto surface (50.00%)
Pascua-Lama surface (100%)
Lagunas Norte surface (100%)
Veladero surface (50.00%)
Latin America and
Asia Pacific Total
3.1
3.1
15
15
7.96
0.80
7.96
0.80
9.8
9.8
6.17
6.17
7.42
7.42
3.5
3.5
180
6.38
180
6.38
80
190
43
1.4
18
16.16
1.62
57.21
2.69
11.97
42
10
79
0.12
7.0
120
1,100
390
57
180
11.17
1.23
52.22
5.40
14.06
330
12.78
140
1,800
14.19
1.9
1.9
37
37
45
43
660
9.9
80
840
870
2.7
2.7
41
41
86
53
740
10
87
13
13
12
12
9.0
9.0
6.1
6.1
33 10.6
1.0
17.8
3.5
15.0
370
15
1.4
20
970
440
2.9
1,000
460
3.2
3.7
3.7
2.5
2.5
11
11
8.8
0.16
9.5
41
47
Total
350
12.52
140
2,000
13.44
1. Mineral resources which are not mineral reserves do not have
demonstrated economic viability.
7. See accompanying Mineral Reserves and Mineral Resources endnote #5.
8. Indicated mineral resources are shown inclusive of probable
2. See accompanying Mineral Reserves and Mineral Resources endnote #1.
3. See accompanying Mineral Reserves and Mineral Resources endnote #3.
4. See accompanying Mineral Reserves and Mineral Resources endnote #4.
5. See accompanying Mineral Reserves and Mineral Resources endnote #7.
6. Measured mineral resources are shown inclusive of proven
mineral reserves.
mineral reserves.
9. See accompanying Mineral Reserves and Mineral Resources endnote #6.
10. See accompanying Mineral Reserves and Mineral Resources endnote #10.
144
MINERAL RESERVES AND MINERAL RESOURCESBarrick Gold Corporation
Summary Gold Mineral Reserves1,2,3,4
For the years ended December 31
2019
2018
Ownership
%
Tonnes
(Mt)
Grade Ounces
(Moz)
(g/t)
Ownership
%
Tonnes
(Mt)
Grade Ounces
(Moz)
(g/t)
Based on attributable ounces
Africa and Middle East
Kibali surface4
Kibali underground4
Kibali Total4
Loulo-Gounkoto surface4
Loulo-Gounkoto underground4
Loulo-Gounkoto Total4
Tongon surface4
Massawa surface4,5
Bulyanhulu surface6
Bulyanhulu underground6
Bulyanhulu Total6
North Mara surface6
North Mara underground6
North Mara Total6
Buzwagi surface6
Jabal Sayid surface
Africa and Middle East Total
North America
Hemlo surface
Hemlo underground
Hemlo Total
Golden Sunlight
Long Canyon surface Total7
Phoenix surface7
Carlin surface8
Carlin Underground8
Carlin Total8
Cortez surface9
Cortez Underground9,10
Cortez Total9
Turquoise Ridge surface11
Turquoise Ridge underground11
Turquoise Ridge Total11
North America Total
Latin America and Asia Pacific
Norte Abierto surface
Pueblo Viejo surface
Veladero surface
Lagunas Norte
Porgera surface
Porgera underground
Porgera Total
Kalgoorlie12
Other
Total
45.00%
45.00%
45.00%
80.00%
80.00%
80.00%
89.70%
83.25%
84.00%
84.00%
84.00%
84.00%
84.00%
84.00%
84.00%
50.00%
100%
100%
100%
61.50%
61.50%
61.50%
61.50%
61.50%
61.50%
61.50%
61.50%
61.50%
61.50%
61.50%
50.00%
60.00%
50.00%
100%
47.50%
47.50%
47.50%
11
20
31
18
27
45
8.9
17
1.1
6.4
7.5
15
5.8
21
5.1
13
2.92
4.87
4.20
3.28
5.16
4.41
2.14
3.94
1.19
10.70
9.34
1.49
5.40
2.57
0.84
0.24
0.99
3.2
4.2
1.9
4.5
6.4
0.61
2.2
0.041
2.2
2.2
0.73
1.0
1.7
0.14
0.097
150
3.69
18
1.6
9.0
11
4.9
100
100
19
120
57
11
69
34
18
51
360
600
71
120
–
8.5
6.6
15
1.28
4.37
3.90
0.066
1.3
1.3
2.48
0.59
2.15
9.59
3.32
1.35
9.91
2.77
1.95
10.90
5.02
0.39
2.0
7.1
5.9
13.0
2.5
3.6
6.1
2.1
6.2
8.3
2.68
31
0.60
2.49
0.73
–
3.63
6.33
4.81
12.0
5.7
2.8
–
0.99
1.3
2.3
63.90%
6.6
8.2
1.7
63.90%
63.90%
17
6.8
2.59
0.90
1.4
0.20
100%
100%
24
0.30
2.48
1.70
100%
100%
100%
63
8.9
72
2.99
9.98
3.91
1.9
–
6.1
2.9
9.0
100%
150
1.87
11
75%
16
12.97
6.8
50.00%
60.00%
50.00%
100%
600
77
110
45
0.60
2.66
0.74
2.74
47.50%
50.00%
13
96
4.93
1.18
12
6.6
2.5
4.0
2.1
3.7
14
0.24
0.10
Latin America and Asia Pacific Total
810
0.87
22
1,300
1.68
71
1,200
1.56
62
1. See accompanying Mineral Reserves and Mineral Resources endnote #1.
2. See accompanying Mineral Reserves and Mineral Resources endnote #2.
3 . See accompanying Mineral Reserves and Mineral Resources endnote #4.
4. See accompanying Mineral Reserves and Mineral Resources endnote #8.
5. See accompanying Mineral Reserves and Mineral Resources endnote #9.
6. See accompanying Mineral Reserves and Mineral Resources endnote #10.
7. See accompanying Mineral Reserves and Mineral Resources endnote #11.
8. See accompanying Mineral Reserves and Mineral Resources endnote #12.
9. See accompanying Mineral Reserves and Mineral Resources endnote #13.
10. See accompanying Mineral Reserves and Mineral Resources endnote #17.
11. See accompanying Mineral Reserves and Mineral Resources endnote #14.
12. See accompanying Mineral Reserves and Mineral Resources endnote #16.
145
MINERAL RESERVES AND MINERAL RESOURCESFinancial Report 2019
Mineral Reserves and Resources Endnotes
1. Mineral reserves (“reserves”) and mineral resources (“resources”) have been estimated as at December 31, 2019 (unless otherwise noted) in accordance
with National Instrument 43-101 as required by Canadian securities regulatory authorities. For United States reporting purposes, 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 (the “Exchange Act”). These amendments became effective February 25, 2019 (the
“SEC Modernization Rules”) with compliance required for the first fiscal year beginning on or after January 1, 2021. The SEC Modernization Rules replace
the historical property disclosure requirements for mining registrants that were included in SEC Industry Guide 7, which will be rescinded from and after
the required compliance date of the SEC Modernization Rules. As a result of the adoption of the SEC Modernization Rules, the SEC now recognizes
estimates of “measured”, “indicated” and “inferred” mineral resources. In addition, the SEC has amended its definitions of “proven mineral reserves”
and “probable mineral reserves” to be substantially similar to the corresponding Canadian Institute of Mining, Metallurgy and Petroleum definitions, as
required by NI 43-101. 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. Mineral resource and mineral reserve estimations have been prepared by employees of Barrick,
its joint venture partners or its joint venture operating companies, as applicable, under the supervision of regional Mineral Resource Managers Simon
Bottoms, Africa & Middle East Mineral Resource Manager and Chad Yuhasz, Latin America & Australia Pacific Mineral Resource Manager, Craig Fiddes,
North America Resource Modeling Manager and reviewed by Rodney Quick, Barrick Executive Mineral Resource Management and Evaluation. 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$2.75 per pound and long-term average exchange rates of 1.30 CAD/US$. 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, 2019 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.
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. The Barrick 2018 mineral resources were reported on an exclusive basis and exclude all areas that form mineral reserves; the Barrick 2019 mineral
resources are reported on an inclusive basis and include all areas that form mineral reserves, reported at a mineral resource cut-off and associated
commodity price. As a result, the respective Barrick 2018 mineral resources are not directly comparable to that of the Barrick 2019 mineral resources.
4. All mineral resource and mineral reserve estimates of tonnes, Au oz, Ag oz and Cu lb are reported to the second significant digit.
5. All measured and indicated mineral resource estimates of grade and all proven and probable mineral reserve estimates of grade for Au g/t, Ag g/t and
Cu % are reported to 2 decimal places.
6. All inferred mineral resource estimates of grade for Au g/t, Ag g/t and Cu % are reported to 1 decimal place.
7. 2019 polymetallic mineral resources and mineral reserves are estimated using the combined value of gold, copper & silver and accordingly are reported
as Gold, Copper & Silver mineral resources and mineral reserves.
8. These sites were acquired as a result of the Merger and therefore are not reported as of December 31, 2018.
9. On December 10, 2019, Barrick entered into an agreement to sell its interest in Massawa to Teranga Gold Corporation. The transaction is expected to close
in the first quarter of 2020. For additional information, see page 57 of Barrick’s Annual Report 2019.
10. Formerly known as Acacia Mining plc. On September 17, 2019, Barrick acquired all of the shares of Acacia it did not own, bringing its ownership of Bulyanhulu,
North Mara and Buzwagi up from 63.9% to 100%. On January 24, 2020, Barrick announced the signing of an agreement with the GoT, through which, among
other things, the GoT will acquire a 16% free-carried interest in these sites, expected to be made effective as of January 1, 2020. For convenience, Barrick
is reporting these mineral reserves and resources at its resulting 84% ownership interest.
11. These sites were acquired as a result of the formation of Nevada Gold Mines on July 1, 2019.
12. On July 1, 2019, Barrick’s Goldstrike and Newmont’s Carlin were contributed to Nevada Gold Mines and are now referred to as Carlin. As a result, the
amounts presented as of December 31, 2018 represent Goldstrike on a 100% basis (including our 60% share of South Arturo), and the amounts presented
as of December 31, 2019 represent Carlin and Goldstrike (including our 60% share of South Arturo) on a 61.5% basis.
13. On July 1, 2019, Cortez was contributed to Nevada Gold Mines. As a result, Barrick now holds a 61.5% interest in Cortez. The amounts presented as of
December 31, 2018 represent Cortez and Goldrush on a 100% basis, and the amounts presented as of December 31, 2019 represent Cortez and Goldrush
on a 61.5% basis.
14. On July 1, 2019, Barrick’s 75% interest in Turquoise Ridge and Newmont’s Twin Creeks and 25% interest in Turquoise Ridge were contributed to Nevada
Gold Mines. As a result, the amounts presented as of December 31, 2018 are based on our 75% interest in Turquoise Ridge and the amounts presented as
of December 31, 2019 represent our 61.5% share of Turquoise Ridge and Twin Creeks, now referred to as Turquoise Ridge.
15. Silver and copper probable reserve tonnage at the Bulyanhulu mine is less than the gold probable reserve tonnage because the gold reserve includes
1.3 million tonnes of tailings material which are being separately reprocessed for recovery of gold only.
16. On November 28, 2019, we completed the sale of our 50% interest in Kalgoorlie in Western Australia to Saracen Mineral Holdings Limited. For additional
information, see page 57 of Barrick’s Annual Report 2019.
17. Cortez underground includes 3.9 million tonnes at 9.69 g/t for 1.2 million ounces of probable reserves, 26.3 million tonnes at 7.80 g/t for 6.6 million ounces
of indicated resources and 4.8 million tonnes at 7.60 g/t for 1.2 million ounces of inferred resources related to Goldrush. As noted in endnote #3, mineral
resources are reported on an inclusive basis.
146
MINERAL RESERVES AND MINERAL RESOURCESBarrick Gold Corporation 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
February 20, 2020
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, 2019.
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, 2019.
The effectiveness of the Company’s internal control over financial reporting as at December 31, 2019 has been audited by
PricewaterhouseCoopers LLP, Chartered Professional Accountants, as stated in their report which is located on pages 148 – 151
of Barrick’s 2019 Annual Financial Statements.
147
Financial Report 2019 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, 2019 and 2018, 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, 2019, 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, 2019 and 2018, 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, 2019, 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.
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.
148
INDEPENDENT AUDITOR’S REPORTBarrick Gold Corporation Critical Audit Matters
The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements
that were communicated or required to be communicated to the audit & risk committee and that (i) relate to accounts or disclosures
that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments.
The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole,
and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts
or disclosures to which they relate.
Fair value of the property, plant and equipment and equity in investees acquired
as part of the Randgold Resources Limited merger (the Merger)
As described in notes 2, 3 and 4 to the consolidated financial statements, the Company acquired 100% of the issued and outstanding
shares of Randgold Resources Limited (Randgold) on January 1, 2019. Total consideration paid by the Company for Randgold shares
was $7.9 billion of which $3.9 billion was allocated to property, plant and equipment and $3.3 billion was allocated to equity in investees.
To determine the fair value of a large portion of property, plant and equipment and equity in investees acquired, management used discounted
cash flow models. Management applied significant judgment in determining the fair value, including the use of significant assumptions such
as: future metal prices, expected future production costs and capital expenditures, weighted average costs of capital, and the estimated
quantities of ore reserves and mineral resources, including the expected conversions of resources to reserves. Estimated quantities of ore
reserves and mineral resources are based on information compiled by qualified persons (management’s specialists).
The principal considerations for our determination that performing procedures relating to the fair value of the property, plant and
equipment and equity in investees acquired as part of the Merger is a critical audit matter are: (i) there was significant judgment required
by management in determining the fair values of a large portion of the property, plant and equipment and equity in investees acquired as
part of the Merger, which were based on discounted cash flow models, including the selection of the significant assumptions such as future
metal prices, expected future production costs and capital expenditures, weighted average costs of capital, and the estimated quantities
of ore reserves and mineral resources, including the expected conversions of resources to reserves; (ii) the degree of auditor judgment,
subjectivity and effort in performing procedures and evaluating audit evidence relating to the fair value measurement of a large portion of the
property, plant and equipment and equity in investees acquired; and (iii) audit effort included the involvement of professionals with specialized
skill and knowledge.
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion
on the consolidated financial statements. These procedures included testing the effectiveness of controls over the valuation of the property,
plant and equipment and equity in investees, including controls relating to the significant assumptions used in those management estimates.
These procedures also included, among others: testing management’s process for determining the fair value of a large portion of the property,
plant and equipment and equity in investees; evaluating the appropriateness of the discounted cash flow models; testing the completeness,
accuracy, and relevance of underlying data used in the models and evaluating the reasonableness of the significant assumptions, including
the future metal prices, expected future production costs and capital expenditures, weighted average costs of capital, and the estimated
quantities of ore reserves and mineral resources, including the expected conversions of resources to reserves. Evaluating the reasonableness
of the future metal price assumptions involved comparing those prices to external benchmarking data. Evaluating the reasonableness of
expected future production costs and capital expenditures was done by comparing the costs and capital expenditures to actual production
and other third-party information, where available. The work of management’s specialists was used in performing the procedures to evaluate
the reasonableness of the ore reserve and mineral resources estimates and the expected conversions of resources to reserves. As a basis
for using this work, management’s specialists’ qualifications and objectivity were understood as well as their methods and assumptions.
The procedures performed included tests of the data used by management’s specialists and evaluation of their findings. Professionals
with specialized skill and knowledge assisted us in evaluating the reasonableness of the weighted average costs of capital.
Fair value of the Newmont Corporation (Newmont) property, plant and equipment acquired and fair value
of the Company’s property plant and equipment contributed as part of the Newmont mines acquisition
As described in notes 2, 3 and 4 to the consolidated financial statements, the Company established a joint venture with Newmont, to combine
their respective mining operations, assets, reserves and talent in Nevada, USA. The transaction concluded on July 1, 2019, establishing
Nevada Gold Mines LLC (Nevada Gold Mines) as the joint venture. Management determined that the Company controls Nevada Gold Mines,
and that the transaction to acquire the Newmont mines represents a business combination with the Company as the acquirer. Management
determined that the consideration paid by the Company for control over the Newmont mines is the fair value of the non-controlling interest
of the Company’s mines contributed and that the fair value of the consideration was $3.9 billion. A large portion of the fair value of the
non-controlling interest contributed was property, plant and equipment. Management also determined that the fair value of the property, plant
and equipment acquired was $3.5 billion. To determine the fair value of a large portion of the property, plant and equipment acquired and
contributed, management used discounted cash flow models. Management applied significant judgment in determining the fair value of a large
portion of the property, plant and equipment acquired and contributed, including the use of significant assumptions such as future metal prices,
weighted average costs of capital, estimated quantities of ore reserves and mineral resources, including expected conversions of resources
to reserves, and expected future production costs and capital expenditures for the mines contributed and acquired. Estimated quantities of ore
reserves and mineral resources are based on information compiled by qualified persons (management’s specialists).
149
INDEPENDENT AUDITOR’S REPORTFinancial Report 2019 The principal considerations for our determination that performing procedures relating to the fair value of the property, plant and
equipment acquired and contributed as part of the Newmont mines acquisition is a critical audit matter are: (i) there was significant judgment
required by management in determining the fair value of a large portion of the property, plant and equipment acquired and contributed using
discounted cash flow models as part of the acquisition, including the selection of the significant assumptions such as future metal prices,
weighted average costs of capital, estimated quantities of ore reserves and mineral resources, including expected conversions of resources
to reserves and expected future production costs and capital expenditures; and (ii) the degree of auditor judgment, subjectivity and effort in
performing procedures and evaluating audit evidence relating to the fair value measurement of a large portion of the property, plant and
equipment acquired and contributed; and (iii) audit effort included the involvement of professionals with specialized skill and knowledge.
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion
on the consolidated financial statements. These procedures included testing the effectiveness of controls over the valuation of the property,
plant and equipment, including controls relating to the significant assumptions used in those management estimates. These procedures also
included, among others: testing management’s process for determining the fair value of a large portion of the property, plant and equipment
acquired and contributed; evaluating the appropriateness of the discounted cash flow models; testing the completeness, accuracy and
relevance of underlying data used in the models and evaluating the reasonableness of significant assumptions, including future metal prices,
weighted average costs of capital, estimated quantities of ore reserves and mineral resources, including expected conversions of resources to
reserves and expected future production costs and capital expenditures. Evaluating the reasonableness of the future metal price assumptions
involved comparing those prices to external benchmarking data. Evaluating the reasonableness of expected future production costs and
capital expenditures was done by comparing the costs and capital expenditures to actual production and other third-party information, where
available. The work of management’s specialists was used in performing the procedures to evaluate the reasonableness of the ore reserves
and mineral resources estimates and the expected conversions of resources to reserves. As a basis for this work, management’s specialists’
qualifications and objectivity were understood as well as their methods and assumptions. The procedures performed included tests of the data
used by management’s specialists and evaluation of their findings. Professionals with specialized skill and knowledge assisted in evaluating
the reasonableness of the weighted average costs of capital.
Impairment assessments for goodwill and other non-current assets and
impairment reversal assessments for other non-current assets
As described in notes 2, 3, 10, 19, 20 and 21 to the consolidated financial statements, the Company’s goodwill and other 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. Impairment assessments and impairment reversal assessments for other non-current 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 and impairment reversal assessments. The Company’s goodwill and other non-current assets balances at December 31, 2019
were $4.8 billion and $32.7 billion, respectively. Indicators of impairment were identified for the following CGUs: Bulyanhulu, North Mara,
Buzwagi, and Pascua-Lama and indicators of impairment reversal were identified for the Lumwana and Pueblo Viejo CGUs. The Company
determined that the carrying amount of Pascua-Lama was not recoverable and an impairment to other non-current assets of $296 million
was recognized. The Company identified that the Fair Values Less Costs of Disposal (FVLCD) of the Lumwana CGU and the Pueblo Viejo
CGU exceeded the carrying values of these CGUs and therefore recognized other non-current asset impairment reversals of $947 million and
$865 million for the Lumwana and Pueblo Viejo CGUs, respectively. For each CGU tested for impairment or impairment reversal, the Company
compared the carrying amount of the CGU to its FVLCD. In all instances, except for the Pascua-Lama CGU, management estimated the
FVLCD of the CGUs by using discounted cash flow models and the application of a specific Net Asset Value (NAV) multiple for each CGU,
where appropriate. For the Pascua-Lama CGU, management estimated the FVLCD of the CGU using a market approach by considering
observable market values for comparable assets expressed as dollar per ounce of measured and indicated resources. Management’s
estimates of FVLCD included significant assumptions with respect to future metal prices, operating and capital costs, weighted average costs
of capital, NAV multiples, market values expressed as dollar per ounce of measured and indicated resources, and the estimated quantities of
ore reserves and mineral resources, including the expected conversions of resources to reserves. Management estimates of quantities of ore
reserves and mineral resources are based on information compiled by qualified persons (management’s specialists).
The principal considerations for our determination that performing procedures relating to the impairment assessments for goodwill
and other non-current assets and impairment reversal assessments for other non-current assets is a critical audit matter are (i) there was
significant judgment required by management in estimating the FVLCD of the CGUs using discounted cash flow models and the application
of a specific NAV multiple, where appropriate or by using a market approach considering observable market values for comparable assets;
(ii) the degree of auditor judgment, subjectivity and effort in performing procedures and evaluating audit evidence relating to the significant
assumptions with respect to future metal prices, operating and capital costs, weighted average costs of capital, NAV multiples, market values
expressed as dollar per ounce of measured and indicated resources, and the estimated quantities of ore reserves and mineral resources,
including expected conversions of resources to reserves as compiled by management’s specialists; and (iii) audit effort included the
involvement of professionals with specialized skill and knowledge.
150
INDEPENDENT AUDITOR’S REPORTBarrick Gold Corporation Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on
the consolidated financial statements. These procedures included testing the effectiveness of controls relating to management’s impairment
and impairment reversal assessments, including controls relating to the significant assumptions used in management’s estimates of the
FVLCDs of the CGUs. These procedures also included, among others: testing management’s process for determining the FVLCDs for CGUs
with goodwill and for each CGU that was tested for impairment; evaluating the appropriateness of the discounted cash flow models or market
approach by considering observable market values for comparable assets; testing the completeness, accuracy, and relevance of underlying
data used in the models and evaluating the reasonableness of the significant assumptions used by management in the estimate of FVLCD,
including future metal prices, operating and capital costs, weighted average costs of capital, NAV multiples, market values expressed as dollar
per ounce of measured and indicated resources, and the estimated quantities of ore reserves and mineral resources, including the expected
conversions of resources to reserves. Evaluating the reasonableness of future metal price assumptions involved comparing those prices to
external benchmarking data. Evaluating the reasonableness of estimated operating and capital costs was done by comparing those costs to
recent actual operating and capital expenditures incurred, assessing the consistency of these costs with related assumptions and comparing
them to third-party information, where available. Evaluating the NAV multiple assumptions and market values expressed as dollar per ounce of
measured and indicated resources was done by comparing them to evidence of value from recent comparable market information. The work
of management’s specialists was used in performing the procedures to evaluate the reasonableness of the ore reserve and mineral resources
estimate and the estimated operating and capital costs and the expected conversions of resources to reserves. As a basis for using this work,
the qualifications and objectivity of management’s specialists were understood, as well as their methods and assumptions. The procedures
performed included tests of the data used by management’s specialists and evaluation of their findings. Professionals with specialized skill
and knowledge assisted us in evaluating the reasonableness of the weighted average costs of capital, NAV multiples, and market values
expressed as dollar per ounce of measured and indicated resources.
Chartered Professional Accountants, Licensed Public Accountants
Toronto, Canada
February 20, 2020
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.
151
INDEPENDENT AUDITOR’S REPORTFinancial Report 2019 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 (reversals) charges (note 10)
Loss on currency translation
Closed mine rehabilitation (note 27b)
Income from equity investees (note 16)
Other (income) expense (note 9)
Income before finance items and income taxes
Finance costs, net (note 14)
Income (loss) before income taxes
Income tax expense (note 12)
Net income (loss)
Attributable to:
Equity holders of Barrick Gold Corporation
Non-controlling interests (note 32)
Earnings (loss) per share data attributable to the equity holders of Barrick Gold Corporation (note 13)
Net income (loss)
Basic
Diluted
The accompanying notes are an integral part of these consolidated financial statements.
2019
2018
$ 9,717
$ 7,243
6,911
212
342
(1,423)
109
5
(165)
(3,100)
6,826
(469)
6,357
(1,783)
5,220
265
383
900
136
(13)
(46)
90
308
(545)
(237)
(1,198)
$ 4,574
$ (1,435)
$ 3,969
605
$
$ (1,545)
$
110
$ 2.26
$
(2.26)
$
$
(1.32)
(1.32)
152
FINANCIAL STATEMENTSBarrick Gold Corporation
Consolidated Statements
of Comprehensive Income
Barrick Gold Corporation
For the years ended December 31 (in millions of United States dollars)
Net income (loss)
Other comprehensive income (loss), net of taxes
Items that may be reclassified subsequently to profit or loss:
Unrealized gains (losses) on derivatives designated as cash flow hedges,
net of tax $nil and ($12)
Realized (gains) losses on derivatives designated as cash flow hedges,
net of tax $nil and $3
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 ($3) and $nil
Net change on equity investments, net of tax $nil and $nil
Total other comprehensive income
Total comprehensive income (loss)
Attributable to:
Equity holders of Barrick Gold Corporation
Non-controlling interests
The accompanying notes are an integral part of these consolidated financial statements.
2019
2018
$ 4,574
$ (1,435)
–
–
(6)
(6)
48
36
8
(2)
(9)
(2)
16
11
$ 4,610
$ (1,424)
$ 4,005
605
$
$ (1,534)
$
110
153
FINANCIAL STATEMENTSFinancial Report 2019
Consolidated Statements of Cash Flow
Barrick Gold Corporation
For the years ended December 31 (in millions of United States dollars)
Operating Activities
Net income (loss)
Adjustments for the following items:
Depreciation
Finance costs (note 14)
Impairment (reversals) charges (note 10)
Income tax expense (note 12)
Loss on currency translation
Gain on sale of non-current assets (note 9)
Remeasurement of Turquoise Ridge to fair value (note 4)
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
Cash acquired in merger (note 4)
Other investing activities (note 15)
Net cash provided by (used in) investing activities
Financing Activities
Lease repayments
Debt repayments
Dividends (note 31)
Funding from non-controlling interests (note 32)
Disbursements to non-controlling interests (note 32)
Other financing activities
Net cash used in financing activities
Effect of exchange rate changes on cash and equivalents
Net increase (decrease) in cash and equivalents
Cash and equivalents at beginning of year (note 25a)
Cash and equivalents at the end of year
The accompanying notes are an integral part of these consolidated financial statements.
154
2019
2018
$ 4,574
$ (1,435)
2,032
500
(1,423)
1,783
109
(441)
(1,886)
(357)
(1,113)
3,778
(333)
(612)
2,833
(1,701)
41
750
(4)
751
213
50
(28)
(281)
(548)
140
(421)
(1)
(1,139)
(1)
1,743
1,571
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
$ 3,314
$ 1,571
FINANCIAL STATEMENTSBarrick Gold Corporation
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 (excluding assets classified as held-for-sale)
Assets classified as held-for-sale (note 4)
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 (excluding liabilities classified as held-for-sale)
Liabilities classified as held-for-sale (note 4)
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,
Mark Bristow, Director
J. Brett Harvey, Director
As at
As at
December 31, December 31,
2018
2019
$ 3,314
363
2,289
565
6,531
356
6,887
2,300
4,527
24,141
226
4,769
235
1,307
$ 44,392
$ 1,155
375
224
622
2,376
–
2,376
5,161
3,114
3,091
823
14,565
29,231
(9,722)
(122)
2,045
21,432
8,395
29,827
$ 1,571
248
1,852
307
3,978
–
3,978
1,696
1,234
12,826
227
1,176
259
1,235
$ 22,631
$ 1,101
43
203
321
1,668
–
1,668
5,695
2,904
1,236
1,743
13,246
20,883
(13,453)
(158)
321
7,593
1,792
9,385
$ 44,392
$ 22,631
155
FINANCIAL STATEMENTSFinancial Report 2019
Consolidated Statements
of Changes in Equity
Attributable to equity holders of the Company
Barrick Gold Corporation
(in millions of United States dollars)
Common Shares
(in thousands) Capital stock
Retained
Accumulated
other
earnings comprehensive
income (loss)1
(deficit)
Total equity
attributable to
Other2 shareholders
Non-
controlling
interests
Total
equity
At January 1, 2019
1,167,847
$ 20,883 $ (13,453)
$ (158) $ 321
$ 7,593
$ 1,792 $ 9,385
–
–
3,969
–
–
36
$
– $ 3,969
$ 36 $
–
–
–
–
Net income (loss)
Total other comprehensive income
Total comprehensive income (loss)
Transactions with owners
Dividends (note 31)
Merger with Randgold Resources
Limited (note 4)
Nevada Gold Mines JV with Newmont
Goldcorp Corporation (note 4)
Acquisition of 36.1% of Acacia
Mining plc (note 4)
Issued on exercise of stock options
Funding from non-controlling
interests (note 32)
Other decrease in non-controlling
interests (note 32)
Dividend reinvestment plan (note 31)
Share-based payments
–
(218)
583,669
7,903
–
–
24,837
131
–
–
1,443
–
423
2
–
–
20
–
–
–
–
–
–
–
(20)
–
–
–
–
–
–
3,969
36
605
–
4,574
36
$ 4,005
$ 605 $ 4,610
(218)
–
(218)
7,903
872
8,775
–
–
–
1,645
1,645
5,910
7,555
–
–
–
–
–
–
70
–
–
–
–
9
493
2
(495)
–
(2)
2
–
–
–
9
140
140
(429)
–
–
(429)
–
9
Total transactions with owners
610,080
$ 8,348 $
(238)
$
– $ 1,724
$ 9,834
$ 5,998 $ 15,832
At December 31, 2019
1,777,927
$ 29,231 $ (9,722)
$ (122) $ 2,045
$ 21,432
$ 8,395 $ 29,827
At December 31, 2017
Impact of adopting IFRS 15 on
January 1, 2018
At January 1, 2018 (restated)
Net (loss) income
Total other comprehensive income
Total comprehensive (loss) income
Transactions with owners
Dividends
Issued on exercise of stock options
Funding from non-controlling interests
Other decrease in non-controlling interests
Dividend reinvestment plan
Other3
1,166,577
$ 20,893 $ (11,759)
$ (169) $ 321
$ 9,286
$ 1,781 $ 11,067
–
–
64
–
–
64
–
64
1,166,577
$ 20,893 $ (11,695)
$ (169) $ 321
$ 9,350
$ 1,781 $ 11,131
–
–
–
–
20
–
–
1,250
–
–
–
(1,545)
–
–
11
$
– $ (1,545)
$ 11 $
–
–
–
–
14
(24)
(199)
–
–
–
(14)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(1,545)
11
110
–
(1,435)
11
$ (1,534)
$ 110 $ (1,424)
(199)
–
–
–
–
(24)
–
–
24
(123)
–
–
(199)
–
24
(123)
–
(24)
$
(223)
$
(99) $
(322)
Total transactions with owners
1,270
$
(10) $
(213)
$
– $
At December 31, 2018
1,167,847
$ 20,883 $ (13,453)
$ (158) $ 321
$ 7,593
$ 1,792 $ 9,385
1. Includes cumulative translation adjustments as at December 31, 2019: $88 million loss (December 31, 2018: $82 million loss).
2. Includes additional paid-in capital as at December 31, 2019: $2,007 million (December 31, 2018: $283 million).
3. Represents a reversal of a previously recognized deferred tax asset, which was originally recognized in capital stock.
The accompanying notes are an integral part of these consolidated financial statements.
156
FINANCIAL STATEMENTSBarrick Gold Corporation
Notes to Consolidated Financial Statements
Barrick Gold Corporation. Tabular dollar amounts in millions of United States dollars, unless otherwise shown. References to A$, ARS,
C$, CLP, DOP, EUR, GBP, PGK, SAR, TZS, XOF, 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 shilling, West African CFA franc,
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 corporate 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. We sell our gold and copper into the world market.
We have ownership interests in producing gold mines that are
located in Argentina, Canada, Côte d’Ivoire, the Democratic Republic
of Congo, the Dominican Republic, Mali, Papua New Guinea,
Tanzania and the United States. We have ownership interests in
producing copper mines in Chile, Saudi Arabia and Zambia. We also
have various projects located throughput the Americas and Africa.
Refer to note 4 for information on acquisitions and divestments
occurring during the 2019 year.
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 20, 2020.
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”).
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”). If the carrying value in
an equity method investment is reduced to zero, additional losses
are not provided for, and a liability is not recognized, unless the
Company has incurred legal or constructive obligations, or made
payments on behalf of the equity method investment.
157
Financial Report 2019 Outlined below is information related to our joint arrangements and entities other than 100% owned Barrick subsidiaries at December 31, 2019:
Nevada Gold Mines3,4,5,6,7
Loulo-Gounkoto3
Tongon3
Pueblo Viejo3
Norte Abierto Project
Donlin Gold Project
Porgera Mine8
Veladero
Kibali9
Morila9
GNX9,10
Jabal Sayid9
Kabanga Project9,10
Zaldívar9
Place of business
United States
Mali
Côte d’Ivoire
Dominican Republic
Chile
United States
Papua New Guinea
Argentina
Democratic Republic of Congo
Mali
Chile
Saudi Arabia
Tanzania
Chile
Entity type
Subsidiary
Subsidiary
Subsidiary
Subsidiary
JO
JO
JO
JO
JV
JV
JV
JV
JV
JV
Economic interest1
Method2
61.5%
80%
89.7%
60%
50%
50%
47.5%
50%
45%
40%
50%
50%
50%
50%
Consolidation
Consolidation
Consolidation
Consolidation
Our share
Our share
Our share
Our share
Equity Method
Equity Method
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 Carlin, Cortez, Turquoise Ridge, Phoenix, Long Canyon, Loulo-Gounkoto, Tongon and Pueblo Viejo and record a non-
controlling interest for the 38.5%, 38.5%, 38.5%, 38.5%, 38.5%, 20%, 10.3% and 40%, respectively, that we do not own. On September 17, 2019, Barrick
acquired all of the shares of Acacia it did not own, bringing our ownership from 63.9% to 100%. When the Government of Tanzania’s 16% free-carried interest
is made effective, which is expected to be as of January 1, 2020, our ownership will be brought down to 84%.
4. On July 1, 2019, Barrick’s Goldstrike (including 60% of South Arturo) and Newmont’s Carlin were contributed to Nevada Gold Mines, a joint venture with
Newmont, and are now referred to as Carlin. This brought our ownership to 61.5% of Carlin (including 36.9% of South Arturo).
5. On July 1, 2019, Cortez was contributed to Nevada Gold Mines bringing our ownership down to 61.5%.
6. Barrick owned 75% of Turquoise Ridge through to the end of the second quarter of 2019, with our joint venture partner, Newmont, owning the remaining 25%.
Turquoise Ridge was proportionately consolidated on the basis that the joint venture partners that have joint control have rights to the assets and obligations
for the liabilities relating to the arrangement. On July 1, 2019, Barrick’s 75% interest in Turquoise Ridge and Newmont’s Twin Creeks and 25% interest in
Turquoise Ridge were contributed to Nevada Gold Mines. This brought our ownership to 61.5% of Turquoise Ridge and Twin Creeks, now referred to as
Turquoise Ridge.
7. Phoenix and Long Canyon were acquired as a result of the formation of Nevada Gold Mines on July 1, 2019, resulting in an ownership of 61.5%.
8. We have joint control given that decisions about relevant activities require unanimous consent of the parties to the joint operation.
9. Barrick has commitments of $324 million relating to its interest in the joint ventures.
10. These JVs are early stage exploration projects and, as such, do not have any significant assets, liabilities, income, contractual commitments or contingencies.
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.
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.
158
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation
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 sale
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 and presented separately in note 6 of these
consolidated financial statements.
Streaming Arrangements
As the deferred revenue on streaming arrangements is considered
variable consideration, an adjustment is made 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
cumulative catch-up 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
cumulative catch-up adjustment is made to accretion expense,
reflecting the impact of the change in the deferred revenue balance.
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.
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.
159
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSFinancial Report 2019 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
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, 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.
160
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation 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
1 – 28 years
5 – 7 years
1 – 7 years
1 – 7 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.
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 based on the
current life of mine (“LOM”) plan that benefit from the development
and are considered 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 LOM plan that benefit from the
development and are considered probable of economic extraction.
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 tonnes mined versus total LOM expected ore tonnes mined;
(3) the current stripping ratio versus the LOM strip ratio; and (4) the
ore grade versus the LOM grade.
161
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSFinancial Report 2019 Stripping costs incurred during the production stage of a pit are
Right-of-use assets are measured at cost comprising
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
Leases are recognized as a right-of-use asset and a corresponding
liability at the date at which the leased asset is available for use by
the Company. Each lease payment is allocated between the liability
and finance cost. The finance cost is charged to profit or loss
over the lease period so as to produce a constant periodic rate of
interest on the remaining balance of the liability for each period.
The right-of-use asset is depreciated over the shorter of the asset’s
useful life and the lease term on a straight-line basis.
the following:
the amount of the initial measurement of the lease liability;
any lease payments made at or before the commencement
date less any lease incentives received;
any initial direct costs; and
restoration costs.
Payments associated with short-term leases and leases of low-value
assets are recognized on a straight-line basis as an expense in profit
or loss. Short-term leases are leases with a lease term of 12 months
or less. Low-value assets are generally comprised of IT equipment
and small items of office furniture.
Capitalized Interest
We capitalize interest costs for qualifying assets. Qualifying assets
are assets that require a significant amount of time to prepare for
their intended use, including projects that are in the exploration and
evaluation, development or construction stages. Qualifying assets
also include significant expansion projects at our operating mines.
Capitalized interest costs are considered an element of the cost of
the qualifying asset which is determined based on gross expenditures
incurred on an asset. Capitalization ceases when the asset is
substantially complete or if active development is suspended or
ceases. Where the funds used to finance a qualifying asset form part
of general borrowings, the amount capitalized is calculated using a
weighted average of rates applicable to the relevant borrowings
during the period. Where funds borrowed are directly attributable to a
qualifying asset, the amount capitalized represents the borrowing
costs specific to those borrowings. Where surplus funds available out
of money borrowed specifically to finance a project are temporarily
invested, the total capitalized interest is reduced by income
generated from short-term investments of such funds.
Insurance
We record losses relating to insurable events as they occur.
Proceeds receivable from insurance coverage are recorded at such
time as receipt is receivable or virtually certain and the amount
receivable is fixed or determinable. For business interruption
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)
Assets and liabilities arising from a lease are initially measured
of Non-Current Assets
on a present value basis. Lease liabilities include the net present
value of the following lease payments:
fixed payments (including in-substance fixed payments), less
any lease incentives receivable;
variable lease payments that are based on an index or a rate;
amounts expected to be payable by the lessee under residual
value guarantees;
the exercise price of a purchase option if the lessee is reasonably
certain to exercise that option; and
payments of penalties for terminating the lease, if the lease term
reflects the lessee exercising that option.
The lease payments are discounted using the interest rate implicit in
the lease. If that rate cannot be determined, the lessee’s incremental
borrowing rate is used, being the rate that the lessee would have to
pay to borrow the funds necessary to obtain an asset of similar value
in a similar economic environment with similar terms and conditions.
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.
162
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation 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 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.
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.
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,
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.
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”).
The recoverable amount of an operating segment is 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.
Cash Flow Hedges
The effective portion of changes in the fair value of derivatives
that are designated and qualify as cash flow hedges is recognized
in equity. The gain or loss relating to the ineffective portion is
recognized in the consolidated statements of income. Amounts
accumulated in equity are transferred to the consolidated statements
of income in the period when the forecasted transaction impacts
earnings. When the forecasted transaction that is hedged results in
the recognition of a non-financial asset or a non-financial liability, the
gains and losses previously deferred in equity are transferred from
equity and included in the measurement of the initial carrying amount
of the asset or liability.
When a derivative designated as a cash flow hedge expires
or is sold and the forecasted transaction is still expected to occur,
any cumulative gain or loss relating to the derivative that is recorded
in equity at that time remains in equity and is recognized in the
consolidated statements of income when the forecasted transaction
occurs. When a forecasted transaction is no longer expected to
occur, the cumulative gain or loss that was recorded in equity is
immediately transferred to the consolidated statements of income.
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.
163
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSFinancial Report 2019 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 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 facilities, 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.
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.
164
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation 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”), Global
Employee Share Plan (“GESP”), Long-Term Incentive Plan (“LTIP”)
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 purchased on the open
market, 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 63.6% 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 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.
For all PGSUs that were outstanding as at December 31, 2019,
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. These 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.
165
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSFinancial Report 2019 Long-Term Incentive Plan (Employees)
Under our LTIP plan, restricted shares are issued to selected
employees, subject to a satisfactory performance level being
achieved during the 12 month period prior to the exercise date of
each tranche of shares as well as a number of company related
performance criteria. All employees to whom restricted shares have
been granted are expected to meet this level of performance.
The performance period is up to three years where the employee
must remain in employment for the shares to vest. There are no
market based vesting conditions on the share awards.
Long-Term Incentive Plan (Executive Directors)
The LTIP is subject to three performance conditions: relative total
shareholder return compared to the Euromoney Global Gold Index,
total cash cost per ounce and reserve replacement ratio. No
dividends are attributable during the vesting period.
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 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.
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 a certain percentage
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.
166
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 2019
IFRS 16 Leases
We have adopted the requirements of IFRS 16 Leases (“IFRS 16”)
as of January 1, 2019. IFRS 16 specifies how to recognize, measure,
present and disclose leases. The standard provides a single lessee
accounting model, requiring lessees to recognize assets and
liabilities for all major leases where a lessee has the right to control
the use of an identified asset. We elected to apply IFRS 16 using
the modified retrospective approach and therefore the comparative
information has not been restated and continues to be reported
under IAS 17 Leases and IFRIC 4: Determining Whether an
Arrangement Contains a Lease. The details of accounting policy
changes and the quantitative impact of these changes are
described below.
In the previous year, the Company only recognized lease
assets and lease liabilities in relation to leases that were classified
as ‘finance leases’ under IAS 17. The assets were presented in
property, plant and equipment and the liabilities as part of the
Company’s borrowings. From January 1, 2019, leases are
recognized as a right-of-use asset and a corresponding liability at the
date at which the leased asset is available for use by the Company.
Assets and liabilities arising from a lease are initially measured
on a present value basis. Lease liabilities include the net present
value of the following lease payments:
fixed payments (including in-substance fixed payments), less any
lease incentives receivable;
variable lease payments that are based on an index or a rate;
amounts expected to be payable by the lessee under residual
value guarantees;
the exercise price of a purchase option if the lessee is reasonably
certain to exercise that option; and
payments of penalties for terminating the lease, if the lease term
reflects the lessee exercising that option.
The lease payments are discounted using the interest rate implicit in
the lease. If that rate cannot be determined, the lessee’s incremental
borrowing rate is used, being the rate that the lessee would have to
pay to borrow the funds necessary to obtain an asset of similar value
in a similar economic environment with similar terms and conditions.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation Right-of-use assets are measured at cost comprising the following:
the amount of the initial measurement of lease liability;
any lease payments made at or before the commencement date
less any lease incentives received;
any initial direct costs; and
restoration costs.
The finance cost is charged to profit or loss over the lease period
so as to produce a constant periodic rate of interest on the remaining
balance of the liability for each period. The right-of-use asset is
depreciated over the shorter of the asset’s useful life and the lease
term on a straight-line basis.
Payments associated with short-term leases and leases of
low-value assets are recognized on a straight-line basis as an
expense in profit or loss. Short-term leases are leases with a lease
term of 12 months or less. Low-value assets are generally comprised
of IT equipment and small items of office furniture.
Impact on consolidated financial statements
On adoption of IFRS 16, we recognized lease liabilities in relation to
leases which had previously been classified as operating leases.
These liabilities were measured at the present value of the remaining
lease payments, discounted using the weighted average incremental
borrowing rate as of January 1, 2019 of 5.83%.
For leases previously classified as finance leases the entity
recognized the carrying amount of the lease asset and lease
liability immediately before transition as the carrying amount of
the right-of-use asset and the lease liability at the date of initial
application. The measurement principles of IFRS 16 are applied
after the date of initial application. The following table reconciles
the Company’s operating lease obligations as at December 31, 2018
as previously disclosed in the Company’s 2018 Annual Financial
Statements, to the lease obligations recognized on initial application
of IFRS 16 at January 1, 2019:
The recognized right-of-use assets relate to the following types
of assets:
December 31,
2019
January 1,
2019
Buildings, Plant & Equipment
Underground mobile equipment
Light vehicles and other mobile equipment
Total right-of-use assets
$ 63
7
5
$ 75
$ 69
7
9
$ 85
Right-of-use assets were measured at the amount equal to the lease
liability, except for onerous contracts.
The change in accounting policy affected the following items
in the balance sheet on January 1, 2019:
property, plant and equipment – increase by $85 million
deferred income tax assets – $nil
debt – increase by $92 million
There was no net impact on deficit on January 1, 2019.
Consolidated net income decreased by $3 million for the year
ended December 31, 2019 as a result of the adoption of IFRS 16.
Additions to the right-of-use assets during the year ended
December 31, 2019 were $49 million.
Practical expedients applied
In applying IFRS 16 for the first time, we have used the following
practical expedients permitted by the standard:
the accounting for operating leases with a remaining lease term of
less than 12 months as at January 1, 2019 as short-term leases;
the exclusion of initial direct costs for the measurement of the
right-of-use asset at the date of initial application;
the adjustment of the right-of-use assets at the date of initial
application by the amount of any provision for onerous contracts
recognized immediately before the date of initial application; and
to not separate non-lease components from lease components,
Barrick operating lease commitments disclosed
as at December 31, 2018
Add: embedded service contracts not
previously assessed as a lease
(Less): contracts reassessed as
service agreements
(Less): short-term leases recognized
on a straight-line basis as expense
(Less): low-value leases recognized on
a straight-line basis as expense
(Less): discounting using the lessee’s incremental
borrowing rate as at January 1, 2019
Discounted leases recognized as at
January 1, 2019
Add: finance lease liabilities recognized as at
December 31, 2018
Add: leases acquired as part of the merger with
Randgold on January 1, 2019
Discounted lease liability recognized as at
January 1, 2019
Of which are:
Current lease liabilities
Non-current lease liabilities
$ 167
and instead account for each lease component and any
associated non-lease components as a single lease component.
38
z) New Accounting Standards Issued
But Not Yet Effective
Certain new accounting standards and interpretations have been
published that are not mandatory for the current period and have not
been early adopted. These standards are not expected to have a
material impact on Barrick in the current or future reporting periods.
(130)
(6)
(1)
(4)
$ 64
19
28
$ 111
37
$ 74
167
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSFinancial Report 2019
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, 2019 we have
used a gold price assumption of $1,200 per ounce, consistent with
the prior year. To calculate our measured, indicated, and inferred
gold resources, as at December 31, 2019 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 tonnes 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
168
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.
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.
With respect to our U.S. properties, 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 not currently designated as superfund
sites in the U.S. could also be so designated as a superfund
site in the future, exposing Barrick to potential further liability under
CERCLA. In 2017, the U.S. Environmental Protection Agency
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 groundwater contamination from past uranium mining.
The San Mateo Site includes legacy operations of our wholly-owned
subsidiary Homestake Mining Company of California (“Homestake”).
In the fourth quarter of 2019, Homestake entered into a voluntary
Administrative Order on Consent obligating Homestake and
two other potentially responsible companies to conduct a study
of groundwater conditions in a portion of the San Mateo uranium
mining district. The Company has made an accrual for the
estimated cost of completing this work.
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 such as
royalties and export duties, 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.
While these amounts represent management’s best estimate based
on the laws and regulations that exist at the time of preparation, we
operate in certain jurisdictions that have an increased degree of
political and sovereign risk and while host governments have
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation historically supported the development of natural resources by
foreign companies, there is a risk that fiscal reform changes with
respect to existing investments could unexpectedly impact the tax
basis of assets and liabilities, and related deferred income tax assets
and liabilities, and estimates of the timing of repatriation of earnings.
This could necessitate future adjustments to tax income and
expense already recorded. 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 $424 million as at December 31,
2019 ($443 million as at December 31, 2018) 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 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,
unless extended. Interest on this amount would accrue from the date
of non-compliance.
In addition, we have recorded $72 million in VAT recoverable
in Argentina as at December 31, 2019 ($112 million as at
December 31, 2018) relating to the development of the Argentinean
side of the project. These amounts may not be fully 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.
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. Refer to note 2f. There was a
$22 million cumulative catch-up adjustment recorded in the fourth
quarter of 2019 related to this streaming transaction as that is when
the updated LOM was completed.
Our silver sale agreement with Wheaton Precious Metals Corp.
(“Wheaton”) 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 consideration paid less credit
for silver delivered up to the date of that event. The residual liability
at December 31, 2019 is $253 million.
In the fourth quarter of 2019, we completed a study of the
Pascua-Lama project and concluded that we do not have a plan that
meets our investment criteria under our current assumptions. As a
result, the deferred revenue liability was derecognized, and a current
liability was recognized for the cash liability payable to Wheaton
of $253 million. This adjustment resulted in $628 million recorded
in Other Income (refer to note 9) and recognizes the significant
uncertainty with the timing and quantity of the delivery of any future
silver production from Pascua-Lama.
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 provided 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. The audit of these tax returns by
the Zambian tax authority was completed in the fourth quarter of
2019 and we recorded a $50 million asset reflecting the final
settlement of this matter. We also released historical accruals related
to customs duty and indirect taxes resulting in a total of $216 million
recognized in Other Income in 2019 (refer to note 9).
Business Combinations
Business combinations are accounted for using the acquisition
method of accounting. The determination of fair value often 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. The
excess of the purchase price over the estimated fair value of the net
assets acquired is then assigned to goodwill. Goodwill is assigned to
individual CGUs based on the relative fair value and/or the CGUs
that are expected to benefit from the synergies of the business
combination. Refer to note 4 for further details on acquisitions.
169
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSFinancial Report 2019 Other Notes to the Financial Statements
Note
Page
Acquisitions and Divestitures
Segment information
Revenue
Cost of sales
Exploration, evaluation and project expenses
Other expense (income)
Impairment (reversals) charges
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
Related party transactions
Stock-based compensation
Post-retirement benefits
Contingencies
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
170
172
175
176
176
177
177
177
177
180
180
180
181
182
183
183
185
186
190
190
190
190
194
197
197
199
200
202
202
204
204
205
206
4 Acquisitions and Divestitures
a) Massawa Project
On December 10, 2019, Barrick announced that it and its
Senegalese joint venture partner had reached an agreement to sell
their aggregate 90% interest in the Massawa project (“Massawa”)
in Senegal to Teranga Gold Corporation (“Teranga”) for total
consideration of up to $430 million. The transaction is expected
to close in the first quarter of 2020 and is subject to receipt of the
Massawa exploitation license and residual exploration license
from the Government of Senegal, certain other acknowledgments
from the Government of Senegal and other customary closing
conditions. As at December 31, 2019, all of the assets and liabilities
of our interest in Massawa were classified as held-for-sale.
The consideration consists of an up-front payment
of $380 million, including a cash payment of approximately
$300 million, Teranga common shares, plus a contingent payment
of up to $50 million which is based upon the average gold price
for the three year period immediately following closing. Barrick
will receive 92.5% of the total purchase price for its interest in
the Massawa project, with the balance to be received by Barrick’s
local Senegalese partner. Barrick is providing $25 million of the
$225 million syndicated debt financing secured by Teranga in
connection with the transaction. On a pro forma basis, Barrick
will hold 19,164,403 Teranga common shares, representing
approximately 11.45% of Teranga’s issued and outstanding
common shares on closing (calculated on a non-diluted basis).
b) Kalgoorlie
On November 28, 2019, we completed the sale of our 50%
interest in the Kalgoorlie mine in Western Australia to Saracen
Mineral Holdings Limited for total cash consideration of $750 million.
The transaction resulted in a gain of $408 million for the year
ended December 31, 2019.
c) Acacia Mining plc
On September 17, 2019, Barrick acquired all of the shares in Acacia
Mining plc (“Acacia”) that we did not already own (36.1%) through
a share-for-share exchange of 0.168 Barrick shares and any Acacia
Exploration Special Dividends for each ordinary share of Acacia.
The Acacia Exploration Special Dividends and any deferred cash
consideration dividends (if applicable) will be paid as a consequence
of a sales process to realize value from the sale of certain Acacia
exploration properties to be undertaken during the two-year period
following closing. This transaction resulted in the issuance of
24,836,670 Barrick common shares or approximately 1% of Barrick’s
share capital.
The difference between the carrying value of the non-controlling
interest and the September 16, 2019 closing price of Barrick’s
common shares issued was recorded in equity in the third quarter of
2019 in the amount of $70 million.
Notwithstanding the completion of the Acacia transaction on
September 17, 2019, we consolidated our interest in Acacia and
recorded a non-controlling interest of 36.1% in the income statement
for the entirety of the third quarter of 2019 as a matter of
convenience. As at September 30, 2019, we derecognized the
non-controlling interest on the balance sheet related to our former
63.9% ownership of Acacia to reflect our current 100% interest.
On January 24, 2020, Barrick announced that the Company
had ratified the creation of Twiga Minerals Corporation (“Twiga”)
at a signing ceremony with the President of Tanzania, formalizing
the establishment of a joint venture between Barrick and the
Government of Tanzania (“GoT”) and resolution of all outstanding
disputes between Barrick and the GoT, including the lifting of the
previous concentrate export ban, effective immediately. The GoT
will receive a free carried shareholding of 16% in each of the former
Acacia mines (Bulyanhulu, Buzwagi and North Mara), and will
receive its half of the economic benefits from taxes, royalties,
clearing fees and participation in all cash distributions made by
the mines and Twiga, after the recoupment of capital investments.
Twiga will provide management services to the mines.
170
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation
Barrick and the GoT continue to fulfill their respective
obligations to satisfy all conditions of the signed agreement, primarily
with respect to the execution and delivery of formal termination
documents for the settlement of all outstanding disputes between
the two parties.
Operating results are included at 100% from October 1, 2019
up until the GoT’s 16% free-carried interest is made effective, which
is expected to be January 1, 2020, and on an 84% basis thereafter.
Refer to note 36 for further details on the agreement and impact on
outstanding contingencies.
d) Nevada Joint Venture
On March 10, 2019, we entered into an implementation agreement
with Newmont Mining Corporation, now Newmont Corporation
(“Newmont”), to create a joint venture combining our respective
mining operations, assets, reserves and talent in Nevada, USA.
This includes Barrick’s Cortez, Goldstrike, Turquoise Ridge and
Goldrush properties and Newmont’s Carlin, Twin Creeks, Phoenix,
Long Canyon and Lone Tree properties. Barrick is the operator
of the joint venture and owns 61.5%, with Newmont owning
the remaining 38.5% of the joint venture. On July 1, 2019,
the transaction concluded establishing Nevada Gold Mines LLC
(“Nevada Gold Mines”). Barrick, as the majority joint venture partner,
has the right to appoint a majority of the board members and can
therefore control decisions requiring majority approval including, but
not limited to, LOM plans, budgets and capital projects. Therefore,
we have determined that Barrick controls Nevada Gold Mines and
began consolidating the operating results, cash flows and net assets
from July 1, 2019 with a 38.5% non-controlling interest.
We have determined that the transaction to acquire the
Newmont mines represents a business combination with Barrick
identified as the acquirer. We have undertaken a purchase price
exercise to determine the fair value of the Newmont mines acquired
and the fair value of the non-controlling interest of the Barrick mines
contributed as consideration. The table below presents the final
allocation of the purchase price to the assets and liabilities acquired.
This allocation was completed in the fourth quarter of 2019. The
$1,645 million difference between the carrying value and the fair
value of the non-controlling interest in the Barrick mines contributed
was recorded in equity in the third quarter of 2019.
($ millions)
Fair value of non-controlling interest of
Barrick mines contributed
Final fair value allocation of
Newmont mines acquired
Current assets
Inventory
Property, plant and equipment
Goodwill
Total assets
Current liabilities
Deferred income tax liabilities
Provisions
Total liabilities
Non-controlling interests
Net assets acquired
$ 3,897
$ 149
970
3,534
2,520
$ 7,173
$
119
268
449
$ 836
2,440
$ 3,897
The Barrick mines in which we held 100% prior to the creation of
Nevada Gold Mines (Cortez, Goldstrike and Goldrush) will continue
to be accounted for at historical cost and continue to be consolidated
with a non-controlling interest in these mines recorded as of July 1,
2019. Prior to July 1, 2019, our 75% interest in the Turquoise Ridge
mine was accounted for as a joint operation and following its
contribution to Nevada Gold Mines it has been consolidated with
a non-controlling interest. It was determined that the contribution
of our 75% share of the assets and liabilities of Turquoise Ridge
to Nevada Gold Mines resulted in a requirement to remeasure our
retained interest at fair value as Turquoise Ridge was previously
accounted for as a joint operation and we now have control and
consolidate. As a result, we recognized a gain of $1.9 billion in
the third quarter of 2019.
We primarily used a discounted cash flow model (being the
net present value of expected future cash flows) to determine the fair
value of the mining interests and used a replacement cost approach
in determining the fair value of buildings, plant and equipment.
Expected future cash flows are based on estimates of future gold
prices inclusive of a $1,300 gold price and projected future revenues,
estimated quantities of ore reserves and mineral resources, including
expected conversions of resources to reserves, expected future
production costs and capital expenditures based on the life of mine
plans for the mines as at the acquisition date.
Goodwill arose on the acquisition principally because of the
following factors: 1) it combines high-quality gold reserves in one
of the world’s most prolific gold districts, positioning the Company
for sustainable growth; 2) the ability to optimize ore sources and
production schedules across the joint venture; and 3) the recognition
of a deferred tax liability for the difference between the assigned
values and the tax bases of assets acquired and liabilities assumed
at amounts that do not reflect fair value. The goodwill is not
deductible for income tax purposes.
Since July 1, 2019, the Newmont mines acquired contributed
revenue of $1,184 million and net income of $322 million for the
year ended December 31, 2019. If the acquisition had occurred on
January 1, 2019, consolidated revenue and consolidated net income
would have been $10,745 million and $4,500 million, respectively.
Acquisition-related costs of approximately $30 million
were expensed in 2019 and were presented as part of corporate
development costs in exploration, evaluation & project expense.
e) Randgold Resources Limited (“Randgold”) Merger
On January 1, 2019, we acquired 100% of the issued and
outstanding shares of Randgold Resources Limited (the “Merger”).
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 was $7.9 billion. We began
consolidating the operating results, cash flows and net assets of
Randgold from January 1, 2019.
Randgold was a publicly traded mining company with ownership
interests in the following gold mines: Kibali in the Democratic
Republic of Congo; Tongon in Côte d’Ivoire; Loulo-Gounkoto
and Morila in Mali; and the Massawa project in Senegal.
171
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSFinancial Report 2019
The table below presents the purchase cost and our allocation
of the purchase price to the assets acquired and liabilities assumed.
This allocation was finalized in the fourth quarter of 2019.
($ millions)
Purchase Cost
Fair value of equity shares issued
Fair value of restricted shares issued
Fair value of consideration
Final Fair Value at Acquisition
Cash
Other current assets
Equity in investees
Property, plant and equipment
Other assets
Goodwill
Total assets
Current liabilities
Deferred income tax liabilities
Provisions
Debt1
Total liabilities
Non-controlling interests
Net assets
$ 7,903
6
$ 7,909
$ 751
319
3,253
3,869
230
1,672
$ 10,094
$ 539
688
55
31
$ 1,313
872
$ 7,909
1. Debt mainly relates to leases as a result of adopting IFRS 16.
In accordance with the acquisition method of accounting, the
acquisition cost has been allocated to the underlying assets acquired
and liabilities assumed, based primarily upon their estimated fair
values at the date of acquisition. We primarily used a discounted
cash flow model (being the net present value of expected future cash
flows) to determine the fair value of the mining interests and used a
replacement cost approach in determining the fair value of buildings,
plant and equipment. Expected future cash flows are based on
estimates of future gold prices and projected future revenues,
estimated quantities of ore reserves and mineral resources, including
expected conversions of resources to reserves, expected future
production costs and capital expenditures based on the life of mine
plans as at the acquisition date. The excess of acquisition cost over
the net identifiable assets acquired represents goodwill.
Goodwill arose on the acquisition principally because of
the following factors: 1) it significantly strengthened Barrick’s position
in the industry relative to high-quality gold reserves in many of
the world’s most prolific gold districts, positioning the Company
for sustainable growth; 2) it included the acquisition of a proven
management team, with a shared vision and commitment
to excellence, and a powerful financial base that will support
sustainable investment in growth; and 3) the recognition of a
deferred tax liability for the difference between the assigned values
and the tax bases of assets acquired and liabilities assumed at
amounts that do not reflect fair value. The goodwill is not deductible
for income tax purposes.
The fair value of accounts receivable was $193 million as at
January 1, 2019, which was equivalent to the contractual amount.
Prior to the Merger, Randgold had received various tax claims
from the State of Mali in respect of its Mali operations, which totaled
$267.7 million as at January 1, 2019. The total amount of the various
tax claims, not including advances made in good faith to date,
172
stood at $275 million as at December 31, 2019. During 2016,
Randgold received payment demands in respect of certain of these
disputed amounts, and consequently, from 2016 up to December
2018, Randgold paid tax advances to the State of Mali to support
the resolution of the tax disputes; which, after offsetting other tax
payments, resulted in a receiving being recorded of $41.1 million.
As part of the purchase price allocation for the Merger, the fair value
of this receivable was reduced to nil. In 2019, a further $60 million
was paid as part of a settlement proposal to resolve outstanding
assessments with respect to 2016 and prior year periods. This
amount was recorded as a provision in the purchase price allocation.
Refer to note 36 for further details.
Since it has been consolidated from January 1, 2019, Randgold
contributed revenue of $1,390 million and net income of $241 million
for the year ended December 31, 2019.
Acquisition-related costs of approximately $37 million
were expensed in 2018 and were presented as part of corporate
development costs in exploration, evaluation & project expense.
f) 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 was able to purchase up to $300 million of Barrick
shares, and Barrick was able to invest an equivalent amount in
shares of Shandong Gold Mining Co., Ltd., a publicly listed company
controlled by Shandong Gold, within a 12-month period. Shares
were purchased on the open market and purchases made by
Barrick were accounted for as other investments with changes
in fair value recorded in OCI. As at December 31, 2019, Barrick
has purchased approximately $120 million of shares of Shandong
Gold Mining Co., Ltd.
5 Segment Information
Starting in the first quarter of 2019, management reviews the
operating results and assesses performance of our operations in
Nevada at an individual minesite level; therefore our Cortez and
Goldstrike minesites, previously presented as Barrick Nevada, have
been presented separately. Barrick’s business is organized into
nineteen minesites and two projects. Barrick’s CODM reviews the
operating results, assesses performance and makes capital
allocation decisions at the minesite, Company and/or project level.
Upon completion of the Merger, Mark Bristow, as President and
Chief Executive Officer, has assumed this role. Each individual
minesite and the Pascua-Lama project are operating segments for
financial reporting purposes. Following the Merger and the Nevada
Gold Mines and Acacia transactions, we re-evaluated our reportable
operating segments and no longer report on our interests in the
following non-core properties: Lagunas Norte and Pascua-Lama.
Our presentation of our reportable operating segments consists
of nine gold mines (Carlin, Cortez, Turquoise Ridge, Pueblo Viejo,
Loulo-Gounkoto, Kibali, Veladero, Porgera and North Mara).
The remaining operating segments, including our remaining gold
mines, copper mines and projects, 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. Prior period figures have
been restated to reflect this disaggregation.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation
Share of equity investee
Segment income
(505)
(207)
(196)
(3)
9
(108)
$ 9,717
$ 4,864
$ 1,991
$ 77
$ 85
$ 2,700
Consolidated Statements of Income Information
Cost of sales
Direct mining,
royalties and
community
For the year ended December 31, 2019
Carlin2,3
Cortez2
Turquoise Ridge2,4
Pueblo Viejo2
Loulo-Gounkoto2
Kibali
Veladero
Porgera
North Mara2
Other Mines2
Revenue
$ 1,862
1,325
688
1,409
1,007
505
386
403
462
2,175
relations Depreciation
$
998
511
285
525
456
207
208
242
213
1,426
$ 312
240
140
196
295
196
115
42
97
554
Reportable segment income
$ 10,222
$ 5,071
$ 2,187
Exploration,
evaluation and
project
expenses
Consolidated Statements of Income Information
Cost of sales
Direct mining,
royalties and
community
For the year ended December 31, 2018
Carlin2,3
Cortez2
Turquoise Ridge2,4
Pueblo Viejo2
Loulo-Gounkoto2
Kibali
Veladero
Porgera
North Mara2
Other Mines2
Revenue
$ 1,066
1,589
331
1,333
–
–
366
269
423
1,866
relations Depreciation
$
624
442
178
547
–
–
189
170
202
1,401
$ 262
386
28
185
–
–
121
42
62
334
Reportable segment income
$ 7,243
$ 3,753
$ 1,420
Exploration,
evaluation and
project
expenses
Other
expenses
(income)1
Segment
income
(loss)
$ 4
16
–
–
6
(9)
3
4
6
46
$
531
550
259
676
238
108
57
113
146
130
$ 76
$ 2,808
Other
expenses
(income)1
Segment
income
(loss)
$
(5)
19
(1)
1
–
–
1
1
12
69
$
166
726
126
579
–
–
53
56
147
48
$ 97
$ 1,901
–
–
$ 17
8
4
12
12
3
3
2
–
19
$ 80
$ 19
16
–
21
–
–
2
–
–
14
$ 72
–
Share of equity investee
Segment income
–
–
–
$ 7,243
$ 3,753
$ 1,420
$ 72
$ 97
$ 1,901
1. Includes accretion expense, which is included with finance costs in the consolidated statements of income. For the year ended December 31, 2019, accretion
expense was $53 million (2018: $53 million).
2. Includes non-controlling interest portion of revenues, cost of sales and segment income (loss) for the year ended December 31, 2019, for Pueblo Viejo,
$566 million, $286 million, $274 million (2018: $535 million, $289 million, $237 million), Nevada Gold Mines, $1,049 million, $704 million, $329 million
(2018: $nil, $nil, $nil), Tanzania mines, $169 million, $125 million, $31 million (2018: $240 million, $163 million, $61 million), Loulo-Gounkoto $201 million,
$150 million, $48 million (2018: $nil, $nil, $nil) and Tongon $39 million, $41 million, $(2) million (2018: $nil, $nil, $nil).
3. On July 1, 2019, Barrick’s Goldstrike and Newmont’s Carlin mines were contributed to Nevada Gold Mines and are now operated as one segment referred
to as Carlin. As a result, the amounts presented represent Goldstrike (including South Arturo) up until June 30, 2019, and the combined results of Carlin
(including Goldstrike) thereafter including non-controlling interest. Refer to note 4.
4. Barrick owned 75% of Turquoise Ridge up until June 30, 2019, with our joint venture partner, Newmont, owning the remaining 25%. Turquoise Ridge was
accounted for as a joint operation and proportionately consolidated. On July 1, 2019, Barrick’s 75% interest in Turquoise Ridge and Newmont’s Twin Creeks
and 25% interest in Turquoise Ridge were contributed to Nevada Gold Mines and are now operated as one segment referred to as Turquoise Ridge.
The figures presented in this table are based on our 75% interest in Turquoise Ridge until June 30, 2019 and the combined results of Turquoise Ridge
(including Twin Creeks) thereafter including non-controlling interest. Refer to note 4.
173
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSFinancial Report 2019
Reconciliation of Segment Income to Income from Continuing Operations Before Income Taxes
For the years ended December 31
2019
2018
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 reversals (charges)
Loss on currency translation
Closed mine rehabilitation
Income from equity investees
Finance costs, net (includes non-segment accretion)2
Gain on non-hedge derivatives3
$ 2,700
(56)
(265)
(212)
3,132
1,423
(109)
(5)
165
(416)
–
$ 1,901
(47)
(311)
(265)
(46)
(900)
(136)
13
46
(492)
–
Income (loss) before income taxes4
$ 6,357
$
(237)
1. Includes realized hedge losses of $nil (2018: $4 million losses).
2. Includes debt extinguishment losses of $3 million (2018: $29 million losses).
3. Includes unrealized non-hedge losses of $nil (2018: $1 million losses).
4. Includes non-controlling interest portion of revenues, cost of sales and non-segment income (loss) for the year ended December 31, 2019,
for Tanzania, $nil, $nil, $(17) million (2018: $nil, $1 million, $2 million) and Nevada Gold Mines, $nil, $6 million, $1 million (2018: $nil, $nil, $nil).
Geographic Information
Non-current assets
Revenue1
United States
Mali
Dominican Republic
Democratic Republic of Congo
Chile
Zambia
Argentina
Tanzania
Canada
Côte d’Ivoire
Saudi Arabia
Papua New Guinea
Peru
Australia
Unallocated
Total
1. Presented based on the location from which the product originated.
As at Dec. 31, As at Dec. 31,
2018
2019
2019
2017
$ 16,514
4,662
4,303
3,218
2,158
1,705
1,571
1,009
490
424
368
361
170
–
552
$ 6,857
–
3,468
–
2,679
735
1,723
1,059
368
–
408
348
145
396
467
$ 4,190
1,007
1,409
–
–
393
386
671
305
384
–
403
279
290
–
$ 3,025
–
1,334
–
–
502
366
664
226
–
–
269
449
408
–
$ 37,505
$ 18,653
$ 9,717
$ 7,243
174
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation
Capital Expenditures Information
Segment capital expenditures1
As at
As at
December 31, December 31,
2018
2019
Carlin
Cortez
Turquoise Ridge
Pueblo Viejo
Loulo-Gounkoto
Kibali
Veladero
Porgera
North Mara
Other Mines
Reportable segment total
Other items not allocated to segments
Total
Share of equity investee
Total
$ 303
327
125
107
198
43
95
50
57
384
$ 1,689
110
$ 1,799
(43)
$ 195
349
62
145
–
–
143
62
82
284
$ 1,322
121
$ 1,443
–
$ 1,756
$ 1,443
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 2019, cash expenditures were $1,701 million (2018: $1,400 million) and the increase in accrued
expenditures was $55 million (2018: $43 million increase).
Principal Products
All of our gold mining operations produce gold in doré form, except
Porgera and Phoenix, which produce both gold doré and gold
concentrate. Gold doré is unrefined gold bullion bars usually
consisting of 90% gold that is refined to pure gold bullion prior to sale
to our customers. Concentrate is a processing product containing the
valuable ore mineral from which most of the waste mineral has been
eliminated. Our Lumwana and Phoenix mines produce a concentrate
that primarily contains copper. Incidental revenues from the sale of
by-products, primarily copper, silver and energy at our gold mines,
are classified within other sales.
6 Revenue
For the years ended December 31
2019
2018
Gold sales1
Spot market sales
Concentrate sales
Provisional pricing adjustments
Copper sales1
Copper concentrate sales
Provisional pricing adjustments
Other sales2
Total
$ 9,084
101
1
$ 6,575
25
–
$ 9,186
$ 6,600
$ 371
22
$ 393
$ 138
$ 549
(37)
$ 512
$ 131
$ 9,717
$ 7,243
1. Revenues include amounts transferred from OCI to earnings for commodity
cash flow hedges.
2. Revenues from the sale of by-products from our gold and copper mines
including silver revenue of $97 million (2018: $121 million).
175
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSFinancial Report 2019
At December 31, 2019, our provisionally priced copper sales
subject to final settlement were recorded at average prices of
$2.80/lb (2018: $2.71/lb). At December 31, 2019, our provisionally
priced gold sales subject to final settlement were recorded at an
average price of $1,524/oz. The sensitivities in the above tables
have been determined as the impact of a 10% change in
commodity prices at each reporting date, while holding all other
variables, including foreign currency exchange rates, constant.
Provisional Copper and Gold Sales
We have provisionally priced sales for which price finalization,
referenced to the relevant copper and gold index, is outstanding at
the balance sheet date. Our exposure at December 31, 2019 to the
impact of movements in market commodity prices for provisionally
priced sales is set out in the following table:
Volumes subject to
final pricing
Copper (millions)
Gold (000s)
Impact on net
income before
taxation of 10%
movement in
market price US$
As at December 31
2019
2018
2019
2018
Copper pounds
Gold ounces
39
15
51
–
$ 11
2
$ 14
–
7 Cost of Sales
Gold
Copper
Other4
Total
For the years ended December 31
2019
2018
Direct mining cost1,2,3
Depreciation
Royalty expense
Community relations
Total
$ 4,274
1,902
308
30
$ 3,130
1,253
196
42
$ 6,514
$ 4,621
2019
$ 224
100
34
3
$ 361
2018
$ 344
170
39
5
$ 558
2019
$ 6
30
–
–
$ 36
2018
$ 7
34
–
–
2019
2018
$ 4,504
2,032
342
33
$ 3,481
1,457
235
47
$ 41
$ 6,911
$ 5,220
1. Direct mining cost related to gold and copper includes charges to reduce the cost of inventory to net realizable value of $26 million (2018: $199 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 $1,350 million (2018: $1,001 million).
4. Other includes realized hedge gains and losses and corporate amortization.
8 Exploration, Evaluation and Project Expenses
For the years ended December 31
1
Global exploration and evaluation
Advanced project costs:
Pascua-Lama
Other
Corporate development2
Business improvement and innovation
Minesite exploration and evaluation1
Total exploration, evaluation and project expenses
2019
2018
$ 143
$ 121
49
20
51
10
69
77
36
60
44
45
$ 342
$ 383
1. Approximates the impact on operating cash flow.
2. 2019 includes $44 million in transaction costs related to the Nevada Gold Mines, Acacia and Kalgoorlie transactions. 2018 includes $37 million in transaction
costs related to the merger with Randgold.
176
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation
9 Other Expense (Income)
11 General and Administrative Expenses
For the years ended December 31
2019
2018
For the years ended December 31
Other Expense:
Litigation1
Write-offs2
Bulyanhulu reduced operations
program costs3
Bank charges
Insurance payment to Porgera JV
Acacia transaction costs4
Tanzania – other
Other
$
26
3
24
16
–
18
11
28
$ 68
51
29
22
13
–
11
28
Corporate administration1
Operating segment administration
Total2
2019
2018
$ 185
27
$ 239
26
$ 212
$ 265
1. Includes $18 million (2018: $63 million) related to one-time
severance payments.
2. Includes employee costs of $131 million (2018: $156 million).
12 Income Tax Expense
Total other expense
$ 126
$ 222
For the years ended December 31
2019
2018
Other Income:
Gain on sale of long-lived assets5
Remeasurement of Turquoise Ridge
to fair value6
Remeasurement of silver sale liability7
Lumwana customs duty and
indirect taxes settlement8
Peru tax disputes settlement
Insurance proceeds related to Kalgoorlie
Interest Income
Other
Total other income
Total
Tax on profit
Current tax
Charge for the year
Adjustment in respect of prior years
Deferred tax
Origination and reversal of temporary
differences in the current year
Adjustment in respect of prior years
$
(441)
$ (68)
(1,886)
(628)
(216)
(18)
–
(20)
(17)
–
–
–
–
(24)
(22)
(18)
$ (3,226)
$ (132)
Income tax expense
$ (3,100)
$ 90
Tax expense related to continuing operations
1. 2018 primarily consists of Tanzania 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 relates to care and maintenance costs.
4. Incurred by Acacia Mining Plc.
5 2019 includes a gain of $408 million from the sale of Kalgoorlie
(refer to note 4). 2018 includes a gain of $45 million from the sale of
a royalty asset at Acacia.
6. Refer to note 4 for further details.
7. Refer to note 29 for further details.
8. Refer to note 3 for further details.
Current
Canada
International
Deferred
Canada
International
Income tax expense
$ 685
25
$ 423
45
$ 710
$ 468
$ 1,112
(39)
$ 821
(91)
$ 1,073
$ 730
$ 1,783
$ 1,198
$
5
705
$
–
468
$ 710
$ 468
–
$
1,073
$ 628
102
$ 1,073
$ 730
$ 1,783
$ 1,198
10 Impairment (Reversals) Charges
For the years ended December 31
2019
2018
Impairment charges (reversals)
of long-lived assets1
Impairment of intangibles1
Impairment of goodwill1
Total
1. Refer to note 21 for further details.
$ (1,423)
–
–
$ (722)
24
154
$ (1,423)
$ 900
177
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSFinancial Report 2019
De-recognition of Deferred Tax Assets
In the 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 assets 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 did not expect to be able to use these losses
in the foreseeable future as a result of the change in strategy in the
fourth quarter of 2018. The de-recognition of the deferred tax asset
in Peru in the fourth quarter of 2018 follows management’s review
of expected future earnings. The associated impairment of inventory
at Lagunas Norte was also driven by the fourth quarter of 2018
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 Withholding Taxes
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.
In 2019, we reassessed our intentions on the current and
future undistributed earnings of our United States subsidiaries due
to the formation of Nevada Gold Mines. Based on the free cash
flow that we expect Nevada Gold Mines to generate, together
with other factors, we concluded that it was no longer our intent to
indefinitely reinvest our current and future undistributed earnings of
our United States subsidiaries. Therefore in the fourth quarter of
2019, we recognized an increase in our income tax provisions in the
amount of $30 million, representing withholding tax on undistributed
United States earnings.
Reconciliation to Canadian Statutory Rate
For the years ended December 31
2019
2018
$ 1,684
$
(63)
At 26.5% statutory rate
Increase (decrease) due to:
Allowances and special tax deductions1
Impact of foreign tax rates2
Expenses not tax deductible
Impairment charges not recognized
in deferred tax assets
Goodwill impairment charges not tax deductible
Net currency translation losses on deferred
tax balances
Tax impact from pass-through entities
and equity accounted investments
Current year tax losses not recognized
in deferred tax assets
Sale of 50% interest in Kalgoorlie
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
Impact of tax rate changes
Dominican Republic tax audit
United States withholding taxes
Other withholding taxes
Mining taxes
Other items
(129)
(264)
78
45
–
43
(140)
8
12
4
–
(13)
21
(35)
–
30
24
412
3
(59)
(4)
74
168
54
41
(15)
100
–
814
(49)
3
–
–
42
(107)
14
184
1
Income tax expense
$ 1,783
$ 1,198
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. This is required in countries
where tax is paid in local currency and accounts are prepared in
local GAAP. The most significant balances are Argentine deferred
tax liabilities. In 2019 and 2018, tax expense of $75 million and
$41 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). In 2019, deferred tax balances for legacy Randgold
assets in Mali and Côte d’Ivoire required remeasurement at
year end.
178
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation
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 provided 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. The audit of these tax returns
by the Zambian tax authority was completed in the fourth quarter
of 2019 and we recorded a $50 million asset reflecting the final
settlement of this matter. We also released historical accruals related
to customs duty and indirect taxes resulting in a total of $216 million
recognized in Other Income in 2019 (refer to note 9).
Framework for former Acacia Mining Operations
in Tanzania
On October 20, 2019, Barrick announced that it had reached an
agreement with the GoT to settle all disputes between the GoT and
the mining companies formerly operated by Acacia but now
managed by Barrick. The final agreements were submitted to the
Tanzanian Attorney General for review and legalization.
On January 24, 2020, Barrick announced that the Company
had ratified the creation of Twiga at a signing ceremony with the
President of Tanzania, formalizing the establishment of a joint
venture between Barrick and the GoT and resolution of all
outstanding disputes between Barrick and the GoT, including the
lifting of the previous concentrate export ban, effective immediately.
The terms of the signed agreement are consistent with those
previously announced, including the payment of $300 million to settle
all outstanding tax and other disputes (the “Settlement Payment”);
the lifting of the concentrate export ban; the sharing of future
economic benefits from the mines on a 50/50 basis; and a dispute
resolution mechanism that provides for binding international
arbitration. The 50/50 division of economic benefits will be
maintained through an annual true-up mechanism, which will not
account for the Settlement Payment.
The Settlement Payment will be paid in installments, with an
initial payment of $100 million to the GoT following the resumption of
mineral concentrate exports. Five subsequent annual payments of
$40 million each will be made, starting on the first anniversary of the
fulfillment of all conditions of the signed agreement, subject to certain
cash flow conditions.
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 $172 million was recorded as
current tax expense. See note 36 for further information with respect
to these matters.
179
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSFinancial Report 2019 13 Earnings (Loss) per Share
For the years ended December 31
($ millions, except shares in millions and per share amounts in dollars)
Net (loss) income
Net income attributable to non-controlling interests
2019
2018
Basic
Diluted
Basic
Diluted
$ 4,574
(605)
$ 4,574 $ (1,435)
(110)
(605)
$ (1,435)
(110)
Net (loss) income attributable to the equity holders of Barrick Gold Corporation
$ 3,969
$ 3,969 $ (1,545)
$ (1,545)
Weighted average shares outstanding
1,758
1,758
1,167
1,167
Basic and diluted earnings (loss) per share data attributable to the equity holders
of Barrick Gold Corporation
$
2.26
$
2.26 $
(1.32)
$
(1.32)
14 Finance Costs, Net
15 Cash Flow – Other Items
For the years ended December 31
2019
2018
Operating Cash Flows – Other Items
Interest1
Amortization of debt issue costs
Amortization of discount (premium)
Interest on lease liabilities
Gain on interest rate hedges
Interest capitalized2
Accretion
Loss on debt extinguishment3
Finance income
$ 435
2
(1)
6
(6)
(14)
75
3
(31)
$ 452
5
(1)
–
(3)
(9)
87
29
(15)
Total
$ 469
$ 545
1. Interest in the consolidated statements of cash flow is presented on a cash
basis. In 2019, cash interest paid was $333 million (2018: $350 million).
2. For the year ended December 31, 2019, the general capitalization rate
was 6.30% (2018: 6.10%).
For the years ended December 31
2019
2018
Adjustments for non-cash income statement items:
Stock-based compensation expense
$
71
$
33
Income from investment in
equity investees (note 16)
Increase (decrease) in estimate of
rehabilitation costs at closed mines
Net inventory impairment charges (note 17)
Remeasurement of silver sale
liability (note 29)
Lumwana customs duty and
indirect taxes settlement (note 3)
Change in other assets and liabilities
Settlement of rehabilitation obligations
(165)
5
26
(628)
(216)
(113)
(93)
(46)
(13)
199
–
–
(169)
(66)
3. 2018 loss arose from a make-whole repurchase of the outstanding principal
Other operating activities
$ (1,113)
$
(62)
Cash flow arising from changes in:
Accounts receivable
Inventory
Other current assets
Accounts payable
Other current liabilities
$
(118)
9
(89)
(108)
(51)
$
(9)
(111)
(109)
19
37
Change in working capital
$
(357)
$
(173)
Investing Cash Flows – Other Items
For the years ended December 31
2019
2018
Dividends received from equity
method investments (note 16)
Shareholder loan repayments from
equity method investments
Funding of equity method
investments (note 16)
Other
$ 125
$
92
(2)
(2)
–
–
(5)
–
Other investing activities
$ 213
$
(5)
on the 4.40% notes due 2021.
180
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation
16 Investments
Equity Accounting Method Investment Continuity
At January 1, 2018
Equity pick-up (loss) from equity investees
Funds invested
Impairment charges
At December 31, 2018
Acquisitions
Equity pick-up from equity investees
Funds invested
Dividends paid
Shareholder loan repayment
At December 31, 2019
Kibali
Jabal Sayid
Zaldívar
Other
$
$
–
–
–
–
–
3,195
98
–
(75)
–
$ 3,218
$ 206
$ 975
39
–
–
14
–
–
$ 245
$ 989
–
51
–
–
–
–
16
–
(50)
–
$ 296
$ 955
$ 32
(7)
5
(30)
$ –
58
–
2
–
(2)
$ 58
Total
$ 1,213
46
5
(30)
$ 1,234
3,253
165
2
(125)
(2)
$ 4,527
Summarized Equity Investee Financial Information
Kibali
Jabal Sayid
Zaldívar
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
2019
$ 1,123
460
435
–
18
$ 210
(16)
$ 194
$ 194
2019
$ 453
338
$ 791
4,623
$ 5,414
$
$
11
35
46
44
648
$ 692
$ 738
$ 4,676
2018
$ –
–
–
–
–
$ –
–
$ –
$ –
2019
$ 315
133
53
1
(2)
$ 130
(27)
$ 103
$ 103
2018
$ 296
158
39
2
9
$ 88
(10)
$ 78
$ 78
2019
2018
$ 685
$ 599
442
172
12
10
49
(17)
32
32
$
$
$
404
118
–
25
52
(24)
28
28
$
$
$
Kibali
Jabal Sayid
Zaldívar
2018
$ –
–
$ –
–
$ –
$ –
–
$ –
–
–
$ –
$ –
$ –
2019
$ 43
67
$ 110
464
$ 574
$
–
63
$ 63
150
14
$ 164
$ 227
$ 347
2018
$ 128
68
$ 196
482
$ 678
$ 48
41
$ 89
331
14
$ 345
$ 434
$ 244
2019
$ 139
632
$ 771
1,823
$ 2,594
$
19
99
$ 118
11
536
$ 547
$ 665
$ 1,929
2018
$ 129
602
$ 731
1,927
$ 2,658
$
18
85
$ 103
12
546
$ 558
$ 661
$ 1,997
1. Zaldívar other current assets include inventory of $543 million (2018: $533 million).
The information above reflects the amounts presented in the financial information of the joint venture adjusted for differences between IFRS
and local GAAP.
181
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSFinancial Report 2019
Reconciliation of Summarized Financial Information to Carrying Value
Opening net assets
Acquisition
Income for the period
Dividend
Closing net assets, December 31
Barrick’s share of net assets
Equity earnings adjustment
Goodwill recognition
Carrying value
Kibali
Jabal Sayid1
Zaldívar
$
–
$ 244
$ 1,997
4,632
194
(150)
$ 4,676
2,107
–
1,111
$ 3,218
–
103
–
$ 347
173
–
123
$ 296
–
32
(100)
$ 1,929
965
(10)
–
$ 955
1. A $75 million non-interest bearing shareholder loan due from the Jabal Sayid JV is presented as part of Other Assets (refer to 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,
2019
As at
Dec. 31,
2018
As at
Dec. 31,
2019
As at
Dec. 31,
2018
$ 2,794
507
617
141
220
$ 4,279
(2,300)
$ 2,106
405
496
146
176
$ 3,329
(1,696)
$ 1,979
$ 1,633
$ 155
–
52
–
103
$ 310
–
$ 310
$ 151
–
66
–
2
$ 219
–
$ 219
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
Pierina
Carlin
Cortez
Golden Sunlight
Lagunas Norte
Lumwana
Porgera
Inventory impairment charges1
2019
$ 12
6
4
4
–
–
–
$ 26
2018
$
4
–
–
10
166
18
1
$ 199
1. Impairment charges in 2018 primarily relate to stockpiles at Lagunas
Norte (refer to note 21).
Ore in Stockpiles
Gold
Carlin
Pueblo Viejo
Turquoise Ridge
Cortez
Loulo-Gounkoto
North Mara
Lagunas Norte
Veladero
Buzwagi
Phoenix
Porgera
Tongon
Kalgoorlie
Other
Copper
Lumwana
182
As at
Dec. 31,
2019
As at
Dec. 31,
2018
$ 1,136
649
258
174
167
136
73
52
47
39
33
29
–
1
$ 841
603
13
242
–
70
49
39
83
–
37
–
125
4
155
151
$ 2,949
$ 2,257
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation
Ore on Leach Pads
18 Accounts Receivable and Other Current Assets
Gold
Lagunas Norte
Veladero
Carlin
Cortez
Phoenix
Long Canyon
Turquoise Ridge
Pierina
As at
Dec. 31,
2019
As at
Dec. 31,
2018
$ 148
123
64
50
44
43
33
2
$ 168
138
–
81
–
–
–
18
$ 507
$ 405
Accounts receivable
Amounts due from concentrate sales
Other receivables
Other current assets
Derivative assets
Goods and services taxes recoverable1
Prepaid expenses
Other2
As at
Dec. 31,
2019
As at
Dec. 31,
2018
$
68
295
$
76
172
$ 363
$ 248
$
1
302
174
88
$
2
182
72
51
$ 565
$ 307
Purchase Commitments
At December 31, 2019, we had purchase obligations for supplies and
consumables of approximately $1,681 million (2018: $1,972 million).
1. Primarily includes VAT and fuel tax recoverables of $141 million in Mali,
$61 million in Tanzania, $50 million in Zambia, $26 million in Argentina, and
$10 million in the Dominican Republic (Dec. 31, 2018: $nil, $67 million,
$60 million, $22 million, and $12 million, respectively).
2. 2019 balance includes $50 million asset reflecting the final settlement of
Zambian tax matters. Refer to note 3 for further details.
19 Property, Plant and Equipment
At January 1, 2019
Net of accumulated depreciation
Additions5,6
Capitalized interest
Acquisitions8
Divestiture9
Disposals
Depreciation
Impairment reversals (charges)
Transfers7
Assets held for sale
At December 31, 2019
At December 31, 2019
Buildings, plant
and equipment1
Mining property
costs subject
to depreciation2,4
Mining property
costs not subject
to depreciation2,3
Total
$ 3,600
$ 6,258
$ 2,968
$ 12,826
298
–
3,473
(127)
(22)
(1,107)
990
648
–
3,458
–
2,270
(106)
–
(907)
742
573
–
1,371
14
1,660
(27)
–
–
(309)
(1,221)
(356)
5,127
14
7,403
(260)
(22)
(2,014)
1,423
–
(356)
$ 7,753
$ 12,288
$ 4,100
$ 24,141
Cost
Accumulated depreciation and impairments
$ 18,544
(10,791)
$ 27,268
(14,980)
$ 16,050
(11,950)
Net carrying amount – December 31, 2019
$ 7,753
$ 12,288
$ 4,100
$ 61,862
(37,721)
$ 24,141
1. Additions include $85 million of transitional adjustments for the recognition of leased right-of-use assets upon the Company’s adoption of IFRS 16 on
January 1, 2019 (refer to note 2), as well as $49 million of right-of-use assets for lease arrangements entered into during the year ended December 31, 2019.
Depreciation includes depreciation for leased right-of-use assets of $25 million for the year ended December 31, 2019. The net carrying amount of leased
right-of-use assets was $75 million as at December 31, 2019.
2. Includes capitalized reserve acquisition costs, capitalized development costs and capitalized exploration and evaluation costs other than exploration license
costs included in intangible assets.
3. Assets not subject to depreciation include construction-in-progress, projects and acquired mineral resources and exploration potential at operating minesites
and development projects.
4. 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.
5. Additions include $3,422 million of remeasurement gain related to the change in ownership of Turquoise Ridge acquired through the Nevada Joint Venture.
Refer to note 4 for further details.
6. Additions include revisions to the capitalized cost of closure and rehabilitation activities.
7. Primarily relates to long-lived assets that are transferred between categories within PP&E once they are placed into service.
8. Acquisitions include assets acquired as part of the Merger and the establishment of Nevada Gold Mines. Refer to note 4 for further details.
9. Relates to the sale of our 50% interest in Kalgoorlie. Refer to note 4 for further details.
183
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSFinancial Report 2019
Buildings, plant
and equipment1
Mining property
costs subject
to depreciation2,4
Mining property
costs not subject
to depreciation2,3
Total
At January 1, 2018
Cost
Accumulated depreciation and impairments
$ 14,209
(9,996)
$ 20,938
(14,416)
$ 14,637
(11,566)
$ 49,784
(35,978)
Net carrying amount – January 1, 2018
$ 4,213
$6,522
$3,071
$ 13,806
Additions5
Capitalized interest
Disposals
Depreciation
Impairment reversals (charges)
Transfers6
At December 31, 2018
At December 31, 2018
(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)
Net carrying amount – December 31, 2018
$ 3,600
$ 6,258
$ 2,968
$ 50,984
(38,158)
$ 12,826
1. Additions include $85 million of transitional adjustments for the recognition of leased right-of-use assets upon the Company’s adoption of IFRS 16 on
January 1, 2019 (refer to note 2), as well as $49 million of right-of-use assets for lease arrangements entered into during the year ended December 31, 2019.
Depreciation includes depreciation for leased right-of-use assets of $25 million for the year ended December 31, 2019. The net carrying amount of leased
right-of-use assets was $75 million as at December 31, 2019.
2. Includes capitalized reserve acquisition costs, capitalized development costs and capitalized exploration and evaluation costs other than exploration license
costs included in intangible assets.
3. Assets not subject to depreciation include construction-in-progress, projects and acquired mineral resources and exploration potential at operating minesites
and development projects.
4. 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.
5. Additions include revisions to the capitalized cost of closure and rehabilitation activities.
6. Primarily relates to long-lived assets that are transferred between categories within PP&E once they are placed into service.
a) Mineral Property Costs Not Subject to Depreciation
b) Changes in Gold and Copper Mineral Life
Construction-in-progress1
Acquired mineral resources and
exploration potential
Projects
Pascua-Lama
Norte Abierto
Donlin Gold
Carrying
amount at
Dec. 31,
2019
Carrying
amount at
Dec. 31,
2018
$ 1,009
$ 786
1,504
124
754
649
184
1,245
639
174
$ 4,100
$ 2,968
1. Represents assets under construction at our operating minesites.
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 2019 was a $49 million
decrease (2018: $85 million decrease).
c) Capital Commitments
In addition to entering into various operational commitments in the
normal course of business, we had commitments of approximately
$383 million at December 31, 2019 (2018: $82 million) for
construction activities at our sites and projects.
d) Other Lease Disclosure
The Company leases various buildings, plant and equipment as part
of the normal course of operations. Lease terms are negotiated on
an individual basis and contain a wide range of different terms and
conditions. Refer to note 25 for the lease maturity analysis. Included
in net income for 2019 are short-term payments and variable lease
payments not included in the measurement of lease liabilities of
$56 million and $97 million, respectively.
184
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation
20 Goodwill and Other Intangible Assets
a) Intangible Assets
Opening balance January 1, 2018
Amortization and impairment losses5
Water
rights1 Technology2
Supply
contracts3
Exploration
potential4
Total
$ 71
$ 9
$ 11
$ 164
$ 255
–
(1)
(3)
(24)
(28)
Closing balance December 31, 2018
$ 71
$ 8
$ 8
$ 140
$ 227
Additions
Amortization
Closing balance December 31, 2019
Cost
Accumulated amortization and impairment losses
Net carrying amount December 31, 2019
1
–
$ 72
$ 72
–
$ 72
–
(1)
$ 7
$ 17
(10)
$ 7
–
(1)
$ 7
$ 39
(32)
$ 7
–
–
1
(2)
$ 140
$ 226
$ 298
(158)
$ 426
(200)
$ 140
$ 226
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 in 2018 relate to the Nyanzaga project in Tanzania.
b) Goodwill
Carlin
Cortez
Turquoise Ridge
Phoenix
Goldrush
Hemlo
Kalgoorlie
Loulo-Gounkoto
Total
Closing balance
December 31,
2018
$
–
514
528
–
–
63
71
–
Closing balance
December 31,
2019
Disposals
$
–
–
–
–
–
–
(71)
–
$ 1,294
724
722
119
175
63
–
1,672
Additions
$ 1,294
210
194
119
175
–
–
1,672
$ 1,176
$ 3,664
$
(71)
$ 4,769
On a total basis, the gross amount and accumulated impairment losses are as follows:
Cost
Accumulated impairment losses December 31, 2019
Net carrying amount December 31, 2019
$ 12,211
(7,442)
$ 4,769
185
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSFinancial Report 2019
21 Impairment and Reversal of Non-Current Assets
Summary of Impairments (Reversals)
For the year ended December 31, 2019, we recorded net impairment
reversals of $1,423 million (2018: impairment losses of $746 million)
for non-current assets and impairment charges of $nil (2018:
$154 million) for goodwill, as summarized in the following table:
For the years ended December 31
2019
2018
project has not been fully permitted nor approved for investment.
Upon review of these changes and associated sensitivities, we
concluded that the mine’s FVLCD exceeded its carrying value and
we recorded a non-current asset impairment reversal of $865 million,
which represents a full reversal of the non-current asset impairment
recorded in 2015.
Third Quarter 2019
Lumwana
On September 28, 2018, as part of their 2019 budget, the Zambian
government introduced changes to the current mining tax regime.
The changes included 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. In the
fourth quarter of 2018, the Zambian government finalized the
changes to the current tax regime, which was effective January 1,
2019, with the exception of the changes to the non-refundable sales
tax. In August 2019, the Zambian government alleviated this fiscal
uncertainty by withdrawing the legislative Bill relating to the
non-refundable sales tax and introduced a new Bill in September
2019 which contains measures to limit the claiming of VAT on certain
items used by Lumwana.
In addition to these external impacts, we have updated our
LOM plan for Lumwana based on the significant reductions achieved
in 2019 in unit mining costs and improvements in plant availability.
This reduction in the cost base has allowed us to lower the cut-off
grade which is expected to deliver a 5-year increase in the mine life
of Lumwana. Finally, during the third quarter of 2019, we also
updated our long-term copper price assumption to $3.00 per pound
(previously $2.85 per pound). As a result of these indicators of
impairment reversal, an assessment was undertaken and a partial
non-current asset impairment reversal of $947 million was
recognized in the third quarter of 2019, as we identified that
Lumwana’s fair value less costs of disposal (“FVLCD”) of $1.4 billion
exceeded its carrying value. The key assumptions and estimates
used in determining the FVLCD are long-term copper prices of
$3.00 per pound and a weighted average cost of capital (“WACC”)
of 10.4%.
Nevada Gold Mines
On July 1, 2019 we formed Nevada Gold Mines, a joint venture
combining the respective mining operations, assets, reserves and
talent from Barrick and Newmont in Nevada, USA. This includes
Barrick’s Cortez, Goldstrike, Turquoise Ridge and Goldrush
properties and Newmont’s Carlin, Twin Creeks, Phoenix, Long
Canyon and Lone Tree properties. Through the purchase price
allocation exercise, we identified various assets with fair values less
than their carrying values. Although IFRS did not require us to
remeasure the net assets of Goldstrike, Cortez and Goldrush to fair
value, we identified indicators of impairment for certain land holdings
and specific Cortez Hills Open Pit infrastructure assets and an
impairment of $60 million was recorded in the third quarter of 2019.
Refer to note 4 for further information.
Lumwana
Pueblo Viejo
Pascua-Lama
Cortez
Lagunas Norte
Golden Sunlight
Veladero
Carlin
Equity method investments
Acacia exploration sites
Other
Total impairment (reversals) losses
of long-lived assets
Veladero goodwill
$
(947)
(865)
296
57
12
9
3
2
–
–
10
$
–
–
(7)
9
405
–
246
5
30
24
34
$ (1,423)
$ 746
–
–
154
$ 154
Total goodwill impairment losses
$
Total impairment (reversals) losses
$ (1,423)
$ 900
2019 Indicators of Impairment/Reversal
Fourth Quarter 2019
In the fourth quarter of 2019, as per our policy, we performed our
annual goodwill impairment test and identified no impairments. 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 Pascua-Lama and an
indicator of impairment reversal at Pueblo Viejo.
Pascua-Lama
In the fourth quarter of 2019, we completed a study of the Pascua-
Lama project and concluded that we do not have a plan that meets
our investment criteria under our current assumptions. It is our
intention to update our geological understanding of the orebody and
this process is expected to take a number of years to complete. We
determined that this was an indicator of impairment and concluded
that the carrying value of Pascua-Lama exceeded the FVLCD and
we recorded a non-current asset impairment of $296 million, based
on a FVLCD of $398 million.
In a related matter, we have updated the Wheaton silver
sale obligation due to the significant uncertainty with the timing
and quantity of the delivery of any future silver production from
Pascua-Lama. Refer to note 29 for further details.
Pueblo Viejo
The progression of our engineering and evaluation work on the
process plant expansion and additional tailings facility at Pueblo
Viejo represented an impairment reversal trigger in the fourth
quarter. In conjunction with the increase in the long-term gold price
assumption, this has resulted in an improvement in the life of mine
cash flows for the mine site. We have also included an additional
risk premium of 2% in the calculation of FVLCD given the expansion
186
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation
Second Quarter 2019
Acacia
On May 21, 2019, Barrick met with the Directors and senior
management of Acacia and presented a proposal to acquire all of the
shares it did not already own in Acacia through a share for share
exchange of 0.153 Barrick shares for each ordinary share of Acacia.
The exchange ratio was based on the 20-day volume weighted
average trading prices of Acacia and Barrick as at market close in
London and New York on May 20, 2019 and implied a value for
100% of Acacia of $787 million.
On July 19, 2019, we announced that the Boards of Barrick and
Acacia reached an agreement on the terms of a recommended offer
by Barrick for the 36.1% of Acacia that we did not own at that time.
Under the terms of the agreement, the minority shareholders would
exchange each Acacia share for 0.168 Barrick shares and would
also be entitled to special dividends under certain conditions.
The offer received shareholder approval in the third quarter of 2019
and the transaction closed on September 17, 2019.
During the second quarter of 2019, Acacia updated its life of
mine plans and subsequent to that, the Barrick technical team had
an opportunity to conduct detailed due diligence on the updated life
of mine plans for the Acacia assets and risk adjust the value of the
assets. The value implied by Barrick’s adjusted life of mine plans
was deemed to be an indicator of impairment in the second quarter
of 2019.
An impairment assessment was undertaken in the second
quarter and Barrick assessed the carrying value of the individual
cash generating units within Acacia (Bulyanhulu, North Mara
and Buzwagi) and determined that the carrying amounts were
recoverable. Therefore, no impairment was recognized.
The key assumptions and estimates used in determining the fair
value less cost to dispose are short-term and long-term gold prices
of $1,250 per ounce, NAV multiples of 1.0–1.1 and a WACC of
6.5%–6.9%. Other assumptions include a 50% economic share of
future economic benefits generated by the mines for the GoT, which
includes taxes, royalties, tolls and 16% free carry interest in the
mines. Management assumed the resumption of concentrate sales
and exports commencing in Q3 2019 and the resumption of
production from underground mining at Bulyanhulu in 2020. The
WACC applied was lower than the 2018 and 2017 impairment tests
for the Acacia CGUs, based on lower risk levels given the state of
Barrick’s negotiations with the GoT at that time and the expectation
that an agreement would be signed once the recommended offer to
purchase the minority shareholdings of Acacia as described above
had closed, and because the economic sharing of benefits had been
modeled into the cash flows.
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 sulfide 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 that time. 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.
187
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSFinancial Report 2019 Lumwana
On September 28, 2018, as part of their 2019 budget, the Zambian
government introduced changes to the current mining tax regime.
The changes included 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 were 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 were expected to be
effective January 1, 2019, with the exception of the changes to the
non-refundable sales tax, which were expected to be finalized in
the first quarter of 2019 and become 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 FVLCD exceeded the carrying
value. We determined we would reassess the impact of the
non-refundable sales tax on the mine’s cash flows once the outcome
was 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 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 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 $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.
188
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation 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.
Pascua-Lama
The FVLCD for Pascua-Lama was determined by considering
observable market values for comparable assets expressed as
dollar per ounce of measured and indicated resources (level 3
of the fair value hierarchy). In the absence of a LOM plan for
Pascua-Lama, we used the market approach. The observable
market values were adjusted, where appropriate, for country
risk if the comparable asset was in a different country.
Assumptions
Our gold price assumption used in our fourth quarter 2019
impairment testing is $1,300 per ounce. Our gold price assumption
used in our 2018 impairment testing was $1,250 per ounce. The
increase in the gold price assumption from 2018 was not considered
an indicator of impairment reversal as the increased price would not,
in isolation, 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:
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
2019
2018
$3.00
3%–7%
4%
n/a
1.2
19
$20–$30
$0.28–$0.42
$2.85
4%–11%
7%
10%
1.05
15
n/a
n/a
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 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 goodwill impairment of
$529 million would be recognized for Loulo-Gounkoto and the fourth
quarter 2019 impairment reversal at Pueblo Viejo would not be
recognized. If the gold price was increased by $100 or the WACC
was decreased by 1%, a full reversal of the $246 million non-current
asset impairment at Veladero would be recognized. If the copper
price per pound was decreased by $0.25, the non-current asset
impairment reversal recognized for Lumwana in the third quarter of
2019 would have been lower by $390 million, with a similar increase
in the copper price per pound resulting in an increase in the
impairment reversal by $390 million.
In addition, for our Pascua-Lama project, we have determined
our valuation based on a market approach. The key assumption that
impacts the impairment calculations is the value per ounce of gold
and per ounce of silver based on an analysis of comparable
companies. We assumed a negative 10% change for the assumption
of gold and silver value per ounce, while holding all other
assumptions constant, and based on the results of the impairment
testing performed in fourth quarter of 2019 for Pascua-Lama, the fair
value of the CGU would have been reduced by approximately
$40 million. We note that this sensitivity identifies the decrease in the
value that, in isolation, would cause the carrying value of the CGU to
exceed its recoverable amount. For Pascua-Lama, this value
decrease is linear to the decrease in value per ounce.
189
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSFinancial Report 2019
The carrying value of the CGUs that are most sensitive to
changes in the key assumptions used in the FVLCD calculation are:
24 Other Current Liabilities
As at December 31, 2019
Carrying Value
Loulo-Gounkoto
Lumwana
Veladero
Bulyanhulu
Pascua-Lama1
$ 4,198
1,307
692
579
153
1. The carrying value of Pascua-Lama is presented net of the Wheaton
streaming liability of $253 million (refer to note 29).
22 Other Assets
Provision for environmental
rehabilitation (note 27b)
Deposit on Pascua-Lama silver
sale agreement1
Deposit on Pueblo Viejo gold and
silver streaming agreement
Share-based payments (note 34b)
Derivative liabilities
Other
As at
Dec. 31,
2019
As at
Dec. 31,
2018
$ 156
$ 111
253
75
48
–
90
–
83
30
3
94
$ 622
$ 321
Goods and services taxes recoverable1
Other investments
Notes receivable2
Norte Abierto JV partner receivable
Restricted cash3
Carlin prepaid royalty
Prepayments
Derivative assets
Other
As at
Dec. 31,
2019
As at
Dec. 31,
2018
$ 253
258
202
134
162
115
30
–
153
$ 271
209
285
143
121
–
37
1
168
$ 1,307
$ 1,235
1. Includes VAT and fuel tax receivables of $70 million in Argentina,
$128 million in Tanzania and $53 million in Chile (Dec. 31, 2018:
$110 million, $111 million and $50 million, respectively).
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. Primarily represents the cash balance at Pueblo Viejo that is contractually
restricted in respect of disbursements for environmental rehabilitation
that are expected to occur near the end of Pueblo Viejo’s mine life.
23 Accounts Payable
1. Reclassified from other non-current liabilities. Refer to note 29.
25 Financial Instruments
Financial instruments include cash; evidence of ownership in an
entity; or a contract that imposes an obligation on one party and
conveys a right to a second entity to deliver/receive cash or another
financial instrument. Information on certain types of financial
instruments is included elsewhere in these consolidated financial
statements as follows: accounts receivable (note 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,
2019
$ 2,571
728
15
As at
Dec. 31,
2018
$ 842
477
252
$ 3,314
$ 1,571
Accounts payable
Accruals
As at
Dec. 31,
2019
$ 715
440
As at
Dec. 31,
2018
$ 744
357
$ 1,155
$ 1,101
Of total cash and cash equivalents as of December 31, 2019, $nil
(2018: $383 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.
190
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation
b) Debt and Interest1
5.7% notes3,9
3.85%/5.25% notes
5.80% notes4,9
6.35% notes5,9
Other fixed rate notes6,9
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
Leases7
Other debt obligations
5.75% notes8,9
Acacia credit facility10
Less: current portion11
Closing
balance
Dec. 31, 2018
$
842
1,079
395
594
1,326
19
598
842
43
$ 5,738
(43)
Closing
balance
Dec. 31, 2017
$ 1,468
1,079
395
593
1,326
46
603
842
71
$ 6,423
(59)
$ 6,364
Proceeds Repayments
$ –
–
–
–
–
–
–
–
–
$ –
–
$
–
–
–
–
(248)
(28)
(4)
–
(29)
$
(309)
–
Proceeds Repayments
$ –
–
–
–
–
–
–
–
–
$ –
–
$ –
$
$
(629)
–
–
–
–
(27)
(3)
–
(28)
(687)
–
$
(687)
Amortization
Closing
balance
and other2 Dec. 31, 2019
$ –
–
–
–
2
105
–
–
–
$107
–
842
$
1,079
395
594
1,080
96
594
842
14
$ 5,536
(375)
$ 3
–
–
1
–
–
(2)
–
–
$ 2
–
$ 2
$
842
1,079
395
594
1,326
19
598
842
43
$ 5,738
(43)
$ 5,695
$ 5,695
$ –
$
(309)
$ 107
$ 5,161
Amortization
Closing
balance
and other2 Dec. 31, 2018
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 $850 million (2018: $850 million) of our wholly-owned subsidiary Barrick North America Finance LLC (“BNAF”) notes due 2041.
4. Consists of $400 million (2018: $400 million) of 5.80% notes which mature in 2034.
5. Consists of $600 million (2018: $600 million) of 6.35% notes which mature in 2036.
6. Consists of $1.1 billion (2018: $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 $nil (2018: $248 million) of BPDAF notes due 2020, $250 million (2018: $250 million) of BNAF notes due
2038 and $850 million (2018: $850 million) of BPDAF notes due 2039.
7. Consists primarily of leases at Nevada Gold Mines, $32 million, Loulo-Gounkoto, $32 million, Lumwana, $10 million, Pascua-Lama, $6 million and Porgera,
$5 million (2018: $nil, $nil, $3 million, $9 million and $nil, respectively).
8. Consists of $850 million (2018: $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 our 3.85% notes ($336 million; 2018: $nil), leases ($25 million; 2018: $11 million) and Acacia credit facility
($14 million; 2018: $28 million), and other debt obligations ($nil; 2018: $4 million).
191
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSFinancial Report 2019
4.4%/5.7% Notes
In June 2011, BNAF issued an aggregate of $4.0 billion in debt
securities consisting of $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,
which will rank equally with Barrick’s other unsecured and
unsubordinated obligations.
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. On January 31,
2020, the remaining $337 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. During 2019, the remaining $248 million
of the 4.95% notes 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 $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.
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
Leases
Other debt obligations
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
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 $850 million of 5.75% notes issued by BNAF that
mature in 2043. $2 billion of the net proceeds from this offering was
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.
Amendment and Refinancing of the Credit Facility
In November 2019, we amended and restated the 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 0.15% on undrawn amounts and
includes terms to replace LIBOR with a suitable replacement as that
issue develops. As part of the amendment and restatement, the
termination date of the Credit Facility was extended from January
2024 to January 2025. The Credit Facility is undrawn as at
December 31, 2019.
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 $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. 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. During 2019, $29 million was
repaid. In January 2020, the final installment of $14 million was paid.
2019
2018
Interest
cost
Effective
rate1
Interest
cost
Effective
rate1
$ 49
53
23
38
77
6
34
49
3
70
34
$ 436
(14)
$ 422
5.74%
4.87%
5.87%
6.41%
6.33%
7.14%
6.17%
5.79%
3.36%
8.75%
6.79%
$
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%
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.
192
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation
Scheduled Debt Repayments1
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
BGC
BGC
BGC
BGC
BGC
BGC
BGC
BGC
BGFC
BGC
BHMC
BNAF
BPDAF
BNAF
BGC
BNAF
Maturity
Year
2020
2021
2022
2023
2024
2025 and
thereafter
Total
$
2021
2022
2025
2025
2026
2026
2033
2034
2034
2035
2036
2038
2039
2041
2042
2043
$
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
14
$ 14
$
7
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
7
$
$
–
337
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
$ 337
$
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
$
$
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
$
– $
–
7
5
32
15
200
200
200
300
600
250
850
850
750
850
–
–
7
337
7
5
32
15
200
200
200
300
600
250
850
850
750
850
–
14
$ 5,109 $ 5,467
Minimum annual payments
under capital leases
$ 25
$ 15
$ 12
$
8
$
5
$
32 $
97
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.
193
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSFinancial Report 2019
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”.
During 2019, we did not enter into any US dollar interest rate
contracts, currency contracts, commodity contracts, or metals
contracts. We had no contracts outstanding at December 31, 2019.
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
Revenue
Cost of sales
Impacted by
Prices of gold, silver
and copper
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, XOF, and ZMW
Currency exchange
rates – US dollar versus
A$, ARS, C$, CLP, DOP,
GBP, PGK, TZS, XOF,
ZAR, and ZMW
Currency exchange
rates – US dollar
versus A$, ARS, C$,
CLP, DOP, EUR, GBP,
PGK, XOF, 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
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.
194
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation a) Assets and Liabilities Measured at Fair Value on a Recurring Basis
Fair Value Measurements
At December 31, 2019
Cash and equivalents
Other investments
Derivatives
Receivables from provisional copper and gold sales
Fair Value Measurements
At December 31, 2018
Cash and equivalents
Other investments
Derivatives
Receivables from provisional copper and gold sales
b) Fair Values of Financial Assets and Liabilities
Financial assets
Other assets1
Other investments2
Derivative assets
Financial liabilities
Debt3
Derivative liabilities
Other liabilities
Quoted prices
in active
markets for
Identical assets
(Level 1)
Significant
other
observable
inputs
(Level 2)
Significant
unobservable
inputs
(Level 3)
$ 3,314
258
–
–
$ 3,572
Quoted prices
in active
markets for
Identical assets
(Level 1)
$ 1,571
209
–
–
$ 1,780
$
–
–
1
68
$ 69
Significant
other
observable
inputs
(Level 2)
$
–
–
–
76
$ 76
$ –
–
–
–
$ –
Significant
unobservable
inputs
(Level 3)
$ –
–
–
–
$ –
Aggregate
fair value
$ 3,314
258
1
68
$ 3,641
Aggregate
fair value
$ 1,571
209
–
76
$ 1,856
At Dec. 31, 2019
At Dec. 31, 2018
Carrying
amount
Estimated
fair value
Carrying
amount
Estimated
fair value
$
612
258
1
$
612
258
1
$
559
209
3
$
559
209
3
$
871
$
871
$
771
$
771
$ 5,536
–
209
$ 6,854
–
209
$ 5,738
3
297
$ 6,183
3
297
$ 5,745
$ 7,063
$ 6,038
$ 6,483
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.
195
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSFinancial Report 2019
c) Assets Measured at Fair Value on a Non-Recurring Basis
Quoted prices
in active
markets for
identical assets
(Level 1)
Significant
other
observable
inputs
(Level 2)
Significant
unobservable
inputs
(Level 3)
Aggregate
fair value
Property, plant and equipment1
$ –
$ –
$ 130
$ 130
1. Property, plant and equipment were written down by $389 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.
196
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation
27 Provisions
a) Provisions
Environmental rehabilitation
(“PER”)
Post-retirement benefits
Share-based payments
Other employee benefits
Other
b) Environmental Rehabilitation
At January 1
PERs acquired (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)
(75)
(72)
(3)
18
(87)
(21)
(1)
57
(30)
(48)
(2)
13
(247)
(18)
(1)
74
$ 3,078
$ 2,837
(156)
(111)
$ 2,922
$ 2,726
The eventual settlement of substantially all PERs estimated is
expected to take place between 2020 and 2059.
The total PER has decreased in the fourth quarter of 2019
by $511 million primarily due to changes in cost estimates at
our Pascua-Lama, Carlin, Golden Sunlight and Cortez properties,
combined with the divestment of Kalgoorlie. For the year ended
December 31, 2019, our PER balance increased by $241 million
primarily due to the contribution of Newmont’s assets to Nevada
Gold Mines on July 1, 2019, the acquisition of Randgold on
January 1, 2019, and a decrease in the discount rate. These
were partially offset by changes in cost estimates primarily at our
Pascua-Lama, Pierina, Golden Sunlight, Lagunas Norte and Pueblo
Viejo properties, combined with the divestment of Kalgoorlie.
A 1% increase in the discount rate would result in a decrease in
PER by $357 million and a 1% decrease in the discount rate would
result in an increase in PER by $207 million, while holding the
other assumptions constant.
As at
Dec. 31,
2019
As at
Dec. 31,
2018
$ 2,922
43
26
19
104
$ 2,726
42
26
22
88
$ 3,114
$ 2,904
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
2019
2018
$ 2,837
425
$ 3,096
–
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 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. We did not enter into any positions during the
year and do not have any positions outstanding at December 31,
2019. Our gold and copper production is subject to market prices.
Fuel
On average we consume 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.
197
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSFinancial Report 2019
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, West African CFA franc, 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 ($3.3 billion at the end of the year); the mark-to-market
value of derivative instruments; and to the interest payments on our
variable-rate debt ($0.1 billion at December 31, 2019).
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,
2019 is approximately $18 million (2018: $16 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,
2019
$ 3,314
363
As at
Dec. 31,
2018
$ 1,572
248
–
2
$ 3,677
$ 1,821
c) Liquidity Risk
Liquidity risk is the risk of loss from not having access to sufficient
funds to meet both expected and unexpected cash demands. We
manage our exposure to liquidity risk by maintaining cash reserves,
access to undrawn credit facilities and access to public debt markets,
by staggering the maturities of outstanding debt instruments to
mitigate refinancing risk and by monitoring of forecasted and actual
cash flows. Details of the undrawn credit facility are included in
note 25.
Our capital structure comprises a mix of debt and shareholders’
equity. As at December 31, 2019, our total debt was $5.5 billion (debt
net of cash and equivalents was $2.2 billion) compared to total debt
as at December 31, 2018 of $5.7 billion (debt net of cash and
equivalents was $4.2 billion).
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 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; issuance of long-term debt securities in the public
markets or to private investors (Moody’s and S&P currently rate
Barrick’s outstanding long-term debt as investment grade, with
ratings of Baa2 and BBB, respectively); and drawing on 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). The key financial covenant in the Credit Facility (undrawn
as at December 31, 2019) 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 0.07:1 as at
December 31, 2019).
198
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation
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.
As at December 31, 2019
(in $ millions)
Cash and equivalents
Accounts receivable
Derivative assets
Trade and other payables
Debt
Derivative liabilities
Other liabilities
As at December 31, 2018
(in $ millions)
Cash and equivalents
Accounts receivable
Derivative assets
Trade and other payables
Debt
Derivative liabilities
Other liabilities
Less than 1 year
1 to 3 years
3 to 5 years Over 5 years
Total
$ 3,314
363
–
1,155
39
–
55
$
–
–
–
–
371
–
52
$
–
–
–
–
13
–
9
$
–
–
–
–
5,141
–
93
$ 3,314
363
–
1,155
5,564
–
209
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
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 agreement1,2
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,
2019
As at
Dec. 31,
2018
$
–
$ 811
425
241
–
52
105
426
270
–
57
179
$ 823
$ 1,743
1. Revenues of $43 million were recognized in 2019 (2018: $76 million)
through the draw-down of our streaming liabilities relating to contracts in
place at Pueblo Viejo in 2019 and Pueblo Viejo and Pascua-Lama in 2018.
2. Reclassified to other current liabilities. Refer to note 24.
199
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSFinancial Report 2019
Silver Sale Agreement
Our silver sale agreement with Wheaton 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 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 was being recorded on the
liability at the rate implicit in the agreement. The liability plus imputed
interest was 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.
In the fourth quarter of 2019, we completed a study of the
Pascua-Lama project and concluded that we do not have a plan that
meets our investment criteria under our current assumptions. As a
result, the deferred revenue liability was derecognized, and a current
liability was recognized for the cash liability payable to Wheaton
of $253 million. This adjustment resulted in $628 million recorded
in Other Income (refer to note 9) and recognizes the significant
uncertainty with the timing and quantity of the delivery of any future
silver production from Pascua-Lama.
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.
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 $33 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 $16,470 million as at December 31, 2019.
Sources of Deferred Income Tax Assets and Liabilities
Deferred tax assets
Tax loss carry forwards
Alternative minimum tax (“AMT”)
and other tax credits
Environmental rehabilitation
Post-retirement benefit obligations and
other employee benefits
Accrued interest payable
Other working capital
Other
Deferred tax liabilities
Property, plant and equipment
Inventory
Accrued interest payable
Classification:
Non-current assets
Non-current liabilities
As at
Dec. 31,
2019
As at
Dec. 31,
2018
$ 511
$ 537
28
329
24
–
75
11
37
292
27
1
32
12
$ 978
$ 938
(3,263)
(545)
(26)
(1,412)
(503)
–
$ (2,856)
$
(977)
$ 235
(3,091)
$ 259
(1,236)
$ (2,856)
$
(977)
The deferred tax asset of $235 million includes $218 million
expected to be realized in more than one year. The deferred tax
liability of $3,091 million is expected to be realized in more than
one year.
200
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation
Expiry Dates of Tax Losses
Non-capital tax losses1
Argentina
Barbados
Canada
Chile
Tanzania
Zambia
Other
2020
2021
2022
2023
2024+
$
$
–
–
–
–
–
12
–
12
$
$
50
–
–
–
–
259
–
$
309
$
–
–
–
–
–
–
–
–
$
–
440
–
–
–
–
–
$
–
1,252
2,371
–
–
–
–
No
expiry
date
$
–
–
–
992
1,566
–
694
Total
$
50
1,692
2,371
992
1,566
271
694
$ 440
$ 3,623
$ 3,252
$ 7,636
1. Represents the gross amount of tax loss carry forwards translated at closing exchange rates at December 31, 2019.
The non-capital tax losses include $6,037 million of losses which are
not recognized in deferred tax assets. Of these, $128 million expire
in 2021, $440 million expire in 2023, $3,623 million expire in 2024 or
later, and $1,846 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 $53 million (December 31, 2018:
$83 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 derecognized. Refer to note 12 for
further details.
Deferred Tax Assets Not Recognized
Argentina
Australia
Barbados
Canada
Chile
Côte d’Ivoire
Dominican Republic
Mali
Peru
Saudi Arabia
Tanzania
United States
Zambia
As at
Dec. 31,
2019
As at
Dec. 31,
2018
$ 103
15
17
1,097
1,074
5
–
8
329
70
156
1
–
$ 174
154
40
1,087
1,028
–
–
–
310
70
156
–
24
$ 2,875
$ 3,043
Deferred Tax Assets Not Recognized relate to: non-capital loss carry
forwards of $1,058 million (2018: $1,134 million), capital loss carry
forwards with no expiry date of $331 million (2018: $447 million), and
other deductible temporary differences with no expiry date of
$1,486 million (2018: $1,462 million).
201
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSFinancial Report 2019
Source of Changes in Deferred Tax Balances
Tax Years Still Under Examination
For the years ended December 31
2019
2018
Temporary differences
Property, plant and equipment
Environmental rehabilitation
Tax loss carry forwards
AMT credits
Inventory
Derivatives
Other
Intraperiod allocation to:
Income from continuing operations
before income taxes
Allocation to PPA
Sale of 50% interest in Kalgoorlie
Income tax payable
Equity
Other comprehensive income
Income Tax Related Contingent Liabilities
At January 1
Net additions based on uncertain tax
positions related to prior years
At December 311
$ (1,851)
37
(27)
(10)
(42)
–
14
$ (15)
(302)
(389)
–
5
(74)
(26)
$ (1,879)
$ (801)
$ (1,073)
(799)
12
(16)
–
(3)
$ (730)
–
–
(38)
(24)
(9)
$ (1,879)
$ (801)
2019
2018
$ 306
$ 306
21
–
$ 327
$ 306
1. If reversed, the total amount of $327 million would be recognized as a
benefit to income taxes on the income statement, and therefore would
impact the reported effective tax rate.
32 Non-Controlling Interests
a) Non-Controlling Interests (“NCI”) Continuity
Argentina
Australia
Canada
Chile
Côte d’Ivoire
Democratic Republic of Congo
Dominican Republic
Mali
Papua New Guinea
Peru
Saudi Arabia
Tanzania
United States
Zambia
31 Capital Stock
2010–2011, 2013–2019
2015–2019
2015–2019
2015–2019
2018–2019
2019
2015–2019
2017–2019
2006–2019
2013–2019
2007–2019
2018–2019
2019
2018–2019
Authorized Capital Stock
Our authorized capital stock is composed of an unlimited number
of common shares (issued 1,777,926,611 common shares as at
December 31, 2019). 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. Refer to note 4 for
further details.
On September 17, 2019, we issued 24,836,670 common
shares to the non-controlling shareholders of Acacia in exchange for
their shares in Acacia. Refer to note 4 for further details.
Dividends
In 2019, we declared dividends in US dollars totaling $218 million
(2018: $199 million) and paid $548 million (2018: $125 million).
The Company’s dividend reinvestment plan resulted in
$20 million (2018: $14 million) reinvested into the Company.
Nevada
Gold Mines
Pueblo
Viejo
Loulo-
Acacia Gounkoto
Tongon
Other
Total
NCI in subsidiary at December 31, 2019
38.5%
40%
–%
20%
10.3%
Various
At January 1, 2018
Share of income (loss)
Cash contributed
Disbursements
At December 31, 2018
Acquisitions1
Share of income (loss)
Cash contributed
Decrease in non-controlling interest1
Disbursements
$
–
–
–
–
$
–
5,910
275
90
–
(236)
$ 1,290
89
–
(108)
$ 1,271
–
311
–
–
(158)
$ 480
22
–
–
$ 502
–
(7)
–
(495)
–
$
–
–
–
–
$
–
887
30
–
–
(16)
$ –
–
–
–
$ –
61
(3)
–
–
(11)
$ 11
(1)
24
(15)
$ 19
(76)
(1)
50
(8)
$ 1,781
110
24
(123)
$ 1,792
6,782
605
140
(495)
(429)
At December 31, 2019
$ 6,039
$ 1,424
$
–
$ 901
$ 47
$ (16)
$ 8,395
202
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation
$ –
–
$ –
–
–
$ –
2018
$ –
–
–
$ –
$ –
b) Summarized Financial Information on Subsidiaries with Material Non-Controlling Interests
Summarized Balance Sheets
Nevada Gold Mines
Pueblo Viejo
Loulo-Gounkoto
Tongon
Current assets
Non-current assets
Total assets
Current liabilities
Non-current liabilities
Total liabilities
As at
Dec. 31,
2019
As at
Dec. 31,
2018
$ 10,977
15,909
$ 26,886
466
1,217
$ 1,683
$ –
–
$ –
–
–
$ –
As at
Dec. 31,
2019
$ 500
4,303
As at
Dec. 31,
2018
$ 520
3,469
As at
Dec. 31,
2019
$ 406
4,662
$ 4,803
$ 3,989
$ 5,068
428
932
720
402
234
634
$ 1,360
$ 1,122
$ 868
$ –
–
$ –
–
–
$ –
$ 158
424
$ 582
59
106
$ 165
As at
Dec. 31,
2018
As at
Dec. 31,
2019
As at
Dec. 31,
2018
Summarized Statements of Income
Nevada Gold Mines1
Pueblo Viejo
Loulo-Gounkoto
Tongon
For the years ended December 31
2019
2018
2019
2018
2019
2018
2019
Revenue
Income (loss) from continuing
operations after tax
Other comprehensive
income (loss)
Total comprehensive
income (loss)
Dividends paid to NCI
$ 2,707
$ –
$ 1,409
$ 1,333
$ 1,007
$ –
$ 384
739
–
739
236
$
$
–
–
$ –
$ –
708
206
158
–
–
–
$ 708
$ 206
$ 158
$ 158
$
–
$
16
–
–
$ –
$ –
(29)
–
$ (29)
$ 11
Summarized Statements of Cash Flows
Nevada Gold Mines1
Pueblo Viejo
Loulo-Gounkoto
Tongon
For the years ended December 31
2019
2018
2019
2018
2019
2018
2019
2018
Net cash provided by (used in)
operating activities
Net cash used in
investing activities
Net cash used in
financing activities
Net increase (decrease) in
cash and cash equivalents
$ 1,296
$ –
$ 504
$ 272
$ 259
$ –
$ 129
$ –
(539)
(379)
–
–
(107)
(144)
(130)
–
61
(397)
(108)
(80)
–
(107)
–
–
$
378
$ –
$
–
$
20
$
49
$ –
$ 83
$ –
1. Nevada Gold Mines was formed July 1, 2019 and therefore results are presented from July 1, 2019 onwards.
203
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSFinancial Report 2019
33 Related Party Transactions
DSU and RSU Activity (Number of Units in Thousands)
The Company’s related parties include its subsidiaries, joint
operations, joint ventures and key management personnel. During its
normal course of operations, the Company enters into transactions
with its related parties for goods and services. Transactions between
the Company and its subsidiaries and joint operations, which are
related parties of the Company, have been eliminated on
consolidation and are not disclosed in this note.
Remuneration of Key Management Personnel
Key management personnel include the members of the Board of
Directors and the executive leadership team. Compensation for key
management personnel (including Directors) was as follows:
For the years ended December 31
Salaries and short-term employee benefits1
Post-employment benefits2
Termination benefits
Share-based payments and other3
2019
$ 22
1
–
28
$ 51
2018
$ 19
3
1
11
$ 34
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, PRSU and LTIP 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 2019, Barrick
contributed and expensed $nil to this plan (2018: $12 million).
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, 2019, the weighted average
remaining contractual life of RSUs was 0.74 years (2018:
0.93 years).
Compensation expense for RSUs was a $9 million charge
to earnings in 2019 (2018: $29 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.
204
DSUs
Fair
value
RSUs
At January 1, 2018
Settled for cash
Forfeited
Granted
Credits for dividends
Change in value
At December 31, 2018
Settled for cash
Forfeited
Granted
Credits for dividends
Change in value
725
(143)
–
182
–
–
764
(404)
–
116
–
–
–
$ 11.6 4,537
(1.9) (3,089)
(731)
2.3 2,974
60
–
–
(0.8)
$ 11.2 3,751
(6.5) (2,131)
– (1,157)
1.9 2,600
47
–
–
2.2
Fair
value
$ 37.7
(34.6)
(7.9)
35.3
0.8
4.7
$ 36.0
(30.7)
(15.8)
35.3
0.8
15.9
At December 31, 2019
476
$ 8.8 3,110
$ 41.5
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, 2019,
3,867 thousand units had been granted at a fair value of $33 million
(2018: 3,024 thousand units at a fair value of $18 million).
d) Employee Share Purchase Plan (ESPP)
In 2008, Barrick launched an Employee Share Purchase Plan.
This plan enabled Barrick employees to purchase Company
shares through payroll deduction. During 2019, Barrick contributed
and expensed $nil to this plan (2018: $0.1 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 2019, Barrick contributed and expensed $3 million to this plan
(2018: $2 million).
f) Long-Term Incentive Plan (LTIP)
In 2019, Barrick assumed the Long-Term Incentive Plan as a result
of the Merger. Under this plan, restricted shares are issued to
selected employees subject to certain performance criteria. During
2019, Barrick expensed $9 million to this plan.
g) Stock Options
Under Barrick’s stock option plan, certain officers and key employees
of the Company 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, 2019, 0.3 million (2018:
0.8 million) stock options were outstanding.
Compensation expense for stock options was $nil in 2019
(2018: $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 2019 and 2018.
Total intrinsic value relating to options exercised in 2019 was
$1 million (2018: $nil).
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation
Employee Stock Option Activity (Number of Shares in millions)
C$ options
At January 1
Exercised
At December 31
US$ options
At January 1
Forfeited
Cancelled/expired
At December 31
2019
2018
Shares Average price
Shares Average price
0.3
(0.1)
0.2
0.5
–
(0.4)
0.1
$ 13
16
$ 10
$ 37
–
39
$ 32
0.3
–
0.3
0.7
(0.1)
(0.1)
0.5
$ 13
10
$ 13
$ 40
34
49
$ 37
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
US$ options
$ 32 – $ 41
0.2
$ 10
2.6
$ 2
0.2
$ 10
$ 2
0.1
$ 32
0.1
$ –
0.1
$ 32
$ –
1. Based on the closing market share price on December 31, 2019 of C$24.12 and US$18.59.
As at December 31, 2019, there was $nil (2018: $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
2019
2018
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
$ 39
4
$ 43
$ 1
–
$ 1
$ (5)
2
$ (3)
$ 36
6
$ 42
$ 1
–
$ 1
$ (4)
–
$ (4)
The amounts recognized in the balance sheet are determined
as follows:
For the years ended December 31
2019
2018
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
$ 69
(76)
$
(7)
46
$ 57
(65)
$
(8)
44
$ 39
$ 36
–
–
Liability in the balance sheet
$ 39
$ 36
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.
205
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSFinancial Report 2019
The significant actuarial assumptions were as follows:
As at December 31
Discount rate
Pension Plans 2019
Benefits 2019 Pension Plans 2018
Other Post-Retirement
Other Post-Retirement
Benefits 2018
2.50–3.30%
3.35%
3.75–4.65%
4.45%
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 9 years (2018: 14 years).
Pension benefits
Other post-retirement benefits
At December 31, 2018
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
$ 7
1
$ 8
27
–
$ 27
$ 7
1
$ 8
7
–
$ 7
$ 22
2
$ 24
20
1
$ 21
$ 139
5
$ 144
95
3
$ 98
Total
$ 175
9
$ 184
149
4
$ 153
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 $41 million
in 2019 (2018: $35 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.
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 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 was alleged that
Barrick made false and misleading statements concerning production
estimates and environmental risks at the Veladero mine.
On April 11, 2019, Barrick received an offer from the plaintiff to
dismiss the proposed class action lawsuit without costs. The Ontario
Superior Court of Justice ordered the dismissal of the proposed class
action lawsuit on August 19, 2019, and the matter is now closed.
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 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
Statements 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.
206
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation
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 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.
In May 2019, the motion for leave to proceed with statutory
misrepresentation claims and for class certification was heard in the
Quebec action. Additional submissions were heard in December
2019. The Quebec court has reserved judgment in this matter.
In July 2019, the motion for leave to proceed with statutory
misrepresentation claims was heard in the Ontario action. In October
2019, the Ontario Superior Court of Justice dismissed all but one of
those claims. The sole remaining statutory misrepresentation claim
pertains to a statement concerning the water management system in
Chile made by the Company in its Management’s Discussion and
Analysis for the second quarter of 2012. The Company has filed a
motion in the Divisional Court for leave to appeal the decision to
allow the sole remaining statutory misrepresentation claim to
proceed. The Plaintiffs have also filed an appeal to the Court of
Appeal for Ontario with respect to the claims that were dismissed.
The motion for class certification in Ontario is scheduled to be
heard in March 2020.
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.
On April 22, 2015, CMN was notified that the SMA 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.
207
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSFinancial Report 2019 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. 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.
On February 19, 2019, the Chilean Supreme Court accepted
the appeal by the indigenous residents of the Environmental Court’s
decision. The Chilean Supreme Court heard oral arguments on
September 10 and 11, 2019. On January 6, 2020, the Chilean
Supreme Court affirmed the Environmental Court’s decision,
upholding the environmental permit amendment and recognizing the
water quality baseline from 2005 to September 2009. The matter is
now closed.
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.
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.
As previously noted, 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.
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.
On March 14, 2019, the Chilean Supreme Court annulled
the October 12, 2018 administrative decision of the Antofagasta
Environmental Court on procedural grounds and remanded the case
back to the Environmental Court for review by a different panel of
judges. The Chilean Supreme Court did not review the merits of the
Revised Resolution, which remains in effect. CMN’s appeal of the
Revised Resolution remains pending before the new panel of judges
ordered by the Chilean Supreme Court, which heard arguments on
July 23, 2019.
The Company intends to vigorously defend 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
208
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation 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 complied
with good behavior and community service requirements for one
year, the Provincial Action would be dismissed.
All defendants have now completed the probationary period for
community service and good behavior and requested dismissal of
the charges in the Provincial Action.
Federal Investigation
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 2015 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.
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 was 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.
In total, six former federal officials were indicted under the
Federal Investigation and the Glacier Investigation (one of whom has
been indicted on two separate charges) and will face trial. In 2019,
the former federal official indicted on separate charges under both
the Federal Investigation and the Glacier Investigation passed away.
As a result, the charges against him have been dropped.
Oral arguments with respect to the charges for the remaining
five former federal officials have been scheduled for February and
March 2020, with a final decision expected by July 2020.
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.
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
209
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSFinancial Report 2019 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).
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.
On December 27, 2017, MAS received notice of a resolution
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.
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.
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
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. On December 26, 2019,
the Argentine Supreme Court ruled on the jurisdictional dispute in
favor of the Federal Court (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.
210
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation 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. On December 26,
2019, the Argentine Supreme Court ruled on the jurisdictional dispute
in favor of the Federal Court.
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.
No amounts have been recorded for any potential liability or
The constitutionality of the federal glacier law was the subject of
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 were held between
March 25 and March 27, 2019. The defendants filed a motion to
dismiss based on the statute of limitations, which was granted in
part and which has been appealed by the prosecution.
The Company filed Mutual Agreement Procedure applications
in Canada on December 21, 2018, and in Argentina on March 29,
2019, pursuant to the Canada-Argentina Income Tax Convention
Act (the “Canada-Argentina Tax Treaty”) to escalate resolution of
the Tax Assessment to the competent authority (as defined in the
Canada-Argentina Tax Treaty) in an effort to seek efficient resolution
of the matter.
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
a challenge before the National Supreme Court of Argentina. 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. On June 4, 2019, the
National Supreme Court of Argentina dismissed the case on the
basis that no harm deriving from the federal glacier law has been
proven and that the federal glacier law does not impact Veladero and
Pascua-Lama and the matter is now closed.
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.
On April 12, 2019, PVDC’s motion to challenge the timeliness of
the appeal was accepted by the Constitutional Court, and the
matter is now closed.
Perilla Complaint
In 2009, Barrick Gold Inc. and Placer Dome Inc. were purportedly
served in Ontario with a complaint filed in November 2008 in the
Regional Trial Court of Boac (the “Court”), on the Philippine island
of Marinduque, on behalf of two named individuals and purportedly
on behalf of the approximately 200,000 residents of Marinduque.
The complaint alleges injury to the economy and the ecology of
Marinduque as a result of the discharge of mine tailings from the
Marcopper mine into Calancan Bay, the Boac River, and the Mogpog
River. 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,
211
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSFinancial Report 2019 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.
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.
On March 20, 2019, the Company was notified that the Court
of Appeals granted a motion by the Petitioners to lift the Suspension
of Proceedings and denied the motion to intervene filed by the two
baranguays and set a preliminary case conference. In April 2019,
212
the Company filed a motion for (i) reconsideration of the March
2019 order lifting the Suspension of Proceedings and dismissing
the Company’s request that the case be dismissed for delay;
(ii) a ruling on its pending Urgent Motion for Ruling on Jurisdiction
and Motion for a Ruling on Subject-Matter Jurisdiction; and
(iii) an order suspending the proceedings pending determination of
these motions. The preliminary case conference was subsequently
cancelled by the Court of Appeals in April 2019.
On September 12, 2019, the Court of Appeals ruled that the
issues raised by the Company should be decided concurrently with a
hearing of the merits of the dispute. The Court set a preliminary case
conference date of September 18, 2019.
On September 17, 2019, the Company filed a further motion to
request that the Court of Appeals determine the Company’s Urgent
Motion for Ruling on Jurisdiction and Motion for a Ruling on
Subject-Matter Jurisdiction prior to any merits hearing. Consequently,
the Court of Appeals adjourned the September 18, 2019 preliminary
case conference to October 21, 2019, to further consider the
Company’s motion requesting the determination of the Company’s
jurisdiction motions prior to any merits hearing.
On October 18, 2019, the Court of Appeals issued a Notice of
Resolution, which, among other things, rejected the Company’s
constitutional objections and held that the Court of Appeals has
jurisdiction based on a “tentative” determination that the Company
was doing business in the Philippines made exclusively on the basis
of unproved allegations made by the Petitioners in their petition,
which “tentative” determination expressly does not foreclose the
possibility of a contrary finding on the basis of evidence at a later
date. On November 4, 2019 the Company filed a Motion for
Reconsideration Ad Cautelam seeking a reversal of the Notice of
Resolution dated October 18, 2019.
On October 21, 2019, the Court of Appeals rescheduled the
preliminary case conference from October 21, 2019 to January 27,
2020 and, following a request from Petitioners’ counsel, it directed
that a court-annexed mediation take place on October 29, 2019.
An additional mediation session took place on November 21, 2019.
On November 11, 2019, the Company filed with the Supreme
Court a Petition for Certiorari seeking to reverse, annul and set aside
the Court of Appeals’ March 18, 2019 Resolution and September 12,
2019 Resolution. To date, the Petition for Certiorari has not yet
been resolved.
On November 25, 2019, among other things, the Court of
Appeals issued a Resolution dismissing the Company’s Motion for
Reconsideration Ad Cautelam dated November 4, 2019.
On January 27, 2020, the Company filed a Petition for Certiorari
with the Supreme Court seeking to reserve, annul and set aside,
among other things, the rulings of the Court of Appeals in its
November 25, 2019 Resolution regarding the Company’s
constitutional challenges and jurisdictional challenges. A preliminary
case conference was also held on January 27, 2020, at which the
parties agreed to a tentative trial date of March 23, 2020.
No amounts have been recorded for any potential liability under
this matter, as the Company cannot reasonably predict the outcome.
The Company intends to continue to defend the action vigorously.
Malian Tax Dispute
Each of Loulo and Gounkoto (which together form the Loulo-
Gounkoto complex) and Morila have separate legally binding
establishment conventions with the State of Mali, which guarantee
fiscal stability, govern applicable taxes and allow for international
arbitration in the event of disputes. Despite these establishment
conventions, prior to the Merger, Randgold had received various tax
claims from the State of Mali in respect of its Mali operations, which
totaled $267.7 million at January 1, 2019. As at the end of the
second quarter of 2019, the total claim for 2018 and prior year
periods had risen to $275 million.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation During 2016, Randgold received payment demands in respect
of certain of these disputed amounts, and consequently, from 2016
up to December 2018, Randgold paid tax advances to the State
of Mali to support the resolution of the tax disputes, which after
offsetting other tax payments resulted in a receivable being recorded
of $41.1 million. As part of the purchase price allocation for the
Merger (see note 4), the fair value of this receivable was reduced to
nil. In July 2019, a further advance of $43 million was paid to the
State of Mali as part of a settlement proposal to resolve outstanding
assessments with respect to 2016 and prior year periods. In addition,
a further $17 million was accrued, bringing the total amount recorded
for these events to $60 million at the end of the second quarter of
2019. This additional accrual amount was recorded as a further
update to the purchase price allocation, and was paid in the fourth
quarter of 2019.
The tax exposures to be resolved for 2014 through 2016 total
$92 million, and remain under discussion with the State of Mali. The
Company has recorded an estimated amount for the potential liability
arising from these matters. In the Company’s view, it would be
prejudicial to disclose the amount of that estimate as the discussions
with the State of Mali are ongoing.
Barrick has been actively engaged with the Malian authorities
and is seeking a complete resolution of the various tax claims to
avoid protracted arbitration. In January 2020, the Government of Mali
signed a protocol, which set forth the terms of its working relationship
with the Company, including an agreement on tax principles that
effectively reflects the Company’s tax filings in 2017 and subsequent
years. For fiscal years 2017, 2018 and 2019, the Company will
cooperate with the State of Mali as those years are reviewed in
accordance with the terms of the signed protocol. The Company
continues to be actively engaged with the Malian authorities with
respect to these matters.
Reko Diq Arbitration
Barrick currently indirectly holds 50% of the shares of Tethyan Copper
Company Pty Limited (“TCC”), with Antofagasta plc (“Antofagasta”)
indirectly holding the other 50%. On November 15, 2011, the
Government of the Province of Balochistan notified Tethyan Copper
Company Pakistan (Private) Limited (“TCCP”) (the local operating
subsidiary of TCC) of the rejection of TCCP’s application for a mining
lease for the Reko Diq project, to which TCCP was lawfully entitled
subject only to “routine” government requirements. On November 28,
2011, TCC filed a request for international arbitration against the
Government of Pakistan (“GOP”) with the International Centre for
Settlement of Investment Disputes (“ICSID”) asserting breaches of
the Bilateral Investment Treaty (“BIT”) between Australia (where TCC
is incorporated) and Pakistan.
On March 20, 2017, the Tribunal issued its decision, rejecting
the GOP’s position. In March 2019, ICSID closed the record in
the arbitration.
In July 2019, ICSID awarded $5.84 billion in damages to TCC
in relation to the arbitration claims and unlawful denial of a mining
lease for the Reko Diq project. Damages include compensation
of $4.087 billion in relation to the fair market value of the Reko Diq
project at the time the mining lease was denied, and interest until
the date of the award of $1.753 billion. Compound interest continues
to apply at a rate of US Prime +1% per annum until the award is paid.
In November 2019, the GOP applied to annul TCC’s damages
award, which resulted in an automatic stay on TCC from pursuing
enforcement action. ICSID has constituted a committee to hear the
annulment application, consisting of a president from South Korea
and additional members from Mexico and Finland. The committee
appointed by ICSID to hear the application for annulment will also
determine whether the stay on enforcement proceedings should
be extended or lifted while it considers the application for annulment.
No decision on the GOP’s annulment application or the stay on
enforcement proceedings has yet been made.
The Company cannot reasonably estimate the financial effect of
the July 2019 settlement award. No amounts have been recognized
at this time.
Acacia Mining plc – Concentrate Export Ban and Related Disputes
On March 3, 2017, the GoT 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 located at the port in
Dar es Salaam.
During the second quarter of 2017, the GoT initiated
investigations which resulted in allegations of historical undeclared
revenue and unpaid taxes by Acacia and its predecessor companies.
Acacia subsequently received adjusted assessments for the tax
years 2000–2017 from the Tanzania Revenue Authority for a total
amount of approximately $190 billion for alleged unpaid taxes,
interest and penalties. In addition, following the end of the third
quarter of 2017, 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. Acacia disputed these assessments through
arbitration and the Tanzanian tax appeals process, respectively.
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 GoT
introducing, among other things, local content requirements, export
regulations and mineral rights regulations, the scope and effect of
which remain under review. Barrick continues to monitor the impact
of all new legislation in light of Acacia’s Mineral Development
Agreements with the GoT.
On October 19, 2017, Barrick announced that it had agreed
with the GoT on a proposed framework for a new partnership
between Acacia and the GoT. Acacia did not participate directly
in these discussions as the GoT had informed Barrick that it wished
to continue dialogue solely with Barrick. Barrick and the GoT also
agreed to form a working group that would focus on the resolution
of outstanding tax claims against Acacia. Key terms of the proposed
framework announced by Barrick and the GoT included (i) the
creation of a new Tanzanian company to provide management
services to 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 GoT’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 GoT, staged over time, on terms to be settled by
the working group. Barrick and the GoT also reviewed the conditions
for the lifting of the Ban.
On February 20, 2019, Barrick announced that it had arrived
at a proposal with the GoT that set forth the commercial terms
to resolve outstanding disputes concerning Acacia’s operations
in Tanzania.
213
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSFinancial Report 2019 On May 19, 2019, the GoT Negotiating Team wrote to Acacia’s
three Tanzanian operating companies (the “TMCs”) to indicate that
the GoT had resolved not to proceed to execute final agreements
for the resolution of Acacia’s disputes if Acacia was one of the
counterparties to the agreements.
On July 12, 2019, Acacia’s North Mara mine received a letter
from the Mining Commission of the Tanzanian Ministry of Minerals
informing it that the Mining Commission is soon to conduct an
inspection of North Mara’s gold production (the “No Export Letter”).
The No Export Letter stated that export permits for gold shipments
from North Mara would be issued following completion of
this inspection.
Following an investigation conducted by the Mining Commission
on July 30 and 31, 2019, the North Mara mine received a letter from
the Mining Commission (the “Inspection Findings Letter”) stating that
it believes that certain provisions of the Mining Regulations, 2010
were violated and directing the North Mara mine to submit a
feasibility study report and current mine plan for its approval by
August 16, 2019. The Inspection Findings Letter also authorized the
resumption of gold exports from North Mara subject to its adherence
to the export procedure.
On July 19, 2019, the Acacia Transaction Committee Directors
and Barrick published a firm offer announcement pursuant to
Rule 2.7 of the City Code on Takeovers and Mergers (“Rule 2.7
Announcement”) announcing that they had reached agreement on
the terms of a recommended final offer by Barrick for the ordinary
share capital of Acacia that Barrick did not already own (see “Key
Business Developments – Acacia Mining plc”), with the belief that the
recommended final offer would enable Barrick to finalize the terms of
a full, final and comprehensive settlement of all of Acacia’s existing
disputes with the GoT. To facilitate this and in anticipation of the
Rule 2.7 Announcement, on July 17, 2019, Acacia announced that
Bulyanhulu Gold Mine Limited and Pangea Minerals Limited would
immediately seek a stay of their international arbitration proceedings
with the GoT.
On September 12, 2019, the High Court of Justice in England
and Wales made an order sanctioning the scheme of arrangement
under Part 26 of the Companies Act 2006 (the “Scheme”), and on
September 17, 2019, Barrick completed the acquisition of all of the
shares of Acacia that the Company did not already own pursuant to
the Scheme. Acacia ceased trading on the London Stock Exchange
and became a wholly-owned subsidiary of Barrick called Barrick
TZ Limited.
On October 20, 2019, Barrick announced that it had reached
an agreement with the GoT to settle all disputes between the GoT
and the mining companies formerly operated by Acacia but now
managed by Barrick. The final agreements were submitted to the
Tanzanian Attorney General for review and legalization.
On January 24, 2020, Barrick announced that the Company
had ratified the creation of Twiga Minerals Corporation (“Twiga”) at a
signing ceremony with the President of Tanzania, formalizing the
establishment of a joint venture between Barrick and the GoT and
resolution of all outstanding disputes between Barrick and the GoT,
including the lifting of the previous concentrate export ban, effective
immediately. The GoT will receive a free carried shareholding of 16%
in each of the former Acacia mines (Bulyanhulu, Buzwagi and North
Mara), and will receive its half of the economic benefits from taxes,
royalties, clearing fees and participation in all cash distributions
made by the mines and Twiga, after the recoupment of capital
investments. Twiga will provide management services to the mines.
The terms of the signed agreement are consistent with those
previously announced, including the payment of $300 million to settle
all outstanding tax and other disputes (the “Settlement Payment”);
the lifting of the concentrate export ban; the sharing of future
economic benefits from the mines on a 50/50 basis; and a dispute
214
resolution mechanism that provides for binding international
arbitration. The 50/50 division of economic benefits will be
maintained through an annual true-up mechanism, which will not
account for the Settlement Payment.
The Settlement Payment will be paid in installments, with an
initial payment of $100 million to the GoT following the resumption of
mineral concentrate exports. Five subsequent annual payments of
$40 million each will be made, starting on the first anniversary of the
fulfillment of all conditions of the signed agreement, subject to certain
cash flow conditions.
Barrick and the GoT continue to fulfill their respective
obligations to satisfy all conditions of the signed agreement, primarily
with respect to the execution and delivery of formal termination
documents for the settlement of all outstanding disputes between
the two parties.
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.
Acacia Mining plc – Tanzanian Revenue
Authority Assessments
The Tanzanian Revenue Authority (“TRA”) issued a number of tax
assessments to Acacia related to past taxation years from 2002
onwards. Acacia believed that the majority of these assessments
were incorrect and 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 was
Acacia’s assessment that the relevant assessments and claims by
the TRA were 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 appealed this assessment on the substantive
grounds that, as an English incorporated company, it was not
resident in Tanzania for taxation purposes. The appeal is currently
pending at the Court of Appeal.
Further TRA assessments were issued to Acacia in January
2016 in the amount of $500.7 million, based on an allegation that
Acacia was resident in Tanzania for corporate and dividend
withholding tax purposes. The corporate tax assessments were
levied on certain of Acacia’s net profits before tax. Acacia appealed
these assessments at the TRA Board level. Acacia’s substantive
grounds of appeal were 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” above.
On October 20, 2019, Barrick announced that it had reached
an agreement with the GoT to settle all disputes between the GoT
and the mining companies formerly operated by Acacia but now
managed by Barrick. The final agreements were submitted to the
Tanzanian Attorney General for review and legalization.
On January 24, 2020, Barrick announced that the Company
had ratified the creation of Twiga Minerals Corporation (“Twiga”)
at a signing ceremony with the President of Tanzania, formalizing
the establishment of a joint venture between Barrick and the
Government of Tanzania (“GoT”) and resolution of all outstanding
disputes between Barrick and the GoT, including the lifting of the
previous concentrate export ban, effective immediately. The GoT will
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSBarrick Gold Corporation Zaldívar Chilean Tax Assessment
On August 28, 2019, Barrick’s Chilean subsidiary that holds the
Company’s interest in the Zaldívar mine, Compañía Minera
Zaldívar Limitada (“CMZ”), received notice of a tax assessment
from the Chilean Internal Revenue Service (“Chilean IRS”)
amounting to approximately $1 billion in outstanding taxes,
including interest and penalties (the “Zaldívar Tax Assessment”).
The Zaldívar Tax Assessment primarily claims that CMZ
improperly claimed a deduction relating to a loss on an
intercompany transaction prior to recognizing and offsetting a
capital gain on the sale of a 50% interest by CMZ in the Zaldívar
mine to Antofagasta in 2015. CMZ filed an administrative appeal
with the Chilean IRS on October 14, 2019. Following initial
meetings with CMZ, the Chilean IRS agreed with CMZ’s position
and reduced the Assessment to US$ 575 million including interest
and penalties. CMZ will continue discussions with the Chilean
IRS, prior to the authority’s final decision.
The Company believes that the Zaldívar Tax Assessment
is without merit and intends to vigorously defend its position.
No amounts have been recorded for any potential liability arising
from the Zaldívar Tax Assessment as the Company cannot
reasonably predict the outcome.
receive a free carried shareholding of 16% in each of the former
Acacia mines (Bulyanhulu, Buzwagi and North Mara), and will
receive its half of the economic benefits from taxes, royalties,
clearing fees and participation in all cash distributions made by
the mines and Twiga, after the recoupment of capital investments.
Twiga will provide management services to the mines.
The terms of the signed agreement are consistent with those
previously announced, including the Settlement Payment; the lifting
of the concentrate export ban; the sharing of future economic
benefits from the mines on a 50/50 basis; and a dispute resolution
mechanism that provides for binding international arbitration.
The 50/50 division of economic benefits will be maintained through
an annual true-up mechanism, which will not account for
the Settlement Payment.
The Settlement Payment will be paid in installments, with an
initial payment of $100 million to the GoT following the resumption
of mineral concentrate exports. Five subsequent annual payments
of $40 million each will be made, starting on the first anniversary of
the fulfillment of all conditions of the signed agreement, subject to
certain cash flow conditions.
Barrick and the GoT continue to fulfill their respective
obligations to satisfy all conditions of the signed agreement, primarily
with respect to the execution and delivery of formal termination
documents for the settlement of all outstanding disputes between
the two parties.
See note 12 of these Financial Statements for information
related to income tax expenses recorded with respect to
these matters.
North Mara Environmental Issues
During 2019, the GoT issued two environmental protection orders
and directions to Acacia’s North Mara mine in relation to alleged
breaches of environmental regulations relating to seepage from and
the discharge of a hazardous substance from the North Mara mine
Tailings Storage Facility (“TSF”). In March 2019, the GoT directed
the North Mara Mine to resolve an incident that resulted in the
spillage of water into the local environment. On July 16, 2019, the
Tanzanian National Environment Management Council (“NEMC”)
issued a Prohibition Notice (the “Prohibition Notice”) to North Mara
Gold Mine Limited (the Tanzanian operating company of the North
Mara mine), which ordered the North Mara mine to suspend
operations at its TSF on Saturday July 20, 2019. NEMC cited
the North Mara mine’s failure to contain and prevent seepage from
the TSF as grounds for its issuance of the Prohibition Notice.
On September 17, 2019, following the submission of a detailed
action plan to remediate issues related to the TSF and the
implementation of remedial measures to contain the seepage from
the TSF, the Prohibition Notice was lifted and North Mara was
permitted to resume operations at the TSF.
215
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSFinancial Report 2019 Shareholder Information
Shares are traded on two stock exchanges
New York
Toronto
Ticker Symbol
NYSE: GOLD
TSX: ABX
Number of Registered Shareholders at
December 31, 2019
15,835
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) – World
MSCI World/Canada Index
FTSE All World/Canada Index
S&P Global/North American Natural Resources Index
S&P/TSX Global Gold Index
2019 Dividend per Share
US$0.20 (paid in respect of the 2019 financial year)
Common Shares
(millions)
Outstanding at December 31, 2019
Weighted average 2019
Basic
Fully diluted
1,778
1,758
1,758
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, 2019
NYSE
TSX
2019
2018
3,690
1,171
3,315
782
US$18.59
C$24.12
Share Trading Information
New York Stock Exchange
Quarter
First
Second
Third
Fourth
Toronto Stock Exchange
Quarter
First
Second
Third
Fourth
216
Share Volume
(millions)
2019
981
882
1,109
718
3,690
2018
632
1,223
887
573
3,315
Share Volume
(millions)
High
Low
2019
2018
2019
2018
US$14.54
16.45
20.06
18.83
US$14.04
14.08
13.59
13.80
US$11.52
11.65
14.85
16.07
US$11.52
11.06
9.53
12.34
High
Low
2019
2018
2019
2018
2019
2018
373
280
325
193
1,171
190
132
173
287
782
C$19.49
21.67
26.69
24.49
C$19.49
17.72
17.83
18.99
C$15.37
15.72
19.79
21.25
C$14.26
15.84
12.54
14.18
Barrick Gold Corporation
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 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.
In 2019, Barrick paid an aggregate cash dividend of $0.20
per common share – $0.07 on January 14, $0.04 on June 17,
$0.04 on September 16 and $0.05 on December 16.
On March 16, 2020, Barrick paid a dividend for the fourth
quarter of 2019 of $0.07 per common share, a 40%
increase on the previous quarter’s dividend, reflecting
Barrick’s profitability and financial strength.
Form 40-F
The Company’s Annual Report on Form 40-F is filed with the
United States Securities and Exchange Commission. This report
is available on Barrick’s website www.barrick.com and will be
made available to shareholders, without charge, upon written
request to the Secretary of the Company at the Corporate Office
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 more 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
Telephone: 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 5, 2020 at 10:00 am (Toronto time).
Please visit www.Barrick.com/investors/AGM for meeting details.
217
Financial Report 2019 Cautionary Statement on Forward-Looking Information
Certain information contained or incorporated by reference in this
Annual Report 2019, 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
Annual Report 2019 contains forward-looking statements including,
without limitation, with respect to: the Company’s goal to be the
world’s most valued gold mining business; Barrick’s forward-looking
production guidance and estimates of future costs; cash flow
forecasts; projected capital, operating and exploration expenditures,
including with respect to Barrick’s 5-year plan for the Group and
each of its North America, Latin America and Asia Pacific and Africa
and the Middle East regions and Barrick’s 10-year production profile;
targeted debt and cost reductions; mine life and production rates;
the benefits expected to be realized from the Nevada Gold Mines
joint venture; targeted debt and cost reductions; mine life and
production rates; potential mineralization and metal or mineral
recoveries; our ability to identify, invest in and develop potential
Tier One gold assets; the potential to identify new reserves and
resources, and our ability to convert resources into reserves,
including our pipeline of greenfield projects; our strategies and plans
with respect to sustainability, governance and environmental matters,
including climate change; our future plans, growth potential, financial
strength, investments and overall strategy; our plans and expected
completion and benefits of our growth projects, including
construction of a third shaft at Turquoise Ridge, the Pueblo Viejo
plant and tailings facility expansions, the development of the third
underground mine at Loulo-Gounkoto, the Zaldívar chloride leach
project, the expected completion of feasibility studies at Goldrush
and Pueblo Viejo and the Veladero power transmission project;
the potential efficiencies from the increased use of digitization and
automation; asset sales, joint ventures and partnerships; and
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 2019 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 projects in the early stages of evaluation and
for which additional engineering and other analysis is required;
the Company’s ability to successfully reintegrate Acacia’s operations;
whether benefits expected from recent transactions, including, but
not limited to, the Twiga joint venture and the Massawa transaction,
are realized; disruption of supply routes which may cause delays
in construction and mining activities at the Company’s more remote
properties; 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 with respect to
whether some or targeted investments and projects 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; 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; risks
associated with illegal and artisanal mining; the risks of operating
in jurisdictions where infectious diseases present major health care
issues; risks associated with the COVID-19 pandemic and its impact
on operations or Barrick’s supply chain; 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
218
Barrick Gold Corporation CAUTIONARY STATEMENT ON FORWARD-LOOKING INFORMATION
may be presented to, or pursued by, the Company; risks associated
with the fact that certain of the initiatives described in this Annual
Report 2019 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;
and availability and increased costs associated with mining inputs
and labor. 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 2019 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 the
Company’s ability to achieve the expectations set forth in the
forward-looking statements contained in this Annual Report 2019.
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.
219
Financial Report 2019 Corporate Office and
General Inquiries
Barrick Gold Corporation
161 Bay Street, Suite 3700
Toronto, Ontario M5J 2S1
Canada
Telephone: +1 416 861-9911
Toll Free (North America): 1-800-720-7415
www.barrick.com
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Barrick Gold Corporation P r i n t e d o n p a p e r m a d e f ro m w o o d f i b re f ro m w e l l - m a n a g e d f o re s t s , a f u l l y re n e w a b l e
P r i n t e d o n p a p e r m a d e f ro m w o o d f i b re f ro m w e l l - m a n a g e d f o re s t s , a f u l l y re n e w a b l e
a n d s u s t a i n a b l e re s o u rc e , i n c l u d i n g 1 0 % re c y c l e d f i b re .
a n d s u s t a i n a b l e re s o u rc e , i n c l u d i n g 1 0 % re c y c l e d f i b re .
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BARRICK GOLD CORPORATION
Corporate Office:
TD Canada Trust Tower
161 Bay Street, Suite 3700
Toronto, Canada M5J 2S1
Tel: +1 416 861-9911
Toll-free throughout North America:
1 800 720-7415
www.barrick.com
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