SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
Form 6-K
Report of Foreign Private Issuer
Pursuant to Rule 13a-16 or 15d-16 of
the Securities Exchange Act of 1934
For the month of: April, 2005 Commission File Number: 1-9059
BARRICK GOLD CORPORATION
(Name of Registrant)
BCE Place, Canada Trust Tower
Suite 3700
161 Bay Street, P.O. Box 212
Toronto, Ontario
Canada M5J 2S1
(Address of Principal Executive Offices)
Indicate by check mark whether the registrant files or will file annual reports
under cover of Form 20-F or Form 40-F:
Form 20-F Form 40-F X
--- ---
Indicate by check mark if the registrant is submitting the Form 6-K in paper as
permitted by Regulation S-T Rule 101(b)(1): ___
Indicate by check mark if the registrant is submitting the Form 6-K in paper as
permitted by Regulation S-T Rule 101(b)(7): ___
Indicate by check mark whether by furnishing the information contained in this
Form, the registrant is also thereby furnishing the information to the
Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934:
Yes No X
--- ---
If "Yes" is marked, indicate below the file number assigned to the registrant in
connection with Rule 12g3-2(b): N/A
INCORPORATION BY REFERENCE
The comparative unaudited interim consolidated financial statements of the
Registrant and the notes thereto for the three months ended March 31, 2005
prepared in accordance with U.S. GAAP, together with management's discussion and
analysis of financial and operating results for the three months ended March 31,
2005, (contained on pages 6 to 34 of Exhibit 1 of this Form 6-K Commission File
No. 1-9059) furnished to the Commission April 29, 2005, are incorporated by
reference into the Registrant's registration statement on Form F-3 (No.
333-14148).
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
BARRICK GOLD CORPORATION
Date: April 29, 2005 By: /s/ Sybil E. Veenman
---------------------------------
Name: Sybil E. Veenman
Title: Vice President, Assistant
General Counsel and
Secretary
EXHIBIT
Exhibit Description of Exhibit
1 Barrick Gold Corporation First Quarter Report for 2005,
including the Comparative Unaudited Financial Statements
prepared in accordance with U.S. generally accepted
accounting principles ("US GAAP") and the notes thereto
for the quarter ended March 31, 2005 and Management's
Discussion and Analysis (US GAAP) for the same period.
EXHIBIT 1
[GRAPHIC OMITTED]
FIRST QUARTER REPORT 2005 - APRIL 28, 2005
Based on US GAAP and expressed in US dollars
Barrick Earns $51 Million ($0.10 per share) in First Quarter
Production at Lagunas Norte Expected to Commence Ahead of Schedule
Highlights
o First quarter 2005 net income was $51 million, or $0.10 per share, and cash
flow from operations was $122 million, or $0.23 per share, compared to net
income of $26 million, or $0.05 per share, and cash flow from operations of
$126 million, or $0.24 per share, in the prior-year period.
o First quarter production was 1.1 million ounces of gold at a total cash
cost of $248(1) per ounce. The Company remains on track with its previous
guidance to produce between 5.4 - 5.5 million ounces of gold for the year
at an average total cash cost of $220-$230 per ounce. As previously
announced, the first half of 2005 is expected to have lower production and
higher cash costs, with the second half improving as Lagunas Norte and
Veladero come on stream.
o Progress at Lagunas Norte is ahead of schedule and on budget, with
production now expected to commence in mid-June. The Tulawaka mine achieved
start-up during the quarter on time and did not have a single lost-time
accident during construction. Significant progress continues to be made on
the remaining development projects. Veladero is on schedule to commence
production in the fourth quarter of this year and Cowal expects to pour its
first gold in the first quarter of 2006. The Company continues to target
approval of the environmental impact assessments for Pascua-Lama by year-
end 2005.
o Barrick and Falconbridge announced earlier this month that they have
entered into a 50/50 joint-venture agreement regarding the Kabanga nickel
deposit and related concessions in Tanzania, with Falconbridge as the
operator of the joint venture.
o In April 2005, the Company's wholly-owned subsidiary, Minera Barrick
Misquichilca S.A., successfully completed the issuance of $50 million in
debt securities in the Peruvian capital markets. The net proceeds from this
offering will be used to partially fund the construction of Lagunas Norte.
Barrick Gold Corporation today reported earnings of $51 million ($0.10 per
share) and operating cash flow of $122 million ($0.23 per share) for first
quarter 2005 compared to earnings of $26 million ($0.05 per share) and operating
cash flow of $126 million ($0.24 per share) in the year-earlier period.
In first quarter 2005, earnings were favorably impacted by a $46-per-ounce
higher realized gold price, and lower interest and amortization expense compared
to the prior-year period, offset by lower gold sales volumes due to the lower
production levels and higher total cash costs.
The Company's first quarter earnings also included $10 million in after-tax
asset/investment sales gains, a $3-million after-tax non-hedge derivative gain,
offset partially by a $3-million after-tax foreign currency translation loss.
Earnings in the prior-year quarter included a $10-million after-tax non-hedge
derivative loss, offset partially by $2 million in after-tax asset/investment
sales gains and a $2-million after-tax foreign currency translation gain.
---------------------
(1) For an explanation of non-GAAP performance measures refer to pages 18-21 of
the Management's Discussion and Analysis found in the First Quarter Report 2005.
BARRICK FIRST QUARTER 2005 PRESS RELEASE
PRODUCTION AND COSTS
In first quarter 2005, Barrick produced 1.1 million ounces of gold at total cash
costs of $248 per ounce, compared to 1.3 million ounces at total cash costs of
$199 per ounce for the prior-year quarter. As previously announced, the first
half of 2005 is expected to have lower production and higher cash costs, with
the second half improving as Lagunas Norte and Veladero come on stream. The
Company is on track with its previous guidance to produce 5.4 - 5.5 million
ounces of gold for the year at an average total cash cost of $220 - $230 per
ounce.
The North American region saw a decline in production over the fourth
quarter 2004 at higher total cash costs due to expected lower grades mined at
the Goldstrike open pit, and lower-than-expected grades mined at Eskay Creek.
The region is expected to slightly exceed its production guidance for full year
2005.
The South American region had a solid production quarter, with first
quarter production at Pierina higher than the fourth quarter 2004 and at lower
total cash costs. The region is expected to meet its guidance for full year
2005.
The Australian/African region's production in the first quarter was higher
than the fourth quarter 2004 and at higher total cash costs. Production for the
full year, however, is now expected to be marginally lower than previously
expected, at slightly higher total cash costs, primarily due to changes in
forecasts at Bulyanhulu and Plutonic. At Bulyanhulu, production and total cash
cost guidance was revised to reflect ongoing dilution and lower grades, and
lower projected throughput resulting from ongoing power supply interruptions and
a mechanical failure in the hoist gearbox. At Plutonic, production and cash cost
guidance was revised to reflect lower underground grades and the discontinuation
of open-pit mining at the end of the second quarter 2005 as a result of
contractor price increases given the tight Australian labor market.
DEVELOPMENT PROJECTS UPDATE
Significant progress was made on all of Barrick's development projects during
the quarter.
"2005 represents a landmark year in the history of Barrick with the
expected start-up of three new mines," said Greg Wilkins, President and Chief
Executive Officer. "During the quarter, Tulawaka, the first of Barrick's new
generation of mines entered production, and Lagunas Norte is now expected to
commence gold production ahead of schedule."
At the Lagunas Norte project in the Alto Chicama district in Peru, progress
is ahead of schedule and on budget, with production now expected to commence in
mid-June. The project is about 95% complete, and commissioning of equipment and
facilities commenced in early April concurrent with construction activities.
About 93% of the project's required manpower is in place, with hiring expected
to be concluded by the end of April 2005.
At Veladero in the Frontera district in Argentina, progress continues with
overall mine development over 80% complete. Stacking of ore on the valley-fill
leach facility has commenced. The project facilities' commissioning program
began in March.
The Company's Cowal project in Australia is progressing well. Engineering
is 75% complete, mine development earthworks are well advanced, and prestrip
activities commenced in April 2005. Production is expected to commence in the
first quarter 2006.
At Barrick's Pascua-Lama project that straddles the Chilean and Argentine
border, approvals for the environmental impact assessments are targeted by the
end of 2005. Work continues on community and government relations, permitting,
protocol implementation and tax stability.
At the East Archimedes project located at the Ruby Hill mine site in
Nevada, steady progress continues. Permitting approvals are expected by the end
of the year. The first gold pour is targeted for mid-2007.
BARRICK FIRST QUARTER 2005 PRESS RELEASE
2
In Nevada, the power plant foundation work is progressing well and building
erection commenced during the quarter. The plant is expected to commence
operation in fourth quarter 2005.
EXPLORATION UPDATE
During the quarter, Barrick had drill programs underway on 14 properties(2).
Early stage exploration was carried out in all regions during the quarter, and
is helping to identify areas for follow up and drilling later in the year.
In the Frontera district in South America, exploration drilling near the
Veladero project began late in first quarter 2005, with encouraging results back
from the first hole drilled in the first target. Drilling in the vicinity of
Veladero will continue until the onset of winter in June, with the program
resuming in September. Additional fieldwork, including mapping, sampling,
trenching, is ongoing to follow up targets defined by the regional compilation.
The work has identified high sulphidation-type systems at targets both north and
south of Pascua-Lama/Veladero. Regional work is also underway along the rest of
the belt to focus follow up in the third quarter.
"The initial positive results confirm my belief in the potential to add
significant resources in the Frontera district," said Alex Davidson, Executive
Vice President, Exploration and Corporate Development. "The targets look great,
and are close to Veladero."
In North America, drill programs commenced at Goldstrike in Nevada, with
the objective of adding reserves and resources. The Betze-Post exploration drift
is 75% complete and a drill program at North Post will commence in the second
quarter. Other drill programs in Nevada are planned or underway at Deep East
Archimedes, REN and Storm.
In the Alto Chicama district in northern Peru, work continues and targets
are being delineated at four areas for follow up this year. In southern Peru, a
drill program commenced at the Cuello Cuello target at the end of the quarter
and results are being evaluated.
In the Australia/Africa region, a 50,000-metre drill program commenced in
early January at Buzwagi in Tanzania to test for mineralization beyond the
currently defined resource. Initial results are positive, confirming the
potential for the project, and engineering studies are ongoing. Drill programs
are also underway on two properties in the Lake Victoria district in Tanzania.
At Kabanga in Tanzania, a drill program began in January, including in-fill
drilling at Kabanga North and Main.
* * *
Barrick is building a new generation of mines around the globe and has the
lowest total cash costs among the major gold producers. Its vision is to be the
world's best gold company by finding, developing and producing quality reserves
in a profitable and socially responsible manner. Barrick's shares are traded on
the Toronto, New York, London and Swiss stock exchanges and the Paris Bourse.
---------------------
(2) Barrick's exploration programs are designed and conducted under the
supervision of Alexander J. Davidson, P. Geo., Executive Vice President,
Exploration and Corporate Development of Barrick. For information on the
geology, exploration activities generally, and drilling and analysis procedures
on Barrick's material properties, see Barrick's most recent Annual Information
Form/Form 40-F on file with Canadian provincial securities regulatory
authorities and the US Securities and Exchange Commission.
BARRICK FIRST QUARTER 2005 PRESS RELEASE
3
Key Statistics
(in United States dollars) Three months ended March 31
---------------------------
(Unaudited) 2005 2004
--------------------------------------------------------------------------------
Operating Results
Gold production (thousands of ounces) 1,135 1,278
Gold sold (thousands of ounces) 1,129 1,247
Per ounce data
Average spot gold price $ 427 $ 408
Average realized gold price 428 382
Cash operating costs(3) 234 187
Total cash costs(1)(3) 248 199
Amortization(3) 78 91
Total production costs(3) 326 290
--------------------------------------------------------------------------------
Financial Results (millions)
Gold sales $ 484 $ 477
Net income 51 26
Operating cash flow 122 126
Per share data (dollars)
Net income (basic and diluted) 0.10 0.05
Operating cash flow 0.23 0.24
Common shares outstanding (as at March 31)(millions)(2) 534 532
--------------------------------------------------------------------------------
As at As at
March 31, Dec. 31,
-----------------------
2005 2004
--------------------------------------------------------------------------------
Financial Position (millions)
Cash and equivalents $ 1,330 $ 1,398
Non-cash working capital 161 141
Long-term debt 1,698 1,655
Shareholders' equity 3,633 3,563
--------------------------------------------------------------------------------
(1) Comprises cash operating costs, royalties and production taxes.
(2) Includes shares issuable upon exchange of BGI (Barrick Gold Inc.)
exchangeable shares.
(3) For an explanation of our use of non-GAAP performance measures refer to
pages 18 to 21 of Management's Discussion and Analysis.
BARRICK FIRST QUARTER 2005 SUMMARY INFORMATION
4
Production and Cost Summary
Production (attributable ounces) Total Cash Costs (USS/oz)(1)
------------------------------------------------------------------------------
For the three months ended March 31 2005 2004 2005 2004
(Unaudited)
----------------------------------------------------------------------------------------------------------
North America
Open Pit 286,738 317,527 $ 276 $ 267
Underground 145,364 154,047 287 253
----------------------------------------------------------------------------------------------------------
Goldstrike Property Total 432,102 471,574 279 262
Eskay Creek 54,805 65,673 59 (19)
Round Mountain (50%) 93,898 93,496 223 207
Hemlo (50%) 62,355 61,142 260 227
Holt-McDermott(2) - 18,809 - 238
Marigold (33%) 14,109 8,602 226 248
----------------------------------------------------------------------------------------------------------
657,269 719,296 251 223
----------------------------------------------------------------------------------------------------------
South America
Pierina 145,983 231,898 134 82
----------------------------------------------------------------------------------------------------------
Australia/Africa
Plutonic 70,418 82,848 287 194
Darlot 27,420 34,250 249 208
Lawlers 31,233 26,618 287 236
Kalgoorlie (50%) 124,523 102,212 247 223
----------------------------------------------------------------------------------------------------------
253,594 245,928 263 213
Bulyanhulu 73,374 81,018 356 276
Tulawaka (70%) 4,554 - - -
----------------------------------------------------------------------------------------------------------
331,522 326,946 288 226
----------------------------------------------------------------------------------------------------------
Total 1,134,774 1,278,140 $ 248 $ 199
----------------------------------------------------------------------------------------------------------
Total Production Costs (US$/oz)(1)
----------------------------------
For the three months ended March 31
(Unaudited) 2005 2004
----------------------------------------------------------------------------------------------------------
Direct mining costs at market foreign exchange rates $ 282 $ 238
Gains realized on currency hedge contracts (22) (24)
By-product credits (26) (27)
----------------------------------------------------------------------------------------------------------
Cash operating costs 234 187
Royalties 11 9
Production taxes 3 3
----------------------------------------------------------------------------------------------------------
Total cash costs 248 199
Amortization 78 91
----------------------------------------------------------------------------------------------------------
Total production costs $ 326 $ 290
----------------------------------------------------------------------------------------------------------
(1) For an explanation of our use of non-GAAP performance measures refer to pages 18 to 21 of Management's Discussion and Analysis.
(2) Holt-McDermott ceased production in fourth quarter 2004.
BARRICK FIRST QUARTER 2005 SUMMARY INFORMATION
5
MANAGEMENT'S DISCUSSION AND ANALYSIS ("MD&A")
This portion of the Quarterly Report provides management's discussion and
analysis of the financial condition and results of operations to enable a reader
to assess material changes in financial condition and results of operations as
at and for the three-month period ended March 31, 2005, in comparison to the
corresponding prior-year period. This MD&A has been prepared as of April 21,
2005. This MD&A is intended to supplement and complement the unaudited interim
consolidated financial statements and notes thereto, prepared in accordance with
US generally accepted accounting principles ("US GAAP"), for the three-month
period ended March 31, 2005 (collectively, the "Financial Statements"), which
are included in this Quarterly Report on pages 22 to 34. You are encouraged to
review the Financial Statements in conjunction with your review of this MD&A.
This MD&A should be read in conjunction with both the annual audited
consolidated financial statements for the three years ended December 31, 2004,
the related annual MD&A included in the 2004 Annual Report, and the most recent
Form 40-F/Annual Information Form on file with the US Securities and Exchange
Commission and Canadian provincial securities regulatory authorities. Certain
notes to the Financial Statements are specifically referred to in this MD&A and
such notes are incorporated by reference herein. All dollar amounts in this MD&A
are in millions of US dollars, unless otherwise specified.
For the purposes of preparing this 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 Barrick Gold Corporation's shares; or (ii) there is a
substantial likelihood that a reasonable investor would consider it important in
making an investment decision, or if it would significantly alter the total mix
of information available to investors. Materiality is evaluated by reference to
all relevant circumstances, including potential market sensitivity.
--------------------------------------------------------------------------------
CONTENTS
Executive Summary 6
Key Economic Trends 6
Results 7
Overview of First Quarter 2005 versus
First Quarter 2004 7
Consolidated Gold Production and Sales 8
Results of Operating Segments 8
Other Costs and Expenses 13
Cash Flow 14
Balance Sheet 15
Quarterly Information 15
Off-Balance Sheet Arrangements 16
Critical Accounting Policies and Estimates 17
Non-GAAP Performance Measures 18
EXECUTIVE SUMMARY
In first quarter 2005 we produced 1.1 million ounces of gold at a total cash
cost of $248 per ounce. Our producing mines remain on track to meet our
production and total cash costs guidance for 2005 of between 5.4 - 5.5 million
ounces at an average total cash cost of $220-$230 per ounce. We had earnings of
$51 million ($0.10 per share) and generated operating cash flow of $122 million
($0.23 per share).
We made steady progress on the development of our new generation of mines that
are driving a targeted production profile of 6.8 - 7.0 million ounces by 2007.
The Tulawaka mine in Tanzania achieved start-up during first quarter as expected
and two additional mines, Lagunas Norte in Peru and Veladero in Argentina, are
targeted to enter production in 2005. At Lagunas Norte, progress is ahead of
schedule and on budget, with production now expected to commence in mid-June
2005. At Veladero, progress continues with overall mine development over 80%
complete and production on track to commence in the fourth quarter of 2005.
These first three new mines are expected to contribute to increased production
and decreased total cash costs per ounce beginning in the second half of 2005.
At our fourth new mine, Cowal in Australia, steady progress is being made with
engineering over 75% complete and production is expected to commence in the
first quarter 2006. We continued work on advancing our two other projects in
development, Pascua-Lama in Chile/Argentina and East Archimedes in Nevada. We
continue to target approval of the Pascua-Lama environmental impact assessments
by year-end 2005. We also entered into a joint venture agreement with
Falconbridge Limited with respect to the Kabanga nickel deposit and related
concessions in Tanzania.
We continued to put in place financing for the construction costs of our
development projects. In April 2005, our wholly-owned subsidiary, Minera Barrick
Misquichilca S.A., successfully completed the issuance of $50 million of debt
securities in the Peruvian capital markets. The net proceeds from this financing
will be used to partially fund the construction of the Lagunas Norte project in
Peru.
KEY ECONOMIC TRENDS
The MD&A included in our 2004 Annual Report contained a discussion of the key
economic trends that affect our business and how they impact our financial
statements. In this interim MD&A, we have included an update to reflect any
significant changes in those trends since the preparation of the 2004 Annual
MD&A.
BARRICK FIRST QUARTER 2005 MANAGEMENT'S DISCUSSION AND ANALYSIS
6
Gold Prices
The gold price was fairly volatile during first quarter 2005, ranging from $412
to $445 per ounce with an average market gold price of $427 per ounce. Gold
prices continue to have a strong negative correlation with the US dollar. We
sold all of our production at market gold prices, resulting in an average
realized selling price of $428 per ounce. We view the outlook for market gold
prices to be positive.
Silver Prices
Market silver prices have generally increased since the end of 2004, with an
average market price of $6.98 per ounce during first quarter 2005. Higher silver
prices help to reduce total cash costs per ounce of gold as silver sales are
recorded as a by-product credit.
Currency Exchange Rates
At March 31, 2005, through our currency hedge position we have protected local
currency-based expenditures for approximately the next three years at average
exchange rates that are more favorable than current market rates in early 2005.
The average rates for currency contracts designated against operating costs over
the next three years are $0.65 for Australian dollar contracts and $0.72 for
Canadian dollar contracts. Further details of our currency hedge position are
included in note 14 to the Financial Statements.
Energy Prices
Diesel Fuel
Fuel prices rose from $43 per barrel at the end of 2004 to $55 per barrel at
March 31, 2005. Subsequent to the end of first quarter 2005, the price has
declined slightly. To help control costs, we have a fuel hedge position totaling
2.2 million barrels, for a portion of our estimated future diesel fuel
consumption over the next three years, with an average cap price of $39 per
barrel and participation to an average floor price of $29 per barrel on almost
half of the position.
Electricity
Electricity prices have risen during 2004 and continue to rise in 2005 as a
result of diesel fuel price increases and natural gas demand, as well as excess
demand for electricity. To partially mitigate rising electricity costs, we are
building a 115-megawatt natural gas-fired power plant that will supply our
Goldstrike mine.
Other Inflationary Cost Pressures
The mining industry has been experiencing significant inflationary cost
pressures. Steel prices and oil-related consumables have risen significantly
over the past few quarters and continue to rise mainly impacting mine
construction costs. We are focusing on supply chain management and continuous
improvement initiatives to mitigate the impact of higher steel prices. Labor
costs in Australia have been rising when compared to first quarter 2004, as a
result of a supply shortage of skilled labor, which has been impacting
production costs at our Australian mines.
US dollar interest rates
Stronger economic indicators in the first quarter have resulted in higher rates
at quarter end when compared to 2004 year-end. In periods of higher interest
rates, we earn higher interest income on cash balances and expect higher forward
selling prices under our gold sales contracts. Most of our long-term debt has
fixed interest rates and therefore interest expense is not materially affected
by rising interest rates.
RESULTS
Selected Quarterly Information
--------------------------------------------------------------------------------
For the three month period ended March 31
($ millions, except per share and per ounce data in dollars) 2005 2004
Gold Production ('000s oz) 1,135 1,278
Gold sales
'000s oz 1,129 1,247
$ millions $ 484 $ 477
Market gold price(1) 427 408
Realized gold price(1) 428 382
Total cash costs(1)(2) 248 199
Amortization(1)(2) 78 91
Net income 51 26
Net income per share - basic and diluted 0.10 0.05
Cash inflow (outflow)
Operating activities 122 126
Capital expenditures (242) (129)
Financing activities $ 76 $ (82)
--------------------------------------------------------------------------------
(1) Per ounce weighted average.
(2) For an explanation of the use of non-GAAP performance measures, refer to
pages 18 to 21 of Management's Discussion and Analysis.
OVERVIEW OF FIRST QUARTER 2005 VERSUS
FIRST QUARTER 2004
Earnings
Earnings in first quarter 2005 were $25 million higher than first quarter 2004
as higher realized gold prices ($52 million pre-tax), lower amortization rates
($15 million pre-tax) and a lower effective income tax rate ($8 million) more
than offset lower production volumes ($11 million pre-tax) and higher total cash
costs per ounce ($55 million pre-tax).
Earnings in first quarter 2005 also benefited from $8 million lower pre-tax
interest expense, a $6 million pre-tax non-hedge derivative gain, and pre-tax
gains on sale of investments totaling $9 million, partly offset by pre-tax
currency translation losses of $4 million. Interest expense decreased by $8
million because all interest incurred in first
BARRICK FIRST QUARTER 2005 MANAGEMENT'S DISCUSSION AND ANALYSIS
7
quarter 2005 was capitalized to development projects. Following a change in
trustee for a deferred compensation plan, held via a rabbi trust, various
investments were sold resulting in realized gains of $9 million.
Special Items - Effect on earnings increase (decrease)
--------------------------------------------------------------------------------
For the three month period ended March 31
($ millions) 2005 2004
Pre-tax Post-Tax Pre-tax Post-Tax
Non-hedge derivative gains (losses) $ 6 $ 3 $(15) $(10)
Gains on investment sales 9 9 2 1
Gains on asset sales 1 1 2 1
Foreign currency translation gains
(losses) (4) (3) 2 2
Total $ 12 $ 10 $ (9) $ (6)
--------------------------------------------------------------------------------
Cash Flow
Our cash position as at December 31, 2004 decreased by $68 million to $1,330
million as at March 31, 2005. Operating cash flow decreased by $4 million in
first quarter 2005, when compared to first quarter 2004, mainly due to lower
gold sales volumes and increases in working capital at our development projects.
In first quarter 2005, higher realized gold prices were offset by the impact of
higher total cash costs per ounce. Capital expenditures increased, when compared
to first quarter 2004, by $113 million to $242 million for first quarter 2005
mainly due to the levels of construction activity at our development projects.
We received $49 million on the drawdown of cash from existing financing
facilities used to fund construction at our development projects and $28 million
of proceeds on shares issued on exercise of stock options.
CONSOLIDATED GOLD PRODUCTION AND SALES
As expected, production in first quarter 2005 was 11% lower than in first
quarter 2004 primarily as a result of lower throughput and mining lower-grade
ore at Goldstrike open pit and Pierina, partly offset by higher production at
Kalgoorlie. Ounces sold decreased by 9% compared to first quarter 2004,
consistent with the lower production levels.
Consolidated total cash costs per ounce
--------------------------------------------------------------------------------
For the three month period ended March 31 (in dollars per ounce)
2005 2004
Cost of goods sold(1) $ 282 $ 238
Currency hedge gains (22) (24)
By-product credits (26) (27)
Cash operating costs 234 187
Royalties/mining taxes 14 12
Total cash costs(2) $ 248 $ 199
--------------------------------------------------------------------------------
(1) At market currency exchange rates.
(2) For an explanation of the use of non-GAAP performance measures, refer to
pages 18 to 21 of Management's Discussion and Analysis.
As expected, total cash costs per ounce in first quarter 2005 were higher than
in first quarter 2004, primarily because of the lower production, together with
the effect of changes in average currency hedge rates on total cash costs per
ounce at our Australian mines. In the second half of 2005, production is
expected to increase and total cash costs per ounce is expected to decrease, as
Lagunas Norte and Veladero begin production.
Although variations may occur at individual mines, we expect consolidated
production and total cash costs per ounce to meet our full-year 2005 guidance
range, which was disclosed in the most recent 40-F/Annual Information Form. In
particular, we have revised the fullyear guidance for the Australia/Africa
region to reflect lower-than-expected production and slightly higher total cash
costs per ounce at Plutonic and Bulyanhulu.
We realized an average selling price of $428 per ounce for our gold production
in first quarter 2005, 12% higher than the $382 per ounce realized in first
quarter 2004, when average market gold prices were lower. In first quarter 2005,
we sold all of our production into the spot market at market prices, whereas in
first quarter 2004, we sold 0.8 million ounces under forward gold sales
contracts at lower prices than spot and 0.4 million ounces into the spot market.
We may opportunistically deliver some of our production into gold sales
contracts in the remainder of 2005, consistent with our goal of reducing our
contract position over time. The price realized for gold sales in 2005 will
depend upon spot market conditions and the selling prices of any gold sales
contracts into which we voluntarily deliver, which could be below prevailing
spot market prices.
RESULTS OF OPERATING SEGMENTS
In our Financial Statements, we present a measure of historical segment income
that reflects gold sales at average consolidated realized gold prices, less
segment operating costs and amortization of segment property, plant and
equipment. Our segments mainly include producing mines and development projects.
We monitor segment operating costs using "total cash costs per ounce(1)"
statistics that represent segment operating costs divided by ounces of gold sold
in each period. The discussion of results for producing mines focuses on this
statistic in explaining changes in segment operating costs.
NORTH AMERICA
In first quarter 2005, the region produced 9% less gold compared with first
quarter 2004 mainly because of lower throughput and the mining of lower-grade
ore, as expected, at the Goldstrike open pit and the mining of
lower-than-expected grades at Eskay Creek. Compared
(1) For an explanation of the use of non-GAAP performance measures, refer to
pages 18 to 21 of the MD&A.
BARRICK FIRST QUARTER 2005 MANAGEMENT'S DISCUSSION AND ANALYSIS
8
to first quarter 2004, total cash costs per ounce were 13% higher, mainly as a
result of the processing of lower- grade ore, lower throughput levels and lower
volumes of silver produced as a by-product. The region is expected slightly
exceed production guidance and be within the range of total cash costs per ounce
guidance for the full year.
Goldstrike, United States
Segment income increased by $14 million in first quarter 2005 from first quarter
2004 levels, mainly due to higher realized gold prices and 5% higher gold sales
volumes, partly offset by 6% higher total cash costs per ounce and 9% higher
amortization expense.
Total cash costs per ounce were 3% higher than in first quarter 2004 as a result
of 13% lower throughput levels due to harder ore encountered in first quarter
2005.
At the underground mine, total cash costs per ounce were 13% higher, mainly due
to lower ore throughput in first quarter 2005. Higher volumes of ore were mined
in first quarter 2004 from the Rodeo underground area than in first quarter
2005. Higher maintenance and freight costs, as well as higher backfill tons,
resulting in increased usage of cement and other consumables, contributed to the
higher total cash costs per ounce in first quarter 2005.
Amortization expense at Goldstrike increased by $3 million in first quarter 2005
mainly due to the effect of the 5% increase in ounces sold compared to first
quarter 2004.
The construction of a 115-megawatt natural gas-fired power plant in Nevada to
supply our Goldstrike mine is on schedule, with the plant expected to commence
operations in fourth quarter 2005. Project highlights include:
o Construction costs of $9 million were incurred in first quarter 2005.
o Delivery of the first engines is expected in early third quarter 2005.
o Overall engineering is substantially complete.
o Site preparation work was completed in January 2005 and foundation concrete
work is 76% complete.
o Construction of buildings started in March 2005 and is on schedule.
o Mechanical and electrical contracts were awarded in March 2005 and related
work mobilization will start in April 2005.
Eskay Creek, Canada
Segment income for Eskay Creek in first quarter 2005 was in line with first
quarter 2004 as 18% lower gold sales volumes and 20% lower by-product credits
were offset by higher realized gold prices and $6 million lower amortization
expense.
Compared to first quarter 2004, production decreased by 17% because of an 8%
decline in ore grade, 5% decline in tons processed and 2% decline in gold
recovery rates. Also, total cash costs per ounce were $59 per ounce compared to
a $10 recovery per ounce in first quarter 2004, as a result of a 20% decrease in
by-product credits due to lower silver content in ore processed in first quarter
2005. The decrease in by- product credits was partly offset by lower smelter
costs.
Eskay Creek's full-year guidance for production and total cash costs per ounce
has been revised to reflect a continuation of mining lower-than-expected ore
grades into second quarter 2005. We now expect to produce between 170,000 to
180,000 ounces in 2005 at an average total cash cost of $130-$140 per ounce.
Amortization expense decreased by $6 million in first quarter 2005 compared to
first quarter 2004 mainly due to the impact of the impairment charge recorded in
fourth quarter 2004 and lower gold sales volumes.
Round Mountain (50% owned), United States
Segment income increased by $5 million in first quarter 2005, mainly due to
higher realized gold prices and a $1 million decrease in amortization expense,
partly offset by 8% higher total cash costs per ounce. Revenues increased by 21%
mainly due to higher realized gold prices and an 8% increase in ounces sold.
Production and total cash costs per ounce were in line with first quarter 2004
as gold ore grades improved by 19% offsetting 5% lower throughput levels.
Amortization expense decreased by $1 million mainly because of lower
amortization rates due to the effect of reserve increases at the end of 2004.
East Archimedes, United States
In 2004 we made a decision to proceed with the East Archimedes project at the
Ruby Hill mine site in Nevada. The project remains on schedule with production
expected to commence by mid-2007. Project highlights include:
o Construction costs of $1 million were incurred in first quarter 2005.
o Permitting approvals are expected by the end of 2005.
o The mine fleet was ordered and delivery is expected in the third quarter
2005.
BARRICK FIRST QUARTER 2005 MANAGEMENT'S DISCUSSION AND ANALYSIS
9
SOUTH AMERICA
In first quarter 2005, all production was from the Pierina mine. Lagunas Norte
and Veladero are expected to begin significantly contributing to the South
America region's results in the second half of 2005. The region is expected to
achieve its production and total cash costs per ounce guidance for the full
year.
Pierina, Peru
Segment income decreased by $8 million in first quarter 2005 mainly due to 43%
lower gold sales volumes with the expected decrease in production levels in
2005, partly offset by $22 million lower amortization expense.
Compared to first quarter 2004, production was 37% lower and total cash costs
per ounce were 63% higher, due to the expected mining of lower-grade ore. Higher
maintenance and fuel costs in first quarter 2005 also contributed to the higher
total cash costs per ounce.
Amortization expense decreased by $22 million, mainly due to the 43% lower gold
sales volumes, combined with lower amortization rates due to the effect of
reserve increases at the end of 2004.
Lagunas Norte, Peru
The project is ahead of schedule with its first gold pour now expected in
mid-June 2005. In first quarter 2005, development/construction costs were
capitalized, whereas in first quarter 2004, the segment loss of $6 million
represents expensed mine development costs. Development costs were expensed
prior to when the project achieved the criteria to classify mineralization as a
reserve for US reporting purposes. Project highlights include:
o Construction of the overall project is about 95% complete, with about 4,000
workers on-site.
o Construction costs of $53 million were incurred in first quarter 2005.
o About 80% of required personnel were in place at quarter end, with hiring
expected to be completed by the end of April 2005.
o Commissioning of equipment and facilities started in early April 2005.
o Structural steel work is 90% complete with all other contracts on target for
scheduled completion.
o The construction of a permanent camp was completed.
Veladero, Argentina
In first quarter 2005, overall mine development continued to progress and the
project is on schedule to commence gold production in fourth quarter 2005.
Project highlights include:
o Construction costs of $69 million were incurred in first quarter 2005 and
construction at the project is about 80% complete.
o Placement of the valley-fill heap leach secondary liner was complete and the
primary liner is 75% complete.
o Stacking of ore at the valley-fill heap leach facility commenced in first
quarter 2005.
o Steel erection at the secondary crusher is substantially complete.
o Mainframe steel erection at the truck wash and concrete work for the
external pits has been completed.
o Process plant steel erection is about 85% complete.
o Installation of a power line from the plant to the crusher areas is 75%
complete. Pole and tower erection continues while foundation work is
complete.
o The primary crusher retainer wall is 95% complete.
o The rate of pre-stripping activities continues to improve with a focus on
increasing equipment availability.
o Drilling around the mine site began in late 2004 and we have had positive
drill results at Guanaco Zonzo target, located within 5 kilometers of
Veladero.
Pascua-Lama, Chile/Argentina
In 2004, we made a decision to proceed with the development of the Pascua-Lama
project in Chile/Argentina, contingent upon obtaining the necessary permits,
approvals and fiscal regimes. We continue to target approval of the
environmental impact assessments for the Pascua-Lama project by the end of 2005.
We expect a three-year construction phase to begin once the required permitting
is completed and other fiscal and taxation matters have been finalized, with
production targeted to commence in 2009.
In first quarter 2005, the segment loss of $1 million represents
non-capitalizable project expenditures. We also capitalized costs of $19 million
in first quarter 2005, including development costs and capitalized interest.
AUSTRALIA/AFRICA
In first quarter 2005, gold production was 1% higher than in first quarter 2004,
mainly due to a 22% increase in production at Kalgoorlie and the production
start-up at Tulawaka, partly offset by a 15% decrease in production at Plutonic
and a 9% decrease at Bulyanhulu. Total cash costs per ounce were 27% higher than
in first quarter 2004 mainly because of processing lower-grade ore at Plutonic
and 10% lower throughput at Bulyanhulu, combined with the effect of a 14%
increase in average Australian dollar currency hedge rates. The average rates of
currency hedge contracts vary each year and quarter-to-quarter, which impacts
reported total cash
BARRICK FIRST QUARTER 2005 MANAGEMENT'S DISCUSSION AND ANALYSIS
10
costs per ounce. The average exchange rate of hedge contracts in first quarter
2005 was $0.64 compared to $0.56 in first quarter 2004, which caused total cash
costs per ounce for the region to increase by 14%.
Full-year 2005 production and total cash costs per ounce guidance for the region
has been revised due to lower-than-expected production at Plutonic and
Bulyanhulu. We now expect to produce between 1,345,000 to 1,375,000 ounces in
2005 at an average total cash cost of about $265-$280 per ounce.
Kalgoorlie (50% owned), Australia
Segment income increased by $2 million in first quarter 2005, mainly due to the
effect of higher realized gold prices, partly offset by 11% higher total cash
costs per ounce. Revenues were 9% higher in first quarter 2005 mainly due to the
higher realized gold prices.
Gold production was 22% higher than in first quarter 2004 due to the combined
effect of 14% higher ore tons processed, 5% higher ore grades and 1% higher gold
recovery rates. Total cash costs per ounce were 11% higher than in first quarter
2004 primarily due to higher fuel prices and higher average exchange rates of
currency hedge contracts.
Amortization expense was in line with first quarter 2004.
Plutonic, Australia
Segment income decreased by $8 million in first quarter 2005 mainly due to 25%
lower gold sales volumes, combined with 48% higher total cash costs per ounce,
partly offset by higher realized gold prices. Revenues decreased by 17% in first
quarter 2005 as lower gold sales volumes were partly offset by higher realized
gold prices.
Compared with first quarter 2004, gold production was 15% lower, mainly due to
an 8% decrease in tons of ore processed and a 7% decrease in ore grades from the
underground Timor area. In first quarter 2004, ore tons processed were higher
because a secondary mill was operating, but this mill ceased operating in mid
2004. Total cash costs per ounce were 48% higher than in first quarter 2004,
mainly due to the combined effect of lower gold production levels, higher fuel
and maintenance costs and higher average exchange rates of currency hedge
contracts.
Amortization decreased by $1 million mainly due to the lower gold sales volumes.
Plutonic's full-year 2005 guidance has been revised to reflect
lower-than-expected production and higher-than-expected total cash costs per
ounce due to lower underground grades, the discontinuation of open-pit mining
and higher labor costs due to increased competition for skilled labor in
Australia. A decision was made to discontinue open-pit mining at the end of
second quarter 2005 due to contractor price increases caused by the tight labor
market in Australia, resulting in a 40,000-ounce reduction of the full-year
production guidance. We now expect to produce between 280,000 to 285,000 ounces
in 2005 at an average total cash cost of $250-$260 per ounce.
Bulyanhulu, Tanzania
Segment loss was $4 million higher in first quarter 2005 mainly due to 29%
higher total cash costs per ounce and a $3 million increase in amortization
expense, partly offset by 15% higher gold sales volumes and higher realized gold
prices. Revenues were 32% higher in first quarter 2005 reflecting the higher
gold sales volumes and higher realized gold prices.
Compared with first quarter 2004, gold production was 9% lower, mainly due to a
10% decrease in the tons of ore processed. Total cash costs per ounce were 29%
higher than in first quarter 2004, mainly due to the lower production levels, as
well as higher contractor costs and freight charges.
Amortization increased by $3 million due to the higher gold sales volumes.
Bulyanhulu's full-year 2005 guidance has been revised to reflect
lower-than-expected production and higher-than-expected total cash costs per
ounce due to lower throughput in 2005 as a result of lower equipment
availability, mining schedule changes, ongoing power supply interruptions and a
mechanical failure in the hoist gearbox in April 2005. We now expect to produce
between 320,000 to 325,000 ounces in 2005 at an average total cash cost of
$330-$340 per ounce.
Tulawaka (70% owned), Tanzania
Tulawaka started production in mid-March 2005. Although 5,000 ounces were
produced in the quarter, none of the ounces were sold.
Continuous operation of the process plant commenced in early March 2005, while
construction and commissioning were being completed. By the end of first quarter
2005, all construction was complete and all contractors demobilized including
the EPCM contractor. All performance tests for the process plant were complete
and signed off by quarter end. During the test phase, the plant performance was
in excess of design but was treating soft ore.
BARRICK FIRST QUARTER 2005 MANAGEMENT'S DISCUSSION AND ANALYSIS
11
Cowal, Australia
The project remains on schedule for production to commence in first quarter
2006. In first quarter 2005, the segment loss of $1 million represents non-
capitalizable project expenditures. Project highlights include:
o Capital expenditures incurred were $44 million.
o Engineering is 75% complete.
o Detailed excavation for the primary crusher pit was completed.
o Mine development earthworks is well underway with the commencement of the
key trench for the south tailings storage facility.
o With the installation of pit dewatering pumps, pumping of pit water to the
northern tailings cell started in March 2005.
o Pre-strip activity commenced in early second quarter 2005.
Kabanga (50% owned), Tanzania
In April 2005, we entered into a joint-venture agreement with Falconbridge
Limited ("Falconbridge") with respect to the Kabanga nickel deposit and related
concessions in Tanzania. Falconbridge has acquired a 50% indirect interest in
respect of the Kabanga project for $15 million and a funding commitment.
Falconbridge will be the operator of the joint venture. The Kabanga project has
a current estimated inferred resource of 26.4 million tonnes grading 2.6%
nickel(1).
Over the next several years, Falconbridge will fund and conduct a further
$50-million work plan that will include additional exploration and infill
drilling, and technical work to update the resource model for Kabanga and bring
the project towards feasibility. It will establish a dedicated team in Tanzania
to coordinate and advance the work plan. Upon conclusion of the work plan,
Falconbridge will fund the next $95 million of any project development
expenditures to advance the Kabanga project. Thereafter, Falconbridge and
Barrick will share equally in joint-venture revenues and expenditures.
Buzwagi, Tanzania
Buzwagi is a late-stage exploration project located about 80 kilometers south of
the Bulyanhulu mine in the Lake Victoria district in Tanzania. A 50,000-metre
drill program commenced in early January to test for mineralization beyond the
currently defined resource. Initial results are positive and confirm the
potential for the project. Engineering studies are also ongoing.
(1) Resource calculations were prepared by employees of Barrick under the
supervision of Alexander J. Davidson, P. Geo., Executive Vice President,
Exploration and Corporate Development of Barrick.
BARRICK FIRST QUARTER 2005 MANAGEMENT'S DISCUSSION AND ANALYSIS
12
OTHER COSTS AND EXPENSES
Exploration, Development and Business Development Expense
------------------------------------------------------------------------------------------------------------------------------------
For the three month period ended March 31
($ millions) 2005 2004 Comments
Exploration
North America $ 7 $ 6
Australia/Africa 12 8 Higher expenditures at Buzwagi project in first quarter 2005.
South America 5 4
Russia/Central Asia 1 1
Other countries 1 -
26 19
Mine development Development costs are expensed until mineralization is classified as proven and
probable reserves for US reporting purposes.
Veladero 1 -
Lagunas Norte - 6 We expensed development costs until May 1, 2004, which is the date when the
project achieved the criteria to classify mineralization as a reserve for US
reporting purposes.
1 6
Non-capitalizable project
expenditures
Cowal 1 -
Pascua-Lama 1 -
2 -
Business development/other 2 4
$ 31 $ 29
------------------------------------------------------------------------------------------------------------------------------------
Amortization, Administration and Interest Expense
------------------------------------------------------------------------------------------------------------------------------------
For the three month period ended March 31
($ millions, except per ounce data and percentages)
2005 2004 % Change Comments
Amortization
Absolute amount $ 93 $ 120 (23%) Decrease mainly due to 9% lower sales volumes and 14% lower amortization per
ounce.
Per ounce (dollars)(1) 78 91 (14%) Decrease following reserve increases at some mines at the
end of 2004, and the impact of the Eskay Creek impairment
charge recorded in fourth quarter 2004.
Administration 17 16 6% Higher regulatory compliance costs in 2005. Expense guidance of $90 million for
full-year 2005 has been reduced to $75 million following the deferral of the
implementation of the new Share-Based Payments (Stock Options) standard that
will require all stock options to be expensed.
Interest costs
Incurred 28 12 133% Increase due to impact of $750 million debentures issued in fourth quarter 2004
and drawdown of $222 million on the $250 million Veladero financing.
Capitalized 28 4 600% Higher amounts capitalized to Lagunas Norte, Veladero and Cowal development
projects as capitalized construction costs were about $600 million higher in
first quarter 2005. Capitalization at Pascua-Lama began on July 1, 2004.
Expensed - 8 N/A
------------------------------------------------------------------------------------------------------------------------------------
(1) For an explanation of the use of non-GAAP performance measures, refer to pages 18 to 21 of Management's Discussion and Analysis.
Other (Income) Expense
------------------------------------------------------------------------------------------------------------------------------------
For the three month period ended March 31
($ millions) 2005 2004 Comments
Non-hedge derivative $ (6) $ 15 Gains in first quarter 2005 mainly relate to non-hedge fuel contracts. Losses
(gains)/losses in first quarter 2004 mainly relate to non-hedge silver contracts.
Gains on asset/investment sales (10) (4) Gains recorded in first quarter 2005 mainly relate to the sale of investments,
held in a rabbi trust for a deferred compensation plan, as a result of a change
of the plan trustee.
Environmental remediation costs 5 8
Currency translation 4 (2)
(gains)/losses
Other items 2 (1)
$ (5) $ 16
BARRICK FIRST QUARTER 2005 MANAGEMENT'S DISCUSSION AND ANALYSIS
13
Income Taxes
Income tax expense of $14 million in first quarter 2005 was in line with first
quarter 2004. Our underlying expected effective tax rate for 2005 is 22%, which
is lower than the effective tax rate of 28% used in first quarter 2004. The
decrease is primarily due to a change in the geographic mix of gold production
in 2005, and therefore the mix of taxable income in different tax jurisdictions.
The expected rate for 2005 is based on a market gold price assumption of $425
per ounce. If actual average market gold prices vary from this assumption, our
actual effective tax rate will also vary. The expected underlying tax rate
excludes the effect of gains and losses on non-hedge derivatives; the effect of
delivering into forward gold sales contracts at prices below prevailing market
prices; and any release of deferred tax valuation allowances.
CASH FLOW
[CHART OMITTED]
Operating Activities
Operating cash flow decreased from first quarter 2004 by $4 million to $122
million in first quarter 2005. The key factors that contributed to the year over
year decrease are summarized in the table below.
Key factors affecting operating cash flow
------------------------------------------------------------------------------------------------------------------------------------
For the three month period ended March 31 Impact on
($ millions, except per comparative
ounce data) operating
2005 2004 cash flow Comments
Gold sales volumes 1,129 1,247 $ (21)
('000s oz)
Realized gold prices $ 428 $ 382 52
($/oz)
Total cash costs ($/oz)(1) 248 199 (55)
Sub-total (24) Refer to pages 8 and 12 for explanations of changes in gold
production and sales.
Other inflows (outflows)
Income tax payments (12) (29) 17 Refunds related to prior periods received in first quarter
2005 and lower required income tax payments.
Increase in inventories (20) (5) (15) Increases in inventory primarily reflect supplies required to
support construction at development projects.
Increase in taxes (17) (6) (11) Tax recoverable increased in first quarter 2005 for goods and
services tax on supplies and materials used in construction at
development projects. Amounts are expected to be recovered
after production begins. A $33 million recovery of a portion
of taxes recoverable at March 31, 2005 is expected in second
quarter 2005.
Other non-cash working 29 3 26 Timing of supplier payments.
capital
Interest expense - 8 8 Increase in amounts capitalized to development projects in
first quarter 2005.
Effect of other factors (5)
Total $ (4)
------------------------------------------------------------------------------------------------------------------------------------
(1) Total cash costs per ounce is a non-GAAP performance measure. For more information, see pages 18 to 21.
BARRICK FIRST QUARTER 2005 MANAGEMENT'S DISCUSSION AND ANALYSIS
14
Investing Activities
------------------------------------------------------------------------------------------------------------------------------------
For the three month period
ended March 31
($ millions) 2005 2004 $ Change Comments
Growth capital expenditures(1)
Veladero $69 $64 $5 Construction activity started in first quarter 2004
with similar expenditure levels in first quarter 2005.
Lagunas Norte 53 6 47 Construction activity started in second quarter 2004.
Cowal 44 20 24 Construction activity started in second quarter 2004.
Principal expenditure in first quarter 2004 was a $15
million payment under a property acquisition agreement.
Tulawaka 5 3 2 Construction activity started in first quarter 2004.
Production started in March 2005.
Pascua-Lama 19 4 15 Similar development expenditures in first quarter 2005.
Capitalization of interest in first quarter 2005.
Nevada Power Plant 9 - 9 Construction activity started in fourth quarter 2004.
East Archimedes 1 - 1 Construction activity started in first quarter 2005.
Sub-total 200 97 103
Sustaining capital expenditures
North America 15 14 1
Australia/Africa 23 15 8 Higher expenditures on underground development and mining
equipment at Bulyanhulu in first quarter 2005.
South America 3 2 1
Other 1 1 -
Sub-total 42 32 10
Total $242 $129 $113
------------------------------------------------------------------------------------------------------------------------------------
(1) Includes construction costs and capitalized interest.
Financing Activities
The most significant financing cash flows in first quarter 2005 were $49 million
of drawdowns under the lease facility for Lagunas Norte and the Veladero project
financing, and $28 million received on the exercise of employee stock options.
We also made scheduled payments under long-term debt obligations totaling $1
million in first quarter 2005.
BALANCE SHEET
SHAREHOLDERS' EQUITY
Outstanding Share Data
As at April 14, 2005, 534 million of our common shares, one special voting share
and 1.4 million Exchangeable Shares not owned by Barrick (exchangeable into 0.7
million of our common shares) were issued and outstanding. As at April 14, 2005,
options to purchase 23 million common shares were outstanding under our option
plans, as well as options to purchase one million common shares under certain
option plans inherited by us in connection with prior acquisitions.
Comprehensive Income
Comprehensive income consists of net income or loss, together with certain other
economic gains and losses that collectively are described as "other
comprehensive income", and excluded from the income statement.
In first quarter 2005, the other comprehensive loss of $9 million mainly
included gain reclassification adjustments totaling $40 million for gains of $9
million on the sale of investments and gains of $31 million on hedge contracts
designated for 2005 that were transferred to earnings in first quarter 2005;
partly offset by gains of $21 million on hedge contracts designated for future
periods caused primarily by changes in currency exchange rates, interest rates
and fuel prices.
QUARTERLY INFORMATION ($ millions, except where indicated)
----------------------------------------------------------------------------------------------------------------------
2005 2004 2003
---- ---------------------------------- --------------------
Q1 Q4 Q3 Q2 Q1 Q4 Q3 Q2
Gold sales $ 484 $ 501 $ 500 $454 $477 $536 $549 $491
Net income 51 156 32 34 26 77 35 59
Net income per share - basic (dollars) 0.10 0.30 0.06 0.06 0.05 0.14 0.07 0.11
----------------------------------------------------------------------------------------------------------------------
Our financial results for the last eight quarters reflect the following general
trends: rising spot gold prices with a corresponding rise in prices realized
from gold sales; and declining gold production, sales volumes, and rising total
cash costs per ounce as a number of our mines process lower-grade ore and are
subject to rising input costs due to inflationary pressures. The trend of lower
production and higher total cash costs per ounce is expected to reverse in the
second half of 2005 as our lower cost Lagunas Norte and Veladero mines begin
production. Net income in each quarter also reflects the timing of various
special items. The items affecting first quarter 2005 and first quarter 2004 are
presented in a table on page 8.
BARRICK FIRST QUARTER 2005 MANAGEMENT'S DISCUSSION AND ANALYSIS
15
OFF-BALANCE SHEET ARRANGEMENTS
The MD&A included in our 2004 Annual Report contained a detailed discussion of
off-balance sheet arrangements. In this interim MD&A, we have included a brief
discussion and an update to reflect any significant changes in off-balance
sheet arrangements.
Gold and Silver Sales Contracts
We have historically used gold and silver sales contracts as a means of selling
a portion of our gold and silver production. The contracting parties are bullion
banks whose business includes entering into contracts to purchase gold or silver
from mining companies. All our gold and silver sales contracts (including
Corporate Gold Sales Contracts, Pascua-Lama Gold Sales Contracts and Floating
Spot-Price Gold Sales Contracts) retain all the benefits of our Master Trading
Agreements ("MTAs") and are not subject to margining, downgrade or unilateral
and discretionary "right to break" provisions. Furthermore, as part of our MTAs,
Pascua-Lama Gold Sales Contracts are not subject to any provisions regarding any
final go-ahead decisions with Pascua-Lama construction, or any possible delay
or change in the Pascua-Lama project. Barrick guarantees the performance of all
its gold and silver sales contracts.
Corporate Gold Sales and Floating Spot-Price Gold Sales Contracts
We had fixed-price Corporate Gold Sales Contracts, which at March 31, 2005
totaled 6.8 million ounces. This represents approximately one year of expected
future gold production and approximately 10% of our proven and probable
reserves, excluding Pascua-Lama. We reduced our fixed-price Corporate Gold Sales
contracts by 0.2 million ounces in first quarter 2005 by converting 0.2 million
ounces of fixed-price contracts to floating spot-price contracts.
At March 31, 2005, we had floating spot-price gold sales contracts under which
we are committed to deliver 0.7 million ounces of gold over the next ten years
at spot prices, less an average fixed-price adjustment of $72 per ounce.
Key Aspects of Corporate Gold Sales Contracts
(at March 31, 2005)
Current termination date of contracts. 2014 in most cases.
Average estimated realizable price in 2014 $433/oz.(1)
Mark-to-market value at March 31, 2005.
Corporate Gold Sales Contracts $(876) million.(2)
Floating Spot-Price Gold Sales Contracts. $(48) million.(2)
(1) Approximate estimated value based on current market US dollar interest rates
and an average lease rate assumption of 1%. Accelerating gold deliveries would
likely lead to reduced contango that would otherwise have built up over time.
Barrick may choose to settle any gold sales contract in advance of this
termination date at any time, at its discretion. Historically, delivery has
occurred in advance of the contractual termination date.
(2) At a spot gold price of $427 per ounce, and market interest rates.
We have an obligation to deliver gold by the termination date, currently 2014 in
most cases. However, because we typically fix the price of gold under our gold
sales contracts to a date that is earlier than the termination date of the
contract (referred to as the "interim price-setting date"), the actual realized
price on the contract termination date depends upon the actual gold market
forward premium ("contango") between the interim price-setting date and the
termination date. The price in the table above is not necessarily representative
of the prices that may be realized each quarter for actual deliveries into gold
sales contracts, in particular if we choose to settle any gold sales contract in
advance of the termination date, which we have the right to do at our
discretion.
Pascua-Lama Gold Sales Contracts
In anticipation of building Pascua-Lama and in support of any related financing,
we have 6.5 million ounces of existing fixed-price gold sales contracts
specifically allocated to Pascua-Lama (the "Pascua-Lama Gold Sales Contracts").
The allocation of these contracts will help reduce gold price risk at
Pascua-Lama and is expected to help secure the financing for its construction.
We expect the allocation of these contracts to eliminate any requirement by
lenders to add any incremental gold sales contracts in the future to support the
financing of Pascua-Lama.
Key Aspects of Pascua-Lama Gold Sales Contracts
(at March 31, 2005)
Expected delivery dates.(1) 2009-2017, the term of
the expected financing.
Future estimated average realizable price. $375/oz.(2)
Mark-to-market value at March 31, 2005. $(931) million.(3)
(1) The contract termination dates are 2014-2017 in most cases, but we expect to
deliver Pascua-Lama production against these contracts starting in 2009.
(2) Upon delivery of production from 2009-2017, the term of expected financing.
Approximate estimated value based on current market contango.
(3) At a spot gold price of $427 per ounce and market interest rates.
BARRICK FIRST QUARTER 2005 MANAGEMENT'S DISCUSSION AND ANALYSIS
16
These contracts represent just over 35% of the 17.6 million ounces of gold
reserves at Pascua-Lama, and do not impact any of the 643 million ounces of
silver contained in gold reserves.
Fair Value of Derivative Positions
-------------------------------------------------------------------------------------------------------
At Mar. 31, At Dec. 31,
Unrealized Gain/(Loss) 2005 2004
Corporate Gold Sales Contracts (1) $(924) $(975)
Pascua-Lama Gold Sales Contracts (931) (966)
Silver Sales Contracts (1) (33) (26;
Foreign currency contracts 260 298
Interest and lease rate contracts 37 45
Fuel contracts 36 4
$(1,555) $(1,620)
-------------------------------------------------------------------------------------------------------
(1) Includes floating spot-price contracts.
Contractual Obligations and Commitments
Purchase obligations for capital expenditures include only those items where
binding commitments have been entered into. They do not include the full amount
of future capital expenditures required to complete construction of the
Company's development projects, because commitments have yet to be made for a
portion of these estimated future capital costs. Significant changes to the
December 31, 2004 contractual obligations and commitments include an additional
$150 million of capital commitments mainly at the development projects and an
additional $120 million of purchase obligations for supplies and consumables and
power contracts that the Company expects to incur mainly in 2005 and 2006.
In first quarter 2005, we have drawn an additional $49 million of long-term debt
on our Veladero project financing facilities and lease facility for Lagunas
Norte that will result in additional repayments of about $8-10 million each year
for 2006 to 2009 and the remainder will be repaid in 2010 and thereafter.
Capital expenditures not yet committed
We expect to incur about $2.3 billion in capital to complete the development of
our present projects over the next five years (Veladero, Lagunas Norte, Cowal,
Pascua-Lama and East Archimedes) and the Nevada Power Plant. A total of about
$0.3 billion of these amounts had been committed at the end of first quarter
2005, with the remainder not yet committed.
CRITICAL ACCOUNTING POLICIES AND 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.
In this MD&A, we have not repeated information provided in our 2004 annual MD&A.
We have provided an update for any changes or expected changes in accounting
policies and critical accounting estimates that were not included in our 2004
annual MD&A.
Accounting Policy Changes
There were no changes in accounting policies in the first quarter of 2005 that
significantly impacted our Financial Statements.
EITF Issue No. 04-6, Accounting for Stripping Costs Incurred during Production
in the Mining Industry ("EITF 04-6")
In March 2005, the FASB approved EITF 04-6. On adoption of EITF 04-6, we will be
required to change our accounting policy for stripping costs. Historically,
stripping costs have been capitalized on the balance sheet under Capitalized
Mining Costs and attributed to earnings using a stripping ratio that results in
a smoothing of these costs over the life of the mine. Under EITF 04-6, stripping
costs incurred in the production phase will be capitalized as a component of
inventory cost each period. This new method of accounting under EITF 04-6 will
likely lead to greater period-to-period volatility in production costs. The
mines most significantly affected will be Goldstrike open pit, Pierina and
Kalgoorlie, as well as our Veladero and Lagunas Norte development projects after
they begin production in 2005. Adoption of EITF 04-6 is required by first
quarter 2006, but earlier adoption is permitted. On adoption, the Company may
choose to record a cumulative effect adjustment in earnings of the period of
adoption, or alternatively retroactively restate all prior periods for the
effect of the change. We are presently evaluating the impact of EITF 04-6, and
we may early adopt EITF 04-6 during 2005.
FAS 123R, Accounting for Stock-Based Compensation ("FAS 123R")
In April 2005, the SEC announced the deferral of the effective date of FAS 123R.
FAS 123R will now be effective by the first quarter of fiscal 2006 for Barrick.
We expect to complete preparations for the adoption of FAS 123R in 2005, ready
for adoption in first quarter 2006. Consequently, we have revised our guidance
for administration expense in 2005 down from $90 million to $75 million.
BARRICK FIRST QUARTER 2005 MANAGEMENT'S DISCUSSION AND ANALYSIS
17
Critical Accounting Estimates
Certain accounting estimates have been identified as being "critical" to the
presentation of our financial condition and results of operations because they
require management to make particularly subjective and/or complex judgments
about matters that are inherently uncertain; and there is a reasonable
likelihood that materially different amounts could be reported under different
conditions or using different assumptions and estimates. Critical accounting
estimates include:
o Reserve estimates used to measure amortization of property, plant and
equipment;
o Stripping ratios used to measure amortization of capitalized mining costs;
o Impairment assessments of long-lived assets;
o The fair value of asset retirement obligations; and
o The measurement of deferred income tax assets and liabilities and
assessments of the amounts of valuation allowances recorded.
Reserve Estimates Used to Measure Amortization of Property, Plant and Equipment
We record amortization expense based on the estimated useful economic lives of
long-lived assets. Changes in reserves, effective December 31, 2004, caused
amortization during first quarter 2005 to decrease by $3 million for the mines
listed below, which had reserve estimate changes (other than production) greater
than 10%.
Impact of Historic Changes in Reserve Estimates on Amortization
--------------------------------------------------------------------------------------------------------------
($ millions, except As at December 31, 2004 For the three month period ended
reserves in millions of contained oz) Reserves increase (decrease)(1) March 31, 2005 Amortization
increase (decrease)
Gold strike
Underground 0.1 $-
Open pit 1.8 (2)
Plutonic 0.2
Eskay Creek (0.1) 1
Kalgoorlie (0.2)
Pierina 0.3 (2)
--------------------------------------------------------------------------------------------------------------
(1) Each year we update our reserve estimates as at the end of the year as part
of our normal business cycle. Reserve changes, shown in millions of contained
ounces, affect amortization expense on a prospective basis.
Stripping Ratios Used to Measure Amortization of Capitalized Mining Costs
Effective January 1, 2005, we increased the stripping ratios for Goldstrike -
Open Pit and Pierina to reflect updated reserves at the end of 2004. The amounts
presented represent the estimated impact on quarterly amortization caused by
these changes, based on production levels and sales volumes in the first
quarter.
Impact of Historic Changes in Stripping Ratios
---------------------------------------------------------------------------------------------
($ millions, except ratios) Amortization
increase
Stripping Ratio used in (decrease)(1)
2005 2004 2005
Goldstrike open pit 127:1 109:1 $ (3)
Pierina 86:1 60:1 $1
---------------------------------------------------------------------------------------------
(1) Impact of the year on year change in the stripping ratio used to amortize
capitalized mining costs. Amortization of capitalized mining costs is recorded
as a component of the cost of inventory, and consequently impacts cost of sales
in the income statement.
Impairment Assessments of Investments
Each reporting period we review all investments whose fair value at the end of
the period is below cost to determine whether an other-than-temporary impairment
has occurred. We consider both positive and negative evidence in order to reach
a conclusion on whether any impairment is other-than-temporary, and if
necessary, record any losses that are other-than-temporary in earnings within
other (income)/expense. Changes in the values of investments are caused by
market factors beyond our control and could be significant. Consequently, the
amount of any impairment charge recorded could materially impact earnings in a
particular reporting period. In first quarter 2005, we reviewed two investments
for impairment purposes and concluded that the impairment in value was not
other-than-temporary, as disclosed in note 11 to the interim financial
statements. If a further or prolonged deterioration in value of these
investments occurs, we may reach a different conclusion that could lead to the
recognition of an impairment charge in earnings of a future period.
NON-GAAP PERFORMANCE MEASURES
--------------------------------------------------------------------------
For the three month period ended March 31
($millions, except per ounce information) 2005 2004
Total cash costs - per US GAAP(1) $ 283 $250
Accretion expense and reclamation costs at
the operating mines (3) (2)
Total cash costs - per Gold Institute
Production Cost Standard $280 $248
Ounces sold (thousands) 1,129 1,247
Total cash costs per ounce - per US GAAP
(dollars) (2) $ 251 $200
Total cash costs per ounce - per Gold Institute
Production Cost Standard (dollars)(2) $ 248 $199
--------------------------------------------------------------------------
(1) Equal to cost of sales and other operating expenses less accretion expense
and reclamation costs at non-operating mines.
(2) Per ounce weighted average.
We have included total cash costs per ounce data because these statistics are a
key performance measure that management uses to monitor performance. We use
these statistics to assess how well our producing mines
BARRICK FIRST QUARTER 2005 MANAGEMENT'S DISCUSSION AND ANALYSIS
18
are performing compared to plan and also to assess the overall effectiveness and
efficiency of our mining operations. We believe that the inclusion of these
statistics in MD&A helps an investor to assess performance "through the eyes of
management". We understand that certain investors also use these statistics to
assess our performance. The inclusion of total cash costs per ounce statistics
enables investors to better understand year-on-year changes in production costs,
which in turn affect profitability and the ability to generate operating cash
flow for use in investing and other activities. We report total cash costs per
ounce data calculated in accordance with The Gold Institute Production Cost
Standard (the "Standard"). Adoption of the Standard is voluntary, but we
understand that most senior gold producers follow the Standard when reporting
cash cost per ounce data. The data does not have a meaning prescribed by US GAAP
and therefore amounts presented may not be comparable to data presented by gold
producers who do not follow the Standard. Total cash costs per ounce are derived
from amounts included in the Statements of Income and mine site operating costs
such as mining, processing, administration, royalties and production taxes, but
exclude amortization, reclamation costs, financing costs, and capital,
development and exploration costs. A US GAAP measure of costs per ounce has also
been presented as required by securities regulations that govern non-GAAP
performance measures. Commentary within this Management's Discussion and
Analysis is focused on the "total cash costs" measure as defined by the
Standard.
The data is intended to provide additional information and should not be
considered in isolation or as a substitute for measures of performance prepared
in accordance with GAAP. The measures are not necessarily indicative of
operating profit or cash flow from operations as determined under GAAP. As can
be seen from the tables on pages 20 to 21 reconciling the GAAP and non-GAAP
measures, the GAAP and non-GAAP measures are not significantly different.
BARRICK FIRST QUARTER 2005 MANAGEMENT'S DISCUSSION AND ANALYSIS
19
Reconciliation of Total Cash Costs Per Ounce to Financial Statements
----------------------------------------------------------------------------------------------------------------------------
Goldstrike - Goldstrike -
Open Pit Underground Eskay Creek(2) Round Mountain
----------------------------------------------------------------------------------------------------------------------------
For the three month period ended March 31 2005 2004 2005 2004 2005 2004 2005 2004
----------------------------------------------------------------------------------------------------------------------------
Total cash production costs-
per US GAAP(1) $84.2 $77.1 $41.4 $35.7 $3.4 $(1.1) $ 21.1 $18.2
Accretion expense and
reclamation costs at operating mines (0.6) (0.6) (0.1) (0.1) (0.2) (0.1) (0.4) (0.4)
Total cash production costs
per Gold Institute Production Cost Standard $83.6 $76.5 $41.3 $35.6 $ 3.2 $(1.2) $ 20.7 $17.8
Ounces sold (thousands) 304 287 144 141 54 66 93 86
Total cash costs per ounce
sold per US GAAP (dollars)(3) $ 278 $ 269 $ 287 $ 254 $ 62 $(18) $ 228 $212
Total cash costs per ounce
sold - per Gold Institute Production Cost
Standard (dollars)(4) $ 276 $ 267 $ 287 $ 253 $ 59 $(19) $ 223 $207
----------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------
Hemlo Holt-McDermott Marigold Total North
America
----------------------------------------------------------------------------------------------------------------------------
For the three month period ended March 31 2005 2004 2005 2004 2005 2004 2005 2004
----------------------------------------------------------------------------------------------------------------------------
Total cash production costs-
per US GAAP(1) $17.2 $14.2 $ - $ 5.2 $ 3.2 $2.1 $170.5 $151.4
Accretion expense and
reclamation costs at operating mines - - - - - - (1.3) (1.2)
Total cash production costs
per Gold Institute Production Cost Standard $17.2 $14.2 - $ 5.2 $ 3.2 $ 21 $169.2 $150.2
Ounces sold (thousands) 66 62 - 22 14 8 675 672
Total cash costs per ounce
sold per US GAAP (dollars)(3) $ 260 $ 227 - $ 238 $ 226 $248 $ 253 $ 225
Total cash costs per ounce
sold - per Gold Institute Production Cost
Standard (dollars)(4) $ 260 $ 227 $ - $ 238 $ 226 $248 $ 251 $ 223
----------------------------------------------------------------------------------------------------------------------------
Pierina Total South Plutonic Darlot
America
----------------------------------------------------------------------------------------------------------------------------
For the three month period ended March 31 2005 2004 2005 2004 2005 2004 2005 2004
----------------------------------------------------------------------------------------------------------------------------
Total cash production costs-
per US GAAP(1) $18.6 $19.4 $18.6 $19.4 $19.4 $17.3 $ 6.4 $ 7.7
Accretion expense and
reclamation costs at operating mines (1.3) (0.8) (1.3) (0.8) - - - -
Total cash production costs
per Gold Institute Production Cost Standard $17.3 $18.6 $17.3 $18.6 $19.4 $17.3 $ 6.4 $ 7.7
Ounces sold (thousands) 129 227 129 227 67 89 26 37
Total cash costs per ounce
sold per US GAAP (dollars)(3) $ 144 $ 86 $ 144 $ 86 $ 287 $194 $ 249 $ 208
Total cash costs per ounce
sold- per Gold Institute Production Cost
Standard (dollars)(4) $ 134 $ 82 $ 134 $ 82 $ 287 $194 $ 249 $ 208
----------------------------------------------------------------------------------------------------------------------------
(1) Represents cost of sales and other operating costs (excluding amortization
and accretion expense and reclamation costs for non-operating mines).
(2) Eskay Creek's total cash costs in three month period ended March 31, 2005
are impacted by higher silver prices which the Company treats as a
by-product. Total cash costs on a co-product basis for the three month
period ended March 31 are: 2005 - gold $234 per ounce, silver $3.80 per
ounce (2004 - gold $186 per ounce, silver $3.49 per ounce).
(3) Represents total cash production costs per US GAAP divided by ounces sold.
(4) Represents total cash production costs per Gold Institute Production Cost
Standard divided by ounces sold.
BARRICK FIRST QUARTER 2005 MANAGEMENT'S DISCUSSION AND ANALYSIS
20
----------------------------------------------------------------------------------------------------------------------------
Lawlers Kalgoorlie Bulyanhulu Total
Australia/Africa
----------------------------------------------------------------------------------------------------------------------------
For the three month period ended March 31 2005 2004 2005 2004 2005 2004 2005 2004
----------------------------------------------------------------------------------------------------------------------------
Total cash production costs -
per US GAAP(1) $ 8.9 $ 7.1 $28.6 $26.3 $30.6 $20.7 $ 93.9 $79.1
Accretion expense and
reclamation costs at operating mines (0.1) - (0.2) (0.2) (0.1) (0.1) (0.4) (0.3)
----------------------------------------------------------------------------------------------------------------------------
Total cash production
costs per Gold Institute Production Cost Standard $ 8.8 $ 7.1 $28.4 $26.1 $30.5 $20.6 $ 93.5 $78.8
----------------------------------------------------------------------------------------------------------------------------
Ounces sold (thousands) 31 30 115 117 86 75 325 348
Total cash costs per ounce
sold per US GAAP (dollars)(2) $ 289 $ 236 $ 248 $225 $ 357 $ 277 $ 289 $ 227
----------------------------------------------------------------------------------------------------------------------------
Total cash costs per ounce
sold - per Gold Institute Production
Cost Standard (dollars)(3) $ 287 $ 236 $ 247 $223 $ 356 $ 276 $ 288 $ 226
----------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------
(1) Represents cost of sales and other operating costs (excluding amortization
and accretion expense and reclamation costs for non-operating mines).
(2) Represents total cash production costs per US GAAP divided by ounces sold.
(3) Represents total cash production costs per Gold Institute Production Cost
Standard divided by ounces sold.
Reconciliation of Amortization Costs per Ounce to Financial Statements
--------------------------------------------------------------------------------------
For the three month period ended March 31 2005 2004
--------------------------------------------------------------------------------------
Amortization expense per consolidated financial statements $ 93 $ 120
Amortization expense recorded on property, plant and equipment
not at operating mine sites (4) (6)
--------------------------------------------------------------------------------------
Amortization expense for per ounce calculation $ 89 $ 114
--------------------------------------------------------------------------------------
Ounces sold (thousands) 1,129 $ 1,247
--------------------------------------------------------------------------------------
Amortization per ounce (dollars) $ 78 $ 91
--------------------------------------------------------------------------------------
BARRICK FIRST QUARTER 2005 MANAGEMENT'S DISCUSSION AND ANALYSIS
21
Consolidated Statements of Income
Barrick Gold Corporation Three months ended
(in millions of United States dollars, March 31,
except per share data) (Unaudited) ------------------
2005 2004
------------------
Gold sales (notes 3 and 4) $484 $ 477
------------------------------------------------------------------------
Costs and expenses
Cost of sales(1) (note 5) 291 254
Amortization (note 3) 93 120
Administration 17 16
Exploration, development and business development 31 29
Other (income) expense (note 6) (5) 16
------------------------------------------------------------------------
57 42
------------------------------------------------------------------------
Interest income 8 6
Interest expense (note 14) - (8)
------------------------------------------------------------------------
Income before income taxes and other items 65 40
Income tax expense (note 7) 14 14
------------------------------------------------------------------------
Net income for the period $ 51 $ 26
------------------------------------------------------------------------
Earnings per share data (note 8):
Net income
Basic and diluted 0.10 $0.05
------------------------------------------------------------------------
(1) Exclusive of amortization (note 5).
The accompanying notes are an integral part of these unaudited interim
consolidated financial statements.
BARRICK FIRST QUARTER 2005 FINANCIAL STATEMENTS
22
Consolidated Statements of Cash Flows
Barrick Gold Corporation Three months ended
(in millions of United States dollars) (Unaudited) March 31,
------------------
2005 2004
------------------------------------------------------------------------------
OPERATING ACTIVITIES
Net income for the period $ 51 $ 26
Amortization 93 120
Deferred income taxes (note 7) 3 (4)
Gains on sale of assets (note 6) (1) (2)
Gains on sale of investments (note 6) (9) (2)
Other items (note 9) (15) (12)
------------------------------------------------------------------------------
Net cash provided by operating activities 122 126
------------------------------------------------------------------------------
INVESTING ACTIVITIES
Property, plant and equipment
Capital expenditures (note 3) (242) (129)
Sales proceeds 5 2
Investments
Purchases (note 11) (28) (41)
Sales proceeds - 4
------------------------------------------------------------------------------
Net cash used in investing activities (265) (164)
------------------------------------------------------------------------------
FINANCING ACTIVITIES
Capital stock
Proceeds on exercise of stock options 28 13
Repurchased for cash - (95)
Long-term debt
Proceeds (note 14a) 49 -
Repayments (1) -
------------------------------------------------------------------------------
Net cash provided by (used in) financing activities 76 (82)
------------------------------------------------------------------------------
Effect of exchange rate changes on cash and equivalents (1) -
Net decrease in cash and equivalents (67) (120)
Cash and equivalents at beginning of period 1,398 970
------------------------------------------------------------------------------
Cash and equivalents at end of period $1,330 $ 850
------------------------------------------------------------------------------
The accompanying notes are an integral part of these unaudited interim
consolidated financial statements.
BARRICK FIRST QUARTER 2005 FINANCIAL STATEMENTS
23
Consolidated Balance Sheets
Barrick Gold Corporation
(in millions of United States dollars) (Unaudited) At Mar. 31 At Dec. 31
-----------------------
2005 2004
--------------------------------------------------------------------------------
ASSETS
Current assets
Cash and equivalents $ 1,330 $1,398
Accounts receivable 52 58
Inventories (note 10) 235 215
Other current assets 329 286
--------------------------------------------------------------------------------
1,946 1,957
Investments (note 11) 141 134
Property, plant and equipment (note 12) 3,551 3,391
Capitalized mining costs (note 13) 222 226
Other assets 591 566
--------------------------------------------------------------------------------
Total assets $ 6,451 $6,274
--------------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable $ 365 $335
Other current liabilities 90 83
--------------------------------------------------------------------------------
455 418
Long-term debt (note 14) 1,698 1,655
Other long-term obligations 528 499
Deferred income tax liabilities 137 139
--------------------------------------------------------------------------------
Total liabilities 2,818 2,711
--------------------------------------------------------------------------------
Shareholders' equity
Capital stock (note 15) 4,157 4,129
Deficit (573) (624)
Accumulated other comprehensive income (note 17) 49 58
--------------------------------------------------------------------------------
Total shareholders' equity 3,633 3,563
--------------------------------------------------------------------------------
Contingencies and commitments (note 18)
--------------------------------------------------------------------------------
Total liabilities and shareholders' equity $ 6,451 $6,274
--------------------------------------------------------------------------------
The accompanying notes are an integral part of these unaudited interim
consolidated financial statements.
BARRICK FIRST QUARTER 2005 FINANCIAL STATEMENTS
24
Consolidated Statements of Shareholders' Equity
Barrick Gold Corporation
(in millions of United States dollars) (Unaudited) 2005 2004
-------------------------------------------------------------------------------
Common shares (number in millions)
At January 1 534 535
Issued on exercise of stock options - 1
Repurchased (note of 15a) - (4)
-------------------------------------------------------------------------------
At March 31 534 532
-------------------------------------------------------------------------------
Common shares (dollar in millions)
At January 1 $4,129 4,115
Issued on exercise of stock options 28 13
Repurchased (note 15a) - (35)
-------------------------------------------------------------------------------
At March 31 4,157 $4,093
-------------------------------------------------------------------------------
Deficit
At January 1 $(624) $(694)
Net income 51 26
Adjustment on repurchase of common shares (note 15a) - (60)
-------------------------------------------------------------------------------
At March 31 $(573) $(728)
-------------------------------------------------------------------------------
Accumulated other comprehensive income (note 17) $49 $72
-------------------------------------------------------------------------------
Total shareholders' equity at March 31 $3,633 $3,437
-------------------------------------------------------------------------------
Consolidated Statements of Comprehensive Income
Three months ended
March 31,
Barrick Gold Corporation ------------------
(in millions of United States dollars) (Unaudited) 2005 2004
-------------------------------------------------------------------------------
Net income $51 $26
Other comprehensive loss, net of tax (note 17) (9) (1)
-------------------------------------------------------------------------------
Comprehensive income $42 25
-------------------------------------------------------------------------------
The accompanying notes are an integral part of these unaudited interim
consolidated financial statements.
BARRICK FIRST QUARTER 2005 FINANCIAL STATEMENTS
25
NOTES TO UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
Tabular dollar amounts in millions of United States dollars, unless otherwise
shown. References to C$, A$ and (euro) are to Canadian dollars, Australian
dollars and Euros, respectively.
1 NATURE OF OPERATIONS
Barrick Gold Corporation ("Barrick" or the "Company") engages in the production
and sale of gold from underground and open-pit mines, including related
activities such as exploration and mine development. Our operations are mainly
located in North America, South America, Australia and Africa.
2 SIGNIFICANT ACCOUNTING POLICIES
A Basis of preparation
The United States dollar is the principal currency of our operations. We prepare
our primary consolidated financial statements in United States dollars and under
United States generally accepted accounting principles ("US GAAP"). The
accompanying unaudited interim consolidated financial statements have been
prepared in accordance with US GAAP for the preparation of interim financial
information. Accordingly, they do not include all of the information and
disclosures required by US GAAP for annual consolidated financial statements.
The accounting policies used in the preparation of the accompanying unaudited
interim consolidated financial statements are the same as those described in our
audited consolidated financial statements and the notes thereto for the three
years ended December 31, 2004.
In the opinion of management, all adjustments considered necessary for the fair
presentation of results for the periods presented have been reflected in these
financial statements. These unaudited interim consolidated financial statements
should be read in conjunction with the audited annual consolidated financial
statements and the notes thereto for the three years ended December 31, 2004.
The preparation of these financial statements requires us to make estimates and
assumptions. The most significant estimates and assumptions are: quantities of
proven and probable gold reserves; expected value of mineral resources not
considered proven and probable reserves; expected future costs and expenses to
produce proven and probable reserves; expected future commodity prices and
foreign currency exchange rates; and expected costs to meet asset retirement
obligations. Decisions and assessments affected by our critical estimates and
assumptions include:
o decisions as to whether mine development costs should be capitalized or
expensed;
o assessments of whether groups of long-lived assets are impaired and the fair
value of those groups of assets that are the basis for measuring impairment
charges;
o assessments of our ability to realize the benefits of deferred income tax
assets;
o the useful lives of long-lived assets and the measurement of amortization
recorded in earnings;
o the fair value of asset retirement obligations; and
o assessments of whether investments are impaired.
We regularly review these estimates and assumptions that affect our financial
statements; however, actual outcomes could differ from estimates and
assumptions.
B Accounting developments
EITF Issue No. 04-6, Accounting for Stripping Costs Incurred during Production
In the Mining Industry (EITF 04-6)
In March 2005, the FASB approved EITF 04-6. On adoption of EITF 04-6, we will be
required to change our accounting policy for stripping costs. Historically,
stripping costs have been capitalized on the balance sheet under Capitalized
Mining Costs and attributed to the cost of inventory using a stripping ratio
that results in the smoothing of these costs over the life of a mine. Under EITF
04-6, actual stripping costs incurred each period during the production phase
will be capitalized as a component of inventory cost for the period. This new
method of accounting under EITF 04-6 will likely lead to greater
period-to-period volatility in inventory costs and therefore cost of sales. The
mines most significantly affected will be Goldstrike Open Pit, Pierina and
Kalgoorlie, as well as our Veladero and Lagunas Norte development projects after
they begin production in the second half of 2005. Adoption of EITF 04-6 is
required by first quarter 2006, but earlier adoption is permitted. On adoption,
a Company may choose to record a cumulative effect adjustment in earnings of the
period of adoption, or alternatively retroactively restate all prior periods for
the effect of the change. We are presently evaluating the impact of EITF 04-6,
and we may early adopt EITF 04-6 during 2005.
BARRICK FIRST QUARTER 2005 NOTES TO FINANCIAL STATEMENTS
26
FAS 123R, Accounting for Stock-Based Compensation (FAS 123R)
In December 2004, the FASB issued FAS 123R. FAS 123R is applicable to
transactions in which an entity exchanges its equity instruments for goods and
services. It focuses primarily on transactions in which an entity obtains
employee services in share-based payment transactions. FAS 123R requires that
the fair value of such equity instruments is recorded as an expense as services
are performed. Prior to FAS 123R, only certain pro forma disclosures of
accounting for these transactions at fair value were required. FAS 123R will be
effective for our first quarter 2006 financial statements, and permits varying
transition methods including: retroactive adjustment of prior periods as far
back as 1995 to give effect to the fair value based method of accounting for
awards granted in those prior periods; or prospective application beginning in
2006. We are presently evaluating the effect of the varying methods of adopting
FAS 123R. We expect to adopt FAS 123R using the prospective method effective
January 1, 2006. Under this transition method we will begin recording stock
option expense prospectively, starting in first quarter 2006.
FIN 47, Accounting for Conditional Asset Retirement Obligations (FIN 47)
FIN 47 was issued in March 2005 and relates to the accounting for a legal
obligation to perform an asset retirement activity, when the timing or method of
settlement are conditional on a future event, which may not be within the
control of the entity. FIN 47 requires recognition of a liability for the fair
value of a conditional asset retirement obligation if the fair value can be
reasonably estimated. FIN 47 is effective no later than the end of fiscal years
ending after December 31, 2005. We are presently evaluating the impact of FIN
47.
C Changes in estimates
Gold Mineral Reserves
Effective December 31, 2004, we updated our estimates of proven and probable
gold mineral reserves. Following the update of these estimates, we prospectively
revised calculations of amortization of property, plant and equipment. The
effect of the change in reserve estimates on amortization of property, plant and
equipment for the three months ended March 31, 2005 was a decrease in this
expense by approximately $3 million for mines with a greater than 10% change
(other than ounces produced) in the reserve estimates. We also revised the
estimated stripping ratios used in the calculation of amortization of
capitalized mining costs, with an increase in the stripping ratios at Goldstrike
Open Pit and at Pierina. The effect of the change in these stripping ratios is
described in note 13.
3 > SEGMENT INFORMATION
Income statement information
----------------------------------------------------------------------------------------------------------------------------
Gold sales Segment operating costs Segment income (loss)
----------------------------------------------------------------------------------------------------------------------------
For the three months ended March 31 2005 2004 2005 2004 2005 2004
----------------------------------------------------------------------------------------------------------------------------
Goldstrike $193 $163 $125 $112 $30 $ 16
Round Mountain 40 33 21 18 15 10
Eskay Creek 23 25 3 (1) 14 14
Hemlo 28 24 17 14 7 8
Other producing mines 6 12 3 7 2 1
----------------------------------------------------------------------------------------------------------------------------
North America 290 257 169 150 68 49
----------------------------------------------------------------------------------------------------------------------------
Kalgoorlie 49 45 28 26 16 14
Plutonic 29 35 20 17 7 15
Bulyanhulu 37 28 31 21 (5) (1)
Other producing mines 24 25 15 15 6 7
Cowal - - 1 - (1) -
----------------------------------------------------------------------------------------------------------------------------
Australia/Africa 139 133 95 79 23 35
----------------------------------------------------------------------------------------------------------------------------
Pierina 55 87 17 19 23 31
Lagunas Norte - - - 6 - (6)
Veladero - - 1 - (1) -
Pascua-Lama - - 1 - (1) -
----------------------------------------------------------------------------------------------------------------------------
South America 55 87 19 25 21 25
----------------------------------------------------------------------------------------------------------------------------
Exploration group - - 26 19 (26) (19)
----------------------------------------------------------------------------------------------------------------------------
Segment total $484 $477 $309 $273 $86 $ 90
----------------------------------------------------------------------------------------------------------------------------
BARRICK FIRST QUARTER 2005 NOTES TO FINANCIAL STATEMENTS
27
Reconciliation of segment income
--------------------------------------------------------------------------------
For the three months ended March 31 2005 2004
--------------------------------------------------------------------------------
Segment income $ 86 $ 90
Accretion expense at producing mines (3) (2)
Other expenses (8) (4)
Amortization of corporate assets (4) (6)
Business development costs (2) (4)
Administration (17) (16)
Interest income 8 6
Interest expense - (8)
Other income (expense) 5 (16)
--------------------------------------------------------------------------------
Income before income taxes and other items $ 65 $ 40
--------------------------------------------------------------------------------
Asset information
--------------------------------------------------------------------------------
Segment capital
Amortization expenditures
--------------------------------------------------------------------------------
For the three months ended March 31 2005 2004 2005 2004
--------------------------------------------------------------------------------
Gold strike $38 $ 35 $ 20 $ 9
Round Mountain 4 5 - -
Eskay Creek 6 12 1 1
Hemlo 4 2 2 1
Other operating segments 1 4 2 3
--------------------------------------------------------------------------------
North America 53 58 25 14
--------------------------------------------------------------------------------
Plutonic 2 3 3 2
Kalgoorlie 5 5 2 2
Cowal - - 44 20
Bulyanhulu 11 8 14 8
Tulawaka - - 5 3
Other operating segments 3 3 4 3
--------------------------------------------------------------------------------
Australia/Africa 21 19 72 38
--------------------------------------------------------------------------------
Pierina 15 37 3 2
Veladero - - 69 64
Pascua-Lama - - 19 4
Lagunas Norte - - 53 6
--------------------------------------------------------------------------------
South America 15 37 144 76
--------------------------------------------------------------------------------
Segment total 89 114 241 128
Other items not allocated
to segments 4 6 1 1
--------------------------------------------------------------------------------
Enterprise total $93 $120 $242 $129
--------------------------------------------------------------------------------
4 > REVENUE AND GOLD SALES CONTRACTS
--------------------------------------------------------------------------------
For the three months ended 2005 2004
--------------------------------------------------------------------------------
Gold bullion sales
Spot market sales $ 452 $ 189
Gold sales contracts - 260
--------------------------------------------------------------------------------
452 449
Concentrate sales 32 28
--------------------------------------------------------------------------------
$ 484 $ 477
--------------------------------------------------------------------------------
At March 31, 2005, we had fixed-price gold sales contracts with various
counterparties for a total of 13.3 million ounces of future gold production and
floating-price forward gold sales contracts for 0.7 million ounces. In 2004, we
allocated 6.5 million ounces of fixed-price gold sales contracts specifically to
Pascua-Lama. The allocation of these contracts will help reduce gold price risk
at Pascua-Lama and is expected to help secure financing for its construction. In
addition to the gold sales contracts allocated to Pascua-Lama, we had 6.8
million ounces of corporate gold sales contracts that we intend to settle
through delivery of future gold production from our operating mines and
development projects, excluding Pascua-Lama. The mark-to-market on the
fixed-price gold sales contracts (at March 31, 2005) was negative $931 million
for the Pascua-Lama Gold Sales Contracts and negative $924 million for the
Corporate Gold Sales Contracts.
Floating spot price sales contracts were previously fixed-price forward sales
contracts for which, in accordance with the terms of our master trading
agreements, we have elected to receive floating spot gold and silver prices,
adjusted by the difference between the spot price and the contract price at the
time of such election. Floating prices were elected for these contracts so that
we could economically regain spot gold price leverage under the terms of
delivery into these contracts. Furthermore, floating price mechanisms were
elected for these contracts at a time when the then current market price was
higher than the fixed price in the contract. The mark-to-market on these
contracts (at March 31, 2005) was negative $48 million, which equates to an
average reduction to the future spot sales price of approximately $72 per ounce,
when we deliver gold at spot prices against these contracts.
5 > COST OF SALES
--------------------------------------------------------------------------------
For the three months ended March 31 2005 2004
--------------------------------------------------------------------------------
Cost of goods sold(1) $ 296 $ 268
By-product revenues(2) (29) (34)
Royalty expense 13 12
Mining taxes 3 4
Other expenses 8 4
--------------------------------------------------------------------------------
$ 291 $ 254
--------------------------------------------------------------------------------
(1) Cost of goods sold includes accretion expense at producing mines of $3
million (2004 - $2 million). The cost of inventory sold in the period
reflects all components capitalized to inventory, except that, for
presentation purposes, the component of inventory cost relating to
amortization of property, plant and equipment is classified in the income
statement under "amortization". Some companies present this amount under
"cost of sales". The amount presented in amortization rather than cost of
sales was $89 million in the three months ended March 31, 2005 (2004 - $114
million).
(2) We use silver sales contracts to sell a portion of silver produced as a
by-product. Silver sales contracts have similar delivery terms and pricing
mecharisms as gold sales contracts At March 31, 2005, he had fixed-price
commitments to deliver 12.1 million ounces of silver at an average price of
$5.61 per ounce, and floating spot price sales contracts for 12 million
ounces, over periods primarily of up to 10 years.
BARRICK FIRST QUARTER 2005 NOTES TO FINANCIAL STATEMENTS
28
6 > OTHER (INCOME) EXPENSE
--------------------------------------------------------------------------------
For the three months ended March 31 2005 2004
--------------------------------------------------------------------------------
Non-hedge derivative (gains) losses
(note 14b) $ (6) $ 15
Gains on sale of assets (1) (2)
Environmental remediation costs(1) 5 8
Gains on sale of investments (9) (2)
World Gold Council fees 2 2
Currency translation (gains) losses 4 (2)
Pension expense 1 1
Other items (1) (4)
--------------------------------------------------------------------------------
$ (5) $ 16
--------------------------------------------------------------------------------
(1) Includes costs at development projects and closed mines.
Pension expense
--------------------------------------------------------------------------------
For the three months ended March 31 2005 2004
--------------------------------------------------------------------------------
Expected return on plan assets $ (3) $ (3)
Interest cost on benefit obligation 3 4
Actuarial losses 1 -
--------------------------------------------------------------------------------
$ 1 $ 1
--------------------------------------------------------------------------------
7 > INCOME TAX EXPENSE
--------------------------------------------------------------------------------
For the three months ended March 31 2005 2004
--------------------------------------------------------------------------------
Current $ 11 $ 18
Deferred 3 (4)
--------------------------------------------------------------------------------
$ 14 $ 14
--------------------------------------------------------------------------------
Actual effective income tax rate 22% 35%
--------------------------------------------------------------------------------
The primary reasons why our actual effective income tax rate differs from the
38% Canadian statutory rate are due to certain allowances and special deductions
unique to extractive industries, and also because we operate in multiple tax
jurisdictions that have different tax rates than the Canadian federal rate.
8 > EARNINGS PER SHARE
--------------------------------------------------------------------------------
For the three months ended March 31
($ millions, except shares in millions and per
share amounts in dollars) 2005 2004
--------------------------------------------------------------------------------
Income available to common stockholders
Basic $ 51 $ 26
Effect of dilutive stock options - -
--------------------------------------------------------------------------------
Diluted $ 51 $ 26
--------------------------------------------------------------------------------
Weighted average shares outstanding
Basic 534 535
Effect of dilutive stock options 2 2
--------------------------------------------------------------------------------
Diluted 536 537
--------------------------------------------------------------------------------
Earnings per share
Basic and diluted $ 0.10 $ 0.05
--------------------------------------------------------------------------------
9 > SUPPLEMENTAL CASH FLOW INFORMATION
--------------------------------------------------------------------------------
For the three months ended March 31 2005 2004
--------------------------------------------------------------------------------
Income statement items:
Currency translation (gains) losses $ 3 $ (2)
Accretion expense 5 4
Non-hedge derivative (gains) losses (6) 15
Current income tax expense 11 18
Changes in:
Accounts receivable 6 (3)
Inventories (20) (5)
Accounts payable 21 -
Capitalized mining costs 4 1
Taxes recoverable (17) (6)
Other assets and liabilities (2) 5
Cash payments:
Asset retirement obligations (8) (10)
Current income taxes (12) (29)
--------------------------------------------------------------------------------
Other net operating activities $(15) $(12)
--------------------------------------------------------------------------------
10 > INVENTORIES
--------------------------------------------------------------------------------
At Mar.31, At Dec.31,
2005 2004
--------------------------------------------------------------------------------
Inventories
Gold in process and ore in stockpiles $ 206 $ 198
Mine operating supplies 95 82
--------------------------------------------------------------------------------
301 280
Non-current ore in stockpiles(1) (66) (65)
--------------------------------------------------------------------------------
$ 235 $ 215
--------------------------------------------------------------------------------
(1) Ore that we do not expect to process in the next 12 months is classified in
other assets.
11 > INVESTMENTS
Available-for-sale securities
--------------------------------------------------------------------------------
At Mar.31, 2005 At Dec.31, 2004
--------------------------------------------------------------------------------
Gains Gains
Fair (Losses) Fair (Losses)
value in OCI value in OCI
--------------------------------------------------------------------------------
Securities in an unrealized
gain position
Benefit plans:(1)
Fixed-income securities $ - $ - $11 $ -
Equity securities - - 19 10
Strategic investments:
Equity securities(2) 51 17 24 13
--------------------------------------------------------------------------------
$51 $17 $54 $23
--------------------------------------------------------------------------------
Securities in an unrealized
loss position(3)
Strategic investments:
Equity securities(2) $ 90 $(9) $80 $(13)
--------------------------------------------------------------------------------
$141 $ 8 $134 $ 10
--------------------------------------------------------------------------------
(1) Under various benefit plans for certain former Homestake executives, a
portfolio of marketable fixed-income and equity securities are held in a
rabbi trust that is used to fund obligations under the plans. As at March
31, 2005, the portfolio consisted entirely of cash that is restricted as to
its use, which was classified within "other current assets".
(2) Mainly includes an investment in Celtic Resources (fair value of $29 million
at March 31, 2005).
(3) All securities have been in a continuous unrealized loss position for less
than twelve months.
BARRICK FIRST QUARTER 2005 NOTES TO FINANCIAL STATEMENTS
29
Strategic equity investments in an unrealized loss position mainly include an
investment in Highland Gold with a fair value of $79 million at March 31, 2005,
and an unrealized loss of $7 million at that date. All of the companies in this
group operate in the gold mining industry, and their market share prices are
significantly impacted by the price of gold. The investments were last in an
unrealized gain position in early March 2005, but, following a decline in market
prices, two investments were in an unrealized loss position at March 31, 2005.
In evaluating whether this impairment was "other than temporary" we took into
consideration the relatively recent decline in value; our positive outlook for
the price of gold; the prospective nature of mineral properties held by these
companies; and also the relative amount of the unrealized loss at March 31, 2005
compared to the fair value of the investments. We concluded that the impairments
were not "other than temporary", and no impairment charges were recorded at
March 31, 2005.
Investment in Celtic Resources Holdings PLC ("Celtic")
On January 5, 2005 we completed a subscription for 3,688,191 units of Celtic for
$7.562 per unit for a total cost of $28 million. Each unit consists of one
ordinary share of Celtic and one-half of one share purchase warrant. On
completion, we held a 9% direct or indirect interest in Celtic's outstanding
common shares. Each whole warrant entitles us to acquire one ordinary share of
Celtic for $7.562, expiring on December 31, 2007. We determined that the share
purchase warrants are derivative instruments as defined by FAS 133. The warrants
are classified as non-hedge derivatives with changes in fair value subsequent to
acquisition recorded in earnings. In the event that Celtic does not acquire 100%
of the license to the Nezhdaninskoye deposit before June 1, 2005, the number of
warrants will automatically increase by 50%. We also entered into the following
agreements:
o We have a pre-emptive right to subscribe for up to $75 million of Celtic
shares at $7.562 per share.
o Celtic has granted us a right of first refusal on any proposed sale of its
direct or interest in Nezhdaninskoye, as well as the right to indirectly
purchase 51% of its interest in Nezhdaninskoye for $195 million, exercisable
for a period of six months starting if and when Celtic acquires 100% of
Nezhdaninskoye.
o Celtic has granted us the right to acquire 50% of any interest in any
mineral property in Kazakhstan that Celtic acquires for a period of 12
months after any such acquisition for an amount equal to 50% of the cost to
Celtic of its interest in the mineral property.
12 > PROPERTY, PLANT AND EQUIPMENT
The following assets are not being amortized.
--------------------------------------------------------------------------------
Carrying Carrying Targeted
amount at amount at timing of
March 31, December 31, production
2005 2004 start-up
--------------------------------------------------------------------------------
Development projects
Veladero $ 419 $ 349 2005
Lagunas Norte 252 196 2005
Cowal 176 128 2006
Pascua-Lama 261 243 2009
Buzwagi exploration project 102 102 -
Nevada Power Plant 27 18 2005
--------------------------------------------------------------------------------
Total $ 1,237 $1.036
--------------------------------------------------------------------------------
Capital commitments
In addition to entering into various operational commitments in the normal
course of business, we have new commitments of approximately $150 million to be
paid during 2005 for construction activities at our development projects and for
a power plant in Nevada for the Goldstrike mine.
13 > CAPITALIZED MINING COSTS
We capitalize and amortize certain costs relating to the removal of waste rock
at open-pit mines, commonly referred to as "stripping costs". We include in
inventory, amortization of amounts capitalized based on a "stripping ratio"
using the units-of-production method. This accounting method results in the
smoothing of these costs over the life of a mine. Instead of capitalizing and
amortizing these costs, some mining companies capitalize them to inventory as
incurred, which may result in the reporting of greater volatility in
period-toperiod results. If we followed a policy of capitalizing these costs to
inventory as incurred, rather than using our present policy, our reported cost
of sales would have been $4 million lower for the three months ended March 31,
2005 (2004 - $1 million lower).
Stripping ratios(1)
--------------------------------------------------------------------------------
For the three months ended March 31 2005 2004
--------------------------------------------------------------------------------
Goldstrike Open Pit 127:1 109:1
Pierina 86:1 60:1
--------------------------------------------------------------------------------
(1) Effective January 1, 2005, we revised the estimated stripping ratios on
update of our gold mineral reserves. The effect of this change on
amortization of capitalized mining costs for the three months ended March
31, 2005 was an increase at Goldstrike Open Pit of $3 million, and increase
at Pierina of $1 million.
BARRICK FIRST QUARTER 2005 NOTES TO FINANCIAL STATEMENTS
30
14 > FINANCIAL INSTRUMENTS
A Long-term debt
Interest expense
--------------------------------------------------------------------------------
For the three months ended March 31 2005 2004
--------------------------------------------------------------------------------
Interest incurred $ 28 $12
Less: capitalized 28 4
--------------------------------------------------------------------------------
Interest expense $ - $ 8
--------------------------------------------------------------------------------
In first quarter 2005, we drew down $24 million under the $250 million Veladero
financing facility, resulting in a total amount of $222 million outstanding
under the facility at March 31, 2005. Also in first quarter 2005, we drew down
$25 million under a $56 million build to suit lease facility held by one of our
wholly owned subsidiaries, Minera Barrick Misquichilca (MBM), as well as
securing an expansion of the original facility to a total facility of $80
million. At March 31, 2005, a total of $55 million had been drawn down under
this facility, which is being used to finance the construction of the leach pad
and process facilities at the Lagunas Norte project. MBM is also finalizing a
second build to suit lease facility for $20 million, which will also be used to
finance the construction of the leach pad and process facilities at the Lagunas
Norte project.
On April 15, 2005, MBM issued $50 million of debt securities in the Peruvian
capital markets. The net proceeds will be used to partially fund the
construction of the Lagunas Norte project. The debt securities bear interest at
Libor plus 1.72%, and mature in 2013.
B Derivative instruments ("derivatives")
Summary of derivatives at March 31, 2005(1)
------------------------------------------------------------------------------------------------------------------------------------
Accounting Classification by Fair
Notional Amount by Term to Maturity Notional Amount value
------------------------------------------------------------------------------------------------------------------------------------
Cash
Within 2 to 5 Over 5 flow Fair value Non
1 year years years Total hedge hedge Hedge
------------------------------------------------------------------------------------------------------------------------------------
US dollar Interest rate contracts
Receive-fixed swaps (millions) $ 75 $ 925 $ - $ 1,000 $ 425 $ 500 $ 75 $ (16)
Pay-fixed swaps (millions) - 175 100 275 150 - 125 (18)
------------------------------------------------------------------------------------------------------------------------------------
Net notional position S 75 $ 750 $ (100) $ 725 $ 275 $ 500 $ (50) $ (34)
------------------------------------------------------------------------------------------------------------------------------------
Currency contracts
CS:US$ contracts (C$ millions) C$ 316 C$ 534 C$ - C$ 850 C$ 788 C$ - C$ 62 $ 88
A$:US$ contracts (A$ millions) A$ 747 A$ 1,335 A$ - A$ 2,082 A$ 2,072 A$ - A$ 10 $ 172
(euro):US$ contracts
((euro) millions) (euro) 32 (euro) - (euro) - (euro) 32 (euro) 32 (euro) - (euro) - (euro) -
------------------------------------------------------------------------------------------------------------------------------------
Commodity contracts
Fuel (WTI) (thousands of barrels) 809 1,389 - 2,198 1,549 - 649 $ 33
Propane contracts (millions of
gallons) 15 14 - 29 29 - - $ 3
------------------------------------------------------------------------------------------------------------------------------------
(1) Excludes normal sales contracts, gold lease rate swaps and share purchase
warrants.
US dollar interest rate contracts
Cash flow hedges - cash balances
Receive-fixed swaps have been designated against the first $425 million of our
cash balances as a hedge of the variability of forecasted interest receipts on
the balances caused by changes in Libor.
Cash flow hedges - Bulyanhulu financing
Pay-fixed swaps totaling $150 million have been designated against the
Bulyanhulu financing as a hedge of the variability in forecasted interest
payments caused by changes in Libor.
Fair value hedges
Receive-fixed swaps totaling $500 million have been designated against the 7
1/2% debentures as a hedge of the variability in the fair value of the
debentures caused by changes in Libor.
Non-hedge contracts
On completion of a prospective effectiveness test using the variable cash flows
method, we concluded that receive-fixed swaps with a total notional amount of
$75 million do not meet the "highly effective" criteria under FAS 133.
Consequently, the swaps were classified as non-hedge derivatives. Despite not
qualifying as an accounting hedge, the swaps protect the Company to a
BARRICK FIRST QUARTER 2005 NOTES TO FINANCIAL STATEMENTS
31
significant extent from the impact of changes in Libor on interest receipts on
cash balances.
We use gold lease rate swaps to achieve a more economically optimal term
structure for gold lease rates implicit in fixed-price gold sales contracts. The
valuation of gold lease rate swaps is impacted by market US dollar interest
rates. Our non-hedge pay-fixed swap position mitigates the impact of changes in
US dollar interest rates on the valuation of gold lease rate swaps.
Currency contracts
Cash flow hedges
Currency contracts totaling C$788 million, A$2,072 million and (euro)32 million
have been designated against forecasted local currency denominated expenditures
as a hedge of the variability of the US dollar amount of those expenditures
caused by changes in currency exchange rates.
Commodity contracts
Cash flow hedges
Commodity contracts totaling 1,549 thousand barrels of diesel fuel and 29
million gallons of propane have been designated against forecasted purchases of
the commodities for expected consumption at our mining operations.
Non-hedge contracts
Non-hedge fuel contracts are used to mitigate the risk of oil price changes on
consumption at the Pierina, Eskay Creek and Lagunas Norte mines. On completion
of regression analysis, we concluded that the contracts do not meet the "highly
effective" criterion in FAS 133 due to currency and basis differences between
contract prices and the prices charged to the mines by oil suppliers. Despite
not qualifying as an accounting hedge, the contracts protect the Company to a
significant extent from the effects of oil price changes.
Non-hedge derivative gains (losses)(1)
--------------------------------------------------------------------------------
For the three months ended March 31 2005 2004
--------------------------------------------------------------------------------
Non-hedge derivatives
Commodity contracts $ 4 $(12)
Currency contracts 2 -
Interest rate contracts 1 (4)
Share purchase warrants 1 -
--------------------------------------------------------------------------------
8 (16)
Hedge ineffectiveness
Ongoing hedge inefficiency (3) -
Due to changes in timing of hedged items 1 1
--------------------------------------------------------------------------------
$ 6 $(15)
--------------------------------------------------------------------------------
(1) Non-hedge derivative gains (losses) are classified as a component of other
(income) expense.
Cash Flow Hedge Gains (Losses) in OCI
-------------------------------------
-----------------------------------------------------------------------------------------------------------------------------------
Commodity
price hedges Currency hedges Interest rate hedges
------------ --------------- --------------------
Operating Administration Capital Cash Long-term
Fuel costs costs expenditures balances debt Total
-----------------------------------------------------------------------------------------------------------------------------------
At Dec.31, 2004 $ 2 $ 240 $ 33 $ 48 $ 3 $ (25) $301
Effective portion of change in fair
value of hedging instruments 25 (10) 2 1 (1) 4 21
Transfers to earnings:
On recording hedged items in earnings (2) (25) (3) (1) (1) 1 (31)
Hedge ineffectiveness due to changes in
timing of hedged items - - - (1) - - (1)
------------------------------------------------------------------------------------------------------------------------------------
At Mar.31, 2005 $ 25 $ 205 $ 32 $ 47 $ 1 $ (20) $290
-----------------------------------------------------------------------------------------------------------------------------------
Cost of Cost of Interest Interest
Hedge gains/losses classified within sales sales Administration Amortization income cost
-----------------------------------------------------------------------------------------------------------------------------------
Portion of hedge gain (loss)
expected to affect earnings
in the next twelve months(1) $ 9 $ 100 $ 15 $ 2 $ 7 $ (4) $129
-----------------------------------------------------------------------------------------------------------------------------------
(1) Based on the fair value of hedge contracts at March 31, 2005.
15 > CAPITAL STOCK
A Common Shares
During the three month period ended March 31, 2004, we repurchased 4.47 million
common shares for $95 million, at an average cost of $21.20 per share. This
resulted in a reduction of common share capital by $35 million and a $60 million
charge (being the difference between the repurchase cost and the average
historic book value of shares repurchased) to retained earnings.
B Exchangeable Shares
In connection with a 1998 acquisition, Barrick Gold Inc. ("BGI"), issued 11.1
million BGI exchangeable shares, which are each exchangeable for 0.53 of a
Barrick common share at any time at the option of the holder, and have
BARRICK FIRST QUARTER 2005 NOTES TO FINANCIAL STATEMENTS
32
essentially the same voting, dividend (payable in Canadian dollars), and other
rights as 0.53 of a Barrick common share. BGI is a subsidiary that holds our
interest in the Hemlo and Eskay Creek Mines.
At March 31, 2005,1.4 million BGI exchangeable shares were outstanding, which
are equivalent to 0.7 million Barrick common shares (2004 - 0.8 million common
shares). While there are exchangeable shares outstanding, we are required to
present summary consolidated financial information relating to BGI.
Summarized financial information for BGI
--------------------------------------------------------------------------------
For the three months ended March 31 2005 2004
--------------------------------------------------------------------------------
Total revenues and other income $ 52 $ 52
Less: costs and expenses (57) (53)
-------------------------------------------------------------------------------
Loss before taxes $ (5) $ (1)
--------------------------------------------------------------------------------
Net loss $ (5) $ (3)
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
At Mar.31, At Dec.31,
2005 2004
--------------------------------------------------------------------------------
Assets
Current assets $ 107 $ 67
Non-current assets 116 119
--------------------------------------------------------------------------------
$ 223 $ 186
--------------------------------------------------------------------------------
Liabilities and shareholders' equity
Other current liabilities 27 24
Intercompany notes payable 393 395
Other long-term liabilities 35 36
Deferred income taxes 16 20
Shareholders' equity (248) (289)
--------------------------------------------------------------------------------
$ 223 $ 186
--------------------------------------------------------------------------------
16 > STOCK-BASED COMPENSATION
We record compensation cost for stock options based on the excess of the market
price of the stock at the grant date of an award over the exercise price.
Historically, the exercise price for stock options has equaled the market price
of stock at the grant date, resulting in no compensation cost. We provide
information in the following table to illustrate the pro forma effect of
following an accounting policy of expensing the fair value of stock options.
Stock option expense (per share amounts in dollars)
--------------------------------------------------------------------------------
For the three months ended March 31 2005 2004
--------------------------------------------------------------------------------
Pro forma effects
Net income, as reported $ 51 $ 26
Stock-option expense (7) (7)
--------------------------------------------------------------------------------
Pro forma net income $ 44 $ 19
--------------------------------------------------------------------------------
Net income per share:
As reported(1) $0.10 $0.05
Pro forma(1) $0.09 $0.04
--------------------------------------------------------------------------------
(1) Basic and diluted.
17 > OTHER COMPREHENSIVE INCOME (LOSS) ("OCI")
--------------------------------------------------------------------------------
2005 2004
--------------------------------------------------------------------------------
Accumulated OCI at Jan.1
Cash flow hedge gains, net of tax of $95, $99 $ 206 $ 189
Investments, net of tax of $nil, $nil 10 38
Currency translation adjustments, net
of tax of $nil, $nil (146) (147)
Additional pension liability, net of tax of
$nil, $nil (12) (7)
--------------------------------------------------------------------------------
$ 58 $ 73
--------------------------------------------------------------------------------
Other comprehensive income (loss) for the period:
Changes in fair value of cash flow hedges 21 18
Changes in fair value of investments 7 7
Less: reclassification adjustments for gains/losses
recorded in earnings:
Transfers of cash flow hedge gains to earnings:
On recording hedged items in earnings (31) (33)
Hedge ineffectiveness due to changes in timing
of hedged items (1) (1)
Investments:
Gains realized on sale (9) -
--------------------------------------------------------------------------------
Other comprehensive loss, before tax (13) (9)
Income tax recovery related to OCI 4 8
--------------------------------------------------------------------------------
Other comprehensive loss, net of tax (9) $ (1)
--------------------------------------------------------------------------------
Accumulated OCI at March 31
Cash flow hedge gains, net of tax of $91, $91 199 181
Investments, net of tax of $nil, $nil 8 45
Currency translation adjustments, net of tax of
$nil, $nil (146) (147)
Additional pension liability, net of tax of
$nil, $nil (12) (7)
--------------------------------------------------------------------------------
$ 49 $ 72
--------------------------------------------------------------------------------
18 > CONTINGENCIES
Bre-X Minerals
In 1998, we were added as a defendant in a class action lawsuit initiated
against Bre-X Minerals Ltd., and certain others in the United States District
Court for the Eastern District of Texas, Texarkana Division. The class action
alleges, among other things, that statements made by us in connection with our
efforts to secure the right to develop and operate the Busang gold deposit in
East Kalimantan, Indonesia were materially false and misleading and omitted to
state material facts relating to the preliminary due diligence investigation
undertaken by us in late 1996.
On March 31, 2003, the Court denied all of the Plaintiffs' motions to certify
the case as a class action. Following the March 31, 2003 denial of the
Plaintiffs' motions, the Court received a proposed Trial Plan along with full
briefings from the parties with respect to the Plan. On March 31, 2005, the
Court treated Plaintiffs' submission as a motion to vacate or change its class
certification order of March 31, 2003. The Court denied Plaintiffs' motion
because the Plaintiffs did not identify any new legal authority or changed
circumstance that justified modification of the prior order. In the absence of
an
BARRICK FIRST QUARTER 2005 NOTES TO FINANCIAL STATEMENTS
33
appeal, we believe this ruling should, in substance, end the case. On April 14,
2005, Plaintiffs filed a petition with the Fifth Circuit Court of Appeals
requesting permission to file an appeal of the Court order. Defendants will
oppose the petition on the grounds that it is untimely and procedurally
improper. The amount of potential loss, if any, which we may incur arising out
of the Plaintiffs' claims is not determinable.
Blanchard complaint
On January 7, 2003, we were served with a Complaint for Injunctive Relief by
Blanchard and Company, Inc. ("Blanchard"), and Herbert Davies ("Davies"). The
complaint, which is pending in the U.S. District Court for the Eastern District
of Louisiana, also names J.P. Morgan Chase & Company ("J.P. Morgan") as a
defendant, along with an unspecified number of additional defendants to be named
later. The complaint, which has been amended several times, alleges that we and
bullion banks with whom we entered into spot deferred gold sales contracts have
manipulated the price of gold, in violation of U.S. anti-trust laws and the
Louisiana Unfair Trade Practices and Consumer Protection Law. Blanchard and
Davies both allege that they have been injured as a seller of gold due to
reduced interest in gold as an investment. The complaint seeks damages and an
injunction terminating certain of our trading agreements with J.P. Morgan and
other bullion banks. In September 2003, the Court issued an Order granting in
part and denying in part Barrick's motions to dismiss this action. In February
2005, the Court granted Blanchard's motion to amend their complaint to add an
allegation of a violation of the Commodity Exchange Act and amend its allegation
of Barrick's violation of anti-trust laws. Discovery has commenced in the case
and a trial date has been tentatively set for July 2005. We have and will
continue to vigorously defend the action.
McKenzie complaint
On September 21, 2004, a putative class action complaint was filed in the U.S.
District Court for the Eastern District of Louisiana against Barrick and J.P.
Morgan. The plaintiffs, Dr. Gregg McKenzie and others are alleged purchasers of
gold and gold derivatives, The complaint alleges violations of the U.S.
anti-trust laws and also of the Commodity Exchange Act, based upon the same
conduct as alleged in the Blanchard complaint. The complaint seeks damages and
an injunction terminating certain of our trading agreements with J.P. Morgan. On
December 17, 2004, a second and substantially identical complaint was filed in
the same court against the same defendants. Barrick has not yet been served with
this second complaint. We have and will continue to vigorously defend both
actions.
Wagner complaint
On June 12, 2003, a complaint was filed against Barrick and several of its
current or former officers in the U.S. District Court for the Southern District
of New York. The complaint is on behalf of Barrick shareholders who purchased
Barrick shares between February 14, 2002 and September 26, 2002. It alleges that
Barrick and the individual defendants violated U.S. securities laws by making
false and misleading statements concerning Barrick's projected operating results
and earnings in 2002. The complaint seeks an unspecified amount of damages.
Other parties on behalf of the same proposed class of Barrick shareholders filed
several other complaints, making the same basic allegations against the same
defendants. In September 2003, the cases were consolidated into a single action
in the Southern District of New York. The plaintiffs filed a Consolidated and/or
Amended Complaint on November 5, 2003. On January 14, 2004, Barrick filed a
motion to dismiss the complaint. On September 29, 2004, the Court issued an
order granting in part and denying in part Barrick's motion to dismiss the
action. The plaintiffs filed a Second Amended Complaint on October 20, 2004. The
Court granted the plaintiffs leave to file a Third Amended Complaint, which was
filed on January 6, 2005. We have and will continue to vigorously defend the
action.
Wilcox complaint
On September 8, 2004, two of our U.S. subsidiaries, Homestake Mining Company of
California ("Homestake California") and Homestake Mining Company ("Homestake")
were served with a First Amended Complaint by persons alleging to be current or
former residents of a rural area near the former Grants Uranium Mill. The
Complaint, which was filed in the U.S. District Court for the District of New
Mexico, identifies 26 plaintiffs. Homestake and Homestake California, along with
an unspecified number of unidentified defendants, are named as defendants. The
plaintiffs allege that they have suffered a variety of physical, emotional and
financial injuries as a result of exposure to radioactive and other hazardous
substances. The Complaint seeks an unspecified amount of damages. A motion to
dismiss the claim was filed with the Court, but the Court has not yet ruled on
the motion. We have and will continue to vigorously defend the action.
BARRICK FIRST QUARTER 2005 NOTES TO FINANCIAL STATEMENTS
34
Mine Statistics
UNITED STATES
------------------------------------------------------------------------------------
Goldstrike
(Unaudited) Open Pit Underground Total Round Mountain
Three months ended March 31 2005 2004 2005 2004 2005 2004 2005 2004
------------------------------------------------------ -------------------- ------------------ ----------------------
Tons mined (thousands) 32,412 34,086 382 438 32,794 34,524 4,497 4,786
Tons processed (thousands) 2,329 2,661 389 452 2,718 3,113 9,096 9,609
Average grade per (ounces ton) 0.148 0.144 0.411 0.383 0.186 0.179 0.019 0.016
Recovery rate (percent) 83.1% 82.8% 91.0% 89.0% 84.2% 83.7% n/a n/a
------------------------------------------------------ -------------------- ------------------ ----------------------
Production of (thousands ounces) 287 318 145 154 432 472 94 93
Production per ounce
Cash operating costs $ 262 $ 250 $ 264 $ 230 $ 263 $ 243 $ 188 $ 174
Royalties and production taxes 14 17 23 23 16 19 35 33
------------------------------------------------------ -------------------- ------------------ ----------------------
Total cash costs 276 267 287 253 279 262 223 207
Amortization 67 63 119 120 84 82 46 60
------------------------------------------------------ -------------------- ------------------ ----------------------
Total production costs $ 343 $ 330 $ 406 $ 373 $ 363 $ 344 $ 269 $ 267
------------------------------------------------------ -------------------- ------------------ ----------------------
Capital expenditures (US$ millions) 11 $ 3 $ 9 $ 6 $ 20 $ 9 $ - $ -
------------------------------------------------------ -------------------- ------------------ ----------------------
AUSTRALIA
------------------------------------------------------------------------------------
Plutonic Darlot Lawlers Kalgoorlie
Three months ended March 31 2005 2004 2005 2004 2005 2004 2005 2004
------------------------------------------------------ -------------------- ------------------ ----------------------
Tons mined (thousands) 2,200 2,613 184 212 177 401 10,397 11,680
Tons processed (thousands) 641 694 173 218 212 208 1,831 1,600
Average grade (ounces per ton) 0.123 0.132 0.165 0.162 0.153 0.131 0.077 0.073
Recovery rate (percent) 89.2% 90.5% 95.6% 97.2% 96.0% 97.0% 88.5% 87.4%
------------------------------------------------------ -------------------- ------------------ ----------------------
Production (thousands of ounces) 70 83 27 34 31 27 125 102
Production costs per ounce
Cash operating costs $ 277 $ 186 $ 240 $ 201 $ 279 $ 229 $ 237 $ 217
Royalties and production taxes 10 8 9 7 8 7 10 6
------------------------------------------------------ -------------------- ------------------ ----------------------
Total cash costs 287 194 249 208 287 236 247 223
Amortization 31 31 67 48 51 45 40 39
------------------------------------------------------ -------------------- ------------------ ----------------------
Total production costs $ 318 $ 225 $ 316 $ 256 $ 338 $ 281 $ 287 $ 262
------------------------------------------------------ -------------------- ------------------ ----------------------
Capital expenditures (USS millions) $ 3 $ 2 $ 2 $ 2 $ 2 $ 1 $ 2 $ 2
------------------------------------------------------ -------------------- ------------------ ----------------------
BARRICK FIRST QUARTER 2005 MINE STATISTICS
35
Mine Statistics
CANADA
------------------------------------------------------------------
(Unaudited) Hemlo Eskay Creek Holt-McDermott
Three months ended March 31 2005 2004 2005 2004 2005 2004
----------------------------------------------------------------- ------------------ -----------------------
Tons mined (thousands) 1,132 890 56 65 - 139
Tons processed (thousands) 492 477 57 60 - 135
Average grade (ounces per ton) 0.136 0.137 1.058 1.145 - 0.150
Recovery rate (percent) 93.7% 94.1% 91.3% 93.2% - 92.6%
----------------------------------------------------------------- ------------------ -----------------------
Production (thousands of ounces) 62 61 55 66 - 19
Production costs per ounce
Cash operating costs $ 249 $ 217 $ 53 $ (25) $ - $ 238
Royalties and production taxes 11 10 6 6 - -
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Total cash costs 260 227 59 (19) - 238
Amortization 54 40 115 179 - 145
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Total production costs $ 314 $ 267 $ 174 $ 160 $ - $ 383
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Capital expenditures (US$ millions) $ 2 $ 1 $ 1 $ 1 $ - $ -
----------------------------------------------------------------- ------------------ -----------------------
PERU TANZANIA
------------------------------------------------------------------
Pierina Bulyanhulu Tulawaka
Three months ended March 31 2005 2004 2005 2004 2005 2004
----------------------------------------------------------------- ------------------ -----------------------
Tons mined (thousands) 11,374 10,323 228 284 916 -
Tons processed (thousands) 4,017 4,038 244 272 24 -
Average grade (ounces per ton) 0.026 0.049 0.341 0.337 0.192 -
Recovery rate (percent) - - 88.4% 88.4% 97.2% -
----------------------------------------------------------------- ------------------ -----------------------
Production (thousands of ounces) 146 232 73 81 5 -
Production costs per ounce
Cash operating costs $ 134 $ 82 $ 345 $ 263 $ - $ -
Royalties and production taxes - - 11 13 - -
----------------------------------------------------------------- ------------------ -----------------------
Total cash costs 134 82 356 276 - -
Amortization 115 165 123 107 - -
----------------------------------------------------------------- ------------------ -----------------------
Total production costs $ 249 $ 247 $ 479 $ 383 $ - -
----------------------------------------------------------------- ------------------ -----------------------
Capital expenditures (US$ millions) $ 3 $ 2 $ 14 $ 8 $ 5 $ 3
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BARRICK FIRST QUARTER 2005 MINE STATISTICS
36
CORPORATE OFFICE TRANSFER AGENTS AND REGISTRARS
Barrick Gold Corporation CIBC Mellon Trust Company
BCE Place, Canada Trust Tower, Suite 3700 P.O. Box 7010, Adelaide Street Postal Station
161 Bay Street, P.O. Box 212 Toronto, Ontario M5C 2W9
Toronto, Canada M5J 2S1 Tel: (416) 643-5500
Tel: (416) 861-9911 Fax: (416) 861-0727 Toll-free throughout North America: 1-800-387-0825
Toll-free within Canada and United States: 1-800-720-7415 Fax: (416) 643-5501
Email: investor@barrick.com Email: inquiries@cibcmellon.ca
Website: www.barrick.com Website: www.cibcmellon.com
SHARES LISTED Mellon Investor Services L.L.C.
ABX - The Toronto Stock Exchange 85 Challenger Road, Overpeck Center
The New York Stock Exchange Ridgefield Park, New Jersey 07660
The Swiss Stock Exchange Tel: (201) 329-8660
La Bourse de Paris Toll-free within the United States:
BGD - The London Stock Exchange 1-800-589-9836
Website: www.mellon-investor.com
INVESTOR CONTACT MEDIA CONTACT
Darren Blasutti Vincent Borg
Vice President, Investor Relations Vice President, Corporate Communications
Tel: (416) 307-7341 Tel: (416) 307-7477
Email: dblasutti@barrick.com Email: vborg@barrick.com
FORWARD-LOOKING INFORMATION
Certain information contained or incorporated by reference in this First Quarter
Report 2005, including any information as to our future financial or operating
performance, constitutes "forward-looking statements". All statements, other
than statements of historical fact, are forward-looking statements. The words
"believe", "expect", "anticipate", "contemplate", "target", "plan", "intends",
"continue", "budget", "estimate", "may", "will", "schedule" and similar
expressions identify forward-looking statements. Forward-looking statements are
necessarily based upon a number of estimates and assumptions that, while
considered reasonable by us, are inherently subject to significant business,
economic and competitive uncertainties and contingencies. Known and unknown
factors could cause actual results to differ materially from those projected in
the forward-looking statements. Such factors include, but are not limited to:
fluctuations in the currency markets (such as the Canadian and Australian
dollars versus the U.S. dollar); fluctuations in the spot and forward price of
gold or certain other commodities (such as silver, copper, diesel fuel and
electricity); changes in U.S. dollar interest rates or gold lease rates that
could impact the mark to market value of outstanding derivative instruments and
ongoing payments/receipts under interest rate swaps and variable rate debt
obligations; risks arising from holding derivative instruments (such as credit
risk, market liquidity risk and mark to market risk); changes in national and
local government legislation, taxation, controls, regulations and political or
economic developments in Canada, the United States, Australia, Chile, Peru,
Argentina, Tanzania, Russia or Barbados or other countries in which we do or may
carry on business in the future; business opportunities that may be presented
to, or pursued by, us; our ability to successfully integrate acquisitions;
operating or technical difficulties in connection with mining or development
activities; the speculative nature of gold exploration and development,
including the risks of obtaining necessary licenses and permits; diminishing
quantities or grades of reserves; adverse changes in our credit rating; and
contests over title to properties, particularly title to undeveloped properties.
In addition, there are risks and hazards associated with the business of gold
exploration, development and mining, including environmental hazards, industrial
accidents, unusual or unexpected formations, pressures, cave-ins, flooding and
gold bullion 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 First Quarter Report 2005 are qualified
by these cautionary statements. Specific reference is made to Barrick's most
recent Form 40-F/Annual Information Form on file with the US Securities and
Exchange Commission and Canadian provincial securities regulatory authorities
for a discussion of some of the factors underlying forward-looking statements.
We disclaim any intention or obligation to update or revise any
forward-looking statements whether as a result of new information, future events
or otherwise.