Edgar Filing: NOVAGOLD RESOURCES INC

Tender Offer Statement

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE TO

Tender Offer Statement under Section 14(d)1 or 13(e)(1)

of the Securities Exchange Act of 1934

NOVAGOLD RESOURCES INC.

(Name of Subject Company (issuer))

BARRICK GOLD CORPORATION

(Name of Filing Person (offeror))

Common Shares

(Title of Class of Securities)

66987E206

(CUSIP Number of Class of Securities)

Sybil E. Veenman

Vice President, Assistant General Counsel, and Secretary

BCE Place, Canada Trust Tower

161 Bay Street, Suite 3700

P.O. Box 212

Toronto, Canada M5J 2S1

(416) 861-9911

(Name, address, and telephone number of person authorized

to receive notices and communications on behalf of filing persons)

CALCULATION OF FILING FEE

Transaction Valuation	Amount of Filing Fee
Not Applicable*	Not Applicable*

*		Pursuant to General Instruction D to Schedule TO, no filing fee is required because this filing contains only preliminary communications made before the commencement of a tender offer.

o		Check box if any part of the fee is offset as provided by Rule 0-11(a)(2) and identify the filing with which the offsetting fee was previously paid. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.
				Amount Previously Paid:_____________________________
				Form or Registration No.:_____________________________
				Filing Party:_______________________________________
				Date Filed:________________________________________
x		Check the box if the filing relates solely to preliminary communications made before the commencement of a tender offer.
Check the appropriate boxes below to designate any transactions to which the statement relates:
	x		third-party tender offer subject to Rule 14d-1.
	o		issuer tender offer subject to Rule 13e-4.
	o		going-private transaction subject to Rule 13e-3
	o		amendment to Schedule 13D under Rule 13d-2

SECOND QUARTER REPORT 2006 - AUGUST 2, 2006

Based on US GAAP and expressed in US dollars

Barrick Reports Record Earnings and Cash Flow

Legacy Placer Dome Gold Hedge Position Eliminated

HIGHLIGHTS
·	Q2 net income was $459 million ($0.53 per share) and operating cash flow was $643 million ($0.73 per share), both Company records and substantially higher than the prior-year period’s net income of $47 million ($0.09 per share) and operating cash flow of $101 million ($0.19 per share).
·	Equity gold production was 2.1 million ounces at total cash costs of $281 per ounce¹ , and copper production was 100 million pounds at total cash costs of $0.76 per pound¹. The Company expects gold production for the second half of 2006 to increase due to stronger operating performances.
·	During Q2, the remaining legacy Placer Dome gold hedge position was eliminated. Year-to-date, the Company has reduced its corporate gold sales position by a total of 7.7 million ounces.
·	During Q2, Barrick concluded the sale of four Placer Dome mines and other agreed interests to Goldcorp Inc. for net cash proceeds of approximately $1.6 billion.
·	The Company is on track to meet its full-year gold production guidance of 8.6 - 8.9 million ounces at total cash costs of $275 - $290 per ounce, and has revised upwards its copper production guidance from 350 million pounds to 370 million pounds and is maintaining total cash costs guidance of about $0.75 - $0.80 per pound.
·	On July 24, 2006, Barrick announced all-cash offers for NovaGold Resources Inc. and Pioneer Metals Corporation in order to consolidate the ownership to 100% of the Donlin Creek project and add Galore Creek to its unrivalled project pipeline.

Barrick Gold Corporation today reported net income of $459 million ($0.53 per share) for second quarter 2006, up significantly from net income of $47 million ($0.09 per share) in the year-earlier period. Second quarter 2006 net income was positively impacted by $30 million ($0.03 per share) of special items (see page 9 of Management’s Discussion and Analysis for further details).

Operating cash flow for second quarter 2006 was $643 million ($0.73 per share), compared with the prior-year period of $101 million ($0.19 per share).

“As gold and copper prices rose in the second quarter, our operating margins expanded and had a

direct positive impact on our bottom line,” said Greg Wilkins, President and CEO. “The result was record earnings and cash flow per share.”

PRODUCTION AND COSTS

In second quarter 2006, Barrick produced 2.1 million ounces of gold at total cash costs of $281 per ounce, compared to 1.2 million ounces produced at total cash costs of $243 per ounce for the prior-year quarter. The increase in production year-over-year is due to the successful acquisition of Placer Dome and the contribution from Barrick’s new generation of mines.

__________________

¹ Total cash costs is defined as cost of sales divided by ounces of gold sold or pounds of copper sold. Total cash costs exclude amortization expense and inventory purchase accounting adjustments. For further information on this performance measure see pages 15 to 17 of the Company’s MD&A.

BARRICK SECOND QUARTER 2006 PRESS RELEASE

Barrick’s financial results benefited from the strong gold price, as it realized $592 per ounce on its gold sales, a 40% increase over the prior-year period. As a result, the Company’s margin over its total cash costs increased to over $300 per ounce in the current quarter, versus $181 per ounce in the prior-year period. The Company also produced 100 million pounds of copper during the second quarter 2006, and realized $3.49 per pound on its copper sales relative to its total cash costs of $0.76 per pound.

HEDGE BOOK REDUCTION

Barrick believes the long-term outlook for gold prices is positive and has aggressively reduced its gold hedge program. During the second quarter, the remaining legacy Placer Dome gold hedge position was eliminated, for a total reduction of 7.7 million ounces year-to-date. The total cost of reducing the Placer Dome gold hedge position was approximately $1.8 billion, of which $0.3 billion remains to be paid. During the second quarter, the Company’s realized price on its gold sales was reduced by $35 per ounce, primarily as a result of hedge accounting adjustments related to the acquired Placer Dome hedge position. The corporate gold sales contract position currently totals 2.8 million ounces, and the Company intends to continue to reduce this position opportunistically, such that it is eliminated by no later than the end of 2009.

REGIONAL RESULTS

North America

The North America region’s second-quarter gold production was 0.8 million ounces at total cash costs of $293 per ounce versus 0.6 million ounces at total cash costs of $257 per ounce in the prior-year period. The Company expects North American gold production for the second half of 2006 to be slightly higher primarily due to planned mine sequencing at Bald Mountain and Cortez. Total cash costs for the region increased over the same period primarily due to the mix of production from the acquired mines, higher prices of diesel fuel and higher royalties. Goldstrike’s total cash costs were reduced in the quarter due to Barrick’s new power plant. The Goldstrike property passed a milestone in May 2006 when it poured its 30 millionth ounce of gold since its acquisition 20 years ago.

At the Cortez Hills project, open-pit mining equipment is being procured, commissioning of a water supply system is ongoing, and development of twin declines for underground exploration continues to advance. During the second quarter, 659 meters of development were advanced, for a total of 1,087 meters of development project-to-date.

At the Pueblo Viejo project, the Company continues to update the feasibility analysis prepared by Placer Dome prior to the acquisition, while concurrently undertaking government and community relations, and environmental permitting. As well, work began on a 3,000-meter, 10-hole diamond drill program to test the extension of mineralization between two ore zones.

Since acquiring control of Placer Dome earlier this year, Barrick has moved decisively at the Donlin Creek project to ensure that the appropriate financial, technical and human resources are being devoted to the timely completion of the required feasibility study. The 2006 budget has been increased from $30 million to $56 million. The number of drills operating at the site have been significantly increased to insure that the 80,000 meters of drilling planned for this year can be completed, ensuring that sufficient drilling information is available to complete the feasibility study. In addition, Barrick has assigned to this project the best qualified technical personnel from both inside of Barrick and externally to ensure that the challenges and opportunities of the project are properly assessed and exploited.

South America

The South America region produced 0.5 million ounces of gold at total cash costs of $176 per ounce in the second quarter 2006 versus 0.2 million ounces of gold at $138 per ounce in 2005 as a result of the start-up of two of Barrick’s new generation of mines in the last year. At Lagunas Norte, which has produced over one million ounces of gold since its start-up in June 2005, primary crusher capacity has been increased from 42,000 tonnes per day to 54,000 tonnes per day. As a result of this increased capacity and higher recovery rates, the mine continues to target production of over one million ounces in 2006. At Veladero, ore grades for leaching are expected to increase as the mine transitions from mining lower grade ore from the Filo Mario pit to higher grade

BARRICK SECOND QUARTER 2006 2 PRESS RELEASE

ore from the Amable pit in the second half of 2006. The Zaldívar copper mine produced 82 million pounds of copper during second quarter 2006 at total cash costs of $0.61 per pound. The Company has increased its 2006 copper production guidance at Zaldívar from 280 million pounds to 300 million pounds due to higher grades.

At the Pascua-Lama project in Chile/Argentina, the Chilean environmental regulatory authorities provided definitive approvals of the development project, when the appeal process was completed in June. In addition, during the quarter, the Argentine evaluation commission reviewing the project’s environmental impact assessment requested the submission of a report consolidating all environmental impact assessment and related documentation, which resulted in an adjustment of the target for approvals to the fourth quarter of 2006.

Australia Pacific

The Australia Pacific region’s second-quarter gold production was 0.6 million ounces at total cash costs of $306 per ounce versus 0.2 million ounces at total cash costs of $257 per ounce in the prior-year period. At Kalgoorlie, lower production was due to reduced throughput because of mill shutdowns which resulted in higher total cash costs. At Cowal, production commenced in late April, and is expected to ramp up in the second half of the year as throughput and recovery levels increase. Total cash costs for the region increased over the prior-year period due to the new mix of mines, higher prices of input commodities, and consumables, higher energy costs and higher foreign exchange rates.

Africa

The Africa region produced 0.2 million ounces of gold in the quarter at total cash costs of $368 per ounce versus 0.1 million ounces at total cash costs of $344 per ounce in the prior-year period. At North Mara, production is expected to increase in the second half of the year due to accessing higher-grade areas of the pit. On May 4, 2006, a loaded skip and 6.7 kilometers of rope fell 1.6 kilometers down the South Deep mine’s Twin Shaft complex during routine maintenance, causing extensive damage but no injuries. As a result, the mine site’s hoisting capacity has been reduced to 40% for the remainder of the year, and the Company is adjusting its full-year guidance for South Deep to about 150,000

ounces of gold production at total cash costs of $560 per ounce. The Company is insured for property damage and a portion of business interruption losses, and has initiated the claims process in connection with this event. The mine’s Twin Shaft complex is expected to be back in operation by early 2007.

EXPLORATION UPDATE²

The Company is pleased with the year-to-date progress on its exploration programs. Based on successful work to date, the Company has increased its budgets at South Arturo and Cortez.

At the South Arturo deposit, the 2006 drill program has been expanded due to success to date. New mineralization along the Hinge Zone has been discovered and the exploration budget has been doubled to $10 million (100% basis). Four drill rigs continue to drill targets with objectives to better define the ore with infill and extension drilling.

At the Cortez property, the Company is focusing on the Gold Acres Window and other favorable geological terrains. Based on year-to-date success, an additional $8.5 million (100% basis) in funding has been allocated to these drill programs. At Gold Acres, the drill program is working on resource delineation of oxide and refractory mineralization near existing pits as well as targeting new mineralization.

CORPORATE DEVELOPMENT

During the second quarter, the Company concluded the sale of the shares of Placer Dome (CLA) Limited, which owns four Placer Dome mines and other agreed interests, to Goldcorp Inc. Net cash proceeds from the sale were approximately $1.6 billion. There is no impact to earnings nor Barrick’s projected 2006 gold production as a result of the transaction.

On July 24, 2006, Barrick announced all-cash offers for NovaGold Resources Inc. and Pioneer Metals Corporation in order to consolidate the ownership to 100% of the Donlin Creek project and add Galore Creek
__________________________

²Barrick’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 SECOND QUARTER 2006 3 PRESS RELEASE

to its unrivalled project pipeline. The proposed NovaGold transaction is valued at approximately $1.29 billion (or $1.53 billion on a fully-diluted basis), while the proposed Pioneer transaction is valued at about C$60.1 million (or C$64.7 million on a fully-diluted basis).

“Having successfully acquired and integrated the Placer Dome mines into our portfolio, the acquisition of NovaGold fits with our strategic plans to further strengthen our project pipeline and meet the challenge of growing our reserve and resource base,” said Mr. Wilkins. “Our strong balance sheet gives us the ability to finance this acquisition with cash, thereby increasing our per share leverage to gold and copper.”

PLACER DOME INTEGRATION AND 2006 OUTLOOK

The integration of the Placer Dome mines has been completed and the Company has done detailed reviews of all significant operations. Numerous improvements have been identified highlighting ‘value add’ opportunities in addition to the integration synergies, and will be implemented in the coming months.

The $200 million annual synergies have been specifically identified, and the Company expects to reach the $200-million run rate in 2007.

The Company is reiterating its 2006 gold production guidance of 8.6 - 8.9 million ounces at $275 - $290 per ounce. Full-year copper production guidance has been increased to approximately 370 million pounds and total cash costs guidance has been maintained at about $0.75 - $0.80 per pound. The Company expects gold production for the second half of 2006 to be stronger due to better performances from Veladero, Lagunas Norte, Cortez and North Mara. The Company now expects its 2006 exploration expense to be in the range of $180 - $190 million, project development expense to be about $150 million, and its tax rate to be about 28% - 30%.

* * * * *

Barrick’s vision is to be the world’s best gold company by finding, acquiring, developing and producing quality reserves in a safe, profitable and socially responsible manner. Barrick’s shares are traded on the Toronto, New York, London, Euronext-Paris and Swiss stock exchanges.

BARRICK SECOND QUARTER 2006 4 PRESS RELEASE

Key Statistics

Three months ended

June 30,

Six months ended

June 30,

(in United States dollars)

(Unaudited)

2006

2005

2006

2005

Operating Results

Gold production (thousands of ounces)¹

2,085

1,159

4,041

2,303

Gold sold (thousands of ounces)¹

1,998

1,085

3,938

2,214

Per ounce data

Average spot gold price

627

427

590

427

Average realized gold price⁵

592

424

565

426

Total cash costs²

281

243

282

242

Amortization³

Total production costs

354

324

359

321

Copper production (millions of pounds)

100

n/a

172

n/a

Copper sold (millions of pounds)

n/a

177

n/a

Per pound data

Average spot copper price

3.27

n/a

2.75

n/a

Average realized copper price

3.49

n/a

2.96

n/a

Total cash costs²

0.76

n/a

0.76

n/a

Amortization³

0.25

n/a

0.47

n/a

Total production costs

1.01

n/a

1.23

n/a

Financial Results (millions)

Sales

1,556

463

2,810

947

Net income

459

683

113

Operating cash flow

643

101

1,021

225

Per Share Data (dollars)

Net income (diluted)

0.53

0.09

0.82

0.21

Operating cash flow (diluted)

0.73

0.19

1.22

0.42

Weighted average diluted common shares (millions)⁴

878

536

835

536

	As at June 30,		As at December 31,
	2006		2005
Financial Position (millions)
Cash and equivalents	$	1,430	$	1,037
Non-cash working capital		54		151
Long-term debt		2,893		1,721
Shareholders’ equity		13,258		3,850

¹	Includes equity gold ounces in Tulawaka and South Deep. Production also includes equity gold ounces in Highland Gold.
²	Represents equity cost of goods sold plus royalties, production taxes and accretion expense, less by-product revenues, divided by equity ounces of gold sold or pounds of copper sold. For further information on this performance measure, refer to page 15. Excludes amortization and inventory purchase accounting adjustments.
³	Represents equity amortization expense and inventory purchase accounting adjustments at the Company's producing mines divided by equity ounces of gold sold or pounds of copper sold.
⁴	Fully diluted, includes dilutive effect of stock options, convertible debt and preferred shares.
⁵	Calculated as consolidated gold sales divided by consolidated ounces sold.

BARRICK SECOND QUARTER 2006 5 SUMMARY INFORMATION

Production and Cost Summary

	Gold Production (attributable ounces) (000’s)						Total Cash Costs (US$/oz)
	Three months ended June 30,			Six months ended June 30,¹			Three months ended June 30,				Six months ended June 30,¹
(Unaudited)		2006	2005		2006	2005		2006		2005		2006		2005
North America		821	620		1,673	1,277	$	293	$	257	$	292	$	254
South America		461	197		884	343		176		138		184		130
Australia Pacific		564	233		1,046	487		306		257		312		244
Africa		230	106		419	184		368		344		365		351
Russia/Central Asia		9	3		19	12		494		323		422		268
Total		2,085	1,159		4,041	2,303	$	281	$	243	$	282	$	242

	Copper Production (attributable pounds) (Millions)						Total Cash Casts (US$/lb)
	Three months ended June 30,			Six months ended June 30,¹			Three months ended June 30,				Six months ended June 30,¹
(Unaudited)		2006	2005		2006	2005		2006		2005		2006		2005
South America		82	-		142	-	$	0.61	$	-	$	0.60	$	-
Australia Pacific		18	-		30	-		1.46		-		1.41		-
Total		100	-		172	-	$	0.76	$	-	$	0.76	$	-

	Total Production Costs (US$/oz)
	Three months ended June 30,						Six months ended June 30,
(Unaudited)	2006			2005			2006			2005
Direct mining costs at market foreign exchange rates	$	286		$	286		$	288		$	279
Gains realized on currency and commodity hedge contracts		(12	)		(25	)		(12	)		(24	)
By-product credits		(19	)		(35	)		(18	)		(30	)
Cash operating costs		255			226			258			225
Royalties		19			12			17			12
Production taxes		4			2			4			2
Accretion and other costs		3			3			3			3
Total cash costs²		281			243			282			242
Amortization		73			81			74			79
Inventory purchase accounting adjustments		-			-			3			-
Total production costs	$	354		$	324		$	359		$	321

	Total Copper Production Costs (US$/lb)
	Three months ended June 30,				Six months ended June 30,
(Unaudited)	2006		2005		2006		2005
Cash operating costs	$	0.75	$	-	$	0.74	$	-
Royalties		0.01		-		0.02		-
Total cash costs²		0.76		-		0.76		-
Amortization		0.13		-		0.13		-
Inventory purchase accounting adjustments		0.12		-		0.34		-
Total production costs	$	1.01	$	-	$	1.23	$	-

¹	Barrick's share of acquired Placer Dome mines' production and total cash costs for the period January 20, 2006 to June 30, 2006.
²	Total cash costs per ounce/pound excludes amortization and inventory purchase accounting adjustments. Total cash costs per ounce/pound is a performance measure that is used throughout this Second Quarter Report 2006. For more information see pages 15 to 17 of the Company's MD&A.

BARRICK SECOND QUARTER 2006 6 SUMMARY INFORMATION

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 and six month periods ended June 30, 2006, in comparison to the corresponding prior-year periods. This MD&A, which has been prepared as of August 2, 2006, 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 and six month periods ended June 30, 2006 (collectively, the "Financial Statements"), which are included in this Quarterly Report on pages 29 to 58. 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, 2005, the related annual MD&A included in the 2005 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 our MD&A, we consider the materiality of information. Information is considered material if: (i) such information results in, or would reasonably be expected to result in, a significant change in the market price or value of our shares; or (ii) there is a substantial likelihood that a reasonable investor would consider it important in making an investment decision; or (iii) if it would significantly alter the total mix of information available to investors. We evaluate materiality with reference to all relevant circumstances, including potential market sensitivity.


CONTENTS
Executive Overview	7	Liquidity	23
Key Economic Trends	10	Capital Resources	23
Consolidated Gold and Copper Production,		Balance Sheet	24
Sales and Costs	11	Contractual Obligations and Commitments	24
Results of Operating Segments	11	Gold Sales Contracts	24
Total Cash Costs Performance Measures	15	Critical Accounting Policies and Estimates	25
Other Costs and Expenses	18	Cautionary Statement on Forward-Looking
Liquidity and Capital Resources	22	Information	27
Cash Flow	22

EXECUTIVE OVERVIEW

Gold production in 2006 has increased substantially over the prior year due to contributions from our three newest mines Lagunas Norte, Veladero and Cowal as well as production from the Placer Dome mines acquired in January 2006. For the three and six month periods ended June 30, 2006 gold production includes 0.66 million and 1.16 million ounces, respectively, from the acquired Placer Dome mines. In second quarter 2006, we produced 100 million pounds of copper from two copper mines acquired with Placer Dome for a total of 172 million pounds of copper produced in the six months

ended June 30, 2006. Earnings and operating cash flow have increased substantially due to the higher gold production levels and higher realized gold prices, as well as the contribution from copper production at recent high copper prices. Earnings on a per share basis reflect 322.8 million common shares issued in first quarter 2006 to acquire Placer Dome. In second quarter 2006, we received $1.641 billion on closing of the sale of certain Placer Dome operations to Goldcorp, repaid $872 million of debt obligations, and spent $274 million on capital expenditures.

BARRICK SECOND QUARTER 2006 7 MANAGEMENT'S DISCUSSION AND ANALYSIS

Results Overview

($ millions, except per share, per ounce/pound data in dollars)


	Three months ended June 30								Six months ended June 30
	Gold					Copper¹		Gold						Copper¹
	2006		2005			2006			2006		2005			2006
Production ('000s oz/millions Ibs)²		2,085		1,159			100			4,041		2,303			172
Sales²
'000s oz/millions Ibs		1,998		1,085			98			3,938		2,214			177
$ millions	$	1,213	$	463		$	343		$	2,284	$	947		$	526
Market price³		627		427			3.27			590		427			2.75
Realized price³		592		424			3.49			565		426			2.96
Total cash costs^{2, 4}		281		243			0.76			282		242			0.76
Amortization^{2, 3, 5}		73		81			0.25			77		79			0.47
Total production costs^{1, 2}	$	354	$	324		$	1.01		$	359	$	321		$	1.23

				2006			2005					2006			2005
Net income			$	459		$	47				$	683		$	113
Net income per share
Basic				0.53			0.09					0.83			0.21
Diluted				0.53			0.09					0.82			0.21
Cash inflow (outflow) from continuing operations
Operating activities				643			101					1,021			225
Investing activities				(308	)		(323	)				(717	)		(590	)
Financing activities			$	(1,776	)	$	25				$	(1,527	)	$	101

¹	The 2005 comparative period for copper has been omitted as we did not produce any significant amounts of copper prior to the copper mines acquired with Placer Dome.
²	Gold production and sales, and total cash cost per ounce/pound statistics exclude the results of discontinued operations, and reflect our equity share of production.
³	Per ounce/pound weighted average.
⁴	Total cash costs per ounce/pound statistics exclude amortization and inventory purchase accounting adjustments. Total cash costs per ounce/pound is a performance measure that is used throughout this MD&A. For more information see pages 15 to 17.
⁵	Amortization includes inventory purchase accounting adjustments.

At acquisition, Placer Dome had a net obligation to deliver approximately 7.7 million ounces of gold as well as various other derivative positions. The aggregate fair value of these derivative positions was recorded as a liability of $1,707 million on January 20, 2006. This Placer Dome gold hedge position has now been reduced to zero (on a net economic basis). The elimination of these hedges was done via a combination of financial closeouts and offsetting positions with 4.7 million ounces eliminated in first quarter 2006 and 3 million ounces eliminated in second quarter 2006. The total cash required to date to settle these Placer Dome gold hedge positions has been approximately $1.5 billion, with approximately $0.3 billion to be incurred in future periods for positions which have been economically offset but not yet settled. The cost to closeout the 3.0 million ounces of Placer Dome gold positions in the second quarter 2006 was approximately $0.8 billion.

The acquired Placer Dome positions received hedge accounting treatment from the date of the acquisition until they were eliminated and, therefore, had a designated date and price against specific future gold

sales. Due to the impact of hedge accounting for these contracts, for the balance of production for 2006, revenue will be based on selling prices that approximate spot gold prices less a fixed reduction of $97 million of which we expect to record a reduction of $79 million in third quarter 2006 and a further $18 million in fourth quarter 2006. Barrick's remaining fixed-price gold sales contracts stand at 2.8 million ounces of Corporate Gold Sales Contracts, and a further 9.5 million ounces of Project Gold Sales Contracts which are allocated to our development projects, principally Pascua-Lama and Pueblo Viejo (see pages 24 to 25).

BARRICK SECOND QUARTER 2006 8 MANAGEMENT'S DISCUSSION AND ANALYSIS

Key Factors Affecting Earnings									people and mining operations of Placer Dome, consolidation of certain business and exploration offices, and elimination of redundancies between the two organizations. The $200 million in annual synergies have been specifically identified, and we expect reach the $200 million run rate in 2007. In second quarter 2006, we also continued to validate our assumptions as to where we expect to achieve these synergies. We continue to expect these synergies to come from the following areas: · Administration and offices globally - we expect this area to contribute about 25% of the total synergies based on the closures of redundant offices around the world. · Exploration - This area contributes about 25% of the total synergies. · Operations and technical services - This area comprises about 30%. Value is being driven from sharing of best practices; project optimization; supply chain management; continuous improvement; and research and development. · Finance and tax - We see opportunities for debt consolidation, reduced fees and costs, and tax planning, which comprise about 20% of the total synergies. Offers to acquire NovaGold Resources Inc. and Pioneer Metals Corporation On July 24, 2006 we announced our intention to make an all cash offer of $14.50 per share for all the outstanding shares of NovaGold Resources Inc. ("NovaGold"). The acquisition of NovaGold would enable us to consolidate our interest in the Donlin Creek project in Alaska, USA, acquire a 100% interest in the Galore Creek project in British Columbia, Canada and a 100% interest in the Rock Creek open-pit gold deposit, in Nome, Alaska, which is targeted to begin commercial production in 2007.¹ NovaGold's other assets at May 31, 2006 included cash of $184 million, and investments with a market value of about $66 million.² Based on the outstanding equity securities of NovaGold at July 24, 2006, the cost of acquiring 100% of NovaGold would be $1.53 billion on a fully diluted basis. Also on July 24, 2006 we announced that we had reached an agreement with Pioneer Metals Corporation ("Pioneer"), whereby it will support Barrick's offer to acquire all its outstanding common shares for cash consideration of C$1.00 per share or approximately C$64.7 million on a fully diluted basis. Pioneer has a portfolio of exploration properties and interests, including the Grace property which is adjacent to NovaGold's Galore Creek project. ¹ ¹ As per NovaGold's Annual Report 2005. ² As per NovaGold's Second Quarter Report 2006. Dollar amounts were converted to US dollars using the month-end rate.
($ millions)		Refer to page			Increase Q2 2006 vs. Q2 2005		(decrease) Year to date 2006 vs. 2005
Higher realized gold prices		11			$ 336		$ 547
Higher sales volumes¹
Gold		11			93		181
Copper		11			255		366
Higher total cash costs		11			(77)		(158)
Higher interest expense		20			(36)		(54)
Higher exploration and project development expense		18			(35)		(56)
Higher income tax expense²		20			(142)		(224)
Special items³		9			11		(25)
Other					7		(7)
Total					$ 412		$ 570
¹ Impact of changing sales volumes on margin between selling prices, total cash costs and amortization, but excluding inventory purchase accounting adjustments. ² Excluding the impact of tax effects of special items. ³ Special items are presented on a post-tax basis.

Special Items - Effect on Earnings Increase (Decrease)¹
			Three months ended June 30			Six months ended June 30
($ millions)	Page		2006	2005		2006		2005
Non-hedge derivative gains	20		$ 40	$ 4		$ 30		$ 7
Gain on Kabanga transaction	20		-	15		-		15
Inventory purchase accounting adjustments	27		(10)	-		(58)		-
Deferred tax credits	20		-	-		31		-
Cumulative accounting changes			-	-		-		6
Total			$ 30	$ 19		$ 3		$ 28
¹ Amounts are presented on a post-tax basis. Acquisition of Placer Dome In second quarter 2006, we completed the sale of shares of Placer Dome (CLA) Limited to Goldcorp Inc. On completion of the transaction, Goldcorp assumed interests in all of Placer Dome's Canadian operations (other than its office in Vancouver), including all mining, reclamation and exploration properties, Placer Dome's interest in the La Coipa mine in Chile, and a 40% interest in the Pueblo Viejo project in the Dominican Republic, for cash consideration of about $1.641 billion. In second quarter 2006, we completed the integration of Placer Dome mines. The integration plan, which we began immediately following the acquisition of Placer Dome in first quarter 2006, focused on integrating the

BARRICK SECOND QUARTER 2006 9 MANAGEMENT'S DISCUSSION AND ANALYSIS

2006 Outlook While our original guidance for consolidated gold production and total cash costs remains unchanged, we have updated our 2006 guidance for copper production, exploration expense, project development expense and our effective tax rate. Higher copper production mainly reflects improved ore grades at Zaldivar. Higher exploration expense and project development expense mainly reflects higher projected levels of activity at our various development projects and exploration programs. The lower expected income tax rate mainly reflects changes in the expected geographical mix of income.		rise in the second quarter supported by strong market fundamentals, reaching a high of $3.99 per pound in May and closing at $3.37 per pound at the end of June 2006. We are optimistic that continuing strong demand and supply constraints in the copper market will provide ongoing support for copper prices. Currency Exchange Rates About 70-75 percent of our production costs are denominated in US dollars and are therefore not exposed to fluctuations in US dollar exchange rates. For the remaining portion of our production costs that are denominated in other currencies, our currency hedge position has mitigated to a significant extent the effect of the weakening of the US dollar over the last few years on operating costs at our Australian and Canadian mines. With the Placer Dome acquisition, our inherent exposure to the Australian dollar and South African rand increased. About one third of our Australian dollar expenditures over the next three years are exposed to changes in Australian dollar exchange rates. Operating expenditures in South Africa are fully exposed to changes in the South African rand, which weakened in the second quarter as investors sold emerging market currencies to the benefit of the US dollar as the US Federal Reserve continued to raise interest rates. Further information on our currency hedge position is included in note 15 to the Financial Statements. Other Commodities and Consumables The mining industry continues to experience price inflation for many commodities and consumables used in the production of gold and copper, as well as, in some cases, constraints on supply. We continue to seek ways to mitigate these risks. To help mitigate rising oil prices and control the cost of fuel consumption, we have a fuel hedge position totaling 2.4 million barrels of oil, which represents about 17% of our total estimated consumption through 2010. The fuel hedge contracts are primarily designated for our Goldstrike, Round Mountain, and Kalgoorlie mines and have an average price of $51 per barrel, about 30% lower than recent market prices. In 2005, we completed construction of a power plant in Nevada for our Goldstrike mine, designed to enable us to lower the cost of power consumed at the mine. The plant has enabled us to lower the cost per kwh from approximately 8 cents to 6.6 cents in 2006, with a corresponding decrease in the total cash costs of gold produced at Goldstrike of about $8 per ounce in the first half of 2006. We have initiated an energy management program with a goal to reduce energy consumption and the cost of energy at our operating mines and projects. Renewable energy sources are being considered as part of this program.
For the year ended December 31	2006E
Gold
Production (millions of ounces)	8.6-8.9
Total cash costs¹ ($ per ounce)	$275-$290
Copper
Production (millions of pounds)	370
Total cash costs¹ ($ per pound)	$0.75-$0.80
Corporate administration expense (millions)	$140
Exploration expense (millions)	$180-$190
Project development expense (millions)	$150
Other operating expenses (millions)	$85
Interest income (millions)	$75
Interest expense (millions)	$110
Capital expenditures (millions)	$1,200-$1,300
Tax rate	28%-30%
¹Total cash costs per ounce exclude amortization expense and inventory purchase accounting adjustments charged to cost of sales. Guidance for 2006 excludes discontinued operations and reflects our equity share of production.
KEY ECONOMIC TRENDS Gold, Silver and Copper Prices In second quarter 2006, gold prices ranged from $543 to $730 per ounce with an average market price of $627 per ounce. The price of gold continued its upward trend in the first half of the quarter largely due to strong investment demand, geopolitical concerns, and a weakening US dollar, before retracting to levels comparable to those observed early in the quarter. The sell off was partly triggered by lower physical demand and fund selling. We remain confident that gold prices will remain strong for the same reasons that have caused gold prices to rise over the first half of 2006, and as investors continue to show interest in gold. Silver prices reached a high of $15.17 per ounce in May 2006, and have risen more than 16% since the beginning of the year, largely due to the silver ETF launched in the second quarter. We expect silver prices to remain buoyant as investors focus on earning increased returns over traditional investments. Copper prices continued to

BARRICK SECOND QUARTER 2006 10 MANAGEMENT'S DISCUSSION AND ANALYSIS

US Dollar Interest Rates

Short-term US dollar interest rates rose in 2006 as the US Federal Reserve continued its tightening cycle. We presently expect long-term interest rates to rise slightly as the front end of the interest rate curve rises due to inflation risks. Volatility in interest rates mainly affects interest receipts on our cash balances ($1.4 billion cash at the end of second quarter 2006), and interest payments on variable-rate debt ($1.1 billion of variable-rate debt at the end of second quarter 2006).

CONSOLIDATED GOLD AND COPPER PRODUCTION, SALES AND COSTS

In second quarter 2006, gold production and sales increased substantially over the prior year period, due to the acquired Placer Dome mines and production from Lagunas Norte, Veladero and Cowal. In second quarter 2006, we produced 100 million pounds of copper for a total of 172 million pounds in the first six months of 2006.

Realized gold prices have increased significantly in 2006 compared to the same period in 2005 due to the trend of rising market gold prices. Realized gold prices of $592 per ounce in second quarter 2006 were $168 higher than in second quarter 2005, due to higher market gold prices, but reflect a reduction of about $35 per ounce primarily due to hedge accounting adjustments relating to the impact of hedge accounting for the acquired Placer Dome gold hedge position from the date of acquisition through the date the position was eliminated. Cash margins on gold, representing the difference between realized gold selling prices and total cash costs, have increased by $130 per ounce, or 72%, in second quarter 2006 compared to the prior year period, as gold price increases have more than offset increases in total cash costs over the same period. Realized copper prices have also increased significantly over the course of 2006, reflecting the trend of higher market copper prices in the first half of the year.

Consolidated Total Cash Costs per Ounce/Pound¹


	Three months ended June 30						Six months ended June 30
	Gold				Copper		Gold				Copper
(in dollars per ounce/pound)	2006		2005		2006		2006		2005		2006
Cost of sales^{1, 2, 3}	$	286	$	286	$	0.75	$	288	$	279	$	0.74
Currency/commodity hedge gains		(12)		(25)		-		(12)		(24)		-
By-product credits		(19)		(35)		-		(18)		(30)		-
Royalties/production taxes		23		14		0.01		21		14		0.02
Accretion/other costs		3		3		-		3		3		-
Total cash costs¹	$	281	$	243	$	0.76	$	282	$	242	$	0.76

¹	Total cash costs per ounce/pound and cost of sales per ounce/pound both exclude amortization and inventory purchase accounting adjustments - see page 17.
²	At market currency exchange and commodity rates, adjusted for non-controlling interests - see page 17.
³	Excludes costs of sales related to discontinued operations.

Total cash costs in second quarter 2006 for gold were higher than the prior-year period, primarily because, on average, costs at the acquired Placer Dome mines are higher than at our legacy mines. The effects of rising commodities and consumables prices, higher royalty costs and processing of lower-grade ore at some of our mines were partly offset by lower-cost production from Lagunas Norte that began in the second half of 2005 and the availability of higher-grade ore at Goldstrike in the first half of 2006.

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 expenses and amortization of segment property, plant and equipment. We monitor segment expenses using "total cash costs per ounce" and "total cash costs per pound" statistics that represent segment cost of sales, less inventory purchase price adjustments, divided by ounces of gold and pounds of copper sold in each period. The discussion of results focuses on these statistics in explaining changes in segment expenses.

BARRICK SECOND QUARTER 2006 11 MANAGEMENT'S DISCUSSION AND ANALYSIS

	Three months ended June 30								Six months ended June 30
	Production (000's ozs/millions Ibs)				Total cash costs ($ per oz/lb)				Production (000's ozs/millions Ibs)				Total cash costs ($ per oz/lb)
	2006		2005		2006		2005		2006		2005		2006		2005
Gold
North America		821		620	$	293	$	257		1,673		1,277	$	292	$	254
South America		461		197		176		138		884		343		184		130
Australia Pacific		564		233		306		257		1,046		487		312		244
Africa		230		106		368		344		419		184		365		351
Russia/Central Asia		9		3		494		323		19		12		422		268
		2,085		1,159		281		243		4,041		2,303		282		242
Copper
South America		82		-		0.61		-		142		-		0.60		-
Australia Pacific		18		-		1.46		-		30		-		1.41		-
		100		-	$	0.76	$	-		172		-	$	0.76	$	-

North America

Producing Mines

Through the Placer Dome acquisition we acquired 4 producing mines. The mines acquired from Placer Dome are Cortez (60% owned), Turquoise Ridge (75% owned) and Bald Mountain in Nevada, and Golden Sunlight in Montana. We also acquired three significant projects: Cortez Hills, within the Cortez Joint Venture area of interest in Nevada (60% owned); Pueblo Viejo in the Dominican Republic (60% owned); and Donlin Creek in Alaska (30% owned with earn-in rights to 70%). In second quarter 2006, gold production increased by 32% over the prior-year period, with the mines acquired through Placer Dome accounting for 30% of the increase. The remaining increase in production is mainly due to increased production at Goldstrike as a result of mining higher-grade material and improved gold recovery rates at the autoclave facility. Temporary lower production levels are being experienced at Round Mountain and Cortez mainly due to layback work leading to fewer ore tons mined (and more waste) at Round Mountain, and a combination of fewer ore tons mined and lower ore grades at Cortez. Due to pit wall instability at Golden Sunlight, production levels have been lower, but remediation work is nearing completion and production levels at the mine are expected to increase in the second half of 2006.

Total cash costs per ounce in the second quarter 2006 were 14% higher than the same period in 2005 mainly due to higher prices of input commodities and consumables used in the production process, higher royalties and production taxes due to higher market gold prices and also because average total cash costs of the acquired Placer Dome mines are higher than those of the legacy Barrick mine sites. At Cortez and Round Mountain, the temporary lower production levels have also contributed to higher total cash costs. These cost

increases have been partially mitigated by higher-than expected silver by-product credits at Eskay Creek due to high market silver prices and higher silver grades in the material produced, and lower power costs at Goldstrike, which is benefiting from the Western 102 power plant. We continue to expect to meet our original full-year 2006 guidance for gold production and total cash costs for the North America region.

Significant Projects

At the Ruby Hill mine project, an open-pit, heap-leach operation exploiting the East Archimedes deposit, construction costs of $7 million were spent during the second quarter 2006, mainly for pre-production waste stripping activities that will continue throughout 2006, with first gold production expected in early 2007.

At the Cortez Hills project, which involves the development of two adjacent deposits - Cortez Hills and Pediment - within the Cortez Joint Venture area of interest, second quarter 2006 activities consisted primarily of the ongoing procurement of open-pit mining equipment, commissioning of a water supply system for the underground portion of the project, and driving an additional 659 meters of underground exploration development for a total of 1,087 meters of development project-to-date. The underground portion of the project consists of twin declines being driven from portals within an existing open pit for exploration of the area underneath the proposed Cortez Hills open pit. Geological, geotechnical and hydrological site data continues to be collected for use in the underground pre-feasibility study. Surface construction activities related to the open pit portion of the project, which include leach pad construction, crusher and conveyor installation, and pre-production waste stripping, will commence once the required permits are obtained.

BARRICK SECOND QUARTER 2006 12 MANAGEMENT'S DISCUSSION AND ANALYSIS

At the Pueblo Viejo project, we continued to update the feasibility analysis prepared by Placer Dome prior to the acquisition and we are reviewing other work completed on the project. Concurrent with the review and update of the feasibility analysis, activities relating to government and community relations and environmental permitting for both the mine and the related power plant are ongoing. In addition, work began on a 3,000-meter, 10-hole diamond drill program to test the extension of mineralization between two ore bodies. In May 2006, a joint venture agreement with Goldcorp was finalized, which establishes Barrick as the 60% owner and operator of the project.

The Donlin Creek project is a large refractory gold deposit in Southwestern Alaska, under lease from two Alaska aboriginal corporations until 2015 and so long thereafter as mining operations are carried out at the Donlin Creek property. The Donlin Creek property is being explored and developed under a Mining Venture Agreement between NovaGold and wholly-owned subsidiaries of Barrick entered into in November 2002. Under the terms of such agreement, Barrick currently holds a 30% interest in the project with the right to increase that interest to 70% by satisfying the following conditions on or before November 12, 2007: (1) funding of $32 million of exploration and development expenditures on the project; (2) delivering a feasibility study to NovaGold; and (3) obtaining the approval of Barrick's Board of Directors to construct a mine on the property. At the end of March 2006, Barrick satisfied the funding condition. Barrick is currently taking the steps necessary to complete the required feasibility study and intends to present the project to its Board of Directors for approval in due course.

Since acquiring control of Placer Dome Inc. earlier this year, Barrick has moved decisively to ensure that the appropriate financial, technical and human resources are being devoted to the timely completion of the required feasibility study. The 2006 budget has been increased from $30 million to $56 million. The number of drills operating at the site have been significantly increased to insure that the 80,000 metres of drilling planned for this year can be completed, ensuring that sufficient drilling information is available to complete the feasibility study. In addition, Barrick has assigned to this project the best qualified technical personnel from both inside of Barrick and externally to ensure that the challenges and opportunities of the project are properly assessed and exploited.

South America

Producing Mines

Gold production was higher in second quarter 2006 compared to the prior-year period, mainly because of the start-up of the Lagunas Norte and Veladero mines in the second half of 2005, partly offset by lower production at Pierina with mining of deeper, lower-grade areas of the deposit. At Lagunas Norte, which has produced over one million ounces of gold since its start-up in June 2005, primary crusher capacity has been increased from 42,000 tonnes per day to 54,000 tonnes per day. As a result of this increased capacity and higher recovery rates, the mine continues to target production of over one million ounces in 2006. At Veladero, after the transition of mining from the Filo Mario pit to the higher-grade ore from the Amable pit in the second half of 2006, we expect gold production to increase. All three mines benefited from higher silver by-product credits in second quarter 2006, but continue to be impacted by higher prices for input commodities and consumables, leading to higher total cash costs in 2006.

At Zaldívar, a copper mine that we acquired through the Placer Dome acquisition, we produced 82 million pounds of copper in second quarter 2006 at total cash costs of $0.61 per pound. Higher production during the second quarter 2006 was mainly due to better equipment availability and the acquisition of three more haul trucks, combined with changes in mine sequencing to mitigate a temporary period of lower conveyor capacity at the crusher. Total cash costs per pound were better than expected, mainly due to the higher production levels.

We continue to expect to meet our original full-year 2006 guidance for gold production and total cash costs for the South America region. Copper production guidance has been increased from 280 million pounds to about 300 million pounds mainly due to higher ore grades, and we are maintaining total cash costs guidance of about $0.65 per pound.

Significant Projects

In second quarter 2006, the Chilean environmental regulatory authorities announced that they had rejected 44 out of 46 individual appeals relating to the development of the Pascua-Lama project. Two reinforcing conditions already stipulated in the environmental impact assessment, which was approved in February 2006 (Resolution RCA 024), related to water quality monitoring and noise mitigation. The Resolution granted imposes other conditions on the development of the project, the implications of which could result in the reduction of reserves by up to 1 million ounces for US reporting purposes, as previously reported. Analysis of the effect of the conditions is ongoing. In second quarter

BARRICK SECOND QUARTER 2006 13 MANAGEMENT'S DISCUSSION AND ANALYSIS

2006, the evaluation commission reviewing the project environmental impact assessment in Argentina requested the submission of a report (on or before August 4th) consolidating all environmental impact assessments in Argentina and related documentation, including responses to public questions and related reference materials. Accommodating this request coupled with the other procedural steps in the Argentine review process has resulted in an adjustment of the target for approvals to the fourth quarter of 2006. The timing of receipt of such approval, as well as the resolution of other external matters, such as permitting and licensing, resolution of objections or challenges to project approval, cross-border approvals and operating issues and fiscal, tax and royalty items are largely beyond the control of the Company. We are in the course of updating cost estimates to reflect inflationary cost pressures. Although inflationary cost pressures are putting upward pressure on capital and production cost estimates, when considered with design improvements and other economic factors, the overall economics of the Pascua-Lama project are expected to improve.

Australia Pacific

Producing Mines

Through the Placer Dome acquisition, we acquired four producing gold mines and a copper-gold mine. The acquired Placer Dome gold mines are Porgera (75% owned) in Papua New Guinea, and Kanowna, Granny Smith and Henty, in Australia. Production in second quarter 2006 was higher than the same period in the prior year mainly due to the contribution from the acquired Placer Dome mines combined with the production start-up at Cowal, partly offset by lower production from Kalgoorlie. At Cowal, our new mine located in Central New South Wales, Australia, production start-up was achieved during second quarter 2006 with production of about 16,000 ounces. Total construction costs were about $400 million, 7% higher than the most recent estimates. Production is expected to ramp up in the second half of 2006 as throughput and recovery levels increase. At Kalgoorlie, lower production in second quarter 2006 compared to the prior-year period was caused by lower throughput due to mill shutdowns for a planned and unplanned maintenance due to harder ore encountered. At Porgera, low-grade long-term stockpiles continued to provide the primary ore feed in second quarter 2006. Remediation of the West Wall cutback continues and is about 50% complete. We expect mining of ore in the pit to begin later in 2006, following which production levels and total cash costs should improve.

Total cash costs per ounce were higher in second quarter 2006 than the prior-year period mainly due to lower

production levels and higher maintenance costs at Kalgoorlie, combined with the impact of higher prices for input commodities and consumables used in the production process, higher exchange rates under hedge contracts, and also because average total cash costs of the acquired Placer Dome mines are higher than those of the legacy Barrick mine sites. We continue to expect to meet our original full-year 2006 gold production and total cash costs guidance for the Australia Pacific region.

The Osborne copper mine produced 18 million pounds of copper in second quarter 2006 at total cash costs per pound of $1.46. Copper production improved in second quarter 2006 compared to first quarter 2006 with higher throughput. We expect to access lower elevations of the mine and higher-grade ore later in 2006 that should lead to improving production levels and total cash costs. We continue to expect to meet our original 2006 guidance for copper production and total cash costs per pound.

Africa

Through the Placer Dome acquisition, we acquired two producing gold mines in Africa, South Deep (50% owned) in South Africa, and North Mara in Tanzania. Gold production in second quarter 2006 was higher than the prior-year period due to the contribution of the acquired Placer Dome mines together with higher production at Bulyanhulu and Tulawaka. Production at North Mara in second quarter 2006 continued to be impacted by reduced shovel capacity, but we expect improvements in the second half of the year, together with the benefits of increased drilling capacity from two new drill rigs. Ore grades at North Mara continue to improve as we move into lower elevation areas in the pit.

On May 4, 2006, a loaded skip and 6.7 kilometers of rope fell 1.6 kilometers down the South Deep mine's Twin Shaft complex during routine maintenance, causing extensive damage but no injuries. As a result, the mine site's hoisting capacity has been reduced to 40% of normal capacity for the remainder of the year. We are evaluating opportunities to increase the hoisting rate of the south shaft during the repair period. As a consequence, we are adjusting our share of full-year guidance for South Deep to about 150,000 ounces of gold production at total cash costs of $560 per ounce. We expect that the main shaft will be back in operation by early 2007, at which time gold production levels should return to similar levels prior to the incident. We are insured for property damage and a portion of business interruption losses, and have initiated the claims process in connection with this incident.

BARRICK SECOND QUARTER 2006 14 MANAGEMENT'S DISCUSSION AND ANALYSIS

Total cash costs per ounce for the second quarter 2006 were higher than the prior-year period mainly due to the lower production levels at South Deep, combined with the impact of higher prices for input commodities and consumables used in the production process, partly offset by the impact of depreciation of the South African Rand relative to the US dollar in the quarter which had a $6 per ounce favorable impact on total cash costs per ounce for the region.

Significant Projects

At the Sedibelo platinum deposit in South Africa, where we have a 50% earn in right, work on a pre-feasibility study commenced in second quarter 2006. Completion of the pre-feasibility is targeted for late 2007. A Barrick project manager has been appointed as well as engineering consultants. Drilling continues to define additional resources and provide samples for metallurgical test work.

Russia/Central Asia

Our equity share of Highland Gold production was about 9,000 ounces at total cash costs of $494 per ounce in second quarter 2006. Higher total cash costs in second quarter 2006 were mainly due to drawdowns of higher cost ore inventory. We continue to advance exploration programs and participate in auctions for exploration properties.

The Taseevskoye project (50% owned) is a previously mined open-pit and underground mine which, in light of the strong gold price environment, is being re-evaluated. The $21 million project budget for 2006 primarily includes a drill program to enable completion of a pre-feasibility study targeted by year-end. With the return to summer working conditions and the availability of five drill rigs on site, drilling is progressing with 6,600 meters completed since early April of a planned 35,000 meter program.

Exploration

In second quarter 2006, we spent $44 million on exploration activities, an increase of $15 million from the prior year period. This increase was mainly due to exploration activity at our mine sites in Australia, combined with exploration activities at acquired Placer Dome mine sites, and the South Arturo deposit and Cortez properties in Nevada. Based on favorable results from work to date, we have increased planned spending at South Arturo and Cortez in 2006.

At the South Arturo deposit, the planned 2006 drill program was completed in the first half of the year. New mineralization along the Hinge Zone has been discovered and, combined with other successful work to date, has

resulted in the scope of the project being expanded. The original exploration budget has been doubled to $10 million (100% basis), and four drill rigs continue to drill targets. Objectives for the second half of the year are to better define the ore with infill and extension drilling, and complete metallurgical work and engineering studies. At the Cortez property, we are focusing on the Gold Acres Window ("Gold Acres"), and other favorable geological terrains. Based on year-to-date success, an additional $8.5 million (100% basis) in funding has been allocated to these drill programs. At Gold Acres, the drill program is working on resource delineation of oxide and refractory mineralization near existing pits as well as targeting new mineralization.

TOTAL CASH COSTS PERFORMANCE MEASURES

Total cash costs include all costs absorbed into inventory, including royalties, by-product credits, production taxes and accretion expense, except for inventory purchase accounting adjustments and amortization. We calculate total cash costs based on our equity interest in production from our mines. Total cash costs per ounce/pound are calculated by dividing the aggregate of these costs by gold ounces or copper pounds sold. Total cash costs and total cash costs per ounce/pound are calculated on a consistent basis for the periods presented. In our income statement, we present amortization separately from cost of sales. Some companies include amortization in cost of sales, which results in a different measurement of cost of sales in the income statement. We have provided below reconciliations to illustrate the impact of excluding amortization and inventory purchase accounting adjustments from total cash costs per ounce/pound statistics. Under purchase accounting rules, we recorded the fair value of acquired work in progress and finished goods inventories as at the date of Placer Dome acquisition. As the acquired inventory is sold, any purchase accounting adjustments reflected in the carrying amount of inventory at acquisition impact cost of sales. The method of valuing these inventories is based on estimated selling prices less costs to complete and a reasonable profit margin. Consequently, the fair values do not necessarily reflect costs to produce consistent with ore mined and processed into gold and copper after the acquisition. Our internal presentation of total cash costs reflects those costs that are incurred in the production and sale of gold and copper, and we exclude the impact of purchase accounting adjustments. The presentation of these statistics in this manner allows us to monitor and manage those factors that impact production costs on a monthly basis.

We present total cash costs based on our equity interest in gold production. We believe that using an equity

BARRICK SECOND QUARTER 2006 15 MANAGEMENT'S DISCUSSION AND ANALYSIS

interest presentation is a fairer, more accurate way to measure economic performance than using a consolidated basis. For mines where we hold less than a 100% share in the production, we exclude the economic share of gold production that flows to our partners who hold a non-controlling interest. Consequently for the South Deep and Tulawaka mines, although we fully consolidate these mines in our Financial Statements, our production and total cash cost statistics only reflect our equity share of the production.

In managing our mining operations, we disaggregate cost of sales between amortization and the other components of cost of sales. We use total cash costs per ounce/pound statistics as a key performance measure internally to monitor the performance of our regional business units. We use the statistics to assess how well our regional business units are performing against internal plans, and also to assess the overall effectiveness and efficiency of our mining operations. We also use amortization costs per ounce/pound statistics to monitor business performance. By disaggregating cost of sales into these two components and separately monitoring them, we are able to better identify and address key performance trends. We believe that the presentation of these statistics in this manner in our MD&A, together with commentary explaining trends and changes in these statistics,

enhances the ability of investors to assess our performance. These statistics also enable investors to better understand year-on-year changes in cash production costs, which in turn affect our profitability and ability to generate cash flow.

The principal limitation associated with total cash costs per ounce/pound statistics is that they do not reflect the total costs to produce gold/copper, which in turn impacts the earnings of Barrick. We believe that we have compensated for this limitation by highlighting the fact that total cash costs exclude amortization and inventory purchase accounting adjustments as well as providing details of the financial effect. We believe that the benefits of providing disaggregated information outweigh the limitation in the method of presentation of total cash costs per ounce/pound statistics.

Total cash costs per ounce/pound statistics are intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with US GAAP. The measures are not necessarily indicative of operating profit or cash flow from operations as determined under US GAAP. Other companies may calculate these measures differently.

BARRICK SECOND QUARTER 2006 16 MANAGEMENT'S DISCUSSION AND ANALYSIS

Illustration of Impact of Excluding Certain Costs from Total Cash Costs per Ounce/Pound


	Three months ended June 30						Six months ended June 30
	Gold				Copper		Gold				Copper
($ millions, except per ounce/pound information in dollars)	2006		2005		2006		2006		2005		2006
Cost of sales¹	$	588	$	266	$	86	$	1,171	$	537	$	195
Cost of sales attributable to non-controlling interests²		(25)		(2)		-		(46)		(2)		-
Inventory purchase accounting adjustments included in cost of sales³		(1)		-		(12)		(13)		-		(61)
Cost of sales as adjusted		562		264		74		1,112		535		134
Amortization at producing mines - consolidated		151		89		13		303		178		22
Amortization at producing mines attributable to non-controlling interests²		(5)		(1)		-		(10)		(1)		-
Amortization at producing mines - equity basis		146		88		13		293		177		22
Inventory purchase accounting adjustments³		1		-		12		13		-		61
Cost of sales including amortization and inventory purchase accounting adjustments - equity basis	$	709	$	352	$	99	$	1,418	$	712	$	217
Ounces/pounds sold - consolidated (thousands/millions)		2,047		1,093		98		4,039		2,222		177
Sales attributable to non-controlling interests²		(49)		(8)		-		(101)		(8)		-
Ounces/pounds sold - equity basis		1,998		1,085		98		3,938		2,214		177
Total cash costs per ounce/pound - equity basis	$	281	$	243	$	0.76	$	282	$	242	$	0.76
Amortization per ounce/pound - equity basis		73		81		0.13		74		79		0.13
Inventory purchase accounting adjustments per ounce/pound		-		-		0.12		3		-		0.34
Cost of sales and amortization per ounce/pound attributable to non-controlling interests²		7		1		-		6		1		-
Total costs per ounce/pound⁴ - consolidated basis	$	361	$	325	$	1.01	$	365	$	322	$	1.23

¹ Per Barrick income statement.

² Relates to a 30% interest in Tulawaka and a 50% interest in South Deep held by independent third parties.

³ Based on our equity interest.

⁴ Includes amortization, amounts attributable to non-controlling interests and inventory purchase accounting adjustments.

BARRICK SECOND QUARTER 2006 17 MANAGEMENT'S DISCUSSION AND ANALYSIS

OTHER COSTS AND EXPENSES

Exploration Expense


	Three months ended June 30				Six months ended June 30

($ millions)	2006		2005		2006		2005		Comments on significant trends and variances
Exploration
North America	$	14	$	7	$	22	$	12		Expenditures are higher in 2006 due to activities at Cortez , Round Mountain, Goldstrike and various greenfield sites, including our Dee joint venture.
South America		6		6		13		11
Australia Pacific		11		3		23		6		Expenditures are higher in 2006 due to activities at Porgera and other Papua New Guinea exploration properties, Cowal, Plutonic and Kalgoorlie.
Africa		10		10		12		18		In 2006, lower expenditures at Buzwagi, were partly offset by expenditures at South Deep, North Mara and Nyanzaga.
Russia/Central Asia		2		2		3		3
Other		1		1		4		3
	$	44	$	29	$	77	$	53


Project Development Expense

	Three months ended June 30				Six months ended June 30

($ millions)		2006		2005		2006		2005		Comments on significant trends and variances
Mine Development	$	22	$	2	$	33	$	5		In 2006, expenditures were higher due to activities at Pueblo Viejo and Donlin Creek.
Non-capitalizable project costs		4		5		6		7		Expenditures incurred at Pascua-Lama and Cowal that did not meet criteria for capitalization.
Business development/other		2		1		8		3
	$	28	$	8	$	47	$	15

BARRICK SECOND QUARTER 2006 18 MANAGEMENT'S DISCUSSION AND ANALYSIS

Amortization Expense


($ millions)
	Three months ended June 30
			Incr. (decr.) due to
	2006 Amount		Sales Volumes¹		Other²		2005 Amount		Comments on other variances
Gold mines
North America	$	62	$	8	$	4	$	50		Decrease in reserves from 2005 combined with increase in amortization expense as a result of fair value adjustments to acquired property, plant and equipment, partly offset by lower capital additions in 2006.
South America		26		11		(4)		19		Impact of lower capital additions in 2006 at Lagunas Norte.
Australia Pacific		35		19		5		11		Impact of higher capital additions in 2006 combined with increase in amortization expense as a result of fair value adjustments to acquired property, plant and equipment.
Africa		28		16		3		9		Impact of higher capital additions in 2006 at Bulyanhulu combined with increase in amortization expense as a result of fair value adjustments to acquired property, plant and equipment.
Copper mines
South America		10		8		2		-		Includes amortization expense as a result of fair value adjustments to acquired property, plant and equipment.
Australia Pacific		3		3		-		-
Sub total		164		65		10		89
Corporate assets		3						5
Total	$	167					$	94


	Six months ended June 30
			Incr. (decr.) due to
	2006 Amount		Sales Volumes¹		Other²		2005 Amount		Comments on other variances
Gold mines
North America	$	122	$	10	$	9	$	103		Decrease in reserves from 2005, primarily at Goldstrike, Hemlo and Eskay Creek, combined with increase in amortization expense as a result of fair value adjustments to acquired property, plant and equipment.
South America		64		35		(5)		34		Impact of lower capital additions in 2006 at Lagunas Norte.
Australia Pacific		65		36		8		21		Impact of capital additions in 2006 combined with increase in amortization expense as a result of fair value adjustments to acquired property, plant and equipment.
Africa		52		31		1		20		Increase in amortization expense as a result of fair value adjustments to acquired property, plant and equipment.
Copper mines
South America		17		15		2		-		Includes amortization expense as a result of fair value adjustments to acquired property, plant and equipment.
Australia Pacific		5		5		-		-
Sub total		325		132		15		178
Corporate assets		14						9		Higher amortization as a result of acquired property, plant and equipment.
Total	$	339					$	187

¹ For explanation of changes in sales volumes refer to page 11.

² Other includes increases/decreases in amortization expense due to additions/dispositions of property, plant and equipment, purchase accounting adjustments and the impact of historic changes in reserve estimates on amortization (refer to page 27).

BARRICK SECOND QUARTER 2006 19 MANAGEMENT'S DISCUSSION AND ANALYSIS

Amortization expense recorded in the first half of 2006 reflects preliminary purchase price allocations for the acquired Placer Dome mines. Valuations are in progress for the acquired mines but will not be finalized until the second half of 2006, at which time we will prospectively

revise amortization calculations to reflect any adjustments to the preliminary allocation. Any adjustments could cause amortization to increase or decrease significantly in future periods.

Corporate Administration, Interest Income and Interest Expense

($ millions)	Three months ended June 30		Six months ended June 30
	2006	2005	2006	2005	Comments on significant trends and variances
Corporate administration	$ 31	$ 19	$ 65	$ 36	Increases in 2006 reflect the impact of costs incurred at the Placer Dome head office in Vancouver in the period prior to closure, augmentation of staffing at the Barrick head office in Toronto in response to the acquisition and stock option expense in 2006 (Q2 2006: $5 million; first half of 2006: $9 million).
Interest income	25	11	52	19	Higher interest income in 2006 was mainly due to higher cash balances in 2006; higher interest rates in 2006, and a financing fee payable by Goldcorp representing, in part, compensation for interest costs incurred by us to carry the cost of financing, related to certain operations to be sold to Goldcorp (Q2 2006: $8 million; first half of 2006: $19 million).
Interest costs
Incurred	67	31	125	59	Higher interest costs in 2006 were mainly due to $1.1 billion of debt assumed on the acquisition of Placer Dome, combined with interest relating to funds drawn under a credit facility that were used for the cash component of the cost of acquisition of Placer Dome.
Capitalized	23	30	49	58	In 2005, interest was capitalized for the construction phase of Veladero, Lagunas Norte, the Western 102 Power Plant and Cowal; as well as for the Pascua-Lama development project. In 2006, interest was capitalized at Cowal and Pascua-Lama.
Allocation to discontinued operations	7	-	21	-
Expensed	$ 37	$ 1	$ 55	$ 1

Other Income (Expense)
($ millions)	Three months ended June 30		Six months ended June 30
	2006	2005	2006	2005	Comments on significant trends and variances
Non-hedge derivative gains	$ 25	$ 3	$ 4	$ 9	Gains in 2006 primarily relate to non-hedge derivatives acquired in the Placer Dome acquisition.
Gains on asset/investment sales	5	-	5	10
Gain on Kabanga transaction	-	15	-	15	In 2005, a transaction closed in which Falconbridge acquired a 50% indirect interest in Kabanga.
Environmental remediation costs	(7)	(9)	(10)	(14)
Currency translation losses	(5)	(1)	(4)	(5)
World Gold Council fees	(5)	(2)	(9)	(4)	Higher costs in 2006 primarily as a result of higher gold production volumes.
Other items	(2)	(1)	2	(1)
Total	$ 11	$ 5	$ (12)	$ 10

Income Taxes

Income tax expense of $131 million in second quarter 2006 included a $13 million expense from tax rate changes in Canada. Excluding the impact of the tax rate changes, the underlying effective tax rate was 20%

compared to 13% in second quarter 2005. The underlying effective rate increased, primarily due to higher market gold prices, and a shift in the geographic mix of production following the acquisition of Placer Dome.

BARRICK SECOND QUARTER 2006 20 MANAGEMENT'S DISCUSSION AND ANALYSIS

Our expected underlying effective tax rate is about 28% to 30%, at current market gold prices. This expected underlying rate excludes the effect of delivering into gold sales contracts in a low tax-rate jurisdiction at prices below prevailing market prices, the impact of tax rate changes and any changes in deferred tax valuation allowances.

We record deferred tax charges or credits if changes in facts or circumstances affect the estimated tax basis of

assets and therefore the amount of deferred tax assets or liabilities or because of changes in valuation allowances reflecting changing expectations in our ability to realize deferred tax assets. The interpretation of tax regulations and legislation and their application to our business is complex and subject to change. We have significant amounts of deferred tax assets, including tax loss carry forwards, and also deferred tax liabilities. Potential changes to any of these amounts, as well as our ability to realize deferred tax assets, could significantly affect net income or cash flow in future periods.

Quarterly Information ($ millions, except where indicated)


	2006		2005				2004
	Q2	Q1	Q4	Q3	Q2	Q1	Q4	Q3
Sales	$ 1,556	$ 1,254	$ 776	$ 627	$ 463	$ 484	$ 501	$ 500
Net income	459	224	175	113	47	66	156	32
Net income per share - basic (dollars)	0.53	0.29	0.33	0.21	0.09	0.12	0.30	0.06
Net income per share - diluted (dollars)	0.53	0.29	0.32	0.21	0.09	0.12	0.29	0.06

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 rising gold production and sales volumes as our new mines began production in 2005 and, in first quarter 2006, our acquisition of Placer Dome. Results in 2006 benefited from the contribution of gold and copper

mines acquired in the Placer Dome acquisition. These historic trends are discussed elsewhere in this MD&A. The quarterly trends are consistent with explanations for annual trends over the last two years. Net income in each quarter also reflects the timing of various special items that are presented in the table on page 9.

BARRICK SECOND QUARTER 2006 21 MANAGEMENT'S DISCUSSION AND ANALYSIS

LIQUIDITY AND CAPITAL RESOURCES

Cash Flow

Key Factors Affecting Operating Cash Flow


($ millions)	Three months ended June 30			Six months ended June 30
	2006	2005	Impact on comparative operating cash flows	2006	2005	Impact on comparative operating cash flows	Comments on significant trends and variances
Gold sales volumes (‘000s oz)	1,998	1,085	$ 165	3,938	2,214	$ 317	See page 11.
Realized gold prices (5/oz)	$ 592	$ 424	336	$ 565	$ 426	547	See page 11.
Copper sales volumes (millions lbs)	98	-	267	177	-	389	See page 11.
Total cash costs gold ($/oz)	$ 281	$ 243	(77)	$ 282	$ 242	(158)	See page 11.
Sub-total			$ 691			$ 1,095
Other inflows (outflows)
Higher expenses	$ 121	$ 65	$ (56)	$ 225	$ 120	$ (105
Purchase of copper put options	-	-	-	(26)	-	(26)	Premiums paid in first quarter 2006 for copper put contracts cash flow hedges.
Non-cash working capital	(10)	(22)	12	7	(47)	54
Interest expense	$ 37	$ 1	(36)	$ 55	1	(54)	See page 20.
Income tax expense	131	7	(124)	175	24	(151)	See page 20.
Effect of other factors			55			(17)
Total			$ 542			$ 796

¹ Includes corporate administration, exploration, project development, and other operating expenses.

BARRICK SECOND QUARTER 2006 22 MANAGEMENT'S DISCUSSION AND ANALYSIS

Investing Activities


($ millions)	Three months ended June 30	Six months ended June 30
	2006