ABX Barrick Gold Corp. (BC) (delisted)

UNITED STATES 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: February 2015		Commission File Number: 1-9059

BARRICK GOLD CORPORATION

(Name of Registrant)

Brookfield Place, TD 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

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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: February 20, 2015				By:		/s/ Richie Haddock
						Name:		Richie Haddock
						Title:		Senior Vice-President and General Counsel

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EXHIBIT

 

Exhibit		Description of Exhibit
99.1		Barrick Gold Corporation Fourth Quarter and Year-End Report for 2014, including the Consolidated Financial Statements prepared in accordance with International Financial Reporting Standards as at and for the years ended December 31, 2014 and December 31, 2013 and Management’s Discussion and Analysis for the same periods.
99.2		Consent of PricewaterhouseCoopers LLP

Exhibit 99.1

 

FOURTH QUARTER AND YEAR-END REPORT 2014

Barrick Reports Fourth Quarter and Full Year 2014 Results

 

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Barrick is a senior gold producer focused on growing free cash flow through disciplined capital allocation and operational excellence.

 

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The company produced 6.25 million ounces of gold at all-in sustaining costs (AISC)1 of $864 per ounce in 2014, generating $2.30 billion in operating cash flow.

 

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In 2015, we intend to reduce our net debt by at least $3 billion to begin restoring our balance sheet to a position of strength.

 

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Barrick’s return to a lean, decentralized operating model is eliminating bureaucracy and management layers. These initiatives are freeing up country and mine managers to be business owners with a focus on driving greater free cash flow.

 

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Production guidance for 2015 is 6.2-6.6 million ounces of gold at all-in sustaining costs of $860-$895 per ounce. The company expects to generate positive free cash flow this year at current gold prices.

 

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Annual gold production from our current portfolio is expected to exceed six million ounces in 2016 and 2017, with all-in sustaining costs lower than this year by 2017.

 

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This year Barrick will complete four prefeasibility studies, advancing growth projects near existing mines in Nevada.

 

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Innovation success reflected by the ramp-up of our proprietary cyanide-free processing technology at Goldstrike, accelerating cash flow from about four million stockpiled ounces of gold.

TORONTO, February 18, 2015 – Barrick Gold Corporation (NYSE: ABX, TSX: ABX) (Barrick or the company) today reported a fourth quarter net loss of $2.85 billion ($2.45 per share), reflecting the impact of $2.8 billion in after-tax impairment charges, primarily related to the Lumwana mine ($930 million) and the Cerro Casale project ($778 million). Fourth quarter adjusted net earnings² were $174 million ($0.15 per share) and operating cash flow was $371 million.

For the full year 2014, Barrick recorded a net loss of $2.91 billion ($2.50 per share), reflecting the impact of $3.4 billion in after-tax impairment charges. Adjusted net earnings for 2014 were $793 million ($0.68 per share) and operating cash flow was $2.30 billion.

TAKING BARRICK ‘BACK TO THE FUTURE’

Barrick became the world’s leading gold company by pursuing its founding purpose: the generation of wealth for its owners, employees, and the communities with which it partners. Those who founded

 

 

¹ All-in sustaining costs per ounce is a non-GAAP financial performance measure. The company believes that all-in sustaining costs more fully defines the total costs associated with the production of gold. See pages 81-91 of Barrick’s Fourth Quarter and Year-End 2014 Report.

² Adjusted net earnings is a non-GAAP financial performance measure. The company believes that, in addition to conventional measures prepared in accordance with GAAP, the company and certain investors use this information to evaluate company performance. See pages 81-91 of Barrick’s Fourth Quarter and Year-End 2014 Report.

 

BARRICK FOURTH QUARTER AND YEAR-END 2014		1		PRESS RELEASE

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and first led the company were committed to a culture of partnership and the values underpinning such a culture: trust, transparency, shared responsibility and accountability, and a sense of emotional and financial ownership.

That culture also nurtured a powerful operating model. In its early years, Barrick was lean and nimble, with minimal bureaucracy. A small head office managed the company with a balance of entrepreneurialism and prudence, focusing on only a few core activities: defining and implementing strategy, allocating human and financial capital, and fulfilling the obligations required of a public company. Leaders at the operational level had greater autonomy, responsibility, and accountability, functioning as business owners. Free from bureaucracy and middle management, they focused on maximizing free cash flow, and the head office focused on allocating that cash flow to maximize shareholder returns.

Over the last year, Barrick has been returning to this partnership culture and the operating model that made it so successful. We have cut our head office by close to half and eliminated all management layers between Toronto and the mines. What remains are shared service centers in the field that provide support directly to our mines and projects, with costs charged directly to the relevant operation.

Along with managing financial capital, managing our talent is a central responsibility of Barrick’s leaders. Attracting, retaining and developing exceptional people is a fundamental component of our partnership culture. In 2014, Darian Rich was promoted to the role of Executive Vice President, Talent Management, elevating this critical function. Over the last six months we attracted 12 new leaders to Barrick who personify the company’s original values and bring vital skills and experience that support our business objectives, such as strengthening the balance sheet, fixing Pascua-Lama, improving efficiency and productivity and building partnerships in China and beyond. This group includes people such as Kevin Thomson (SEVP, Strategic Matters), Shaun Usmar (SEVP & CFO), Sergio Fuentes (Executive Project Director, Pascua-Lama) and Melanie Miller (VP, Supply Chain) to name just a few. We have also promoted top internal talent across the organization to challenging new roles that will strengthen their capabilities. This includes Rich Haddock (SVP & General Counsel), a lawyer who intimately understands all facets of our business, and Calvin Pon (SVP, Finance & Tax) one of the brightest analytical minds in the industry.

Going “back to the future” demands that our leaders be owners. Accordingly, we have extended our innovative partnership plan to 35 leaders across the business. Each year, these leaders will be graded on their collective performance, as measured against a transparent long-term scorecard disclosed to shareholders in advance. A significant portion of their total compensation, if earned, will be long-term in nature, awarded in units that convert into Barrick common shares which cannot be sold until an individual retires or leaves the company. A smaller proportion of total compensation, if earned, will be in the form of annual bonuses, determined for each individual based on a personal scorecard tailored to the individual’s specific responsibilities. This plan increases financial and emotional ownership among our senior leaders, and will deepen to include new partners over time.

Our approach to capital allocation ensures that all new investments align with our strategic focus and contribute to maximizing free cash flow in pursuit of industry-leading returns.

 

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Investments in new projects will compete with share buybacks and acquisitions, along with our objective of paying a dividend to our owners. We expect our portfolio to deliver a 10-15 percent return on invested capital through the metal price cycle and, as such, individual projects are assessed against a hurdle rate of 15 percent. We will defer, cancel or sell projects that cannot achieve this target. We will also apply more rigor in monitoring execution to ensure that we meet our cost and schedule commitments. And we will conduct post-investment reviews to evaluate how we have lived up to our original investment promises, using what we learn to improve execution on future projects.

A portion of our capital budget is re-invested in existing mines to sustain or expand them. That capital is not spread evenly across the portfolio and our operations must compete for it. We will focus our investments at mines that meet our overall expectations for returns on invested capital. Assets that are unable to meet our capital allocation objectives over time will be sold.

RESTORING A STRONG BALANCE SHEET

For many years, Barrick had the only A-rated balance sheet in the gold industry. Prudent financial management was a bedrock principle of the company. Our current level of debt is inconsistent with that principle, and that inconsistency is reflected in the company’s share price. As we return to our original values, no priority is more important than restoring a strong balance sheet.

We intend to reduce our net debt by at least $3 billion by the end of 2015. The company has a number of options to achieve this target, and we will take only those actions that make sense for the business, on terms we consider most favorable to our shareholders. Our debt reduction strategy includes the following levers:

 

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Maximizing free cash flow by implementing a leaner, decentralized operating model that reflects Barrick’s original culture; with more efficient capital spending, reduced general and administrative costs, and profitable growth;

 

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Disciplined non-core asset sales, beginning with a process to sell the Porgera Joint Venture and Cowal mine;

 

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Joint ventures and strategic partnerships if and where they make sense.

Our strong liquidity means the company can tackle its debt in a disciplined manner. We have less than $1 billion in debt due over the next three years, a $4 billion undrawn credit facility, and $2.7 billion in cash at the end of 2014.

MAXIMIZING FREE CASH FLOW

A return to the lean, decentralized operating model that underpinned Barrick’s early success is freeing up our country and mine managers to focus on maximizing free cash flow across the business.

As part of this transformation, we expect to realize $30 million in savings from reduced general and administrative expenditures and overhead costs in 2015. These savings are projected to reach

 

BARRICK FOURTH QUARTER AND YEAR-END 2014		3		PRESS RELEASE

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$70 million on an annualized basis in 2016. And we expect more to follow, as our leaders focus on maximizing cash flow without the constraints of bureaucracy and unnecessary management layers.

We are reducing the size of our head office by close to half, from 260 positions in 2014 to 140 positions in 2015. As a result, our corporate administration expense is expected to be about $145 million this year, and even lower in 2016.

We are now reporting G&A with clarity and transparency. We have eliminated all management layers between the head office and our operations; what remains are shared service centers that provide support directly to our mines and projects. These costs will no longer be reported as G&A. They will be charged directly to the mines and projects that use the services, and will be reflected in operating costs, as they should be. Services that are not required will be eliminated, driving further cost savings.

G&A costs at Barrick will now include head office administration, stock-based compensation and administration expense from Acacia Mining Plc.

For a full description of G&A expenses, please read page 34 of the Management Discussion and Analysis.

In addition, we are taking steps to improve the efficiency of our procurement and supply chain practices, freeing up working capital by reducing inventories. We also expect to generate additional free cash flow over the next 12 months through better integration of mine site maintenance programs and our global procurement and logistics system.

Innovation also plays a key role in improving efficiency and unlocking the cash-generating potential of our assets. We see this in action at Goldstrike, where a revolutionary new cyanide-free processing technology developed in-house at Barrick is allowing us to accelerate cash flow from about four million stockpiled ounces of gold (see page 11 for more details). Our in-house research and development team has also developed a patented flotation technology capable of utilizing sea water, reducing demand on scarce fresh water resources. We will continue to develop industry-leading processing technologies, while expanding our focus to include more efficient ways to use water and power at our operations.

BEST ASSETS AND REGIONS

Barrick’s five cornerstone mines in the Americas are expected to account for 60 percent of our production in 2015 at average all-in sustaining costs of $725-$775 per ounce. At two grams per tonne, these mines have an average reserve grade more than double that of our peer group average³. They are among the most attractive assets in the entire gold industry, generating strong free cash flow even in today’s gold price environment, while offering exceptional leverage to higher gold prices.

We maintain a strong competitive advantage in Nevada and the Andean region, underpinned by proven operating experience, a critical mass of infrastructure, technical and exploration expertise, and established partnerships with host governments and communities. We believe these regions provide the best opportunities to generate returns for shareholders, and we will therefore give them

 

 

³ Comparison based on the average overall reserve grade for Goldcorp Inc., Kinross Gold Corporation, Newmont Mining Corporation and Newcrest Mining Limited as reported in each of the Kinross and Newcrest reserve reports as of December 31, 2014, and as reported in each of the Goldcorp and Newmont reserve reports as of December 31, 2013.

 

BARRICK FOURTH QUARTER AND YEAR-END 2014		4		PRESS RELEASE

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the majority of our focus. Divestments outside of the Americas, including the Porgera Joint Venture and the Cowal mine, will further center the company’s portfolio on its strongest assets.

Two-thirds of our 2015 exploration budget of $220-$260⁴ million is focused on high-quality, brownfield projects, with the remainder targeted at emerging discoveries that have the potential to become profitable mines. Approximately 85 percent of the total exploration budget is allocated to the Americas and about half of the budget will be directed to Nevada.

GROWTH IN THE AMERICAS

This year, Barrick is advancing growth opportunities at or near existing operations in Nevada, with four prefeasibility studies on track for completion in 2015⁵.

We also have within our portfolio a number of the world’s largest undeveloped gold deposits, including Pascua-Lama, Donlin Gold and Cerro Casale. These projects offer leverage to higher gold prices, with more than 37 million ounces of gold in reserves (100 percent basis) and more than 48 million ounces of gold in measured and indicated resources (100 percent basis). They provide the company with a platform for long-term growth in a higher gold price environment. In the meantime, we will work to optimize the economics of these projects, spending the minimum required to maintain them as development options within our portfolio. As with all our investments, we will only proceed with construction if these projects meet our capital allocation objectives, including our target hurdle rate of 15 percent, with a robust execution plan to ensure execution on budget and on schedule.

Goldrush – Major new discovery near existing infrastructure

The Goldrush project, located six kilometers from the Cortez mine, is one of the largest gold discoveries of the last decade. Measured and indicated resources stood at 10.6 million ounces and inferred resources were 4.9 million ounces at the end of 2014. The prefeasibility study remains on schedule for completion in mid-2015. Infill drilling in 2014 continued to demonstrate high grade continuity and led to resource upgrades, with nearly 70 percent of the overall resource now in the measured and indicated category. A permit application for twin exploration declines that will allow the company to better explore the northern limits of the known deposit was submitted in the second quarter of 2014.

Turquoise Ridge – A core mine in the making

The Turquoise Ridge mine contains 4.5 million ounces in reserves (75 percent basis) at an average grade of 16.9 grams per tonne — the highest reserve grade in the company’s operating portfolio and among the highest in the entire gold industry. Turquoise Ridge has considerable untapped potential and could become a core operation for Barrick. The company is advancing a project to develop an additional shaft, which could bring forward more than one million ounces of production, roughly doubling output to an average of 500,000 ounces per year (100 percent basis) at all-in sustaining

 

 

⁴ Approximately 15 percent is expected to be capitalized.

⁵ Complete mineral reserve and mineral resource data for each of these projects and all other mines and projects referenced in this news release, including tonnes, grades and ounces, can be found on pages 93-98 of Barrick’s Fourth Quarter and Year-End 2014 Report.

 

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costs of about $625-$675 per ounce⁶. The prefeasibility study was completed in January 2015 and key permits are expected in the third quarter. Pending approval by the joint venture partners, construction could commence in the fourth quarter of 2015, with initial production beginning in 2019. Preliminary estimates indicate capital expenditures of approximately $300-$325 million (100 percent basis) for additional underground development and shaft construction, and an attractive payback period of roughly two and a half years using a gold price assumption of $1,300 per ounce.

Drilling at the northern extension of the deposit confirms the ore body is larger than previously known, at higher grades. Due to the substantial thickness of the mineralization, our engineering team is also looking at the economics of introducing bulk underground mining in some parts of the ore body. Advanced ground support technology and improved reinforcement techniques have also mitigated ground stability issues that challenged previous mining operations at the site.

Cortez – High-grade underground expansion

A prefeasibility study for underground mining at Cortez below currently permitted levels will be completed in late 2015. Mineralization in this zone is primarily oxide and higher grade compared to the current underground mine, which is sulfide in nature. The limits of the Lower Zone have not yet been defined, and drilling has indicated the potential for new targets at depth. The exploration drift has been extended to the south, enabling additional step-out drilling, which is anticipated to begin in June. Drill results to date include 36.6 meters at 31.5 grams per tonne and 27.4 meters at 20.9 grams per tonne, both oxide in nature, which compare favorably with the average grade of 13.8 grams per tonne in refractory ore above the 3,800 foot level⁷.

Spring Valley – Low capital cost, heap leach project

The Spring Valley project, 70 percent owned by Barrick and located approximately 75 miles west of Cortez, is a low capital cost, oxide heap leach project with potential to become another standalone mine in Nevada. Barrick reported an initial measured and indicated resource of 1.3 million ounces (70 percent basis) averaging 0.66 grams per tonne and an inferred resource of 0.6 million ounces (70 percent basis) averaging 0.62 grams per tonne for Spring Valley at the end of 2014. In addition, there is good potential to expand the current resource at higher gold prices. The company expects to complete a prefeasibility study in late 2015.

Pascua-Lama

Pascua-Lama has 15.4 million ounces of gold reserves and more than 674 million ounces of contained silver. The mine is expected to have low operating costs and the potential to generate significant free cash flow over a 25-year plus mine life.

 

 

⁶ Annual average for the first full eight years.

⁷ The drill results for the Cortez mine contained in this news release have been prepared in accordance with National Instrument 43-101 – Standards of Disclosure for Mineral Projects. For additional details regarding the Cortez exploration information included in this news release, please see Barrick’s most recent Form 40-F/Annual Information Form on file with the SEC and Canadian provincial securities regulatory authorities.

 

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The unique challenges of Pascua-Lama are well known, and we have acknowledged the issues that led to the mine’s suspension. But those are sunk costs, and the question before Barrick now is whether Pascua-Lama’s economics going forward will justify resuming development.

Pascua-Lama’s new Executive Project Director, Sergio Fuentes, reports to our Co-Presidents and comes to Barrick after nearly three decades of successfully managing the construction of complex mining projects in Chile, including high-altitude operations in the Andes. He and the team he is assembling are working hard to assess Pascua-Lama’s economics going forward. To do so, they will address the project’s outstanding legal and regulatory hurdles, and will complete a new execution plan to optimize remaining construction activities. If that plan aligns with our capital allocation objectives and demonstrates an acceptable return on invested capital of at least 15 percent, we will consider resuming development of Pascua-Lama.

In any scenario, the company must permit and construct a new water management system in Chile. We will submit our application for the new system by June, with permitting expected to take two years.

In the meantime, we are working to minimize the costs of holding the asset. In 2015, Barrick anticipates expenditures of approximately $170-$190 million for the project, including approximately $140-$150 million⁸ for care and maintenance, including water management system costs, and approximately $30-$40 million⁹ for other project costs, including those related to permit obligations in Argentina and Chile.

FINANCIAL HIGHLIGHTS

Fourth quarter 2014 adjusted net earnings were $174 million ($0.15 per share)¹⁰ compared to $406 million ($0.37 per share) in the prior year period. This reflects the impact of 257,000 fewer ounces sold in the quarter along with lower realized gold and copper prices. The net loss for the fourth quarter was $2.85 billion ($2.45 per share) compared to a net loss of $2.83 billion ($2.61 per share) in the prior year quarter. Significant adjusting items for the quarter include:

 

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$2.8 billion in after-tax impairment charges, including $1.7 billion in asset impairment charges primarily related to Cerro Casale and Lumwana, and $1.1 billion in goodwill impairments, largely related to Zaldivar and Lumwana; and,

 

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$138 million in unrealized losses on non-hedge derivative instruments primarily related to fuel hedge positions.

Fourth quarter operating cash flow of $371 million compares to $1.02 billion in the prior year period. The decrease in operating cash flow primarily reflects lower realized gold and copper prices, partially offset by a decrease in income tax payments and a lower net loss compared to the prior year.

 

 

⁸ This amount is expected to be expensed.

⁹ This amount is expected to be capitalized.

¹⁰ Adjusted net earnings and adjusted net earnings per share are non-GAAP financial performance measures with no standardized definition under IFRS. See pages 81-91 of Barrick’s Fourth Quarter and Year-End 2014 Report.

 

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RESERVES AND RESOURCES

Barrick calculated its 2014 reserves using a conservative gold price assumption of $1,100 per ounce, unchanged from 2013. While this is below the company’s gold price outlook and current spot prices, it reflects Barrick’s emphasis on pursuing profitable ounces. Gold reserves were 93.0 million ounces¹¹ at the end of 2014, compared to 104.1 million ounces at the end of 2013. Approximately 65 percent of the reduction was attributable to ounces mined and processed in 2014, with the balance reflecting the divestiture of the Kanowna, Plutonic and Marigold mines, and the partial sale of Barrick’s equity interest in Acacia Mining Plc during the year.

Measured and indicated gold resources were 94.3 million ounces¹¹ at the end of 2014, compared to 99.4 million ounces at the end of 2013. The majority of the reduction relates to a lower gold price assumption of $1,400 per ounce (compared to $1,500 per ounce for 2013), with divestitures and movements to reserves more than offset by additions in the year. Inferred gold resources were 29.3 million ounces¹¹ at the end of 2014, compared to 31.9 million ounces at the end of 2013, primarily due to ounces upgraded to the measured and indicated category and from divestitures.

Copper reserves decreased to 9.6 billion pounds¹¹ from 14.0 billion pounds based on a copper price assumption of $3.00 per pound (unchanged from 2013), primarily reflecting the transfer of Lumwana reserves into resources following the company’s decision to place the mine on care and maintenance. Measured and indicated copper resources decreased to 4.6 billion pounds¹¹ compared to 6.9 billion pounds at the end of 2013 based on an unchanged copper price assumption of $3.50 per pound. Inferred copper resources were 0.1 billion pounds¹¹ compared to 0.2 billion pounds at the end of 2013.

2015 OUTLOOK

Barrick’s 2015 AISC guidance is $860-$895 per ounce. The company’s five cornerstone mines are forecast to contribute 60 percent of overall production at AISC of $725-$775 per ounce in 2015.

Gold production guidance for 2015 is 6.2-6.6 million ounces, with higher contributions from Goldstrike, Lagunas Norte and Acacia more than offsetting lower production from Veladero and the sale of Kanowna, Plutonic and Marigold in 2014. Copper guidance of 310-340 million pounds at C1 cash costs of $1.75-$2.00 per pound primarily reflects the planned suspension of the Lumwana mine in Zambia, partially offset by higher expected production from Zaldivar.

 

 

 

 

 

11	Calculated in accordance with National Instrument 43-101 as required by Canadian securities regulatory authorities. For a breakdown and additional detail on tonnes, grade and ounces, see pages 93-98 of Barrick’s Fourth Quarter and Year-End 2014 Report.

 

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Detailed 2015 operating and capital expenditure guidance is as follows:

 

GOLD PRODUCTION AND COSTS
		Production (millions of ounces)		AISC12 ($ per ounce)		Cash Costs12,13 ($ per ounce)
Cortez		0.825-0.900		760-835		560-610
Goldstrike		1.000-1.150		700-800		540-590
Pueblo Viejo (60%)		0.625-0.675		540-590		390-425
Lagunas Norte		0.600-0.650		675-725		375-425
Veladero		0.575-0.625		990-1,075		600-650
Sub-total		3.800-4.000		725-775		500-540
Porgera (95%)		0.500-0.550		1,025-1,125		775-825
Acacia (63.9%)		0.480-0.510		1,050-1,100		695-725
KCGM (50%)		0.315-0.330		915-940		775-800
Cowal		0.250-0.280		740-775		630-655
Hemlo		0.200-0.225		940-980		675-715
Turquoise Ridge (75%)		0.175-0.200		875-925		570-600
Round Mountain (50%)		0.170-0.190		1,180-1,205		875-900
Bald Mountain		0.170-0.195		1,060-1,100		560-600
Golden Sunlight		0.090-0.105		1,000-1,025		740-765
Total Gold		6.200-6.60014		860-895		600-640
COPPER PRODUCTION AND COSTS
		Production (millions of pounds)		C1 cash costs15 ($ per pound)		C3 fully allocated costs13     ($ per pound)
Zaldivar		240-260		1.65-1.95		2.00-2.30
Lumwana		70-8016		1.90-2.15		3.05-3.35
Total Copper		310-340		1.75-2.00		2.30-2.60
CAPITAL EXPENDITURES
		($ millions)
Mine site sustaining		1,600-1,800
Mine site expansion		150-200
Projects		150-200
Total		1,900-2,200

 

 

¹² Excludes the impact of financial hedges.

¹³ Unchanged from the measure previously referred to as adjusted operating costs.

¹⁴ Operating unit guidance ranges reflect expectations at each individual operating unit, but do not add up to corporate-wide guidance range total.

¹⁵ C1 cash costs per pound and C3 fully allocated costs per pound are non-GAAP financial performance measures. See pages 81-91 of Barrick’s Fourth Quarter and

Year-End 2014 Report.

¹⁶ Lower production reflects decision to suspend operations at Lumwana following implementation of Zambia’s new royalty regime.

 

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Total capital expenditures in 2015 are expected to be $1.90-$2.20 billion compared to $2.18 billion in 2014. The lower forecast expenditures primarily reflect reduced expansion capital due to the commissioning of the Goldstrike thiosulfate project in the fourth quarter of 2014 and lower sustaining and development capital at Lumwana following the decision to suspend operations. Sustaining capital expenditures are forecast to increase slightly at Lagunas Norte, Cortez and Turquoise Ridge and also reflect increased stripping activities at Porgera, Veladero and Bald Mountain.

The company anticipates higher depreciation expense of $240-$260 per ounce in 2015 due to higher depreciation at Lagunas Norte, Goldstrike, Cortez and Pueblo Viejo. We expect similar increases in depreciation expense over the next two years.

The table found in the appendix at the end of this news release outlines the material assumptions used to develop the forward-looking statements in our outlook and guidance and provides an economic sensitivity analysis of those assumptions.

 

OPERATING HIGHLIGHTS
Gold		Fourth Quarter 2014				Full Year 2014
Production (000s of ounces)17			1,527				6,249
All-in sustaining costs ($ per ounce)			925				864
Copper
Production (millions of pounds)17			134				436
C1 cash costs ($ per pound)			1.78				1.92
TOTAL CAPITAL EXPENDITURES ($ millions)18			627				2,180

Cortez

The Cortez mine produced 902,000 ounces at AISC of $706 per ounce in 2014. After several years of exceptional performance with production surpassing one million ounces at low AISC, the Cortez mine is transitioning to a greater proportion of underground mining. Barrick is advancing plans to expand profitable production from the underground mine at Cortez, which is characterized by higher grades and significant resource upside. Expected production of 825,000-900,000 ounces in 2015 reflects lower open pit tonnage due to stripping requirements and a period of lower grades from the underground mine. AISC of $760-$835 per ounce in 2015 reflects lower sales and higher sustaining capital. To mitigate cost increases at Cortez, the mine is improving shift change sequencing, revamping fleet maintenance practices, improving underground capital efficiency, installing advanced process controls, and strengthening geo-metallurgical modeling.

Cortez has considerable exploration potential, particularly in the higher grade and mostly oxide Lower Zone below the 3,800 foot level which remains open at depth and to the south.

 

 

¹⁷ Barrick’s share.

¹⁸ Barrick’s share on an accrued basis, excluding capitalized interest.

 

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Goldstrike

Goldstrike delivered another year of outstanding results, while further solidifying its position as one of the world’s most technologically advanced gold processing centers. The mine contributed 902,000 ounces in 2014 at AISC of $854 per ounce, with the fourth quarter reflecting lower expected grades and a shutdown of the autoclave facility to complete the transition to thiosulfate processing.

First gold from the thiosulfate circuit, an innovative and proprietary technology developed by Barrick, was produced in late November. Since it was commissioned late last year, the new circuit has met our production and cost expectations. This new processing method, which does not use cyanide, will enable Goldstrike to accelerate cash flow from about four million stockpiled ounces. The new circuit is expected to process an average of 350,000-450,000 ounces annually in its first full five years. Production at Goldstrike in 2015 is expected to be 1.000-1.150 million ounces at AISC of $700-$800 per ounce including contributions from the thiosulfate leaching circuit. The mine is anticipated to continue producing at the one million ounce level for the next three years (2015-2017) at AISC below $900 per ounce.

Pueblo Viejo

Pueblo Viejo completed its ramp up in 2014, and is now the only mine in the world with annual production of more than one million ounces (100 percent basis), at AISC below $700 per ounce for the next three years (2015-2017). Our technical experts have identified opportunities to further optimize operations and increase cash flow at Pueblo Viejo. These include: increasing plant throughput by optimizing ore blending and autoclave availability and reducing costs by optimizing maintenance programs. Long-term, Pueblo Viejo has significant reserves and resources with potential to extend the life of the mine.

Barrick’s 60 percent share of production from Pueblo Viejo for the year was 665,000 ounces at AISC of $588 per ounce. Production in the fourth quarter was lower due to scheduled maintenance, which more than offset higher grades. Production in 2015 is forecast to be 625,000-675,000 ounces at AISC of $540-$590 per ounce.

Lagunas Norte

Lagunas Norte contributed 582,000 ounces at AISC of $543 per ounce in 2014. As expected, production in the fourth quarter improved due to higher grade material and a faster leach cycle from stacking ore on a new area of the leach pad. Production in 2015 is anticipated to be 600,000–650,000 ounces, also benefiting from increased leach pad efficiency. AISC of $675-$725 per ounce in 2015 reflect the start of construction on the next phase of the new leach pad and the expansion of existing waste rock storage facilities.

The company is currently evaluating a plan to extend the life of Lagunas Norte by mining the refractory ore body below the current oxide ore body.

 

BARRICK FOURTH QUARTER AND YEAR-END 2014		11		PRESS RELEASE

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Veladero

The Veladero mine produced 722,000 ounces of gold in 2014 at AISC of $815 per ounce on positive grade reconciliations and a reduction in capitalized stripping costs. Production guidance of 575,000-625,000 ounces for 2015 reflects lower grades in the mine plan. AISC guidance of $990-$1,075 per ounce reflects lower production and higher capitalized stripping compared to 2014, related to development of the next phase of the Federico pit.

The company is working to realize cost savings at Veladero by improving the efficiency and effectiveness of inventory management and maintenance and improving productivity in equipment availability and utilization.

Turquoise Ridge

The Turquoise Ridge mine had a strong performance in 2014, contributing 195,000 ounces (75 percent basis) at AISC of $628 per ounce on increased throughput, higher grades and lower sustaining capital. The mine is expected to produce 175,000-200,000 ounces (75 percent basis) in 2015 at AISC of $875-$925 per ounce. As discussed on page five, Barrick is advancing a project to develop an additional shaft, which could nearly double production to 500,000 ounces (100 percent basis) per year at AISC of about $625-$675 per ounce.

Porgera

Higher recoveries and throughput from improved mill availability and a focus on reducing sustaining capital contributed to improved 2014 production and AISC of 493,000 ounces and $996 per ounce, respectively. Porgera is expected to produce 500,000-550,000 ounces in 2015, reflecting increased underground mining rates and mining from higher grade areas of the open pit. AISC of $1,025-$1,125 per ounce in 2015 reflects increased sustaining capital in line with the mine plan. The company is evaluating a number of initiatives with the potential to further reduce costs at Porgera. These include: lowering energy costs through an alternative electricity supply project and reducing the number of expatriate staff and other external spending.

Other Mines

Barrick’s other mines — consisting of Bald Mountain, Round Mountain, Ruby Hill, Golden Sunlight, Hemlo, Cowal and KCGM — contributed 1.2 million ounces at AISC of $1,011 per ounce in 2014.

Acacia Mining

Barrick’s share of full year production was 470,000 ounces, while AISC of $1,105 per ounce were at the bottom of the guidance range. Barrick’s share of 2015 production from Acacia is anticipated to be 480,000-510,000 ounces at AISC of $1,050-$1,100 per ounce.

 

BARRICK FOURTH QUARTER AND YEAR-END 2014		12		PRESS RELEASE

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Global Copper

Copper production in 2014 was 436 million pounds at C1 cash costs of $1.92 per pound. Lower copper production for the year was primarily due to the temporary shutdown of Lumwana to repair the conveyor and fewer tons processed at Zaldivar, along with a minor disruption in leaching irrigation due to piping and pump issues.

Copper production guidance for 2015 of 310-340 million pounds at C1 cash costs of $1.75-$2.00 per pound assumes the planned suspension of Lumwana in March.

Lumwana contributed 214 million pounds at C1 cash costs of $2.08 per pound in 2014. During the quarter, the Zambian government enacted changes to the country’s mining tax regime that replaced corporate income tax and variable profit tax with a 20 percent gross royalty which took effect on January 1, 2015. Given the substantial impact of the new royalty and in light of current low copper prices, Barrick intends to proceed with a suspension of operations at Lumwana unless an agreement with the government of Zambia can be reached. Assuming a suspension, the mine is expected to produce 70-80 million pounds¹⁹ of copper in 2015 at C1 cash costs of $1.90-$2.15 per pound.

The Zaldívar mine produced 222 million pounds in 2014 at C1 cash costs of $1.79 per pound. The mine continues to be a steady generator of free cash flow and is expected to have improved production of 240-260 million pounds at C1 cash costs of $1.65-$1.95 per pound in 2015, reflecting higher mining rates and better equipment availability.

During the fourth quarter, Barrick completed the joint venture agreement with Saudi Arabian Mining Company (Ma’aden) to advance and operate the Jabal Sayid copper mine. Construction to complete safety and security installations has begun and shipments of low-cost copper-in-concentrate are anticipated in early 2016. Once the mine reaches full production, the average annual output is expected to be 100 million pounds per year, with the potential to increase to 130 million pounds.

Qualified Person

Scientific and technical information relating to exploration at the company’s Cortez property contained in this news release has been reviewed and approved by Robert Krcmarov, Senior Vice President, Global Exploration of Barrick, who is a “Qualified Person” as defined in National Instrument 43-101 – Standards of Disclosure for Mineral Projects.

 

 

19	Lower production reflects decision to suspend operations at Lumwana following implementation of Zambia’s new royalty regime.

 

BARRICK FOURTH QUARTER AND YEAR-END 2014		13		PRESS RELEASE

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APPENDIX

Outlook Assumptions and Economic Sensitivity Analysis

		2015 Guidance Assumption		Hypothetical Change		Impact on AISC		EBITDA20 (millions)
Gold revenue, net of royalties		$1,250/oz21		+/- $100/oz		n/a		$635
Copper revenue, net of royalties		$2.50/lb22		+/- $0.50/lb		n/a		$163
Gold all-in sustaining costs
Gold royalties & production taxes		$1,250/oz		$100/oz		$3/oz		$19
WTI crude oil price22, 23		$50/bbl		$10/bbl		$3/oz		$19
Australian dollar exchange rate23		0.83 : 1		+10%		($3)/oz		($23)
Australian dollar exchange rate23		0.83:1		-10%		$3/oz		$23
Canadian dollar exchange rate23		1.20:1		+10%		($4)/oz		($27)
Canadian dollar exchange rate23		1.20:1		-10%		$2/oz		$11
Copper C1 cash costs						Impact on C1
WTI crude oil price23, 24		$50/bbl		$10/bbl		$0.00/lb		$1
Chilean peso exchange rate23		610 : 1		+10%		($0.03)/lb		($11)
Chilean peso exchange rate23		610 : 1		-10%		$0.00/lb		$1

 

 

20	EBITDA is a non-GAAP financial performance measure with no standardized definition under IFRS. See pages 81-91 of Barrick’s Fourth Quarter and Year-End 2014 Report.

21	We have assumed a gold price of $1,250 per ounce and copper price of $2.50 per pound, which are in line with current market prices.

22	Due to our hedging activities, which are reflected in these sensitivities, we are partially protected against changes in these factors.

23	Impact on EBITDA only reflects contracts that mature in 2015.

 

BARRICK FOURTH QUARTER AND YEAR-END 2014		14		PRESS RELEASE

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Key Statistics

 

Barrick Gold Corporation (in United States dollars)			Three months ended December 31								Twelve months ended December 31
			2014				2013				2014				2013
Operating Results
Gold production (thousands of ounces)1			1,527				1,713				6,249				7,166
Gold sold (thousands of ounces)1			1,572				1,829				6,284				7,174
Per ounce data
Average spot gold price		$	1,201			$	1,276			$	1,266			$	1,411
Average realized gold price2			1,204				1,272				1,265				1,407
Cash costs2			628				573				598				566
All-in sustaining costs2			925				899				864				915
All-in costs2			1,094				1,317				986				1,282
Cash costs (on a co-product basis)2			648				592				618				589
All-in sustaining costs (on a co-product basis)2			945				918				884				938
All-in costs (on a co-product basis)2			1,114				1,336				1,006				1,305
Copper production (millions of pounds)			134				139				436				539
Copper sold (millions of pounds)			139				134				435				519
Per pound data
Average spot copper price		$	3.00			$	3.24			$	3.11			$	3.32
Average realized copper price2			2.91				3.34				3.03				3.39
C1 cash costs2			1.78				1.81				1.92				1.92
Depreciation3			0.38				0.37				0.39				0.35
Other4			0.11				0.15				0.12				0.15
C3 fully allocated costs2			2.27				2.33				2.43				2.42
Financial Results (millions)
Revenues		$	2,510			$	2,942			$	10,239			$	12,527
Net loss5			(2,851	)			(2,830	)			(2,907	)			(10,366	)
Adjusted net earnings2			174				406				793				2,569
Operating cash flow			371				1,016				2,296				4,239
Adjusted operating cash flow2			371				1,085				2,296				4,359
Per Share Data (dollars)
Net loss (basic)			(2.45	)			(2.61	)			(2.50	)			(10.14	)
Adjusted net earnings (basic)2			0.15				0.37				0.68				2.51
Net loss (diluted)			(2.45	)			(2.61	)			(2.50	)			(10.14	)
Weighted average basic common shares (millions)			1,165				1,085				1,165				1,022
Weighted average diluted common shares (millions)6			1,165				1,085				1,165				1,022
											As at				As at
											December 31,				December 31,
											2014				2013
Financial Position (millions)
Cash and equivalents										$	2,699			$	2,404
Non-cash working capital											3,377				3,060

1

Production includes Acacia on a 73.9% basis until February 28, 2014 and a 63.9% basis thereafter and Pueblo Viejo on a 60% basis, both of which reflect our equity share of production. Also includes production from Yilgarn South up to September 30, 2013, Plutonic up to January 31, 2014, Kanowna up to March 1, 2014 and Marigold up to April 4, 2014, the effective dates of sale of these assets. Sales include our equity share of gold sales from Acacia and Pueblo Viejo.

2

Realized price, cash costs, all-in sustaining costs, all-in costs, cash costs (on a co-product basis), all-in sustaining costs (on a co-product basis), all-in costs (on a co-product basis), C1 cash costs, C3 fully allocated costs, adjusted net earnings and adjusted operating cash flow are non-gaap financial performance measures with no standard definition under IFRS. Refer to the Non-GAAP Financial Performance Measures section of the Company’s MD&A.

3	Represents equity depreciation expense divided by equity pounds of copper sold.

4	For a breakdown, see reconciliation of cost of sales to C1 cash costs and C3 fully allocated costs per pound in the Non-GAAP Financial Performance Measures section of the Company’s MD&A.

5	Net loss represents net loss attributable to the equity holders of the Company.

6	Fully diluted includes dilutive effect of stock options.

 

BARRICK YEAR END 2014		15		SUMMARY INFORMATION

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Production and Cost Summary

 

		Gold Production (attributable ounces) (000’s)																All-in sustaining costs5 ($/oz)
			Three months ended								Twelve months ended								Three months ended								Twelve months ended
			December 31,								December 31,								December 31,								December 31,
			2014				2013				2014				2013				2014				2013				2014				2013
Gold
Goldstrike			187				242				902				892				$877				$779				$854				$913
Cortez			185				244				902				1,337				849				505				706				440
Pueblo Viejo			177				157				665				488				597				720				588				735
Lagunas Norte			176				195				582				606				522				613				543				627
Veladero			197				142				722				641				894				969				815				833
Turquoise Ridge			39				53				195				167				732				624				628				928
Porgera			126				131				493				482				977				1,419				996				1,361
Kalgoorlie			81				80				326				315				1,142				992				1,037				1,070
Acacia2			116				122				470				474				1,088				1,163				1,105				1,346
Other Mines - Gold1			237				331				975				1,667				1,017				1,058				994				1,054
Other3			6				16				17				97				1,946				1,794				2,277				1,349
Total			1,527				1,713				6,249				7,166				$925				$899				$864				$915
			Copper Production (attributable pounds) (millions)																C1 Cash Costs5 ($/lb)
			Three months ended								Twelve months ended								Three months ended								Twelve months ended
			December 31,								December 31,								December 31,								December 31,
			2014				2013				2014				2013				2014				2013				2014				2013
Lumwana			76				67				214				260			$	1.77			$	2.04			$	2.08			$	2.29
Zaldívar			58				72				222				279				1.82				1.66				1.79				1.65
Total			134				139				436				539			$	1.78			$	1.81			$	1.92			$	1.92

 

		Total Gold Production Costs ($/oz)
			Three months ended								Twelve months ended
			December 31,								December 31,
			2014				2013				2014				2013
Direct mining costs before impact of hedges at market foreign exchange rates		$	616			$	597			$	597			$	604
Gains realized on currency hedge and commodity hedge/economic hedge contracts			(3	)			(34	)			(16	)			(41	)
Other5			-				-				-				(8	)
By-product credits			(20	)			(19	)			(20	)			(23	)
Royalties			35				29				37				34
Cash costs4			628				573				598				566
Depreciation			211				146				202				190
Other5			-				-				-				8
Total production costs		$	839			$	719			$	800			$	764
Cash costs4		$	628			$	573			$	598			$	566
General & administrative costs			52				34				48				42
Rehabilitation - accretion and amortization (operating sites)			19				17				20				19
Mine on-site exploration and evaluation costs			4				9				3				8
Mine development expenditures			90				129				104				154
Sustaining capital expenditures			132				137				91				126
All-in sustaining costs4		$	925			$	899			$	864			$	915
All-in costs4		$	1,094			$	1,317			$	986			$	1,282
		Total Copper Production Costs ($/lb)
			Three months ended								Twelve months ended
			December 31,								December 31,
			2014				2013				2014				2013
C1 cash costs4		$	1.78			$	1.81			$	1.92			$	1.92
Depreciation6			0.38				0.37				0.39				0.35
Other7			0.11				0.15				0.12				0.15
C3 fully allocated costs4		$	2.27			$	2.33			$	2.43			$	2.42

 

1	Includes production from Yilgarn South up to September 30, 2013, Plutonic up to January 31, 2014, Kanowna up to March 1, 2014 and Marigold up to April 4, 2014, the effective dates of sale of these assets.

2	Figures relating to Acacia are presented on a 73.9% basis until February 28, 2014 and a 63.9% basis thereafter, which reflects our equity share of production.

3	Production and all-in sustaining costs include Pierina.

4	Cash costs, all-in sustaining costs, all-in costs, C1 cash costs and C3 fully allocated costs are non-GAAP financial performance measures with no standard meaning under IFRS. Refer to the Non-GAAP Financial Performance Measures section of the Company’s MD&A.

5	Represents the Barrick Energy gross margin divided by equity ounces of gold sold. Barrick Energy was divested in the third quarter of 2013.

6	Represents equity depreciation expense divided by equity pounds of copper sold.

7	For a breakdown, see reconciliation of cost of sales to C1 cash costs and C3 fully allocated costs per pound in the Non-GAAP Financial Performance Measures section of the Company’s MD&A.

 

BARRICK YEAR END 2014		16		SUMMARY INFORMATION

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MANAGEMENT’S DISCUSSION AND ANALYSIS (“MD&A”)

 

 

 

 

CAUTIONARY STATEMENT ON FORWARD-LOOKING INFORMATION

 

 

BARRICK YEAR-END 2014		17		MANAGEMENT’S DISCUSSION AND ANALYSIS

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BARRICK YEAR-END 2014		18		MANAGEMENT’S DISCUSSION AND ANALYSIS

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INDEX

 

			page
Overview
Our Business and Strategy			20
Risks to Achieving our Strategy			23
Review of 2014 Results			25
Key Business Developments			29
Outlook for 2015			31
Market Overview			37
Review of Financial Results
Revenue			42
Production Costs			42
General & Administrative Expenses			43
Other Expense (Income)			43
Exploration and Project Costs			43
Capital Expenditures			43
Finance Cost/Finance Income			44
Impairment Charges/Reversals			44
Income Tax Expense			45
Operating Segments Performance			46
Financial Condition Review
Balance Sheet Review			68
Shareholders’ Equity			68
Comprehensive Income			68
Financial Position and Liquidity			69
Financial Instruments			71
Commitments and Contingencies			71
Internal Control over Financial Reporting and Disclosure Controls and Procedures			72
Review of Quarterly Results			74
IFRS Critical Accounting Policies and Accounting Estimates			75
Non-GAAP Financial Performance Measures			81
Glossary of Technical Terms			92

 

BARRICK YEAR-END 2014		19		MANAGEMENT’S DISCUSSION AND ANALYSIS

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OVERVIEW

 

 

BARRICK YEAR-END 2014		20		MANAGEMENT’S DISCUSSION AND ANALYSIS

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BARRICK YEAR-END 2014		21		MANAGEMENT’S DISCUSSION AND ANALYSIS

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BARRICK YEAR-END 2014		22		MANAGEMENT’S DISCUSSION AND ANALYSIS

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BARRICK YEAR-END 2014		23		MANAGEMENT’S DISCUSSION AND ANALYSIS

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BARRICK YEAR-END 2014		24		MANAGEMENT’S DISCUSSION AND ANALYSIS

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Review of 2014 Results

($ millions, except where indicated)		For the three months ended December 31								For the years ended December 31
		2014				2013				2014				2013
Financial Data
Revenue			$2,510				$2,942				$10,239				$12,527
Net earnings (loss)1			(2,851)				(2,830)				(2,907)				(10,366)
Per share (“EPS”)2			(2.45)				(2.61)				(2.50)				(10.14)
Adjusted net earnings3			174				406				793				2,569
Per share (“adjusted EPS”)2,3			0.15				0.37				0.68				2.51
Total project capital expenditures4,5			121				658				234				2,434
Total capital expenditures – expansion4			90				122				392				468
Total capital expenditures – sustaining4			438				568				1,638				2,473
Operating cash flow			371				1,016				2,296				4,239
Adjusted operating cash flow3			371				1,085				2,296				4,359
Free cash flow3			$(176)				$(280)				$(136)				$(1,142)
Debt to Adjusted EBITDA6											3.43:1				2.60:1
Operating Data
Gold
Gold produced (000s ounces)7			1,527				1,713				6,249				7,166
Gold sold (000s ounces)7			1,572				1,829				6,284				7,174
Realized price ($ per ounce)3			$1,204				$1,272				$1,265				$1,407
Cash costs ($ per ounce)3			$628				$573				$598				$566
Cash costs on a co-product basis ($ per ounce)3			$648				$592				$618				$589
All-in sustaining costs ($ per ounce)3			$925				$899				$864				$915
All-in sustaining costs on a co-product basis ($ per ounce)3			$945				$918				$884				$938
All-in costs ($ per ounce)3			$1,094				$1,317				$986				$1,282
All-in costs on a co-product basis ($ per ounce)3			$1,114				$1,336				$1,006				$1,305
Copper
Copper produced (millions of pounds)			134				139				436				539
Copper sold (millions of pounds)			139				134				435				519
Realized price ($ per pound)3			$2.91				$3.34				$3.03				$3.39
C1 cash costs ($ per pound)3			$1.78				$1.81				$1.92				$1.92
Safety
Total reportable injury frequency rate											0.58				0.64

 

1	Net loss represents net loss attributable to the equity holders of the Company.

2	Calculated using weighted average number of shares outstanding under the basic method.

3	These are non-GAAP financial performance measures with no standardized definition under IFRS. For further information and detailed reconciliations, please see pages 81 – 91 of this MD&A.

4	These amounts are presented on a 100% accrued basis. Project and expansion capital expenditures are included in our calculation of all-in costs, but not included in our calculation of all-in sustaining costs.

5	Project capital expenditures include the reversal of contract claim accruals that were closed out during the year and the reclassification of assets from inventory to construction-in-process at Pascua-Lama.

6	Represents total debt divided by Adjusted EBITDA as at December 31, 2014 and December 31, 2013.

7	Gold production and sales include our pro rata share of Acacia and Pueblo Viejo at our equity share.

 

BARRICK YEAR-END 2014		25		MANAGEMENT’S DISCUSSION AND ANALYSIS

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FULL YEAR FINANCIAL AND OPERATING HIGHLIGHTS

Net Income, Adjusted Net Income, Operating Cash Flow and Free Cash Flow

The net loss was lower in 2014 than the net loss recorded in the prior year, which was primarily due to the recognition of $11.5 billion in impairment losses in the prior year compared to $3.4 billion in 2014. The decrease in adjusted net earnings was primarily due to lower realized gold and copper prices combined with lower gold and copper sales volumes, partially offset by lower cost of sales applicable to gold and copper.

The increase in EPS over the same prior year period reflects the lower net loss in 2014, and the impact of our equity offering in fourth quarter 2013 that increased our total shares outstanding by 15%, and therefore decreased our per share net loss. The decrease in adjusted EPS over the prior year was primarily due to the decrease in adjusted net earnings, as described above, combined with the increase in total shares outstanding.

Operating cash flow decreased 46% primarily reflecting lower sales volumes and lower gross margins, partially offset by a decrease in income tax payments.

Free cash flow in 2014 was an outflow of $136 million, an improvement of $1 billion over the prior year, primarily reflecting lower capital expenditures which more than offset lower operating cash flows.

 

Gold production, cash costs and all-in sustaining costs

 

Gold production for 2014 was 13% lower, primarily due to the impact of the divestiture of the Yilgarn South assets in fourth quarter 2013, the Plutonic and Kanowna assets in first quarter 2014 and the Marigold assets in second quarter 2014, which accounted for 10% of 2013 production. The lower production in 2014 also
		reflects lower production at Cortez, partially offset by higher production at Goldstrike, Pueblo Viejo, Lagunas Norte, Veladero, Turquoise Ridge and at Porgera.

 

BARRICK YEAR-END 2014		26		MANAGEMENT’S DISCUSSION AND ANALYSIS

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Cash costs for 2014 increased 6% primarily due to the impact of lower production levels on unit production costs; partially offset by lower total direct mining costs and lower depreciation expense. All-in sustaining costs for 2014 decreased 6% as lower minesite sustaining capital expenditures more than offset the increase in cash costs. As a result of our actions to reduce and defer sustaining capital expenditures, we were able to finish the year below our guidance range for all-in sustaining costs, which had already been reduced twice throughout the year. We will continue this focus on controlling our expenditures in order to maximize the free cash flow we generate from operations in this lower gold price environment, as can be seen in our 2015 guidance range of $860 to $895 per ounce. All-in costs for 2014 were 23% lower as a result of lower all-in sustaining costs and lower non-sustaining capital, primarily as a result of the temporary suspension of construction at Pascua-Lama that occurred in fourth quarter 2013.

Copper production and C1 costs

 

		Copper production for 2014 decreased 19% compared to the prior year, due to lower production at Zaldívar and at Lumwana. The decrease in copper production at Zaldívar was due to lower tonnes processed combined with a minor disruption in leaching irrigation due to piping and pump failures. The decrease in production at Lumwana was primarily due to the partial conveyor collapse that occurred in second quarter 2014 which shut down concentrate production for most of the second quarter. Copper C1 cash costs were similar to the prior year as the impact of lower production levels on unit production costs was offset by lower total direct mining costs.
Significant Adjusting Items   Significant adjusting items (net of tax and non-controlling interest effects) in 2014 include: $3.4 billion in impairment losses; $169 million in unrealized foreign currency translation losses; $137 million in unrealized losses on non-hedge derivative instruments, partially offset by $49 million in tax adjustments and $48 million in gains on sale of assets.

 

BARRICK YEAR-END 2014		27		MANAGEMENT’S DISCUSSION AND ANALYSIS

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Capital Expenditures

 

Capital expenditures for 2014 were down 58% primarily due to lower project capital expenditures, our initiatives to reduce sustaining capital at each of our operating sites and lower minesite expansion capital expenditures. The lower minesite expansion capital expenditures is primarily due to a reduction in costs at Cortez as well as at Bulyanhulu due to the expansion of the carbon-in-leach (‘CIL’) plant which was commissioned in fourth quarter 2014. The reduction in project capital expenditures is primarily due to our decision in fourth quarter 2013 to temporarily suspend the Pascua-Lama project.

 

		Safety   Nothing is more important to Barrick than the safety, health and well-being of workers and their families. In 2014, we continued a ten-year trend of improving our total reportable injury frequency rate5 (“TRIFR”) and since 2004, there has been a 79 percent improvement in the TRIFR (from 2.79 to 0.58). Another example of our safety culture was that our Turquoise Ridge mine, with more than 500 employees and contractors, operated throughout 2014 without a single medical treatment injury. Although we are pleased with these trends, this performance was overshadowed by the tragic occurrence of a fatality in 2014 at our Zaldívar mine.

Reserves and Resources

Barrick calculated its 2014 reserves using a conservative gold price assumption of $1,100 per ounce, unchanged from 2013. While this is below the company’s gold price outlook and current spot prices, it reflects Barrick’s emphasis on pursuing profitable ounces. Gold reserves were 93.0 million ounces⁶ at the end of 2014, compared to 104.1 million ounces at the end of 2013. Approximately 65 percent of the reduction was attributable to ounces mined and processed in 2014, with the balance reflecting the divestiture of the Kanowna, Plutonic and Marigold mines, and the partial sale of Barrick’s equity interest in Acacia Mining plc during the year. This includes 17.4 million ounces related to our 75% share of Cerro Casale which, notwithstanding the impairment we took on the project in fourth quarter 2014, still qualify as reserves pursuant to National Instrument 43-101.

Measured and indicated gold resources were 94.3 million ounces⁶ at the end of 2014, compared to 99.4 million ounces at the end of 2013. The majority of the reduction relates to a lower gold price assumption of $1,400 per ounce (compared to $1,500 per ounce for 2013), with divestitures and movements to reserves more than offset by additions in the year. Inferred gold resources were 29.3 million ounces⁶ at the end of 2014, compared to 31.9 million ounces at the end of 2013, primarily due to ounces upgraded to the measured and indicated category and from divestitures.

Copper reserves decreased to 9.6 billion pounds⁶ from 14.0 billion pounds based on a copper price assumption of $3.00 per pound (unchanged from 2013), primarily reflecting the transfer of Lumwana reserves into resources following the company’s decision to place the mine on care and maintenance. Measured and indicated copper resources decreased to 4.6 billion pounds⁶ compared to 6.9 billion pounds at the end of 2013 based on an unchanged copper price assumption of $3.50 per pound. Inferred copper resources were 0.1 billion pounds⁶ compared to 0.2 billion pounds at the end of 2013.

 

5	Total reportable incident frequency rate (TRIFR) is a ratio calculated as follows: number of reportable injuries x 200,000 hours divided by the total number of hours worked. Reportable injuries include fatalities, lost time injuries, restricted duty injuries, and medically treated injuries.

6	Calculated in accordance with National Instrument 43-101 as required by Canadian securities regulatory authorities. For a breakdown and additional detail on tonnes, grade and ounces, see pages 93- 98.

 

BARRICK YEAR-END 2014		28		MANAGEMENT’S DISCUSSION AND ANALYSIS

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BARRICK YEAR-END 2014		29		MANAGEMENT’S DISCUSSION AND ANALYSIS

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BARRICK YEAR-END 2014		30		MANAGEMENT’S DISCUSSION AND ANALYSIS

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Outlook for 2015

Operating Unit Guidance

Our 2014 gold and copper production, cash costs, all-in sustaining costs and forecast gold production, cash costs and all-in sustaining costs ranges by operating unit for 2015 are as follows:

 

Operating Unit		2014 production (‘000s ozs)		2014 cash costs ($/oz)		2014 all-in sustaining costs ($/oz)		2015 forecast production (‘000s ozs)		2015 forecast cash costs ($/oz)		2015 forecast all-in sustaining costs ($/oz)
Gold
Cortez		902		$498		$706		825 - 900		$560 - $610		$760 - $835
Goldstrike		902		571		854		1,000 - 1,150		540 - 590		700 - 800
Pueblo Viejo (60%)		665		446		588		625 - 675		390 - 425		540 - 590
Lagunas Norte		582		379		543		600 - 650		375 - 425		675 - 725
Veladero		722		566		815		575 - 625		600 - 650		990 - 1,075
Total Core Mines		3,773		$500		$716		3,800 - 4,000		$500 - $540		$725 - $775
Turquoise Ridge (75%)		195		473		628		175 - 200		570 - 600		875 - 925
Porgera (95%)		493		915		996		500 - 550		775 - 825		1,025 - 1,125
Kalgoorlie (50%)		326		817		1,037		315 - 330		775 - 800		915 - 940
Acacia (63.9%)		470		732		1,105		480 - 510		695 - 725		1,050 - 1,100
Cowal		268		608		787		250 - 280		630 - 655		740 - 775
Hemlo		206		829		1,059		200 - 225		675 - 715		940 - 980
Round Mountain (50%)		164		936		1,170		170 - 190		875 - 900		1,180 - 1,205
Bald Mountain		161		724		1,070		170 - 195		560 - 600		1,060 - 1,100
Golden Sunlight		86		893		1,181		90 - 105		740 - 765		1,000 - 1,025
Ruby Hill		33		637		713		-		-		-
Total Continuing Operations		6,175		$608		$825		6,200 - 6,600		$580 - $620		$820 - $855
Kanowna		39		641		674		-		-		-
Pierina		17		1,419		2,277		-		-		-
Marigold (33%)		11		1,001		1,197		-		-		-
Plutonic		7		1,120		1,206		-		-		-
Total Divested/Closed Sites		74		$945		$1,213		-		-		-
Total Gold1		6,249		$614		$832		6,200 - 6,600		$580 - $620		$820 - $855
Total Consolidated Barrick		6,249		$598		$864		6,200 -  6,6002		$600 - $640		$860 - $895
		2014 production (millions lbs)		2014 C1 cash costs ($/lb)		2014 C3 fully allocated costs ($/lb)		2015 forecast production (millions lbs)		2015 forecast C1 cash costs ($/lb)		2015 forecast C3 fully allocated costs ($/lb)
Copper
Zaldívar		222		$1.79		$2.14		240 - 260		$1.65 - $1.95		$2.00 - $2.30
Lumwana		214		2.08		2.76		70 - 80		$1.90 - $2.15		$3.05 - $3.35
Total Copper		436		$1.92		$2.43		310 - 340		$1.75 - $2.00		$2.30 - $2.60

1

Total gold cash costs and all-in sustaining costs exclude the impact of hedges (2014: $16/oz gain; 2015: $20/oz loss) and/or corporate general & administrative costs (2014: $48/oz; 2015: $20/oz). 2015 forecast cash costs include an allocation of costs that were formerly reported as general & administrative expense.

2	Operating unit guidance ranges reflect expectations at each individual operating unit, but do not add up to corporate-wide guidance range total.

 

BARRICK YEAR-END 2014		31		MANAGEMENT’S DISCUSSION AND ANALYSIS

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Consolidated Expense & Capital Guidance

Our 2014 consolidated expenses and capital expenditures and forecast consolidated expenses and capital expenditures for 2015 are as follows:

 

($ millions, except per ounce/pound data)		2014 Actual				2015 Guidance
Depreciation:
Gold ($ per ounce)			202				240 – 260
Copper ($ per pound)			0.39				0.35 – 0.45
Exploration and project expenses			392				370 – 460
Exploration and evaluation			184				220 – 270
Project expenses			208				150 – 190
General and administrative1:
Corporate Administration			180				~145
Operating Segment Administration			-				-
Stock Based Compensation			9				~50
Acacia			44				~30
Total General and Administrative			233				~225
Other expense			47				40-60
Finance costs			796				800 – 825
Capital expenditures:
Minesite sustaining			1,584				1,600 – 1,800
Minesite expansion			362				150 – 200
Projects			234				150 – 200
Total capital expenditures			2,180				1,900 – 2,200

1	2014 General and administrative expenses have been restated to conform with current period presentation.

Total general and administrative expenses of $385 million in 2014 include $120 million in segment administration

costs and $25 million in severance costs.

 

 

BARRICK YEAR-END 2014		32		MANAGEMENT’S DISCUSSION AND ANALYSIS

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BARRICK YEAR-END 2014		33		MANAGEMENT’S DISCUSSION AND ANALYSIS

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BARRICK YEAR-END 2014		34		MANAGEMENT’S DISCUSSION AND ANALYSIS

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BARRICK YEAR-END 2014		35		MANAGEMENT’S DISCUSSION AND ANALYSIS

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Outlook Assumptions and Economic Sensitivity Analysis

 

		2015 Guidance Assumption		Hypothetical Change		Impact on AISC		EBITDA1 (millions)
Gold revenue, net of royalties		$1,250/oz2		+/-$100/oz		n/a		$635
Copper revenue, net of royalties		$2.50/lb2		+/-$0.50/lb		n/a		$163
Gold all-in sustaining costs
Gold royalties & production taxes		$1,250/oz		$100/oz		$3/oz		$19
WTI crude oil price3, 4		$50/bbl		$10/bbl		$3/oz		$19
Australian dollar exchange rate3		0.83:1		+10%		($3)/oz		($23)
Australian dollar exchange rate3		0.83:1		-10%		$3/oz		$23
Canadian dollar exchange rate3		1.20:1		+10%		($4)/oz		($27)
Canadian dollar exchange rate3		1.20:1		-10%		$2/oz		$11
Copper C1 cash costs						Impact on C1
WTI crude oil price3, 4		$50/bbl		$10/bbl		$0.00/lb		$1
Chilean peso exchange rate3		610:1		+10%		($0.03)/lb		($11)
Chilean peso exchange rate3		610:1		-10%		$0.00/lb		$1

 

1	EBITDA is a non-GAAP financial performance measure with no standardized definition under IFRS. For further information and a detailed reconciliation, please see pages 81 - 91 of this MD&A.

2	We have assumed a gold price of $1,250 per ounce and copper price of $2.50 per pound, which are in line with current market prices.

3	Due to our hedging activities, which are reflected in these sensitivities, we are partially protected against changes in these factors.

4	Impact on EBITDA only reflects contracts that mature in 2015.

 

BARRICK YEAR-END 2014		36		MANAGEMENT’S DISCUSSION AND ANALYSIS

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BARRICK YEAR-END 2014		37		MANAGEMENT’S DISCUSSION AND ANALYSIS

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BARRICK YEAR-END 2014		38		MANAGEMENT’S DISCUSSION AND ANALYSIS

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BARRICK YEAR-END 2014		39		MANAGEMENT’S DISCUSSION AND ANALYSIS

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BARRICK YEAR-END 2014		40		MANAGEMENT’S DISCUSSION AND ANALYSIS

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BARRICK YEAR-END 2014		41		MANAGEMENT’S DISCUSSION AND ANALYSIS

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BARRICK YEAR-END 2014		42		MANAGEMENT’S DISCUSSION AND ANALYSIS

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BARRICK YEAR-END 2014		43		MANAGEMENT’S DISCUSSION AND ANALYSIS

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BARRICK YEAR-END 2014		44		MANAGEMENT’S DISCUSSION AND ANALYSIS

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BARRICK YEAR-END 2014		45		MANAGEMENT’S DISCUSSION AND ANALYSIS

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BARRICK YEAR-END 2014		46		MANAGEMENT’S DISCUSSION AND ANALYSIS

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Summary of Operations

 

For the years ended December 31
		2014								2013
		Gold Produced (ozs)		Gold Sold (ozs)		Cash Costs ($/oz)		All-In sustaining Costs (S/oz)		Gold Produced (ozs)		Gold Sold (ozs)		Cash Costs ($/oz)		All-In sustaining Costs ($/oz)
Cortez		902		865		$498		706		1,337		1,371		$229		440
Goldstrike		902		908		571		854		892		887		618		913
Pueblo Viejo (60%)		665		667		446		588		488		444		561		735
Lagunas Norte		582		604		379		543		606		591		361		627
Veladero		722		724		566		815		641		659		501		833
Total Core Mines		3,773		3,768		$500		$716		3,964		3,952		$419		$673
Turquoise Ridge (75%)		195		200		$473		628		167		162		$586		928
Porgera (95%)		493		507		915		996		482		465		965		1,361
Kalgoorlie (50%)		326		330		817		1,037		315		330		846		1,070
Acacia (63.9%)1		470		459		732		1,105		474		481		812		1,346
Cowal		268		270		608		787		297		301		530		854
Hemlo		206		223		829		1,059		204		198		922		1,227
Round Mountain (50%)		164		171		936		1,170		156		159		892		1,345
Bald Mountain		161		161		724		1,070		94		95		894		2,182
Golden Sunlight		86		83		893		1,181		92		95		680		915
Ruby Hill		33		33		637		713		91		91		789		910
Total Continuing Operations		6,175		6,205		$608		$825		6,336		6,329		$565		$874
Kanowna		39		37		$641		$674		226		231		$881		$958
Pierina		17		19		1,419		2,277		97		94		1,085		1,349
Marigold (33%)		11		15		1,001		1,197		54		49		908		1,563
Plutonic		7		8		1,120		1,206		114		117		1,183		1,316
Yilgarn South		-		-		-		-		339		354		749		1,014
Total Divested/Closed Sites		74		79		$945		$1,213		830		845		$892		$1,110
Total Gold2		6,249		6,284		$614		$832		7,166		7,174		$615		$914
Total Consolidated Barrick		6,249		6,284		$598		$864		7,166		7,174		$566		$915
		Copper Produced (lbs)		Copper Sold (lbs)		C1 Cash Costs ($/lb)		C3 Cash Costs ($/lb)		Copper Produced (lbs)		Copper Sold (lbs)		C1 Cash Costs ($/lb)		C3 Cash Costs ($/lb)
Zaldívar		222		222		$1.79		$2.14		279		279		$1.65		$1.99
Lumwana		214		213		2.08		2.76		260		240		2.29		2.97
Total Copper		436		435		$1.92		$2.43		539		519		$1.92		$2.42

 

1	2013 production and sales ounces for Acacia include amounts relating to the Tulawaka mine.

2

Total gold cash costs and all-in sustaining costs exclude the impact of hedges (2014: $16/oz gain; 2013: $41/oz gain) and/or corporate general & administrative costs (2014: $48/oz; 2013: $42/oz). Total gold cash costs for 2013 also excludes the impact of the Barrick Energy gross margin ($8/oz), which was divested in third quarter 2013.

 

BARRICK YEAR-END 2014		47		MANAGEMENT’S DISCUSSION AND ANALYSIS

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  Cortez, Nevada USA

Summary of Operating Data		For the years ended December 31
		2014				2013				% Change				2012
Total tonnes mined (000s)			152,146				134,007				14%				109,046
Ore tonnes processed (000s)			25,957				19,999				30%				8,954
Average grade (grams/tonne)			1.34				2.59				(48%)				5.16
Gold produced (000s/oz)			902				1,337				(33%)				1,370
Gold sold (000s/oz)			865				1,371				(37%)				1,346
Cost of sales ($ millions)			$ 687				$ 636				8%				$ 603
Cash costs (per oz)1			$ 498				$ 229				117%				$ 237
All-in sustaining costs (per oz)1			$ 706				$ 440				60%				$ 612
All-in costs (per oz)1			$ 728				$ 536				36%				$ 632
Summary of Financial Data		For the years ended December 31
		2014				2013				% Change				2012
Segment EBIT ($ millions)			$ 393				$ 1,289				(70%)				$ 1,598
Segment EBITDA ($ millions)1			$ 648				$ 1,610				(60%)				$ 1,887
Capital expenditures ($ millions)2			$ 189				$ 396				(52%)				$ 502
Minesite sustaining			$ 170				$ 264				(36%)				$ 475
Minesite expansion			$19				$ 132				(86%)				$ 27

 

1

These are non-GAAP financial performance measures; for further information and a detailed reconciliation, please see pages 81 - 91 of this MD&A.

2

Amounts presented exclude capitalized interest.

 

Financial Results   Segment EBIT for 2014 was 70% lower than the prior year, primarily due to a reduction in sales volumes combined with a lower realized gold price.   In 2014, gold production decreased 33% from the prior year, primarily due to the anticipated processing of lower grade ore combined with the impact of a negative grade reconciliation in an area of the open pit in early 2014. Mining in that area of the pit ceased at the beginning of 2015 and consequently a write-down of $46 million related to the attributable capitalized costs was recorded in fourth quarter 2014. This was partially offset by an increase in ore tonnes placed on the leach pads and an increase in tonnes mined from the open pit resulting from the commissioning of new trucks at the end of 2013.   Cost of sales for 2014 was 8% higher than the prior year, primarily due to an increase in processing costs resulting from an increase in tonnes of refractory ore processed, higher reagent costs as a result of increased tonnes on the leach pad and a reduction in capitalized stripping costs, partially offset by lower sales volumes. Cash costs were 117% higher than the prior year, primarily due to the impact of lower sales volume on unit production costs. All-in sustaining costs for 2014 increased by $266 per ounce over the prior year due to higher cash costs, partially offset by a decrease in minesite sustaining capital expenditures.

 

BARRICK YEAR-END 2014		48		MANAGEMENT’S DISCUSSION AND ANALYSIS

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Capital expenditures for 2014 decreased by $207 million, or 52%, from the prior year. The decrease was primarily due to a reduction in capitalized stripping costs and in minesite expansion capital expenditures.   Outlook   At Cortez we expect 2015 gold production to be in the range of 825 to 900 thousand ounces, down slightly compared to 2014 production levels mainly due to a decrease in open pit tonnage processed as a result of mine sequencing, and declining underground ore grade and tonnage due to a transition to lower grade underground ore zones as we advance deeper in the mine. Mining in 2015 will include Cortez Hills and Crossroads pre-stripping, and as a result open pit tonnes processed will be down significantly. The impact of lower tonnes processed from the open pit will be partially offset by higher processed ore grades.

In 2015, we expect cash costs to be in the range of $560 to $610 per ounce, higher than 2014, due to lower capitalized stripping and higher processing costs. Processing costs are expected to rise as a higher proportion of production will be processed at the Goldstrike autoclaves. All-in sustaining costs are expected to be in the range of $760 to $835 per ounce, higher than 2014, primarily due to the impact of lower sales volumes on unit production costs and higher sustaining capital expenditures.

 

		Goldrush   The Goldrush project, located six kilometers from the Cortez mine, is one of the largest gold discoveries of the last decade. Measured and indicated resources stood at 10.6 million ounces and inferred resources were 4.9 million ounces at the end of 2014. The prefeasibility study remains on schedule for completion in mid-2015. Infill drilling in 2014 continued to demonstrate high grade continuity and led to resource upgrades, with nearly 70 percent of the overall resource now in the measured and indicated category. A permit application for twin exploration declines that will allow the company to better explore the northern limits of the known deposit was submitted in the second quarter of 2014.

 

Cortez Hills Lower Zone   A prefeasibility study for underground mining at Cortez below currently permitted levels will be completed in late 2015. Mineralization in this zone is primarily oxide and higher grade compared to the current underground mine, which is sulfide in nature. The limits of the Lower Zone have not yet been defined, and drilling has indicated the potential for new targets at depth. The exploration drift has been extended to the south, enabling additional step-out drilling, which is anticipated to begin in June. Drill results to date include 36.6 meters at 31.5 grams per tonne and 27.4 meters at 20.9 grams per tonne, both oxide in nature, which compare favorably with the average grade of 13.8 grams per tonne in refractory ore above the 3,800 foot level 7.   Scientific and technical information relating to exploration at the company’s Cortez property contained in this MD&A has been reviewed and approved by Robert Krcmarov, Senior Vice President, Global Exploration of Barrick, who is a “Qualified Person” as defined in National Instrument 43-101 – Standards of Disclosure for Mineral Projects.

 

7

The drill results for the Cortez mine contained in this MD&A have been prepared in accordance with National Instrument 43-101 – Standards of Disclosure for Mineral Projects. For additional details regarding the Cortez exploration information included in this MD&A, please see Barrick’s most recent Form 40-F/Annual Information Form on file with the SEC and Canadian provincial securities regulatory authorities.

 

BARRICK YEAR-END 2014		49		MANAGEMENT’S DISCUSSION AND ANALYSIS

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  Goldstrike, Nevada USA

Summary of Operating Data		For the years ended December 31
		2014				2013				% Change				2012
Total tonnes mined (000s)			81,410				87,350				(7%)				100,118
Ore tonnes processed (000s)			5,307				6,829				(22%)				7,487
Average grade (grams/tonne)			6.28				5.01				25%				5.89
Gold produced (000s/oz)			902				892				1%				1,174
Gold sold (000s/oz)			908				887				2%				1,175
Cost of sales ($ millions)			$ 651				$ 662				(2%)				$ 730
Cash costs (per oz)			$ 571				$ 618				(8%)				$ 527
All-in sustaining costs (per oz)			$ 854				$ 913				(6%)				$ 809
All-in costs (per oz)			$ 1,170				$ 1,165				-				$ 933
Summary of Financial Data		For the years ended December 31
		2014				2013				% Change				2012
Segment EBIT ($ millions)			$ 496				$ 581				(15%)				$ 1,227
Segment EBITDA ($ millions)			$ 628				$ 693				(10%)				$ 1,340
Capital expenditures ($ millions)			$ 533				$ 474				12%				$ 453
Minesite sustaining			$ 246				$ 251				(2%)				$ 308
Minesite expansion			$ 287				$ 223				29%				$ 145

 

Financial Results   Segment EBIT for 2014 was 15% lower than the prior year. The decrease was primarily due to a lower realized gold price and an increase in underground mining costs and depreciation expense, partially offset by an increase in capitalized stripping costs.   In 2014, gold production of 902 thousand ounces increased by 1% over the prior year. The increase was primarily due to higher grades from the open pit, combined with increased recoveries, partially offset by a decrease in ore tonnes processed.   Cost of sales for 2014 of $651 million was $11 million, or 2%, lower than the prior year. The decrease was primarily due to a decrease in processing costs and an increase in capitalized stripping costs, partially offset by an increase in sales volume. Cash costs were $571 per ounce, down $47 per ounce, or 8%, compared to the prior year. The decrease was primarily due to the impact of higher sales volume on unit production costs. All-in sustaining costs for 2014 decreased by $59 per ounce compared to the prior year primarily due to the lower cash costs combined with a decrease in minesite sustaining capital expenditures.   In 2014, capital expenditures increased by $59 million, or 12%, compared to the prior year. The increase was primarily due to an increase in minesite expansion capital expenditure as a result of construction activity at the thiosulfate technology project.

 

BARRICK YEAR-END 2014		50		MANAGEMENT’S DISCUSSION AND ANALYSIS

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Goldstrike thiosulfate technology project   Goldstrike achieved first gold production through its autoclaves in fourth quarter 2014, after being successfully retrofitted with Barrick’s innovative and proprietary thiosulfate technology. The new thiosulfate circuit allows for continued production from the autoclaves and accelerates the cash flow from about four million stockpiled ounces. The expected average annual contribution is about 350 to 450 thousand ounces of production (including Cortez ore processed at Goldstrike) in the first full five years following implementation of this process. In 2015, Goldstrike’s production is expected to exceed 1.0 million ounces with contributions from the thiosulfate process. The project will finalize some adjustments to the system in first quarter 2015, with total project costs expected to remain at about $620 million.

Outlook

At Goldstrike we expect 2015 production to be in the range of 1,000 to 1,150 thousand ounces, which is up from 2014 production levels, due primarily to the commissioning of the thiosulfate circuit. As a result of the thiosulfate circuit, ounces produced at the autoclave will increase by approximately 250 thousand ounces in 2015. This will be partially offset by lower production from the roaster due to lower grades from the open pit in 2015. Underground production is expected to be consistent with 2014.

Operating costs are expected to be higher in 2015 due to higher process throughput at the autoclaves, but this will largely be offset by the impact of higher sales volumes on unit production costs. As a result, we expect cash costs to be in the range of $540 to $590 per ounce, which is consistent with 2014, and all-in sustaining costs to be $700 to $800 per ounce, which is down significantly compared to 2014 due to the impact of higher production levels.

Achieving these production and related cost guidance ranges is dependent on the thiosulfate circuit ramping up as planned. This process utilizes new technology, and, as with any such new process, there are risks associated with the ramp-up to full capacity. If the ramp-up progresses slower than we currently anticipate, then our production guidance for both Goldstrike and Cortez would be at risk.

 

BARRICK YEAR-END 2014		51		MANAGEMENT’S DISCUSSION AND ANALYSIS

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  Pueblo Viejo, Dominican Republic

Summary of Operating Data		For the years ended December 31
		2014				2013				% Change				2012
Total tonnes mined (000s)			21,055				9,192				129%				9,651
Ore tonnes processed (000s)			4,027				2,658				52%				445
Average grade (grams/tonne)			5.53				6.14				(10%)				5.23
Gold produced (000s/oz)			665				488				36%				67
Gold sold (000s/oz)			667				444				50%				-
Cost of sales ($ millions)			$ 885				$ 574				54%				-
Cash costs (per oz)			$ 446				$ 561				(20%)				-
All-in sustaining costs (per oz)			$ 588				$ 735				(20%)				-
All-in costs (per oz)			$ 588				$ 800				(27%)				-
Summary of Financial Data		For the years ended December 31
		2014				2013				% Change				2012
Segment EBIT ($ millions)			$ 669				$ 430				56%				-
Segment EBITDA ($ millions)			$ 912				$ 569				60%				-
Capital expenditures ($ millions)			$ 80				$ 101				(21%)				$ 949
Minesite sustaining			$ 80				$ 73				10%				$ 95
Minesite expansion			-				-				-				-
Project capex			-				$ 28				(100%)				$ 854

 

Financial Results   Segment EBIT in 2014 was 56% higher than the prior year primarily due to increased sales volume as the minesite ramped up to full production, partially offset by a lower realized gold price.   In 2014, gold production increased by 36% over the prior year, following the completion of major modifications to the autoclave facility in the second half of 2013 as the mine worked to achieve design capacity and all four autoclaves came online. In second quarter 2014, the autoclaves achieved targeted and sustainable run rates, achieving full production. Modifications to the lime circuit are essentially complete and the mine is progressing toward design capacities on copper and silver.   Cost of sales for 2014 was 54% higher than the prior year, primarily due to increased sales volume. Cash costs were 20% lower than the prior year primarily due to the impact of higher sales volume on unit production costs. All-in sustaining costs decreased by 20% from the prior year due to the lower cash costs, partially offset by increased capitalized stripping costs.   In 2014, capital expenditures decreased by 21% from the prior year primarily due to a decrease in project capital expenditures resulting from the completion of the 215 megawatt power plant that was commissioned in third quarter 2013, partially offset by an increase in capitalized stripping costs.

Outlook

At Pueblo Viejo, we expect our equity share of 2015 gold production to be in the range of 625 to 675 thousand ounces, which is in line with 2014 production levels. In 2015, a decrease in processed grade will be offset by greater throughput, mainly as a result of greater plant availability following the completion of plant debottlenecking modifications to the autoclave facility resulting in achievable targeted and sustainable run rates. Modifications to the lime circuit are essentially complete and the mine is progressing toward design capacities on silver and copper.

 

BARRICK YEAR-END 2014		52		MANAGEMENT’S DISCUSSION AND ANALYSIS

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We expect cash costs to be in the range of $390 to $425 per ounce and all-in sustaining costs to be $540 to $590 per ounce. Operating costs are expected to be lower primarily due to an improvement in higher silver and copper by-product credits as the mine works toward design capacities on silver and copper.

Barrick’s team of technical experts has identified multiple opportunities to optimize operations and increase cash flow at Pueblo Viejo. Over the next 12 to 24 months, we will concentrate on decreasing costs and increasing production. This will involve:

—

Increasing plant processing throughput by optimizing blending and autoclave availability

—

Decreasing overall power cost by switching from heavy fuel oil to lower-cost liquid natural gas

—

Reducing costs by optimizing our maintenance spend and reducing G&A

These initiatives and the transition from ramp-up to steady state operations create the opportunity to significantly decrease our all-in sustaining costs over the next five years. In the longer term, Pueblo Viejo has significant reserves and resources as well as substantial exploration potential that will continue to extend the profitable life of the mine. We are actively exploring opportunities to extend the life of the asset beyond 2050.

 

Pueblo Viejo is one of the world’s leading gold mines. It is expected to produce more than 1 million ounces of gold a year at all-in sustaining costs of less than $700 per ounce over the next three years. The mine is now past commissioning, is fully up and running, and has a long operating life ahead of it with the potential for further additions to reserves and resources.

On February 17, 2015, the Pueblo Viejo mine achieved certain operational and technical milestones as required for the mine’s $1.035 billion loan facility to become non-recourse to Barrick and Goldcorp Inc. As a result, the sponsor guarantees previously provided by Barrick and Goldcorp Inc,. in proportion to their ownership interest in the mine, were terminated as of February 17, 2015.

 

BARRICK YEAR-END 2014		53		MANAGEMENT’S DISCUSSION AND ANALYSIS

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  Lagunas Norte, Peru

Summary of Operating Data		For the years ended December 31
		2014				2013				% Change				2012
Total tonnes mined (000s)			50,030				36,934				35%				31,226
Ore tonnes processed (000s)			22,110				21,089				5%				20,533
Average grade (grams/tonne)			0.99				1.06				(7%)				1.26
Gold produced (000s/oz)			582				606				(4%)				754
Gold sold (000s/oz)			604				591				2%				734
Cost of sales ($ millions)			$ 335				$ 281				19%				$ 296
Cash costs (per oz)			$ 379				$ 361				5%				$ 318
All-in sustaining costs (per oz)			$ 543				$ 627				(13%)				$ 565
All-in costs (per oz)			$ 543				$ 627				(13%)				$ 565
Summary of Financial Data		For the years ended December 31
		2014				2013				% Change				2012
Segment EBIT ($ millions)			$ 439				$ 548				(20%)				$ 929
Segment EBITDA ($ millions)			$ 531				$ 602				(12%)				$ 987
Capital expenditures ($ millions)			$ 81				$ 139				(42%)				$ 162
Minesite sustaining			$ 81				$ 139				(42%)				$ 162
Minesite expansion			-				-				-				-

 

Financial Results   Segment EBIT for 2014 decreased 20% from the prior year primarily due to a lower realized gold price combined with higher operating costs, partially offset by an increased sales volume.   In 2014, gold production was 4% lower, compared to the prior year, primarily due to a decrease in average grade, partially offset by increased mine equipment availability resulting in increased tonnes placed on the leach pad combined with higher throughput due to increased crusher availability.   Cost of sales for 2014 was 19% higher than the prior year, primarily due to higher operating costs resulting from an increase in ore tonnes mined combined with higher depreciation expense. Cash costs were 5% higher than the prior year, primarily due to increased mining costs resulting from an increase in ore tonnes mined. All-in sustaining costs decreased 13% from the prior year due to lower minesite sustaining capital expenditures, partially offset by the higher cash costs.   In 2014, capital expenditures decreased by 42% from the prior year, primarily due to the significant construction progress made in 2013 on the new phase 5 leach pad, which is now operational, and the water treatment plants and tailings ponds, which are currently undergoing commissioning.

 

BARRICK YEAR-END 2014		54		MANAGEMENT’S DISCUSSION AND ANALYSIS

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Outlook

At Lagunas Norte we expect 2015 production to be in the range of 600 to 650 thousand ounces, which is higher than 2014 production levels as a result of the availability of better recovery ore for the leach pad, increasing the tonnage placed on the leach pads and increasing the flow rate through the Merrill Crowe and CIC plants, which will allow us to convert leach pad inventory into production.

In 2015, we expect cash costs to be in the range of $375 to $425 per ounce and all-in sustaining costs to be $675 to $725 per ounce, which is higher than 2014 levels. The increase in all-in sustaining costs is mainly due to the construction of the Leach Pad Phase 6 Expansion and the engineering and construction of the East Waste dump expansion and ARD Treatment Plant.

 

Lagunas Norte Refractory Ore   We are currently evaluating options for mining and processing the refractory ore body below the current mine. If successful, this project has the potential to extend the mine life by approximately eight years. The project would leverage existing on-site infrastructure, which improves the risk profile and expected return on investment from the project. If it proceeds, this project will have the potential to unlock the value of other refractory ore deposits in the area.

 

BARRICK YEAR-END 2014		55		MANAGEMENT’S DISCUSSION AND ANALYSIS

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  Veladero, Argentina

Summary of Operating Data		For the years ended December 31
		2014				2013				% Change				2012
Total tonnes mined (000s)			67,686				78,592				(14%)				83,892
Ore tonnes processed (000s)			29,500				29,086				1%				27,695
Average grade (grams/tonne)			1.00				0.94				6%				1.10
Gold produced (000s/oz)			722				641				13%				766
Gold sold (000s/oz)			724				659				10%				754
Cost of sales ($ millions)			$ 554				$ 568				(2%)				$ 586
Cash costs (per oz)			$ 566				$ 501				13%				$ 487
All-in sustaining costs (per oz)			$ 815				$ 833				(2%)				$ 761
All-in costs (per oz)			$ 815				$ 833				(2%)				$ 761
Summary of Financial Data		For the years ended December 31
		2014				2013				% Change				2012
Segment EBIT ($ millions)			$ 330				$ 354				(7%)				$ 625
Segment EBITDA ($ millions)			$ 446				$ 522				(15%)				$ 819
Capital expenditures ($ millions)			$ 173				$ 208				(17%)				$ 196
Minesite sustaining			$ 173				$ 208				(17%)				$ 196
Minesite expansion			-				-				-				-

 

Financial Results   Segment EBIT for 2014 was 7% lower than the prior year, primarily due to an increase in sales volume, partially offset by the lower realized gold price.   In 2014, gold production was 13% higher compared to the prior year, primarily due to a positive grade reconciliation from Phase 3 of the Federico pit, partially offset by lower tonnes mined due to decreased primary crusher availability resulting from increased maintenance downtime in first quarter 2014 and lower mine equipment availability.   Cost of sales for 2014 was slightly lower than the prior year, primarily due to lower depreciation expense as a result of impairment charges recorded in 2013 combined with lower operating costs due to the devaluation of the Argentine peso in 2014, partially offset by the impact of higher sales volume. Cash costs were 13% higher than the prior year, primarily due the impact of lower silver by-product credits, partially offset by the impact of higher production levels on unit production costs. All-in sustaining costs decreased slightly, compared to the prior year, primarily due to a reduction in capitalized stripping costs, partially offset by the higher cash costs.   In 2014, capital expenditures decreased 17% compared to the prior year, primarily due to lower minesite sustaining capital expenditures as a result of a reduction in costs related to the leach pad expansion, as construction activities relating to both phases 4 and 5 were ongoing in the first half of 2013, combined with lower capitalized stripping costs. This was partially offset by the commencement in third quarter 2014 of a project related to the recirculation of leach solution to achieve improved recoveries.

 

BARRICK YEAR-END 2014		56		MANAGEMENT’S DISCUSSION AND ANALYSIS

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Outlook   At Veladero, we expect 2015 production to be in the range of 575 to 625 thousand ounces, which is down compared to 2014 production levels as a result of lower grade from the Federico pit.   We expect cash costs in 2015 to be in the range of $600 to $650 per ounce and all-in sustaining costs to be $990 to $1,075 per ounce, higher than 2014 levels mainly due to the decline in gold production and higher mining costs associated with lower grades and an increase in waste material being mined in 2015. At Veladero, there are a number of initiatives under way to reduce operating costs mainly in the areas of supply chain and inventory management, maintenance practices, mining productivity and energy costs. Operating costs at Veladero are highly sensitive to local inflation and the foreign exchange rate of the Argentine peso. We have assumed an average ARS:USD
exchange rate of 10.2:1 for the purposes of preparing our cash cost and all-in sustaining cost guidance for 2015; however, we do expect further devaluation of the Argentine peso over the next several years which will have a significant impact on our local labor costs and therefore our cash costs and all-in sustaining costs.

Veladero continues to be subject to restrictions that affect the amount of leach solution. New government regulations set a level limit for the leach solution pond, reducing storage capacity, impacting operational capacity to manage solution balance and reducing leaching kinetics, as ore has to be placed on upper levels of the leach pad to maintain pond level. These restrictions are considered in our 2015 operating guidance.

 

BARRICK YEAR-END 2014		57		MANAGEMENT’S DISCUSSION AND ANALYSIS

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  Turquoise Ridge, Nevada USA

Summary of Operating Data		For the years ended December 31
		2014				2013				% Change				2012
Total tonnes mined (000s)			312				305				2%				265
Ore tonnes processed (000s)			335				340				(1%)				293
Average grade (grams/tonne)			19.62				16.29				20%				16.60
Gold produced (000s/oz)			195				167				17%				144
Gold sold (000s/oz)			200				162				23%				145
Cost of sales ($ millions)			$ 111				$ 109				2%				$ 94
Cash costs (per oz)			$ 473				$ 586				(19%)				$ 547
All-in sustaining costs (per oz)			$ 628				$ 928				(32%)				$ 1,410
All-in costs (per oz)			$ 628				$ 928				(32%)				$ 1,410
Summary of Financial Data		For the years ended December 31
		2014				2013				% Change				2012
Segment EBIT ($ millions)			$ 139				$ 115				21%				$ 147
Segment EBITDA ($ millions)			$ 156				$ 129				21%				$ 162
Capital expenditures ($ millions)			$ 30				$ 55				(45%)				$ 45
Minesite sustaining			$ 30				$ 55				(45%)				$ 45
Minesite expansion			-				-				-				-

 

Financial Results   Segment EBIT for 2014 increased 21% from the prior year, primarily due to an increase in sales volume, partially offset by a lower realized gold price and higher depreciation expense.   In 2014, gold production of 195 thousand ounces was 17% higher, compared to the prior year. The increase was primarily due to increased throughput and improved ore grades.   Cost of sales for 2014 was consistent with the prior year. Cash costs were 19% lower than the prior year. The decrease was primarily due to the impact of higher sales volume on unit production costs. All-in sustaining costs decreased by 32% compared to the prior year due to lower per ounce cash costs combined with lower minesite sustaining capital expenditures.   In 2014, capital expenditures decreased by 45% compared to the prior year, primarily due to lower minesite sustaining capital expenditures.

 

BARRICK YEAR-END 2014		58		MANAGEMENT’S DISCUSSION AND ANALYSIS

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Outlook   At Turquoise Ridge we expect 2015 production to be in the range of 175 to 200 thousand ounces, which is in line with 2014 production levels. In 2015, as we expand into the South Zone8, lower grades will be offset with higher tonnage mined and processed. We will see the benefit of this expansion into South Zone in 2016 and beyond through increased production.   We expect cash costs in 2015 to be in the range of $570 to $600 per ounce and all-in sustaining costs to be in the range of $875 to $925 per ounce. Cash costs are expected to be higher due to the impact of higher operating costs as a result of higher tonnage mined and processed with expansion into South Zone. All-in sustaining costs in 2015 are expected to be higher than 2014, due to higher spend on sustaining capital to support the ongoing infrastructure requirements in the North Zone as well as mobile equipment for the South Zone.

Turquoise Ridge Second Shaft

The Turquoise Ridge mine contains 4.5 million ounces in reserves (75 percent basis) at an average grade of 16.9 grams per tonne — the highest reserve grade in the company’s operating portfolio and among the highest in the entire gold industry. Turquoise Ridge has considerable untapped potential and could become a core operation for Barrick. The company is advancing a project to develop an additional shaft, which could bring forward more than one million ounces of production, roughly doubling output to an average of 375 thousand ounces per year (75 percent basis) at all-in sustaining costs of about $625-675 per ounce⁹. The prefeasibility study was completed in January 2015 and key permits are expected in the third quarter. Pending approval by the joint venture partners, construction could commence in the fourth quarter of 2015, with initial production beginning in 2019. Preliminary estimates indicate capital expenditures of approximately $225-$245 million (75% basis) for additional underground development and shaft construction, and an attractive payback period of roughly two and a half years using a gold price assumption of $1,300 per ounce.

Drilling at the northern extension of the deposit confirms the ore body is larger than previously known, at higher grades. Due to the substantial thickness of the mineralization, our engineering team is also looking at the economics of introducing bulk underground mining in some parts of the ore body. Advanced ground support technology and improved reinforcement techniques have also mitigated ground stability issues that challenged previous mining operations at the site.

 

 

8	Expansion into the South Zone is subject to approval by the joint venture partners.

9	Annual average for the first full eight years.

 

BARRICK YEAR-END 2014		59		MANAGEMENT’S DISCUSSION AND ANALYSIS

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  Porgera, Papua New Guinea

Summary of Operating Data		For the years ended December 31
		2014				2013				% Change				2012
Total tonnes mined (000s)			15,719				18,628				(16%)				21,935
Ore tonnes processed (000s)			5,584				5,354				4%				4,963
Average grade (grams/tonne)			3.10				3.22				(4%)				3.17
Gold produced (000s/oz)			493				482				2%				436
Gold sold (000s/oz)			507				465				9%				426
Cost of sales ($ millions)			$ 545				$ 524				4%				$ 484
Cash costs (per oz)			$ 915				$ 965				(5%)				$ 968
All-in sustaining costs (per oz)			$ 996				$ 1,361				(27%)				$ 1,452
All-in costs (per oz)			$ 996				$ 1,361				(27%)				$ 1,452
Summary of Financial Data		For the years ended December 31
		2014				2013				% Change				2012
Segment EBIT ($ millions)			$ 84				$ 116				(28%)				$ 223
Segment EBITDA ($ millions)			$ 164				$ 190				(14%)				$ 292
Capital expenditures ($ millions)			$ 33				$ 171				(81%)				$ 194
Minesite sustaining			$ 33				$ 171				(81%)				$ 194
Minesite expansion			-				-				-				-

 

Financial Results   Segment EBIT for 2014 was 28% lower than the prior year. The decrease was primarily due to the lower realized gold price, partially offset by an increase in sales volume.   In 2014, gold production of 493 thousand ounces was 2% higher compared to the prior year. The increase was primarily due to higher recoveries and throughput as a result of improved mill availability.   Cost of sales for 2014 of $545 million was 4% higher than the prior year. The increase was primarily due to the increased sales volume combined with higher operating costs as a result of increased transport and maintenance costs as well as a decrease in capitalized stripping costs. Cash costs were $915 per ounce, down $50 per ounce compared to the prior year. The decrease was primarily due to the impact of higher sales volume on unit production costs. All-in sustaining costs decreased by $365 per ounce, or 27%, compared to the prior year reflecting the focus to significantly decrease minesite sustaining capital expenditures.   In 2014, capital expenditures decreased by $138 million, or 81%, compared to the prior year. The decrease was primarily due to a reduction in capitalized stripping costs as a result of a change in the 2014 mine plan to reduce open pit mining activity.   In 2014, management resolved technical issues and developed an optimized mine plan to sequence the west wall cutback in an economical manner. As a result, management was able to bring a significant portion of the ounces from the open pit back into the 2015 mine plan. The new plan resulted in an increase in the estimated mine life from 8 to 12 years, and an increase in the estimated fair value less cost to dispose (“FVLCD”) of the mine, which has resulted in a partial reversal of a previous impairment loss of $160 million in fourth quarter 2014.

 

BARRICK YEAR-END 2014		60		MANAGEMENT’S DISCUSSION AND ANALYSIS

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Outlook

At Porgera we expect 2015 gold production to be in the range of 500 to 550 thousand ounces, which is slightly higher than 2014 production levels. Porgera production is expected to be higher than 2014 mainly due to the change in the mine plan which focuses on the increasing underground mining rates and mining of higher grade open pit material. Processed tonnes are constrained due to sulfur oxidation capacity. However the commencement of concentrate export will allow for stored concentrate to be reclaimed or optimal mill throughput to be achieved.

In 2015, we expect cash costs to be in the range of $775 to $825 per ounce which is lower than 2014 cash costs of $915, primarily due to an increase in capitalized stripping in the open pit. All-in sustaining costs are expected to higher than 2014, mainly due to the increase in sustaining capital in line with the new mine plan.

Porgera is a well-established asset in a highly prospective region with extensive infrastructure, proven technology, and a team that is able to operate successfully in a challenging environment. As part of Barrick’s global strategy we continue to focus on further decreasing Porgera’s cost structure in the short term, with initiatives that could reduce our all-in sustaining costs by approximately 50% over the next decade. In addition, we are advancing plans that could significantly increase the life of the mine. The large drivers of cost and mine life improvements we are exploring include:

•    Decreasing energy costs through a contracted build, own, operate, and transfer model; •    Reducing the number of expatriate staff by training and developing local talent; •    Implementing a cost optimization program focused on reducing external spending through commercial negotiations, inventory optimization, and demand management; •    Consistent positive reconciliation of actual versus mined tonnage, which adds process life and associated underground mine life; and •    In the longer term, expansions from high-potential targets in the area surrounding the mine.

 

BARRICK YEAR-END 2014		61		MANAGEMENT’S DISCUSSION AND ANALYSIS

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  Kalgoorlie, Australia

Summary of Operating Data											For the years ended December 31
		2014				2013				% Change				2012
Total tonnes mined (000s)			34,644				36,445				(5%)				33,905
Ore tonnes processed (000s)			5,809				5,924				(2%)				5,871
Average grade (grams/tonne)			2.01				1.97				2%				2.05
Gold produced (000s/oz)			326				315				3%				327
Gold sold (000s/oz)			330				330				-				340
Cost of sales ($ millions)			$ 309				$309				-				$295
Cash costs (per oz)			$ 817				$846				(3%)				$803
All-in sustaining costs (per oz)			$ 1,037				$1,070				(3%)				$1,085
All-in costs (per oz)			$ 1,037				$1,070				(3%)				$1,085
Summary of Financial Data											For the years ended December 31
			2014				2013				% Change				2012
Segment EBIT ($ millions)			$ 106				$154				(31%)				$266
Segment EBITDA ($ millions)			$ 148				$182				(19%)				$286
Capital expenditures ($ millions)			$ 66				$66				-				$87
Minesite sustaining			$ 66				$66				-				$87
Minesite expansion			-				-				-				-

 

Financial Results Segment EBIT for 2014 was 31% lower than the prior year. The decrease was primarily due to lower realized gold prices and an increase in depreciation expense compared to the prior year.   In 2014, gold production was 3% higher compared to the prior year primarily due to increased grades and improved recovery, partially offset by a decrease in ore tonnes processed.   Cost of sales for 2014 was in line with the prior year as lower operating costs, resulting from a decrease in ore tonnes mined were offset by an increase in depreciation expense. Cash costs were 3% lower than the prior year primarily due to a decrease in mining costs resulting from a decrease in ore tonnes mined. All-in sustaining costs decreased by $33 per ounce compared to the prior year, primarily due to the lower cash costs.   In 2014, capital expenditures were in line with the prior year as lower capitalized stripping costs at Golden Pike were offset by higher capital expenditures associated with the emissions reduction program.

 

BARRICK YEAR-END 2014		62		MANAGEMENT’S DISCUSSION AND ANALYSIS

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Outlook

At Kalgoorlie we expect 2015 production to be in the range of 315 to 330 thousand ounces, which is line with 2014 levels. Kalgoorlie’s mine plan reflects a slightly lower mined grade from Golden Pike in the open pit and an associated lower feed grade and mill recovery. This is offset by higher processed tonnes due to an increase in throughput rates in the Fimiston circuit.

 

 

BARRICK YEAR-END 2014		63		MANAGEMENT’S DISCUSSION AND ANALYSIS

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  Acacia Mining plc¹, Africa

  100% basis

 

Summary of Operating Data											For the years ended December 31
		2014				2013				% Change				2012
Total tonnes mined (000s)			44,847				54,100				(17%)				48,303
Ore tonnes processed (000s)			9,036				7,980				13%				7,697
Average grade (grams/tonne)			3.00				2.86				5%				2.86
Gold produced (000s/oz)			719				641				12%				627
Gold sold (000s/oz)			704				650				8%				609
Cost of sales ($ millions)			$693				$ 756				(8%)				$ 794
Cash costs (per oz)			$732				$ 812				(10%)				$ 958
All-in sustaining costs (per oz)			$ 1,105				$ 1,346				(18%)				$ 1,585
All-in costs (per oz)			$ 1,190				$ 1,519				(22%)				$ 1,645
Summary of Financial Data											For the years ended December 31
			2014				2013				% Change				2012
Segment EBIT ($ millions)			$ 191				$ 115				66%				$ 216
Segment EBITDA ($ millions)			$ 320				$ 275				16%				$ 378
Capital expenditures ($ millions)			$ 251				$ 385				(35%)				$ 323
Minesite sustaining			$ 195				$ 272				(28%)				$ 287
Minesite expansion			$ 56				$ 113				(50%)				$ 36

1	Formerly African Barrick Gold plc.

 

 

In 2014, capital expenditures decreased by 35% from the prior year, primarily due to a reduction in minesite sustaining capital expenditures across all sites, partially offset by higher capitalized underground development costs at Bulyanhulu.

 

BARRICK YEAR-END 2014		64		MANAGEMENT’S DISCUSSION AND ANALYSIS

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In 2015, we expect cash costs to be in the range of $695 to $725 per ounce, which is lower than 2014 cash costs of $732 per ounce, primarily due to further cost reductions at Bulyanhulu. All-in sustaining costs are expected to be $1,050 to $1,100 per ounce, which is lower compared to 2014 mainly due to a decrease in sustaining capital at Buzwagi.

 

BARRICK YEAR-END 2014		65		MANAGEMENT’S DISCUSSION AND ANALYSIS

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  Global Copper, Zambia and Chile

Summary of Operating Data											For the years ended December 31
		2014				2013				% Change				2012
Copper produced (millions of lbs)			436				539				(19%)				468
Copper sold (millions of lbs)			435				519				(16%)				472
Cost of sales ($ millions)			$ 961				$ 1,114				(14%)				$ 1,227
C1 cash costs (per lb)			$ 1.92				$ 1.92				-				$ 2.05
C3 fully allocated costs (per lb)			$ 2.43				$ 2.42				-				$ 2.85
Summary of Financial Data											For the years ended December 31
			2014				2013				% Change				2012
Segment EBIT ($ millions)			$ 233				$ 468				(50%)				$ 394
Segment EBITDA ($ millions)			$ 407				$ 656				(38%)				$ 647
Capital expenditures ($ millions)			$ 298				$ 405				(26%)				$ 741
Minesite sustaining			$ 292				$ 342				(15%)				$ 555
Minesite expansion			-				-				-				-
Project capex			$ 6				$ 63				(90%)				$ 186

 

 

In 2014, capital expenditures decreased by $107 million, or 26%, compared to the prior year. The decrease was primarily due to lower minesite sustaining capital expenditures at Zaldívar due to the deferral of expenditures, as well as lower project capital expenditures at Jabal Sayid, which was put on care and maintenance in late 2013.

On December 18, 2014, the Zambian government passed changes to the country’s mining tax regime that would replace the current corporate income tax and variable profit tax with a 20 percent royalty which took effect on January 1, 2015. The application of a 20 percent royalty rate compared to the 6 percent royalty rate the company was paying has a significant negative impact on the expected future cash flows of our Lumwana mine and was considered an indicator of impairment. As a result, we conducted an impairment test and, as a result of the new royalty rate, along with the decrease in our copper

 

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On April 2, 2014 Zambia’s energy regulator approved a 28.8% electricity price increase for mining companies. Subsequently, the bulk power supply agreement tariffs between state power company ZESCO and Copperbelt Energy Corporation were increased to 6.84 cents per KWhr from 5.31 cents per KWhr. The Lumwana Mining Company has a long-term power supply contract with ZESCO and does not believe that the rates it pays thereunder should be affected by the announced rate increase. Lumwana and several other mining companies in Zambia have been granted leave to challenge the rate increase in court. As noted above, we have announced our intention to suspend operations at the mine and therefore this electricity price increase will not have any immediate impact. We will continue to progress the matter.

Outlook

Copper production is expected to be in the range of 310 to 340 million pounds, lower than 2014 production levels, due to the expected suspension of operations at Lumwana in the first quarter of 2015, following the ratification of the new 20 percent royalty rate in Zambia. The production decrease at Lumwana is partially offset by the increased production at Zaldívar as a result of improved stacker reliability and shovel availability as compared to 2014.

C1 cash costs are expected to be $1.75 to $2.00 per pound compared to $1.92 per pound in 2014 and C3 fully allocated costs are expected to be in the range of $2.30 to $2.60 per pound. C1 cash costs are expected to be slightly lower in 2015 due to cost reductions and the impact of suspending Lumwana operations.

 

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FINANCIAL CONDITION REVIEW

Summary Balance Sheet and Key Financial Ratios¹

 

 

($ millions, except ratios and share amounts)		As at December 31, 2014				As at December 31, 2013
Total cash and equivalents			$2,699				$2,424
Current assets			3,451				3,588
Non-current assets			27,729				31,436
Total Assets			$33,879				$37,448
Current liabilities excluding short-term debt			$2,227				$2,626
Non-current liabilities excluding long-term debt			5,709				5,741
Debt (current and long-term)			13,081				13,080
Total Liabilities			$21,017				$21,447
Total shareholders’ equity			10,247				13,533
Non-controlling interests			2,615				2,468
Total Equity			$12,862				$16,001
Dividends			$232				$508
Debt			$13,081				$13,080
Total common shares outstanding (millions of shares)2			1,165				1,165
Key Financial Ratios:
Current ratio3			2.40:1				2.14:1
Debt-to-equity4			1.02:1				0.82:1
Debt-to-total capitalization5			0.39:1				0.39:1

 

1	Figures include assets and liabilities classified as held-for-sale as at December 31, 2013.

2	Total common shares outstanding do not include 5.1 million stock options.

3	Represents current assets divided by current liabilities (including short-term debt) as at December 31, 2014 and December 31, 2013.

4	Represents debt divided by total shareholders’ equity (including minority interest) as at December 31, 2014 and December 31, 2013.

5	Represents debt divided by capital stock and debt as at December 31, 2014 and December 31, 2013.

 

 

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BARRICK YEAR-END 2014		69		MANAGEMENT’S DISCUSSION AND ANALYSIS

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Summary of Financial Instruments

  As at December 31, 2014

 

Financial Instrument		Principal/Notional Amount								Associated Risks
										• Interest rate
Cash and equivalents					$ 2,699			million		• Credit
										• Credit
Accounts receivable					$ 418			million		• Market
										• Market
Available-for-sale securities					$ 35			million		• Liquidity
Accounts payable					$ 1,653			million		• Liquidity
Debt					$ 13,187			million		• Interest rate
Restricted share units					$ 30			million		• Market
Deferred share units					$ 3			million		• Market
		CAD			240			million		• Market/liquidity
		CLP			102,000			million		• Credit
		AUD			462			million		• Interest rate
Derivative instruments - currency contracts		ZAR			421			million
										• Market/liquidity
										• Credit
Derivative instruments - copper contracts					4			million lbs		• Interest rate
										• Market/liquidity
										• Credit
Derivative instruments - energy contracts		Diesel			9			million bbls		• Interest rate
Derivative instruments - interest rate contracts		Receive float interest rate swaps			$ 142			million		• Market/liquidity

Commitments and Contingencies

Litigation and Claims

We are currently subject to various litigation proceedings as disclosed in note 35 to the consolidated financial statements, and we may be involved in disputes with other parties in the future that may result in litigation. If we are unable to resolve these disputes favorably, it may have a material adverse impact on our financial condition, cash flow and results of operations

 

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  Contractual Obligations and Commitments

 

						Payments due
							As at December 31, 2014
($ millions)			2015				2016				2017				2018				2019				2020 and thereafter				Total
Debt1
Repayment of principal			$ 262				$ 665				$ 127				$ 878				$ 877				$ 10,026				$ 12,835
Capital leases			71				65				62				56				42				56				352
Interest			663				654				633				624				551				6,449				9,574
Provisions for environmental rehabilitation2			119				118				76				80				129				2,071				2,593
Operating leases			27				19				19				19				11				39				134
Restricted share units			15				3				9				3				—				—				30
Pension benefits and other post-retirement benefits			21				21				21				21				21				427				532
Derivative liabilities3			157				89				28				12				1				—				287
Purchase obligations for supplies and consumables4			492				271				124				74				54				139				1,154
Capital commitments5			133				5				5				5				4				7				159
Social development costs6			73				71				8				8				8				57				225
Total			$ 2,033				$ 1,981				$ 1,112				$ 1,780				$ 1,698				$ 19,271				$ 27,875

 

1

Debt and Interest - Our debt obligations do not include any subjective acceleration clauses or other clauses that enable the holder of the debt to call for early repayment, except in the event that we breach any of the terms and conditions of the debt or for other customary events of default. The debt and interest amounts include 100% of the Pueblo Viejo financing, even though our attributable share is 60 per cent of this total, consistent with our ownership interest in the mine. We are not required to post any collateral under any debt obligations. Projected interest payments on variable rate debt were based on interest rates in effect at December 31, 2014. Interest is calculated on our long-term debt obligations using both fixed and variable rates.

2

Provisions for Environmental Rehabilitation - Amounts presented in the table represent the undiscounted uninflated future payments for the expected cost of provisions for environmental rehabilitation.

3

Derivative Liabilities - Amounts presented in the table relate to derivative contracts disclosed under note 24C to the consolidated financial statements. Payments related to derivative contracts cannot be reasonably estimated given variable market conditions.

4

Purchase Obligations for Supplies and Consumables - Includes commitments related to new purchase obligations to secure a supply of acid, tires and cyanide for our production process.

5

Capital Commitments - Purchase obligations for capital expenditures include only those items where binding commitments have been entered into.

6

Social Development Costs - Includes Pascua-Lama’s commitment related to the potential funding of a power transmission line in Argentina of $120 million, expected to be paid over the period 2015-2016.

 

 

INTERNAL CONTROL OVER FINANCIAL REPORTING AND DISCLOSURE CONTROLS AND PROCEDURES

 

 

BARRICK YEAR-END 2014		72		MANAGEMENT’S DISCUSSION AND ANALYSIS

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BARRICK YEAR-END 2014		73		MANAGEMENT’S DISCUSSION AND ANALYSIS

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  REVIEW OF QUARTERLY RESULTS

 

Quarterly Information1
		2014																2013
($ millions, except where indicated)		Q4				Q3				Q2				Q1				Q4				Q3				Q2				Q1
Revenues			$ 2,510				$ 2,598				$ 2,432				$ 2,632				$ 2,942				$ 2,985				$ 3,201				$ 3,399
Realized price per ounce – gold2			1,204				1,285				1,289				1,285				1,272				1,323				1,411				1,629
Realized price per pound – copper2			2.91				3.09				3.17				3.03				3.34				3.40				3.28				3.56
Cost of sales			1,799				1,642				1,590				1,692				1,853				1,788				1,832				1,810
Net earnings (loss)			(2,851)				125				(269)				88				(2,830)				172				(8,555)				847
Per share (dollars)2,3			(2.45)				0.11				(0.23)				0.08				(2.61)				0.17				(8.55)				0.85
Adjusted net earnings2			174				222				159				238				406				577				663				923
Per share (dollars)2,3			0.15				0.19				0.14				0.20				0.37				0.58				0.66				0.92
Operating cash flow			371				852				488				585				1,016				1,231				907				1,085
Adjusted operating cash flow2			$ 371				$ 852				$ 488				$ 585				$ 1,085				$ 1,300				$ 815				$ 1,158

1	Sum of all the quarters may not add up to the annual total due to rounding.

2	Calculated using weighted average number of shares outstanding under the basic method of earnings per share.

3	Realized price, adjusted net earnings, adjusted EPS and adjusted operating cash flow are non-GAAP financial performance measures with no standard meaning under IFRS. For further information and a detailed reconciliation, please see pages 81 - 91 of this MD&A.

 

 

BARRICK YEAR-END 2014		74		MANAGEMENT’S DISCUSSION AND ANALYSIS

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IFRS CRITICAL ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES

 

 

BARRICK YEAR-END 2014		75		MANAGEMENT’S DISCUSSION AND ANALYSIS

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BARRICK YEAR-END 2014		76		MANAGEMENT’S DISCUSSION AND ANALYSIS

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BARRICK YEAR-END 2014		77		MANAGEMENT’S DISCUSSION AND ANALYSIS

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BARRICK YEAR-END 2014		78		MANAGEMENT’S DISCUSSION AND ANALYSIS

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BARRICK YEAR-END 2014		79		MANAGEMENT’S DISCUSSION AND ANALYSIS

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BARRICK YEAR-END 2014		80		MANAGEMENT’S DISCUSSION AND ANALYSIS

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NON-GAAP FINANCIAL PERFORMANCE MEASURES

 

BARRICK YEAR-END 2014		81		MANAGEMENT’S DISCUSSION AND ANALYSIS

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Reconciliation of Net Earnings to Adjusted Net Earnings and Adjusted Net Earnings per Share1
($ millions, except per share amounts in dollars)		For the years ended December 31												For the three months ended December 31
		2014				2013				2012				2014				2013
Net earnings (loss) attributable to equity holders of the Company			$ (2,907)				($ 10,366)				($ 538)				$ (2,851)				($ 2,830)
Impairment charges related to intangibles, goodwill, property, plant and equipment, and investments			3,394				11,536				4,425				2,848				2,815
Acquisition/disposition (gains)/losses			(48)				442				(13)				(13)				(31)
Foreign currency translation (gains)/losses			169				233				125				(17)				138
Tax adjustments			(49)				297				(83)				63				17
Other expense adjustments2			97				483				75				6				296
Unrealized losses/(gains) on non-hedge derivative instruments			137				(56)				(37)				138				1
Adjusted net earnings			$ 793				$ 2,569				$ 3,954				$ 174				$ 406
Net earnings (loss) per share3			($2.50)				($10.14)				($0.54)				($2.45)				($2.61)
Adjusted net earnings per share3			$0.68				$2.51				$3.95				$0.15				$0.37

1	Amounts presented in this table are after-tax and net of non-controlling interest.

2	Other expense adjustments include $30 million of demobilization costs relating to Pascua-Lama for the year ended December 31, 2014 (2013: $196 million).

3	Calculated using weighted average number of shares outstanding under the basic method of earnings per share.

 

 

BARRICK YEAR-END 2014		82		MANAGEMENT’S DISCUSSION AND ANALYSIS

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Reconciliation of Operating Cash Flow to Adjusted Operating Cash Flow and Free Cash Flow

($ millions)		For the years ended December 31												For the three months ended December 31
		2014				2013				2012				2014				2013
Operating cash flow			$ 2,296				$ 4,239				$ 5,983				$ 371				$ 1,016
Settlement of currency and commodity contracts			-				64				(385)				-				69
Settlement of contingent consideration			-				-				50				-				-
Non-recurring tax payments			-				56				52				-				-
Adjusted operating cash flow			$ 2,296				$ 4,359				$ 5,700				$ 371				$ 1,085
Capital expenditures			(2,432)				(5,501)				(6,773)				(547)				(1,365)
Free cash flow			($ 136)				($ 1,142)				($ 1,073)				($ 176)				($ 280)

Cash costs per ounce, All-in sustaining costs per ounce, All-in costs per ounce, C1 cash costs per pound and C3 fully allocated costs per pound

 

 

BARRICK YEAR-END 2014		83		MANAGEMENT’S DISCUSSION AND ANALYSIS

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BARRICK YEAR-END 2014		84		MANAGEMENT’S DISCUSSION AND ANALYSIS

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Reconciliation of Gold Cost of Sales to Cash costs per ounce, All-in sustaining costs per ounce and All-in costs per ounce

($ millions, except per ounce information in dollars)				For the years ended December 31												For the three months ended December 31
		Reference		2014				2013				2012				2014				2013
Cost of sales		A			$ 5,662				$ 6,063				$ 6,078				$ 1,472				$ 1,445
Cost of sales applicable to non-controlling interests1		B			(514)				(383)				(216)				(132)				(104)
Cost of sales applicable to ore purchase arrangement		C			-				(46)				(161)				-				-
Other metal sales		D			(183)				(189)				(141)				(45)				(43)
Realized non-hedge gains/losses on fuel hedges		E			(8)				(20)				(8)				4				(5)
Community relations costs related to current operations		F			53				52				39				16				20
Treatment and refinement charges		G			11				6				6				3				2
Total production costs					$ 5,021				$ 5,483				$ 5,597				$ 1,318				$ 1,315
Depreciation		H			($ 1,267)				($ 1,363)				($ 1,401)				($ 332)				($ 268)
Impact of Barrick Energy		I			-				(57)				(90)				-				-
Cash Costs					$ 3,754				$ 4,063				$ 4,106				$ 986				$ 1,047
General & administrative costs		J			300				298				438				82				63
Rehabilitation - accretion and amortization (operating sites)		K			127				139				131				30				31
Mine on-site exploration and evaluation costs		L			20				61				115				6				16
Mine development expenditures2		M			655				1,101				1,222				141				236
Sustaining capital expenditures2		M			569				901				1,381				208				251
All-in sustaining costs					$ 5,425				$ 6,563				$ 7,393				$ 1,453				$ 1,644
Community relations costs not related to current operations		F			35				23				26				19				12
Rehabilitation - accretion and amortization not related to current operations		K			12				10				10				3				2
Exploration and evaluation costs (non-sustaining)		L			153				117				193				45				30
Non-sustaining capital expenditures2
Pascua-Lama		M			195				1,998				1,869				103				605
Pueblo Viejo		M			-				29				512				-				(4	)
Cortez		M			19				132				27				5				9
Goldstrike thiosulfate project		M			287				223				145				65				71
Bulyanhulu CIL		M			29				83				27				4				30
Other		M			43				24				35				22				7
All-in costs					$ 6,198				$ 9,202				$ 10,237				$ 1,719				$ 2,406
Ounces sold - consolidated basis (000s ounces)					6,960				7,604				7,465				1,741				1,951
Ounces sold - non-controlling interest (000s ounces)1					(675)				(430)				(173)				(168)				(122)
Ounces sold - equity basis (000s ounces)					6,284				7,174				7,292				1,572				1,829
Total production costs per ounce3					$ 800				$ 764				$ 767				$ 839				$ 719
Cash costs per ounce3					$ 598				$ 566				$ 563				$ 628				$ 573
Cash costs per ounce (on a co-product basis)3,4					$ 618				$ 589				$ 580				$ 648				$ 592
All-in sustaining costs per ounce3					$ 864				$ 915				$ 1,014				$ 925				$ 899
All-in sustaining costs per ounce (on a co-product basis)3,4					$ 884				$ 938				$ 1,031				$ 945				$ 918
All-in costs per ounce3					$ 986				$ 1,282				$ 1,404				$ 1,094				$ 1,317
All-in costs per ounce (on a co-product basis)3,4					$ 1,006				$ 1,305				$ 1,421				$ 1,114				$ 1,336

1	Relates to interest in Pueblo Viejo and Acacia held by outside shareholders.

2	Amounts represent our share of capital expenditures.

3	Total production costs, cash costs, all-in sustaining costs, and all-in costs per ounce may not calculate based on amounts presented in this table due to rounding.

4	Amounts presented on a co-product basis remove the impact of other metal sales (net of non-controlling interest) from cost per ounce calculations that are produced as a by-product of our gold production.

 

BARRICK YEAR-END 2014		85		MANAGEMENT’S DISCUSSION AND ANALYSIS

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($ millions, except per ounce information in dollars)				For the years ended December 31												For the three months ended December 31
					2014				2013				2012				2014				2013
		References
A		Cost of sales - gold
		Cost of sales (statement of income)			$ 6,830				$ 7,329				$ 7,332				$ 1,799				$ 1,853
		Less: cost of sales - copper (Note 5)			(954)				(1,098)				(1,245)				(272)				(265)
		Direct mining, royalties and community relations			787				926				985				221				219
		Depreciation			174				188				253				53				50
		Hedge gains			(7)				(16)				(7)				(2)				(4)
		Add: Barrick Energy depreciation			-				43				102				-				-
		Less: Community relations costs - gold & other non-operating			(69)				(62)				64				(22)				(24)
		Less: Cost of sales related to power sales			(72)				(15)				-				(17)				(15)
		Less: Cost of sales - corporate 1			(73)				(134)				(175)				(16)				(104)
		Total Cost of Sales - Gold			$ 5,662				6,063				$ 6,078				$ 1,472				1,445

¹ 2013 and 2012 figures include amounts related to Barrick Energy that was sold in third quarter 2013.

 

B		Cost of sales applicable to non-controlling interests
		Cost of sales applicable to Acacia (Note 5)
		Direct mining, royalties and community relations			$ 564				$ 596				$ 647				$ 165				$ 155
		Depreciation			129				160				162				35				29
		Total related to Acacia			$ 693				$ 756				$ 809				$ 200				$ 184
		Portion attributable to non-controlling interest			$ 222				$ 189				$ 216				$ 66				$ 42
		Cost of sales applicable to Pueblo Viejo (Note 5)
		Direct mining, royalties and community relations (excluding cost of sales related to power sales)			$ 566				$ 420				$-				$ 138				$ 143
		Depreciation			243				139				-				56				44
		Total related to Pueblo Viejo			$ 809				$ 559				$-				$ 194				$ 187
		Portion attributable to non-controlling interest			$ 292				$ 194				$-				$ 66				$ 62
		Cost of sales applicable to non-controlling interests			$ 514				$ 383				$ 216				$ 132				$ 104

 

C	Cost of sales applicable to ore purchase arrangement

Equal to the cost of sales from ore purchase agreements that have economic characteristics similar to a toll milling arrangement, as the cost of producing these ounces is not indicative of our normal production costs. These figures cannot be tied directly to the financial statements or notes.

 

D	Other metal sales

By-product revenues from metals produced in conjunction with gold are deducted from the costs incurred to produce gold (note 6). By product revenues from metals produced net of copper and non-controlling interest for the three months and year ended December 31, 2014 were $35 million and $139 million, respectively (2013: $37 million and $168 million, respectively, 2012: $130 million).

 

E		Realizednon-hedge gains/losses on fuel hedges
		Fuel gains/(losses) (Note 24E)			($ 181)				$ 12				$ 6				($ 201)				($ 6)
		Add/Less: Unrealized gains/(losses)			173				(32)				(14)				205				1
		Realized non-hedge gains/(losses) on fuel hedges			($ 8)				($ 20)				($ 8)				$ 4				($ 5)

 

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		($ millions, except per ounce information in dollars)		For the years ended December 31												For the three months ended December 31
				2014				2013				2012				2014				2013
F		Community relations costs
		Community relations costs (Note 7)			$ 76				$ 71				$ 75				$ 23				$ 28
		Community relations costs relating to Pascua-Lama			25				18				8				16				10
		Less: NCI of Community relations costs			(4)				(5)				(3)				(2)				(3)
		Less: Community relations costs - non-gold			(9)				(9)				(15)				(2)				(3)
		Total Community relations costs - gold			$ 88				$ 75				$ 65				$ 35				$ 32
		Community relations costs related to current operations			53				52				39				16				20
		Community relations costs not related to current operations			35				23				26				19				12
		Total Community relations costs - gold			$ 88				$ 75				$ 65				$ 35				$ 32
G		Treatment and refinement charges
		Treatment and refinement charges, which are recorded against concentrate revenues, for the three months and year ended December 31, 2014 were $3 million and $11 million, respectively (2013: $2 million and $6 million, respectively, 2012: $6 million).
H		Depreciation - gold
		Depreciation (Note 7)			$ 1,648				$ 1,732				$ 1,651				$ 434				$ 442
		Less: copper depreciation (Note 5)			(174)				(188)				(253)				(53)				(50)
		Add: Barrick Energy depreciation			-				43				102				-				-
		Less: NCI portion			(135)				(88)				(46)				(33)				(17)
		Less: Depreciation - corporate assets			(72)				(136)				(53)				(16)				(107)
		Total depreciation - gold			$ 1,267				$ 1,363				$ 1,401				$ 332				$ 268
I		Impact of Barrick Energy (Note 4)
		Revenue related to Barrick Energy			$-				$ 93				$ 153				$-				$-
		Less: Cost of sales related to Barrick Energy			-				(79)				(165)				-				-
		Add: Barrick Energy depreciation			-				43				102				-				-
		Impact of Barrick Energy			$-				$ 57				$ 90				$-				$-
J		General & administrative costs
		Total general & administrative costs (statement of income)			$ 385				$ 390				$ 503				$ 102				$ 93
		Less: non-gold and non-operating general & administrative costs			(56)				(58)				(74)				(15)				(16)
		Less: NCI portion			(15)				(10)				-				(5)				(2)
		Add: World Gold Council fees			3				8				26				-				2
		Less: non-recurring items1			(17)				(32)				(17)				-				(14)
		Total general & administrative costs			$ 300				$ 298				$ 438				$ 82				$ 63

¹ 2014 figures include amounts relating to severance costs.

 

K	Rehabilitation - accretion and amortization

Includes depreciation (note 7) on the assets related to rehabilitation provisions of our gold operations of $17million and $73 million for the three months and year ended December 31, 2014, respectively, (2013: $18 million and $88 million, respectively, 2012: $91 million) and accretion (note 13) on the rehabilitation provision of our gold operations of $16 million and $66 million for the three months and year ended December 31, 2014, respectively (2013: $16 million and $61 million, respectively, 2012: $50 million).

 

BARRICK YEAR-END 2014		87		MANAGEMENT’S DISCUSSION AND ANALYSIS

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($ millions, except per ounce information in dollars)				For the years ended December 31												For the three months ended December 31
				2014				2013				2012				2014				2013
L		Exploration and evaluation costs
		Exploration and evaluation costs (note 8)			$ 184				$ 208				$ 359				$ 54				$ 54
		Less: exploration and evaluation costs - non-gold & NCI			(11)				(30)				(51)				(3)				(8)
		Total exploration and evaluation costs - gold			$ 173				$ 178				$ 308				$ 51				$ 46
		Exploration & evaluation costs (sustaining)			20				61				115				6				16
		Exploration and evaluation costs (non-sustaining)			153				117				193				45				30
		Total exploration and evaluation costs - gold			$ 173				$ 178				$ 308				$ 51				$ 46
M		Capital expenditures
		Gold segments (Note 5)			$ 1,702				$ 2,558				$ 3,630				$ 443				$ 624
		Pascua-Lama operating unit (Note 5)			195				2,226				2,113				103				635
		Other gold projects1			72				177				128				48				51
		Capital expenditures - gold			$ 1,969				$ 4,961				$ 5,871				$ 594				$ 1,310
		Less: NCI portion			(142)				(173)				(204)				(38)				(38)
		Less: capitalized interest (note 13)			(30)				(297)				(567)				(8)				(67)
		Add: capitalized interest relating to copper			-				-				118				-				-
		Total capital expenditures - gold			$ 1,797				$ 4,491				$ 5,218				$ 548				$ 1,205
		Mine development expenditures			655				1,101				1,222				141				236
		Sustaining capital expenditures			569				901				1,381				208				251
		Non-sustaining capital expenditures			573				2,489				2,615				199				718
		Total capital expenditures - gold			$ 1,797				$ 4,491				$ 5,218				$ 548				$ 1,205

1	2013 and 2012 figures include capital expenditures related to Barrick Energy that was sold in third quarter 2013.

 

BARRICK YEAR-END 2014		88		MANAGEMENT’S DISCUSSION AND ANALYSIS

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Reconciliation of Copper Cost of Sales to C1 cash costs per pound and C3 fully allocated costs per pound

 

($ millions, except per pound information in dollars)		For the years ended December 31												For the three months ended December 31
		2014				2013				2012				2014				2013
Cost of sales			$ 947				$ 1,091				$ 1,227				$ 270				$ 267
Depreciation/amortization			(171)				(184)				(253)				(52)				(49)
Treatment and refinement charges			120				126				95				42				36
Community relations			7				9				10				2				2
Less: royalties			(39)				(48)				(34)				(14)				(12)
Non-routine charges			(1)				5				(56)				-				1
Other metal sales			(1)				(1)				(1)				-				-
Other1			(26)				-				(22)				-				-
C1 cash cost of sales			$ 836				$ 998				$ 966				$ 248				$ 245
Depreciation/amortization			171				184				253				52				49
Royalties			39				48				34				14				12
Non-routine charges			1				(5)				56				-				(1)
Administration costs			16				16				9				4				3
Other expense (income)			(5)				17				27				(2)				3
C3 fully allocated cost of sales			$ 1,058				$ 1,258				$ 1,345				$ 316				$ 311
Pounds sold - consolidated basis (millions pounds)			435				519				472				139				134
C1 cash cost per pound2			$ 1.92				$ 1.92				$ 2.05				$ 1.78				$ 1.81
C3 fully allocated cost per pound2			$ 2.43				$ 2.42				$ 2.85				$ 2.27				$ 2.33

1	Includes $17 million related to copper cathode purchases and $10 million of abnormal costs related to the conveyor collapse at Lumwana, as these costs are not indicative of our normal production costs.

2	C1 cash costs per pound and C3 fully allocated costs may not calculate based on amounts presented in this table due to rounding.

 

BARRICK YEAR-END 2014		89		MANAGEMENT’S DISCUSSION AND ANALYSIS

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EBITDA and Adjusted EBITDA

 

($ millions, except per share amounts in dollars)		For the years ended December 31												For the three months ended December 31
		2014				2013				2012				2014				2013
Net earnings (loss)			$ (2,959)				$ (10,603)				$ (549)				$ (3,040)				$ (2,772)
Income tax expense			306				630				(164)				(381)				(338)
Finance costs			721				589				121				180				248
Finance income			(11)				(9)				(11)				(2)				(2)
Depreciation			1,648				1,732				1,753				434				442
EBITDA			($ 295)				($ 7,661)				$ 1,150				$ (2,809)				($ 2,422)
Impairment charges			$ 4,106				$ 12,687				$ 6,502				$ 3,564				3,342
Adjusted EBITDA			$ 3,811				$ 5,026				$ 7,652				$ 755				$ 920
Reported as:
Cortez			$ 648				$ 1,610				$ 1,887				$ 96				$ 290
Goldstrike			628				693				1,340				114				198
Pueblo Viejo			912				569				-				197				166
Lagunas Norte			531				602				987				152				151
Veladero			446				522				819				121				92
Turquoise Ridge			156				129				162				31				41
Porgera			164				190				292				32				29
Kalgoorlie			148				182				286				35				52
Acacia			320				275				378				72				37
Copper			407				656				647				139				180
Other			(549)				(402)				854				(234)				(316)
Impairment charges			(4,106)				(12,687)				(6,502)				(3,564)				(3,342)
EBITDA			($ 295)				($ 7,661)				$ 1,150				($ 2,809)				($ 2,422)
Impairment charges			$ 4,106				$ 12,687				$ 6,502				$ 3,564				$ 3,342
Adjusted EBITDA			$ 3,811				$ 5,026				$ 7,652				$ 755				$ 920

 

BARRICK YEAR-END 2014		90		MANAGEMENT’S DISCUSSION AND ANALYSIS

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Realized Prices

 

Reconciliation of Sales to Realized Price per ounce/pound

 

																For the years ended December 31
($ millions, except per ounce/pound information in dollars)		Gold														Copper
		2014				2013				2012						2014				2013				2012
Sales			$ 8,744				$ 10,670				$ 12,564						$ 1,224				$ 1,651				$ 1,689
Sales applicable to non-controlling interests			(851)				(589)				(288)						-				-				-
Sales attributable to ore purchase agreement			-				(46)				(174)						-				-				-
Realized non-hedge gold/copper derivative (losses) gains			1				1				-						(11)				(22)				(76)
Treatment and refinement charges			11				6				6						120				126				95
Export duties			48				51				65						-				-				-
Other1			-				-				-						-				-				(22)
Revenues – as adjusted			$ 7,953				$ 10,093				$ 12,173						$ 1,333				$ 1,755				$ 1,686
Ounces/pounds sold (000s ounces/millions pounds)			6,284				7,174				7,292						435				519				472
Realized gold/copper price per ounce/pound2			$ 1,265				$ 1,407				$ 1,669						$ 3.03				$ 3.39				$ 3.57

1	Revenue related to copper cathode purchases made in second quarter 2014.

2	Realized price per ounce/pound may not calculate based on amounts presented in this table due to rounding.

 

BARRICK YEAR-END 2014		91		MANAGEMENT’S DISCUSSION AND ANALYSIS

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BARRICK YEAR-END 2014		92		MANAGEMENT’S DISCUSSION AND ANALYSIS

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GOLD MINERAL RESERVES ⁽¹⁾

 

As at December 31, 2014		PROVEN												PROBABLE												TOTAL
Based on attributable ounces		Tonnes (000’s)				Grade (gm/t)				Contained ozs (000’s)				Tonnes (000’s)				Grade (gm/t)				Contained ozs (000’s)				Tonnes (000’s)				Grade (gm/t)				Contained ozs (000’s)
NORTH AMERICA
Goldstrike Open Pit			56,802				3.01				5,504				17,390				3.97				2,220				74,192				3.24				7,724
Goldstrike Underground			4,156				9.85				1,316				2,505				7.13				574				6,661				8.83				1,890
Goldstrike Property Total			60,958				3.48				6,820				19,895				4.37				2,794				80,853				3.70				9,614
Pueblo Viejo (60.00%)			27,235				3.17				2,780				60,287				3.37				6,538				87,522				3.31				9,318
Cortez			15,418				2.30				1,141				138,403				1.96				8,710				153,821				1.99				9,851
Bald Mountain			16,421				0.96				509				44,056				0.60				852				60,477				0.70				1,361
Turquoise Ridge (75.00%)			4,619				17.39				2,583				3,580				16.29				1,875				8,199				16.91				4,458
Round Mountain (50.00%)			15,255				0.84				414				12,044				0.71				276				27,299				0.79				690
South Arturo (60.00%)			-				-				-				1,711				4.40				242				1,711				4.40				242
Ruby Hill			270				0.46				4				1,296				0.48				20				1,566				0.48				24
Hemlo			1,103				2.26				80				11,164				2.06				740				12,267				2.08				820
Golden Sunlight			846				1.43				39				1,435				1.91				88				2,281				1.73				127
SOUTH AMERICA
Cerro Casale (75.00%)			172,276				0.65				3,586				725,926				0.59				13,848				898,202				0.60				17,434
Pascua-Lama			31,934				1.84				1,887				292,692				1.43				13,497				324,626				1.47				15,384
Veladero			21,491				0.80				552				150,512				0.86				4,185				172,003				0.86				4,737
Lagunas Norte			17,087				1.42				780				52,563				1.21				2,053				69,650				1.27				2,833
AUSTRALIA PACIFIC
Porgera (95.00%)			2,426				8.50				663				14,623				4.99				2,345				17,049				5.49				3,008
Kalgoorlie (50.00%)			64,175				0.94				1,940				24,892				1.93				1,542				89,067				1.22				3,482
Cowal			15,507				0.97				485				25,963				1.28				1,070				41,470				1.17				1,555
AFRICA
Bulyanhulu (63.90%)			941				11.73				355				23,828				7.49				5,735				24,769				7.65				6,090
North Mara (63.90%)			2,466				2.12				168				12,648				2.80				1,140				15,114				2.69				1,308
Buzwagi (63.90%)			4,244				1.01				138				9,023				1.50				436				13,267				1.35				574
OTHER			224				0.28				2				12,198				0.27				105				12,422				0.27				107
TOTAL			474,896				1.63				24,926				1,638,739				1.29				68,091				2,113,635				1.37				93,017
COPPER MINERAL RESERVES (1)
As at December 31, 2014		PROVEN												PROBABLE												TOTAL
Based on attributable pounds		Tonnes (000’s)				Grade (%)				Contained lbs (millions)				Tonnes (000’s)				Grade (%)				Contained lbs (millions)				Tonnes (000’s)				Grade (%)				Contained lbs (millions)
Zaldivar			360,824				0.556				4,419.3				100,620				0.513				1,138.7				461,444				0.546				5,558.0
Lumwana			164,369				0.572				2,071.7				93,586				0.609				1,257.3				257,955				0.585				3,329.0
Jabal Sayid (50.00%)			224				2.248				11.1				12,198				2.559				688.2				12,422				2.554				699.3
TOTAL			525,417				0.561				6,502.1				206,404				0.678				3,084.2				731,821				0.594				9,586.3

 

(1)	See accompanying footnote #1.

 

93

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GOLD MINERAL RESOURCES ^(1,2)

As at December 31, 2014		MEASURED (M)												INDICATED (I)												(M) + (I)				INFERRED
Based on attributable ounces		Tonnes (000’s)				Grade (gm/t)				Contained ozs (000’s)				Tonnes (000’s)				Grade (gm/t)				Contained ozs (000’s)				Contained ozs (000’s)				Tonnes (000’s)				Grade (gm/t)				Contained ozs (000’s)
NORTH AMERICA
Goldstrike Open Pit			620				2.46				49				3,876				1.81				225				274				469				2.65				40
Goldstrike Underground			1,161				12.86				480				2,579				11.04				915				1,395				1,657				10.32				550
Goldstrike Property Total			1,781				9.24				529				6,455				5.49				1,140				1,669				2,126				8.63				590
Pueblo Viejo (60.00%)			2,185				2.88				202				72,563				2.61				6,099				6,301				1,993				2.51				161
Cortez			3,060				2.08				205				35,865				2.87				3,308				3,513				23,630				1.52				1,156
Goldrush			3,106				5.09				508				65,016				4.82				10,066				10,574				27,920				5.42				4,868
Bald Mountain			40,133				0.78				1,004				166,814				0.59				3,156				4,160				29,687				0.48				461
Turquoise Ridge (75.00%)			14,206				6.12				2,793				67,000				4.33				9,318				12,111				29,373				5.50				5,198
Round Mountain (50.00%)			10,413				0.61				204				13,353				0.55				236				440				7,861				0.51				130
South Arturo (60.00%)			5				-				-				32,415				1.46				1,525				1,525				5,799				0.68				126
Ruby Hill			2,898				0.87				81				185,447				0.64				3,842				3,923				22,627				1.39				1,010
Hemlo			457				4.29				63				36,473				1.37				1,608				1,671				5,025				2.10				340
Spring Valley (70.00%)			1,736				0.73				41				60,633				0.66				1,285				1,326				27,909				0.62				553
Golden Sunlight			22				1.41				1				5,588				1.56				280				281				2,280				2.02				148
Donlin Gold (50.00%)			3,865				2.52				313				266,803				2.24				19,190				19,503				46,108				2.02				2,997
SOUTH AMERICA
Cerro Casale (75.00%)			17,217				0.30				167				205,268				0.36				2,362				2,529				371,580				0.38				4,493
Pascua-Lama			14,772				1.49				710				142,693				1.25				5,749				6,459				19,486				1.56				975
Veladero			7,174				0.63				145				164,797				0.70				3,727				3,872				5,911				0.44				83
Lagunas Norte			1,322				0.75				32				18,061				0.68				397				429				1,566				0.73				37
AUSTRALIA PACIFIC
Porgera (95.00%)			161				5.80				30				34,095				3.67				4,020				4,050				20,875				3.14				2,105
Kalgoorlie (50.00%)			5,410				1.48				257				18,224				1.52				889				1,146				604				2.27				44
Cowal			7,186				0.63				146				41,729				1.16				1,562				1,708				4,090				1.28				168
AFRICA
Bulyanhulu (63.90%)			-				-				-				7,923				8.49				2,163				2,163				8,770				9.90				2,791
North Mara (63.90%)			1,821				2.70				158				9,656				2.91				902				1,060				6,437				3.24				670
Buzwagi (63.90%)			134				1.62				7				30,751				1.30				1,282				1,289				2,954				1.24				118
Nyanzaga (63.90%)			-				-				-				62,208				1.31				2,621				2,621				1,944				0.93				58
OTHER			-				-				-				239				0.13				1				1				246				0.25				2
TOTAL			139,064				1.70				7,596				1,750,069				1.54				86,728				94,324				676,801				1.35				29,282
COPPER MINERAL RESOURCES (1,2)
As at December 31, 2014		MEASURED (M)												INDICATED (I)												(M) + (I)				INFERRED
Based on attributable pounds		Tonnes (000’s)				Grade (%)				Contained lbs (millions)				Tonnes (000’s)				Grade (%)				Contained lbs (millions)				Contained lbs (millions)				Tonnes (000’s)				Grade (%)				Contained lbs (millions)
Zaldivar			102,863				0.460				1,043.3				37,652				0.460				382.2				1,425.5				6,081				0.612				82.0
Lumwana			52,727				0.510				592.7				216,623				0.549				2,621.5				3,214.2				38				0.477				0.4
Jabal Sayid (50.00%)			-								-				239				1.442				7.6				7.6				246				2.747				14.9
TOTAL			155,590				0.477				1,636.0				254,514				0.537				3,011.3				4,647.3				6,365				0.693				97.3

(1)	Resources which are not reserves do not have demonstrated economic viability.

(2)	See accompanying footnote #1.

 

94

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SUMMARY GOLD MINERAL RESERVES AND MINERAL RESOURCES ^(1,2,3)

For the year ended December 31, 2014				2014												2013
Based on attributable ounces				Tonnes (000’s)				Grade (gm/t)				Ounces (000’s)				Tonnes (000’s)				Grade (gm/t)				Ounces (000’s)
NORTH AMERICA
Goldstrike Open Pit		(proven and probable)			74,192				3.24				7,724				76,436				3.31				8,122
		(mineral resource)			4,496				1.90				274				5,361				2.40				413
Goldstrike Underground		(proven and probable)			6,661				8.83				1,890				9,502				8.46				2,585
		(mineral resource)			3,740				11.60				1,395				5,430				10.37				1,810
Goldstrike Property Total		(proven and probable)			80,853				3.70				9,614				85,938				3.88				10,707
		(mineral resource)			8,236				6.30				1,669				10,791				6.41				2,223
Pueblo Viejo (60.00%)		(proven and probable)			87,522				3.31				9,318				92,844				3.25				9,694
		(mineral resource)			74,748				2.62				6,301				115,606				2.42				9,011
Cortez		(proven and probable)			153,821				1.99				9,851				188,434				1.82				11,024
		(mineral resource)			38,925				2.81				3,513				91,142				1.68				4,914
Goldrush		(proven and probable)			-				-				-				-				-				-
		(mineral resource)			68,122				4.83				10,574				68,529				4.52				9,960
Bald Mountain		(proven and probable)			60,477				0.70				1,361				122,518				0.62				2,460
		(mineral resource)			206,947				0.63				4,160				187,278				0.59				3,579
Turquoise Ridge (75.00%)		(proven and probable)			8,199				16.91				4,458				8,893				17.73				5,070
		(mineral resource)			81,206				4.64				12,111				82,119				4.35				11,488
Round Mountain (50.00%)		(proven and probable)			27,299				0.79				690				42,146				0.68				919
		(mineral resource)			23,766				0.58				440				38,115				0.74				904
South Arturo (10.00%)		(proven and probable)			1,711				4.40				242				18,620				1.68				1,007
		(mineral resource)			32,420				1.46				1,525				29,598				1.51				1,440
Ruby Hill		(proven and probable)			1,566				0.48				24				4,502				0.97				140
		(mineral resource)			188,345				0.65				3,923				161,869				0.69				3,612
Hemlo		(proven and probable)			12,267				2.08				820				12,802				2.48				1,019
		(mineral resource)			36,930				1.41				1,671				52,847				1.12				1,903
Marigold Mine (0.00%)(4)		(proven and probable)			-				-				-				80,010				0.54				1,389
		(mineral resource)			-				-				-				11,188				0.44				158
Spring Valley (70.00%)		(proven and probable)			-				-				-				-				-				-
		(mineral resource)			62,369				0.66				1,326				-				-				-
Golden Sunlight		(proven and probable)			2,281				1.73				127				3,650				1.67				196
		(mineral resource)			5,610				1.56				281				4,279				1.24				170
Donlin Gold (50.00%)		(proven and probable)			-				-				-				-				-				-
		(mineral resource)			270,668				2.24				19,503				270,668				2.24				19,503
SOUTH AMERICA									-												-
Cerro Casale (75.00%)		(proven and probable)			898,202				0.60				17,434				898,202				0.60				17,434
		(mineral resource)			222,485				0.35				2,529				228,576				0.34				2,530
Pascua-Lama		(proven and probable)			324,626				1.47				15,384				324,626				1.47				15,384
		(mineral resource)			157,465				1.28				6,459				157,465				1.28				6,459
Veladero		(proven and probable)			172,003				0.86				4,737				186,626				0.85				5,117
		(mineral resource)			171,971				0.70				3,872				164,387				0.68				3,588
Lagunas Norte		(proven and probable)			69,650				1.27				2,833				90,800				1.28				3,751
		(mineral resource)			19,383				0.69				429				33,795				0.70				757
AUSTRALIA PACIFIC									-												-
Porgera (95.00%)		(proven and probable)			17,049				5.49				3,008				23,134				4.10				3,051
		(mineral resource)			34,256				3.68				4,050				36,592				2.75				3,238
Kalgoorlie (50.00%)		(proven and probable)			89,067				1.22				3,482				91,793				1.26				3,718
		(mineral resource)			23,634				1.51				1,146				25,185				1.49				1,204
Cowal		(proven and probable)			41,470				1.17				1,555				47,875				1.18				1,816
		(mineral resource)			48,915				1.09				1,708				63,328				1.08				2,203
Plutonic (0.00%)(5)		(proven and probable)			-				-				-				442				9.22				131
		(mineral resource)			-				-				-				4,204				6.53				883
Kanowna Belle (0.00%)(6)		(proven and probable)			-				-				-				2,616				4.85				408
		(mineral resource)			-				-				-				3,392				4.70				513
AFRICA									-												-
Bulyanhulu (63.90%)(7)		(proven and probable)			24,769				7.65				6,090				27,775				7.77				6,937
		(mineral resource)			7,923				8.49				2,163				7,556				10.65				2,588
North Mara (63.90%)(7)		(proven and probable)			15,114				2.69				1,308				16,043				3.17				1,634
		(mineral resource)			11,477				2.87				1,060				18,672				3.32				1,991
Buzwagi (63.90%)(7)		(proven and probable)			13,267				1.35				574				17,813				1.45				828
		(mineral resource)			30,885				1.30				1,289				36,291				1.29				1,506
Nyanzaga (63.90%)(7)		(proven and probable)			-				-				-				-				-				-
		(mineral resource)			62,208				1.31				2,621				71,943				1.31				3,032
OTHER		(proven and probable)			12,422				0.27				107				25,338				0.27				217
		(mineral resource)			239				0.13				1				870				0.18				5
TOTAL		(proven and probable)			2,113,635				1.37				93,017				2,413,440				1.34				104,051
		(mineral resource)			1,889,133				1.55				94,324				1,976,285				1.56				99,362

 

(1)	Resources which are not reserves do not have demonstrated economic viability.

(2)	See accompanying footnote #1.

(3)	Measured plus indicated resources

(4)	See accompanying footnote #2.

(5)	See accompanying footnote #3.

(6)	See accompanying footnote #4.

(7)	See accompanying footnote #5.

 

95

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CONTAINED SILVER WITHIN REPORTED GOLD RESERVES ⁽¹⁾

For the year ended Dec. 31, 2014		IN PROVEN GOLD RESERVES												IN PROBABLE GOLD RESERVES																TOTAL
Based on attributable ounces		Tonnes (000s)				Grade (gm/t)				Contained ozs (000s)				Tonnes (000s)				Grade (gm/t)				Contained ozs (000s)				Tonnes (000s)				Grade (gm/t)				Contained ozs (000s)				Process recovery %
NORTH AMERICA
Pueblo Viejo (60.00%)			27,235				22.928				20,076				60,287				19.74				38,255				87,522				20.73				58,331				87.0%
SOUTH AMERICA
Cerro Casale (75.00%)			172,276				1.907				10,565				725,926				1.43				33,451				898,202				1.52				44,016				69.0%
Pascua-Lama			31,934				69.840				71,705				292,692				64.09				603,137				324,626				64.66				674,842				81.7%
Lagunas Norte			15,123				3.856				1,875				52,563				4.75				8,026				67,686				4.55				9,901				19.5%
Veladero			12,606				11.989				4,859				150,512				16.51				79,892				163,118				16.16				84,751				9.6%
AFRICA
Bulyanhulu (63.90%)			941				8.83				267				23,828				7.22				5,530				24,769				7.28				5,797				64.9%
TOTAL			260,115				13.08				109,347				1,305,808				18.30				768,291				1,565,923				17.43				877,638				73.6%

(1)	Silver is accounted for as a by-product credit against reported or projected gold production costs.

CONTAINED COPPER WITHIN REPORTED GOLD RESERVES ⁽¹⁾

For the year ended Dec. 31, 2014		IN PROVEN GOLD RESERVES												IN PROBABLE GOLD RESERVES																TOTAL
Based on attributable pounds		Tonnes (000s)				Grade (%)				Contained lbs (millions)				Tonnes (000s)				Grade (%)				Contained lbs (millions)				Tonnes (000s)				Grade (%)				Contained lbs (millions)				Process recovery %
NORTH AMERICA
Pueblo Viejo (60.00%)			27,235				0.094				56.6				60,287				0.118				156.5				87,522				0.110				213.1				79.5%
SOUTH AMERICA
Cerro Casale (75.00%)			172,276				0.190				721.3				725,926				0.226				3,613.3				898,202				0.219				4,334.6				87.4%
Pascua-Lama			31,934				0.094				66.1				292,692				0.069				447.8				324,626				0.072				513.9				38.5%
AFRICA
Bulyanhulu (63.90%)			941				0.660				13.7				18,025				0.583				231.5				18,966				0.586				245.2				95.0%
Buzwagi (63.90%)			4,244				0.067				6.3				9,023				0.109				21.6				13,267				0.095				27.9				64.9%
TOTAL			236,630				0.166				864.0				1,105,953				0.183				4,470.7				1,342,583				0.180				5,334.7				82.6%

(1)	Copper is accounted for as a by-product credit against reported or projected gold production costs.

 

96

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CONTAINED SILVER WITHIN REPORTED GOLD RESOURCES ⁽¹⁾

For the year ended Dec. 31, 2014		MEASURED (M)												INDICATED (I)												(M) + (I)				INFERRED
Based on attributable ounces		Tonnes (000’s)				Grade (gm/t)				Contained ozs (000’s)				Tonnes (000’s)				Grade (gm/t)				Contained ozs (000’s)				Ounces (000’s)				Tonnes (000’s)				Grade (gm/t)				Contained ozs (000’s)
NORTH AMERICA
Pueblo Viejo (60.00%)			2,185				18.18				1,277				72,563				15.17				35,394				36,671				1,993				21.22				1,360
SOUTH AMERICA
Cerro Casale (75.00%)			17,217				1.19				661				205,268				1.06				6,985				7,646				371,580				1.04				12,379
Pascua-Lama			14,772				26.37				12,525				142,658				22.28				102,178				114,703				19,476				20.13				12,607
Lagunas Norte			1,322				2.26				96				18,061				2.10				1,221				1,317				1,566				2.48				125
Veladero			7,174				0.68				157				164,797				0.52				2,772				2,929				5,911				0.31				59
AFRICA
Bulyanhulu (63.90%)			-				-				-				7,923				6.50				1,657				1,657				8,576				7.26				2,001
TOTAL			42,670				10.73				14,716				611,270				7.64				150,207				164,923				409,102				2.17				28,531

(1)	Resources which are not reserves do not have demonstrated economic viability.

CONTAINED COPPER WITHIN REPORTED GOLD RESOURCES ⁽¹⁾

For the year ended Dec. 31, 2014		IN MEASURED (M) GOLD RESOURCES												IN INDICATED (I) GOLD RESOURCES												(M) + (I)				INFERRED
Based on attributable pounds		Tonnes (000’s)				Grade (%)				Contained lbs (millions)				Tonnes (000’s)				Grade (%)				Contained lbs (millions)				Contained lbs (millions)				Tonnes (000’s)				Grade (%)				Contained lbs (millions)
NORTH AMERICA
Pueblo Viejo (60.00%)			2,185				0.118				5.7				72,563				0.083				133.1				138.8				1,993				0.020				0.9
SOUTH AMERICA
Cerro Casale (75.00%)			17,217				0.132				50.1				205,268				0.164				743.8				793.9				371,580				0.192				1,570.2
Pascua-Lama			14,772				0.072				23.5				142,693				0.061				193.4				216.9				19,486				0.040				17.3
AFRICA
Buzwagi (63.90%)			134				0.102				0.3				30,751				0.110				74.3				74.6				2,954				0.109				7.1
TOTAL			34,308				0.105				79.6				451,275				0.115				1,144.6				1,224.2				396,013				0.183				1,595.5

(1)	Resources which are not reserves do not have demonstrated economic viability.

NICKEL MINERAL RESOURCES ⁽¹⁾

For the year ended Dec. 31, 2014

MEASURED (M)

INDICATED (I)

(M) + (I)

INFERRED

Based on attributable pounds

Tonnes (000’s)

Grade (%)

Contained lbs (millions)

Tonnes (000’s)

Grade (%)

Contained lbs (millions)

Contained lbs (millions)

Tonnes (000’s)

Grade (%)

Contained lbs (millions)

AFRICA

Kabanga (50.00%)

6,905

2.490

379.0

11,705

2.720

701.9

1,080.9

10,400

2.600

596.1

(1)	Resources which are not reserves do not have demonstrated economic viability.

 

97

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Mineral Reserves and Resources Notes

1.            Mineral reserves (“reserves”) and mineral resources (“resources”) have been calculated as at December 31, 2014 in accordance with National Instrument 43-101 as required by Canadian securities regulatory authorities. For United States reporting purposes, Industry Guide 7, (under the Securities and Exchange Act of 1934), as interpreted by Staff of the SEC, applies different standards in order to classify mineralization as a reserve. In addition, while the terms “measured”, “indicated” and “inferred” mineral resources are required pursuant to National Instrument 43-101, the U.S. Securities and Exchange Commission does not recognize such terms. Canadian standards differ significantly from the requirements of the U.S. Securities and Exchange Commission, and mineral resource information contained herein is not comparable to similar information regarding mineral reserves disclosed in accordance with the requirements of the U.S. Securities and Exchange Commission. U.S. investors should understand that “inferred” mineral resources have a great amount of uncertainty as to their existence and great uncertainty as to their economic and legal feasibility. In addition, U.S. investors are cautioned not to assume that any part or all of Barrick’s mineral resources constitute or will be converted into reserves. Calculations have been prepared by employees of Barrick, its joint venture partners or its joint venture operating companies, as applicable, under the supervision of Rick Sims, Senior Director, Resources and Reserves, of Barrick, Steven Haggarty, Senior Director, Metallurgy, of Barrick and Patrick Garretson, Director, LOM Planning, of Barrick. Except as noted below, reserves have been calculated using an assumed long-term average gold price of USD $1,100 per ounce, a silver price of USD $17.00 per ounce, a copper price of US $3.00 per pound and exchange rates of 1.10 CAD/USD and 0.91 USD/AUD. Reserves at Round Mountain have been calculated using an assumed long-term average gold price of USD $1,200. Reserves at Kalgoorlie assumed a gold price of AUD $1,350 and Bulyanhulu, North Mara and Buzwagi assumed a gold price of US $1,300. Reserve calculations incorporate current and/or expected mine plans and cost levels at each property. Varying cut-off grades have been used depending on the mine and type of ore contained in the reserves. Barrick’s normal data verification procedures have been employed in connection with the calculations. Resources as at December 31, 2014 have been estimated using varying cut-off grades, depending on both the type of mine or project, its maturity and ore types at each property. For a breakdown of reserves and resources by category and for a more detailed description of the key assumptions, parameters and methods used in calculating Barrick’s reserves and resources, see Barrick’s most recent Annual Information Form/Form 40-F on file with Canadian provincial securities regulatory authorities and the U.S. Securities and Exchange Commission.

2.            On April 4, 2014, the Company divested its interest in the Marigold mine. For additional information regarding this matter, see page 29 of Barrick’s Year-End Report 2014.

3.            On January 31, 2014, the Company divested the Plutonic mine. For additional information regarding this matter, see page 30 of Barrick’s Year-End Report 2014.

4.            On March 1, 2014, the Company divested the Kanowna Bell mine. For additional information regarding this matter, see page 30 of Barrick’s Year-End Report 2014.

5.            On March 11, 2014, the Company divested 41 million shares in Acacia Gold, reducing the Company’s interest in Acacia Gold to 63.90%. For additional information regarding this matter, see page 29 of Barrick’s Year-End Report 2014.

6.            On December 3, 2014, the Company divested 50% of its interest in the Jabal Sayid project. For additional information regarding this matter, see page 29 of Barrick’s Year-End Report 2014.

 

98

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MANAGEMENT’S RESPONSIBILITY

Management’s Responsibility for Financial Statements

The accompanying consolidated financial statements have been prepared by and are the responsibility of the Board of Directors and Management of the Company.

The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board and reflect Management’s best estimates and judgments based on currently available information. The Company has developed and maintains a system of internal controls in order to ensure, on a reasonable and cost effective basis, the reliability of its financial information.

The consolidated financial statements have been audited by PricewaterhouseCoopers LLP, Chartered Accountants. Their report outlines the scope of their examination and opinion on the consolidated financial statements.

 

Ammar Al-Joundi

Executive Vice President

and Chief Financial Officer

Toronto, Canada

February 18, 2015

 

BARRICK YEAR END 2014		99		MANAGEMENT’S RESPONSIBILITY

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MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

Barrick’s management is responsible for establishing and maintaining internal control over financial reporting.

Barrick’s management assessed the effectiveness of the Company’s internal control over financial reporting as at December 31, 2014. Barrick’s Management used the Internal Control – Integrated Framework (2013) as issued by the Committee of Sponsoring Organizations (COSO) of the Treadway Commission to evaluate the effectiveness of Barrick’s internal control over financial reporting. Based on management’s assessment, Barrick’s internal control over financial reporting is effective as at December 31, 2014.

The effectiveness of the Company’s internal control over financial reporting as at December 31, 2014 has been audited by PricewaterhouseCoopers LLP, Chartered Accountants, as stated in their report which is located on pages 101 - 103 of Barrick’s 2014 Annual Financial Statements.

 

BARRICK YEAR END 2014		100		MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

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February 18, 2015

Independent Auditor’s Report

To the Shareholders of

Barrick Gold Corporation

We have completed integrated audits of Barrick Gold Corporation’s (the company) 2014 and 2013 consolidated financial statements and its internal control over financial reporting as at December 31, 2014. Our opinions, based on our audits, are presented below.

Report on the consolidated financial statements

We have audited the accompanying consolidated financial statements of Barrick Gold Corporation, which comprise the consolidated balance sheets as at December 31, 2014 and December 31, 2013 and the consolidated statements of income, comprehensive income, cash flow and changes in equity for the years then ended, and the related notes.

Management’s responsibility for the consolidated financial statements

Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB) and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

Auditor’s responsibility

Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with Canadian generally accepted auditing standards and the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement. Canadian generally accepted auditing standards also require that we comply with ethical requirements.

An audit involves performing procedures to obtain audit evidence, on a test basis, about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the company’s preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances.

 

    PricewaterhouseCoopers LLP

    PwC Tower, 18 York Street, Suite 2600, Toronto, Ontario, Canada M5J oB2

    T: +1 416 863 1133, F: +1 416 365 8215, www.pwc.com/ca

    “PwC” refers to PricewaterhouseCoopers LLP, an Ontario limited liability partnership.

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An audit also includes evaluating the appropriateness of accounting principles and policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that the audit evidence we have obtained in our audits is sufficient and appropriate to provide a basis for our audit opinion on the consolidated financial statements.

Opinion

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of Barrick Gold Corporation as at December 31, 2014 and December 31, 2013 and its financial performance and its cash flows for the years then ended in accordance with IFRS as issued by the IASB.

Report on internal control over financial reporting

We have also audited Barrick Gold Corporation’s internal control over financial reporting as at December 31, 2014, based on criteria established in Internal Control – Integrated Framework (2013), issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

Management’s responsibility for internal control over financial reporting

Management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control over Financial Reporting.

Auditor’s responsibility

Our responsibility is to express an opinion on the company’s internal control over financial reporting based on our audit. We conducted our audit of internal control over financial reporting in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.

An audit of internal control over financial reporting includes obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control, based on the assessed risk, and performing such other procedures as we consider necessary in the circumstances.

We believe that our audit provides a reasonable basis for our audit opinion on the company’s internal control over financial reporting.

Definition of internal control over financial reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that: (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

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Inherent limitations

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate.

Opinion

In our opinion, Barrick Gold Corporation maintained, in all material respects, effective internal control over financial reporting as at December 31, 2014, based on criteria established in Internal Control – Integrated Framework (2013) issued by COSO.

(Signed) “PricewaterhouseCoopers LLP”

Chartered Professional Accountants, Licenced Public Accountants

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Consolidated Statements of Income

 

Barrick Gold Corporation For the years ended December 31 (in millions of United States dollars, except per share data)			2014				2013
Revenue (notes 5 and 6)		$	10,239			$	12,527
Costs and expenses
Cost of sales (notes 5 and 7)			6,830				7,329
General and administrative expenses (note 10)			385				390
Exploration, evaluation and project expenses (notes 5 and 8)			392				680
Impairment charges (note 9b)			4,106				12,687
Loss on currency translation			132				180
Closed mine rehabilitation			83				100
Loss (gain) on non-hedge derivatives (note 24e)			193				(76	)
Other expense (income) (note 9a)			(14	)			56
Loss before finance items and income taxes			(1,868	)			(8,819	)
Finance items
Finance income			11				9
Finance costs (note 13)			(796	)			(657	)
Loss before income taxes			(2,653	)			(9,467	)
Income tax expense (note 11)			(306	)			(630	)
Loss from continuing operations			(2,959	)			(10,097	)
Loss from discontinued operations (note 4e)			-				(506	)
Net loss		$	(2,959	)		$	(10,603	)
Attributable to:
Equity holders of Barrick Gold Corporation		$	(2,907	)		$	(10,366	)
Non-controlling interests (note 31)		$	(52	)		$	(237	)
Earnings per share data attributable to the equity holders of Barrick Gold Corporation      (note 12)
Loss from continuing operations
Basic		$	(2.50	)		$	(9.65	)
Diluted		$	(2.50	)		$	(9.65	)
Loss from discontinued operations
Basic		$	-			$	(0.49	)
Diluted		$	-			$	(0.49	)
Net loss
Basic		$	(2.50	)		$	(10.14	)
Diluted		$	(2.50	)		$	(10.14	)

The accompanying notes are an integral part of these consolidated financial statements.

 

BARRICK YEAR END 2014		104		FINANCIAL STATEMENTS

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Consolidated Statements of Comprehensive Income

 

Barrick Gold Corporation For the years ended December 31 (in millions of United States dollars)			2014				2013
Net loss		$	(2,959)			$	(10,603)
Other comprehensive income (loss), net of taxes
Items that may be reclassified subsequently to profit or loss:
Unrealized gains (losses) on available-for-sale (“AFS”) financial securities, net of tax $nil, $6			18				(68	)
Realized (gains) losses and impairments on AFS financial securities, net of tax $nil, ($3)			18				17
Unrealized gains (losses) on derivative investments designated as cash flow hedges, net of tax $6, ($7)			(35	)			(63	)
Realized (gains) losses on derivative investments designated as cash flow hedges, net of tax ($1), $73			(88	)			(325	)
Currency translation adjustments gain (loss), net of tax $nil, $nil			(43	)			(93	)
Items that will not be reclassified to profit or loss:
Remeasurement gains (losses) of post-employment benefit obligations, net of tax $10, ($13)			(19	)			24
Total other comprehensive loss			(149	)			(508	)
Total comprehensive loss		$	(3,108	)		$	(11,111	)
Attributable to:
Equity holders of Barrick Gold Corporation
Continuing operations		$	(3,056	)		$	(10,337	)
Discontinued operations		$	-			$	(537	)
Non-controlling interests		$	(52	)		$	(237	)

The accompanying notes are an integral part of these consolidated financial statements.

 

BARRICK YEAR END 2014		105		FINANCIAL STATEMENTS

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Consolidated Statements of Cash Flow

 

Barrick Gold Corporation For the years ended December 31 (in millions of United States dollars)			2014				2013
OPERATING ACTIVITIES
Net loss from continuing operations		$	(2,959	)		$	(10,097	)
Adjustments for the following items:
Depreciation			1,648				1,732
Finance costs (note 13)			796				657
Impairment charges (note 9b)			4,106				12,687
Income tax expense (note 11)			306				630
Increase in inventory			(78	)			(352	)
Proceeds from settlement of hedge contracts			-				219
Loss (gain) on non-hedge derivatives (note 24e)			193				(76	)
Gain on sale of long-lived assets/investments			(52	)			(41	)
Other operating activities (note 14a)			(442	)			601
Operating cash flows before interest and income taxes			3,518				5,960
Interest paid			(707	)			(662	)
Income taxes paid			(515	)			(1,109	)
Net cash provided by operating activities from continuing operations			2,296				4,189
Net cash provided by operating activities from discontinued operations			-				50
Net cash provided by operating activities			2,296				4,239
INVESTING ACTIVITIES
Property, plant and equipment
Capital expenditures (note 5)			(2,432	)			(5,501	)
Sales proceeds			72				50
Proceeds from joint venture agreement of Jabal Sayid			216				-
Divestitures (note 4)			166				522
Investment sales			120				18
Other investing activities (note 14b)			(92	)			(262	)
Net cash used in investing activities from continuing operations			(1,950	)			(5,173	)
Net cash used in investing activities from discontinued operations			-				(64	)
Net cash used in investing activities			(1,950	)			(5,237	)
FINANCING ACTIVITIES
Capital stock
Proceeds on exercise of stock options			-				1
Proceeds on common share offering (note 30)			-				2,910
Proceeds from divestment of 10% of issued ordinary share capital of Acacia (note 4c)			186				-
Debt (note 24b)
Proceeds			141				5,414
Repayments			(188	)			(6,412	)
Dividends (note 30)			(232	)			(508	)
Funding from non-controlling interests (note 31)			24				55
Other financing activities (note 14c)			9				(118	)
Net cash provided by (used in) financing activities from continuing operations			(60	)			1,342
Net cash provided by financing activities from discontinued operations			-				-
Net cash provided by (used in) financing activities			(60	)			1,342
Effect of exchange rate changes on cash and equivalents			(11	)			(17	)
Net increase in cash and equivalents			275				327
Cash and equivalents at beginning of year (note 24a)			2,404				2,097
Add: cash and equivalents of assets classified as held for sale at the beginning of year			20				-
Cash and equivalents at the end of year (note 24a)		$	2,699			$	2,424
Less: cash and equivalents of assets classified as held for sale at the end of year			-				20
Cash and equivalents excluding assets classified as held for sale at the end of year		$	2,699			$	2,404

The accompanying notes are an integral part of these consolidated financial statements.

 

BARRICK YEAR END 2014		106		FINANCIAL STATEMENTS

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Consolidated Balance Sheets

 

Barrick Gold Corporation		As at December 31,				As at December 31,
(in millions of United States dollars)			2014				2013
ASSETS
Current assets
Cash and equivalents (note 24a)		$	2,699			$	2,404
Accounts receivable (note 17)			418				385
Inventories (note 16)			2,722				2,679
Other current assets (note 17)			311				421
Total current assets (excluding assets classified as held for sale)			6,150				5,889
Assets classified as held for sale			-				323
Total current assets			6,150				6,212
Non-current assets
Equity in investees (note 15a)			206				27
Other investments (note 15b)			35				120
Property, plant and equipment (note 18)			19,193				21,688
Goodwill (note 19a)			4,426				5,835
Intangible assets (note 19b)			308				320
Deferred income tax assets (note 29)			674				501
Non-current portion of inventory (note 16)			1,684				1,679
Other assets (note 21)			1,203				1,066
Total assets		$	33,879			$	37,448
LIABILITIES AND EQUITY
Current liabilities
Accounts payable (note 22)		$	1,653			$	2,165
Debt (note 24b)			333				179
Current income tax liabilities			84				75
Other current liabilities (note 23)			490				303
Total current liabilities (excluding liabilities classified as held for sale)			2,560				2,722
Liabilities classified as held for sale			-				162
Total current liabilities			2,560				2,884
Non-current liabilities
Debt (note 24b)			12,748				12,901
Provisions (note 26)			2,561				2,428
Deferred income tax liabilities (note 29)			2,036				2,258
Other liabilities (note 28)			1,112				976
Total liabilities			21,017				21,447
Equity
Capital stock (note 30)			20,864				20,869
Deficit			(10,739	)			(7,581	)
Accumulated other comprehensive income (loss)			(199	)			(69	)
Other			321				314
Total equity attributable to Barrick Gold Corporation shareholders			10,247				13,533
Non-controlling interests (note 31)			2,615				2,468
Total equity			12,862				16,001
Contingencies and commitments (notes 2, 16, 18 and 35)
Total liabilities and equity		$	33,879			$	37,448

The accompanying notes are an integral part of these consolidated financial statements.

 

Signed on behalf of the Board,
John L. Thornton, Chairman		Steven J. Shapiro, Director

 

BARRICK YEAR END 2014		107		FINANCIAL STATEMENTS

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Consolidated Statements of Changes in Equity

 

Barrick Gold Corporation						Attributable to equity holders of the company
(in millions of United States dollars)			Common Shares (in thousands)				Capital stock				Retained earnings (deficit)				Accumulated other comprehensive income (loss)1				Other2				Total equity attributable to shareholders				Non- controlling interests				Total equity
At January 1, 2014			1,164,652			$	20,869			$	(7,581	)		$	(69	)		$	314			$	13,533			$	2,468			$	16,001
Net loss			-				-				(2,907	)			-				-				(2,907	)			(52	)			(2,959	)
Total other comprehensive loss			-				-				(19	)			(130	)			-				(149	)			-				(149	)
Total comprehensive loss			-			$	-			$	(2,926	)		$	(130	)		$	-			$	(3,056	)		$	(52	)		$	(3,108	)
Transactions with owners
Dividends			-				-				(232	)			-				-				(232	)			-				(232	)
Issued on exercise of stock options			18				-				-				-				-				-				-				-
Derecognition of stock option expense			-				(5	)			-				-				-				(5	)			-				(5	)
Recognized on divestment of 10% of Acacia Mining plc			-				-				-				-				7				7				174				181
Funding from non-controlling interests			-				-				-				-				-				-				29				29
Other decrease in non-controlling interests			-				-				-				-				-				-				(4	)			(4	)
Total transactions with owners			18			$	(5	)		$	(232	)		$	-			$	7			$	(230	)		$	199			$	(31	)
At December 31, 2014			1,164,670			$	20,864			$	(10,739	)		$	(199	)		$	321			$	10,247			$	2,615			$	12,862
At January 1, 2013			1,001,108			$	17,926			$	3,269			$	463			$	314			$	21,972			$	2,664			$	24,636
Net loss			-				-				(10,366	)			-				-				(10,366	)			(237	)			(10,603	)
Total other comprehensive income (loss)			-				-				24				(532	)			-				(508	)			-				(508	)
Total comprehensive loss			-			$	-			$	(10,342	)		$	(532	)		$	-			$	(10,874	)		$	(237	)		$	(11,111	)
Transactions with owners
Dividends			-				-				(508	)			-				-				(508	)			-				(508	)
Issued on public equity offering			163,500				2,934				-				-				-				2,934				-				2,934
Issued on exercise of stock options			44				1				-				-				-				1				-				1
Recognition of stock option expense			-				8				-				-				-				8				-				8
Funding from non-controlling interests			-				-				-				-				-				-				55				55
Other decrease in non-controlling interests			-				-				-				-				-				-				(14	)			(14	)
Total transactions with owners			163,544			$	2,943			$	(508	)		$	-			$	-			$	2,435			$	41			$	2,476
At December 31, 2013			1,164,652			$	20,869			$	(7,581	)		$	(69	)		$	314			$	13,533			$	2,468			$	16,001

 

1	Includes cumulative translation adjustments as at December 31, 2014: $122 million loss (2013: $80 million).

² Includes additional paid-in capital as at December 31, 2014: $283 million (December 31, 2013: $276 million) and convertible borrowings - equity component as at December 31, 2014: $38 million (December 31, 2013: $38 million).

The accompanying notes are an integral part of these consolidated financial statements.

 

BARRICK YEAR END 2014		108		FINANCIAL STATEMENTS

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NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

 

 

BARRICK YEAR END 2014		109		NOTES TO FINANCIAL STATEMENTS

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Outlined below is information related to our joint arrangements and entities other than 100% owned Barrick subsidiaries at December 31, 2014:

 

		Place of business		Entity type		Economic interest1		Method2
Round Mountain Mine		United States		JO		50%		Our share
Turquoise Ridge Mine3		United States		JO		75%		Our share
Kalgoorlie Mine		Australia		JO		50%		Our share
Porgera Mine		Papua New Guinea		JO		95%		Our share
Acacia Mining plc4		Tanzania		Subsidiary, publicly traded		63.9%		Consolidation
Pueblo Viejo4		Dominican Republic		Subsidiary		60%		Consolidation
Cerro Casale Project4		Chile		Subsidiary		75%		Consolidation
Donlin Gold Project		United States		JO		50%		Our share
Jabal Sayid5		Saudi Arabia		JV		50%		Equity Method
Kabanga Project5,6		Tanzania		JV		50%		Equity Method

 

 

1	Unless otherwise noted, all of our joint arrangements are funded by contributions made by their partners in proportion to their economic interest.

2	For our JOs, we recognize our share of any assets, liabilities, revenues and expenses of the JO.

3	We have joint control given that decisions about relevant activities require unanimous consent of the parties to the joint operation.

4	We consolidate our interests in Pueblo Viejo, Cerro Casale and Acacia and record a non-controlling interest for the 40%, 25% and 36.1%, respectively, that we do not own.

5	Barrick has commitments of $29 million relating to its interest in the joint ventures in 2014.

6	Our JV is an early stage exploration project and, as such, does not have any significant assets, liabilities, income, contractual commitments or contingencies. Expenses are recognized through our equity pick-up (loss). Refer to note 15 for further details.

 

 

BARRICK YEAR END 2014		110		NOTES TO FINANCIAL STATEMENTS

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BARRICK YEAR END 2014		111		NOTES TO FINANCIAL STATEMENTS

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BARRICK YEAR END 2014		112		NOTES TO FINANCIAL STATEMENTS

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BARRICK YEAR END 2014		113		NOTES TO FINANCIAL STATEMENTS

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BARRICK YEAR END 2014		114		NOTES TO FINANCIAL STATEMENTS

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BARRICK YEAR END 2014		115		NOTES TO FINANCIAL STATEMENTS

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BARRICK YEAR END 2014		116		NOTES TO FINANCIAL STATEMENTS

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BARRICK YEAR END 2014		117		NOTES TO FINANCIAL STATEMENTS

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BARRICK YEAR END 2014		118		NOTES TO FINANCIAL STATEMENTS

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BARRICK YEAR END 2014		119		NOTES TO FINANCIAL STATEMENTS

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BARRICK YEAR END 2014		120		NOTES TO FINANCIAL STATEMENTS

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BARRICK YEAR END 2014		121		NOTES TO FINANCIAL STATEMENTS

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BARRICK YEAR END 2014		122		NOTES TO FINANCIAL STATEMENTS

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BARRICK YEAR END 2014		123		NOTES TO FINANCIAL STATEMENTS

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BARRICK YEAR END 2014		124		NOTES TO FINANCIAL STATEMENTS

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5 > SEGMENT INFORMATION

As a result of the organizational changes that were implemented in third quarter 2014, we have determined that our Co-Presidents, acting together, are Barrick’s Chief Operating Decision Maker (“CODM”). Beginning in fourth quarter 2014, CODM reviews the operating results, assesses performance and makes capital allocation decisions at the mine site or project level, with the exception of Acacia which is reviewed and assessed as a separate business. Therefore, each individual mine site and Acacia are operating segments for financial reporting purposes. As a result, our former North America Portfolio, Australia Pacific and Copper operating segments have been eliminated and each individual mine within those segments is now an operating segment. For segment reporting purposes, we present our reportable operating segments as follows: eight individual gold mines, Acacia and our Pascua-Lama project. The remaining operating segments have been grouped into two other categories: (a) our remaining gold mines and (b) our two copper mines.

Segment performance is evaluated based on a number of measures including operating income before tax, production levels and unit production costs. Income tax, operating segment administration, finance income and costs, impairment charges and reversals, investment write-downs and gains/losses on hedge and non-hedge derivatives are managed on a consolidated basis and are therefore not reflected in segment income.

    Consolidated Statements of Income Information

							Cost of Sales
For the year ended     December 31, 2014		Revenue				Direct Mining, Royalties and Community Relations				Depreciation				Exploration, Evaluation and Project Expenses				Other Expenses (Income)1				Segment   Income (Loss)
Goldstrike			$1,154				$519				$132				$1				$6				$496
Cortez			1,093				432				255				1				12				393
Pueblo Viejo			1,552				642				243				-				(2)				669
Lagunas Norte			775				243				92				2				(1)				439
Veladero			894				438				116				3				7				330
Turquoise Ridge			252				94				17				1				1				139
Porgera			644				465				80				2				13				84
Kalgoorlie			417				267				42				1				1				106
Acacia			923				564				129				18				21				191
Pascua-Lama			-				-				14				113				(12)				(115)
Other Mines - Gold			1,282				785				301				13				(4)				187
Other Mines - Copper2			1,226				787				174				42				(10)				233
			$ 10,212				$ 5,236				$ 1,595				$ 197				$ 32				$ 3,152

 

BARRICK YEAR END 2014		125		NOTES TO FINANCIAL STATEMENTS

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    Consolidated Statements of Income Information

						Cost of Sales
For the year ended     December 31, 2013		Revenue				Direct Mining, Royalties and Community Relations				Depreciation				Exploration, Evaluation and Project Expenses				Other Expenses (Income)1				Segment   Income (Loss)
Goldstrike			$1,252				$550				$112				$    -				$9				$581
Cortez			1,938				315				321				3				10				1,289
Pueblo Viejo			995				435				139				-				(9)				430
Lagunas Norte			839				227				54				3				7				548
Veladero			941				400				168				6				13				354
Turquoise Ridge			225				95				14				-				1				115
Porgera			659				450				74				7				12				116
Kalgoorlie			468				281				28				1				4				154
Acacia			937				596				160				17				49				115
Pascua-Lama			-				-				3				388				-				(391)
Other Mines - Gold			2,474				1,485				409				30				25				525
Other Mines - Copper2			1,653				926				188				57				14				468
			$ 12,381				$ 5,760				$ 1,670				$ 512				$ 135				$ 4,304

 

1	Other expenses include accretion expense, which is included with finance costs in the consolidated statements of income. For the year ended December 31, 2014, accretion expense was $51 million (2013: $51 million). Refer to note 9a for details of other expenses (income).

2	Includes exploration and evaluation expense and losses from equity investees that hold copper projects.

 

Reconciliation of Segment Income to Loss from Continuing Operations Before Income Taxes
For the years ended December 31			2014				2013
Segment income		$	3,152			$	4,304
Other revenue1			27				146
Other cost of sales/amortization1,2			1				101
Exploration, evaluation and project expenses not attributable to segments			(195	)			(168	)
General and administrative expenses			(385	)			(390	)
Other (expense) income not attributable to segments			(5	)			28
Impairment charges			(4,106	)			(12,687	)
Loss on currency translation			(132	)			(180	)
Closed mine rehabilitation			(83	)			(100	)
Finance income			11				9
Finance costs (includes non segment accretion)			(745	)			(606	)
(Loss) gain on non-hedge derivatives			(193	)			76
Loss before income taxes		$	(2,653	)		$	(9,467	)

¹ Includes revenue and costs from Pierina, which is not part of any of our operating segments. Pierina entered closure in 2013.

² Includes all realized hedge gains/losses.

 

BARRICK YEAR END 2014		126		NOTES TO FINANCIAL STATEMENTS

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Geographic Information

		Non-current assets1								Revenue2
			As at Dec. 31, 2014				As at Dec. 31, 2013				2014				2013
United States			$ 9,455				$ 7,014				$ 3,095				$ 4,117
Zambia			395				1,036				515				666
Chile			3,711				3,998				711				987
Dominican Republic			5,208				4,836				1,552				995
Argentina			2,517				2,425				894				941
Tanzania			1,717				1,549				923				937
Canada			495				448				283				278
Saudi Arabia			343				741				-				-
Australia			1,155				997				821				1,962
Papua New Guinea			668				672				644				659
Peru			1,045				734				801				985
Unallocated1			1,020				6,786				-				-
Total			$ 27,729				$ 31,236				$ 10,239				$ 12,527

1

As a result of the reorganization of our operating segments in the fourth quarter of 2014, the presentation of the 2014 non-current asset information differs from the 2013 information, which reflects the presentation under the previous operating segment grouping. The primary difference relates to the presentation of goodwill in our former operating units in 2013 while being presented with the individual mine site for 2014. We have determined that it is not practical to restate prior year comparative information into current year segment presentation, nor is it practical to disclose 2014 information into the previous segment grouping, as the goodwill impairments recorded in each of 2013 and 2014 would have been determined at the operating segment level which is different in each year. As a result, the 2014 non-current asset information is presented under the updated segment presentation and the comparative 2013 information is disclosed under the previous segment grouping.

2	Presented based on the location from which the product originated.

    Capital Expenditures Information

		Segment Capital Expenditures1
			For the year ended Dec. 31, 2014				For the year ended Dec. 31, 2013
Goldstrike			$ 558				$ 474
Cortez			189				396
Pueblo Viejo			134				169
Lagunas Norte			82				145
Veladero			173				208
Turquoise Ridge			30				55
Porgera			33				171
Kalgoorlie			66				66
Acacia			254				387
Pascua-Lama			195				2,226
Other Mines - Gold			183				487
Other Mines - Copper			298				405
Segment total			$ 2,195				$ 5,189
Other items not allocated to segments			69				120
Total			$ 2,264				$ 5,309

 

1

Segment capital expenditures are presented for internal management reporting purposes on an accrual basis. Capital expenditures in the Consolidated Statements of Cash Flow are presented on a cash basis. In 2014, cash expenditures were $2,432 million (2013: $5,501 million) and the decrease in accrued expenditures was $168 million (2013: $192 million decrease).

 

BARRICK YEAR END 2014		127		NOTES TO FINANCIAL STATEMENTS

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BARRICK YEAR END 2014		128		NOTES TO FINANCIAL STATEMENTS

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BARRICK YEAR END 2014		129		NOTES TO FINANCIAL STATEMENTS

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BARRICK YEAR END 2014		130		NOTES TO FINANCIAL STATEMENTS

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BARRICK YEAR END 2014		131		NOTES TO FINANCIAL STATEMENTS

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12 > LOSS PER SHARE

 

For the years ended December 31 ($ millions, except shares in millions and per share amounts		2014								2013
in dollars)		Basic				Diluted				Basic				Diluted
Loss from continuing operations			$ (2,959)				$ (2,959)				$ (10,097)				$ (10,097)
Loss from discontinued operations			-				-				(506)				(506)
Loss attributable to non-controlling interests			52				52				237				237
Net loss attributable to equity holders of Barrick Gold Corporation			$ (2,907)				$ (2,907)				$ (10,366)				$ (10,366)
Weighted average shares outstanding			1,165				1,165				1,022				1,022
Stock options			-				-				-				-
			1,165				1,165				1,022				1,022
Loss per share data attributable to the equity holders of Barrick Gold Corporation
Loss from continuing operations			$ (2.50)				$ (2.50)				$ (9.65)				$ (9.65)
Loss from discontinued operations			$    -				$    -				$ (0.49)				$ (0.49)
Net loss			$ (2.50)				$ (2.50)				$ (10.14)				$ (10.14)

 

13	> FINANCE COSTS

 

For the years ended December 31		2014				2013
Interest			$ 733				$ 775
Amortization of debt issue costs			21				22
Amortization of premium			(1)				-
Gain on interest rate hedges			(2)				(1)
Interest capitalized1			(30)				(297)
Accretion			75				68
Debt extinguishment fees			-				90
Total			$ 796				$ 657

1	For the year ended December 31, 2014, the general capitalization rate was 5.40% (2013: 5.00%)

 

BARRICK YEAR END 2014		132		NOTES TO FINANCIAL STATEMENTS

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14	> CASH FLOW – OTHER ITEMS

    A Operating Cash Flows - Other Items

For the years ended December 31		2014				2013
Adjustments for non-cash income statement items:
Loss on currency translation			$ 132				$ 180
RSU expense (recovery)			8				(1)
Stock option expense (recovery)			(5)				8
Change in estimate of rehabilitation costs at closed mines			83				100
Net inventory impairment charges (note 16)			121				46
Cash flow arising from changes in:
Accounts receivable			(24)				28
Other current assets			(177)				(31)
Accounts payable			(329)				429
Other current liabilities			141				17
Other assets and liabilities			(284)				(119)
Settlement of rehabilitation obligations			(108)				(56)
Other net operating activities			$ (442)				$ 601
B Investing Cash Flows – Other Items
For the years ended December 31			2014				2013
Value added tax recoverable on project capital expenditures			$ (66)				$ (237)
Derivative settlements			-				20
Other			(26)				(45)
Other net investing activities			$ (92)				$ (262)
Investing cash flow includes payments for:
Capitalized interest (note 24)			$ 29				$ 394
C Financing Cash Flows – Other Items
For the years ended December 31			2014				2013
Financing fees on long-term debt			$    -				$ (32)
Debt extinguishment fees			-				(90)
Derivative settlements			9				4
Other net financing activities			$ 9				$ (118)

 

BARRICK YEAR END 2014		133		NOTES TO FINANCIAL STATEMENTS

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15	> INVESTMENTS

A Equity Accounting Method Investment Continuity

		Kabanga				Jabal Sayid				Total
At January 1, 2013			$  20				$     -				$20
Funds invested			7				-				7
At December 31, 2013			$  27				$     -				$27
Funds invested			1				178				179
At December 31, 2014			$28				$ 178				$206
Publicly traded			No				No

Summarized Equity Investee Financial Information

 

		Jabal Sayid
For the year ended December 31					2014
Summarized Balance Sheet
Cash and equivalents					$ 10
Other current assets					21
Total current assets					$ 31
Non-current assets					429
Total assets					$ 460
Current financial liabilities (excluding trade, other payables & provisions)					3
Other current liabilities					1
Total current liabilities					$ 4
Non-current financial liabilities (excluding trade, other payables & provisions)					2
Other non-current liabilities					343
Total non-current liabilities					$ 345
Total liabilities					$ 349
Net assets					$ 111

The information above reflects the amounts presented in the financial information of the joint venture adjusted for differences between IFRS and Saudi GAAP.

Reconciliation of Summarized Financial Information to Carrying Value

 

Opening net assets, January 1		$	111
Profit/(loss) for the period			-
Closing net assets, December 31		$	111
Barrick’s share of net assets (50%)			55
Goodwill recognition			123
Carrying value		$	178

B Other Investments

 

		As at Dec. 31, 2014								As at Dec. 31, 2013
			Fair Value	1			Cumulative Gains in AOCI				Fair Value	1			Cumulative Losses in AOCI
Available-for-sale securities			$ 35				$ 4				$ 120				$ (32)

¹ Refer to note 25 for further information on the measurement of fair value.

 

BARRICK YEAR END 2014		134		NOTES TO FINANCIAL STATEMENTS

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Gains on Investments Recorded in Earnings
For the years ended December 31											2014				2013
Gains realized on sales											$    -				$ 6
Cash proceeds from sales1											120				18
1 Primarily relates to sale of Goldfields investments
16 > INVENTORIES
		Gold								Copper
		As at Dec. 31, 2014				As at Dec. 31, 2013				As at Dec. 31, 2014				As at Dec. 31, 2013
Raw materials
Ore in stockpiles			$ 2,036				$ 1,835				$ 182				$ 236
Ore on leach pads			357				334				392				320
Mine operating supplies			875				1,027				132				151
Work in process			245				209				7				6
Finished products
Gold doré			129				177				-				-
Copper cathode			-				-				12				12
Copper concentrate			-				-				28				47
Gold concentrate			11				4				-				-
			$ 3,653				$ 3,586				$ 753				$ 772
Non-current ore in stockpiles1			(1,584)				(1,477)				(100)				(202)
			$ 2,069				$ 2,109				$ 653				$ 570
1 Ore that we do not expect to process in the next 12 months is classified within other long-term assets
For the years ended December 31											2014				2013
Inventory impairment charges											$ 121				$ 53
Inventory impairment charges reversed											-				(7)

 

 

BARRICK YEAR END 2014		135		NOTES TO FINANCIAL STATEMENTS

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BARRICK YEAR END 2014		136		NOTES TO FINANCIAL STATEMENTS

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18	> PROPERTY, PLANT AND EQUIPMENT

 

		Buildings, plant and equipment				Mining property costs subject to depreciation1,3				Mining property costs not subject to depreciation1,2				Oil and gas properties4				Total
At January 1, 2014
Net of accumulated depreciation			$ 6,210				$ 8,551				$ 6,927				$    -				$ 21,688
Additions			190				301				2,048				-				2,539
Capitalized interest			-				2				28				-				30
Disposals			(36)				(15)				(523)				-				(574)
Depreciation			(933)				(891)				-				-				(1,824)
Impairment charges			(105)				(422)				(2,139)				-				(2,666)
Transfers5			1,400				738				(2,138)				-				-
At December 31, 2014			$ 6,726				$ 8,264				$4,203				$    -				$ 19,193
At December 31, 2014
Cost			$ 15,316				$ 21,803				$ 16,017				$    -				$ 53,136
Accumulated depreciation and impairments			(8,590)				(13,539)				(11,814)				-				(33,943)
Net carrying amount – December 31, 2014			$ 6,726				$ 8,264				$ 4,203				$    -				$ 19,193
		Buildings, plant and equipment				Mining property costs subject to depreciation1,3				Mining property costs not subject to depreciation1,2				Oil and gas properties4				Total
At January 1, 2013
Cost			$ 10,371				$ 19,373				$ 18,460				$ 1,416				$ 49,620
Accumulated depreciation and impairments			(6,542)				(10,651)				(2,597)				(553)				(20,343)
Net carrying amount – January 1, 2013			$ 3,829				$ 8,722				$ 15,863				$ 863				$ 29,277
Adjustment on currency translation			-				-				-				(28)				(28)
Additions			151				630				4,420				7				5,208
Capitalized interest			-				-				295				-				295
Disposals			(531)				4				(5)				(799)				(1,331)
Depreciation			(848)				(1,052)				-				(43)				(1,943)
Impairment charges			(1,046)				(1,524)				(7,078)				-				(9,648)
Transfers5			4,691				1,867				(6,539)				-				19
Assets held for sale			(36)				(96)				(29)				-				(161)
At December 31, 2013			$ 6,210				$ 8,551				$ 6,927				$    -				$ 21,688
At December 31, 2013
Cost			$ 13,817				$ 20,769				$ 16,602				$    -				$ 51,188
Accumulated depreciation and impairments			(7,607)				(12,218)				(9,675)				-				(29,500)
Net carrying amount – December 31, 2013			$ 6,210				$ 8,551				$ 6,927				$    -				$ 21,688

1	Includes capitalized reserve acquisition costs, capitalized development costs and capitalized exploration and evaluation costs other than exploration license costs included in intangible assets.

2	Assets not subject to depreciation includes construction-in-progress, projects and acquired mineral resources and exploration potential at operating mine sites and development projects.

3	Assets subject to depreciation include the following items for production stage properties: acquired mineral reserves and resources, capitalized mine development costs, capitalized stripping and capitalized exploration and evaluation costs.

4	Represents Barrick Energy which was divested in July 2013 (refer to note 4e).

5	Primarily relates to long-lived assets that are transferred to PP&E once they are placed into service.

 

BARRICK YEAR END 2014		137		NOTES TO FINANCIAL STATEMENTS

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19 > GOODWILL AND OTHER INTANGIBLE ASSETS

A Goodwill

 

		Gold
		North America				Australia				South America				Acacia				Capital Projects				Copper				Barrick Energy				Total
Opening balance January 1, 2013			$ 2,376				$ 1,480				$ 441				$ 185				$ 809				$ 3,451				$ 95				$ 8,837
Additions			-				-				-				-				-				-				-				-
Other1			(18)				(74)				-				-				-				-				-				(92)
Impairments2			-				(1,200)				-				(185)				(397)				(1,033)				(95)				(2,910)
Transfers3			412				-				-				-				(412)				-				-				-
Net carrying amount December 31, 2013			$ 2,770				$ 206				$ 441				$    -				$    -				$  2,418				$    -				$  5,835

¹ Represents the allocation of goodwill to assets held for sale as well as the disposition of YSS assets.

² Refer to note 20.

³ In the first quarter 2013 we transferred $412 million of goodwill from the Capital Projects segment to the North American segment as a result of Pueblo Viejo entering production.

 

BARRICK YEAR END 2014		138		NOTES TO FINANCIAL STATEMENTS

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As a result of the reorganization of our operating segments in fourth quarter 2013, we reallocated goodwill, which had previously been recorded in our Regional Business Units (our former operating segments), to the new Operating Units on a relative fair value basis except for Pueblo Viejo, which had specifically identified goodwill from the earlier allocation in 2013. The reorganization of the Operating Units did not result in any indicators of impairment (see note 20). In 2014, we also reorganized our segments and reallocated goodwill, which had previously been recorded in our North America Portfolio, Australia Pacific and Copper Operating units on a relative fair value basis. This reorganized operating segments were then tested for impairment (see note 20).

 

		Closing balance December 31, 2013				Additions				Impairments (Q2 2014)2				Reallocation1				Impairments (Q4 2014)				Closing balance December 31, 2014
Goldstrike			$            730				$            -				$            -				$            -				$            -				$            730
Cortez			869				-				-				-				-				869
Pueblo Viejo			412				-				-				-				-				412
Lagunas Norte			247				-				-				-				-				247
Veladero			195				-				-				-				-				195
North America Portfolio			758				-				-				(758)				-				-
Turquoise Ridge			-				-				-				528				-				528
Hemlo			-				-				-				63				-				63
Bald Mountain			-				-				-				131				(131)				-
Round Mountain			-				-				-				36				(36)				-
Australia Pacific			206				-				-				(206)				-				-
Kalgoorlie			-				-				-				71				-				71
Cowal			-				-				-				64				-				64
Porgera			-				-				-				71				-				71
Copper			2,418				-				(316)				(2,102)				-				-
Zaldívar			-				-				-				1,888				(712)				1,176
Lumwana			-				-				-				214				(214)				-
Total			$            5,835				$             -				$             (316)				$             -				$        (1,093)				$       4,426

¹ As a result of the reorganization of our operating segments in November 2014, we reallocated goodwill, which had previously been recorded in our North America Portfolio, Australia Pacific and Copper Operating Units on a relative fair value basis. The reorganized operating segments were then tested for impairment (see note 20).

² In Q2 we reclassified Jabal Sayid to Held for Sale pending the sale of 50% to our Joint Venture partner. As a result, we recorded an impairment of goodwill of $316 million.

On a total basis, the gross amount and accumulated impairment losses are as follows:

 

Cost			$           9,635
Accumulated impairment losses and other January 1, 2013			(798)
Impairment losses and other 2013			(3,002)
Impairment losses 2014			(1,409)
Accumulated impairment losses and other December 31, 2014			(5,209)
Net carrying amount December 31, 2014			$              4,426

 

BARRICK YEAR END 2014		139		NOTES TO FINANCIAL STATEMENTS

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B Intangible Assets

 

		Water rights1				Technology2				Supply contracts3				Exploration potential4				Total
Opening balance January 1, 2013			$ 116				$ 17				$ 22				$ 298				$ 453
Additions			-				-				-				-				-
Amortization and impairment losses			-				(1)				(2)				(130)				(133)
Closing balance December 31, 2013			$ 116				$ 16				$ 20				$ 168				$ 320
Additions			-				-				-				-				-
Amortization and impairment losses			-				(2)				(3)				(7)				(12)
Closing balance December 31, 2014			$ 116				$ 14				$ 17				$ 161				$ 308
Cost			$ 116				$ 17				$ 39				$ 467				$ 639
Accumulated amortization and impairment losses			-				(3)				(22)				(306)				(331)
Net carrying amount December 31, 2014			$ 116				$ 14				$ 17				$ 161				$ 308

1	Relates to water rights in South America which are subject to annual impairment testing and will be amortized through cost of sales when we begin using these in the future.

2	The amount will be amortized through cost of sales using the UOP method over LOM ounces of the Pueblo Viejo mine, with no assumed residual value.

3	Relates to a supply agreement with Michelin North America Inc. to secure a supply of tires and is amortized over the effective term of the contract through cost of sales.

4

Exploration potential consists of the estimated fair value attributable to exploration licenses acquired as a result of a business combination or asset acquisition. The carrying value of the licenses will be transferred to PP&E when the development of attributable mineral resources commences (note 2m(i)). See note 20 for details of impairment charges recorded against exploration assets.

 

BARRICK YEAR END 2014		140		NOTES TO FINANCIAL STATEMENTS

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BARRICK YEAR END 2014		141		NOTES TO FINANCIAL STATEMENTS

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BARRICK YEAR END 2014		142		NOTES TO FINANCIAL STATEMENTS

---

 

BARRICK YEAR END 2014		143		NOTES TO FINANCIAL STATEMENTS

---

 

BARRICK YEAR END 2014		144		NOTES TO FINANCIAL STATEMENTS

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BARRICK YEAR END 2014		145		NOTES TO FINANCIAL STATEMENTS

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24 > FINANCIAL INSTRUMENTS

Financial instruments include cash; evidence of ownership in an entity; or a contract that imposes an obligation on one party and conveys a right to a second entity to deliver/receive cash or another financial instrument. Information on certain types of financial instruments is included elsewhere in these consolidated financial statements as follows: accounts receivable (note 17); investments (note 15); restricted share units (note 33b).

A Cash and Equivalents

Cash and equivalents include cash, term deposits, treasury bills and money market investments with original maturities of less than 90 days.

 

		As at Dec. 31, 2014				As at Dec. 31, 2013
Cash deposits			$ 967				$ 648
Term deposits			630				235
Money market investments			1,102				1,521
			$ 2,699				$ 2,404

 

BARRICK YEAR END 2014		146		NOTES TO FINANCIAL STATEMENTS

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Of total cash and cash equivalents as of December 31, 2014, $614 million (2013: $305 million) was held in subsidiaries which have regulatory regulations, contractual restrictions or operate in countries where exchange controls and other legal restrictions apply and are therefore not available for general use by the Company. In addition, $242 million (2013: $936 million) of cash and equivalents is held in subsidiaries where we have determined the cash is reinvested for the foreseeable future for the calculation of deferred income tax. This cash can be repatriated, however there would be a tax cost of doing so.

B Long-Term Debt¹

 

		2014
			At Dec. 31				Proceeds				Repayments				Amortization and Other	2			At Jan. 1
2.9%/4.4%/5.7% notes3			$ 2,409				$ -				$ -				$ 3				$ 2,406
3.85%/5.25% notes			1,983				-				-				-				1,983
5.80% notes			395				-				-				-				395
5.75%/6.35% notes			855				-				-				-				855
Other fixed rate notes4			2,720				-				-				8				2,712
Project financing			850				-				102				11				941
Capital leases5			354				133				46				27				240
Other debt obligations			794				8				40				(3)				829
2.5%/4.10%/5.75% notes6			2,579				-				-				2				2,577
Acacia Credit facility7			142				-				-				-				142
			$ 13,081				$ 141				$ 188				$ 48				$ 13,080
Less: current portion8			(333)				-				-				-				(179)
			$ 12,748				$ 141				$ 188				$ 48				$ 12,901
		2013
			At Dec. 31				Proceeds				Repayments				Amortization and Other	2			At Jan.1
1.75%/2.9%/4.4%/5.7% notes3			$ 2,406				$ -				$ 1,571				$ 6				$ 3,971
3.85%/5.25% notes			1,983				-				-				2				1,981
4.875%/5.80% notes			395				-				350				1				744
5.75%/6.35% notes			855				-				136				1				990
Other fixed rate notes4			2,712				-				500				4				3,208
Project financing			941				94				45				2				890
Capital leases5			240				-				93				148				185
Other debt obligations			829				178				119				(4)				774
Credit facility			-				-				1,200				-				1,200
2012 Credit facility			-				2,000				2,000				-				-
2.5%/4.10%/5.75% notes6			2,577				3,000				398				(25)				-
Acacia Credit facility7			142				142				-				-				-
			$ 13,080				$ 5,414				$ 6,412				$ 135				$ 13,943
Less: current portion8			(179)				-				-				-				(1,848)
			$12,901				$ 5,414				$ 6,412				$ 135				$ 12,095

1

The agreements that govern our long-term debt each contain various provisions which are not summarized herein. These provisions allow Barrick to, at its option, redeem indebtedness prior to maturity at specified prices and also may permit redemption of debt by Barrick upon the occurrence of certain specified changes in tax legislation.

2	Amortization of debt premium/discount and increases in capital leases.

3

Consists of $2.4 billion in conjunction with our wholly-owned subsidiary Barrick North America Finance LLC (“BNAF”). This consists of $229 million of BGC notes due 2016, $1.35 billion of BNAF notes due 2021 and $850 million of BNAF notes due 2041. We provide an unconditional and irrevocable guarantee on all BNAF Notes and generally provide such guarantees on all BNAF notes issued, which will rank equally with our other unsecured and unsubordinated obligations.

4

Consists of $2.8 billion in conjunction with our wholly-owned subsidiary Barrick North America Finance LLC (“BNAF”) and our wholly-owned subsidiary Barrick (PD) Australia Finance Pty Ltd. (“BPDAF”). This consists of $500 million of BNAF notes due 2018, $750 million of BGC notes due 2019, $400 million of BPDAF notes due 2020, $250 million of BNAF notes due 2038 and $850 million of BPDAF notes due 2039. We provide an unconditional and irrevocable guarantee on all BNAF and BPDAF notes and generally provide such guarantees on all BNAF and BPDAF notes issued, which will rank equally with our other unsecured and unsubordinated obligations.

5	Consists primarily of capital leases at Pascua-Lama $199 million and Lagunas Norte, $123 million (2013: $71 million and $150 million, respectively).

6

Consists of $2.6 billion in conjunction with our wholly-owned subsidiary Barrick North America Finance LLC (“BNAF”). This consists of $252 million of BGC notes due 2018, $1.5 billion of BGC notes due 2023 and $850 million of BNAF notes due 2043. We provide an unconditional and irrevocable guarantee on all BNAF Notes and generally provide such guarantees on all BNAF notes issued, which will rank equally with our other unsecured and unsubordinated obligations.

7	Consists of an export credit backed term loan facility.

8	The current portion of long-term debt consists of project financing ($98 million; 2013: $102 million), other debt obligations ($150 million, 2013: $39 million), and capital leases ($71 million, 2013: $38 million) and Acacia credit facility ($14 million, 2013: nil).

 

BARRICK YEAR END 2014		147		NOTES TO FINANCIAL STATEMENTS

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BARRICK YEAR END 2014		148		NOTES TO FINANCIAL STATEMENTS

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BARRICK YEAR END 2014		149		NOTES TO FINANCIAL STATEMENTS

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    Interest

 

		2014										2013
For the years ended December 31			Interest cost				Effective rate	1					Interest cost				Effective rate	1
1.75%/2.9%/4.4%/5.7% notes			$ 118				4.84%						$ 153				3.97%
3.85%/5.2% notes			89				4.44%						87				4.34%
5.80% notes			23				5.87%						40				5.58%
5.75%/6.35% notes			54				6.25%						60				6.11%
Other fixed rate notes			179				6.50%						202				6.53%
Project financing			47				5.09%						46				4.77%
Capital leases			13				3.51%						6				3.20%
Other debt obligations			46				5.97%						42				5.12%
Credit facility			-				-						2				0.88%
2012 Credit Facility			-				-						5				1.47%
2.5%/4.10%/5.75% notes			120				4.59%						85				4.30%
Acacia credit facility			4				2.80%						2				2.80%
Deposits on silver contracts (note 28)			57				8.32%						55				8.59%
Accretion			75										68
Other interest			1										11
Debt extinguishment fees			-										90
			$ 826										$ 954
Less: interest capitalized			(30)										(297)
			$ 796										$ 657
Cash interest paid			$ 736										$ 1,056
Amortization of debt issue costs			21										22
Gain on interest rate hedges			(2)										(1)
(Decrease) Increase in interest accruals			(4)										(281)
Accretion			75										68
Debt extinguishment fees			-										90
Interest cost			$ 826										$ 954

1	The effective rate includes the stated interest rate under the debt agreement, amortization of debt issue costs and debt discount/premium and the impact of interest rate contracts designated in a hedging relationship with debt.

    Scheduled Debt Repayments¹

 

		2015				2016				2017				2018				2019				2020 and thereafter				Total
2.9%/4.4%/5.7% notes			$     -				$ 229				$     -				$     -				$     -				$ 2,200				$ 2,429
3.85%/5.2% notes			-				-				-				-				-				2,000				2,000
5.80% notes			-				-				-				-				-				400				400
5.75%/6.35% notes			-				264				-				-				-				600				864
Other fixed rate notes			-				-				-				500				750				1,500				2,750
Project financing			98				98				98				98				98				398				888
Other debt obligations			150				46				-				-				-				564				760
2.5%/4.10%/5.75% notes			-				-				-				252				-				2,350				2,602
Acacia credit facility			14				28				29				28				29				14				142
			$ 262				$ 665				$ 127				$ 878				$ 877				$ 10,026				$ 12,835
Minimum annual payments under capital leases			$ 71				$ 65				$ 62				$ 56				$ 42				$ 56				$ 352

1	This table illustrates the contractual undiscounted cash flows, and may not agree with the amounts disclosed in the consolidated balance sheet.

 

BARRICK YEAR END 2014		150		NOTES TO FINANCIAL STATEMENTS

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BARRICK YEAR END 2014		151		NOTES TO FINANCIAL STATEMENTS

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  D Summary of Derivatives at December 31, 2014

 

 

		Notional Amount by Term to Maturity																Accounting Classification by Notional Amount
		Within 1 year				2 to 3 years				4 to 5 years				Total				Cash flow hedge				Non-Hedge				Fair value (USD)
US dollar interest rate contracts (US$ millions)
Total receive - float swap positions			$ 14				$ 57				$ 71				$ 142				$ 142				$ -				$ 1
Currency contracts
A$:US$ contracts (A$ millions)			377				85				-				462				429				33				(83)
C$:US$ contracts (C$ millions)			240				-				-				240				240				-				(6)
CLP:US$ contracts (CLP millions)			102,000				-				-				102,000				83,474				18,526				(7)
PGK:US$ contracts (PGK millions)			15				-				-				15				-				15				-
ZAR:US$ contracts (ZAR millions)			421				-				-				421				171				250				(1)
Commodity contracts
Copper collar sell contracts (millions of pounds)			4				-				-				4				-				4				3
Diesel contracts (thousands of barrels)1			2,855				4,731				1,080				8,666				-				8,666				(185)

1

Diesel commodity contracts represent a combination of WTI and BRENT. These derivatives hedge physical supply contracts based on the price of ULSD, WTB, MOPS and JET, respectively, plus a spread. WTI represents West Texas Intermediate, BRENT represents Brent Crude Oil, and MOPS represents Mean of Platts Singapore.

  Fair Values of Derivative Instruments

 

		Asset Derivatives												Liability Derivatives
		Balance Sheet Classification				Fair Value as at Dec. 31, 2014				Fair Value as at Dec. 31, 2013				Balance Sheet Classification				Fair Value as at Dec. 31, 2014				Fair Value as at Dec. 31, 2013
Derivatives designated as hedging instruments
US dollar interest rate contracts			Other assets				$ 2				$ 6				Other liabilities				$ 1				$ 1
Currency contracts			Other assets				-				-				Other liabilities				71				55
Commodity contracts			Other assets				-				7				Other liabilities				-				-
Total derivatives classified as hedging instruments							$ 2				$ 13								$ 72				$ 56
Derivatives not designated as hedging instruments
US dollar interest rate contracts			Other assets				$    -				$ 2				Other liabilities				$    -				$    -
Currency contracts			Other assets				4				12				Other liabilities				30				39
Commodity contracts			Other assets				3				20				Other liabilities				185				11
Total derivatives not designated as hedging instruments							$ 7				$ 34								$ 215				$ 50
Total derivatives							$ 9				$ 47								$ 287				$ 106

 

BARRICK YEAR END 2014		152		NOTES TO FINANCIAL STATEMENTS

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BARRICK YEAR END 2014		153		NOTES TO FINANCIAL STATEMENTS

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BARRICK YEAR END 2014		154		NOTES TO FINANCIAL STATEMENTS

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  Cash Flow Hedge Gains (Losses) in Accumulated Other Comprehensive Income (“AOCI”)

 

 

		Commodity price hedges												Currency hedges												Interest rate hedges
		Gold/Silver1				Copper				Fuel				Operating costs				General and administrative costs				Capital expenditures				Long- term debt				Total
At January 1, 2013			$ 10				$    -				$ 7				$ 456				$ 25				$ 26				$ (31)				$ 493
Effective portion of change in fair value of hedging instruments			55				57				(2)				(140)				(16)				(12)				2				(56)
Transfers to earnings:
On recording hedged items in earnings/PP&E1			(1)				(57)				(9)				(268)				(11)				(14)				3				(357)
Hedge ineffectiveness due to changes in original forecasted transaction			(46)				-				-				5				-				-				-				(41)
At December 31, 2013			$ 18				$-				$ (4)				$ 53				$ (2)				$    -				$ (26)				$ 39
Effective portion of change in fair value of hedging instruments			-				2				-				(44)				3				-				(2)				(41)
Transfers to earnings:
On recording hedged items in earnings/PP&E1			-				(2)				4				(93)				(4)				-				3				(92)
Hedge ineffectiveness due to changes in original forecasted transaction			-				-				-				5				-				-				-				5
At December 31, 2014			$ 18				$-				$-				$ (79)				$ (3)				$    -				$ (25)				$ (89)
Hedge gains/losses classified within		Gold/Silver sales				Copper sales				Cost of sales				Cost of sales				General and administrative costs				Property, plant, and equipment				Interest expense				Total
Portion of hedge gain (loss) expected to affect 2015 earnings2			$ 13				$    -				$    -				$ (54)				$ (3)				$    -				$ (4)				$ (48)

1	Realized gains (losses) on qualifying currency hedges of capital expenditures are transferred from OCI to PP&E on settlement.

2	Based on the fair value of hedge contracts at December 31, 2014.

  Cash Flow Hedge Gains (Losses) at December 31

 

Derivatives in cash flow hedging relationships		Amount of gain (loss) recognized in OCI								Location of gain (loss) transferred from OCI into income/PP&E (effective portion)		Amount of gain (loss) transferred from OCI into income (effective portion)								Location of gain (loss) recognized in income (ineffective portion and amount  excluded from effectiveness testing)		Amount of gain (loss) recognized in income (ineffective portion and amount excluded from effectiveness testing)
		2014				2013						2014				2013						2014				2013
Interest rate   contracts			$(2)				$2			Finance income/finance costs			$(3)				$(3)			Gain (loss) on non-hedge derivatives			$    -				$    -
Foreign exchange   contracts			(41)				(168)			General and administrative costs			97				293			Gain (loss) on non-hedge derivatives			(4)				(18)
Commodity contracts			2				110			Revenue/cost of sales			(2)				67			Gain (loss) on non-hedge derivatives			(6)				(7)
Total			$ (41)				$(56)						$92				$357						$ (10)				$(25)

  Fair Value Hedge Gains at December 31

 

 

Derivatives in fair value hedging relationships		Location of gain (loss) recognized in income on derivatives				Amount of gain (loss) recognized in income on derivatives
						2014				2013
Interest rate contracts			Interest income/expense				$ 1				$ (2)

 

BARRICK YEAR END 2014		155		NOTES TO FINANCIAL STATEMENTS

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BARRICK YEAR END 2014		156		NOTES TO FINANCIAL STATEMENTS

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A Assets and Liabilities Measured at Fair Value on a Recurring Basis

 

 

  Fair Value Measurements

 

At December 31, 2014		Quoted Prices in Active Markets for Identical Assets (Level 1)				Significant Other Observable Inputs (Level 2)				Significant Unobservable Inputs (Level 3)				Aggregate Fair Value
Cash and equivalents			$ 2,699				$  -				$  -				$ 2,699
Available-for-sale securities			35				-				-				35
Derivatives			-				(278)				-				(278)
Receivables from provisional copper and gold sales			-				184				-				184
			$ 2,734				$ (94)				$  -				$ 2,640
Fair Value Measurements
At December 31, 2013		Quoted Prices in Active Markets for Identical Assets (Level 1)				Significant Other Observable Inputs (Level 2)				Significant Unobservable Inputs (Level 3)				Aggregate Fair Value
Cash and equivalents			$ 2,404				$  -				$  -				$ 2,404
Available-for-sale securities			120				-				-				120
Derivatives			-				(59)				-				(59)
Receivables from provisional copper and gold sales			-				246				-				246
			$ 2,524				$ 187				$  -				$ 2,711

 

BARRICK YEAR END 2014		157		NOTES TO FINANCIAL STATEMENTS

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B Fair Values of Financial Assets and Liabilities

 

		At Dec. 31, 2014								At Dec. 31, 2013
		Carrying amount				Estimated fair value				Carrying amount				Estimated fair value
Financial assets
Other receivables			$ 385				$ 385				$ 167				$ 167
Available-for-sale securities1			35				35				120				120
Derivative assets			9				9				47				47
			$ 429				$ 429				$ 334				$ 334
Financial liabilities
Debt2			$ 13,081				$ 13,356				$ 13,080				$ 12,525
Derivative liabilities			287				287				106				106
Other liabilities			360				360				355				355
			$ 13,728				$ 14,003				$ 13,541				$ 12,986

 

1	Recorded at fair value. Quoted market prices are used to determine fair value.

2

Debt is generally recorded at amortized cost except for obligations that are designated in a fair-value hedge relationship, in which case the carrying amount is adjusted for changes in fair value of the hedging instrument in periods when a hedge relationship exists. The fair value of debt is primarily determined using quoted market prices. Balance includes both current and long-term portions of debt.

We do not offset financial assets with financial liabilities.

C Assets Measured at Fair Value on a Non-Recurring Basis

 

		Quoted prices in active markets for identical assets (Level 1)				Significant other observable inputs (Level 2)				Significant unobservable inputs (Level 3)				Aggregate fair value
Property, plant and equipment1			$    -				$    -				$ 3,665				$ 3,665
Intangible assets2			-				-				2				2
Goodwill3			-				-				3,278				3,278

 

1	Property, plant and equipment were written down by $2,672 million which was included in earnings in this period, to their fair value less costs of disposal of $3,665 million.

2	Intangible assets were written down by $7 million which was included in earnings in this period, to their fair value less costs of disposal of $2 million.

3	Goodwill was written down by $1,409 million which was included in earnings in this period.

 

 

BARRICK YEAR END 2014		158		NOTES TO FINANCIAL STATEMENTS

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BARRICK YEAR END 2014		159		NOTES TO FINANCIAL STATEMENTS

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BARRICK YEAR END 2014		160		NOTES TO FINANCIAL STATEMENTS

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BARRICK YEAR END 2014		161		NOTES TO FINANCIAL STATEMENTS

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BARRICK YEAR END 2014		162		NOTES TO FINANCIAL STATEMENTS

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As at December 31, 2014     (in $ millions)		Less than 1 year				1 to 3 years				3 to 5 years				Over 5 years				Total
Cash and equivalents			$ 2,699				$    -				$    -				$    -				$ 2,699
Accounts receivable			418				-				-				-				418
Derivative assets			7				1				1				-				9
Trade and other payables			1,653				-				-				-				1,653
Debt			333				919				1,853				10,082				13,187
Derivative liabilities			157				117				13				-				287
Other liabilities			67				112				46				135				360
As at December 31, 2013     (in $ millions)		Less than 1 year				1 to 3 years				3 to 5 years				Over 5 years				Total
Cash and equivalents			$ 2,404				$    -				$    -				$    -				$ 2,404
Accounts receivable			385				-				-				-				385
Derivative assets			34				7				5				1				47
Trade and other payables			2,165				-				-				-				2,165
Debt			179				1,002				1,068				10,958				13,207
Derivative liabilities			32				72				2				-				106
Other liabilities			111				145				41				58				355

 

BARRICK YEAR END 2014		163		NOTES TO FINANCIAL STATEMENTS

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BARRICK YEAR END 2014		164		NOTES TO FINANCIAL STATEMENTS

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BARRICK YEAR END 2014		165		NOTES TO FINANCIAL STATEMENTS

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BARRICK YEAR END 2014		166		NOTES TO FINANCIAL STATEMENTS

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31 > NON-CONTROLLING INTERESTS

A) NON-CONTROLLING INTERESTS CONTINUITY

 

		Pueblo Viejo				Acacia				Cerro Casale				Other				Total
NCI in subsidiary at December 31, 2014			40%				36.1%				25%				Various
At January 1, 2013			$ 1,405				$ 747				$ 512				$    -				$ 2,664
Share of loss			(21)				(211)				(5)				-				(237)
Cash contributed			48				-				7				-				55
Decrease of non-controlling interest			-				(14)				-				-				(14)
At December 31, 2013			$ 1,432				$ 522				$ 514				$    -				$ 2,468
Share of income (loss)			89				62				(199)				(4)				(52)
Cash contributed			-				-				4				25				29
Increase (decrease) in non-controlling interest1			-				174				-				(4)				170
At December 31, 2014			$ 1,521				$ 758				$ 319				$ 17				$ 2,615

¹ Primarily represents the increase in non-controlling interests as a result of divestment of 10% of issued ordinary share capital of Acacia (see note 4c).

 

BARRICK YEAR END 2014		167		NOTES TO FINANCIAL STATEMENTS

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B) SUMMARIZED FINANCIAL INFORMATION ON SUBSIDIARIES WITH MATERIAL NON-CONTROLLING INTERESTS

Summarized Balance Sheets

		Pueblo Viejo								Acacia								Cerro Casale
		As at Dec. 31, 2014				As at Dec. 31, 2013				As at Dec. 31, 2014				As at Dec. 31, 2013				As at Dec. 31, 2014				As at Dec. 31,   2013
Current assets			$      771				$        473				$        672				$        675				$        5				$          5
Non-current assets			5,209				5,252				1,810				1,655				561				2,040
Total assets			$      5,980				$     5,725				$     2,482				$     2,330				$    566				$    2,045
Current liabilities			1,338				1,487				214				152				40				36
Non-current liabilities			1,175				744				365				322				42				526
			$      2,513				$   2,231				$      579				$      474				$    82				$    562

 

Summarized Statements of Income
		Pueblo Viejo								Acacia								Cerro Casale
For the years ended December 31		2014				2013				2014				2013				2014				2013
Revenue		$	1,552			$	995			$	923			$	937			$	-			$	-
Income (loss) from continuing operations after tax			311				199				79				(1,022)				(1,018)				(20)
Other comprehensive income (loss)			-				-				(1)				2				-				-
Total comprehensive income (loss)		$	311			$	199			$	78			$	(1,020)			$	(1,018)			$	(20)
Dividends paid to NCI		$	-			$	-			$	5			$	14			$	-			$	-
Summarized Statements of Cash Flows
		Pueblo Viejo								Acacia								Cerro Casale
For the years ended December 31			2014				2013				2014				2013				2014				2013
Net cash provided by (used in) operating activities		$	533			$	190			$	286			$	172			$	(2)			$	11
Net cash used in investing activities			(184)				(259)				(255)				(375)				(1)				(21)
Net cash provided by (used in) financing activities			(101)				96				(19)				84				4				8
Net increase (decrease) in cash and cash equivalents		$	248			$	27			$	12			$	(119)			$	1			$	(2)

Under the terms of Pueblo Viejo’s project financing agreement described in note 24b, Pueblo Viejo Dominicana Corporation is prohibited from making cash payments to Barrick and Goldcorp in the form of dividends or certain shareholder loan interest and principal payments until Pueblo Viejo achieves specified requirements, including requirements relating to operational, social, and environmental matters.

The project financing agreement contains covenants which limit certain activities by Pueblo Viejo Dominicana, including Pueblo Viejo’s ability to sell assets and incur debt. Furthermore, Pueblo Viejo’s material tangible and intangible assets, including the proceeds from metal sales, are segregated and pledged for the benefit of the project lenders, thus restricting our access to those assets and our ability to use those assets to settle our liabilities to third parties.

 

BARRICK YEAR END 2014		168		NOTES TO FINANCIAL STATEMENTS

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32 > REMUNERATION OF KEY MANAGEMENT PERSONNEL

Key management personnel include the members of the Board of Directors and the Executive leadership team. Compensation for key management personnel (including Directors) was as follows:

 

For the years ended December 31			2014						2013
Salaries and short-term employee benefits1			$ 20						$ 22
Post-employment benefits2			2						3
Termination Benefits			11						7
Share-based payments and other3			6						13
			$ 39						$ 45

¹ Includes annual salary and annual short-term incentives/other bonuses earned in the year.

² Represents company contributions to retirement savings plans.

³ Relates to stock option, RSU, and PRSU grants and other compensation.

33 > STOCK-BASED COMPENSATION

 

    Employee Stock Option Activity (Number of Shares in Millions)

		2014								2013
			Shares				Average Price				Shares				Average Price
C$ options
At January 1			0.1				$ 19				0.6				$ 28
Granted			0.1				20				0.1				18
Exercised			-				-				-				-
Cancelled/expired			-				-				(0.6)				28
At December 31			0.2				$19				0.1				$ 19
US$ options
At January 1			6.4				$ 41				6.3				$ 42
Granted			-				-				1.1				32
Exercised			-				-				-				-
Forfeited			(0.3)				42				(0.5)				32
Cancelled/expired			(0.9)				41				(0.5)				42
At December 31			5.2				$ 41				6.4				$ 41

 

BARRICK YEAR END 2014		169		NOTES TO FINANCIAL STATEMENTS

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    Stock Options Outstanding (Number of Shares in Millions)

		Outstanding																Exercisable
Range of exercise prices		Shares				Average price				Average life (years)				Intrinsic value1 ($ millions)						Shares				Average price				Intrinsic value1   ($ millions)
C$ options
$ 18 - $ 21			0.2				$ 19				6.1				$ (1)						-				-				$    -
			0.2				$ 19				6.1				$ (1)						-				-				$    -
US$ options
$ 20 - $ 27			0.4				$ 26				0.8				$ (6)						0.4				26				$(6)
$ 28 - $ 41			1.8				34				3.9				(42)						0.9				36				(23)
$ 42 - $ 55			3.0				47				2.5				(111)						2.6				47				(95)
			5.2				$ 41				2.8				$ (159)						3.9				$ 42				$ (124)

¹ Based on the closing market share price on December 31, 2014 of C $12.52 and US $10.75.

 

 

BARRICK YEAR END 2014		170		NOTES TO FINANCIAL STATEMENTS

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BARRICK YEAR END 2014		171		NOTES TO FINANCIAL STATEMENTS

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		Present value of obligation				Fair value of plan assets				Total				Impact of minimum funding requirement/asset ceiling				Total
At January 1, 2013			$ 328				$ (207)				$ 121				$    -				$ 121
Current service cost			1				-				1				-				1
Interest expense (income)			11				(9)				2				-				2
			$ 340				$ (216)				$ 124				$    -				$ 124
Remeasurements:
Loss from demographic assumptions			6				-				6				-				6
Gain from financial assumptions			(25)				-				(25)				-				(25)
Experience gains			(5)				(17)				(22)				-				(22)
Change in asset ceiling			-				-				-				5				5
			$ (24)				$ (17)				$ (41)				$ 5				$ (36)
Exchange differences			(4)				1				(3)				-				(3)
Contributions - employers			-				(8)				(8)				-				(8)
Benefit payments			(24)				24				-				-				-
At December 31, 2013			$ 288				$ (216)				$ 72				$ 5				$ 77
Interest expense (income)			12				(9)				3				-				3
			$ 300				$ (225)				$ 75				$ 5				$ 80
Remeasurements:
Loss from demographic assumptions			25				-				25				-				25
Loss from financial assumptions			24				-				24				-				24
Experience gains			(4)				(11)				(15)				-				(15)
Change in asset ceiling			-				-				-				(5)				(5)
			$ 45				$ (11)				$ 34				$ (5)				$ 29
Exchange differences			(5)				1				(4)				-				(4)
Contributions - employers			-				(8)				(8)				-				(8)
Benefit payments			(21)				21				-				-				-
Settlements			(5)				4				(1)				-				(1)
At December 31, 2014			$ 314				$ (218)				$ 96				$    -				$ 96

 

BARRICK YEAR END 2014		172		NOTES TO FINANCIAL STATEMENTS

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The significant actuarial assumptions were as follows:

 

As at December 31		Pension Plans 2014				Other Post-Retirement Benefits 2014				Pension Plans 2013				Other Post-Retirement Benefits 2013
Discount rate			1.95 - 4.05%				3.40 - 3.55%				2.15 - 4.90%				3.90 - 4.10%

The sensitivity of the defined benefit obligation to changes in assumptions is set out below. The effects on each plan of a change in an assumption are weighted proportionately to the total plan obligations to determine the total impact for each assumption presented.

 

Impact on defined benefit obligation

Change in assumption

Increase in assumption

Decrease in assumption

Discount rate

0.50%

Decrease by 5.3%

Increase by 5.8%

Increase by 1 year in assumption

Decrease by 1 year in assumption

Life expectancy

Increase by 4.2%

Decrease by 4.1%

B Other Post-Retirement Benefits

We provide post-retirement medical, dental, and life insurance benefits to certain employees in the US. All of these plans are unfunded.

The movement in the defined benefit liability over the year is as follows:

 

		Present value of obligation				Fair value of plan assets				Total
At January 1, 2013			$  8				$  -				$  8
Remeasurements:
Experience gains			(1)				-				(1)
			$ (1)				$  -				$ (1)
Contributions - employers			-				(1)				(1)
Benefit payments			(1)				1				-
Settlements			-				-				-
At December 31, 2013			$  6				$  -				$  6
Remeasurements:
Loss from demographic assumptions			1				-				1
			$  1				$  -				$  1
Contributions - employers			-				(1)				(1)
Benefit payments			-				1				1
At December 31, 2014			$  7				$  -				$  7

The sensitivity of the defined benefit obligation to changes in assumptions is set out below. The effects on each plan of a change in an assumption are weighted proportionately to the total plan obligations to determine the total impact for each assumption presented.

 

BARRICK YEAR END 2014		173		NOTES TO FINANCIAL STATEMENTS

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		Impact on defined benefit obligation
		Change in assumption		Increase in assumption		Decrease in assumption
Discount rate		0.50%		Decrease by 3.7%		Increase by 4.0%
Healthcare cost increase		1%		Increase by 8.6%		Decrease by 7.7%
				Increase by 1 year in assumption		Decrease by 1 year in assumption
Life expectancy				Increase by 9.1%		Decrease by 8.3%

Plan assets, which are funding the Company’s defined pension plans are comprised as follows:

 

		2014								2013
As at December 31		in %				Total				in %				Total
Composition of plan assets1
Cash			3%				$ 7				-				$      -
Equity instruments			48%				104				53%				116
Fixed income securities			49%				107				47%				100
			100%				$ 218				100%				$  216

¹ Holdings in equity and fixed income securities consist of Level 1 and Level 2 assets within the fair value hierarchy.

 

 

BARRICK YEAR END 2014		174		NOTES TO FINANCIAL STATEMENTS

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BARRICK YEAR END 2014		175		NOTES TO FINANCIAL STATEMENTS

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BARRICK YEAR END 2014		176		NOTES TO FINANCIAL STATEMENTS

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BARRICK YEAR END 2014		177		NOTES TO FINANCIAL STATEMENTS

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BARRICK YEAR END 2014		178		NOTES TO FINANCIAL STATEMENTS

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BARRICK YEAR END 2014		179		NOTES TO FINANCIAL STATEMENTS

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CORPORATE OFFICE		TRANSFER AGENTS AND REGISTRARS
Barrick Gold Corporation		CST Trust Company
Brookfield Place, TD Canada Trust Tower		P.O. Box 700, Postal Station B
Suite 3700		Montreal, Quebec, Canada H3B 3K3
161 Bay Street, P.O. Box 212		or
Toronto, Canada    M5J 2S1		American Stock Transfer & Trust Company, LLC
Tel: (416) 861-9911    Fax: (416) 861-0727		6201 – 15 Avenue
Toll-free throughout North America: 1-800-720-7415		Brooklyn, NY    11219
Email: investor@barrick.com		Tel: 1-800-387-0825
Website: www.barrick.com		Toll-free throughout North America
		Fax: 1-888-249-6189
SHARES LISTED		Email: inquiries@canstockta.com
ABX – The New York Stock Exchange		Website: www.canstockta.com
The Toronto Stock Exchange
INVESTOR CONTACT		MEDIA CONTACT
Amy Schwalm		Andy Lloyd
Vice President,		Vice President,
Investor Relations		Communications
Tel: (416) 307-7422		Tel: (416) 307-7414
Email: aschwalm@barrick.com		Email: alloyd@barrick.com

CAUTIONARY STATEMENT ON FORWARD-LOOKING INFORMATION

Certain information contained or incorporated by reference in this Fourth Quarter and Year-End Report 2014, including any information as to our strategy, projects, plans or future financial or operating performance, constitutes “forward-looking statements”. All statements, other than statements of historical fact, are forward-looking statements. The words “believe”, “expect”, “anticipate”, “contemplate”, “target”, “plan”, “intend”, “continue”, “budget”, “estimate”, “may”, “will”, “schedule” and similar expressions identify forward-looking statements. Forward-looking statements are necessarily based upon a number of estimates and assumptions that, while considered reasonable by the company, are inherently subject to significant business, economic and competitive uncertainties and contingencies. Known and unknown factors could cause actual results to differ materially from those projected in the forward-looking statements. Such factors include, but are not limited to: fluctuations in the spot and forward price of gold, copper or certain other commodities (such as silver, diesel fuel and electricity); changes in national and local government legislation, taxation, controls or regulations and/or changes in the administration of laws, policies and practices, expropriation or nationalization of property and political or economic developments in Canada, the United States, Zambia and other jurisdictions in which the Company does or may carry on business in the future; failure to comply with environmental and health and safety laws and regulations; timing of receipt of, or failure to comply with, necessary permits and approvals; diminishing quantities or grades of reserves; increased costs, delays, suspensions and technical challenges associated with the construction of capital projects; the impact of global liquidity and credit availability on the timing of cash flows and the values of assets and liabilities based on projected future cash flows; adverse changes in our credit rating; the impact of inflation; operating or technical difficulties in connection with mining or development activities; the speculative nature of mineral exploration and development; risk of loss due to acts of war, terrorism, sabotage and civil disturbances; fluctuations in the currency markets; changes in U.S. dollar interest rates; risks arising from holding derivative instruments; litigation; contests over title to properties, particularly title to undeveloped properties, or over access to water, power and other required infrastructure; business opportunities that may be presented to, or pursued by, the company; our ability to successfully integrate acquisitions or complete divestitures; employee relations; availability and increased costs associated with mining inputs and labor; and the organization of our previously held African gold operations and properties under a separate listed company. In addition, there are risks and hazards associated with the business of mineral exploration, development and mining, including environmental hazards, industrial accidents, unusual or unexpected formations, pressures, cave-ins, flooding and gold bullion, copper cathode or gold or copper concentrate losses (and the risk of inadequate insurance, or inability to obtain insurance, to cover these risks). Many of these uncertainties and contingencies can affect our actual results and could cause actual results to differ materially from those expressed or implied in any forward-looking statements made by, or on behalf of, us. Readers are cautioned that forward-looking statements are not guarantees of future performance. All of the forward-looking statements made in this Fourth Quarter and Year-End Report 2014 are qualified by these cautionary statements. Specific reference is made to the most recent Form 40-F/Annual Information Form on file with the SEC and Canadian provincial securities regulatory authorities for a discussion of some of the factors underlying forward-looking statements.

The company disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise, except as required by applicable law.

EXHIBIT 99.2

CONSENT OF INDEPENDENT AUDITOR

We hereby consent to the incorporation by reference on Form S-8 (File Nos. 333-121500, 333-131715, 333-135769) of Barrick Gold Corporation (the Company) of our report dated February 18, 2015 relating to the 2014 consolidated financial statements and the effectiveness of internal control over financial reporting of the Company which appears in Exhibit 99.1 to the Company’s current report on Form 6-K furnished to the U.S. Securities and Exchange Commission on February 20, 2015.

 

/s/ PricewaterhouseCoopers LLP

Chartered Professional Accountants, Licensed Public Accountants

Toronto, Ontario

February 20, 2015