Barrick Gold Corporation (NYSE: ABX)(TSX: ABX) -
FOURTH QUARTER AND YEAR-END REPORT 2010
Based on US GAAP and expressed in US dollars
For a full explanation of results, the Financial Statements and
Management Discussion & Analysis, 2011 outlook, mine statistics
and mineral reserves and resources, please see the Company's
website, www.barrick.com.
Highlights:
-- Q4 reported net income was a record $896 million ($0.90 per share). Q4
adjusted net income rose 57% to $947 million ($0.95 per share)(1)
compared to $604 million ($0.61 per share) in Q4 2009. Operating cash
flow was $781 million and adjusted operating cash flow set a new Company
record rising 56% to $1.44 billion(1) from $921 million in the prior
year period.
-- Q4 gold production of 1.70 million ounces at total cash costs of $486
per ounce(1) or net cash costs of $326 per ounce(1) was in line with
expectations on a strong performance from the North America region.
Higher production and lower cash costs were realized in 2010 as compared
to the prior year. Full year production of 7.77 million ounces at
total and net cash costs of $457 and $341 per ounce(1), respectively,
was in line with original guidance despite higher royalties and taxes
associated with higher gold prices.
-- Q4 cash margins continued to benefit from rising gold prices increasing
35% to $882 per ounce(1) from $654 per ounce in Q4 2009 and net cash
margins rose 29% to $1,042 per ounce(1) from $809 per ounce in the prior
year period.
-- The average gold price increased 26% in 2010 while full year adjusted
net income rose 81% to $3.28 billion(1) and adjusted operating cash flow
increased 65% to $4.78 billion(1) from 2009, demonstrating the Company's
exceptional leverage to the gold price. Full year adjusted net income
translated to a higher return on equity of 19%(1) from 12% in 2009.
Reported net income and operating cash flow in 2010 were $3.27 billion
and $4.13 billion, respectively.
-- 2011 production is expected to be comparable to 2010 in the range of
7.6-8.0 million ounces at total cash costs of $450-$480 per ounce and
net cash costs of $340-$380 per ounce(2) (IFRS basis).
-- The newly expanded Cortez mine exceeded expectations in its first full
year of production and the Company continues to advance its project
pipeline, including the world-class Pueblo Viejo and Pascua-Lama
projects. Preproduction capital budgets are expected to be higher than
previous estimates by about 10-15% to $3.3-$3.5 billion (100% basis) and
10-20% to $3.3-$3.6 billion for Pueblo Viejo and Pascua-Lama,
respectively. Despite these increases, Pueblo Viejo and Pascua-Lama
continue to have very strong economics. Once at full capacity, these two
mines are anticipated to contribute about 1.4 million ounces(3) of
annual production at low cash costs.
-- The Company replaced proven and probable gold reserves to an industry
leading 139.8 million ounces(4) at the end of 2010. Measured and
indicated gold resources increased by 14.5 million ounces or 24% to 76.3
million ounces(4) and inferred gold resources grew by 5.6 million ounces
or 18% to 37.2 million ounces(4).
-- Barrick continues to have a strong financial position, including a
quarter-end cash balance of $4.0 billion, low net debt of $2.5
billion(1) and robust operating cash flow generation.
Q4 production of 1.70 million ounces of gold was in line with
expectations at total and net cash costs of $486 and $326 per
ounce, respectively. Full year production of 7.77 million ounces at
total and net cash costs of $457 and $341 per ounce, respectively,
was in line with original guidance despite higher royalties and
taxes associated with higher realized gold prices. The realized
gold price for the quarter was a record $1,368 per ounce(5), 22%
higher than the prior year period. Q4 cash margins increased 35% to
$882 per ounce from $654 per ounce in Q4 2009 and net cash margins
rose 29% to $1,042 per ounce from $809 per ounce in the same prior
year period.
Q4 adjusted net income rose 57% to $947 million ($0.95 per
share), compared to $604 million ($0.61 per share) in Q4 2009,
reflecting higher gold sales volume and higher realized prices for
both gold and copper. Reported Q4 net income of $896 million ($0.90
per share) was a Company record. Q4 operating cash flow of $781
million reflects payments to eliminate the remaining settlement
obligation associated with closing the gold sales contracts in
2009. Q4 adjusted operating cash flow, which excludes the impact of
these payments, rose 56% to a record $1.44 billion from $921
million in the prior year period.
The average gold price increased 26% in 2010, while full year
adjusted net income rose 81% to $3.28 billion and adjusted
operating cash flow increased 65% to $4.78 billion from 2009. Full
year reported net income and operating cash flow were $3.27 billion
and $4.13 billion, respectively.
"Looking back at 2010, we are pleased with the Company's
performance," said Aaron Regent, President and CEO of Barrick Gold.
"We met our operating targets with higher production at lower costs
than the previous year. This allowed us to fully benefit from the
increase in the gold price, which resulted in significant expansion
of our margins and record earnings and cash flow. Development of
our project pipeline progressed with the successful completion and
ramp up of Cortez Hills, and the continued construction of Pueblo
Viejo and Pascua-Lama. We were able to replace reserves and grow
measured and indicated resources by 24% and inferred resources by
18%. And our focus on value creation opportunities within our
existing asset base, has now positioned us to increase production
to 9 million ounces within five years."
PRODUCTION AND COSTS
The North America region had a strong quarter, producing 0.70
million ounces at total cash costs of $486 per ounce. The Cortez
property produced 0.21 million ounces at total cash costs of $329
per ounce. Due to mine sequencing, production was expected to be
lower in Q4 as previously disclosed, but is expected to increase
again in the first quarter of this year. Full year production of
1.14 million ounces at Cortez exceeded original guidance of
1.08-1.12 million ounces on higher than anticipated grades and
recoveries from the Cortez Hills open pit and underground. The
Company expects to receive a new Record of Decision for Cortez
Hills imminently, which will allow the operation to revert to its
original scope. Production at Cortez is anticipated to increase to
1.30-1.45 million ounces at total cash costs of $235-$265 per ounce
in 2011.
The Goldstrike operation performed strongly, producing 0.29
million ounces at total cash costs of $490 per ounce in Q4,
primarily due to better than expected grades from the open pit and
higher roaster throughput. Full year 2011 production for the North
America region is expected to increase to 3.30-3.46 million ounces
at total cash costs of $425-$450 per ounce driven largely by higher
production from Cortez.
The South American business unit performed as expected, with
production of 0.38 million ounces at total cash costs of $297 per
ounce in Q4. The Veladero mine produced 0.24 million ounces at
total cash costs of $252 per ounce in the fourth quarter. Full year
production at Veladero was 1.12 million ounces at total cash costs
of $256 per ounce due to access to higher grades and the increased
throughput from a crusher expansion completed in Q3 2009. The
Lagunas Norte operation contributed 0.11 million ounces at total
cash costs of $294 per ounce. Based on previously disclosed changes
to the mine plan, production was expected to be lower in the fourth
quarter but is anticipated to increase again in the first quarter
of this year. In 2011, South America production is expected to be
1.80-1.935 million ounces at total cash costs of $350-$380 per
ounce primarily due to lower grades at Veladero as anticipated in
the mine plan.
The Australia Pacific business unit produced 0.49 million ounces
at total cash costs of $639 per ounce in Q4. The Porgera mine, the
region's largest operation, produced 0.14 million ounces at total
cash costs of $578 per ounce. Australia Pacific is expected to
produce 1.85-2.00 million ounces at total cash costs of $610-$635
per ounce in 2011. The Company is 92% hedged on all of its
Australian operating and capital expenditures in 2011 at an average
rate of $0.79, 84% hedged for 2012 at an average rate of $0.75, and
has substantial coverage for the following two years at rates at or
below $0.75.
Attributable production from African Barrick Gold plc (ABG) in
Q4 was 0.13 million ounces at total cash costs of $679 per ounce.
Barrick's share of 2011 production is expected to be 0.515-0.560
million ounces at total cash costs of $590-$650 per ounce.
Q4 copper production was 82 million pounds at total cash costs
of $1.12 per pound(6). Utilizing option collar strategies, the
Company has put in place floor protection at an average floor price
of about $3.00 per pound on approximately 60% of 2011 production
and can participate in upside up to an average ceiling price of
about $4.85 per pound on approximately 70% of 2011
production(7).
PROJECTS UPDATE
At the Pueblo Viejo project in the Dominican Republic,
preproduction capital is expected to increase by 10-15% from the
previous estimate to $3.3-$3.5 billion (100% basis). The increased
capital cost estimate is largely due to higher labor, power supply,
freight and steel product related costs as well as general
inflation. In December, the Environmental Impact Assessment for the
240 kV power transmission line was approved allowing associated
construction activities to commence. Alternative temporary power
sources are being secured which will allow project commissioning in
the fourth quarter of 2011. First production is expected in the
first quarter of 2012. Overall construction is about 50% complete,
approximately 75% of the capital has been committed and all four of
the autoclaves are on site and have been placed on their footings.
About 80% of the planned concrete has been poured, 55% of the steel
has been erected and more than 600,000 tons of ore have been
stockpiled. Work continues toward achieving key milestones
including the connection of power to the site. Barrick's 60% share
of annual gold production in the first full five years of operation
is expected to average 625,000-675,000 ounces at total cash costs
of $275-$300 per ounce(8).
At the Pascua-Lama project on the border of Chile and Argentina,
pre-production capital is expected to increase by 10-20% to
$3.3-$3.6 billion. Pressure on capital costs are primarily as a
result of a stronger Chilean peso, labor, commodity and other input
cost increases in both countries and higher inflation particularly
in Argentina. First production is expected in the first half of
2013. Approximately 40% of the capital has been committed, detailed
engineering and procurement are more than 90% complete and about
60% of the earthworks necessary for the process plant and mining
support facilities have been moved. Construction of the power
transmission line has commenced and the new access road is almost
75% complete. Development of the tunnel, which connects the mine in
Chile and the process plant in Argentina, is progressing on both
sides. Occupancy of the construction camps in Chile and Argentina
continues to ramp up with more than 2,000 housed on site. Average
annual gold production from Pascua-Lama is expected to be
750,000-800,000 ounces in the first full five years of operation at
total cash costs of $20-$50 per ounce(9) based on a silver price of
$16 per ounce. For every $1 per ounce increase in the silver price,
total cash costs are expected to decrease by about $35 per ounce
over this period.
At the Cerro Casale project in Chile, the review of additional
permitting requirements before considering a construction decision
is progressing alongside discussions with the government and
meetings with local communities and indigenous groups. Given the
changed operating environment in Chile and the Company's experience
at Pascua-Lama, a review of the capital cost of the project has
been initiated. Early indications suggest that the capital cost may
be higher by about 20-25% from the previous estimate of $4.2
billion (100% basis), which is based on the feasibility study
completed in 2009 and reflects the impact of a stronger Chilean
peso, higher labor, commodity and other input costs. An update will
be provided by the end of the second quarter. Barrick's 75% share
of average annual production is anticipated to be about
750,000-825,000 ounces of gold and 170-190 million pounds of copper
in the first full five years of operation at total cash costs of
about $240-$260 per ounce(10), also based on the feasibility study
completed in 2009. A $0.25 per pound change in the copper price
would result in an approximate $50 per ounce impact on the expected
total cash costs per ounce over the first full five years of
operation.
RESERVES AND RESOURCES
Barrick replaced proven and probable gold reserves to an
industry leading 139.8 million ounces at the end of 2010, based on
a $1,000 per ounce gold price. Measured and indicated gold
resources increased by 24% or 14.5 million ounces to 76.3 million
ounces and inferred gold resources grew by 18% or 5.6 million
ounces to 37.2 million ounces, based on a $1,200 per ounce gold
price. The Company replaced reserves and grew resources despite the
initial public offering of ABG in early 2010, which reduced
Barrick's interest in ABG to about 74%. Measured, indicated and
inferred resources increased with exploration success and the
potential to develop an open pit mine at Turquoise Ridge,
exploration success at Cortez and from the additional 25% ownership
in Cerro Casale.
As a result of exploration success in 2010, the 2011
exploration(11) budget has increased to $320-$340 million, of which
approximately one-third will be capitalized. The budget is weighted
towards near-term resource additions and conversion at existing
mines while still providing support for earlier stage exploration
in operating districts and other emerging areas. North America is
expected to be allocated about 43% of the total budget, the
majority of which is targeted for Nevada. About 24% is expected to
be spent in the Australia Pacific region. Approximately 15% is to
be targeted for the South America region with the remainder divided
between Africa and other emerging areas.
FINANCIAL POSITION
At December 31, 2010, Barrick remained in a strong financial
position with the gold industry's only 'A' credit rating, a
quarter-end cash balance of $4.0 billion and low net debt of $2.5
billion. Full year 2010 operating cash flow was $4.1 billion, which
reflects payments to eliminate the remaining settlement obligation
associated with closing the gold sales contracts in 2009. Adjusted
cash flow of $4.8 billion excludes the impact of these payments.
The Company generated free cash flow of about $1.5 billion(12) in
2010, compared to $541 million in 2009, despite the substantial
capital investment in the Pueblo Viejo and Pascua-Lama projects.
Barrick's financial strength positions the Company well to continue
investing in its project pipeline and pursue other value-enhancing
opportunities.
CORPORATE SOCIAL RESPONSIBILITY
In Q4, Barrick announced that it was the first Canadian mining
company to join the Voluntary Principles on Security and Human
Rights, a set of guidelines by which companies in the extractive
sector can maintain the safety and security of their operations
while ensuring respect for human rights and fundamental freedoms.
The Company is advancing the implementation of the Voluntary
Principles, engaging in the tripartite process with NGOs,
extractive companies and government members. This is particularly
important in the complex environments in which Barrick operates,
where it is further strengthening its policies and compliance with
these human rights principles. The Company also announced two new
Corporate Social Responsibility (CSR) initiatives to further
strengthen the Company's CSR performance. Barrick will appoint an
independent Director to its Board of Directors to support its
commitment to CSR and the search is underway to fill this position
in 2011. The Company will also establish an external CSR Advisory
Board that will provide advice and guidance on challenging social
and environmental issues and encourage further innovation and
leadership in CSR.
In November, the Company was ranked among the top 100 companies
in the world for its sustainability performance by the NASDAQ OMX
CRD Global Sustainability Index and is the only Canadian mining
company to be ranked as such by NASDAQ.
OUTLOOK AND GUIDANCE
The Company expects 2011 gold production to be in a comparable
range to 2010 at 7.6-8.0 million ounces at total cash costs of
$450-$480 per ounce or net cash costs of $340-$380 per ounce.
Higher expected gold cash costs for 2011 primarily reflect lower
grades and higher labor costs in South America and Australia.
Production is anticipated to increase to 9 million ounces within
the next five years and total cash costs are expected to benefit
from low cost projects, primarily Pueblo Viejo and Pascua-Lama, as
these mines come on stream.
Copper production for 2011 is anticipated to be about 300
million pounds at total cash costs of $1.35-$1.45 per pound. Total
cash costs are expected to be higher in 2011 compared to 2010,
primarily due to increased market prices for sulfuric acid and the
processing of lower grades. The Company has secured contracts for
essentially all of its sulfuric acid supply required in 2011 at
prices well below the average current market price.
Capital project expenditures for 2011 are expected to be in the
range of $2.1-$2.3 billion(13) primarily related to construction
activities at Pueblo Viejo and Pascua-Lama. Open pit and
underground development, which includes capitalized waste
stripping, is anticipated to be $750-$850 million as Goldstrike and
Cortez enter a period of high waste stripping as anticipated by
their mine plans. The high waste stripping phases at both mines are
expected to be substantially complete by the end of 2011. Mine site
expansion capital is expected to be $450-$500 million and includes
expenditures on development projects at Lagunas Norte, Cortez,
Turquoise Ridge, Goldstrike, Bald Mountain, Golden Sunlight and
North Mara. Mine site sustaining capital expenditures are expected
to be $0.90-$1.00 billion. Based on the current portfolio of
development projects and mine plans, total capital expenditures are
anticipated to decrease in 2012.
Barrick's vision is to be the world's best gold company by
finding, acquiring, developing and producing quality reserves in a
safe, profitable and socially responsible manner. Barrick's shares
are traded on the Toronto and New York stock exchanges.
Outlook Assumptions and Economic Sensitivity Analysis
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2011 Impact on Impact on
Guidance Hypothetical Total Cash EBITDA
Assumption Change Costs (millions)
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Gold revenue $1,300/oz $50/oz n/a $380 - $400
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Copper revenue $3.75/lb $0.25/lb n/a $75
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Gold total cash costs
Gold price effect on
royalties and production
taxes $1,300/oz $50/oz $1.25/oz $9
WTI crude oil price(1) $85/bbl $10/bbl $0.20/oz $2
Australian dollar
exchange rate(1) 0.95 : 1 10% - -
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Copper total cash costs
WTI crude oil price(1) $85/bbl $10/bbl $0.01/lb $3
Chilean peso exchange
rate(1) 500 : 1 10% $0.01/lb $5
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(1)Due to hedging activities the Company is largely protected against
changes in these factors.
(1) Adjusted net income, adjusted operating cash flow, total
cash costs per ounce, net cash costs per ounce, cash margins per
ounce, net cash margins per ounce, return on equity, and net debt
are non-GAAP financial measures. See pages 56-62 of Barrick's 2010
Year-End Report.
(2) Based on an expected realized copper price of $3.75 per
pound.
(3) 1.4 million ounces of production is based on the estimated
cumulative average annual production in the first full 5 years once
both are at full capacity.
(4) Calculated 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
Exchange Act of 1934), as interpreted by the Staff of the SEC,
applies different standards in order to classify mineralization as
a reserve. Accordingly, for U.S. reporting purposes, Cerro Casale
is classified as mineralized material. For a breakdown of reserves
and resources by category and additional information relating to
reserves and resources, see pages 140-145 of Barrick's 2010
Year-End Report.
(5) Realized price per ounce is a non-GAAP financial measure.
See pages 56-62 of Barrick's 2010 Year-End Report.
(6) Total cash costs per pound is a non-GAAP financial measure.
See pages 56-62 of Barrick's 2010 Year-End Report.
(7) The realized price is expected to be negatively impacted by
about $0.12 per pound in 2011 as a result of the net premium paid
on option hedging strategies.
(8) Based on gold price and oil price assumptions of $1,100 per
ounce and $85 per barrel, respectively.
(9) Based on silver price, gold price and oil price assumptions
of $16 per ounce, $1,100 per ounce, and $85 per barrel,
respectively and assuming a Chilean peso f/x rate of 500:1.
(10) Based on a gold price, copper price and oil price
assumptions of $1,100 per ounce, $2.75 per pound and $85 per
barrel, respectively and a Chilean peso f/x rate of 500:1.
(11) Barrick's exploration programs are designed and conducted
under the supervision of Robert Krcmarov, Senior Vice President,
Global Exploration of Barrick. For information on the geology,
exploration activities generally, and drilling and analysis
procedures on Barrick's material properties, see Barrick's most
recent Annual Information Form/Form 40-F on file with Canadian
provincial securities regulatory authorities and the U.S.
Securities and Exchange Commission.
(12) Free cash flow is a non-GAAP financial measure. See pages
56-62 of Barrick's 2010 Year-End Report.
(13) Represents Barrick's share of expenditures and includes
capitalized interest of about $350 million.
Key Statistics
Barrick Gold Corporation Three months ended Twelve months ended
(in United States dollars) December 31, December 31,
--------------------------------------------------
(Unaudited) 2010 2009 2010 2009
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Operating Results
Gold production (thousands
of ounces)(1) 1,700 1,871 7,765 7,397
Gold sold (thousands of
ounces) 1,825 1,797 7,734 7,279
Per ounce data
Average spot gold price $ 1,367 $ 1,100 $ 1,225 $ 972
Average realized gold
price(2) 1,368 1,119 1,228 985
Net cash costs(5) 326 310 341 360
Total cash costs(3) 486 465 457 464
Amortization and other(4) 132 129 133 124
Total production costs 618 594 590 588
Copper credits 160 155 116 104
Copper production
(millions of pounds) 82 98 368 393
Copper sold (millions of
pounds) 103 118 391 380
Per pound data
Average spot copper price $ 3.92 $ 3.01 $ 3.42 $ 2.34
Average realized copper
price(2) 3.99 3.44 3.41 3.16
Total cash costs(3) 1.12 1.08 1.11 1.17
Amortization and other(4) 0.23 0.19 0.22 0.20
Total production costs 1.35 1.27 1.33 1.37
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Financial Results
(millions)
Sales $ 2,946 $ 2,358 $ 10,924 $ 8,136
Net income (loss) 896 215 3,274 (4,274)
Adjusted net income(6) 947 604 3,279 1,810
Operating cash flow 781 (4,300) 4,127 (2,322)
Adjusted operating cash
flow(7) 1,437 921 4,783 2,899
Free cash flow(8) 292 173 1,460 541
Per Share Data (dollars)
Net income (loss) (basic) 0.90 0.22 3.32 (4.73)
Adjusted net income
(basic)(6) 0.95 0.61 3.32 2.00
Net income (loss)
(diluted) 0.90 0.21 3.28 (4.73)
Weighted average basic
common shares (millions) 995 984 987 903
Weighted average diluted
common shares
(millions)(9) 1,000 996 997 903
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As at As at
December 31, December 31,
---------------------------
2010 2009
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Financial Position
(millions)
Cash and equivalents $ 3,968 $ 2,564
Non-cash working capital 1,806 1,473
Adjusted debt(10) 6,392 6,919
Net debt(10) 2,542 4,355
Shareholders' equity 19,065 15,063
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(1)Production includes our equity share of gold production at Highland Gold.
(2) Realized price is a non-GAAP financial performance measure with no
standard meaning under US GAAP. See page 60 of the Company's MD&A.
(3) Total cash costs is a non-GAAP financial performance measure with no
standard meaning under US GAAP. See page 58 of the Company's MD&A.
(4) Represents equity amortization expense, unrealized losses on non-hedge
currency and commodity contracts and inventory purchase accounting
adjustments at the Company's producing mines, divided by equity ounces of
gold sold or pounds of copper sold.
(5) Net cash costs is a non-GAAP financial performance measure with no
standard meaning under US GAAP. See page 58 of the Company's MD&A.
(6) Adjusted net income is a non-GAAP financial performance measure with no
standard meaning under US GAAP. See page 56 of the Company's MD&A.
(7) Adjusted operating cash flow is a non-GAAP financial performance measure
with no standard meaning under US GAAP. See page 57 of the Company's MD&A.
(8) Free cash flow is a non-GAAP financial performance measure with no
standard meaning under US GAAP. See page 57 of the Company's MD&A.
(9) Fully diluted, includes dilutive effect of stock options and convertible
debt.
(10) Adjusted debt and net debt are non-GAAP financial performance measures
with no standard meaning under US GAAP. See page 62 of the Company's MD&A.
Production and Cost Summary
Gold Production
(attributable ounces)
(000's) Total Cash Costs ($/oz)
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Three months Three months
ended Year ended ended Year ended
December 31, December 31, December 31, December 31,
----------------------------------------------------------------
(Unaudited) 2010 2009 2010 2009 2010 2009 2010 2009
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North
America (1) 697 597 3,110 2,810 $ 486 $ 523 $ 489 $ 504
South
America 377 542 2,120 1,889 297 253 243 265
Australia
Pacific 485 511 1,939 1,950 639 580 613 581
African
Barrick
Gold(4) 133 213 564 716 679 617 646 545
Other 8 8 32 32 494 494 494 494
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Total 1,700 1,871 7,765 7,397 $ 486 $ 465 $ 457 $ 464
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Copper Production
(attributable pounds)
(Millions) Total Cash Costs ($/lb)
----------------------------------------------------------------
Three months Three months
ended Year ended ended Year ended
December 31, December 31, December 31, December 31,
----------------------------------------------------------------
(Unaudited) 2010 2009 2010 2009 2010 2009 2010 2009
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South
America 82 75 318 302 $ 1.11 $ 1.03 $ 1.09 $ 1.17
Australia
Pacific - 23 50 91 1.18 1.25 1.18 1.15
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Total 82 98 368 393 $ 1.12 $ 1.08 $ 1.11 $ 1.17
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Total Gold Production Costs ($/oz)
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Three months ended Year ended
December 31, December 31,
------------------------------------------------
(Unaudited) 2010 2009 2010 2009
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Direct mining costs at
market foreign exchange
rates $ 497 $ 456 $ 450 $ 430
(Gains) losses realized on
currency hedge and
commodity hedge/economic
hedge contracts (35) (14) (20) 11
Adjustments to direct
mining costs(3) (13) (3) (6) (2)
By-product credits (18) (15) (15) (11)
Copper credits (160) (155) (116) (104)
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Cash operating costs, net
basis 271 269 293 324
Royalties 43 36 36 30
Production taxes 12 5 12 6
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Net cash costs(2) 326 310 341 360
Copper credits 160 155 116 104
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Total cash costs(2) 486 465 457 464
Amortization 119 126 127 122
Adjustments to direct
mining costs(3) 13 3 6 2
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Total production costs $ 618 $ 594 $ 590 $ 588
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Total Copper Production Costs ($/lb)
------------------------------------------------
Three months ended Year ended
December 31, December 31,
----------------------- ---------------------
(Unaudited) 2010 2009 2010 2009
--------------------------------------------------- ------------------------
Cash operating costs $ 1.10 $1.07 $ 1.09 $ 1.16
Royalties 0.02 0.01 0.02 0.01
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Total cash costs(2) 1.12 1.08 1.11 1.17
Amortization 0.23 0.19 0.22 0.20
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Total production costs $ 1.35 $ 1.27 $ 1.33 $ 1.37
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(1)Production includes an additional 50% interest in Hemlo from January 1,
2009 onwards and Barrick's share of total cash costs increased to 100%
effective May 1, 2009.
(2)Total cash costs and net cash costs are non-GAAP financial performance
measures with no standard meaning under US GAAP. See page 58 of the
Company's MD&A.
(3)Represents unrealized losses on non-hedge currency and commodity
contracts and the impact of Barrick Energy.
(4)Figures relating to African Barrick Gold are stated at 100% up to March
31, 2010 and 73.9% thereafter.
Consolidated Statements of Income
Barrick Gold Corporation
For the years ended December 31,
(in millions of United States dollars, except per share data)
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2010 2009 2008
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Sales (notes 4 and 5) $ 10,924 $ 8,136 $ 7,613
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Costs and expenses
Cost of sales (notes 4 and 6)(1) 4,201 3,807 3,706
Amortization and accretion (notes 4 and
15B) 1,196 1,073 957
Corporate administration 154 171 155
Exploration (notes 4 and 7) 180 141 198
Project development expense (notes 4 and 7) 153 85 242
Elimination of gold sales contracts - 5,933 -
Other expense (note 8A) 463 343 302
Impairment charges (note 8B) 7 277 598
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6,354 11,830 6,158
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Interest income 14 10 39
Interest expense (note 20B) (121) (57) (21)
Other income (note 8C) 124 112 291
Write-down of investments (note 8B) - (1) (205)
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17 64 104
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Income (loss) from continuing operations
before income taxes and other items 4,587 (3,630) 1,559
Income tax expense (note 9) (1,370) (648) (594)
Loss from equity investees (note 12) (41) (87) (64)
----------------------------------------------------------------------------
Income (loss) from continuing operations
before non-controlling interests 3,176 (4,365) 901
Income (loss) from discontinued operations
(note 3I) 121 97 (104)
----------------------------------------------------------------------------
Income (loss) before non-controlling
interests 3,297 (4,268) 797
Non-controlling interests (note 27) (23) (6) (12)
----------------------------------------------------------------------------
Net income (loss) $ 3,274 $ (4,274) $ 785
----------------------------------------------------------------------------
Earnings (loss) per share data (note 10)
Income (loss) from continuing operations
Basic $ 3.19 $ (4.84) $ 1.02
Diluted $ 3.16 $ (4.84) $ 1.01
----------------------------------------------------------------------------
Income (loss) from discontinued operations
Basic $ 0.13 $ 0.11 $ (0.12)
Diluted $ 0.12 $ 0.11 $ (0.12)
----------------------------------------------------------------------------
Net income (loss)
Basic $ 3.32 $ (4.73) $ 0.90
Diluted $ 3.28 $ (4.73) $ 0.89
----------------------------------------------------------------------------
(1)Exclusive of amortization.
The notes to these unaudited consolidated financial statements, which are
contained in the Fourth quarter and Year-end report, available on our
website, are an integral part of these consolidated financial statements.
Consolidated Statements of Cash Flow
Barrick Gold Corporation
For the years ended December 31,
(in millions of United States dollars)
2010 2009 2008
----------------------------------------------------------------------------
OPERATING ACTIVITIES
Net income (loss) $ 3,274 $ (4,274) $ 785
Amortization and accretion (notes 4 and
15B) 1,196 1,073 957
Impairment charges and write-down of
investments (note 8B) 7 278 803
Income tax expense (note 9) 1,370 648 594
Income taxes paid (647) (376) (575)
Net proceeds taxes paid (85) (66) -
Increase in inventory (403) (372) (370)
Elimination of gold sales contracts - 5,933 -
Payment on settlement for gold sales
contracts (656) (5,221) -
Gain on sale/acquisition of long-lived
assets (note 8C) (50) (85) (187)
(Income) loss from discontinued operations
(note 3I) (121) (97) 104
Operating cash flows of discontinued
operations (note 3I) (8) 7 26
Other operating activities (note 11A) 250 230 117
----------------------------------------------------------------------------
Net cash provided by (used in) operating
activities 4,127 (2,322) 2,254
----------------------------------------------------------------------------
INVESTING ACTIVITIES
Property, plant and equipment
Capital expenditures (note 4) (3,323) (2,351) (1,749)
Sales proceeds 61 10 185
Acquisitions (note 3) (813) (101) (2,174)
Investments (note 12)
Purchases (61) (3) (18)
Sales 15 7 76
Decrease in restricted cash - 113 18
Investing cash flows of discontinued
operations (note 3I) - (3) (27)
Other investing activities (note 11B) (51) (87) (231)
----------------------------------------------------------------------------
Net cash used in investing activities (4,172) (2,415) (3,920)
----------------------------------------------------------------------------
FINANCING ACTIVITIES
Capital stock
Proceeds on exercise of stock options 127 65 74
Proceeds on common share offering (note
25) - 3,885 -
Proceeds from public issuance of common
shares by a subsidiary (note 3E) 884 - -
Long-term debt (note 20B)
Proceeds 782 2,154 2,717
Repayments (149) (397) (1,603)
Dividends (note 25) (436) (369) (349)
Funding from non-controlling interests 114 304 88
Deposit on silver sale agreement 137 213 -
Financing cash flows of discontinued
operations (note 3I) - - -
Other financing activities (note 11C) (25) (26) (34)
----------------------------------------------------------------------------
Net cash provided by financing activities 1,434 5,829 893
----------------------------------------------------------------------------
Effect of exchange rate changes on cash and
equivalents 15 35 3
----------------------------------------------------------------------------
Net increase (decrease) in cash and
equivalents 1,404 1,127 (770)
Cash and equivalents at beginning of period
(note 20A) 2,564 1,437 2,207
----------------------------------------------------------------------------
Cash and equivalents at end of period (note
20A) $ 3,968 $ 2,564 $ 1,437
----------------------------------------------------------------------------
The notes to these unaudited consolidated financial statements, which are
contained in the Fourth quarter and Year-end report, available on our
website, are an integral part of these consolidated financial statements.
Consolidated Balance Sheets
Barrick Gold Corporation
At December 31,
(in millions of United States dollars)
----------------------------------------------------------------------------
2010 2009
----------------------------------------------------------------------------
ASSETS
Current assets
Cash and equivalents (note 20A) $ 3,968 $ 2,564
Accounts receivable (note 14) 346 251
Inventories (note 13) 1,852 1,540
Other current assets (note 14) 947 524
Assets of discontinued operations (note 3I) - 59
----------------------------------------------------------------------------
7,113 4,938
Non-current assets
Equity in investees (note 12A) 291 1,136
Other investments (note 12B) 203 92
Property, plant and equipment (note 15) 17,751 13,125
Goodwill (note 17) 5,287 5,197
Intangible assets (note 16) 140 66
Deferred income tax assets (note 24) 467 949
Other assets (note 18) 2,070 1,531
Assets of discontinued operations (note 3I) - 41
----------------------------------------------------------------------------
Total assets $ 33,322 $ 27,075
----------------------------------------------------------------------------
LIABILITIES AND EQUITY
Current liabilities
Accounts payable 1,511 1,221
Current portion of long-term debt (note 20B) 14 54
Other current liabilities (note 19) 964 475
Liabilities of discontinued operations (note 3I) - 23
----------------------------------------------------------------------------
2,489 1,773
Non-current liabilities
Long-term debt (note 20B) 6,678 6,281
Asset retirement obligations (note 22) 1,439 1,122
Deferred income tax liabilities (note 24) 1,114 1,184
Other liabilities (note 23) 868 1,145
Liabilities of discontinued operations (note 3I) - 23
----------------------------------------------------------------------------
Total liabilities 12,588 11,528
----------------------------------------------------------------------------
Equity
Capital stock (note 25) 17,790 17,390
Additional paid-in capital 288 -
Retained earnings (deficit) 456 (2,382)
Accumulated other comprehensive income (note 26) 531 55
----------------------------------------------------------------------------
Total shareholders' equity 19,065 15,063
Non-controlling interests (note 27) 1,669 484
----------------------------------------------------------------------------
Total equity 20,734 15,547
----------------------------------------------------------------------------
Contingencies and commitments (notes 15 and 30)
----------------------------------------------------------------------------
Total liabilities and equity $ 33,322 $ 27,075
----------------------------------------------------------------------------
The notes to these unaudited consolidated financial statements, which are
contained in the Fourth quarter and Year-end report, available on our
website, are an integral part of these consolidated financial statements.
Consolidated Statements of Equity
Barrick Gold Corporation
For the years ended December 31,
(in millions of United States dollars)
----------------------------------------------------------------------------
2010 2009 2008
----------------------------------------------------------------------------
Common shares (number in thousands)
At January 1 984,328 872,739 869,887
Issued on public equity offering (note 25) - 108,973 -
Issued on exercise of stock options 4,760 2,349 2,383
Issued on conversion of debentures (note
20B) 9,412 - -
Issued on redemption of exchangeable shares
(note 25B) - 267 469
----------------------------------------------------------------------------
At December 31 998,500 984,328 872,739
----------------------------------------------------------------------------
Common shares
At January 1 $ 17,390 $ 13,372 $ 13,273
Issued on public equity offering (note 25) - 3,926 -
Issued on conversion of debentures (note
20B) 268 - -
Issued on exercise of stock options 127 65 74
Recognition of stock option expense 14 20 25
Other adjustments (9) 7 -
----------------------------------------------------------------------------
At December 31 17,790 17,390 13,372
----------------------------------------------------------------------------
Additional paid-in capital
At January 1 - - -
Recognized on initial public offering of
African Barrick Gold (note 3E) 288 - -
----------------------------------------------------------------------------
At December 31 288 - -
----------------------------------------------------------------------------
Retained earnings (deficit)
At January 1 (2,382) 2,261 1,832
Net income (loss) 3,274 (4,274) 785
Dividends (note 25) (436) (369) (349)
Repurchase of preferred shares of a
subsidiary - - (7)
----------------------------------------------------------------------------
At December 31 456 (2,382) 2,261
----------------------------------------------------------------------------
Accumulated other comprehensive income (loss)
(note 26) 531 55 (356)
----------------------------------------------------------------------------
Total shareholders' equity 19,065 15,063 15,277
----------------------------------------------------------------------------
Non-controlling interests (note 27)
At January 1 484 182 82
Net income attributable to non-controlling
interests 23 6 12
Funding from non-controlling interests 114 299 90
Other increase (decrease) in non-controlling
interests 1,048 (3) (2)
----------------------------------------------------------------------------
At December 31 1,669 484 182
----------------------------------------------------------------------------
Total equity at December 31 $ 20,734 $ 15,547 $ 15,459
----------------------------------------------------------------------------
Consolidated Statements of Comprehensive Income
Barrick Gold Corporation
For the years ended December 31,
(in millions of United States dollars)
----------------------------------------------------------------------------
2010 2009 2008
----------------------------------------------------------------------------
Net income (loss) $ 3,274 $ (4,274) $ 785
Other comprehensive income (loss), net of tax
(note 26) 476 411 (507)
----------------------------------------------------------------------------
Comprehensive income (loss) $ 3,750 $ (3,863) $ 278
----------------------------------------------------------------------------
The notes to these unaudited consolidated financial statements, which are
contained in the Fourth quarter and Year-end report, available on our
website, are an integral part of these consolidated financial statements.
CORPORATE OFFICE TRANSFER AGENTS AND REGISTRARS
Barrick Gold Corporation CIBC Mellon Trust Company
Brookfield Place, TD Canada Trust P.O. Box 7010, Adelaide Street Postal
Tower Station
Suite 3700 Toronto, Canada M5C 2W9
161 Bay Street, P.O. Box 212 Tel: (416) 643-5500
Toronto, Canada M5J 2S1 Toll-free throughout North America: 1-
Tel: (416) 861-9911 800-387-0825
Fax: (416) 861-0727 Fax: (416) 643-5501
Toll-free throughout North America: Email: inquiries@cibcmellon.com
1-800-720-7415 Website: www.cibcmellon.com
Email: investor@barrick.com
Website: www.barrick.com
SHARES LISTED BNY MELLON SHAREOWNER SERVICES
ABX - The New York Stock Exchange 480 Washington Blvd. - 27th Floor
The Toronto Stock Exchange Jersey City, NJ 07310
Tel: 1-800-589-9836 Fax: (201) 680-4665
Email: shrrelations@mellon.com
Website: www.melloninvestor.com
CAUTIONARY STATEMENT ON FORWARD-LOOKING INFORMATION
Certain information contained in this Fourth Quarter and
Year-End Report 2010, including any information as to our strategy,
projects, plans or future financial or operating performance and
other statements that express management's expectations or
estimates of future performance, constitute "forward-looking
statements". All statements, other than statements of historical
fact, are forward-looking statements. The words "believe",
"expect", "will", "anticipate", "contemplate", "target", "plan",
"continue", "budget", "may", "intend", "estimate" 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 management, are
inherently subject to significant business, economic and
competitive uncertainties and contingencies. The Company cautions
the reader that such forward-looking statements involve known and
unknown risks, uncertainties and other factors that may cause the
actual financial results, performance or achievements of Barrick to
be materially different from the Company's estimated future
results, performance or achievements expressed or implied by those
forward-looking statements and the forward-looking statements are
not guarantees of future performance. These risks, uncertainties
and other factors include, but are not limited to: 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; changes in the worldwide price of gold, copper
or certain other commodities (such as silver, fuel and
electricity); fluctuations in currency markets; changes in U.S.
dollar interest rates; risks arising from holding derivative
instruments; ability to successfully complete announced
transactions and integrate acquired assets; legislative, political
or economic developments in the jurisdictions in which the Company
carries on business; operating or technical difficulties in
connection with mining or development activities; employee
relations; availability and costs associated with mining inputs and
labor; the speculative nature of exploration and development,
including the risks of obtaining necessary licenses and permits and
diminishing quantities or grades of reserves; changes in costs and
estimates associated with our projects; adverse changes in our
credit rating, level of indebtedness and liquidity, contests over
title to properties, particularly title to undeveloped properties;
the risks involved in the exploration, development and mining
business. Certain of these factors are discussed in greater detail
in the Company's most recent Form 40-F/Annual Information Form on
file with the U.S. Securities and Exchange Commission and Canadian
provincial securities regulatory authorities.
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.
Contacts: INVESTOR CONTACT: Deni Nicoski Vice President,
Investor Relations (416) 307-7410 dnicoski@barrick.com MEDIA
CONTACT: Rod Jimenez Vice President, Corporate Affairs (416)
307-7427 rjimenez@barrick.com
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