UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Form 6-K
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16 UNDER THE
SECURITIES EXCHANGE ACT OF 1934
For the month of
August 2015
Commission File Number: 1-9059
Barrick Gold
Corporation
(Registrants name)
Brookfield
Place, TD Canada Trust Tower, Suite 3700
161 Bay Street, P.O. Box 212
Toronto, Ontario M5J 2S1 Canada
(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): ¨
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.
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BARRICK GOLD CORPORATION |
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Date: August 6, 2015 |
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By: |
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/s/ Richie Haddock |
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Name: |
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Richie Haddock |
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Title: |
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Senior Vice President and |
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General Counsel |
EXHIBIT
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Exhibit |
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Description of Exhibit |
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99.1 |
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Barrick Gold Corporation Second Quarter Report for 2015, including the Comparative Unaudited Financial Statements prepared in accordance with International Financial Reporting Standards (IFRS) and the notes thereto for
the three months ended June 30, 2015 and Managements Discussion and Analysis (MD&A) for the same period. |
Exhibit 99.1
SECOND QUARTER REPORT 2015
All amounts
expressed in US dollars
Barrick Reports Second Quarter 2015 Results
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Company reported a net loss of $9 million ($0.01 per share) in the second quarter; adjusted net earnings were $60 million ($0.05 per share)1. |
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Free cash flow was $26 million1 and operating cash flow was $525 million. |
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Production in the second quarter was 1.45 million ounces of gold at all-in sustaining costs (AISC) of $895 per ounce1. |
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Full-year gold production is now expected to be 6.1-6.4 million ounces, reflecting the impact of asset sales. |
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All-in sustaining cost guidance for 2015 has been reduced to $840-$880 per ounce. |
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Total debt reduced by approximately $250 million in first half. |
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$2.45 billion in asset sales and joint ventures announced to date. |
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Targeting $2 billion in reduced expenditures across the company by the end of 2016. |
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Capital and other expenditures reduced by $240 million in the second quarter. |
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Lowered quarterly dividend to two cents per share. |
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Scenario planning completed for gold prices down to $900 per ounce. |
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On track to achieve approximately $50 million in G&A cost savings in 2015, exceeding original $30 million target for the year. Targeting $90 million in
annualized savings in 2016, up from original target of $70 million. |
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Completed Preliminary Economic Assessments on projects with the potential to significantly extend mine life at Lagunas Norte and Pueblo Viejo.
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TORONTO, August 5, 2015 Barrick Gold Corporation (NYSE:ABX) (TSX:ABX) (Barrick or the company) reported
a net loss of $9 million ($0.01 per share) for the second quarter, with adjusted net earnings of $60 million ($0.05 per share). Free cash flow was $26 million, compared to negative free cash flow of $128 million in the prior year period. Operating
cash flow in the second quarter was $525 million. Second quarter adjusted EBITDA was $725 million1. On an unadjusted basis, EBITDA was $690
million1.
Gold production guidance for 2015 has been adjusted to
6.1-6.4 million ounces to reflect the impact of divestments, with production 55 percent weighted to the second half of the year. Costs are expected to be 10 percent lower in the second half of 2015. Full-year all-in sustaining cost guidance is
$840-$880 per ounce, down from $860-$895 per ounce.
1 All-in sustaining costs per ounce, adjusted net earnings and adjusted net earnings per share, free
cash flow, adjusted EBITDA and EBITDA are non-GAAP financial performance measures with no standardized definition under IFRS. For further information and detailed reconciliations, please see pages 50-56 of Barricks Second Quarter 2015 Report.
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BARRICK SECOND QUARTER 2015 |
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1 |
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PRESS RELEASE |
The implementation of a lean, decentralized operating model designed to maximize free cash
flow and take costs out of the business has helped to mitigate the impact of recent gold price declines. We have cut $300 million in capital spending so far this year and are on track to achieve $90 million in reduced general and administrative
(G&A) expenditures by 2016. We have also made significant progress on our debt reduction target. Our current focus is on improving productivity and reducing operating costs to ensure our business is robust enough to generate a 10-15 percent
return on invested capital through the metal price cycle.
STRENGTHENING THE BALANCE SHEET
Earlier this year, we set a debt reduction target of $3 billion for 2015. Thus far, we have announced agreements representing $2.45 billion from asset
sales, joint ventures and streaming. In addition, we have also retired approximately $250 million in debt using cash on hand in the first half of this year. Collectively, these actions represent $2.7 billion, or 90 percent of our target.
Transactions announced to date include:
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Sale of 100 percent of the Cowal mine for $550 million in cash, further focusing the geographic footprint of our portfolio by divesting the last
Barrick-operated mine in Australia. |
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Sale of a 50 percent interest in Barrick (Niugini) Ltd. for $298 million in cash2, establishing a
long-term strategic partnership with Chinas Zijin Mining. |
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Sale of a 50 percent interest in the Zaldívar copper mine for $1.005 billion in cash2, realizing
significant value from a non-core operation while maintaining a sizeable stake in this cash-generating asset. This transaction has also resulted in a new partnership with Antofagasta Plc, one of the worlds leading copper companies, with
significant opportunities to collaborate on potential projects in the future. |
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Streaming agreement on a portion of Barricks share of gold and silver production from Pueblo Viejo for $610 million in cash2, structured to maintain significant exposure to higher metal prices. |
With a $4 billion undrawn credit facility and $2.1 billion in cash on hand at the end of the second quarter, we will continue to pursue
our debt reduction target in a disciplined manner and will take only those actions that make sense for the business, on terms we consider favorable to our shareholders.
Additional asset divestments
Over the last several months,
Barrick has received a number of proposals and expressions of interest relating to the proposed acquisition of various non-core assets in Nevada and Montana. Over the next several weeks, we intend to commence a formal process to sell Bald Mountain,
Round Mountain (50 percent interest), Spring Valley (70 percent interest), Ruby Hill, Hilltop and Golden Sunlight. These
2 Barrick has entered into agreements to sell 50 percent of its interests in Barrick (Niugini) Ltd.
and Zaldívar, and to sell a gold-silver stream linked to its 60 percent interest in the Pueblo Viejo mine. These transactions are expected close in the third quarter, late 2015, and early in the fourth quarter, respectively.
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BARRICK SECOND QUARTER 2015 |
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2 |
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PRESS RELEASE |
assets represent an attractive portfolio of producing and development-stage assets in a politically stable
and highly prospective region.
OPERATIONAL FOCUS
Our
strategy is focused on maximizing free cash flow per share from a portfolio of high-quality gold assets in our core regions, underpinned by disciplined capital allocation and operational excellence. In the past six months, we have taken significant
actions to improve our business plans, resulting in positive free cash flow in the second quarter. We remain focused on improving productivity and driving down costs to ensure we can continue to generate free cash flow in the current gold price
environment.
Anticipating the potential for weaker gold prices in the second half of 2015, we challenged our leaders to cut spending
by $1 billion. We have now increased this target. By the end of 2016, we are targeting $2 billion in reduced expenditures across the company. These reductions will come from operating expenses, capital spending and corporate overhead. We have
identified $1.4 billion in potential opportunities to date. This will strengthen the resilience of our portfolio in a lower gold price environment, while positioning us to deliver stronger margins when gold prices recover.
These efforts are benefiting from the outcomes of our Value Realization reviews, which have now been completed for all operations. This
process has identified concrete projects to maximize free cash flow, extend mine lives and lower costs. The reviews also support non-core asset sales by ensuring we understand the full value of every mine before proceeding with any divestiture. For
details on key Value Realization opportunities identified at Lagunas Norte and Pueblo Viejo, please see Appendix 1 on page 9. For certain related risk factors, please see the cautionary statement on forward-looking information at the end of this
press release.
We have also carried out a series of scenario planning exercises that detail actions we can take to optimize mine
plans and increase flexibility in a lower gold price environment. These actions include:
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Adjust life-of-mine plans to maximize short-term free cash flow |
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Place higher-cost operations on temporary care and maintenance |
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Defer stripping activities |
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Close or divest mines that do not meet capital allocation objectives
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Increase cut-off grades |
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Reduce mining/processing rates |
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Further reduce G&A and exploration |
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Further reduce sustaining capital |
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Process higher-grade stockpiles |
Capital Costs
As we continue to review all expenditures for 2015 and 2016, we are cancelling or deferring spending that does not meet our capital allocation
objectives, which include, first and foremost, the ability to meet a hurdle rate of 15 percent. In the second quarter, we identified $240 million in reductions that have now been removed from our plans. Total capital expenditures for 2015 are now
expected to be $1.6-$1.9 billion, 20 percent lower than in 2014.
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BARRICK SECOND QUARTER 2015 |
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3 |
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PRESS RELEASE |
Exploration expenditures are now expected to be $180-$220 million, a reduction of 17
percent from our original 2015 guidance. Sixty-five percent of our exploration budget is allocated to mine site exploration, with 35 percent directed at greenfield projects, primarily on our newest discovery Alturas and the El Indio belt.
Reductions identified in the second quarter include:
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Sustaining capital reduced by $100 million to $1.4-$1.6 billion; |
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Expansion capital reduced by $50 million to $100-$150 million, driven by efficiencies and reductions at Turquoise Ridge, Cortez and Ruby Hill;
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Project capital reduced by $50 million to $100-$150 million, primarily reflecting reductions at Pascua-Lama and Spring Valley; and |
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Exploration budget reduced by $40 million to $180-$220 million, focusing expenditures on our most promising opportunities where we see the highest potential
returns. |
G&A Expenses
We are
focused on reducing costs and improving productivity across the entire business. Excluding severance and one-time costs, the company is on track to capture approximately $50 million in savings from reduced G&A expenditures and overhead costs in
2015, exceeding our original target of $30 million for the year. We expect to reach $90 million in annualized G&A savings by 2016.
FINANCIAL DISCUSSION
Second quarter 2015 adjusted net earnings were $60 million ($0.05 per share) compared to $159 million ($0.14 per share) in the prior year
period. The net loss for the quarter was $9 million ($0.01 per share) compared to a net loss of $269 million ($0.23 per share) in the prior year quarter. Lower adjusted net earnings reflect lower gold sales and lower realized gold and copper prices
compared to the prior year period. Significant adjusting items for the quarter (net of tax and non-controlling interest effects) include:
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$22 million in impairment charges primarily related to power assets at Pueblo Viejo; |
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$30 million in unrealized foreign currency translation losses; |
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$17 million in costs related to the closure of our Perth office; and |
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A $15 million positive adjustment reflecting the impact of the increase in the discount rate used to calculate the provision for environmental remediation at
closed mines. |
Second quarter adjusted EBITDA was $725 million compared to $990 million in the prior year period.
On an unadjusted basis, EBITDA was $690 million for the second quarter compared to $478 million in the prior year period. Operating cash flow was $525 million compared to $488 million in the prior year period. The company generated positive free
cash flow of $26 million in the second quarter compared to an outflow of $128 million in the prior year period, reflecting higher operating cash flow
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BARRICK SECOND QUARTER 2015 |
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PRESS RELEASE |
and lower capital expenditures as a result of the companys continued emphasis on rigorous capital discipline.
The Board of Directors has decided to reduce the companys quarterly dividend by 60 percent, from five cents per share to two cents
per share. The Board believes this reduction is a prudent measure to increase financial flexibility in light of current market conditions. The dividend will be paid on September 15, 2015 to shareholders of record at the close of business on
August 31, 20153.
The Board has approved a Dividend Reinvestment Plan (the
DRIP), which we intend to make available to eligible shareholders for the first time with payment of the above-mentioned dividend on September 15, 2015 to shareholders of record on August 31, 2015. The DRIP will allow
registered or beneficial holders of Barricks common shares who reside in Canada or the United States to reinvest cash dividends paid on their common shares in additional common shares at a discount to the average market price (as defined in
the DRIP), currently set at three percent and subject to change at the discretion of the Board. Additional details about the DRIP and enrollment instructions will be provided at a later date.
OPERATING HIGHLIGHTS AND GUIDANCE
Reflecting the
divestiture of Cowal and 50 percent of Barrick (Niugini) Ltd., 2015 gold production is now anticipated to be 6.1-6.4 million ounces at reduced AISC of $840-$880 per ounce. Production is 55 percent weighted to the second half of the year,
primarily due to higher planned production at Goldstrike, Cortez and Pueblo Viejo. Third quarter AISC are expected to be lower than our AISC in the first half of the year, and fourth quarter AISC are expected to be significantly lower than the third
quarter, driven largely by higher production at Goldstrike, Pueblo Viejo and Cortez in the second half of the year.
Total copper
guidance for 2015 remains unchanged at 480-520 million pounds at C1 cash costs of $1.75-$2.00 per pound4.
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Gold |
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Second Quarter
2015 |
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Current
2015 Guidance |
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Original
2015 Guidance |
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Production (000s of ounces)5 |
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1,445 |
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6,100-6,400 |
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6,200-6,600 |
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AISC ($ per ounce) |
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895 |
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840-880 |
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860-895 |
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Cash costs ($ per ounce)4 |
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624 |
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600-640 |
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600-640 |
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Copper |
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Production (millions of pounds) |
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115 |
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480-520 |
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310-340 |
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C1 cash costs ($ per pound) |
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1.94 |
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1.75-2.00 |
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1.75-2.00 |
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Total Capital Expenditures ($ millions)6 |
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414 |
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1,600-1,900 |
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1,900-2,200 |
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3 The declaration and payment of dividends is at the discretion of the Board of Directors and will depend on the companys financial results, cash requirements, future prospects and other factors
deemed relevant by the Board.
4 Cash costs per ounce and C1 cash costs per pound are non-GAAP
financial performance measures. See pages 50-56 of Barricks Second Quarter 2015 Report.
5
Barricks share.
6 Barricks share on a 100 percent accrued basis.
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BARRICK SECOND QUARTER 2015 |
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5 |
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PRESS RELEASE |
Cortez
The
Cortez mine produced 193,000 ounces at AISC of $811 per ounce in the second quarter. Production benefited from positive grade reconciliations in the Cortez Hills open pit and improved underground productivity, as well as from some initial treatment
of refractory ore through Goldstrikes thiosulfate (TCM) process. AISC were positively impacted by higher production, lower operating costs and lower sustaining capital. Production in 2015 is forecast to be 825,000-900,000 ounces at AISC of
$760-$835 per ounce. Production in the second half is fourth-quarter weighted as the open pit transitions into higher-grade ore and as the ramp-up of the TCM circuit at Goldstrike allows for additional processing of refractory ore from Cortez.
Goldstrike
The Goldstrike mine contributed 206,000 ounces in
the second quarter, in line with plan. AISC of $732 per ounce were better than expected on higher tonnes and grades from the underground operation, as well as lower sustaining capital. Grades and recoveries from the TCM circuit continue to be
consistent with feasibility results. Several adjustments were implemented to improve the throughput of the circuit during the commissioning phase and the process is expected to ramp up on schedule this year. Production and AISC guidance for 2015 is
1.00-1.15 million ounces and $700-$800 per ounce. The third quarter is expected to be the stronger of the two remaining quarters on higher anticipated open pit grades.
Pueblo Viejo
Barricks 60 percent share of production
from Pueblo Viejo for the second quarter was 131,000 ounces at AISC of $682 per ounce. Production in the quarter was lower than planned due to lower gold recoveries, largely related to a higher proportion of carbonaceous ore. AISC were also impacted
by lower silver recoveries associated with a temporary shutdown of the lime boil process during scheduled autoclave maintenance. Recent modifications to the lime boil are showing significantly improved silver recoveries and the first copper
concentrate was shipped in the second quarter. Attributable production in 2015 is forecast to be 625,000-675,000 ounces at AISC of $540-$590 per ounce. Production is expected to be higher and costs lower in the fourth quarter compared to the third
quarter on higher-expected grades, improved recoveries and better autoclave availability, as maintenance shutdowns were weighted to the first half of 2015.
Lagunas Norte
The Lagunas Norte mine contributed 155,000
ounces at AISC of $509 per ounce in the second quarter. Production was in line with expectations while AISC were better than plan on lower sustaining capital. Production in 2015 is anticipated to be 600,000-650,000 ounces at AISC of $600-$650 per
ounce.
Veladero
The Veladero mine produced 151,000
ounces of gold in the second quarter, in line with plan. AISC of $961 per ounce benefited from higher than expected sales and lower sustaining capital. Production
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BARRICK SECOND QUARTER 2015 |
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PRESS RELEASE |
guidance for 2015 is 575,000-625,000 ounces at AISC of $950-$1,035 per ounce, with second half costs expected to be highest in the third quarter related to capitalized stripping and sustaining
capital, as well as lower byproduct credits.
Turquoise Ridge
The Turquoise Ridge mine contributed 52,000 ounces (75 percent basis), in line with expectations. AISC of $780 per ounce reflect higher sustaining
capital associated with the focus on growing production and improving ventilation. Costs are expected to be highest in the third quarter related to these efforts as well as to feasibility and detailed engineering work for the second shaft project.
The mine is forecast to produce 175,000-200,000 ounces (75 percent basis) in 2015 at AISC of $775-$825 per ounce.
Porgera
The Porgera mine produced 118,000 ounces (95 percent basis), slightly below plan on lower open pit grades. AISC of $1,128 per ounce were lower than
expected as a result of lower capitalized stripping costs due to fewer waste tonnes mined and lower sustaining capital. Reflecting the partial divestiture, attributable production in 2015 is now expected to be 400,000-450,000 ounces at AISC of
$1,025-$1,125 per ounce.
Other Mines
Barricks
other mines consisting of Bald Mountain, Round Mountain, Golden Sunlight, Ruby Hill, Hemlo, Cowal, KCGM and Pierina contributed 320,000 ounces at AISC of $895 per ounce in the second quarter. An improved closure plan at Pierina is
expected to contribute approximately 270,000 ounces over the next three-and-a-half years for minimal capital.
Acacia Mining
Barricks share of second quarter production was 119,000 ounces at AISC of $1,149 per ounce. Attributable 2015 production from Acacia is anticipated
to be 480,000-510,000 ounces at AISC of $1,050-$1,100 per ounce. Production will be weighted to the second half of 2015, driven by operational improvements and a planned ramp-up at Bulyanhulu.
Global Copper
Copper production in the second quarter was
115 million pounds at C1 cash costs of $1.94 per pound. For 2015, copper production is anticipated to be 480-520 million pounds at C1 cash costs of $1.75-$2.00 per pound.
Lumwana contributed 63 million pounds at C1 cash costs of $2.01 per pound in the second quarter, in line with expectations. The
Zambian government has ratified amendments to the countrys mining tax regime that replaced the recently-adopted 20 percent gross royalty on open pit mines with a nine percent royalty, and reintroduced a 30 percent corporate income tax and a 15
percent variable profits tax. Production is anticipated to be 250-270 million pounds at C1 cash costs of $1.90-$2.15 per pound in 2015.
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BARRICK SECOND QUARTER 2015 |
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PRESS RELEASE |
Production of 52 million pounds at Zaldívar at C1 cash costs of $1.85 per pound
in the second quarter was in line with plan. Production for 2015 is anticipated to be 230-250 million pounds at C1 cash costs of $1.65-$1.95 per pound.
At Jabal Sayid, first 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.
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BARRICK SECOND QUARTER 2015 |
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8 |
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PRESS RELEASE |
APPENDIX 1 Key Value Realization Initiatives at Barricks Lagunas Norte and Pueblo Viejo Mines
Lagunas Norte
Refractory Material Mine Life
Extension Project: Since it began operations in 2005, Lagunas Norte has outperformed production expectations and become one of our most profitable mines. In 2014, the mine produced 582,000 ounces of gold at all-in sustaining costs of $543 per
ounce. In its early years, production peaked at more than one million ounces per year. To date, Lagunas Norte has operated as an oxide heap leach mine. The mine will transition from oxide ore into mixed oxide/refractory material as it approaches the
end of its current mine life in 2018.
We have now completed a Preliminary Economic Assessment (PEA) on a plan to extend
the life of Lagunas Norte by approximately 12 years by mining the refractory material below the oxide ore body in the current pit. The refractory material cannot be economically processed using heap leaching due to low recoveries. The plan
contemplates the installation of a new grinding-flotation-autoclave processing circuit to treat the refractory material.
Work has
begun on a Pre-Feasibility Study (PFS) to further assess the technical and financial viability of, and risks associated with, the project, which has the potential to add nearly two million ounces of measured and indicated gold resources
that are not currently included in the mines existing mineral reserves and resources. Based on the preliminary analysis completed to date, Barrick expects that approximately $500 million would be required to build the facilities necessary to
treat the refractory material. The PEA for this initiative will be incorporated in an updated technical report prepared by Barricks independent technical advisor, Roscoe Postle Associates Inc. (RPA), which Barrick intends to file
within 45 days. We expect to complete the PFS on this opportunity by the end of 2015.
The table below summarizes the mineral
resources associated with the Refractory Material Mine Life Extension Project that, except as otherwise noted, are not included in the mines mineral resource statement as at December 31, 2014.
Gold Mineral Resources Associated with the Refractory Material Mine Life Extension Project1, 2, 3, 4, 5
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Tonnes |
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Gold |
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ounces |
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Category |
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(000s) |
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g/t |
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(000s) |
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Measured |
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1,203 |
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2.60 |
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100 |
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Indicated |
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21,188 |
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2.54 |
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1,732 |
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Within pit |
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Measured and |
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design6 |
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Indicated |
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22,391 |
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2.55 |
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1,832 |
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Inferred |
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314 |
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1.92 |
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19 |
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Heap leach
stockpile7 |
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Indicated |
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5,300 |
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2.29 |
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391 |
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Notes:
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1. |
Mineral resources have been estimated as at December 31, 2014 based on a gold price of $1,400 per ounce. All estimates have been made in accordance with
the standards of the Canadian Institute of Mining, Metallurgy and Petroleum in National Instrument 43-101. |
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BARRICK SECOND QUARTER 2015 |
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9 |
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PRESS RELEASE |
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2. |
Mineral resources that are not mineral reserves do not have demonstrated economic viability. |
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3. |
Gold cut-off grades ranged from 0.48 g/t to 1.00 g/t depending on the material type. |
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4. |
Gold recovery as a result of this initiative is expected to reach an average of 90 percent. |
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5. |
Numbers may not add due to rounding. |
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6. |
Includes 2.013 million tonnes of measured and indicated resources grading 1.15 g/t gold (74 thousand contained ounces of gold) that were previously
reported in the mines resource statement as at December 31, 2014. |
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7. |
This material is expected to be reclaimed from the existing leach facility and reprocessed through the new facility for this initiative.
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The PEA for the Refractory Material Mine Life Extension Project is preliminary in nature and is based in part on
inferred resources which are considered too speculative geologically to have economic considerations applied to them that would enable them to be categorized as mineral reserves, and there is no certainty that the PEA will be realized.
Pueblo Viejo
Expansion of Tailings Storage Capacity:
Pueblo Viejo is one of the worlds largest, lowest-cost gold mines. In 2014, Barricks 60 percent share of production from the Pueblo Viejo mine was approximately 665,000 ounces of gold at all-in sustaining costs of $588 per ounce. As
reported in the mines resource statement as at December 31, 2014, in addition to existing reserves, Pueblo Viejo has approximately six million ounces of gold and 37 million ounces of silver in the measured and indicated resource
category (Barricks 60 percent share). A significant portion of these resources are not currently included in reserves due to tailings storage constraints. We have completed a PEA evaluating a plan to remove these constraints to tailings
capacity, which if implemented could allow Barrick to significantly extend the life of the mine. Barrick expects to complete further engineering work and commission a PFS in the second half of 2016 to refine the technical and financial analysis for
the increase in tailings storage capacity and confirm whether the measured and indicated resources described above can be brought into reserves.
Conversion of Power Plant and Lime Kilns to Natural Gas Fuel: Energy is one of the biggest cost drivers at any mining operation. We have
completed a PFS on an initiative to reduce energy costs at Pueblo Viejo by converting the fuel supply for the Quisqueya I power plant that supplies electricity to the mine to natural gas from more expensive heavy fuel oil, and retrofitting the lime
kilns to burn natural gas instead of diesel. The power plant was originally designed to operate on multiple fuel types, including natural gas. The PFS evaluated the delivery and use of liquid or compressed natural gas to the mine and power plant.
Barrick is currently engaged in negotiations regarding the supply of natural gas to the Quisqueya I power plant and the Pueblo Viejo
mine. If a supply agreement is successfully negotiated, this initiative to transition to natural gas could be implemented as early as 2017. Barrick anticipates that the conversion of the power plant and lime kilns at the mine site will require only
minimal capital investment by Pueblo Viejo and that all capital costs associated with the construction of the natural gas infrastructure including the necessary natural gas pipeline to the power plant would be borne by the natural gas supplier.
|
|
|
|
|
BARRICK SECOND QUARTER 2015 |
|
10 |
|
PRESS RELEASE |
Qualified Persons
A Technical Report supporting the PEA for the Refractory Material Mine Life Extension Project at Lagunas Norte will be prepared in accordance
with Form 43-101F1 and filed on SEDAR within 45 days of this news release. For further information with respect to the key assumptions, parameters and risks associated with the results of the PEA for the Refractory Material Mine Life Extension
Project at Lagunas Norte, the mineral resource estimates included therein and other technical information with respect to that initiative, please refer to the Technical Report to be made available at www.sedar.com.
The following qualified persons, as that term is defined in National Instrument 43-101 Standards of Disclosure for Mineral
Projects, have prepared or supervised the preparation of their relevant portions of the technical information described above and, in the case of the PEA for the Refractory Material Mine Life Extension Project at Lagunas Norte, the
related Technical Report to be filed:
|
● |
|
Deborah McCombe, P.Geo., Principal Geologist (RPA) |
|
● |
|
Graham Clow, P.Eng., Principal Mining Engineer (RPA) |
|
● |
|
Kathleen Altman, P.E., Ph.D., Principal Metallurgist (RPA) |
|
● |
|
Richard Lambert, P.E., P.Eng., Principal Mining Engineer (RPA) |
|
● |
|
Rick Sims, Registered Member SME, Senior Director, Resources and Reserves (Barrick) |
|
● |
|
Steven Haggarty, P.Eng., Senior Director, Metallurgy (Barrick) |
|
● |
|
Patrick Garretson, Registered Member SME, Director, Life of Mine Planning (Barrick) |
|
|
|
|
|
BARRICK SECOND QUARTER 2015 |
|
11 |
|
PRESS RELEASE |
APPENDIX 2 Detailed 2015 Operating and Capital Expenditure Guidance
|
|
|
|
|
|
|
|
GOLD PRODUCTION AND COSTS |
|
|
Production |
|
AISC7 |
|
Cash Costs8 |
|
|
(millions of ounces) |
|
($ per ounce) |
|
($ 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 |
|
600-650 |
|
350-400 |
Veladero |
|
0.575-0.625 |
|
950-1,035 |
|
580-630 |
|
Sub-total |
|
3.800-4.000 |
|
700-750 |
|
500-540 |
|
Porgera (95%)9 |
|
0.400-0.450 |
|
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 |
|
0.120-0.150 |
|
740-775 |
|
630-655 |
Hemlo |
|
0.200-0.225 |
|
940-980 |
|
675-715 |
Turquoise Ridge (75%) |
|
0.175-0.200 |
|
775-825 |
|
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 |
|
6.100-6.40010 |
|
840-880 |
|
600-640 |
|
|
|
|
|
|
|
|
|
COPPER PRODUCTION AND COSTS |
|
|
Production |
|
C1 cash costs |
|
C3 fully allocated costs11 |
|
|
(millions of pounds) |
|
($ per pound) |
|
($ per pound) |
|
Zaldívar |
|
230-250 |
|
1.65-1.95 |
|
2.00-2.30 |
|
Lumwana |
|
250-270 |
|
1.90-2.15 |
|
2.65-2.95 |
|
Total Copper |
|
480-520 |
|
1.75-2.00 |
|
2.35-2.65 |
|
|
|
|
|
|
|
|
|
CAPITAL EXPENDITURES |
|
|
($ millions) |
|
|
|
|
|
Mine site sustaining |
|
1,400-1,60012 |
|
|
|
|
Mine site expansion |
|
100-150 |
|
|
|
|
Projects |
|
100-150 |
|
|
|
|
|
Total |
|
1,600-1,90012 |
|
|
|
|
|
7 All-in sustaining costs are calculated in accordance with the standard published by the World Gold Council
(WGC). See page 52 of Barricks Second Quarter 2015 Report for further details.
8 Cash costs
reflect our equity share of unit production costs, including the impact of by-product credits, which is calculated in accordance with the standard published by the WGC. See page 52 of Barricks Second Quarter 2015 Report for further details.
9 Production range adjusted for expected closing of the sale of 50 percent of Barrick (Niugini) Ltd. to Zijin
Mining which is expected to close in Q3 2015.
10 Operating unit guidance ranges reflect expectations at each
individual operating unit, but do not add up to corporate-wide guidance range total.
11 C3 fully allocated costs
per pound is a non-GAAP financial performance measure. See pages 50-56 of Barricks Second Quarter 2015 Report.
12 We now expect minesite sustaining capital expenditures to be in the range of $1,400-$1,600 million and total
capital expenditures to be in the range of $1,600-$1,900 million compared to our previous guidance ranges of $1,500-$1,700 million and $1,800-$2,100 million, respectively.
|
|
|
|
|
BARRICK SECOND QUARTER 2015 |
|
12 |
|
PRESS RELEASE |
APPENDIX 3 Outlook Assumptions and Economic Sensitivity Analysis
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2015 Guidance |
|
Hypothetical |
|
Impact on |
|
EBITDA13 |
|
FCF13 |
|
|
Assumption |
|
Change |
|
AISC13 |
|
(millions) |
|
(millions) |
|
Gold revenue, net of royalties |
|
$1,100/oz14 |
|
+/- $100/oz |
|
n/a |
|
$330 |
|
$218 |
Copper revenue, net of royalties |
|
$2.50/lb |
|
+/- $0.50/lb |
|
n/a |
|
$133 |
|
$88 |
|
Gold all-in sustaining costs |
|
|
|
|
|
|
|
|
|
|
Gold royalties & production taxes |
|
$1,100/oz |
|
$100/oz |
|
($3)/oz |
|
$10 |
|
$7 |
WTI crude oil price15, 16 |
|
$60/bbl |
|
$10/bbl |
|
($2)/oz |
|
$7 |
|
$5 |
Australian dollar exchange rate15 |
|
0.80 : 1 |
|
+10% |
|
$1/oz |
|
($3) |
|
($2) |
Australian dollar exchange rate15 |
|
0.80 : 1 |
|
-10% |
|
($1)/oz |
|
$3 |
|
$2 |
|
Canadian dollar exchange rate15 |
|
1.25 : 1 |
|
+10% |
|
($2)/oz |
|
$6 |
|
$4 |
|
Canadian dollar exchange rate15 |
|
1.25 : 1 |
|
-10% |
|
$3/oz |
|
($10) |
|
($7) |
|
Copper C1 cash costs |
|
|
|
|
|
Impact on C1 |
|
|
|
|
WTI crude oil price15,16 |
|
$60/bbl |
|
$10/bbl |
|
($0.01)/lb |
|
$2 |
|
$1 |
Chilean peso exchange rate15 |
|
610 : 1 |
|
+10% |
|
($0.01)/lb |
|
$4 |
|
$3 |
Chilean peso exchange rate15 |
|
610 : 1 |
|
-10% |
|
$0.05/lb |
|
($12) |
|
($8) |
|
13
All-in sustaining costs per ounce, EBITDA and free cash flow are non-GAAP financial performance measures. See pages 50-56 of Barricks Second Quarter 2015 Report.
14 Our outlook assumes an average gold price of $1,100 per ounce and a copper price of $2.50 per pound for the
remainder of 2015.
15 Due to our hedging activities, which are reflected in these sensitivities, we are
partially protected against changes in these factors.
16 Impact on EBITDA only reflects contracts that mature in
2015.
|
|
|
|
|
BARRICK SECOND QUARTER 2015 |
|
13 |
|
PRESS RELEASE |
Key Statistics
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Barrick Gold Corporation |
|
|
|
|
|
|
|
|
|
|
|
|
(in United States dollars) |
|
Three months ended June 30, |
|
|
Six months ended June 30, |
|
|
|
|
|
|
|
|
2015 |
|
|
2014 |
|
|
2015 |
|
|
2014 |
|
|
|
Operating Results |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gold production (thousands of ounces)1 |
|
|
1,445 |
|
|
|
1,485 |
|
|
|
2,835 |
|
|
|
3,073 |
|
Gold sold (thousands of ounces)1 |
|
|
1,466 |
|
|
|
1,516 |
|
|
|
2,851 |
|
|
|
3,134 |
|
Per ounce data |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average spot gold price |
|
$ |
1,192 |
|
|
$ |
1,288 |
|
|
$ |
1,206 |
|
|
$ |
1,291 |
|
Average realized gold price2 |
|
|
1,190 |
|
|
|
1,289 |
|
|
|
1,204 |
|
|
|
1,287 |
|
Cash costs2 |
|
|
624 |
|
|
|
594 |
|
|
|
640 |
|
|
|
588 |
|
All-in sustaining costs2 |
|
|
895 |
|
|
|
865 |
|
|
|
918 |
|
|
|
849 |
|
All-in costs2 |
|
|
954 |
|
|
|
945 |
|
|
|
995 |
|
|
|
940 |
|
Cash costs (on a co-product basis)2 |
|
|
648 |
|
|
|
615 |
|
|
|
666 |
|
|
|
610 |
|
All-in sustaining costs (on a co-product basis) 2 |
|
|
919 |
|
|
|
886 |
|
|
|
944 |
|
|
|
871 |
|
All-in costs (on a co-product basis)2 |
|
|
978 |
|
|
|
966 |
|
|
|
1,021 |
|
|
|
962 |
|
|
|
|
|
|
Copper production (millions of pounds) |
|
|
115 |
|
|
|
67 |
|
|
|
233 |
|
|
|
171 |
|
Copper sold (millions of pounds) |
|
|
112 |
|
|
|
73 |
|
|
|
233 |
|
|
|
184 |
|
|
|
|
|
|
Per pound data |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average spot copper price |
|
$ |
2.74 |
|
|
$ |
3.08 |
|
|
$ |
2.69 |
|
|
$ |
3.14 |
|
Average realized copper price2 |
|
|
2.66 |
|
|
|
3.17 |
|
|
|
2.60 |
|
|
|
3.08 |
|
C1 cash costs2 |
|
|
1.94 |
|
|
|
2.04 |
|
|
|
1.89 |
|
|
|
2.08 |
|
Depreciation3 |
|
|
0.24 |
|
|
|
0.37 |
|
|
|
0.27 |
|
|
|
0.37 |
|
Other4 |
|
|
0.32 |
|
|
|
0.11 |
|
|
|
0.26 |
|
|
|
0.14 |
|
C3 fully allocated costs2 |
|
|
2.50 |
|
|
|
2.52 |
|
|
|
2.42 |
|
|
|
2.59 |
|
|
|
Financial Results (millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues |
|
$ |
2,231 |
|
|
$ |
2,458 |
|
|
$ |
4,476 |
|
|
$ |
5,105 |
|
Net income (loss)5 |
|
|
(9 |
) |
|
|
(269 |
) |
|
|
48 |
|
|
|
(181) |
|
Adjusted net earnings2 |
|
|
60 |
|
|
|
159 |
|
|
|
122 |
|
|
|
397 |
|
Operating cash flow |
|
|
525 |
|
|
|
488 |
|
|
|
841 |
|
|
|
1,073 |
|
Free cash flow2 |
|
|
26 |
|
|
|
(128 |
) |
|
|
(172 |
) |
|
|
(159) |
|
Per Share Data (dollars) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings (loss) (basic) |
|
|
(0.01 |
) |
|
|
(0.23 |
) |
|
|
0.04 |
|
|
|
(0.16) |
|
Adjusted net earnings (basic)2 |
|
|
0.05 |
|
|
|
0.14 |
|
|
|
0.10 |
|
|
|
0.34 |
|
Net earnings (loss) (diluted) |
|
|
(0.01 |
) |
|
|
(0.23 |
) |
|
|
0.04 |
|
|
|
(0.16) |
|
Weighted average basic and diluted common shares (millions)
|
|
|
1,165 |
|
|
|
1,165 |
|
|
|
1,165 |
|
|
|
1,165 |
|
|
|
|
|
|
|
|
|
|
|
As at |
|
|
As at |
|
|
|
|
|
|
|
|
|
June 30, |
|
|
December 31, |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2015 |
|
|
2014 |
|
|
|
Financial Position (millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and equivalents |
|
|
|
|
|
|
|
|
|
$ |
2,122 |
|
|
$ |
2,699 |
|
Non-cash working capital |
|
|
|
|
|
|
|
|
|
|
3,444 |
|
|
|
3,621 |
|
|
|
|
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 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 free 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 Companys 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 Companys MD&A. |
|
5 |
Net income (loss) represents net income (loss) attributable to the equity holders of the Company. |
|
|
|
|
|
BARRICK SECOND QUARTER 2015 |
|
14 |
|
SUMMARY INFORMATION |
Production and Cost Summary
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gold Production (attributable ounces) (000s) |
|
|
All-in sustaining costs 5 ($/oz) |
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
June 30, |
|
|
Six months ended
June 30, |
|
|
Three months ended
June 30, |
|
|
Six months ended
June 30, |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2015 |
|
|
2014 |
|
|
2015 |
|
|
2014 |
|
|
2015 |
|
|
2014 |
|
|
2015 |
|
|
2014 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gold |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Goldstrike |
|
|
206 |
|
|
|
214 |
|
|
|
413 |
|
|
|
476 |
|
|
$ |
732 |
|
|
$ |
890 |
|
|
$ |
811 |
|
|
$ |
812 |
|
Cortez |
|
|
193 |
|
|
|
217 |
|
|
|
326 |
|
|
|
444 |
|
|
|
811 |
|
|
|
759 |
|
|
|
877 |
|
|
|
711 |
|
Pueblo Viejo3 |
|
|
131 |
|
|
|
161 |
|
|
|
266 |
|
|
|
320 |
|
|
|
682 |
|
|
|
601 |
|
|
|
673 |
|
|
|
599 |
|
Lagunas Norte |
|
|
155 |
|
|
|
115 |
|
|
|
333 |
|
|
|
249 |
|
|
|
509 |
|
|
|
593 |
|
|
|
483 |
|
|
|
552 |
|
Veladero |
|
|
151 |
|
|
|
189 |
|
|
|
300 |
|
|
|
347 |
|
|
|
961 |
|
|
|
740 |
|
|
|
978 |
|
|
|
768 |
|
Turquoise Ridge |
|
|
52 |
|
|
|
48 |
|
|
|
101 |
|
|
|
102 |
|
|
|
780 |
|
|
|
687 |
|
|
|
747 |
|
|
|
595 |
|
Porgera |
|
|
118 |
|
|
|
120 |
|
|
|
236 |
|
|
|
230 |
|
|
|
1,128 |
|
|
|
1,026 |
|
|
|
1,099 |
|
|
|
1,019 |
|
Kalgoorlie |
|
|
81 |
|
|
|
84 |
|
|
|
140 |
|
|
|
162 |
|
|
|
886 |
|
|
|
958 |
|
|
|
1,045 |
|
|
|
987 |
|
Acacia2 |
|
|
119 |
|
|
|
114 |
|
|
|
235 |
|
|
|
232 |
|
|
|
1,149 |
|
|
|
1,105 |
|
|
|
1,133 |
|
|
|
1,118 |
|
Other Mines - Gold1 |
|
|
231 |
|
|
|
221 |
|
|
|
475 |
|
|
|
507 |
|
|
|
883 |
|
|
|
994 |
|
|
|
899 |
|
|
|
982 |
|
Other4 |
|
|
8 |
|
|
|
2 |
|
|
|
10 |
|
|
|
4 |
|
|
|
1,297 |
|
|
|
2,794 |
|
|
|
1,627 |
|
|
|
2,267 |
|
|
|
Total |
|
|
1,445 |
|
|
|
1,485 |
|
|
|
2,835 |
|
|
|
3,073 |
|
|
$ |
895 |
|
|
$ |
865 |
|
|
$ |
918 |
|
|
$ |
849 |
|
|
|
|
|
|
|
|
Copper Production (attributable
pounds) (millions) |
|
|
C1 Cash Costs5 ($/lb) |
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
June 30, |
|
|
Six months ended
June 30, |
|
|
Three months ended
June 30, |
|
|
Six months ended
June 30, |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2015 |
|
|
2014 |
|
|
2015 |
|
|
2014 |
|
|
2015 |
|
|
2014 |
|
|
2015 |
|
|
2014 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lumwana |
|
|
63 |
|
|
|
13 |
|
|
|
129 |
|
|
|
63 |
|
|
$ |
2.01 |
|
|
$ |
2.49 |
|
|
$ |
1.95 |
|
|
$ |
2.55 |
|
Zaldívar |
|
|
52 |
|
|
|
54 |
|
|
|
104 |
|
|
|
108 |
|
|
|
1.85 |
|
|
|
1.85 |
|
|
|
1.81 |
|
|
|
1.76 |
|
|
|
Total |
|
|
115 |
|
|
|
67 |
|
|
|
233 |
|
|
|
171 |
|
|
$ |
1.94 |
|
|
$ |
2.04 |
|
|
$ |
1.89 |
|
|
$ |
2.08 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Gold Production Costs ($ /oz) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
June 30, |
|
|
Six months ended
June 30, |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2015 |
|
|
2014 |
|
|
2015 |
|
|
2014 |
|
|
|
|
|
|
|
Direct mining costs before impact of hedges at market foreign exchange rates |
|
|
|
|
|
|
$ |
601 |
|
|
$ |
600 |
|
|
$ |
618 |
|
|
$ |
595 |
|
Losses (gains) realized on currency hedge and commodity hedge/economic hedge contracts |
|
|
|
|
|
|
|
15 |
|
|
|
(23) |
|
|
|
14 |
|
|
|
(21) |
|
By-product credits |
|
|
|
|
|
|
|
(24 |
) |
|
|
(21) |
|
|
|
(26) |
|
|
|
(22) |
|
Royalties |
|
|
|
|
|
|
|
32 |
|
|
|
38 |
|
|
|
34 |
|
|
|
36 |
|
|
|
Cash costs5 |
|
|
|
|
|
|
|
624 |
|
|
|
594 |
|
|
|
640 |
|
|
|
588 |
|
Depreciation |
|
|
|
|
|
|
|
231 |
|
|
|
202 |
|
|
|
234 |
|
|
|
199 |
|
|
|
Total production costs |
|
|
|
|
|
|
$ |
855 |
|
|
$ |
796 |
|
|
$ |
874 |
|
|
$ |
787 |
|
|
|
Cash costs5 |
|
|
|
|
|
|
$ |
624 |
|
|
$ |
594 |
|
|
$ |
640 |
|
|
$ |
588 |
|
General & administrative costs |
|
|
|
|
|
|
|
38 |
|
|
|
43 |
|
|
|
39 |
|
|
|
49 |
|
Rehabilitation - accretion and amortization (operating sites) |
|
|
|
|
|
|
|
25 |
|
|
|
21 |
|
|
|
25 |
|
|
|
21 |
|
Mine on-site exploration and evaluation costs |
|
|
|
|
|
|
|
10 |
|
|
|
4 |
|
|
|
7 |
|
|
|
3 |
|
Mine development expenditures |
|
|
|
|
|
|
|
112 |
|
|
|
117 |
|
|
|
116 |
|
|
|
117 |
|
Sustaining capital expenditures |
|
|
|
|
|
|
|
86 |
|
|
|
86 |
|
|
|
91 |
|
|
|
71 |
|
|
|
All-in sustaining costs 5 |
|
|
|
|
|
|
$ |
895 |
|
|
$ |
865 |
|
|
$ |
918 |
|
|
$ |
849 |
|
|
|
All-in costs5 |
|
|
|
|
|
|
$ |
954 |
|
|
$ |
945 |
|
|
$ |
995 |
|
|
$ |
940 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Copper Production Costs ($/lb) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
June 30, |
|
|
Six months ended
June 30, |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2015 |
|
|
2014 |
|
|
2015 |
|
|
2014 |
|
|
|
|
|
|
|
C1 cash costs5 |
|
|
|
|
|
|
$ |
1.94 |
|
|
$ |
2.04 |
|
|
$ |
1.89 |
|
|
$ |
2.08 |
|
Depreciation6 |
|
|
|
|
|
|
|
0.24 |
|
|
|
0.37 |
|
|
|
0.27 |
|
|
|
0.37 |
|
Other7 |
|
|
|
|
|
|
|
0.32 |
|
|
|
0.11 |
|
|
|
0.26 |
|
|
|
0.14 |
|
|
|
C3 fully allocated costs4 |
|
|
|
|
|
|
$ |
2.50 |
|
|
$ |
2.52 |
|
|
$ |
2.42 |
|
|
$ |
2.59 |
|
|
|
|
1 |
Includes production from 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 |
Reflects production from Pueblo Viejo on a 60% basis, which reflects our equity share of production. |
|
4 |
Production and all-in sustaining costs include Pierina. |
|
5 |
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 Companys MD&A. |
|
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 Companys MD&A. |
|
|
|
|
|
BARRICK SECOND QUARTER 2015 |
|
15 |
|
SUMMARY INFORMATION |
MANAGEMENTS DISCUSSION AND ANALYSIS (MD&A)
This portion of the Quarterly Report provides managements discussion and analysis
(MD&A) of the financial condition and results of operations to enable a reader to assess material changes in financial condition and results of operations as at and for the three and six month periods ended June 30, 2015, in
comparison to the corresponding prioryear periods. The MD&A is intended to help the reader understand Barrick Gold Corporation (Barrick, we, our or the Company), our operations, financial
performance and present and future business environment. This MD&A, which has been prepared as of August 5, 2015, is intended to supplement and complement the condensed unaudited interim consolidated financial statements and notes thereto,
prepared in accordance with International Accounting Standard 34 Interim Financial Reporting (IAS 34) as issued by the International Accounting Standards Board (IASB), for the three and six month periods ended June 30,
2015 (collectively, the Financial Statements), which are included in this Quarterly Report on pages 57 to 81. You are encouraged to review the Financial Statements in conjunction with your review of this MD&A. This MD&A should be
read in conjunction with both the annual audited
consolidated financial statements for the two years ended December 31, 2014, the related annual MD&A included in the 2014 Annual Report, and the most recent Form 40F/Annual
Information Form on file with the US Securities and Exchange Commission (SEC) and Canadian provincial securities regulatory authorities. Certain notes to the Financial Statements are specifically referred to in this MD&A and such
notes are incorporated by reference herein. All dollar amounts in this MD&A are in millions of US dollars, unless otherwise specified.
For the
purposes of preparing our MD&A, we consider the materiality of information. Information is considered material if: (i) such information results in, or would reasonably be expected to result in, a significant change in the market price or
value of our shares; or (ii) there is a substantial likelihood that a reasonable investor would consider it important in making an investment decision; or (iii) it would significantly alter the total mix of information available to
investors. We evaluate materiality with reference to all relevant circumstances, including potential market sensitivity.
CAUTIONARY STATEMENT ON FORWARD-LOOKING INFORMATION
Certain information contained or incorporated by reference in this MD&A, including any information as
to our strategy, projects, plans or future financial or operating performance constitutes forward-looking statements. All statements, other than statements of historical fact, are forward-looking statements. The words
believe, expect, anticipate, contemplate, target, plan, intend, project, continue, budget, estimate,
potential, may, will, can, could 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 in light of managements experience and perception of current conditions and expected developments, are inherently subject to significant business, economic and competitive uncertainties and
contingencies. Known and unknown factors could cause actual results to differ materially from those projected in the forward-looking statements. 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 and risks related to the potential impact of climate change; 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, including disruptions in the maintenance or provision of required infrastructure and information technology systems; damage to
the Companys reputation due to the actual or perceived occurrence
|
|
|
|
|
BARRICK SECOND QUARTER 2015 |
|
16 |
|
MANAGEMENTS DISCUSSION AND ANALYSIS |
of any number of events, including negative publicity with respect to the Companys handling of environmental matters or dealings with community groups, whether true or not; the speculative
nature of mineral exploration and development; the possibility that future exploration results will not be consistent with the Companys expectations; changes in mineral production performance, exploitation and exploration successes; risks that
exploration data may be incomplete and considerable additional work may be required to complete further evaluation, including but not limited to drilling, engineering and socio-economic studies and investment; 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 MD&A are qualified by these cautionary statements. Specific reference is made to the most recent Form 40-F/Annual Information Form on file with the SEC and Canadian provincial
securities regulatory authorities for a discussion of some of the factors underlying forward-looking statements. We disclaim any intention or obligation to update or revise any forward-looking statements whether as a result of new information,
future events or otherwise, except as required by applicable law.
|
|
|
|
|
BARRICK SECOND QUARTER 2015 |
|
17 |
|
MANAGEMENTS DISCUSSION AND ANALYSIS |
INDEX
|
|
|
|
|
|
|
page |
|
Results Overview |
|
|
|
|
|
|
Review of 2015 Second Quarter Results and Full Year Outlook |
|
|
19 |
|
|
|
Key Business Developments |
|
|
24 |
|
|
|
Market Overview |
|
|
26 |
|
|
|
Review of Financial Results |
|
|
|
|
|
|
Revenue |
|
|
28 |
|
|
|
Production Costs |
|
|
28 |
|
|
|
Capital Expenditures |
|
|
29 |
|
|
|
Additional Significant Statement of Income Items |
|
|
29 |
|
|
|
Income Tax Expense |
|
|
30 |
|
|
|
Operating Segments Performance |
|
|
31 |
|
|
|
Financial Condition Review |
|
|
|
|
|
|
Balance Sheet Review |
|
|
44 |
|
|
|
Shareholders Equity |
|
|
44 |
|
|
|
Comprehensive Income |
|
|
44 |
|
|
|
Financial Position and Liquidity |
|
|
45 |
|
|
|
Financial Instruments |
|
|
47 |
|
|
|
Commitments and Contingencies |
|
|
47 |
|
|
|
Internal Control over Financial Reporting and Disclosure Controls and Procedures |
|
|
48 |
|
|
|
Review of Quarterly Results |
|
|
49 |
|
|
|
IFRS Critical Accounting Policies and Accounting Estimates |
|
|
49 |
|
|
|
Non-GAAP Financial Performance Measures |
|
|
50 |
|
|
|
|
|
|
BARRICK SECOND QUARTER 2015 |
|
18 |
|
MANAGEMENTS DISCUSSION AND ANALYSIS |
RESULTS
OVERVIEW
Review of 2015 Second Quarter Results and Full Year Outlook
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
($ millions, except where indicated) |
|
For the three months ended June 30 |
|
|
For the six months ended June 30 |
|
|
|
|
|
2015 |
|
|
2014 |
|
|
2015 |
|
|
2014 |
|
|
|
Financial Data |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue |
|
|
$ 2,231 |
|
|
|
$ 2,458 |
|
|
|
$ 4,476 |
|
|
|
$ 5,105 |
|
Net earnings (loss)1 |
|
|
(9) |
|
|
|
(269) |
|
|
|
48 |
|
|
|
(181) |
|
Per share (EPS)2 |
|
|
(0.01) |
|
|
|
(0.23) |
|
|
|
0.04 |
|
|
|
(0.16) |
|
Adjusted net earnings3 |
|
|
60 |
|
|
|
159 |
|
|
|
122 |
|
|
|
397 |
|
Per share (adjusted EPS)2,3 |
|
|
0.05 |
|
|
|
0.14 |
|
|
|
0.10 |
|
|
|
0.34 |
|
Adjusted EBITDA |
|
|
725 |
|
|
|
990 |
|
|
|
1,523 |
|
|
|
1,997 |
|
Total project capital expenditures4 |
|
|
22 |
|
|
|
(4) |
|
|
|
37 |
|
|
|
47 |
|
Total capital expenditures - expansion4 |
|
|
31 |
|
|
|
84 |
|
|
|
120 |
|
|
|
173 |
|
Total capital expenditures - sustaining4 |
|
|
361 |
|
|
|
422 |
|
|
|
713 |
|
|
|
791 |
|
Operating cash flow |
|
|
525 |
|
|
|
488 |
|
|
|
841 |
|
|
|
1,073 |
|
Free cash flow3 |
|
|
$ 26 |
|
|
|
$ (128) |
|
|
|
$ (172) |
|
|
|
$ (159) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Data |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gold |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gold produced (000s ounces)5 |
|
|
1,445 |
|
|
|
1,485 |
|
|
|
2,835 |
|
|
|
3,073 |
|
Gold sold (000s ounces)5 |
|
|
1,466 |
|
|
|
1,516 |
|
|
|
2,851 |
|
|
|
3,134 |
|
Realized price ($ per ounce)3 |
|
|
$ 1,190 |
|
|
|
$ 1,289 |
|
|
|
$ 1,204 |
|
|
|
$ 1,287 |
|
Cash costs ($ per ounce)3 |
|
|
624 |
|
|
|
594 |
|
|
|
640 |
|
|
|
588 |
|
Cash costs on a co-product basis ($ per ounce)3 |
|
|
648 |
|
|
|
615 |
|
|
|
666 |
|
|
|
610 |
|
All-in sustaining costs ($ per ounce)3 |
|
|
895 |
|
|
|
865 |
|
|
|
918 |
|
|
|
849 |
|
All-in sustaining costs on a co-product basis ($ per ounce)3 |
|
|
919 |
|
|
|
886 |
|
|
|
944 |
|
|
|
871 |
|
All-in costs ($ per ounce)3 |
|
|
954 |
|
|
|
945 |
|
|
|
995 |
|
|
|
940 |
|
All-in costs on a co-product basis ($ per ounce)3 |
|
|
$ 978 |
|
|
|
$ 966 |
|
|
|
$ 1,021 |
|
|
|
$ 962 |
|
Copper |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Copper produced (millions of pounds) |
|
|
115 |
|
|
|
67 |
|
|
|
233 |
|
|
|
171 |
|
Copper sold (millions of pounds) |
|
|
112 |
|
|
|
73 |
|
|
|
233 |
|
|
|
184 |
|
Realized price ($ per pound)3 |
|
|
$ 2.66 |
|
|
|
$ 3.17 |
|
|
|
$ 2.60 |
|
|
|
$ 3.08 |
|
C1 cash costs ($ per pound)3 |
|
|
$ 1.94 |
|
|
|
$ 2.04 |
|
|
|
$ 1.89 |
|
|
|
$ 2.08 |
|
C3 cash costs ($ per pound)3 |
|
|
$ 2.50 |
|
|
|
$ 2.52 |
|
|
|
$ 2.42 |
|
|
|
$ 2.59 |
|
|
|
|
1 |
Net earnings/loss represents net earnings/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 50 - 56 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 |
Gold production and sales include our pro rata share of Acacia and Pueblo Viejo at our equity share. |
|
|
|
|
|
BARRICK SECOND QUARTER 2015 |
|
19 |
|
MANAGEMENTS DISCUSSION AND ANALYSIS |
FINANCIAL AND OPERATING HIGHLIGHTS
Net Income, Adjusted Net Income, Adjusted EBITDA,
Operating Cash Flow and
Free Cash Flow
|
● |
|
Net earnings and adjusted net earnings were 97% higher and 62% lower, respectively, in second quarter 2015 than in the same prior year period. For the six
month period ended June 30, 2015, net earnings and adjusted net earnings were 127% higher and 69% lower, respectively, compared to the first half of 2014. |
|
● |
|
The increases in net earnings are primarily due to the impact of a $514 million impairment charge recorded in second quarter 2014 relating to the
reclassification of the Jabal Sayid copper project as held for sale, partially offset by a decrease in gold sales volume and a lower realized gold and copper price. |
|
● |
|
The decreases in adjusted net earnings are primarily due to a decrease in gold sales volumes combined with a decrease in gold and copper realized prices,
partially offset by a 53% and 27% increase in copper sales volume in second quarter and the first half of 2015, respectively, compared to the same prior year periods. |
|
● |
|
Significant adjusting items (net of tax and non-controlling interest effects) in second quarter 2015 include:
|
|
¡ |
|
$22 million in impairment charges primarily related to power assets at our Pueblo Viejo mine; |
|
¡ |
|
$30 million in unrealized foreign currency translation losses; and |
|
¡ |
|
$17 million in costs relating to the closure of our Perth office; partially offset by |
|
¡ |
|
$15 million positive adjustment reflecting the impact of the increase in the discount rate used to calculate the provision for environmental remediation at our closed mines. |
|
● |
|
Significant adjusting items (net of tax and non-controlling interests effects) in the first half of 2015 include: |
|
¡ |
|
$25 million in impairment charges primarily related to power assets at our Pueblo Viejo mine; |
|
¡ |
|
$36 million in unrealized foreign currency translation losses; and |
|
¡ |
|
$17 million in costs relating to the closure of our Perth office; partially offset by |
|
¡ |
|
$26 million in gains on sale of assets. |
|
● |
|
Adjusted EBITDA was 27% and 24% lower for the three and six month periods ended June 30, 2015, respectively, compared to the same prior year periods. The
decreases were primarily due to a decrease in gold sales volumes combined with a decrease in realized gold and copper prices, partially offset by an increase in copper sales volume. |
|
● |
|
Operating cash flow for the three and six month period ended June 30, 2015 of $525 million and $841 million, respectively, was 8% higher and 22% lower,
respectively than the same prior year periods. |
|
● |
|
The increase in operating cash flow for second quarter 2015 primarily reflects working capital improvements, particularly a lower draw down of accounts
payable and accruals relating to our Pascua-Lama project, combined with a decrease in income tax payments. |
|
● |
|
The decrease in operating cash flow for the first half of 2015 is primarily due an increase in inventory due to increased leachpad inventory
|
|
|
|
|
|
BARRICK SECOND QUARTER 2015 |
|
20 |
|
MANAGEMENTS DISCUSSION AND ANALYSIS |
|
levels at Zaldívar as a result of the severe rain event that occurred at the end of first quarter 2015. The decrease was partially offset by working capital improvements, particularly a
lower draw down of accounts payable and accruals relating to our Pascua-Lama project. |
|
● |
|
Free cash flow for the three and six month periods ended June 30, 2015 was an inflow of $26 million and an outflow of $172 million, respectively,
compared to an outflow of $128 million and $159 million, respectively, in the same prior year periods. |
|
● |
|
The inflow in second quarter 2015 reflects the higher operating cash flows combined with the impact of lower capital expenditures. For the six month period
ended June 30, 2015, the larger outflow reflects the lower operating cash flows, partially offset by the impact of lower capital expenditures. |
|
● |
|
Our portfolio continues to generate positive free cash flow positive at a gold price of $1,100 per ounce.
|
Gold production, cash costs and all-in sustaining costs
|
● |
|
Gold production for the three and six month periods ended June 30, 2015 was 3% and 8% lower, respectively, compared to the same prior year periods
largely due to a decrease in production at Cortez, Goldstrike, Pueblo Viejo and Veladero, partially offset by an increase in production at Lagunas Norte. Also contributing to the decreased production for the first half of 2015 was the impact of the
asset sales that occurred in the first half of 2014. The lower production was in line with our operating plan for 2015 and consistent with our guidance that 55% of our production will come in the second half of the year. Higher second half
production is primarily due to higher production at Goldstrike as the thiosulfate circuit ramps up to commercial production levels; higher production at Cortez as the open pit transitions into higher grade material and the thiosulfate circuit at
Goldstrike allows for the processing of existing Cortez stockpiles; and higher production at Pueblo Viejo due to the availability of higher grade ore and increased throughput due to higher autoclave availability. We now expect gold production for
2015 to be in the range of 6.1 to 6.4 million ounces, compared to our previous guidance range of 6.2 to 6.6 million ounces, reflecting the divestiture of our Cowal mine, which closed on July 23, and 50% of our Porgera mine, which is
expected to close in the third quarter. |
|
● |
|
For the three and six month periods ended June 30, 2015, cash costs increased 5% and 9%, respectively, compared to the same prior year periods, primarily
due to the impact of lower sales volume on unit costs. All-in sustaining costs for the three and six month periods ended June 30, 2015 increased 3% and 8%, respectively, compared to the same prior year periods, as the higher cash costs were
partially offset by lower sustaining capital expenditures, primarily due to a reduction in capitalized stripping costs. As expected, second quarter 2015 was our highest cost quarter for both cash costs and all-in sustaining costs, largely due to the
impact of higher costs at Goldstrike due to the impact of lower sales volume as a significant portion of thiosulfate circuit production from the second quarter will not be sold until the third quarter, partially offset by lower sustaining capital
expenditures. |
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BARRICK SECOND QUARTER 2015 |
|
21 |
|
MANAGEMENTS DISCUSSION AND ANALYSIS |
|
● |
|
We continue to expect 2015 cash costs to be within our guidance ranges of $600 to $640 per ounce and now expect all-in sustaining costs to be $840 to $880 per
ounce, compared to our previous range of $860 to $895 per ounce. Costs are expected to be about 10% lower in second half 2015 due to the impact of higher production levels on unit costs as well as lower sustaining capital expenditures following
rigorous application of our capital allocation framework. |
|
● |
|
All-in costs for the three and six month periods ended June 30, 2015 were 1% and 6% higher, respectively, than the same prior year periods. The increases
were primarily due to the same factors affecting all-in sustaining costs combined with an increase in project capital expenditures relating to our South Arturo project, partially offset by a decrease in expansion capital expenditures.
|
Copper production and C1 costs
|
● |
|
For the three and six month periods ended June 30, 2015, copper production increased 72% and 36%, respectively, compared to the same prior year periods,
due to higher production at Lumwana as a result of the partial conveyor collapse that shutdown the mill and concentrate production for much of second quarter 2014. Production at Zaldívar was slightly down compared to the same prior year
periods largely due to the impact on production of the severe rain event that occurred at the end of first quarter 2015. |
|
● |
|
C1 cash costs were 5% and 9% lower, respectively, than the same prior year periods due to the impact of higher sales volume on unit production costs.
|
Capital Expenditures
|
● |
|
Capital expenditures for the three and six month period ended June 30, 2015 were 18% and 14% lower, respectively, compared to the same prior year
periods. The decreases are primarily due to a 14% and 10% reduction, respectively, in minesite sustaining capital expenditures due to lower capitalized stripping costs across most sites, partially offset by an increase in project capital
expenditures relating to our South Arturo project. As at June 30, 2015, we have incurred $870 million in capital expenditures. |
|
● |
|
As a result of rigorous application of our capital allocation framework, we now expect minesite
|
|
|
sustaining capital expenditures to be in the range of $1.4 to $1.6 billion; minesite expansion capital expenditures to be in the range of $100 to $150 million, driven by efficiencies at Turquoise
Ridge, Cortez and Ruby Hill; project expenditures to be in the range of $100 to $150 million, reflecting reduced spending at Pascua-Lama, Donlin Gold and Spring Valley; and total capital expenditures to be in the range of $1.6 to $1.9 billion. These
compare to our previous guidance ranges of $1.5 to $1.7 billion, $150 to $200 million, $150 to $200 million and $1.8 to $2.1 billion, respectively. All significant new and ongoing projects will be reviewed by our investment committee against our
target 15% hurdle rate. |
Strengthening the Balance Sheet
|
● |
|
Earlier this year, we set a debt reduction target of $3 billion for 2015. Thus far, we have announced agreements representing $2.45 billion from asset sales,
joint ventures and streaming. In addition, we have also retired approximately $250 million in debt using cash on hand in the first half of this year. Collectively, these actions represent $2.7 billion, or 90 percent of our target. Transactions
announced to date include: |
|
¡ |
|
Sale of our Cowal mine for cash proceeds of $550 million, which closed on July 23, 2015; |
|
¡ |
|
Sale of 50% of our interest in the Porgera mine for cash proceeds of $298 million, which is expected to close in third quarter 2015; |
|
¡ |
|
Sale of 50% of our Zaldívar mine for $1.005 billion, which is expected to close in late 2015; and |
|
¡ |
|
Streaming agreement on a portion of Barricks share of gold and silver production from Pueblo Viejo for cash proceeds of $610 million, expected to close in fourth quarter 2015. |
|
● |
|
To begin with, we intend to use a portion of the net proceeds from the sale of the Cowal mine to redeem the outstanding $229 million aggregate principal
amount of 2.90% notes due 2016 issued by Barrick. The notes will be redeemed on September 9, 2015 in accordance with their terms. |
|
● |
|
Over the last several months, Barrick has received a number of proposals and expressions of interest relating to the proposed acquisition of various non-core
assets in Nevada and Montana. Over the next several weeks, we intend to commence a formal process to sell Bald
|
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|
BARRICK SECOND QUARTER 2015 |
|
22 |
|
MANAGEMENTS DISCUSSION AND ANALYSIS |
|
Mountain, Round Mountain (50 percent interest), Spring Valley (70 percent interest), Ruby Hill, Hilltop and Golden Sunlight. These assets represent an attractive portfolio of producing and
development-stage assets in a politically stable and highly prospective region. |
|
● |
|
Lowered our quarterly dividend to two cents per share and introduced a dividend reinvestment plan |
Operational Focus
|
● |
|
Anticipating the potential for a weaker gold price environment in the second half of 2015, we have carried out a series of planning exercises that detail
actions we can take to optimize mine plans and increase flexibility in a lower gold price environment. |
|
● |
|
These actions include: adjusting life-of-mine plans to maximize short-term cash flow; placing higher cost operations on care and maintenance; deferring
stripping activities; close or divest mines that do not meet capital allocation objectives; increase cut-off grades; reduce mining/processing rates; further reduce G&A and exploration; further reduce sustaining capital; and process higher grade
stockpiles. |
|
|
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|
BARRICK SECOND QUARTER 2015 |
|
23 |
|
MANAGEMENTS DISCUSSION AND ANALYSIS |
Full Year 2015 Outlook
|
|
|
|
|
($ millions, except per ounce/pound data) |
|
2015E |
|
|
|
Gold production and costs |
|
|
|
|
Production (millions of ounces) 1 |
|
|
6.1 - 6.4 |
|
Gold unit production costs |
|
|
|
|
All-in sustaining costs ($ per ounce) 2 |
|
|
840 - 880 |
|
Cash costs ($ per ounce)3 |
|
|
600 - 640 |
|
Depreciation ($ per ounce) |
|
|
240 - 260 |
|
|
|
Copper production and costs |
|
|
|
|
Production (millions of pounds)4 |
|
|
480 - 520 |
|
Copper unit production costs |
|
|
|
|
C1 cash costs ($ per pound) |
|
|
1.75 - 2.00 |
|
Depreciation ($ per pound) 5 |
|
|
0.25 - 0.35 |
|
C3 fully allocated costs ($ per pound)4 |
|
|
2.35 -2.65 |
|
|
|
Exploration and project expenses6 |
|
|
330 - 420 |
|
Exploration and evaluation6 |
|
|
180 - 230 |
|
Project expenses |
|
|
150 - 190 |
|
General and administrative expenses |
|
|
~225 |
|
Corporate administration |
|
|
~145 |
|
Stock-based compensation |
|
|
~50 |
|
Acacia |
|
|
~30 |
|
Other expense |
|
|
40 - 60 |
|
Finance costs |
|
|
800 - 825 |
|
Capital expenditures: |
|
|
|
|
Minesite sustaining7 |
|
|
1,400 - 1,600 |
|
Minesite expansion7 |
|
|
100 - 150 |
|
Projects 7 |
|
|
100 - 150 |
|
Total capital expenditures7 |
|
|
1,600 - 1,900 |
|
|
|
Effective income tax rate |
|
|
~53% |
|
|
|
Key Assumptions |
|
|
|
|
Gold Price ($/ounce) |
|
|
$ 1,100 |
|
Copper Price ($/pound) |
|
|
$ 2.50 |
|
Oil Price ($/barrel) |
|
|
$60 |
|
AUD Exchange Rate |
|
|
$ 0.80 |
|
ARS Exchange Rate |
|
|
9.88 |
|
CAD Exchange Rate |
|
|
$ 1.25 |
|
CLP Exchange Rate |
|
|
610 |
|
|
|
1 |
We now expect gold production to be in the range of 6.1 - 6.4 million ounces, compared to our previous guidance of 6.2 - 6.6 million ounces,
reflecting the divestiture of our Cowal mine and 50% of our Porgera mine. |
2 |
We now expect all-in sustaining costs to be $840 to $880 per ounce, compared to our previous range of $860 to $895 per ounce. All-in sustaining costs are
calculated in accordance with the standard published by the World Gold Council (WGC). See page 52 of this MD&A for further details. |
3 |
Cash costs reflect our equity share of unit production costs, including the impact of by-product credits, which is calculated in accordance with the standard
published by the WGC. See pages 52 of this MD&A for further details. |
4 |
As a result of the decision to continue operations at Lumwana, we continue to expect copper production to be in the range of 480 to 520 million lbs and
C3 fully allocated costs to be in the range of $2.35 to $2.65 per pound compared to our previous guidance ranges of 310 to 340 million lbs and $2.30 to $2.60 per pound, respectively. |
5 |
We now expect depreciation per pound to be in the range of $0.25 - $0.35 per pound compared to our previous guidance range of $0.35 - $0.45 per pound to
reflect the lower asset base at Lumwana following the recognition of year-end impairment charges on full year depreciation. |
6 |
We now expect exploration and evaluation expenditures to be in the range of $180 to $230 million and total exploration and project expenses to be in the range
of $330 to $420 million compared to our previous guidance
|
|
ranges of $220 to $270 million and $370 to $460 million, respectively. |
7 |
We now expect minesite sustaining capital expenditures to be in the range of $1,400 to $1,600 million, minesite expansion capital expenditures to be in the
range of $100 to $150 million, projects expenditures to be in the range of $100 to $150 million and total capital expenditures to be in the range of $1,600 to $1,900 million compared to our previous guidance ranges of $1,500 to $1,700 million, $150
to $200 million, $150 to $200 million and $1,800 to $2,100 million, respectively. |
|
Key Business Developments
Divestitures
On July 30, 2015, we announced the sale of
50% of our Zaldívar copper mine in Chile to Antofagasta Plc for total cash consideration of $1.005 billion. As a result, we expect to record a goodwill impairment of approximately $400 million in third quarter 2015. The transaction is
expected to be completed in late 2015 and is subject to customary closing conditions.
On July 23, 2015, we completed the sale of our Cowal mine
in Australia for cash consideration of $550 million. As at June 30, 2015, all of the assets and liabilities of Cowal were classified as held for sale. We intend to use a portion of the net proceeds from the sale of the Cowal mine to redeem the
outstanding $229 million aggregate principal amount of 2.90% notes due 2016 issued by Barrick. The notes will be redeemed on September 9, 2015 in accordance with their terms.
On May 26, 2015, we announced the sale of 50% of our interest in the Porgera mine in Papua New Guinea to Zijin Mining Group Company
(Zijin) for cash consideration of $298 million. As at June 30, 2015, all of the assets and liabilities of Porgera were classified as held for sale as the transaction will result in a loss of control. The transaction is expected to
close in third quarter 2015.
Streaming Agreement
On
August 5, 2015 we announced that we had entered into a gold and silver streaming agreement with Royal Gold, Inc. (Royal Gold) for production linked to Barricks 60 percent interest in the Pueblo Viejo mine. In return, Royal
Gold has agreed to make an upfront cash payment of $610 million plus continuing cash payments for gold and silver delivered under the agreement.
Under the terms of the agreement, Barrick will sell gold and silver to Royal Gold equivalent to:
|
|
7.5 percent of Barricks interest in the gold produced at Pueblo Viejo until 990,000 ounces of gold have been delivered, and 3.75 percent thereafter.
|
|
|
75 percent of Barricks interest in the silver produced at Pueblo Viejo until 50 million ounces
|
|
|
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|
BARRICK SECOND QUARTER 2015 |
|
24 |
|
MANAGEMENTS DISCUSSION AND ANALYSIS |
|
have been delivered, and 37.5 percent thereafter. Silver will be delivered based on a fixed recovery rate of 70 percent. Silver above this recovery rate is not subject to the stream.
|
Ongoing cash payments to Barrick are tied to prevailing spot prices rather than fixed in advance, maintaining material exposure to
higher gold and silver prices in the future. Barrick will receive ongoing cash payments from Royal Gold equivalent to 30 percent of the prevailing spot prices for the first 550,000 ounces of gold and 23.1 million ounces of silver delivered.
Thereafter payments will double to 60 percent of prevailing spot prices for each subsequent ounce of gold and silver delivered.
Royalty Changes in Zambia
On April 20, 2015, the Zambian government announced amendments to the countrys mining tax regime that would replace the recently
adopted 20 percent gross royalty on open pit mines with a nine percent royalty, along with the reintroduction of a 30 percent corporate income tax and a 15 percent variable profits tax. The legislation was passed in late July. In third quarter 2015
we will evaluate the potential for a reversal of previous impairments recorded in fourth quarter 2014.
Zambia Power Reductions
In second quarter 2015, the Zambian power authority (ZESCO) announced reduction to power generation necessitated by the low water levels in
its reservoirs as a result of the poor rainfall experienced during the recent rainy season. We are working with industry and ZESCO to develop an optimal load shedding program to minimize the impact to production.
Jabal Sayid Financing Facility
On April 2, 2015,
Maaden Barrick Copper Company (our 50% Barrick owned equity method investment) signed a financing agreement with the Saudi British Bank to finance the Jabal Sayid copper project for SAR 750 million ($200 million USD). The proceeds will be
used to fund the expenditures remaining to bring the mine into commercial production.
Pascua-Lama Chilean Environmental Court Ruling
On March 23, 2015, Chiles Environmental Court ruled that the Pascua-Lama project has not damaged glaciers in the project area. The plaintiffs
did not file an appeal and the matter is now closed.
Pascua-Lama SMA Regulatory Sanctions
On April 22, 2015, Chiles environmental regulator (known as the SMA) reopened the administrative proceeding against Compañía
Minera Nevada (CMN), Barricks Chilean subsidiary that holds the Chilean portion of the
Pascua-Lama project (the Project) in accordance with the March 3, 2014 decision of the Environmental Court of Santiago, Chile. A decision from the SMA is pending in this matter.
Also on April 22, 2015, CMN was notified that the SMA has initiated a new administrative proceeding for alleged deviations from certain
requirements of the Projects environmental approval, including with respect to the Projects environmental impact and a series of monitoring requirements. In May 2015, CMN submitted a compliance program to address certain of the
allegations and presented its defense to the remainder of the alleged deviations. The SMA rejected CMNs proposed compliance program on June 24, 2015. CMN filed an administrative appeal of this decision on July 3, 2015. A decision
from the SMA on the administrative appeal and on CMNs defense to the remainder of the alleged deviations is pending. Further submissions may be required if CMNs administrative appeal is denied. Refer to Note 22 to the consolidated
financial statements for more information.
Hemlo Land Acquisition
In March 2015, Barrick acquired certain surface and mineral lands adjacent to the Hemlo property in Ontario from subsidiaries of Newmont Mining
Corporation for $37.5 million. The acquisition will enable Hemlo to realize additional value through near-term, lower-cost ounces, optimize its current operation, and increase exploration potential, which will allow for potential mine life
extensions.
Alturas Gold Discovery
We have made a new
gold discovery located in the Andean region of Chile. The new discovery is the result of a methodical re-evaluation of the El Indio belt led by our exploration team. Drilling has concluded for the current season and we expect to report an initial
resource at the end of the year.
Exploration Partnership with QPX
Our focus is gold and we have no plans to expand our existing copper position. However, we seek to maximize the value of our highly prospective land
holdings where there is currently little to no exploration taking place, so we have formed a strategic partnership with Quantum Pacific Exploration (QPX) to explore for copper deposits on our land in northern Chile. Any gold deposits
located on Barrick land will remain 100 percent Barrick-owned. If a copper deposit project is identified on either Barrick or QPX land, it will be 50 percent owned by each company.
|
|
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|
BARRICK SECOND QUARTER 2015 |
|
25 |
|
MANAGEMENTS DISCUSSION AND ANALYSIS |
Market Overview
Gold and
Copper
The market prices of gold and, to a lesser extent, copper are the primary drivers of our profitability and our ability to generate free
cash flow for our shareholders.
The price of gold is subject to volatile price movements over short periods of time and is impacted by numerous
industry and macroeconomic factors. During second quarter, the price of gold ranged from $1,163 to $1,232 per ounce. The price of gold closed at $1,171 per ounce on June 30, 2015, while the average quarterly market price of $1,192 per ounce
represented a $96 per ounce or 7% decrease from the $1,288 per ounce average market price in the same prior year period.
Copper prices in second
quarter traded in a range of $2.56 per pound to $2.94 per pound. The average price for second quarter was $2.74 per pound and the closing price was $2.60 per pound on June 30, 2015. Copper prices should continue to be influenced by demand from
emerging markets, specifically China, the availability of scrap and production levels of mines and smelters in the future.
We have provisionally
priced copper sales for which final price determination versus the relevant copper index is outstanding at the balance sheet date. As at June 30, 2015, we have recorded 61 million pounds of copper sales subject to final settlement at an
average provisional price of $2.61 per pound. The impact to net income before taxation of a 10% movement in the market price of copper would be approximately $16 million, holding all other variables constant.
Silver
Silver prices do not significantly impact our current
operating earnings, cash flows or gold cash costs. Silver prices, however, will have a significant impact on the overall economics for our Pascua-Lama project.
In second quarter, silver prices traded in a range of $15.50 per ounce to $17.78 per ounce, averaged $16.39 per ounce and closed the quarter at $15.70
per ounce. The silver price is driven by factors similar to those influencing investment demands for gold.
Currency Exchange Rates
The results of our mining operations outside of the United States are affected by US dollar exchange rates with non-US denominated currencies comprising
approximately 25% of our operating and capital cost exposures. We have exposure to the Australian and Canadian dollars through a combination of mine operating and corporate administration costs, as well as exposure to the Chilean
peso through expected future capital and operating costs at our Pascua-Lama project and mine operating costs at Zaldívar. We also have exposure to the Argentinean peso through operating
costs at our Veladero mine, peso denominated VAT receivable balances and expected future capital and operating costs at our Pascua-Lama project. In addition, we have exposure to the Papua New Guinea kina, Peruvian sol, Zambian kwacha, Tanzanian
shilling and Dominican peso through mine operating and capital costs.
As a means of minimizing the volatility on our operating costs from
fluctuations in the US dollar, we have put in place protection through our currency hedging program on our three largest currency exposures, namely the Australian dollar, the Canadian dollar and the Chilean peso. In second quarter 2015, the
Australian dollar traded in a range of $0.75 to $0.82 against the US dollar, while the US dollar against the Canadian dollar and Chilean peso traded in ranges of $1.19 to $1.27 and CLP 593 to CLP 640, respectively.
In second quarter 2015, we recorded losses in earnings of approximately $34 million from our Australian, Canadian and Chilean peso hedges, primarily
impacting our operating and corporate administration costs (Q2 2014: $33 million gain).
|
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|
|
|
|
AUD Currency Contracts |
|
|
|
|
|
Contracts (AUD millions |
|
|
Effective Average Hedge Rate (AUDUSD) |
|
|
% of Total Expected AUD Exposure1 Hedged |
|
|
% of Expected Operating Cost Exposure Hedged |
|
|
Crystallized Gain/(Loss) in OCI 2 (USD millions) |
|
|
|
2015 |
|
|
165 |
|
|
|
0.93 |
|
|
|
69% |
|
|
|
80% |
|
|
|
2 |
|
2016 |
|
|
85 |
|
|
|
0.91 |
|
|
|
20% |
|
|
|
23% |
|
|
|
(14) |
|
|
|
|
CAD Currency Contracts |
|
|
|
|
|
Contracts (CAD millions)3 |
|
|
Effective Average Hedge Rate (USDCAD) |
|
|
% of Total Expected CAD Exposure1 Hedged |
|
|
% of Expected Operating Cost Exposure Hedged |
|
|
Crystallized Gain/(Loss) in OCI 2 (USD millions) |
|
|
|
2015 |
|
|
120 |
|
|
|
1.03 |
|
|
|
52% |
|
|
|
59% |
|
|
|
- |
|
|
|
|
|
|
|
|
BARRICK SECOND QUARTER 2015 |
|
26 |
|
MANAGEMENTS DISCUSSION AND ANALYSIS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CLP Currency Contracts |
|
|
|
|
|
Contracts (CLP millions) 4 |
|
|
Effective Average Hedge Rate (USDCLP) |
|
|
% of Total Expected CLP Exposure1 Hedged |
|
|
% of Expected Operating Cost Exposure Hedged |
|
|
Crystallized Gain/(Loss) in OCI 2 (USD
millions) |
|
|
|
2015 |
|
|
51,000 |
|
|
|
521 |
|
|
|
40% |
|
|
|
68% |
|
|
|
- |
|
|
|
1 |
Includes all forecasted operating, administrative, sustainable and eligible project capital expenditures. |
2 |
To be reclassified from Other Comprehensive Income (OCI) to earnings when indicated. |
3 |
Includes C$120 million CAD collar contracts with an average range of $1.03 - $1.15. |
4 |
Includes CLP 51,000 million collar contracts with an average range of 521 - 601. |
Fuel
For second quarter, the price of West Texas Intermediate
(WTI) crude oil traded in a range of $47 to $63 per barrel, averaged $58 per barrel, compared to an average of $103 per barrel in the same prior year period, and ended the quarter at $59 per barrel.
In second quarter 2015, we recorded a hedge loss of $1 million on our fuel hedge positions (Q2 2014: $4 million gain).
Financial Fuel Hedge Summary
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Barrels (thousands) |
|
|
Average Price |
|
|
% of Expected Exposure |
|
|
Impact of $10 change on Pre- tax Earnings (USD millions)1 |
|
|
|
2015 |
|
|
1,378 |
|
|
|
90 |
|
|
|
60% |
|
|
|
9 |
|
2016 |
|
|
2,933 |
|
|
|
85 |
|
|
|
64% |
|
|
|
17 |
|
2017 |
|
|
1,984 |
|
|
|
81 |
|
|
|
48% |
|
|
|
21 |
|
2018 |
|
|
1,080 |
|
|
|
79 |
|
|
|
26% |
|
|
|
30 |
|
|
|
1 |
Includes the impact of hedges currently in place. |
US
Dollar Interest Rates
During second quarter 2015, the Federal Open Market Committee of the US Federal Reserve (FOMC) released a
statement reiterating its view that a highly accommodative stance of monetary policy remains appropriate. In determining how long to maintain the current 0% to 0.25% range for the benchmark rate, the FOMC noted that it will use a wide range of
information, including measures of labor market conditions, indicators of inflation pressures and inflation expectations, and readings on financial and international developments, to assess progress towards its objectives of maximum employment and 2
percent inflation.
At present, our interest rate exposure mainly relates to interest receipts on our cash balances ($2.1 billion at June 30,
2015); the mark-to-market value of derivative instruments; the fair value of and ongoing payments under US dollar interest-rate swaps; the carrying value
of certain long lived assets and liabilities; and to the interest payments on our variable-rate debt ($1.0 billion at June 30, 2015). Currently, the amount of interest expense recorded in our consolidated statement of income is not materially
impacted by changes in interest rates, because the majority of debt was issued at fixed interest rates. The relative amounts of variable-rate financial assets and liabilities may change in the future,
depending on the amount of operating cash flow we generate, as well as the level of capital expenditures and our ability to borrow on favorable terms using fixed rate debt instruments.
|
|
|
|
|
BARRICK SECOND QUARTER 2015 |
|
27 |
|
MANAGEMENTS DISCUSSION AND ANALYSIS |
REVIEW OF
FINANCIAL RESULTS
Revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
($ millions, except per
ounce/pound data in dollars) |
|
For the three months ended June 30 |
|
|
For the six months ended June 30 |
|
|
|
|
|
2015 |
|
|
2014 |
|
|
2015 |
|
|
2014 |
|
|
|
Gold |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
000s oz sold1 |
|
|
1,466 |
|
|
|
1,516 |
|
|
|
2,851 |
|
|
|
3,134 |
|
Revenue |
|
|
$ 1,921 |
|
|
|
$ 2,150 |
|
|
|
$ 3,840 |
|
|
|
$ 4,429 |
|
Market price2 |
|
|
1,192 |
|
|
|
1,288 |
|
|
|
1,206 |
|
|
|
1,291 |
|
Realized price2,3 |
|
|
$ 1,190 |
|
|
|
$ 1,289 |
|
|
|
$ 1,204 |
|
|
|
$ 1,287 |
|
Copper |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
millions lbs sold1 |
|
|
112 |
|
|
|
73 |
|
|
|
233 |
|
|
|
184 |
|
Revenue |
|
|
$ 257 |
|
|
|
$ 237 |
|
|
|
$ 524 |
|
|
|
$ 542 |
|
Market price2 |
|
|
2.74 |
|
|
|
3.08 |
|
|
|
2.69 |
|
|
|
3.14 |
|
Realized price2,3 |
|
|
2.66 |
|
|
|
3.17 |
|
|
|
2.60 |
|
|
|
3.08 |
|
Other sales |
|
|
$ 53 |
|
|
|
$ 71 |
|
|
|
$ 112 |
|
|
|
$ 134 |
|
|
|
|
1 |
Includes our equity share of gold ounces from Acacia and Pueblo Viejo. |
|
2 |
Per ounce/pound weighted average. |
|
3 |
Realized price is a non-GAAP financial performance measure with no standard meaning under IFRS. For further information and a detailed reconciliation, please
see page 56 of this MD&A. |
For the three and six month periods ended June 30, 2015, gold revenues were down 11% and 13%,
respectively, compared to the same prior year periods. The decreases were primarily due to lower gold sales volume and lower realized gold prices compared to the same prior year periods. Copper revenues for the three and six month periods ended
June 30, 2015 were up 8% and down 3%, respectively, compared to the same prior year periods. The increase in second quarter 2015 was primarily due to the impact of higher copper sales volume, partially offset by the lower realized copper price
compared to the same prior year periods. For the six month period ended June 30, 2015 the decrease in copper revenue was primarily due to the lower copper realized price, partially offset by an increase in sales volume.
Realized gold prices for the three and six month periods ended June 30, 2015 were down $99 and $83 per ounce, respectively, compared to the same
prior year periods. The decrease in realized gold prices reflects the lower market gold prices in the second quarter and first half of 2015 compared to the same prior year periods. For the three and six month periods ended June 30, 2015,
realized copper prices were down $0.51 and $0.48 per pound, respectively, compared to the same prior year periods, due to the 11% and 14% decline in market copper prices, respectively, over the same prior year periods.
Gold production for the three and six month periods ended June 30, 2015 of 1.45 million and
2.84 million ounces, respectively, were 3% and 8% lower, respectively, than the same prior year periods. The decrease was primarily due to lower production at Cortez, Goldstrike, Pueblo Viejo and Veladero, combined with the impact of asset
sales that occurred in the first half of 2014, partially offset by an increase in production at Lagunas Norte.
For the three and six month periods
ended June 30, 2015, copper production increased by 72% and 36%, respectively, compared to the same prior year periods due to higher production at Lumwana, partially offset by slightly lower production at Zaldívar. The increased
production at Lumwana was primarily due to the partial conveyor collapse that shutdown the mill and concentrate production for much of second quarter 2014. Production at Zaldívar was negatively impacted by the severe rain event that occurred
in first quarter 2015.
Production Costs
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
($ millions, except per ounce/pound data in dollars) |
|
For the three months ended June 30 |
|
|
For the six months ended June 30 |
|
|
|
|
|
2015 |
|
|
2014 |
|
|
2015 |
|
|
2014 |
|
|
|
Cost of sales |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Direct mining costs |
|
|
$ 1,164 |
|
|
|
$ 1,139 |
|
|
|
$ 2,350 |
|
|
|
$ 2,367 |
|
Depreciation |
|
|
419 |
|
|
|
400 |
|
|
|
840 |
|
|
|
802 |
|
Royalty expense |
|
|
89 |
|
|
|
73 |
|
|
|
179 |
|
|
|
148 |
|
Community relations |
|
|
17 |
|
|
|
19 |
|
|
|
28 |
|
|
|
33 |
|
Cost of sales - gold1 |
|
|
1,410 |
|
|
|
1,407 |
|
|
|
2,834 |
|
|
|
2,851 |
|
Cash costs2,3 |
|
|
624 |
|
|
|
594 |
|
|
|
640 |
|
|
|
588 |
|
All-in sustaining costs - gold2,3 |
|
|
895 |
|
|
|
865 |
|
|
|
918 |
|
|
|
849 |
|
Cost of sales - copper1 |
|
|
237 |
|
|
|
196 |
|
|
|
488 |
|
|
|
451 |
|
C1 cash costs2,3 |
|
|
1.94 |
|
|
|
2.04 |
|
|
|
1.89 |
|
|
|
2.08 |
|
C3 fully allocated costs2,3 |
|
|
$ 2.50 |
|
|
|
$ 2.52 |
|
|
|
$ 2.42 |
|
|
|
$ 2.59 |
|
|
|
|
1 |
2014 figures restated to include community relations costs. |
|
2 |
Per ounce/pound weighted average. |
|
3 |
Cash costs, all-in sustaining costs, C1 cash costs and C3 fully allocated costs are non-GAAP financial performance measures with no standard meaning under
IFRS. For further information and a detailed reconciliation, please see pages 52 - 55 of this MD&A. |
For the three and six
month periods ended June 30, 2015, cost of sales applicable to gold was in line with the same prior year periods. For second quarter and first half 2015, lower direct mining costs resulting from decreased sales volumes were offset by an
increase in depreciation expense as well as the impact of inventory write-downs taken in the first half of the year.
|
|
|
|
|
BARRICK SECOND QUARTER 2015 |
|
28 |
|
MANAGEMENTS DISCUSSION AND ANALYSIS |
Gold cash costs for the three and six month periods ended June 30, 2015 were up $30 and $52 per ounce,
respectively, compared to the same prior year periods. The increases were primarily due to the impact of lower production levels on unit production costs combined with an increase in shared services costs allocated to the operating sites. All-in
sustaining costs for the three and six months ended June 30, 2015 were up $30 and $69 per ounce, respectively, compared to the same prior year periods. The increases were primarily due to the higher cash costs per ounce partially offset by
lower minesite sustaining capital expenditures.
For the three and six month periods ended June 30, 2015, cost of sales applicable to copper
increased $41 million and $37 million, respectively, compared to the same prior year periods. The increases were primarily due to significantly higher royalty expense at Lumwana resulting from the increase in the royalty rate from 6% to 20% in first
quarter 2015. This was partially offset by lower depreciation expense as a result of the impairment charge recorded in fourth quarter 2014.
C1 cash
costs per pound for the three and six month periods ended June 30, 2015 were 5% and 9% lower, respectively, than the same prior year periods reflecting the impact of higher sales volume on unit production costs. C3 fully allocated costs were in
line and 7% lower, respectively, than the same prior year periods, primarily reflecting the effect of the above factors on C1 cash costs combined with lower depreciation.
Capital Expenditures1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
($ millions) |
|
For the three months ended June 30 |
|
|
For the six months ended June 30 |
|
|
|
|
|
2015 |
|
|
2014 |
|
|
2015 |
|
|
2014 |
|
|
|
Project capital expenditures2 |
|
|
$ 22 |
|
|
|
($4) |
|
|
|
$ 37 |
|
|
|
$47 |
|
Minesite sustaining |
|
|
152 |
|
|
|
175 |
|
|
|
305 |
|
|
|
308 |
|
Mine development |
|
|
209 |
|
|
|
247 |
|
|
|
409 |
|
|
|
482 |
|
Minesite expansion2 |
|
|
23 |
|
|
|
77 |
|
|
|
102 |
|
|
|
160 |
|
Capitalized interest |
|
|
8 |
|
|
|
7 |
|
|
|
17 |
|
|
|
14 |
|
|
|
Total consolidated capital expenditures |
|
|
$ 414 |
|
|
|
$ 502 |
|
|
|
$ 870 |
|
|
|
$ 1,011 |
|
|
|
|
1 |
These amounts are presented on a 100% accrued basis. |
|
2 |
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.
|
For the three and six month periods ended June 30, 2015, capital expenditures decreased 18% and 14%, respectively, compared
to the same prior year periods. The decreases are primarily due to a decrease in minesite sustaining and development capital expenditures combined with lower minesite
expansion capital expenditures, partially offset by an increase in project capital expenditures. The decreases in minesite sustaining capital expenditures are primarily due to the deferral of
non-critical capital spending across sites, partially offset by an increase in costs at Veladero relating to the phase 4B and 5A leach pad expansions. The 15% reduction in minesite development capital expenditures for the three and six month periods
ended June 30, 2015 is due to lower capitalized stripping costs, primarily at Cortez and Pueblo Viejo, partially offset by an increase in those costs at Veladero and at Porgera. Minesite expansion capital expenditures decreased 70% and 36%,
respectively, over the same prior year periods due to a decrease in expenditures at Goldstrike, as the construction of the thiosulfate technology project neared completion. The increase in project capital expenditures compared to the same prior year
periods is primarily due to costs incurred at our South Arturo project. In second quarter 2015, capitalized interest was in line with the same prior year period, whereas for the first half of 2015 capitalized interest was 21% higher due to increased
interest capitalized for the thiosulfate technology project.
Additional Significant Statement of Income Items
|
|
|
|
|
|
|
|
|
($ millions) |
|
For the three months ended
June 30 |
|
For the six months ended June 30 |
|
|
|
2015 |
|
2014 |
|
2015 |
|
2014 |
|
|
|
|
|
|
General & administrative expenses |
|
$ 70 |
|
$ 82 |
|
$ 137 |
|
$ 185 |
Corporate administration1 |
|
$ 49 |
|
$ 41 |
|
$ 100 |
|
$ 95 |
Operating segment administration2 |
|
$ - |
|
$ 31 |
|
$ - |
|
$ 64 |
Stock-based compensation |
|
$ 5 |
|
- |
|
$ 10 |
|
$ 6 |
Acacia |
|
$ 16 |
|
$ 10 |
|
$ 27 |
|
$ 20 |
Other expense/(income) |
|
$ 32 |
|
$ 17 |
|
$ 14 |
|
$ 36 |
Exploration, evaluation & project costs |
|
$ 97 |
|
$ 105 |
|
$ 183 |
|
$ 205 |
Finance costs |
|
$ 194 |
|
$ 200 |
|
$ 390 |
|
$ 401 |
Finance income |
|
$ 2 |
|
$ 3 |
|
$ 4 |
|
$ 6 |
Impairments |
|
$ 35 |
|
$ 512 |
|
$ 40 |
|
$ 524 |
|
|
1 |
For the three and six month period ended June 30, 2015, corporate administration costs include approximately $8 million and $13 million, respectively, of
non-recurring severance costs. |
|
2 |
In 2015, operating segment administration costs have been allocated to our operating sites and are now included in cost of sales.
|
|
|
|
|
|
BARRICK SECOND QUARTER 2015 |
|
29 |
|
MANAGEMENTS DISCUSSION AND ANALYSIS |
General and Administrative Expenses
For the three and six month periods ended June 30, 2015, general and administrative expenses were $12 million and $48 million lower, respectively,
than the same prior year periods. The decreases were primarily due to an increase in the allocation of shared services costs from general and administrative expenses to cost of sales, partially offset by an increase in corporate administrative costs
and an increase in costs relating to Acacia. For second quarter 2015, the increase in corporate administrative costs reflects $8 million in severance costs incurred as a result of restructuring, whereas the increase for the first six months of 2015
reflects $13 million in severance costs, partially offset by $11 million in corporate administrative costs that were allocated to the sites. We are on track to achieve our targeted reduction of $50 million in general and administrative and overhead
costs in 2015, exceeding our original target of $30 million for the year. We now expect to reach $90 million in annualized savings in 2016, up from our original target of $70 million.
Other Expense (Income)
Other expense for the three and
six month periods ended June 30, 2015 increased by $15 million and decreased by $22 million, respectively, compared to the same prior year periods. The increase in second quarter 2015 reflects $24 million in office closure costs primarily
related to our Perth office. The decrease for the six month period ended June 30, 2015 was primarily due to a $14 million reduction in consulting fees, partially offset by the $24 million in office closure costs. For a further breakdown of
other expense (income), refer to note 10 to the consolidated financial statements.
Exploration, Evaluation and Project Costs
Exploration, evaluation and project costs for the three and six months ended June 30, 2015 decreased $8 and $22 million, respectively, compared to
the same prior year periods. The decrease in second quarter 2015 is primarily due to a $7 million decrease in project costs at Jabal Sayid combined with a $4 million decrease in community relations costs relating to projects. For the six month
period ended June 30, 2015, the decrease was primarily due to a $17 million reduction in project costs at Jabal Sayid combined with a $13 million decrease in project costs at Pascua-Lama as we continue to drive down the cost of ongoing care and
maintenance activities. This was partially offset by a 15% increase in costs relating to global exploration programs, specifically relating to Goldrush and Alturas, as well as an increase in corporate development costs. In line with our
strategic objectives to identify, explore, and develop only those districts that show potential for superior returns on invested capital, we have revised our exploration and evaluation guidance
to $180 million to $230 million from our previous guidance of $220 million to $270 million. For a further breakdown of exploration, evaluation and project costs, refer to note 8 to the consolidated financial statements.
Finance Costs
For the three and six month periods ended
June 30, 2015, finance costs were $6 million and $11 million lower, respectively, compared to the same prior year periods. The decreases in finance costs were primarily due to a $4 million and $9 million decrease, respectively, in accretion
expense. Interest costs incurred were in line with the same prior year period. For a further breakdown of finance costs/income, refer to note 11 to the consolidated financial statements.
Impairment Charges
For the three and six month periods
ended June 30, 2015, impairment charges of $35 million and $40 million were incurred, respectively, compared to $512 million and $524 million, respectively, in the same prior year periods. Impairment charges in second quarter and the first half
of 2015 primarily relate to a write-down of power assets at our Pueblo Viejo mine. Impairment charges in the same prior year periods primarily relate to the reclassification of the Jabal Sayid project as held-for-sale in second quarter 2014. For a
further breakdown of impairment charges, refer to note 10B and 17 to the consolidated financial statements.
Income Tax Expense
Income tax expense was $103 million in second quarter 2015. The tax rate for income in second quarter 2015 was 110%. After adjusting for the impact of
de-recognition of a deferred tax asset, the impact of net currency translation losses on deferred tax balances, the impact of impairments, asset sales and non-hedge derivatives, and the impact of non-deductible foreign exchange losses, the
underlying effective tax rate for ordinary income in the second quarter 2015 was 53%.
We record deferred tax charges or credits if changes in facts
or circumstances affect the estimated tax basis of assets and therefore the amount of deferred tax assets or liabilities to reflect changing expectations in our ability to realize deferred tax assets. The interpretation of tax regulations and
legislation and their application to our business is complex and subject to change. We have significant amounts of deferred tax assets, including tax
|
|
|
|
|
BARRICK SECOND QUARTER 2015 |
|
30 |
|
MANAGEMENTS DISCUSSION AND ANALYSIS |
loss carry forwards, and also deferred tax liabilities. Potential changes of any of these amounts, as well as our ability to realize deferred tax assets, could significantly affect net income or
cash flow in future periods.
Operating Segments Performance
Review
of Operating Segments Performance
Barricks business is organized into fourteen individual mine sites, one publicly traded company and
one project. Barricks Chief Operating Decision Maker (CODM), the Co-Presidents, review the operating results, assess performance and make capital allocation decisions at the mine site, Company and/or project level. Therefore, each
individual mine site and Acacia are operating segments for financial reporting purposes. For segment reporting purposes, we present our reportable operating segments as follows: eight individual gold mines, two individual copper mines, Acacia and
our Pascua-Lama project. The remaining operating segments have been grouped into an other category consisting of our remaining gold mines.
Segment performance is evaluated based on a number of measures including operating income before tax, production levels and unit production costs.
Certain costs are managed on a consolidated basis and are therefore not reflected in segment income. Starting January 1, 2015, we updated the allocation of our general and administration costs to individual mine sites to reflect the removal of
all regional oversight and hold the mine sites directly accountable for the cost of the functional services they require to run their business.
|
|
|
|
|
BARRICK SECOND QUARTER 2015 |
|
31 |
|
MANAGEMENTS DISCUSSION AND ANALYSIS |
Summary of Operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the three months ended June 30 |
|
|
|
|
|
|
|
2015 |
|
|
|
20141 |
|
|
|
Gold Produced (ozs) |
|
Gold Sold (ozs) |
|
Cash Costs ($/oz) |
|
All-In sustaining Costs ($/oz) |
|
|
|
Gold Produced (ozs) |
|
Gold Sold (ozs) |
|
Cash Costs
($/oz) |
|
All-In sustaining Costs ($/oz) |
|
Cortez |
|
193 |
|
201 |
|
$599 |
|
$811 |
|
|
|
217 |
|
228 |
|
$474 |
|
$759 |
Goldstrike |
|
206 |
|
164 |
|
522 |
|
732 |
|
|
|
214 |
|
201 |
|
532 |
|
890 |
Pueblo Viejo (60%) |
|
131 |
|
151 |
|
553 |
|
682 |
|
|
|
161 |
|
157 |
|
421 |
|
601 |
Lagunas Norte |
|
155 |
|
160 |
|
325 |
|
509 |
|
|
|
115 |
|
118 |
|
395 |
|
593 |
Veladero |
|
151 |
|
153 |
|
510 |
|
961 |
|
|
|
189 |
|
222 |
|
582 |
|
740 |
|
Total Core Mines |
|
836 |
|
829 |
|
$ 506 |
|
$ 741 |
|
|
|
896 |
|
926 |
|
$493 |
|
$735 |
|
|
|
|
|
|
|
|
|
|
|
Turquoise Ridge (75%) |
|
52 |
|
53 |
|
$575 |
|
$780 |
|
|
|
48 |
|
45 |
|
$482 |
|
$687 |
Porgera (95%) |
|
118 |
|
125 |
|
910 |
|
1,128 |
|
|
|
120 |
|
119 |
|
952 |
|
1,026 |
Kalgoorlie (50%) |
|
81 |
|
85 |
|
778 |
|
886 |
|
|
|
84 |
|
80 |
|
805 |
|
958 |
Acacia (63.9%)2 |
|
119 |
|
118 |
|
777 |
|
1,149 |
|
|
|
114 |
|
110 |
|
749 |
|
1,105 |
Cowal |
|
71 |
|
81 |
|
550 |
|
593 |
|
|
|
64 |
|
63 |
|
661 |
|
840 |
Hemlo |
|
42 |
|
43 |
|
868 |
|
1,147 |
|
|
|
48 |
|
51 |
|
867 |
|
1,091 |
Round Mountain (50%) |
|
47 |
|
47 |
|
564 |
|
807 |
|
|
|
41 |
|
43 |
|
851 |
|
1,077 |
Bald Mountain |
|
52 |
|
53 |
|
541 |
|
1,055 |
|
|
|
39 |
|
40 |
|
783 |
|
991 |
Golden Sunlight |
|
16 |
|
19 |
|
992 |
|
1,265 |
|
|
|
15 |
|
19 |
|
894 |
|
1,166 |
Ruby Hill |
|
3 |
|
3 |
|
665 |
|
600 |
|
|
|
14 |
|
13 |
|
771 |
|
841 |
|
Total Continuing Operations |
|
1,437 |
|
1,456 |
|
$604 |
|
$841 |
|
|
|
1,483 |
|
1,509 |
|
$609 |
|
$835 |
|
|
|
|
|
|
|
|
|
|
|
Pierina |
|
8 |
|
10 |
|
786 |
|
1,297 |
|
|
|
2 |
|
5 |
|
2,049 |
|
2,794 |
Marigold |
|
- |
|
- |
|
- |
|
- |
|
|
|
- |
|
2 |
|
1,057 |
|
1,057 |
|
Total Divested/Closed Sites |
|
8 |
|
10 |
|
$786 |
|
$1,297 |
|
|
|
2 |
|
7 |
|
$1,766 |
|
$2,298 |
|
Total Gold3 |
|
1,445 |
|
1,466 |
|
$605 |
|
$844 |
|
|
|
1,485 |
|
1,516 |
|
$615 |
|
$841 |
|
Total Consolidated Barrick |
|
1,445 |
|
1,466 |
|
$624 |
|
$895 |
|
|
|
1,485 |
|
1,516 |
|
$594 |
|
$865 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Copper Produced (lbs) |
|
Copper Sold (lbs) |
|
C1 Cash Costs ($/lb) |
|
C3 Cash Costs ($/lb) |
|
|
|
Copper Produced (lbs) |
|
Copper Sold (lbs) |
|
C1 Cash Costs
($/lb) |
|
C3 Cash Costs ($/lb) |
|
Zaldívar |
|
52 |
|
46 |
|
$ 1.85 |
|
$ 2.18 |
|
|
|
54 |
|
50 |
|
$ 1.85 |
|
$ 2.23 |
Lumwana |
|
63 |
|
66 |
|
2.01 |
|
2.73 |
|
|
|
13 |
|
23 |
|
2.49 |
|
3.17 |
|
Total Copper |
|
115 |
|
112 |
|
$ 1.94 |
|
$ 2.50 |
|
|
|
67 |
|
73 |
|
$ 2.04 |
|
$ 2.52 |
|
|
1 |
2014 cash costs per ounce for individual mine sites have been restated to exclude the impact of hedges. |
|
2 |
Acacia presented on a 73.9% basis until February 28, 2014 and a 63.9% basis thereafter. |
|
3 |
Total gold cash costs and all-in sustaining costs per ounce exclude the impact of hedges and/or costs allocated to non-operating sites. |
|
|
|
|
|
BARRICK SECOND QUARTER 2015 |
|
32 |
|
MANAGEMENTS DISCUSSION AND ANALYSIS |
Cortez, Nevada USA
|
|
|
|
|
|
|
|
|
|
|
|
|
Summary of Operating Data |
|
For the three months ended June 30 |
|
For the six months ended June 30 |
|
|
|
2015 |
|
2014 |
|
% Change |
|
2015 |
|
2014 |
|
% Change |
|
Total tonnes mined (000s) |
|
38,610 |
|
38,381 |
|
1% |
|
78,258 |
|
75,776 |
|
3% |
Ore tonnes processed (000s) |
|
4,026 |
|
5,176 |
|
(22%) |
|
9,183 |
|
12,309 |
|
(25%) |
Average grade (grams/tonne) |
|
1.73 |
|
1.53 |
|
13% |
|
1.33 |
|
1.46 |
|
(9%) |
Gold produced (000s/oz) |
|
193 |
|
217 |
|
(11%) |
|
326 |
|
444 |
|
(27%) |
Gold sold (000s/oz) |
|
201 |
|
228 |
|
(12%) |
|
356 |
|
425 |
|
(16%) |
Cost of sales ($ millions) |
|
$ 195 |
|
$ 171 |
|
14% |
|
$ 391 |
|
$ 300 |
|
30% |
Cash costs (per oz)1 |
|
$ 599 |
|
$ 474 |
|
26% |
|
$ 693 |
|
$ 436 |
|
59% |
All-in sustaining costs (per oz)1 |
|
$ 811 |
|
$ 759 |
|
7% |
|
$ 877 |
|
$ 711 |
|
23% |
All-in costs (per oz)1 |
|
$ 898 |
|
$ 776 |
|
16% |
|
$ 961 |
|
$ 734 |
|
31% |
|
Summary of Financial Data |
|
For the three months ended June 30 |
|
For the six months ended June 30 |
|
|
|
2015 |
|
2014 |
|
% Change |
|
2015 |
|
2014 |
|
% Change |
|
Segment EBIT ($ millions) |
|
$ 43 |
|
$ 121 |
|
(64%) |
|
$ 34 |
|
$ 240 |
|
(86%) |
Segment EBITDA ($ millions)1 |
|
$ 117 |
|
$ 184 |
|
(36%) |
|
$ 178 |
|
$ 355 |
|
(50%) |
Capital expenditures ($ millions)2 |
|
$ 57 |
|
$ 66 |
|
(14%) |
|
$ 90 |
|
$ 120 |
|
(25%) |
Minesite sustaining |
|
$ 39 |
|
$ 62 |
|
(37%) |
|
$ 60 |
|
$ 110 |
|
(45%) |
Minesite expansion |
|
$ 18 |
|
$ 4 |
|
350% |
|
$ 30 |
|
$ 10 |
|
200% |
|
|
1 |
These are non-GAAP financial performance measures; for further information and a detailed reconciliation, please see pages 52 - 56 of this MD&A.
|
2 |
Amounts presented exclude capitalized interest. |
Financial Results
Segment EBIT for the three and six month periods ended June 30, 2015 were 64% and 86% lower,
respectively, than the same prior year periods primarily due to a significant reduction in sales volumes combined with a lower realized gold price.
Gold production for the three and six month period ended June 30, 2015 was 11% and 27% lower, respectively, compared to the same prior year periods.
The decrease in second quarter 2015 was primarily due to the mining of mostly refractory ore from the underground, which is being stockpiled for shipment to Goldstrike, compared to the mining of primarily oxide ore from the Breccia zone in second
quarter 2014. For the six month period ended June 30, 2015, the decrease was primarily due to the concentration of mining in the Cortez Hills phase 4, which has been primarily low grade leach ore, combined with the processing of lower grade
Pipeline ore, whereas higher grade ore from the open pit was available for processing in the same prior year period.
Cost of sales for the three and
six month period ended June 30, 2015 was 14% and 30% higher, respectively, compared to the same prior year periods. The increase for the three month period ended June 30, 2015 was primarily due to a reduction in capitalized stripping costs
coming from Cortez Hills phase 4, partially offset by the impact of lower fuel costs and lower fuel consumption due to shorter hauls, productivity gains and a reduction in sales volumes. For the six month period ended June 30, 2015 the increase
was primarily due to the
recognition of $75 million in inventory write-downs in the first half of 2015 as a result of the mining of low grade ore combined with the impact of high depreciation base for the Cortez Hills
open pit, as well as the impact of lower capitalized stripping costs from Cortez Hills phase 4. Cash costs were $125 per ounce and $257 per ounce higher, respectively, for the three and six month periods ended June 30, 2015, compared to the
same prior year periods. The increases were primarily due to higher cost of sales combined with the impact of lower sales volume on unit production costs. All-in sustaining costs increased by $52 per ounce and $166 per ounce over the same prior year
periods due to higher cash costs, partially offset by a decrease in minesite sustaining capital expenditures.
Capital expenditures for the three and
six month period ended June 30, 2015 decreased by 14% and 25%, respectively, compared to the same prior year periods. The decreases were primarily due to a reduction in minesite sustaining capital expenditures due to lower capitalized stripping
costs, partially offset by an increase in minesite expansion capital expenditures relating to the Lower Zone and CHUG Deep South expansion.
We are
committed to improving our cost structure, and in 2015 the focus will be on improving efficiency and reducing costs through several initiatives, including increased efficiency of open pit equipment, reduced administration staff and decreased diesel
consumption. This has allowed us to mine more efficiently, but with the
|
|
|
|
|
BARRICK SECOND QUARTER 2015 |
|
33 |
|
MANAGEMENTS DISCUSSION AND ANALYSIS |
current lower grades, per ounce costs remain elevated. Once we move back into the higher grade areas of the mine, we expect to recognize significant savings on a per ounce basis. Efforts to
reduce operating costs in 2015 are on track, and as a result planned capital expenditures for the year have been reduced.
Our guidance remains unchanged from our previous guidance range of 825 to 900 thousand ounces at cash
costs of $560 to $610 per ounce and all-in sustaining costs of $760 to $835 per ounce. Production is expected to be higher in the second half of the year as the open pit transitions into higher grade material and the ramp-up of the thiosulfate
circuit at Goldstrike allows for processing of existing Cortez stockpiles.
Goldstrike, Nevada USA
|
|
|
|
|
|
|
|
|
|
|
|
|
Summary of Operating Data |
|
For the three months ended June 30 |
|
For the six months ended June 30 |
|
|
|
2015 |
|
2014 |
|
% Change |
|
2015 |
|
2014 |
|
% Change |
|
Total tonnes mined (000s) |
|
11,336 |
|
20,848 |
|
(46%) |
|
31,965 |
|
41,299 |
|
(23%) |
Ore tonnes processed (000s) |
|
1,417 |
|
1,123 |
|
26% |
|
2,931 |
|
2,385 |
|
23% |
Average grade (grams/tonne) |
|
5.53 |
|
6.97 |
|
(21%) |
|
5.36 |
|
7.24 |
|
(26%) |
Gold produced (000s/oz) |
|
206 |
|
214 |
|
(4%) |
|
413 |
|
476 |
|
(13%) |
Gold sold (000s/oz) |
|
164 |
|
201 |
|
(18%) |
|
363 |
|
483 |
|
(25%) |
Cost of sales ($ millions) |
|
$ 113 |
|
$ 137 |
|
(18%) |
|
$ 262 |
|
$ 342 |
|
(23%) |
Cash costs (per oz) |
|
$ 522 |
|
$ 532 |
|
(2%) |
|
$ 556 |
|
$ 558 |
|
- |
All-in sustaining costs (per oz) |
|
$ 732 |
|
$ 890 |
|
(18%) |
|
$ 811 |
|
$ 812 |
|
- |
All-in costs (per oz) |
|
$ 760 |
|
$ 1,205 |
|
(37%) |
|
$ 903 |
|
$ 1,074 |
|
(16%) |
|
Summary of Financial
Data |
|
For the three months ended June 30 |
|
For the six months ended June 30 |
|
|
|
2015 |
|
2014 |
|
% Change |
|
2015 |
|
2014 |
|
% Change |
|
Segment EBIT ($ millions) |
|
$ 72 |
|
$ 125 |
|
(42%) |
|
$ 158 |
|
$ 278 |
|
(43%) |
Segment EBITDA ($ millions) |
|
$ 100 |
|
$ 155 |
|
(35%) |
|
$ 218 |
|
$ 350 |
|
(39%) |
Capital expenditures ($ millions) |
|
$ 29 |
|
$ 132 |
|
(78%) |
|
$ 113 |
|
$ 243 |
|
(53%) |
Minesite sustaining |
|
$ 24 |
|
$ 68 |
|
(65%) |
|
$ 80 |
|
$ 116 |
|
(31%) |
Minesite expansion |
|
$ 5 |
|
$ 64 |
|
(92%) |
|
$ 33 |
|
$ 127 |
|
(74%) |
|
Financial Results
Segment EBIT for the three and six month periods ended June 30, 2015 were 42% and 43% lower,
respectively, than the same prior year periods. The decreases were primarily due to a lower realized gold price combined with a decrease in sales volume, partially offset by a decrease in open pit and underground mining costs.
Gold production for the three and six month period ended June 30, 2015 was 4% and 13% lower, respectively, compared to the same prior year periods.
The decreases are primarily due to a reduction in ore tonnes mined as a result of the stripping activities on the North Betze layback, with minimal ore mined to date. The increase in tonnes processed and the decrease in recoveries are related to the
commissioning of the thiosulfate circuit, which is running low grade stockpiles during the ramp up phase.
Cost of sales for the three and six month
period ended June 30, 2015 was 18% and 23% lower, respectively, compared to the same prior year periods. The decreases were primarily due to a decrease in open pit and underground mining costs resulting from a reduction in
fuel costs and fuel consumption as a result of shorter hauls; lower contractor services costs due to the completion of an underground development project; and an increase in capitalized
development costs due to the capitalization of the stripping costs related to the North Betze layback. For the three and six month periods ended June 30, 2015 cash costs were $10 per ounce lower and in line, respectively, compared to the same
prior year periods as the impact of the lower sales volume on unit production costs was offset by the decrease in cost of sales. All-in sustaining costs were $158 per ounce lower and in line over the same prior year periods. The decrease in all-in
sustaining costs in second quarter 2015 was primarily due to the lower cash costs combined with a decrease in minesite sustaining and minesite expansion capital expenditures.
Capital expenditures for the three and six month period ended June 30, 2015 decreased by 78% and 53%, respectively, compared to the same prior year
periods. The decreases were primarily due to a decrease in minesite expansion capital expenditure as a result of a
|
|
|
|
|
BARRICK SECOND QUARTER 2015 |
|
34 |
|
MANAGEMENTS DISCUSSION AND ANALYSIS |
reduction in costs associated with the thiosulfate circuit as it nears completion.
We are
committed to improving our cost structure, and in 2015 we are working towards improving operating performance and reducing costs through several initiatives, including enhanced integration between maintenance and supply chain, which is resulting in
inventory optimizations, and also incremental improvements in underground contractor costs.
Our guidance remains unchanged from our previous guidance range of 1,000 to 1,150 thousand ounces at cash costs of $540 to $590 per ounce and all-in
sustaining costs of $700 to $800 per ounce. Production will be largely weighted to the second half of the year as a result of the ramp up of the thiosulfate circuit.
Pueblo Viejo, Dominican Republic
|
|
|
|
|
|
|
|
|
|
|
|
|
Summary of Operating Data |
|
For the three months ended June 30 |
|
For the six months ended June 30 |
|
|
|
2015 |
|
2014 |
|
% Change |
|
2015 |
|
2014 |
|
% Change |
|
Total tonnes mined (000s) |
|
5,781 |
|
5,251 |
|
10% |
|
10,325 |
|
10,364 |
|
- |
Ore tonnes processed (000s) |
|
1,042 |
|
975 |
|
7% |
|
2,158 |
|
1,956 |
|
10% |
Average grade (grams/tonne) |
|
4.54 |
|
5.47 |
|
(17%) |
|
4.41 |
|
5.50 |
|
(20%) |
Gold produced (000s/oz) |
|
131 |
|
161 |
|
(19%) |
|
266 |
|
320 |
|
(17%) |
Gold sold (000s/oz) |
|
151 |
|
157 |
|
(4%) |
|
285 |
|
330 |
|
(14%) |
Cost of sales ($ millions) |
|
$ 224 |
|
$ 218 |
|
3% |
|
$ 455 |
|
$ 441 |
|
3% |
Cash costs (per oz) |
|
$ 553 |
|
$ 421 |
|
31% |
|
$ 526 |
|
$ 442 |
|
19% |
All-in sustaining costs (per oz) |
|
$ 682 |
|
$ 601 |
|
13% |
|
$ 673 |
|
$ 599 |
|
12% |
All-in costs (per oz) |
|
$ 682 |
|
$ 601 |
|
13% |
|
$ 673 |
|
$ 599 |
|
12% |
|
Summary of Financial Data |
|
For the three months ended June 30 |
|
For the six months ended June 30 |
|
|
|
2015 |
|
2014 |
|
% Change |
|
2015 |
|
2014 |
|
% Change |
|
Segment EBIT ($ millions) |
|
$ 91 |
|
$ 164 |
|
(45%) |
|
$ 228 |
|
$ 347 |
|
(34%) |
Segment EBITDA ($ millions) |
|
$ 161 |
|
$ 230 |
|
(30%) |
|
$ 367 |
|
$ 467 |
|
(21%) |
Capital expenditures ($ millions) |
|
$ 17 |
|
$ 24 |
|
(29%) |
|
$ 37 |
|
$ 43 |
|
(14%) |
Minesite sustaining |
|
$ 17 |
|
$ 24 |
|
(29%) |
|
$ 37 |
|
$ 43 |
|
(14%) |
Minesite expansion |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
Project capex |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
Financial Results
Segment EBIT for the three and six month periods ended June 30, 2015 were 45% and 34% lower,
respectively, than the same prior year periods primarily due to a lower realized gold price combined with a decrease in sales volume.
Gold
production for the three and six month period ended June 30, 2015 was 19% and 17% lower, respectively, compared to the same prior year periods. The decreases were primarily due to lower ore grades and decreased recovery rates as the ore mined
in the first six months of 2015 was from the upper benches of Montenegro and Moore phase 2, which have lower ore grades and recoveries. The lower grades and recoveries in second quarter 2015 were partially offset by an increase in ore tonnes
processed compared to the same prior year period.
Cost of sales for the three and six month period ended June 30, 2015 was 3% higher compared
to the same prior year periods. The increases are primarily due to an
increase in the allocation of shared services costs to the site, partially offset by lower fuel costs, lower energy costs, and lower royalty costs. For the three and six month periods ended
June 30, 2015, cash costs were $132 per ounce and $84 per ounce higher, respectively, compared to the same prior year periods. The increases were primarily due to the impact of lower sales volume on unit production costs. All-in sustaining
costs increased by $81 per ounce and $74 per ounce, respectively, compared to the same prior year periods due to the higher cash costs, partially offset by a reduction in minesite sustaining capital expenditures.
Capital expenditures for the three and six month period ended June 30, 2015 decreased by 29% and 14%, respectively, compared to the same prior year
periods. The decreases were primarily due to the deferral and cancellation of non-critical minesite sustaining capital expenditures in 2015.
|
|
|
|
|
BARRICK SECOND QUARTER 2015 |
|
35 |
|
MANAGEMENTS DISCUSSION AND ANALYSIS |
We are committed to improving our cost structure, and in 2015 the focus will be on improving efficiency and
reducing costs through several initiatives, including optimizing ore blending and increasing autoclave availability, optimizing our maintenance strategies, as well as assessing alternatives to reduce energy costs.
Our guidance remains unchanged from our previous guidance range of 625 to 675 thousand ounces at cash
costs of $390 to $425 per ounce and all-in sustaining costs of $540 to $590 per ounce. Production is expected to be higher in the second half of the year as improved grades and higher recoveries
are anticipated and higher throughput is anticipated due to higher autoclave availability (two planned maintenance shutdowns in the first half and only one in the second half of the year.)
Lagunas Norte, Peru
|
|
|
|
|
|
|
|
|
|
|
|
|
Summary of Operating Data |
|
For the three months ended June 30 |
|
For the six months ended June 30 |
|
|
|
2015 |
|
2014 |
|
% Change |
|
2015 |
|
2014 |
|
% Change |
|
Total tonnes mined (000s) |
|
12,315 |
|
13,115 |
|
(6%) |
|
24,977 |
|
22,384 |
|
12% |
Ore tonnes processed (000s) |
|
5,356 |
|
5,261 |
|
2% |
|
11,005 |
|
10,785 |
|
2% |
Average grade (grams/tonne) |
|
1.04 |
|
1.00 |
|
4% |
|
1.11 |
|
0.95 |
|
18% |
Gold produced (000s/oz) |
|
155 |
|
115 |
|
35% |
|
333 |
|
249 |
|
34% |
Gold sold (000s/oz) |
|
160 |
|
118 |
|
36% |
|
327 |
|
270 |
|
21% |
Cost of sales ($ millions) |
|
$ 103 |
|
$ 61 |
|
69% |
|
$ 202 |
|
$ 132 |
|
53% |
Cash costs (per oz) |
|
$ 325 |
|
$ 395 |
|
(18%) |
|
$ 321 |
|
$ 365 |
|
(12%) |
All-in sustaining costs (per oz) |
|
$ 509 |
|
$ 593 |
|
(14%) |
|
$ 483 |
|
$ 552 |
|
(13%) |
All-in costs (per oz) |
|
$ 509 |
|
$ 593 |
|
(14%) |
|
$ 483 |
|
$ 552 |
|
(13%) |
|
Summary of Financial Data |
|
For the three months ended June 30 |
|
For the six months ended June 30 |
|
|
|
2015 |
|
2014 |
|
% Change |
|
2015 |
|
2014 |
|
% Change |
|
Segment EBIT ($ millions) |
|
$ 90 |
|
$ 93 |
|
(3%) |
|
$ 194 |
|
$ 220 |
|
(12%) |
Segment EBITDA ($ millions) |
|
$ 136 |
|
$ 104 |
|
31% |
|
$ 281 |
|
$ 246 |
|
14% |
Capital expenditures ($ millions) |
|
$ 18 |
|
$ 19 |
|
(5%) |
|
$ 31 |
|
$ 42 |
|
(26%) |
Minesite sustaining |
|
$ 18 |
|
$ 19 |
|
(5%) |
|
$ 31 |
|
$ 42 |
|
(26%) |
Minesite expansion |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
Financial Results
Segment EBIT for the three and six month periods ended June 30, 2015 were 3% and 12% lower,
respectively, than the same prior year periods. The decrease was primarily due to a lower realized gold price combined with higher depreciation expense, partially offset by an increase in sales volume.
Gold production for the three and six month period ended June 30, 2015 was 35% and 34% higher, respectively, compared to the same prior year
periods. The increases were primarily due to the acceleration in the recovery of ounces as a result of the new leach pad and increased capacity provided by the carbon-in-circuit and Merrill-Crowe plants combined with the processing of higher grade
ore.
Cost of sales for the three and six month period ended June 30, 2015 was 69% and 53% higher, respectively, compared to the same prior year
periods. The increases were primarily due to higher depreciation expense arising from the depreciation of the carbon-in-circuit plant and new phase 5 leach pad and related facilities, which were
both commissioned at the end of 2014, as well as the newly commissioned water treatment plant. This was partially offset by a decrease in fuel, cyanide and lime costs. For the three and six month
periods ended June 30, 2015, cash costs were $70 per ounce and $44 per ounce lower, respectively, compared to the same prior year periods. The decreases were primarily due to the impact of increased sales volumes on unit production costs
together with the above reductions in costs of consumables. All-in sustaining costs decreased by $84 per ounce and $69 per ounce over the same prior year periods due to the lower cash costs combined with a decrease in minesite sustaining capital
expenditures.
Capital expenditures for the three and six month period ended June 30, 2015 decreased by 5% and 26%, respectively, compared to
the same prior year periods. The decreases were primarily due to completion in 2014 of the carbon-in-circuit plant, water treatment plants and the new phase 5 leach pad and related facilities. Capital expenditures in the first half of 2015 mainly
include the
|
|
|
|
|
BARRICK SECOND QUARTER 2015 |
|
36 |
|
MANAGEMENTS DISCUSSION AND ANALYSIS |
construction of phase 6 of the leach pad, which is currently in the early stages of construction.
As part of our commitment towards continuous improvement of our cost structure, our focus in 2015 is improving efficiency and reducing costs through
several initiatives, including reducing leach pad inventory, improving our maintenance strategy for the mine fleet engines, improving contract sourcing and pricing for consumables such as lime, reducing cyanide consumption and general and
administrative costs.
In 2015, we continue to expect production to be in the range of 600 to 650 thousand ounces and now
expect cash costs to be in the range of $350 to $400 per ounce and all-in sustaining costs to be in the range of $600 to $650 per ounce.
Veladero, Argentina
|
|
|
|
|
|
|
|
|
|
|
|
|
Summary of Operating Data |
|
For the three months ended June 30 |
|
For the six months ended June 30 |
|
|
|
2015 |
|
2014 |
|
% Change |
|
2015 |
|
2014 |
|
% Change |
|
Total tonnes mined (000s) |
|
23,130 |
|
16,824 |
|
37% |
|
42,249 |
|
33,483 |
|
26% |
Ore tonnes processed (000s) |
|
7,628 |
|
7,597 |
|
- |
|
14,808 |
|
14,382 |
|
3% |
Average grade (grams/tonne) |
|
0.80 |
|
1.00 |
|
(20%) |
|
0.79 |
|
0.97 |
|
(19%) |
Gold produced (000s/oz) |
|
151 |
|
189 |
|
(20%) |
|
300 |
|
347 |
|
(14%) |
Gold sold (000s/oz) |
|
153 |
|
222 |
|
(31%) |
|
321 |
|
361 |
|
(11%) |
Cost of sales ($ millions) |
|
$ 110 |
|
$ 172 |
|
(36%) |
|
$ 238 |
|
$ 292 |
|
(18%) |
Cash costs (per oz) |
|
$ 510 |
|
$ 582 |
|
(12%) |
|
$ 542 |
|
$ 581 |
|
(7%) |
All-in sustaining costs (per oz) |
|
$ 961 |
|
$ 740 |
|
30% |
|
$ 978 |
|
$ 768 |
|
27% |
All-in costs (per oz) |
|
$ 961 |
|
$ 740 |
|
30% |
|
$ 978 |
|
$ 768 |
|
27% |
|
Summary of Financial Data |
|
For the three months ended June 30 |
|
For the six months ended June 30 |
|
|
|
2015 |
|
2014 |
|
% Change |
|
2015 |
|
2014 |
|
% Change |
|
Segment EBIT ($ millions) |
|
$ 67 |
|
$ 101 |
|
(34%) |
|
$ 140 |
|
$ 159 |
|
(12%) |
Segment EBITDA ($ millions) |
|
$ 93 |
|
$ 137 |
|
(32%) |
|
$ 192 |
|
$ 225 |
|
(15%) |
Capital expenditures ($ millions) |
|
$ 68 |
|
$ 33 |
|
106% |
|
$ 136 |
|
$ 64 |
|
113% |
Minesite sustaining |
|
$ 68 |
|
$ 33 |
|
106% |
|
$ 136 |
|
$ 64 |
|
113% |
Minesite expansion |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
Financial Results
Segment EBIT for the three and six month periods ended June 30, 2015 were 34% and 12% lower,
respectively, than the same prior year periods. The decreases were primarily due to a decrease in sales volume combined with a lower realized gold price; partially offset a decrease in cost of sales.
Gold production for the three and six month periods ended June 30, 2015 was 20% and 14% lower, respectively, compared to the same prior year
periods. The decreases were primarily due to lower ore grades from Federico phase 3, partially offset by increased throughput due to improved primary crusher availability.
Cost of sales for the three and six month period ended June 30, 2015 was 36% and 18% lower, respectively, compared to the same prior year periods.
The decreases were primarily due to a reduction in operating costs resulting from an increase in capitalized stripping costs
combined with lower royalty costs as a result of lower sales volume, partially offset by an increase in the allocation of shared services costs to the site. For the three and six month periods
ended June 30, 2015, cash costs were $72 per ounce and $39 per ounce lower, respectively, compared to the same prior year periods. The decreases were primarily due to the lower cost of sales, partially offset by the impact of lower production
levels on unit production costs. All-in sustaining costs increased by $221 per ounce and $210 per ounce over the same prior year periods primarily due to an increase in minesite sustaining costs, partially offset by lower cash costs.
Capital expenditures for the three and six month period ended June 30, 2015 increased by 106% and 113%, respectively, compared to the same prior
year periods. The increases were primarily due to an increase in minesite sustaining capital expenditures relating to the
|
|
|
|
|
BARRICK SECOND QUARTER 2015 |
|
37 |
|
MANAGEMENTS DISCUSSION AND ANALYSIS |
construction of the phase 4B and phase 5A leach pad expansions combined with higher capitalized stripping costs.
As part of our commitment to continuous cost improvement, we continue to work towards improving operating performance and reducing costs through improved
maintenance and blasting activities, reduced contractor services costs, strict optimized capital allocation and recovery of ounces from inventory through management of the leach pad.
In 2015, we continue to expect production to be in the range of 575 to 625 thousand ounces and now
expect cash costs to be in the range of $580 to $630 per ounce and all-in sustaining costs to be in the range of $950 to $1,035 per ounce.
Turquoise Ridge, Nevada USA
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Summary of Operating Data |
|
For the three months ended June 30 |
|
|
For the six months ended June 30 |
|
|
|
|
|
2015 |
|
|
2014 |
|
|
% Change |
|
|
2015 |
|
|
2014 |
|
|
% Change |
|
|
|
Total tonnes mined (000s) |
|
|
90 |
|
|
|
78 |
|
|
|
15% |
|
|
|
183 |
|
|
|
152 |
|
|
|
20% |
|
Ore tonnes processed (000s) |
|
|
94 |
|
|
|
85 |
|
|
|
11% |
|
|
|
178 |
|
|
|
170 |
|
|
|
5% |
|
Average grade (grams/tonne) |
|
|
18.91 |
|
|
|
19.31 |
|
|
|
(2%) |
|
|
|
19.23 |
|
|
|
20.26 |
|
|
|
(5%) |
|
Gold produced (000s/oz) |
|
|
52 |
|
|
|
48 |
|
|
|
8% |
|
|
|
101 |
|
|
|
102 |
|
|
|
(1%) |
|
Gold sold (000s/oz) |
|
|
53 |
|
|
|
45 |
|
|
|
18% |
|
|
|
99 |
|
|
|
101 |
|
|
|
(2%) |
|
Cost of sales ($ millions) |
|
|
$ 37 |
|
|
|
$ 26 |
|
|
|
42% |
|
|
|
$ 68 |
|
|
|
$ 53 |
|
|
|
28% |
|
Cash costs (per oz) |
|
|
$ 575 |
|
|
|
$ 482 |
|
|
|
19% |
|
|
|
$ 576 |
|
|
|
$ 442 |
|
|
|
30% |
|
All-in sustaining costs (per oz) |
|
|
$ 780 |
|
|
|
$ 687 |
|
|
|
14% |
|
|
|
$ 747 |
|
|
|
$ 595 |
|
|
|
26% |
|
All-in costs (per oz) |
|
|
$ 780 |
|
|
|
$ 687 |
|
|
|
14% |
|
|
|
$ 747 |
|
|
|
$ 595 |
|
|
|
26% |
|
|
|
|
|
|
Summary of Financial Data |
|
For the three months ended June 30 |
|
|
For the six months ended June 30 |
|
|
|
|
|
2015 |
|
|
2014 |
|
|
% Change |
|
|
2015 |
|
|
2014 |
|
|
% Change |
|
|
|
Segment EBIT ($ millions) |
|
|
$ 26 |
|
|
|
$ 31 |
|
|
|
(16%) |
|
|
|
$ 50 |
|
|
|
$ 77 |
|
|
|
(35%) |
|
Segment EBITDA ($ millions) |
|
|
$ 32 |
|
|
|
$ 35 |
|
|
|
(9%) |
|
|
|
$ 61 |
|
|
|
$ 85 |
|
|
|
(28%) |
|
Capital expenditures ($ millions) |
|
|
$ 10 |
|
|
|
$ 9 |
|
|
|
11% |
|
|
|
$ 16 |
|
|
|
$ 15 |
|
|
|
7% |
|
Minesite sustaining |
|
|
$ 10 |
|
|
|
$ 9 |
|
|
|
11% |
|
|
|
$ 16 |
|
|
|
$ 15 |
|
|
|
7% |
|
Minesite expansion |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
Financial Results
Segment EBIT for the three and six month periods ended June 30, 2015 were 16% and 35% lower,
respectively, than the same prior year periods. The decreases were primarily due to lower realized price combined with an increase in underground mining costs, partially offset by an increase in sales volume in second quarter 2015.
Gold production for the three and six month period ended June 30, 2015 was 8% higher and 1% lower, respectively, compared to the same prior year
periods. The increased production in second quarter 2015 was primarily due to the processing of more ore tonnes resulting from increased productivity due to transitioning to fully mechanized topcuts in first quarter 2015, which were subsequently
processed in second quarter 2015. For the six months ended June 30, 2015, the decrease in gold production was primarily due to the processing of lower grade ore.
Cost of sales for the three and six month period ended June 30, 2015 was 42% and 28% higher,
respectively, compared to the same prior year periods. The increases were primarily due to an increase in underground labor costs, as we added manpower to support production growth, higher maintenance costs due to the timing of planned replacement
of major components and higher processing costs resulting from the processing of increased ore tonnes. For the three and six month periods ended June 30, 2015, cash costs per ounce were $93 per ounce and $134 per ounce higher, respectively,
compared to the same prior year periods. The increases were primarily due to higher costs of sales. For second quarter 2015, the increase was partially offset by the impact of higher sales volume on unit production costs. All-in sustaining costs
increased by $93 per ounce and $152 per ounce over the same prior year periods due to
|
|
|
|
|
BARRICK SECOND QUARTER 2015 |
|
38 |
|
MANAGEMENTS DISCUSSION AND ANALYSIS |
the higher cash costs combined with slightly higher capital expenditures.
Capital expenditures
for the three and six month period ended June 30, 2015 increased by 11% and 7%, respectively, compared to the same prior year periods. The increases were primarily due to higher minesite sustaining capital expenditures for water treatment and
ventilation, partially offset by lower capitalized development costs, compared to the same prior year periods.
As part of our commitment to continuous cost improvement, we are working towards improving operating
performance and reducing costs through increased productivity, including an initiative to increase tonnage per foot mined by increasing mining dimensions. This initiative has been successful and as a result will be extended to all topcut headings.
In 2015, we continue to expect production to be in the range of 175 to 200 thousand ounces at cash costs of $570 to $600 per ounce and now
expect all-in sustaining costs to be in the range of $775 to $825 per ounce.
Porgera, Papua New Guinea
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Summary of Operating Data |
|
For the three months ended June 30 |
|
|
For the six months ended June 30 |
|
|
|
|
|
2015 |
|
|
2014 |
|
|
% Change |
|
|
2015 |
|
|
2014 |
|
|
% Change |
|
|
|
Total tonnes mined (000s) |
|
|
4,727 |
|
|
|
3,634 |
|
|
|
30% |
|
|
|
9,624 |
|
|
|
7,639 |
|
|
|
26% |
|
Ore tonnes processed (000s) |
|
|
1,435 |
|
|
|
1,406 |
|
|
|
2% |
|
|
|
2,723 |
|
|
|
2,673 |
|
|
|
2% |
|
Average grade (grams/tonne) |
|
|
2.95 |
|
|
|
3.02 |
|
|
|
(2%) |
|
|
|
3.13 |
|
|
|
3.03 |
|
|
|
3% |
|
Gold produced (000s/oz) |
|
|
118 |
|
|
|
120 |
|
|
|
(2%) |
|
|
|
236 |
|
|
|
230 |
|
|
|
3% |
|
Gold sold (000s/oz) |
|
|
125 |
|
|
|
119 |
|
|
|
5% |
|
|
|
240 |
|
|
|
236 |
|
|
|
2% |
|
Cost of sales ($ millions) |
|
|
$ 126 |
|
|
|
$ 133 |
|
|
|
(5%) |
|
|
|
$ 234 |
|
|
|
$ 267 |
|
|
|
(12%) |
|
Cash costs (per oz) |
|
|
$ 910 |
|
|
|
$ 952 |
|
|
|
(4%) |
|
|
|
$ 861 |
|
|
|
$ 952 |
|
|
|
(10%) |
|
All-in sustaining costs (per oz) |
|
|
$ 1,128 |
|
|
|
$ 1,026 |
|
|
|
10% |
|
|
|
$ 1,099 |
|
|
|
$ 1,019 |
|
|
|
8% |
|
All-in costs (per oz) |
|
|
$ 1,128 |
|
|
|
$ 1,026 |
|
|
|
10% |
|
|
|
$ 1,099 |
|
|
|
$ 1,019 |
|
|
|
8% |
|
|
|
|
|
|
Summary of Financial Data |
|
For the three months ended June 30 |
|
|
For the six months ended June 30 |
|
|
|
|
|
2015 |
|
|
2014 |
|
|
% Change |
|
|
2015 |
|
|
2014 |
|
|
% Change |
|
|
|
Segment EBIT ($ millions) |
|
|
$ 20 |
|
|
|
$ 18 |
|
|
|
11% |
|
|
|
$ 55 |
|
|
|
$ 34 |
|
|
|
62% |
|
Segment EBITDA ($ millions) |
|
|
$ 32 |
|
|
|
$ 37 |
|
|
|
(14%) |
|
|
|
$ 82 |
|
|
|
$ 75 |
|
|
|
9% |
|
Capital expenditures ($ millions) |
|
|
$ 26 |
|
|
|
$ 7 |
|
|
|
271% |
|
|
|
$ 54 |
|
|
|
$ 12 |
|
|
|
350% |
|
Minesite sustaining |
|
|
$ 26 |
|
|
|
$ 7 |
|
|
|
271% |
|
|
|
$ 54 |
|
|
|
$ 12 |
|
|
|
350% |
|
Minesite expansion |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
Financial Results
Segment EBIT for the three and six month periods ended June 30, 2015 were 11% and 62% higher,
respectively, than the same prior year periods. The increases were primarily due to a decrease in operating costs combined with an increase in sales volume, partially offset by a lower realized gold price.
Gold production for the three and six month period ended June 30, 2015 was 2% lower and 3% higher, respectively, compared to the same prior year
periods. The decrease in second quarter 2015 was primarily due to lower ore grades as a result of processing low sulfur ore to mitigate current low lime availability issues and allow for continued mill production. For the six month period ended
June 30, 2015, the increase in production was primarily due to higher head grade driven by the improved performance from both open pit and underground operations.
Cost of sales for the three and six month period ended June 30, 2015 was 5% and 12% lower,
respectively, compared to the same prior year periods. The decreases were primarily due to lower operating costs as a result of a decrease in power and diesel costs, the impact of the devaluation of the Australian dollar, as well as an increase in
capitalized stripping costs. For the three and six month periods ended June 30, 2015, cash costs were $42 and $91 per ounce lower, respectively, compared to the same prior year periods primarily due to the decrease in cost of sales combined
with the impact of higher sales volumes on unit production costs. All-in sustaining costs increased by $102 per ounce and $80 per ounce over the same prior year periods due to a significant increase in capitalized stripping.
|
|
|
|
|
BARRICK SECOND QUARTER 2015 |
|
39 |
|
MANAGEMENTS DISCUSSION AND ANALYSIS |
Capital expenditures for the three and six month period ended June 30, 2015 increased by 271% and
350%, respectively, compared to the same prior year periods. The increases were primarily due to a significant increase in capitalized stripping costs as a result of a change in the 2015 mine plan that increased open pit mining activity combined
with an increase in minesite sustaining capital expenditures due to the commencement of the
concentrate export project as well as a gas turbine power management system and controls project.
Due to the divestment of 50% of our ownership interest in Porgera, we now expect 2015 gold production to be in the range of 400 to 450 thousand
ounces at cash costs of $775 to $825 per ounce and all-in sustaining costs of $1,025 to $1,125 per ounce.
Kalgoorlie, Australia
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Summary of Operating Data |
|
For the three months ended June 30 |
|
|
For the six months ended June 30 |
|
|
|
|
|
2015 |
|
|
2014 |
|
|
% Change |
|
|
2015 |
|
|
2014 |
|
|
% Change |
|
|
|
Total tonnes mined (000s) |
|
|
10,243 |
|
|
|
8,606 |
|
|
|
19% |
|
|
|
19,518 |
|
|
|
17,543 |
|
|
|
11% |
|
Ore tonnes processed (000s) |
|
|
1,535 |
|
|
|
1,471 |
|
|
|
4% |
|
|
|
2,679 |
|
|
|
2,955 |
|
|
|
(9%) |
|
Average grade (grams/tonne) |
|
|
2.03 |
|
|
|
2.05 |
|
|
|
(1%) |
|
|
|
1.96 |
|
|
|
1.98 |
|
|
|
(1%) |
|
Gold produced (000s/oz) |
|
|
81 |
|
|
|
84 |
|
|
|
(4%) |
|
|
|
140 |
|
|
|
162 |
|
|
|
(14%) |
|
Gold sold (000s/oz) |
|
|
85 |
|
|
|
80 |
|
|
|
6% |
|
|
|
145 |
|
|
|
170 |
|
|
|
(15%) |
|
Cost of sales ($ millions) |
|
|
$ 78 |
|
|
|
$ 75 |
|
|
|
4% |
|
|
|
$ 144 |
|
|
|
$ 160 |
|
|
|
(10%) |
|
Cash costs (per oz) |
|
|
$ 778 |
|
|
|
$ 805 |
|
|
|
(3%) |
|
|
|
$ 853 |
|
|
|
$ 814 |
|
|
|
5% |
|
All-in sustaining costs (per oz) |
|
|
$ 886 |
|
|
|
$ 958 |
|
|
|
(8%) |
|
|
|
$ 1,045 |
|
|
|
$ 987 |
|
|
|
6% |
|
All-in costs (per oz) |
|
|
$ 886 |
|
|
|
$ 958 |
|
|
|
(8%) |
|
|
|
$ 1,045 |
|
|
|
$ 987 |
|
|
|
6% |
|
|
|
|
|
|
Summary of Financial Data |
|
For the three months ended June 30 |
|
|
For the six months ended June 30 |
|
|
|
|
|
2015 |
|
|
2014 |
|
|
% Change |
|
|
2015 |
|
|
2014 |
|
|
% Change |
|
|
|
Segment EBIT ($ millions) |
|
|
$ 18 |
|
|
|
$ 29 |
|
|
|
(38%) |
|
|
|
$ 27 |
|
|
|
$ 58 |
|
|
|
(53%) |
|
Segment EBITDA ($ millions) |
|
|
$ 31 |
|
|
|
$ 39 |
|
|
|
(21%) |
|
|
|
$ 49 |
|
|
|
$ 79 |
|
|
|
(38%) |
|
Capital expenditures ($ millions) |
|
|
$ 6 |
|
|
|
$ 10 |
|
|
|
(40%) |
|
|
|
$ 23 |
|
|
|
$ 26 |
|
|
|
(12%) |
|
Minesite sustaining |
|
|
$ 6 |
|
|
|
$ 10 |
|
|
|
(40%) |
|
|
|
$ 23 |
|
|
|
$ 26 |
|
|
|
(12%) |
|
Minesite expansion |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
Financial Results
Segment EBIT for the three and six month periods ended June 30, 2015 were 38% and 53% lower,
respectively, than the same prior year periods. The decrease in second quarter 2015 was primarily due to a lower realized gold price combined with an increase in depreciation expense, partially offset by an increase in sales volume. For the six
month period ended June 30, 2015, the decrease was primarily due to a reduction in sales volume combined with a lower realized gold price.
Gold
production for the three and six month period ended June 30, 2015 was 4% and 14% lower, respectively, compared to the same prior year periods. The decreases were primarily due to increased maintenance time on the SAG mill and operational
downtime as a result of issues relating to the conveyor and lube system.
Cost of sales for the three and six month period ended June 30, 2015
was 4% higher and 10% lower, respectively, compared to the same prior year periods. The increase in second quarter 2015 was primarily due to
more ore tonnes mined resulting in a decrease in capitalized stripping costs. For the six month period ended June 30, 2015 the decrease was primarily due to lower operating costs resulting
from a decrease in ore tonnes processed combined with the impact of the devaluation of the Australian dollar. For the three and six month periods ended June 30, 2015, cash costs were $27 per ounce lower and $39 per ounce higher, respectively,
compared to the same prior year periods. The decrease in second quarter 2015 was primarily due to the impact of higher sales volume on unit production costs. For the six month period ended June 30, 2015, the increase in cash costs per ounce
were primarily due to the impact of lower sales volume on unit production costs combined with an increase in shared services costs allocated to the mine site. All-in sustaining costs were $72 per ounce lower and $58 per ounce higher, respectively,
compared to the same prior year periods primarily reflecting the impact of lower and higher cash costs, respectively.
|
|
|
|
|
BARRICK SECOND QUARTER 2015 |
|
40 |
|
MANAGEMENTS DISCUSSION AND ANALYSIS |
Capital expenditures for the three and six month period ended June 30, 2015 decreased by 40% and 12%,
respectively, compared to the same prior year periods. The decreases were primarily due to lower capitalized stripping costs, partially offset by higher capital expenditures associated with an emissions reduction program.
Our guidance remains unchanged from our previous guidance range of 315 to 330 thousand ounces at cash
costs of $775 to $800 per ounce and all-in sustaining costs of $915 to $940 per ounce.
Acacia Mining plc1, Africa
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
100% basis |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Summary of Operating Data |
|
For the three months ended June 30 |
|
|
For the six months ended June 30 |
|
|
|
|
|
2015 |
|
|
2014 |
|
|
% Change |
|
|
2015 |
|
|
2014 |
|
|
% Change |
|
|
|
Total tonnes mined (000s) |
|
|
10,322 |
|
|
|
10,355 |
|
|
|
- |
|
|
|
20,475 |
|
|
|
19,892 |
|
|
|
3% |
|
Ore tonnes processed (000s) |
|
|
2,484 |
|
|
|
1,925 |
|
|
|
29% |
|
|
|
4,559 |
|
|
|
3,770 |
|
|
|
21% |
|
Average grade (grams/tonne) |
|
|
2.60 |
|
|
|
3.20 |
|
|
|
(19%) |
|
|
|
2.80 |
|
|
|
3.20 |
|
|
|
(13%) |
|
Gold produced (000s/oz) |
|
|
186 |
|
|
|
178 |
|
|
|
5% |
|
|
|
367 |
|
|
|
347 |
|
|
|
6% |
|
Gold sold (000s/oz) |
|
|
184 |
|
|
|
172 |
|
|
|
7% |
|
|
|
355 |
|
|
|
331 |
|
|
|
7% |
|
Cost of sales ($ millions) |
|
|
$ 187 |
|
|
|
$ 172 |
|
|
|
9% |
|
|
|
$ 361 |
|
|
|
$ 334 |
|
|
|
8% |
|
Cash costs (per oz) |
|
|
$ 777 |
|
|
|
$ 749 |
|
|
|
4% |
|
|
|
$ 780 |
|
|
|
$ 752 |
|
|
|
4% |
|
All-in sustaining costs (per oz) |
|
|
$ 1,149 |
|
|
|
$ 1,105 |
|
|
|
4% |
|
|
|
$ 1,133 |
|
|
|
$ 1,118 |
|
|
|
1% |
|
All-in costs (per oz) |
|
|
$ 1,140 |
|
|
|
$ 1,169 |
|
|
|
(2%) |
|
|
|
$ 1,130 |
|
|
|
$ 1,198 |
|
|
|
(6%) |
|
|
|
|
|
|
Summary of Financial Data |
|
For the three months ended June 30 |
|
|
For the six months ended June 30 |
|
|
|
|
|
2015 |
|
|
2014 |
|
|
% Change |
|
|
2015 |
|
|
2014 |
|
|
% Change |
|
|
|
Segment EBIT ($ millions) |
|
|
$ 36 |
|
|
|
$ 44 |
|
|
|
(18%) |
|
|
|
$ 69 |
|
|
|
$ 90 |
|
|
|
(23%) |
|
Segment EBITDA ($ millions) |
|
|
$ 70 |
|
|
|
$ 79 |
|
|
|
(11%) |
|
|
|
$ 136 |
|
|
|
$ 155 |
|
|
|
(12%) |
|
Capital expenditures ($ millions) |
|
|
$ 42 |
|
|
|
$ 59 |
|
|
|
(29%) |
|
|
|
$ 83 |
|
|
|
$ 113 |
|
|
|
(27%) |
|
Minesite sustaining |
|
|
$ 44 |
|
|
|
$ 49 |
|
|
|
(10%) |
|
|
|
$ 84 |
|
|
|
$ 89 |
|
|
|
(6%) |
|
Minesite expansion |
|
|
($ 2) |
|
|
|
$ 10 |
|
|
|
(120%) |
|
|
|
($ 1) |
|
|
|
$ 24 |
|
|
|
(104%) |
|
|
|
1 |
Formerly African Barrick Gold plc. |
Financial Results
Segment EBIT for the three and six month periods ended June 30, 2015 were 18% and 23% lower,
respectively, than the same prior year periods. The decreases were primarily due to higher cost of sales combined with a lower realized gold price, partially offset by an increase in sales volume.
Gold production for the three and six month period ended June 30, 2015 was 5% and 6% higher, respectively, compared to the same prior year periods.
The increase for second quarter 2015 was due to increased production at Bulyanhulu, partially offset by lower production at North Mara and Buzwagi. For the six month period ended June 30, 2015, the increased production was due to higher
production at Bulyanhulu and North Mara, partially offset by lower production at Buzwagi. Production at Bulyanhulu for the three and six month periods ended June 30, 2015 increased 42% and 26%, respectively, over the same prior year periods
primarily due to increased production from the new CIL plant, which was commissioned in fourth quarter 2014,
combined with the mining of higher grade ore from the underground and improved throughput, partially offset by lower recoveries, due to instability issues relating to the elution circuit. The
lower production at North Mara in second quarter 2015 was primarily due to the mining of lower grade ore from the Nyabirama pit and moving away from the main higher grade ore zone of the Gokona pit. Increased production at North Mara in the first
half of 2015 was primarily due to increased throughput as a result of business improvement initiatives in the mining and milling areas. Production at Buzwagi decreased 17% and 10% compared to the same prior year periods, respectively, primarily due
to lower grade, partially offset by increased recoveries resulting from process plant enhancements made in 2014 and increased throughput resulting from improved plant availability.
Cost of sales for the three and six month period ended June 30, 2015 was 9% and 8% higher, respectively, compared to the same prior year periods.
The increases were primarily due to a decrease in capitalized stripping
|
|
|
|
|
BARRICK SECOND QUARTER 2015 |
|
41 |
|
MANAGEMENTS DISCUSSION AND ANALYSIS |
costs combined with an increase in contractor services costs, increased maintenance costs and higher consumable costs resulting from the CIL plant becoming operational. This was partially offset
by lower labor costs as a result of headcount reductions and lower fuel costs. Cash costs were up 4% from the same prior year periods, primarily due to the increase in cost of sales, partially offset by the impact of higher sales volume on unit
production costs. All-in sustaining costs for the three and six month periods ended June 30, 2015 increased 4% and 1%, respectively, over the same prior year periods reflecting the higher cash costs, partially offset by a decrease in minesite
sustaining capital expenditures.
Capital expenditures for the three and six month period ended June 30, 2015 decreased by 29% and 27%,
respectively, compared to the same prior year periods. The decreases were primarily due to a reduction in minesite expansion capital expenditures attributable to lower costs relating to the CIL plant which was commissioned in fourth quarter 2014
combined with a decrease in minesite sustaining capital expenditures arising from a reduction in capitalized stripping costs.
Our guidance remains
unchanged from our previous guidance range of 480 to 510 thousand ounces (Barricks share) at cash costs of $695 to $725 per ounce and all-in sustaining costs of $1,050 to $1,100 per ounce.
Zaldívar, Chile
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Summary of Operating Data |
|
For the three months ended June 30 |
|
|
For the six months ended June 30 |
|
|
|
|
|
2015 |
|
|
2014 |
|
|
% Change |
|
|
2015 |
|
|
2014 |
|
|
% Change |
|
|
|
Copper produced (millions of lbs) |
|
|
52 |
|
|
|
54 |
|
|
|
(4%) |
|
|
|
104 |
|
|
|
108 |
|
|
|
(4%) |
|
Copper sold (millions of lbs) |
|
|
46 |
|
|
|
50 |
|
|
|
(8%) |
|
|
|
99 |
|
|
|
105 |
|
|
|
(6%) |
|
Cost of sales ($ millions) |
|
|
$ 101 |
|
|
|
$ 123 |
|
|
|
(18%) |
|
|
|
$ 215 |
|
|
|
$ 234 |
|
|
|
(8%) |
|
C1 cash costs (per lb) |
|
|
$ 1.85 |
|
|
|
$ 1.85 |
|
|
|
- |
|
|
|
$ 1.81 |
|
|
|
$ 1.76 |
|
|
|
3% |
|
C3 fully allocated costs (per lb) |
|
|
$ 2.18 |
|
|
|
$ 2.23 |
|
|
|
(2%) |
|
|
|
$ 2.18 |
|
|
|
$ 2.13 |
|
|
|
2% |
|
|
|
|
|
|
Summary of Financial Data |
|
For the three months ended June 30 |
|
|
For the six months ended June 30 |
|
|
|
|
|
2015 |
|
|
2014 |
|
|
% Change |
|
|
2015 |
|
|
2014 |
|
|
% Change |
|
|
|
Segment EBIT ($ millions) |
|
|
$ 22 |
|
|
|
$ 50 |
|
|
|
(56%) |
|
|
|
$ 49 |
|
|
|
$ 110 |
|
|
|
(55%) |
|
Segment EBITDA ($ millions) |
|
|
$ 38 |
|
|
|
$ 65 |
|
|
|
(42%) |
|
|
|
$ 84 |
|
|
|
$ 143 |
|
|
|
(41%) |
|
Capital expenditures ($ millions) |
|
|
$ 15 |
|
|
|
$ 22 |
|
|
|
(32%) |
|
|
|
$ 28 |
|
|
|
$ 52 |
|
|
|
(46%) |
|
Minesite sustaining |
|
|
$ 15 |
|
|
|
$ 22 |
|
|
|
(32%) |
|
|
|
$ 28 |
|
|
|
$ 52 |
|
|
|
(46%) |
|
Minesite expansion |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Project capex |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
Financial Results
Segment EBIT for the three and six month periods ended June 30, 2015 were 56% and 55% lower,
respectively, than the same prior year periods. The decreases were primarily due to a lower realized copper price combined with a decrease in sales volume.
Copper production for the three and six month periods ended June 30, 2015 was 4% lower compared to the same prior year periods. The decrease was
primarily due to flooding at the mine as a result of a severe rain event at the end of first quarter 2015, which negatively impacted production in the first half of the year.
Cost of sales for three and six month periods ended June 30, 2015 were 18% and 8% lower, respectively, than the same prior year periods. The
decrease in second quarter 2015 was primarily due to the purchase of copper cathode at market prices to satisfy contractual copper sales obligations in second quarter 2014. For the six
month period ended June 30, 2015, the decrease was primarily due to lower acid and maintenance costs. For the three and six month period ended June 30, 2015, C1 cash costs were in line
and 3% higher, respectively, than the same prior year periods. The increase in the first half of 2015 was primarily due to the impact of lower sales volume on unit production costs combined with the an increase in shared services costs allocated to
the mine site. C3 fully allocated costs per pound were $0.05 per pound lower and $0.05 per pound higher, respectively, compared to the same prior year periods, reflecting the effect of the above factors on C1 cash costs.
Capital expenditures for the three and six month period ended June 30, 2015 decreased by 32% and 46%, respectively, compared to the same prior year
periods due to lower capitalized stripping costs.
|
|
|
|
|
BARRICK SECOND QUARTER 2015 |
|
42 |
|
MANAGEMENTS DISCUSSION AND ANALYSIS |
Our guidance remains unchanged from our previous guidance range of 230 to 250 million pounds at C1
cash costs of $1.65 to $1.95 per pound and C3 fully allocated costs to be in the range of $2.00 to $2.30 per pound.
Lumwana, Zambia
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Summary of Operating Data |
|
For the three months ended June 30 |
|
|
For the six months ended June 30 |
|
|
|
|
|
2015 |
|
|
2014 |
|
|
% Change |
|
|
2015 |
|
|
2014 |
|
|
% Change |
|
|
|
Copper produced (millions of
lbs) |
|
|
63 |
|
|
|
13 |
|
|
|
385% |
|
|
|
129 |
|
|
|
63 |
|
|
|
105% |
|
Copper sold (millions of lbs) |
|
|
66 |
|
|
|
23 |
|
|
|
187% |
|
|
|
134 |
|
|
|
79 |
|
|
|
70% |
|
Cost of sales ($ millions) |
|
|
$ 136 |
|
|
|
$ 73 |
|
|
|
86% |
|
|
|
$ 273 |
|
|
|
$ 219 |
|
|
|
25% |
|
C1 cash costs (per lb) |
|
|
$ 2.01 |
|
|
|
$ 2.49 |
|
|
|
(19%) |
|
|
|
$ 1.95 |
|
|
|
$ 2.55 |
|
|
|
(24%) |
|
C3 fully allocated costs (per
lb) |
|
|
$ 2.73 |
|
|
|
$ 3.21 |
|
|
|
(15%) |
|
|
|
$ 2.60 |
|
|
|
$ 3.24 |
|
|
|
(20%) |
|
|
|
Summary of Financial Data |
|
For the three months ended June 30 |
|
|
For the six months ended June 30 |
|
|
|
|
|
2015 |
|
|
2014 |
|
|
% Change |
|
|
2015 |
|
|
2014 |
|
|
% Change |
|
|
|
Segment EBIT ($ millions) |
|
|
($ 6) |
|
|
|
($ 11) |
|
|
|
45% |
|
|
|
($ 17) |
|
|
|
($ 24) |
|
|
|
29% |
|
Segment EBITDA ($ millions) |
|
|
$ 3 |
|
|
|
$ 2 |
|
|
|
50% |
|
|
|
$ 10 |
|
|
|
$ 12 |
|
|
|
(17%) |
|
Capital expenditures ($
millions) |
|
|
$ 29 |
|
|
|
$ 59 |
|
|
|
(51%) |
|
|
|
$ 43 |
|
|
|
$ 91 |
|
|
|
(53%) |
|
Minesite sustaining |
|
|
$ 29 |
|
|
|
$ 59 |
|
|
|
(51%) |
|
|
|
$ 43 |
|
|
|
$ 91 |
|
|
|
(53%) |
|
Minesite expansion |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Project capex |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
Financial Results
Segment EBIT for the three and six month periods ended June 30, 2015 were 45% and 29% higher,
respectively, than the same prior year periods. The increases are primarily due to an increase in sales volume resulting from the mill shutdown that occurred in second quarter 2014 as a result of the partial collapse of the terminal end of the main
conveyor that negatively impacted production, partially offset by a lower realized copper price.
Copper production for the three and six month
period ended June 30, 2015 was 385% and 105% higher, respectively, compared to the same prior year periods. The increases were primarily due to the conveyor collapse mentioned above combined with better operating conditions at the mine in 2015
resulting from less rainfall.
Cost of sales for the three and six month period ended June 30, 2015 was 86% and 25% higher, respectively,
compared to the same prior year periods. The increases were primarily due to higher mining costs as a result of more ore tonnes mined compared to the same prior year periods, partially offset by lower depreciation expense resulting from the
impairment charge taken in fourth quarter 2014. For the three and six month period ended June 30, 2015, C1 cash costs were 19% and 24% lower, respectively, than the same prior year periods. The decreases were primarily due to the impact of
higher
sales volume on unit production costs and a continued positive trend in mining and processing efficiency resulting in a lower unit cost. C3 fully allocated costs per pound were $0.48 and $0.64
per pound lower respectively, compared to the same prior year periods reflecting the impact of lower C1 cash costs and lower depreciation as a result of the impairment taken in fourth quarter 2014. This was partially offset by a higher royalty rate
of 20%, which was effective in the first six months of 2015, compared to 6% in the same prior year periods.
Capital expenditures for the three and
six month period ended June 30, 2015 decreased by 51% and 53%, respectively, compared to the same prior year periods. The decreases were primarily due to lower capitalized stripping costs combined with the deferral of minesite sustaining
expenditures in anticipation of the suspension of operations.
On April 20, 2015, the Zambian government announced amendments to the
countrys mining tax regime that would replace the recently adopted 20 percent gross royalty on open pit mines with a nine percent royalty, along with the reintroduction of a 30 percent corporate income tax and a 15 percent variable profits
tax. The legislation was passed in late July. In third quarter 2015 we will evaluate the potential for a reversal of previous impairments recorded in fourth quarter 2014.
|
|
|
|
|
BARRICK SECOND QUARTER 2015 |
|
43 |
|
MANAGEMENTS DISCUSSION AND ANALYSIS |
Also in second quarter 2015, the Zambian power authority (ZESCO) announced reduction to power
generation necessitated by the low water levels in its reservoirs as a result of the poor rainfall experienced during the recent rainy season. We are working with industry and ZESCO to develop an optimal load shedding program to minimize the impact
to production.
Our guidance remains unchanged from our previous guidance range of 250 to 270 million pounds at C1
cash costs of $1.90 to $2.15 per pound and C3 fully allocated costs to be in the range of $2.65 to $2.95 per pound.
|
|
|
|
|
|
|
|
|
|
|
FINANCIAL CONDITION REVIEW |
|
|
|
|
|
|
|
|
Summary Balance Sheet and Key Financial Ratios |
|
|
|
|
|
|
|
|
|
|
|
|
|
($ millions, except ratios and share amounts) |
|
As at June 30, 2015 |
|
|
As at December 31, 2014 |
|
|
|
Total cash and equivalents |
|
|
$ 2,122 |
|
|
|
$ 2,699 |
|
Current assets |
|
|
4,668 |
|
|
|
3,451 |
|
Non-current assets |
|
|
26,403 |
|
|
|
27,729 |
|
|
|
Total Assets |
|
|
$ 33,193 |
|
|
|
$ 33,879 |
|
|
|
Current liabilities excluding short-term
debt |
|
|
$ 2,126 |
|
|
|
$ 2,227 |
|
Non-current liabilities excluding
long-term debt |
|
|
5,472 |
|
|
|
5,709 |
|
Debt (current and long-term) |
|
|
12,823 |
|
|
|
13,081 |
|
|
|
Total Liabilities |
|
|
$ 20,421 |
|
|
|
$ 21,017 |
|
|
|
Total shareholders equity |
|
|
10,169 |
|
|
|
10,247 |
|
Non-controlling interests |
|
|
2,603 |
|
|
|
2,615 |
|
|
|
Total Equity |
|
|
$ 12,772 |
|
|
|
$ 12,862 |
|
|
|
Total common shares outstanding
(millions of shares)1 |
|
|
1,165 |
|
|
|
1,165 |
|
|
|
|
|
|
Key Financial Ratios: |
|
|
|
|
|
|
|
|
|
|
Current ratio2 |
|
|
2.62:1 |
|
|
|
2.40:1 |
|
Debt-to-equity3 |
|
|
1.00:1 |
|
|
|
1.02:1 |
|
Debt-to-total capitalization4 |
|
|
0.38:1 |
|
|
|
0.39:1 |
|
|
|
1 Total common shares outstanding do not
include 3.9 million stock options.
2 Represents current assets divided by
current liabilities (including short-term debt) as at June 30, 2015 and December 31, 2014.
3 Represents debt divided by total shareholders equity (including
minority interest) as at June 30, 2015 and December 31, 2014.
4 Represents debt divided by capital stock and debt as at June 30, 2015 and
December 31, 2014.
Balance Sheet Review
Total assets were $33.2 billion at June 30, 2015, in line with total assets at December 31, 2014.
Our asset base is primarily comprised of non-current assets such as property, plant and equipment and goodwill, reflecting the capital intensive nature of the mining business and our history of growing through acquisitions. Other significant assets
include production inventories, indirect taxes and other government receivables, and cash and equivalents. We typically do not carry a material accounts receivable balance, since only sales of concentrate and copper cathode have a settlement period.
Total liabilities at June 30, 2015 totaled $20 billion, consistent with total liabilities at December 31, 2014.
Shareholders Equity
|
|
|
|
|
As at July 27, 2015 |
|
Number of shares |
|
|
|
Common shares |
|
|
1,164,669,758 |
|
Stock options |
|
|
4,936,361 |
|
|
|
Comprehensive Income
Comprehensive income consists of net income or loss, together with certain other economic gains and losses, which, collectively, are described as
other comprehensive income or OCI, and excluded from the income statement.
For second quarter 2015 other comprehensive
income was a gain of $57 million on an after-tax basis. The gain reflected gains of $37 million on hedge contracts
|
|
|
|
|
BARRICK SECOND QUARTER 2015 |
|
44 |
|
MANAGEMENTS DISCUSSION AND ANALYSIS |
designated for future periods, caused primarily by changes in currency exchange rates, copper prices, and fuel prices, reclassification adjustments totaling $35 million for losses on hedge
contracts designated for 2015 (or ineffective amounts) that were transferred to earnings or PPE in conjunction with the recognition of the related hedge exposure, $2 million in gains for currency translation adjustments, and $1 million of gains
recorded as a result of realized changes in equity investments, partially offset by $6 million of losses recorded as a result in changes in the fair value of investments held during the quarter, and $12 million loss due to tax expense on the overall
increase in OCI.
Included in accumulated other comprehensive income at June 30, 2015 were unrealized pre-tax losses on currency, commodity and
interest rate hedge contracts totaling $77 million. The balance primarily relates to currency hedge contracts that are designated against operating costs and capital expenditures, primarily over the next two years, including $12 million remaining in
crystallized hedge losses related to our Australian dollar contracts that were settled in third quarter 2012 or closed out in the second half of 2013 and $16 million in crystallized hedge gains related to our silver contracts. These hedge
gains/losses are expected to be recorded in earnings at the same time the corresponding hedged operating costs/depreciation are recorded in earnings.
Financial
Position and Liquidity
Our capital structure comprises a mix of debt and shareholders equity. As at June 30, 2015, our total debt was
$12.8 billion (debt net of cash and equivalents was $10.7 billion) and our debt-to-equity ratio and debt-to-total capitalization ratios were 1:1 and 0.38:1, respectively. This compares to debt as at December 31, 2014 of $13.1 billion (debt net
of cash and equivalents was $10.4 billion), and debt-to-equity and debt-to-total capitalization ratios of 1.02:1 and 0.39:1, respectively. We have attributable debt principal of less than $100 million maturing by the end of 2015 and less than $800
million due by the end of 2017 (refer to note 18B to the consolidated financial statements). Our $4.0 billion revolving credit facility (2012 Credit Facility) is fully undrawn and expires in January 2020.
1 |
Amounts exclude capital leases and include 60% of the Pueblo Viejo financing and 100% of the Acacia financing. |
Our top priority is restoring a strong balance sheet and we have targeted a reduction in our debt of $3 billion by the end of 2015. Thus far, we have
announced agreements representing $2.45 billion from asset sales, joint ventures and streaming. In addition, we have also retired approximately $250 million in debt using cash on hand in the first half of this year. Collectively, these actions
represent $2.7 billion, or 90 percent of our target. To begin with, we intend to use a portion of the net proceeds from the sale of the Cowal mine to redeem the outstanding $229 million aggregate principal amount of 2.90% notes due 2016 issued by
Barrick. The notes will be redeemed on September 9, 2015 in accordance with their terms.
Our primary source of liquidity is our operating cash
flow, which is dependent on the ability of our operations to deliver projected future cash flows. The companys Board of Directors has reduced the quarterly dividend by 60 percent to $0.02 per share as a prudent measure to increase financial
flexibility in light of current market conditions1. The Board of Directors has also approved a Dividend Reinvestment Plan (the DRIP), which we intend to make available to eligible
shareholders for the first time with payment of the above-mentioned dividend on September 15, 2015 to shareholders of record on August 31, 2015. The DRIP will allow registered or beneficial holders of Barricks common shares who
reside in Canada or the United States to reinvest cash dividends paid on their common shares in additional common shares at a discount to the average market price (as defined in the DRIP), currently set at 3% and subject to change at the discretion
of the board of directors. Other options to enhance liquidity include drawing the $4.0 billion available under our 2012 Credit Facility (subject to
1 |
The declaration and payment of dividends is at the discretion of the Board of Directors and will depend on the companys financial results, cash
requirements, future prospects and other factors deemed relevant by the Board. |
|
|
|
|
|
BARRICK SECOND QUARTER 2015 |
|
45 |
|
MANAGEMENTS DISCUSSION AND ANALYSIS |
compliance with covenants and the making of certain representations and warranties, this facility is
available for drawdown as a source of financing); further non-core asset sales or joint ventures opportunities; and issuances of debt or equity securities in the public markets or to private investors, which could be undertaken for liquidity
enhancement and/or in connection with establishing a strategic partnership. Many factors, including but not limited to, general market conditions and then prevailing metals prices could impact our ability to issue securities on acceptable terms, as
could our credit ratings. Moodys and S&P currently rate our long-term debt Baa2 (negative) and BBB- (stable), respectively after our credit rating was downgraded by S&P on March 2, 2015 to BBB- (stable), which is the lowest
investment grade rating. Further changes in our ratings could affect the trading prices of our securities and our cost of capital. If we were to borrow under our 2012 Credit Facility, the applicable interest rate on the amounts borrowed would be
based, in part, on our credit ratings at the time. The key financial covenant in the 2012 Credit Facility (undrawn as at August 5, 2015) requires Barrick to maintain a consolidated tangible net worth (CTNW) of at least $3.0 billion.
Barricks CTNW was $5.7 billion as at June 30, 2015.
Cash and equivalents and cash flow
Total cash and cash equivalents as at June 30, 2015 were $2.1 billion2. Our cash position
consists of a mix of term deposits, treasury bills and money market investments and is primarily denominated in US dollars.
2 |
Includes $591 million cash held at Acacia and Pueblo Viejo, which may not be readily deployed outside of Acacia and/or Pueblo Viejo.
|
Summary of Cash Inflow (Outflow)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
($ millions) |
|
For the three months ended June 30 |
|
|
For the six months
ended June 30 |
|
|
|
|
|
2015 |
|
|
2014 |
|
|
2015 |
|
|
2014 |
|
|
|
Operating inflows |
|
|
$ 525 |
|
|
|
$ 488 |
|
|
|
$ 841 |
|
|
|
$ 1,073 |
|
|
|
|
|
|
|
|
Investing activities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital Expenditures1 |
|
|
$ (499) |
|
|
|
$ (616) |
|
|
|
$ (1,013) |
|
|
|
$ (1,232) |
|
|
|
|
|
|
Divestitures |
|
|
- |
|
|
|
86 |
|
|
|
2 |
|
|
|
166 |
|
|
|
|
|
|
Other |
|
|
1 |
|
|
|
(10) |
|
|
|
45 |
|
|
|
10 |
|
|
|
|
|
|
|
|
Total investing outflows |
|
|
$ (498) |
|
|
|
$ (540) |
|
|
|
$ (966) |
|
|
|
$ (1,056) |
|
|
|
|
|
|
|
|
Financing activities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net change in debt |
|
|
$ (85) |
|
|
|
$ (18) |
|
|
|
$ (267) |
|
|
|
$ 40 |
|
|
|
|
|
|
Dividends |
|
|
(58) |
|
|
|
(58) |
|
|
|
(116) |
|
|
|
(116) |
|
|
|
|
|
|
Proceeds from divestment of 10% of issued ordinary share capital of Acacia |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
186 |
|
|
|
|
|
|
Other |
|
|
1 |
|
|
|
- |
|
|
|
(42) |
|
|
|
2 |
|
|
|
Total financing (outflows) inflows |
|
|
$ (142) |
|
|
|
$ (76) |
|
|
|
$ (425) |
|
|
|
$ 112 |
|
|
|
|
|
|
|
|
Effect of exchange rate |
|
|
(1) |
|
|
|
1 |
|
|
|
(7) |
|
|
|
(4) |
|
|
|
Increase/(decrease) in cash and equivalents |
|
|
($ 116) |
|
|
|
($ 127) |
|
|
|
(557) |
|
|
|
125 |
|
|
|
|
1 |
The amounts include capitalized interest of $13 million and $17 million for the three and six months ended June 30, 2015, respectively (2014: $11 million
and $13 million, respectively). |
In second quarter 2015, we generated $525 million in operating cash flow, compared to $488 million
of operating cash flow in the same prior year period. The increase in operating cash flow primarily reflects working capital improvements, particularly a lower draw down of accounts payable and accruals relating to our Pascua-Lama project, partially
offset by lower realized gold and copper prices and lower gold sales volume. The most significant driver of the change in operating cash flow is market gold and copper prices. The ability of our operations to deliver projected future cash flows
within the parameters of a reduced production profile, as well as future changes in gold and copper market prices, either favorable or unfavorable, will continue to have a material impact on our cash flow and liquidity. The principal uses of
operating cash flow are to fund our capital expenditures, interest and dividend payments.
Cash used in investing activities in second quarter 2015
amounted to $498 million compared to $540 million in the same prior year period. The decrease of $42 million compared to second quarter 2014 is primarily due to a decrease in capital expenditures, partially offset by lower proceeds from divestitures
as we completed the sale of two of our Australian mines and one of our North American mines in first half 2014. In second quarter 2015, capital expenditures on a cash basis were $499
|
|
|
|
|
BARRICK SECOND QUARTER 2015 |
|
46 |
|
MANAGEMENTS DISCUSSION AND ANALYSIS |
million compared to $616 million in second quarter 2014. The decrease of $117 million is primarily due to a decrease in project capital expenditures due to the suspension of our Pascua-Lama
project, combined with a decrease in minesite development capital due to a reduction in capitalized stripping costs across most sites.
Net financing cash outflows for second quarter 2015 amounted to $142 million, compared to $76 million of
cash outflows in the same prior year period. The net financing cash outflows for second quarter 2015 primarily consist of $88 million of debt repayments and $58 million of dividend payments. The net financing cash outflows for second quarter 2014
primarily consist of $18 million in debt repayments combined with $58 million of dividend payments.
Summary of Financial Instruments
|
|
|
|
|
|
|
|
|
|
|
|
|
As at June 30, 2015 |
|
|
|
|
|
Financial Instrument |
|
|
Principal/Notional Amount |
|
|
|
|
Associated Risks |
|
|
|
|
|
|
|
|
|
|
|
|
|
● Interest
rate |
Cash and equivalents |
|
|
|
|
|
|
$ 2,122 |
|
|
million |
|
● Credit |
|
|
|
|
|
|
|
|
|
|
|
|
|
● Credit |
Accounts receivable |
|
|
|
|
|
|
$ 354 |
|
|
million |
|
● Market |
|
|
|
|
|
|
|
|
|
|
|
|
|
● Market |
Other investments |
|
|
|
|
|
|
$ 12 |
|
|
million |
|
● Liquidity |
|
Accounts payable |
|
|
|
|
|
|
$ 1,319 |
|
|
million |
|
● Liquidity |
|
Debt |
|
|
|
|
|
|
$ 12,920 |
|
|
million |
|
● Interest
rate |
|
Restricted share units |
|
|
|
|
|
|
$ 52 |
|
|
million |
|
● Market |
|
Deferred share units |
|
|
|
|
|
|
$ 4 |
|
|
million |
|
● Market |
|
|
|
|
CAD |
|
|
|
120 |
|
|
million |
|
● Market/liquidity |
|
|
|
CLP |
|
|
|
51,000 |
|
|
million |
|
● Credit |
|
|
|
AUD |
|
|
|
250 |
|
|
million |
|
● Interest
rate |
Derivative instruments - currency contracts |
|
|
ZAR |
|
|
|
171 |
|
|
million |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
● Market/liquidity |
|
|
|
|
|
|
|
|
|
|
|
|
● Credit |
Derivative instruments - energy contracts |
|
|
Diesel |
|
|
|
7 |
|
|
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 22 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
|
|
|
|
|
BARRICK SECOND QUARTER 2015 |
|
47 |
|
MANAGEMENTS DISCUSSION AND ANALYSIS |
Contractual Obligations and Commitments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Payments due |
|
|
|
|
|
|
|
|
|
|
|
|
As at June 30, 2015 |
|
|
|
|
|
|
|
|
|
|
|
|
($ millions) |
|
20151 |
|
|
2016 |
|
|
2017 |
|
|
2018 |
|
|
2019 |
|
|
2020 and thereafter |
|
|
Total |
|
|
|
Debt2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Repayment of principal |
|
|
$ 83 |
|
|
|
$ 660 |
|
|
|
$ 127 |
|
|
|
$ 873 |
|
|
|
$ 871 |
|
|
|
$ 9,985 |
|
|
|
$ 12,599 |
|
Capital leases |
|
|
41 |
|
|
|
65 |
|
|
|
62 |
|
|
|
56 |
|
|
|
42 |
|
|
|
55 |
|
|
|
321 |
|
Interest |
|
|
329 |
|
|
|
651 |
|
|
|
630 |
|
|
|
620 |
|
|
|
549 |
|
|
|
6,443 |
|
|
|
9,222 |
|
Provisions for environmental
rehabilitation3 |
|
|
76 |
|
|
|
112 |
|
|
|
71 |
|
|
|
77 |
|
|
|
127 |
|
|
|
2,035 |
|
|
|
2,498 |
|
Operating leases |
|
|
35 |
|
|
|
49 |
|
|
|
48 |
|
|
|
46 |
|
|
|
36 |
|
|
|
58 |
|
|
|
272 |
|
Restricted share units |
|
|
18 |
|
|
|
9 |
|
|
|
20 |
|
|
|
5 |
|
|
|
- |
|
|
|
- |
|
|
|
52 |
|
Pension benefits and other
post-retirement benefits |
|
|
12 |
|
|
|
22 |
|
|
|
22 |
|
|
|
22 |
|
|
|
22 |
|
|
|
433 |
|
|
|
533 |
|
Derivative liabilities4 |
|
|
85 |
|
|
|
95 |
|
|
|
34 |
|
|
|
16 |
|
|
|
1 |
|
|
|
- |
|
|
|
231 |
|
Purchase obligations for supplies and
consumables5 |
|
|
390 |
|
|
|
349 |
|
|
|
216 |
|
|
|
145 |
|
|
|
119 |
|
|
|
264 |
|
|
|
1,483 |
|
Capital commitments6 |
|
|
72 |
|
|
|
18 |
|
|
|
9 |
|
|
|
9 |
|
|
|
5 |
|
|
|
8 |
|
|
|
121 |
|
Social development costs7 |
|
|
28 |
|
|
|
8 |
|
|
|
6 |
|
|
|
6 |
|
|
|
6 |
|
|
|
174 |
|
|
|
228 |
|
|
|
Total |
|
|
$ 1,169 |
|
|
|
$ 2,038 |
|
|
|
$ 1,245 |
|
|
|
$ 1,875 |
|
|
|
$ 1,778 |
|
|
|
$ 19,455 |
|
|
|
$ 27,560 |
|
|
|
1 |
Represents the obligations and commitments for the remainder of the year. |
2 |
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
June 30, 2015. Interest is calculated on our long-term debt obligations using both fixed and variable rates. |
3 |
Provisions for Environmental Rehabilitation - Amounts presented in the table represent the undiscounted uninflated future payments for the expected cost of
provisions for environmental rehabilitation. |
4 |
Derivative Liabilities - Amounts presented in the table relate to derivative contracts disclosed under note 18C to the consolidated financial statements.
Payments related to derivative contracts may be subject to change given variable market conditions. |
5 |
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. |
6 |
Capital Commitments - Purchase obligations for capital expenditures include only those items where binding commitments have been entered into.
|
7 |
Social Development Costs - Includes Pascua-Lamas commitment related to the potential funding of a power transmission line in Argentina of $93 million,
expected to be paid in 2020 and thereafter. |
INTERNAL CONTROL OVER FINANCIAL REPORTING AND DISCLOSURE CONTROLS AND PROCEDURES
Management is responsible for establishing and maintaining adequate internal control over financial
reporting and disclosure controls and procedures as defined in our 2014 annual MD&A.
Together, the internal control over financial reporting and
disclosure controls and procedures frameworks provide internal control over financial reporting and disclosure. Due to its inherent limitations, internal control over financial reporting and disclosure may not prevent or detect all misstatements.
Further, the effectiveness of internal control is subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with policies or procedures may change.
Management will continue to monitor the effectiveness of its internal control over financial reporting and
disclosure controls and procedures under the new organizational structure and may make modifications from time to time as considered necessary.
|
|
|
|
|
BARRICK SECOND QUARTER 2015 |
|
48 |
|
MANAGEMENTS DISCUSSION AND ANALYSIS |
REVIEW OF
QUARTERLY RESULTS
Quarterly Information1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2015 |
|
|
2014 |
|
|
2013 |
|
|
|
($ millions, except where indicated) |
|
Q2 |
|
|
Q1 |
|
|
Q4 |
|
|
Q3 |
|
|
Q2 |
|
|
Q1 |
|
|
Q4 |
|
|
Q3 |
|
|
|
Revenues |
|
|
$ 2,231 |
|
|
|
$ 2,245 |
|
|
|
$ 2,510 |
|
|
|
$ 2,598 |
|
|
|
$ 2,458 |
|
|
|
$ 2,647 |
|
|
|
$ 2,942 |
|
|
|
$ 2,985 |
|
Realized price per ounce - gold2 |
|
|
1,190 |
|
|
|
1,219 |
|
|
|
1,204 |
|
|
|
1,285 |
|
|
|
1,289 |
|
|
|
1,285 |
|
|
|
1,272 |
|
|
|
1,323 |
|
Realized price per pound - copper2 |
|
|
2.66 |
|
|
|
2.55 |
|
|
|
2.91 |
|
|
|
3.09 |
|
|
|
3.17 |
|
|
|
3.03 |
|
|
|
3.34 |
|
|
|
3.40 |
|
Cost of sales |
|
|
1,689 |
|
|
|
1,708 |
|
|
|
1,799 |
|
|
|
1,642 |
|
|
|
1,631 |
|
|
|
1,719 |
|
|
|
1,853 |
|
|
|
1,788 |
|
Net earnings (loss) |
|
|
(9) |
|
|
|
57 |
|
|
|
(2,851) |
|
|
|
125 |
|
|
|
(269) |
|
|
|
88 |
|
|
|
(2,830) |
|
|
|
172 |
|
Per share (dollars)2,3 |
|
|
(0.01) |
|
|
|
0.05 |
|
|
|
(2.45) |
|
|
|
0.11 |
|
|
|
(0.23) |
|
|
|
0.08 |
|
|
|
(2.61) |
|
|
|
0.17 |
|
Adjusted net earnings2 |
|
|
60 |
|
|
|
62 |
|
|
|
174 |
|
|
|
222 |
|
|
|
159 |
|
|
|
238 |
|
|
|
406 |
|
|
|
577 |
|
Per share (dollars)2,3 |
|
|
0.05 |
|
|
|
0.05 |
|
|
|
0.15 |
|
|
|
0.19 |
|
|
|
0.14 |
|
|
|
0.20 |
|
|
|
0.37 |
|
|
|
0.58 |
|
Operating cash flow |
|
|
525 |
|
|
|
316 |
|
|
|
371 |
|
|
|
852 |
|
|
|
488 |
|
|
|
585 |
|
|
|
1,016 |
|
|
|
1,231 |
|
Adjusted operating cash flow2 |
|
|
$ 525 |
|
|
|
$ 316 |
|
|
|
$ 371 |
|
|
|
$ 852 |
|
|
|
$ 488 |
|
|
|
$ 585 |
|
|
|
$ 1,085 |
|
|
|
$ 1,300 |
|
|
|
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 50 - 56 of this MD&A. |
Our recent financial results reflect a trend of declining spot gold prices, and as a result of an emphasis
on cost control and maximizing free cash flow, costs have also decreased. Our adjusted net earnings and adjusted operating cash flow levels have fluctuated with gold and copper realized prices and production levels each quarter. In fourth quarter
2014, we recorded asset and goodwill impairments of $2.8 billion (net of tax effects and non-controlling interests), primarily at Lumwana, Zaldívar and Cerro Casale. The net loss in second quarter 2014 reflected asset and goodwill impairment
charges of $514 million relating to Jabal Sayid as a result
of classifying the project as held for sale. In fourth quarter 2013, we recorded asset and goodwill impairment charges totaling $2.8 billion (net of tax effects and non-controlling interests),
primarily at Pascua-Lama, Porgera, Veladero and goodwill related to our Australia Pacific segment. The net loss in second quarter 2013 reflected asset and goodwill impairment charges totaling $8.7 billion (net of tax and non-controlling interest
effects), primarily at Pascua-Lama, Buzwagi, Jabal Sayid and goodwill related to our global copper, Australia Pacific and Capital Projects segments.
IFRS CRITICAL ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES
Management has discussed the development and determination of our critical accounting estimates and
significant accounting policies with the Audit Committee of the Board of Directors, and the Audit Committee has reviewed the disclosure relating to such estimates and policies in conjunction with its review of this MD&A. The accounting policies
and methods we utilize determine how we report our financial condition and results of operations, and they may require management to make estimates or rely on assumptions about matters that are inherently uncertain. Our significant accounting
policies are disclosed in note 2 of our most recent Annual Consolidated Financial Statements. A summary of current and future accounting policy changes is disclosed in notes 2B and 2C of the accompanying interim consolidated financial statements,
respectively, including our early adoption of IFRS 9 Financial Instruments in first quarter 2015.
Critical Accounting Estimates and Judgments
Certain accounting estimates have been identified as being critical to the presentation of our financial condition and results of operations
because they require us to make subjective and/or complex judgments about matters that are inherently uncertain; or there is a reasonable likelihood that materially different amounts could be reported under different conditions or using different
assumptions and estimates. Our significant accounting judgments, estimates and assumptions are disclosed in note 3 of the Annual Consolidated Financial Statements and an update is provided in note 3 of the accompanying interim consolidated financial
statements.
Pascua-Lama
The Pascua-Lama project received
$570 million in value added tax (VAT) refunds in Chile relating to the development of the Chilean side of the project. These amounts must be repaid if the project does not enter
|
|
|
|
|
BARRICK SECOND QUARTER 2015 |
|
49 |
|
MANAGEMENTS DISCUSSION AND ANALYSIS |
production by 2017. However, in light of the temporary suspension of construction of the Pascua-Lama project, Barrick currently expects to be able to extend the 2017 deadline in order to avoid
repayment of these amounts. The Pascua-Lama project has also recorded $437 million in VAT recoverable in Argentina relating to the development of the Argentine side of the project. These amounts may not be recoverable if the project does not enter
into production and are subject to devaluation risk as the amounts are recoverable in Argentine pesos.
Accounting for impairment of non-current assets
In accordance with our accounting policy, goodwill is tested for impairment in the fourth quarter and also when there is an indicator of impairment.
Non-current assets are tested for impairment when events or changes in circumstances suggest that the carrying amount may not be recoverable. No potential indicators of impairment at our operating segment level were identified in second quarter
2015. Based on the results of our last impairment test performed in fourth quarter 2014, the carrying value of the CGUs that are most sensitive to the change in sales prices used in the annual test are:
|
|
|
|
|
|
|
As at June 30, 2015 |
|
Carrying value |
|
|
|
Cortez1 |
|
|
$3,824 |
|
Zaldívar1,2 |
|
|
2,420 |
|
Pascua-Lama2 |
|
|
1,263 |
|
Veladero1 |
|
|
1,090 |
|
Bald Mountain2 |
|
|
522 |
|
Cerro Casale2 |
|
|
514 |
|
Lumwana2 |
|
|
335 |
|
Round Mountain2 |
|
|
151 |
|
|
|
1 |
Carrying value includes goodwill. |
2 |
These CGUs have been impaired or had an impairment reversal in 2014 and therefore their fair value approximates carrying value. |
As disclosed on page 25, the Zambian government announced amendments to the countrys mining tax regime. The legislation was passed in late July. In
third quarter 2015 we will evaluate the potential for a reversal of previous impairments recorded in fourth quarter 2014.
Subsequent to quarter end,
the trading price of the companys shares declined such that the carrying value of our net assets exceeded our market capitalization, which is a potential indicator of impairment. If this potential indicator of impairment exists at the end of
third quarter 2015, we may be required to conduct an impairment assessment.
As noted on page 45, the key financial covenant in the 2012 Credit
Facility requires Barrick to maintain a CTNW of at least $3.0 billion. Barricks CTNW would be reduced by the amount of any non-current asset impairments, repayments of VAT refunds or write-downs of VAT receivables. Barricks CTNW was $5.7
billion as at June 30, 2015.
NON-GAAP FINANCIAL PERFORMANCE MEASURES
We use certain non-GAAP financial performance measures in our MD&A. For a detailed description of each
of the non-GAAP measures used in this MD&A, please refer to the Non-GAAP Financial Performance Measures in our 2014 annual MD&A. The non-GAAP financial performance measures set out in this MD&A are intended to provide additional
information to investors and do not have any standardized definition under IFRS and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS.
Starting with our first quarter 2015 MD&A, we have amended our calculation of cash costs to exclude hedge gains/losses in the individual mine site
figures. Hedge gains/losses will be included in the
consolidated company cash costs, but are not allocated because hedging is done at a corporate level and not within the control of the mine site. Comparative figures have been restated to reflect
this change.
Also starting with our first quarter 2015 MD&A, we have begun including costs that were formerly part of operating segment
administration costs in cash costs. This was done to reflect the change in our operating structure that occurred at the end of 2014 to remove all regional oversight and hold the mine sites directly accountable for the cost of the functional services
they require to run their business.
|
|
|
|
|
BARRICK SECOND QUARTER 2015 |
|
50 |
|
MANAGEMENTS DISCUSSION AND ANALYSIS |
Reconciliation of Net Earnings to Adjusted Net Earnings and Adjusted Net Earnings per Share1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
($ millions, except per share amounts in dollars) |
|
For the three months ended June 30 |
|
|
For the six months ended June 30 |
|
|
|
|
|
2015 |
|
|
2014 |
|
|
2015 |
|
|
2014 |
|
|
|
Net earnings (loss) attributable to equity holders of the Company |
|
|
$ (9) |
|
|
|
($ 269) |
|
|
|
$ 48 |
|
|
|
($ 181) |
|
Impairment charges related to intangibles, goodwill, property, plant and equipment, and
investments2 |
|
|
22 |
|
|
|
525 |
|
|
|
25 |
|
|
|
536 |
|
Acquisition/disposition (gains)/losses3 |
|
|
(4) |
|
|
|
(24) |
|
|
|
(26) |
|
|
|
(23) |
|
Foreign currency translation (gains)/losses4 |
|
|
30 |
|
|
|
31 |
|
|
|
36 |
|
|
|
144 |
|
Tax adjustments5 |
|
|
12 |
|
|
|
(112) |
|
|
|
12 |
|
|
|
(112) |
|
Other expense adjustments6 |
|
|
3 |
|
|
|
42 |
|
|
|
21 |
|
|
|
85 |
|
Unrealized losses/(gains) on non-hedge derivative instruments7 |
|
|
6 |
|
|
|
(34) |
|
|
|
6 |
|
|
|
(52) |
|
|
|
Adjusted net earnings |
|
|
$ 60 |
|
|
|
$ 159 |
|
|
|
$ 122 |
|
|
|
$ 397 |
|
|
|
Net earnings (loss) per share8 |
|
|
(0.01) |
|
|
|
(0.23) |
|
|
|
0.04 |
|
|
|
(0.16) |
|
Adjusted net earnings per share8 |
|
|
0.05 |
|
|
|
0.14 |
|
|
|
0.10 |
|
|
|
0.34 |
|
|
|
1 |
Amounts presented in this table are after-tax and net of non-controlling interest. |
2 |
Impairment charges for the three and six month period ended June 30, 2015 is presented net of tax and non-controlling interest $13 million and $14
million expense, respectively (2014: ($13) million and ($11) million benefit, respectively). |
3 |
Acquisition/disposition losses for the three and six month period ended June 30, 2015 is presented net of tax ($2) million benefit and $1 million
expense, respectively (2014: ($3) million and ($1) million benefit, respectively). |
4 |
Foreign currency translation losses for the three and six month period ended June 30, 2015 is presented net of tax $8 million and $7 million expense,
respectively (2014: $4 million and $9 million expense, respectively). |
5 |
Tax adjustments for the three and six month period ended June 30, 2015 is presented net of non-controlling interest $8 million expense, respectively
(2014: nil, respectively). |
6 |
Other expense adjustments for the three and six month period ended June 30, 2015 is presented net of tax nil and $8 million expense, respectively (2014:
$13 million and $19 million expense, respectively). |
7 |
Unrealized losses/(gains) on non-hedge derivative instruments for the three and six month period ended June 30, 2015 is presented net of tax ($3) million
and ($2) million benefit, respectively (2014: $11 million and $17 million expense, respectively). |
8 |
Calculated using weighted average number of shares outstanding under the basic method of earnings per share. |
Reconciliation of Operating Cash Flow to Free Cash Flow
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
($ millions) |
|
For the three months ended June 30 |
|
|
For the six months ended June 30 |
|
|
|
|
|
2015 |
|
|
2014 |
|
|
2015 |
|
|
2014 |
|
|
|
Operating cash flow |
|
|
$ 525 |
|
|
|
$ 488 |
|
|
|
$ 841 |
|
|
|
$ 1,073 |
|
Capital expenditures |
|
|
(499) |
|
|
|
(616) |
|
|
|
(1,013) |
|
|
|
(1,232) |
|
|
|
Free cash flow |
|
|
$ 26 |
|
|
|
($ 128) |
|
|
|
($ 172) |
|
|
|
($ 159) |
|
|
|
|
|
|
|
|
BARRICK SECOND QUARTER 2015 |
|
51 |
|
MANAGEMENTS DISCUSSION AND ANALYSIS |
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 three months ended June 30 |
|
|
For the six months ended June 30 |
|
|
|
|
|
|
|
Reference |
|
2015 |
|
|
2014 |
|
|
2015 |
|
|
2014 |
|
|
|
|
|
Cost of sales |
|
A |
|
|
$ 1,410 |
|
|
|
$ 1,407 |
|
|
|
$ 2,834 |
|
|
|
$ 2,851 |
|
|
|
Cost of sales applicable to non-controlling interests1 |
|
B |
|
|
(137) |
|
|
|
(131) |
|
|
|
(294) |
|
|
|
(252) |
|
|
|
Cost of sales applicable to power sales |
|
C |
|
|
(16) |
|
|
|
(22) |
|
|
|
(29) |
|
|
|
(35) |
|
|
|
Other metal sales |
|
D |
|
|
(32) |
|
|
|
(44) |
|
|
|
(74) |
|
|
|
(92) |
|
|
|
Realized non-hedge (gains)/losses |
|
E |
|
|
27 |
|
|
|
(5) |
|
|
|
47 |
|
|
|
(9) |
|
|
|
Treatment and refinement charges |
|
F |
|
|
3 |
|
|
|
3 |
|
|
|
6 |
|
|
|
3 |
|
|
|
|
|
|
|
Total production costs |
|
|
|
|
$ 1,255 |
|
|
|
$ 1,208 |
|
|
|
$ 2,490 |
|
|
|
$ 2,466 |
|
|
|
|
|
|
|
Depreciation |
|
G |
|
|
($ 339) |
|
|
|
($ 306) |
|
|
|
($ 668) |
|
|
|
($ 623) |
|
|
|
|
|
|
|
Cash Costs |
|
|
|
|
$ 916 |
|
|
|
$ 902 |
|
|
|
$ 1,822 |
|
|
|
$ 1,843 |
|
|
|
|
|
|
|
General & administrative costs |
|
H |
|
|
56 |
|
|
|
66 |
|
|
|
111 |
|
|
|
153 |
|
|
|
Rehabilitation - accretion and amortization (operating sites) |
|
I |
|
|
37 |
|
|
|
31 |
|
|
|
71 |
|
|
|
64 |
|
|
|
Mine on-site exploration and evaluation costs |
|
J |
|
|
15 |
|
|
|
6 |
|
|
|
21 |
|
|
|
8 |
|
|
|
Mine development expenditures2 |
|
K |
|
|
164 |
|
|
|
177 |
|
|
|
330 |
|
|
|
365 |
|
|
|
Sustaining capital expenditures2 |
|
K |
|
|
125 |
|
|
|
130 |
|
|
|
259 |
|
|
|
224 |
|
|
|
|
|
|
|
All-in sustaining costs |
|
|
|
|
$ 1,313 |
|
|
|
$ 1,312 |
|
|
|
$ 2,614 |
|
|
|
$ 2,657 |
|
|
|
|
|
|
|
Community relations costs not related to current operations |
|
L |
|
|
4 |
|
|
|
7 |
|
|
|
7 |
|
|
|
12 |
|
|
|
Rehabilitation - accretion and amortization not related to current operations |
|
I |
|
|
3 |
|
|
|
3 |
|
|
|
6 |
|
|
|
8 |
|
|
|
Exploration and evaluation costs (non-sustaining) |
|
J |
|
|
34 |
|
|
|
44 |
|
|
|
69 |
|
|
|
72 |
|
|
|
Non-sustaining capital expenditures2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pascua-Lama |
|
K |
|
|
(4) |
|
|
|
(12) |
|
|
|
- |
|
|
|
31 |
|
|
|
Cortez |
|
K |
|
|
18 |
|
|
|
4 |
|
|
|
30 |
|
|
|
10 |
|
|
|
Goldstrike thiosulfate project |
|
K |
|
|
5 |
|
|
|
63 |
|
|
|
33 |
|
|
|
127 |
|
|
|
Bulyanhulu CIL |
|
K |
|
|
- |
|
|
|
6 |
|
|
|
(1) |
|
|
|
15 |
|
|
|
Hemlo |
|
K |
|
|
- |
|
|
|
- |
|
|
|
37 |
|
|
|
- |
|
|
|
Other |
|
K |
|
|
27 |
|
|
|
7 |
|
|
|
39 |
|
|
|
11 |
|
|
|
|
|
|
|
All-in costs |
|
|
|
|
$ 1,400 |
|
|
|
$ 1,434 |
|
|
|
$ 2,834 |
|
|
|
$ 2,943 |
|
|
|
|
|
|
|
Ounces sold - consolidated basis (000s ounces) |
|
|
|
|
1,624 |
|
|
|
1,683 |
|
|
|
3,208 |
|
|
|
3,464 |
|
|
|
Ounces sold - non-controlling interest (000s ounces)1 |
|
|
|
|
(158) |
|
|
|
(167) |
|
|
|
(357) |
|
|
|
(330) |
|
|
|
Ounces sold - equity basis (000s ounces) |
|
|
|
|
1,466 |
|
|
|
1,516 |
|
|
|
2,851 |
|
|
|
3,134 |
|
|
|
|
|
|
|
Total production costs per ounce3 |
|
|
|
|
$ 855 |
|
|
|
$ 796 |
|
|
|
$ 874 |
|
|
|
$ 787 |
|
|
|
|
|
|
|
Cash costs per ounce3 |
|
|
|
|
$ 624 |
|
|
|
$ 594 |
|
|
|
$ 640 |
|
|
|
$ 588 |
|
|
|
Cash costs per ounce (on a co-product basis)3,4 |
|
|
|
|
$ 648 |
|
|
|
$ 615 |
|
|
|
$ 666 |
|
|
|
$ 610 |
|
|
|
|
|
|
|
All-in sustaining costs per ounce3 |
|
|
|
|
$ 895 |
|
|
|
$ 865 |
|
|
|
$ 918 |
|
|
|
$ 849 |
|
|
|
All-in sustaining costs per ounce (on a co-product basis)3,4 |
|
|
|
|
$ 919 |
|
|
|
$ 886 |
|
|
|
$ 944 |
|
|
|
$ 871 |
|
|
|
|
|
|
|
All-in costs per ounce3 |
|
|
|
|
$ 954 |
|
|
|
$ 945 |
|
|
|
$ 995 |
|
|
|
$ 940 |
|
|
|
All-in costs per ounce (on a co-product basis)3,4 |
|
|
|
|
$ 978 |
|
|
|
$ 966 |
|
|
|
$ 1,021 |
|
|
|
$ 962 |
|
|
|
|
|
|
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 SECOND QUARTER 2015 |
|
52 |
|
MANAGEMENTS DISCUSSION AND ANALYSIS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
($ millions, except per ounce information in dollars) |
|
For the three months ended June 30 |
|
|
For the six months ended June 30 |
|
|
|
|
|
|
|
2015 |
|
|
2014 |
|
|
2015 |
|
|
2014 |
|
|
|
|
|
References |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
A |
|
Cost of sales - gold |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales (statement of income) |
|
|
$ 1,689 |
|
|
|
$ 1,631 |
|
|
|
$ 3,397 |
|
|
|
$ 3,350 |
|
|
|
Less: cost of sales - copper |
|
|
(237) |
|
|
|
(198) |
|
|
|
(488) |
|
|
|
(451) |
|
|
|
Direct mining, royalties and community relations |
|
|
212 |
|
|
|
169 |
|
|
|
426 |
|
|
|
384 |
|
|
|
Depreciation |
|
|
25 |
|
|
|
30 |
|
|
|
62 |
|
|
|
71 |
|
|
|
Hedge gains |
|
|
- |
|
|
|
(1) |
|
|
|
- |
|
|
|
(4) |
|
|
|
Less: cost of sales - non-operating sites |
|
|
- |
|
|
|
(2) |
|
|
|
- |
|
|
|
(5) |
|
|
|
Less: cost of sales - corporate |
|
|
(42) |
|
|
|
(24) |
|
|
|
(75) |
|
|
|
(43) |
|
|
|
|
|
|
|
Total Cost of Sales - Gold |
|
|
$ 1,410 |
|
|
|
1,407 |
|
|
|
$ 2,834 |
|
|
|
2,851 |
|
|
|
|
|
|
|
|
|
|
|
B |
|
Cost of sales applicable to non-controlling interests |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales applicable to Acacia (Note 5) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Direct mining, royalties and community relations |
|
|
$ 153 |
|
|
|
$ 137 |
|
|
|
$ 294 |
|
|
|
$ 269 |
|
|
|
Depreciation |
|
|
34 |
|
|
|
35 |
|
|
|
67 |
|
|
|
65 |
|
|
|
|
|
|
|
Total related to Acacia |
|
|
$ 187 |
|
|
|
$ 172 |
|
|
|
$ 361 |
|
|
|
$ 334 |
|
|
|
|
|
|
|
Portion attributable to non-controlling interest |
|
|
$ 63 |
|
|
|
$ 60 |
|
|
|
$ 124 |
|
|
|
$ 104 |
|
|
|
|
|
|
|
Cost of sales applicable to Pueblo Viejo (Note 5) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Direct mining, royalties and community relations |
|
|
$ 154 |
|
|
|
$ 152 |
|
|
|
$ 316 |
|
|
|
$ 321 |
|
|
|
Depreciation |
|
|
70 |
|
|
|
66 |
|
|
|
139 |
|
|
|
120 |
|
|
|
|
|
|
|
Total related to Pueblo Viejo |
|
|
$ 224 |
|
|
|
$ 218 |
|
|
|
$ 455 |
|
|
|
$ 441 |
|
|
|
|
|
|
|
Portion attributable to non-controlling interest |
|
|
$ 74 |
|
|
|
$ 71 |
|
|
|
$ 170 |
|
|
|
$ 148 |
|
|
|
|
|
|
|
Cost of sales applicable to non-controlling interests |
|
|
$ 137 |
|
|
|
$ 131 |
|
|
|
$ 294 |
|
|
|
$ 252 |
|
|
|
|
|
|
|
C |
|
Cost of sales applicable to power sales |
|
|
|
Equal to the cost of sales related to power sales from our Pueblo Viejo mine that are included in consolidated costs of sales but excluded from cash
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, power revenues and non-controlling interest for the three and six months ended June 30, 2015 were $18 million and $43 million, respectively (2014: $33 million and $70 million, respectively). |
|
|
|
E |
|
Realized non-hedge gains/losses on fuel hedges |
|
|
|
(Gains)/Losses on non-hedge derivatives (Note 18D) |
|
|
($ 8) |
|
|
|
$ 44 |
|
|
|
($ 11) |
|
|
|
$ 65 |
|
|
|
Less: unrealized (gains)/losses and de-designated realized losses |
|
|
35 |
|
|
|
(49) |
|
|
|
58 |
|
|
|
(74) |
|
|
|
|
|
|
|
Realized non-hedge (gains)/losses |
|
|
$ 27 |
|
|
|
($ 5) |
|
|
|
$ 47 |
|
|
|
($ 9) |
|
|
|
|
|
|
|
F |
|
Treatment and refinement charges |
|
|
|
|
|
Treatment and refinement charges, which are recorded against concentrate revenues, for the three and six months ended June 30, 2015 were $3 million and
$6 million, respectively (2014: $3 million and $3 million, respectively). |
|
|
|
|
|
|
BARRICK SECOND QUARTER 2015 |
|
53 |
|
MANAGEMENTS DISCUSSION AND ANALYSIS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
($ millions, except per ounce information in dollars) |
|
For the three months ended June 30 |
|
|
For the six months ended June 30 |
|
|
|
|
|
|
|
2015 |
|
|
2014 |
|
|
2015 |
|
|
2014 |
|
|
|
|
|
|
|
G |
|
Depreciation - gold |
|
|
|
|
|
|
|
|
|
|
Depreciation (Note 7) |
|
|
$ 419 |
|
|
|
$ 400 |
|
|
|
$ 840 |
|
|
|
$ 802 |
|
|
|
Less: copper depreciation |
|
|
(25) |
|
|
|
(30) |
|
|
|
(62) |
|
|
|
(71) |
|
|
|
Less: NCI portion |
|
|
(39) |
|
|
|
(38) |
|
|
|
(83) |
|
|
|
(66) |
|
|
|
Less: Depreciation - corporate assets |
|
|
(16) |
|
|
|
(26) |
|
|
|
(27) |
|
|
|
(42) |
|
|
|
|
|
|
|
Total depreciation - gold |
|
|
$ 339 |
|
|
|
$ 306 |
|
|
|
$ 668 |
|
|
|
$ 623 |
|
|
|
|
|
|
|
|
|
H |
|
General & administrative costs |
|
|
|
|
|
|
|
|
|
|
Total general & administrative costs (statement of income) |
|
|
$ 70 |
|
|
|
$ 82 |
|
|
|
$ 137 |
|
|
|
$ 185 |
|
|
|
Less: non-gold and non-operating general & administrative costs |
|
|
(5) |
|
|
|
(13) |
|
|
|
(12) |
|
|
|
(26) |
|
|
|
Less: NCI portion |
|
|
(6) |
|
|
|
(4) |
|
|
|
(10) |
|
|
|
(7) |
|
|
|
Add: World Gold Council fees |
|
|
- |
|
|
|
1 |
|
|
|
- |
|
|
|
2 |
|
|
|
Less: non-recurring items |
|
|
(3) |
|
|
|
- |
|
|
|
(4) |
|
|
|
(1) |
|
|
|
|
|
|
|
Total general & administrative costs |
|
|
$ 56 |
|
|
|
$ 66 |
|
|
|
$ 111 |
|
|
|
$ 153 |
|
|
|
|
|
|
|
I |
|
Rehabilitation - accretion and amortization |
|
|
|
Includes depreciation (Note 7) on the assets related to rehabilitation provisions of our gold operations of $27 million and $50 million for the three
and six months ended June 30, 2015, respectively (2014: $18 million and $37 million, respectively) and accretion (Note 11) on the rehabilitation provision of our gold operations of $13 million and $27 million for the three and six months ended June
30, 2015, respectively (2014: $16 million and $35 million, respectively). |
|
|
|
|
|
J |
|
Exploration and evaluation costs |
|
|
|
|
|
|
|
|
|
|
Exploration and evaluation costs (Note 8) |
|
|
$ 52 |
|
|
|
$ 53 |
|
|
|
$ 97 |
|
|
|
$ 85 |
|
|
|
Less: exploration and evaluation costs - non-gold & NCI |
|
|
(3) |
|
|
|
(3) |
|
|
|
(7) |
|
|
|
(5) |
|
|
|
|
|
|
|
Total exploration and evaluation costs - gold |
|
|
$ 49 |
|
|
|
$ 50 |
|
|
|
$ 90 |
|
|
|
$ 80 |
|
|
|
|
|
|
|
Exploration & evaluation costs (sustaining) |
|
|
15 |
|
|
|
6 |
|
|
|
21 |
|
|
|
8 |
|
|
|
Exploration and evaluation costs (non-sustaining) |
|
|
34 |
|
|
|
44 |
|
|
|
69 |
|
|
|
72 |
|
|
|
|
|
|
|
Total exploration and evaluation costs - gold |
|
|
$ 49 |
|
|
|
$ 50 |
|
|
|
$ 90 |
|
|
|
$ 80 |
|
|
|
|
|
|
|
|
|
K |
|
Capital expenditures |
|
|
|
|
|
|
|
|
|
|
Gold segments (Note 5) |
|
|
$ 369 |
|
|
|
$ 417 |
|
|
|
$ 792 |
|
|
|
$ 813 |
|
|
|
Pascua-Lama operating unit (Note 5) |
|
|
(4) |
|
|
|
(12) |
|
|
|
- |
|
|
|
31 |
|
|
|
Other gold projects |
|
|
5 |
|
|
|
16 |
|
|
|
7 |
|
|
|
24 |
|
|
|
|
|
|
|
Capital expenditures - gold |
|
|
$ 370 |
|
|
|
$ 421 |
|
|
|
$ 799 |
|
|
|
$ 868 |
|
|
|
|
|
|
|
Less: NCI portion |
|
|
(27) |
|
|
|
(39) |
|
|
|
(55) |
|
|
|
(71) |
|
|
|
Less: capitalized interest (Note 11) |
|
|
(8) |
|
|
|
(7) |
|
|
|
(17) |
|
|
|
(14) |
|
|
|
|
|
|
|
Total capital expenditures - gold |
|
|
$ 335 |
|
|
|
$ 375 |
|
|
|
$ 727 |
|
|
|
$ 783 |
|
|
|
|
|
|
|
Mine development expenditures |
|
|
164 |
|
|
|
177 |
|
|
|
330 |
|
|
|
365 |
|
|
|
Sustaining capital expenditures |
|
|
125 |
|
|
|
130 |
|
|
|
259 |
|
|
|
224 |
|
|
|
Non-sustaining capital expenditures |
|
|
46 |
|
|
|
68 |
|
|
|
138 |
|
|
|
194 |
|
|
|
|
|
|
|
Total capital expenditures - gold |
|
|
$ 335 |
|
|
|
$ 375 |
|
|
|
$727 |
|
|
|
$783 |
|
|
|
|
|
|
|
|
|
L |
|
Community relations costs |
|
|
|
|
|
|
|
|
|
|
Community relations costs (Note 7) |
|
|
$ 17 |
|
|
|
$ 19 |
|
|
|
$ 28 |
|
|
|
$ 33 |
|
|
|
Less: community relations costs relating to current operations |
|
|
(13) |
|
|
|
(12) |
|
|
|
(21) |
|
|
|
(21) |
|
|
|
|
|
|
|
Community relations costs not related to current operations |
|
|
$ 4 |
|
|
|
$ 7 |
|
|
|
$ 7 |
|
|
|
$ 12 |
|
|
|
|
|
|
|
|
|
|
BARRICK SECOND QUARTER 2015 |
|
54 |
|
MANAGEMENTS DISCUSSION AND ANALYSIS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 three months ended June 30 |
|
|
|
|
|
For the six months ended June 30 |
|
|
|
|
|
2015 |
|
|
2014 |
|
|
|
|
|
2015 |
|
|
2014 |
|
|
|
Cost of sales |
|
|
$ 237 |
|
|
|
$ 196 |
|
|
|
|
|
|
|
$ 488 |
|
|
|
$ 451 |
|
Depreciation/amortization |
|
|
(25) |
|
|
|
(28) |
|
|
|
|
|
|
|
(62) |
|
|
|
(69) |
|
Treatment and refinement charges |
|
|
41 |
|
|
|
14 |
|
|
|
|
|
|
|
83 |
|
|
|
47 |
|
Less: royalties |
|
|
(36) |
|
|
|
(6) |
|
|
|
|
|
|
|
(69) |
|
|
|
(17) |
|
Non-routine charges |
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
- |
|
|
|
(1) |
|
Other metal sales |
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
- |
|
|
|
(1) |
|
Other1 |
|
|
- |
|
|
|
(27) |
|
|
|
|
|
|
|
- |
|
|
|
(27) |
|
|
|
C1 cash cost of sales |
|
|
$ 217 |
|
|
|
$ 149 |
|
|
|
|
|
|
|
$ 440 |
|
|
|
$ 383 |
|
|
|
Depreciation/amortization |
|
|
25 |
|
|
|
28 |
|
|
|
|
|
|
|
62 |
|
|
|
69 |
|
Royalties |
|
|
36 |
|
|
|
6 |
|
|
|
|
|
|
|
69 |
|
|
|
17 |
|
Non-routine charges |
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
- |
|
|
|
1 |
|
Other expense (income) |
|
|
1 |
|
|
|
2 |
|
|
|
|
|
|
|
(7) |
|
|
|
3 |
|
|
|
C3 fully allocated cost of sales |
|
|
$ 279 |
|
|
|
$ 185 |
|
|
|
|
|
|
|
$ 564 |
|
|
|
$ 473 |
|
|
|
Pounds sold - consolidated basis (millions pounds) |
|
|
112 |
|
|
|
73 |
|
|
|
|
|
|
|
233 |
|
|
|
184 |
|
|
|
C1 cash cost per pound2 |
|
|
$ 1.94 |
|
|
|
$ 2.04 |
|
|
|
|
|
|
|
$ 1.89 |
|
|
|
$ 2.08 |
|
|
|
C3 fully allocated cost per pound2 |
|
|
$ 2.50 |
|
|
|
$ 2.52 |
|
|
|
|
|
|
|
$ 2.42 |
|
|
|
$ 2.59 |
|
|
|
|
1 |
Includes $17 million related to copper cathode purchases and $10 million of abnormal costs related to the conveyor collapse at Lumwana, as these costs are not
indicative of our normal production costs. |
|
2 |
C1 cash costs per pound and C3 fully allocated costs may not calculate based on amounts presented in this table due to rounding. |
|
|
|
|
|
BARRICK SECOND QUARTER 2015 |
|
55 |
|
MANAGEMENTS DISCUSSION AND ANALYSIS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA and Adjusted EBITDA |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
($ millions, except per share amounts in dollars) |
|
For the three months ended June 30 |
|
|
For the six months ended June 30 |
|
|
|
|
|
2015 |
|
|
2014 |
|
|
2015 |
|
|
2014 |
|
|
|
Net earnings (loss) |
|
|
$ (9) |
|
|
|
$(223) |
|
|
|
$80 |
|
|
|
$(96) |
|
Income tax expense |
|
|
103 |
|
|
|
123 |
|
|
|
208 |
|
|
|
412 |
|
Finance costs1 |
|
|
179 |
|
|
|
181 |
|
|
|
359 |
|
|
|
361 |
|
Finance income |
|
|
(2) |
|
|
|
(3) |
|
|
|
(4) |
|
|
|
(6) |
|
Depreciation |
|
|
419 |
|
|
|
400 |
|
|
|
840 |
|
|
|
802 |
|
|
|
EBITDA |
|
|
$ 690 |
|
|
|
$ 478 |
|
|
|
$ 1,483 |
|
|
|
$ 1,473 |
|
Impairment charges |
|
|
35 |
|
|
|
512 |
|
|
|
40 |
|
|
|
524 |
|
|
|
Adjusted EBITDA |
|
|
$ 725 |
|
|
|
$ 990 |
|
|
|
$ 1,523 |
|
|
|
$ 1,997 |
|
|
|
Reported as: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cortez |
|
|
117 |
|
|
|
184 |
|
|
|
178 |
|
|
|
355 |
|
Goldstrike |
|
|
100 |
|
|
|
155 |
|
|
|
218 |
|
|
|
350 |
|
Pueblo Viejo |
|
|
161 |
|
|
|
230 |
|
|
|
367 |
|
|
|
467 |
|
Lagunas Norte |
|
|
136 |
|
|
|
104 |
|
|
|
281 |
|
|
|
246 |
|
Veladero |
|
|
93 |
|
|
|
137 |
|
|
|
192 |
|
|
|
225 |
|
Turquoise Ridge |
|
|
32 |
|
|
|
35 |
|
|
|
61 |
|
|
|
85 |
|
Porgera |
|
|
32 |
|
|
|
37 |
|
|
|
82 |
|
|
|
75 |
|
Kalgoorlie |
|
|
31 |
|
|
|
39 |
|
|
|
49 |
|
|
|
79 |
|
Acacia |
|
|
70 |
|
|
|
79 |
|
|
|
136 |
|
|
|
155 |
|
Zaldívar |
|
|
38 |
|
|
|
65 |
|
|
|
84 |
|
|
|
143 |
|
Lumwana |
|
|
3 |
|
|
|
2 |
|
|
|
10 |
|
|
|
12 |
|
Other |
|
|
(88) |
|
|
|
(77) |
|
|
|
(135) |
|
|
|
(195) |
|
Impairment charges |
|
|
(35) |
|
|
|
(512) |
|
|
|
(40) |
|
|
|
(524) |
|
|
|
EBITDA |
|
|
$ 690 |
|
|
|
$ 478 |
|
|
|
$ 1,483 |
|
|
|
$ 1,473 |
|
Impairment charges |
|
|
35 |
|
|
|
512 |
|
|
|
40 |
|
|
|
524 |
|
|
|
Adjusted EBITDA |
|
|
$ 725 |
|
|
|
$ 990 |
|
|
|
$ 1,523 |
|
|
|
$ 1,997 |
|
|
|
1 |
Finance costs exclude accretion. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of Sales to Realized Price per ounce/pound |
|
|
|
|
|
|
For the three months ended June 30 |
|
|
For the six months ended June 30 |
|
|
|
($ millions, except per ounce/pound information in dollars) |
|
Gold |
|
|
Copper |
|
|
Gold |
|
|
Copper |
|
|
|
|
|
2015 |
|
|
2014 |
|
|
2015 |
|
|
2014 |
|
|
2015 |
|
|
2014 |
|
|
2015 |
|
|
2014 |
|
|
|
Sales |
|
|
$ 1,921 |
|
|
|
$ 2,150 |
|
|
|
$ 257 |
|
|
|
$ 237 |
|
|
|
$ 3,840 |
|
|
|
$ 4,429 |
|
|
|
$ 524 |
|
|
|
$ 542 |
|
Sales applicable to non-controlling interests |
|
|
(189) |
|
|
|
(215) |
|
|
|
- |
|
|
|
- |
|
|
|
(432) |
|
|
|
(426) |
|
|
|
- |
|
|
|
- |
|
Realized non-hedge gold/copper derivative (losses) gains |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(3) |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(6) |
|
Treatment and refinement charges |
|
|
3 |
|
|
|
3 |
|
|
|
41 |
|
|
|
14 |
|
|
|
6 |
|
|
|
3 |
|
|
|
83 |
|
|
|
47 |
|
Export duties |
|
|
9 |
|
|
|
15 |
|
|
|
- |
|
|
|
- |
|
|
|
19 |
|
|
|
25 |
|
|
|
- |
|
|
|
- |
|
Other1 |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(17) |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(17) |
|
|
|
Revenues - as adjusted |
|
|
$ 1,744 |
|
|
|
$ 1,953 |
|
|
|
$ 298 |
|
|
|
$ 231 |
|
|
|
$ 3,433 |
|
|
|
$ 4,031 |
|
|
|
$ 607 |
|
|
|
$ 566 |
|
|
|
Ounces/pounds sold (000s ounces/millions pounds) |
|
|
1,466 |
|
|
|
1,516 |
|
|
|
112 |
|
|
|
73 |
|
|
|
2,851 |
|
|
|
3,134 |
|
|
|
233 |
|
|
|
184 |
|
|
|
Realized gold/copper price per ounce/pound2 |
|
|
$ 1,190 |
|
|
|
$ 1,289 |
|
|
|
2.66 |
|
|
|
$ 3.17 |
|
|
|
$ 1,204 |
|
|
|
$ 1,287 |
|
|
|
$ 2.60 |
|
|
|
$ 3.08 |
|
|
|
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 SECOND QUARTER 2015 |
|
56 |
|
MANAGEMENTS DISCUSSION AND ANALYSIS |
Consolidated Statements of Income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Barrick Gold Corporation (in millions of United States dollars,
except per share data) (Unaudited) |
|
Three months ended June 30, |
|
|
Six months ended June 30, |
|
|
|
|
|
2015 |
|
|
2014 |
|
|
2015 |
|
|
2014 |
|
|
|
|
|
|
|
|
Revenue (notes 5 and 6) |
|
$ |
2,231 |
|
|
$ |
2,458 |
|
|
$ |
4,476 |
|
|
$ |
5,105 |
|
|
|
Costs and expenses (income) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales (notes 5 and 7) |
|
|
1,689 |
|
|
|
1,631 |
|
|
|
3,397 |
|
|
|
3,350 |
|
General and administrative expenses |
|
|
70 |
|
|
|
82 |
|
|
|
137 |
|
|
|
185 |
|
Exploration, evaluation and project expenses (note 8) |
|
|
97 |
|
|
|
105 |
|
|
|
183 |
|
|
|
205 |
|
Impairment charges (note 10B) |
|
|
35 |
|
|
|
512 |
|
|
|
40 |
|
|
|
524 |
|
Loss on currency translation |
|
|
33 |
|
|
|
31 |
|
|
|
31 |
|
|
|
110 |
|
Closed mine rehabilitation |
|
|
(19) |
|
|
|
27 |
|
|
|
(11) |
|
|
|
49 |
|
Loss (gain) on non-hedge derivatives (note 18D) |
|
|
8 |
|
|
|
(44) |
|
|
|
11 |
|
|
|
(65) |
|
Other expense (note 10A) |
|
|
32 |
|
|
|
17 |
|
|
|
14 |
|
|
|
36 |
|
|
|
Income before finance items and income taxes |
|
$ |
286 |
|
|
$ |
97 |
|
|
$ |
674 |
|
|
$ |
711 |
|
Finance items |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Finance income |
|
|
2 |
|
|
|
3 |
|
|
|
4 |
|
|
|
6 |
|
Finance costs (note 11) |
|
|
(194) |
|
|
|
(200) |
|
|
|
(390) |
|
|
|
(401) |
|
|
|
Income (loss) before income taxes |
|
$ |
94 |
|
|
$ |
(100) |
|
|
$ |
288 |
|
|
$ |
316 |
|
Income tax expense (note 12) |
|
|
(103) |
|
|
|
(123) |
|
|
|
(208) |
|
|
|
(412) |
|
|
|
Net income (loss) |
|
$ |
(9) |
|
|
$ |
(223) |
|
|
$ |
80 |
|
|
$ |
(96) |
|
|
|
Attributable to: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity holders of Barrick Gold Corporation |
|
$ |
(9) |
|
|
$ |
(269) |
|
|
$ |
48 |
|
|
$ |
(181) |
|
Non-controlling interests (note 21) |
|
$ |
- |
|
|
$ |
46 |
|
|
$ |
32 |
|
|
$ |
85 |
|
|
|
|
Earnings (loss) per share data attributable to the equity holders of Barrick Gold Corporation (note 9) |
|
Net income (loss) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
(0.01) |
|
|
$ |
(0.23) |
|
|
$ |
0.04 |
|
|
$ |
(0.16) |
|
Diluted |
|
$ |
(0.01) |
|
|
$ |
(0.23) |
|
|
$ |
0.04 |
|
|
$ |
(0.16) |
|
|
|
The accompanying notes are an integral part of these consolidated financial statements.
|
|
|
|
|
BARRICK SECOND QUARTER 2015 |
|
57 |
|
FINANCIAL STATEMENTS (UNAUDITED) |
Consolidated Statements of Comprehensive Income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Barrick Gold Corporation (in millions of United States dollars)
(Unaudited) |
|
Three months ended June 30, |
|
|
Six months ended June 30, |
|
|
|
|
|
2015 |
|
|
2014 |
|
|
2015 |
|
|
2014 |
|
|
|
Net income (loss) |
|
$ |
(9) |
|
|
$ |
(223) |
|
|
$ |
80 |
|
|
$ |
(96) |
|
Other comprehensive income (loss), net of taxes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Movement in equity investments fair value reserve: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net unrealized change on equity investments, net of tax $nil, $nil, $nil and $nil |
|
|
(6) |
|
|
|
5 |
|
|
|
(11) |
|
|
|
22 |
|
Net realized change on equity investments, net of tax $nil, $nil, $nil and $nil |
|
|
1 |
|
|
|
3 |
|
|
|
18 |
|
|
|
7 |
|
Impairment losses on equity investments, net of tax $nil, $nil, $nil and $nil |
|
|
- |
|
|
|
14 |
|
|
|
- |
|
|
|
16 |
|
|
|
|
|
|
Items that may be reclassified subsequently to profit or loss: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized gains (losses) on derivatives designated as cash flow hedges, net of tax ($13), ($3), $1 and $1 |
|
|
24 |
|
|
|
13 |
|
|
|
(33) |
|
|
|
28 |
|
Realized (gains) losses on derivatives designated as cash flow hedges, net of tax $1, $1, $nil and $1 |
|
|
36 |
|
|
|
(31) |
|
|
|
51 |
|
|
|
(54) |
|
Currency translation adjustments, net of tax $nil, $nil, $nil and $nil |
|
|
2 |
|
|
|
4 |
|
|
|
(30) |
|
|
|
7 |
|
|
|
Total other comprehensive income (loss) |
|
|
57 |
|
|
|
8 |
|
|
|
(5) |
|
|
|
26 |
|
|
|
Total comprehensive income (loss) |
|
$ |
48 |
|
|
$ |
(215) |
|
|
$ |
75 |
|
|
$ |
(70) |
|
|
|
Attributable to: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity holders of Barrick Gold Corporation |
|
$ |
48 |
|
|
$ |
(261) |
|
|
$ |
43 |
|
|
$ |
(155) |
|
Non-controlling interests |
|
$ |
- |
|
|
$ |
46 |
|
|
$ |
32 |
|
|
$ |
85 |
|
|
|
The accompanying notes are an integral part of these consolidated financial statements.
|
|
|
|
|
BARRICK SECOND QUARTER 2015 |
|
58 |
|
FINANCIAL STATEMENTS (UNAUDITED) |
Consolidated Statements of Cash Flow
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Barrick Gold Corporation (in millions of United States dollars)
(Unaudited) |
|
Three months ended June 30, |
|
|
Six months ended June 30, |
|
|
|
|
|
2015 |
|
|
2014 |
|
|
2015 |
|
|
2014 |
|
|
|
OPERATING ACTIVITIES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) |
|
$ |
(9) |
|
|
$ |
(223) |
|
|
$ |
80 |
|
|
$ |
(96) |
|
Adjusted for the following items: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation |
|
|
419 |
|
|
|
400 |
|
|
|
840 |
|
|
|
802 |
|
Finance costs |
|
|
194 |
|
|
|
200 |
|
|
|
390 |
|
|
|
401 |
|
Impairment charges (note 10B) |
|
|
35 |
|
|
|
512 |
|
|
|
40 |
|
|
|
524 |
|
Income tax expense (note 12) |
|
|
103 |
|
|
|
123 |
|
|
|
208 |
|
|
|
412 |
|
(Increase) decrease in inventory |
|
|
(41) |
|
|
|
(37) |
|
|
|
(65) |
|
|
|
5 |
|
Loss (gain) on non-hedge derivatives |
|
|
8 |
|
|
|
(44) |
|
|
|
11 |
|
|
|
(65) |
|
Gain on sale of long-lived assets |
|
|
(2) |
|
|
|
(22) |
|
|
|
(26) |
|
|
|
(23) |
|
Other operating activities (note 13A) |
|
|
121 |
|
|
|
16 |
|
|
|
(88) |
|
|
|
(225) |
|
|
|
Operating cash flows before interest and income taxes |
|
|
828 |
|
|
|
925 |
|
|
|
1,390 |
|
|
|
1,735 |
|
Interest paid |
|
|
(274) |
|
|
|
(276) |
|
|
|
(349) |
|
|
|
(352) |
|
Income taxes paid |
|
|
(29) |
|
|
|
(161) |
|
|
|
(200) |
|
|
|
(310) |
|
|
|
Net cash provided by operating activities |
|
|
525 |
|
|
|
488 |
|
|
|
841 |
|
|
|
1,073 |
|
|
|
INVESTING ACTIVITIES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property, plant and equipment |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures (note 5) |
|
|
(499) |
|
|
|
(616) |
|
|
|
(1,013) |
|
|
|
(1,232) |
|
Sales proceeds |
|
|
7 |
|
|
|
2 |
|
|
|
19 |
|
|
|
37 |
|
Divestitures |
|
|
- |
|
|
|
86 |
|
|
|
2 |
|
|
|
166 |
|
Investments sales |
|
|
- |
|
|
|
27 |
|
|
|
33 |
|
|
|
52 |
|
Other investing activities (note 13B) |
|
|
(6) |
|
|
|
(39) |
|
|
|
(7) |
|
|
|
(79) |
|
|
|
Net cash used in investing activities |
|
|
(498) |
|
|
|
(540) |
|
|
|
(966) |
|
|
|
(1,056) |
|
|
|
FINANCING ACTIVITIES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from divestment of 10% of issued ordinary share capital of Acacia |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
186 |
|
Debt |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds |
|
|
3 |
|
|
|
- |
|
|
|
5 |
|
|
|
133 |
|
Repayments |
|
|
(88) |
|
|
|
(18) |
|
|
|
(272) |
|
|
|
(93) |
|
Dividends |
|
|
(58) |
|
|
|
(58) |
|
|
|
(116) |
|
|
|
(116) |
|
Funding from non-controlling interests |
|
|
21 |
|
|
|
- |
|
|
|
22 |
|
|
|
2 |
|
Disbursements to non-controlling interests |
|
|
(20) |
|
|
|
- |
|
|
|
(64) |
|
|
|
- |
|
|
|
Net cash (used in) provided by financing activities |
|
|
(142) |
|
|
|
(76) |
|
|
|
(425) |
|
|
|
112 |
|
|
|
Effect of exchange rate changes on cash and equivalents |
|
|
(1) |
|
|
|
1 |
|
|
|
(7) |
|
|
|
(4) |
|
|
|
Net (decrease) increase in cash and equivalents |
|
|
(116) |
|
|
|
(127) |
|
|
|
(557) |
|
|
|
125 |
|
Cash and equivalents excluding assets classified as held for sale at the beginning of period |
|
|
2,258 |
|
|
|
2,672 |
|
|
|
2,699 |
|
|
|
2,404 |
|
Add: cash and equivalents of assets classified as held for sale at the beginning of period |
|
|
- |
|
|
|
4 |
|
|
|
- |
|
|
|
20 |
|
|
|
Cash and equivalents at the end of period |
|
$ |
2,142 |
|
|
$ |
2,549 |
|
|
$ |
2,142 |
|
|
$ |
2,549 |
|
|
|
Less: cash and equivalents of assets classified as held for sale at the end of period |
|
|
20 |
|
|
|
- |
|
|
|
20 |
|
|
|
- |
|
|
|
Cash and equivalents excluding assets classified as held for sale at the end of period |
|
$ |
2,122 |
|
|
$ |
2,549 |
|
|
$ |
2,122 |
|
|
$ |
2,549 |
|
|
|
The accompanying notes are an integral part of these consolidated financial statements.
|
|
|
|
|
BARRICK SECOND QUARTER 2015 |
|
59 |
|
FINANCIAL STATEMENTS (UNAUDITED) |
Consolidated Balance Sheets
|
|
|
|
|
|
|
|
|
Barrick Gold Corporation (in millions of United States
dollars) (Unaudited) |
|
As at June 30, |
|
|
As at December 31, |
|
|
|
|
|
2015 |
|
|
2014 |
|
|
|
ASSETS |
|
|
|
|
|
|
|
|
Current assets |
|
|
|
|
|
|
|
|
Cash and equivalents (note 18A) |
|
$ |
2,122 |
|
|
$ |
2,699 |
|
Accounts receivable |
|
|
354 |
|
|
|
418 |
|
Inventories (note 15) |
|
|
2,465 |
|
|
|
2,722 |
|
Other current assets |
|
|
335 |
|
|
|
311 |
|
|
|
Total current assets (excluding assets classified as held for sale) |
|
$ |
5,276 |
|
|
$ |
6,150 |
|
Assets classified as held for sale (note 4A) |
|
|
1,514 |
|
|
|
- |
|
|
|
Total current assets |
|
$ |
6,790 |
|
|
$ |
6,150 |
|
|
|
|
Non-current assets |
|
|
|
|
|
|
|
|
Equity in investees (note 14) |
|
|
208 |
|
|
|
206 |
|
Other investments |
|
|
12 |
|
|
|
35 |
|
Property, plant and equipment (note 16) |
|
|
18,331 |
|
|
|
19,193 |
|
Goodwill |
|
|
4,291 |
|
|
|
4,426 |
|
Intangible assets |
|
|
305 |
|
|
|
308 |
|
Deferred income tax assets |
|
|
687 |
|
|
|
674 |
|
Non-current portion of inventory (note 15) |
|
|
1,388 |
|
|
|
1,684 |
|
Other assets |
|
|
1,181 |
|
|
|
1,203 |
|
|
|
Total assets |
|
$ |
33,193 |
|
|
$ |
33,879 |
|
|
|
LIABILITIES AND EQUITY |
|
|
|
|
|
|
|
|
Current liabilities |
|
|
|
|
|
|
|
|
Accounts payable |
|
$ |
1,319 |
|
|
$ |
1,653 |
|
Debt (note 18B) |
|
|
462 |
|
|
|
333 |
|
Current income tax liabilities |
|
|
24 |
|
|
|
84 |
|
Other current liabilities |
|
|
409 |
|
|
|
490 |
|
|
|
Total current liabilities (excluding liabilities classified as held for sale) |
|
$ |
2,214 |
|
|
$ |
2,560 |
|
Liabilities classified as held for sale (note 4A) |
|
|
374 |
|
|
|
- |
|
|
|
Total current liabilities |
|
$ |
2,588 |
|
|
$ |
2,560 |
|
|
|
|
Non-current liabilities |
|
|
|
|
|
|
|
|
Debt (note 18B) |
|
|
12,361 |
|
|
|
12,748 |
|
Provisions |
|
|
2,347 |
|
|
|
2,561 |
|
Deferred income tax liabilities |
|
|
2,069 |
|
|
|
2,036 |
|
Other liabilities |
|
|
1,056 |
|
|
|
1,112 |
|
|
|
Total liabilities |
|
$ |
20,421 |
|
|
$ |
21,017 |
|
|
|
Equity |
|
|
|
|
|
|
|
|
Capital stock (note 20) |
|
$ |
20,865 |
|
|
$ |
20,864 |
|
Deficit |
|
|
(10,714) |
|
|
|
(10,739) |
|
Accumulated other comprehensive loss |
|
|
(303) |
|
|
|
(199) |
|
Other |
|
|
321 |
|
|
|
321 |
|
|
|
Total equity attributable to Barrick Gold Corporation shareholders |
|
$ |
10,169 |
|
|
$ |
10,247 |
|
Non-controlling interests (note 21) |
|
|
2,603 |
|
|
|
2,615 |
|
|
|
Total equity |
|
$ |
12,772 |
|
|
$ |
12,862 |
|
|
|
Contingencies and commitments (notes 15, 16 and 22) |
|
|
|
|
|
|
|
|
|
|
Total liabilities and equity |
|
$ |
33,193 |
|
|
$ |
33,879 |
|
|
|
The accompanying notes are an integral part of these consolidated financial statements.
|
|
|
|
|
BARRICK SECOND QUARTER 2015 |
|
60 |
|
FINANCIAL STATEMENTS (UNAUDITED) |
Consolidated Statements of Changes in Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Barrick Gold Corporation |
|
|
|
|
Attributable to equity holders of the company |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in millions of United States dollars) (Unaudited) |
|
Common Shares (in thousands) |
|
|
Capital stock |
|
|
Retained deficit |
|
|
Accumulated other comprehensive income (loss)1 |
|
|
Other2 |
|
|
Total equity attributable to shareholders |
|
|
Non-controlling interests |
|
|
Total equity |
|
|
|
At December 31, 2014 |
|
|
1,164,670 |
|
|
$ |
20,864 |
|
|
$ |
(10,739 |
) |
|
$ |
(199 |
) |
|
$ |
321 |
|
|
$ |
10,247 |
|
|
$ |
2,615 |
|
|
$ |
12,862 |
|
|
|
Impact of adopting IFRS 9 on January 1, 2015 (note 2B) |
|
|
- |
|
|
|
- |
|
|
|
99 |
|
|
|
(99 |
) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
At January 1, 2015 (restated) |
|
|
1,164,670 |
|
|
$ |
20,864 |
|
|
$ |
(10,640 |
) |
|
$ |
(298 |
) |
|
$ |
321 |
|
|
$ |
10,247 |
|
|
$ |
2,615 |
|
|
$ |
12,862 |
|
|
|
Net income |
|
|
- |
|
|
|
- |
|
|
|
48 |
|
|
|
- |
|
|
|
- |
|
|
|
48 |
|
|
|
32 |
|
|
|
80 |
|
Total other comprehensive loss |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(5 |
) |
|
|
- |
|
|
|
(5 |
) |
|
|
- |
|
|
|
(5) |
|
|
|
Total comprehensive income (loss) |
|
|
- |
|
|
|
- |
|
|
|
48 |
|
|
|
(5 |
) |
|
|
- |
|
|
|
43 |
|
|
|
32 |
|
|
|
75 |
|
|
|
Transactions with owners |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends |
|
|
- |
|
|
|
- |
|
|
|
(116 |
) |
|
|
- |
|
|
|
- |
|
|
|
(116 |
) |
|
|
- |
|
|
|
(116) |
|
Recognition of stock option expense |
|
|
- |
|
|
|
1 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
1 |
|
|
|
- |
|
|
|
1 |
|
Funding from non-controlling interests |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
22 |
|
|
|
22 |
|
Other decrease in non-controlling interest |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(66 |
) |
|
|
(66) |
|
Other decreases |
|
|
- |
|
|
|
- |
|
|
|
(6 |
) |
|
|
- |
|
|
|
- |
|
|
|
(6 |
) |
|
|
- |
|
|
|
(6) |
|
|
|
Total transactions with owners |
|
|
- |
|
|
|
1 |
|
|
|
(122 |
) |
|
|
- |
|
|
|
- |
|
|
|
(121 |
) |
|
|
(44 |
) |
|
|
(165) |
|
|
|
At June 30, 2015 |
|
|
1,164,670 |
|
|
$ |
20,865 |
|
|
$ |
(10,714 |
) |
|
$ |
(303 |
) |
|
$ |
321 |
|
|
$ |
10,169 |
|
|
$ |
2,603 |
|
|
$ |
12,772 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At January 1, 2014 |
|
|
1,164,652 |
|
|
$ |
20,869 |
|
|
$ |
(7,581 |
) |
|
$ |
(69 |
) |
|
$ |
314 |
|
|
$ |
13,533 |
|
|
$ |
2,468 |
|
|
$ |
16,001 |
|
|
|
Net income (loss) |
|
|
- |
|
|
|
- |
|
|
|
(181 |
) |
|
|
- |
|
|
|
- |
|
|
|
(181 |
) |
|
|
85 |
|
|
|
(96) |
|
Total other comprehensive income |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
26 |
|
|
|
- |
|
|
|
26 |
|
|
|
- |
|
|
|
26 |
|
|
|
Total comprehensive income (loss) |
|
|
- |
|
|
|
- |
|
|
|
(181 |
) |
|
|
26 |
|
|
|
- |
|
|
|
(155 |
) |
|
|
85 |
|
|
|
(70) |
|
|
|
Transactions with owners |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends |
|
|
- |
|
|
|
- |
|
|
|
(116 |
) |
|
|
- |
|
|
|
- |
|
|
|
(116 |
) |
|
|
- |
|
|
|
(116) |
|
Issued on exercise of stock options |
|
|
18 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Recognized on divestment of 10% of Acacia |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
7 |
|
|
|
7 |
|
|
|
177 |
|
|
|
184 |
|
Derecognition of stock option expense |
|
|
- |
|
|
|
(7 |
) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(7 |
) |
|
|
- |
|
|
|
(7) |
|
Funding from non-controlling interests |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
2 |
|
|
|
2 |
|
|
|
Total transactions with owners |
|
|
18 |
|
|
|
(7 |
) |
|
|
(116 |
) |
|
|
- |
|
|
|
7 |
|
|
|
(116 |
) |
|
|
179 |
|
|
|
63 |
|
|
|
At June 30, 2014 |
|
|
1,164,670 |
|
|
$ |
20,862 |
|
|
$ |
(7,878 |
) |
|
$ |
(43 |
) |
|
$ |
321 |
|
|
$ |
13,262 |
|
|
$ |
2,732 |
|
|
$ |
15,994 |
|
|
|
1 Includes cumulative translation losses at June 30, 2015: $152
million (June 30, 2014: losses of $73 million).
2 Includes additional paid-in capital as at
June 30, 2015: $283 million (December 31, 2014: $283 million; June 30, 2014: $283 million) and convertible borrowings - equity component as at June 30, 2015: $38 million (December 31, 2014: $38 million; June 30, 2014: $38
million).
The accompanying notes are an integral part of these consolidated financial statements.
|
|
|
|
|
BARRICK SECOND QUARTER 2015 |
|
61 |
|
FINANCIAL STATEMENTS (UNAUDITED) |
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
Barrick Gold Corporation. Tabular dollar amounts in
millions of United States dollars, unless otherwise shown. References to A$, ARS, C$, CLP, DOP, EUR, GBP, JPY, PGK, SAR, TZS, ZAR, and ZMW are to Australian dollars, Argentine pesos, Canadian dollars, Chilean pesos, Dominican pesos, Euros, British
pound sterling, Japanese yen, Papua New Guinea kina, Saudi riyal, Tanzanian shillings, South African rand, and Zambian kwacha, respectively.
1 >
CORPORATE INFORMATION
Barrick Gold Corporation (Barrick or the Company) is a corporation governed by the Business
Corporations Act (Ontario). The Companys head and registered office is located at Brookfield Place, TD Canada Trust Tower, 161 Bay Street, Suite 3700, Toronto, Ontario, M5J 2S1. We are principally engaged in the production and sale of gold and
copper, as well as related activities such as exploration and mine development. Our producing gold mines are located in Canada, the United States, Peru, Argentina, Australia, Dominican Republic and Papua New Guinea. We also hold a 63.9% equity
interest in Acacia Mining plc (Acacia), a company listed on the London Stock Exchange that owns gold mines and exploration properties in Africa. Our Copper business contains producing copper mines located in Chile and Zambia and a mine
under construction in Saudi Arabia. We also have projects located in South America and North America. We sell our gold and copper production into the world market.
2 > SIGNIFICANT ACCOUNTING POLICIES
A) |
Statement of Compliance |
These
condensed interim consolidated financial statements have been prepared in accordance with International Accounting Standard 34 Interim Financial Reporting (IAS 34) as issued by the International Accounting Standards Board
(IASB). These interim financial statements should be read in conjunction with Barricks most recently issued Annual Report which includes information necessary or useful to understanding the Companys business and financial
statement presentation. In particular, the Companys significant accounting policies were presented in Note 2 of the consolidated financial statements for the year ended December 31, 2014, and have been consistently applied in the
preparation of these interim financial statements except for note 2J, Other Investments, which as a result of the adoption of IFRS 9 in the current interim period has been replaced with the following: Investments in
publicly quoted equity securities that are neither subsidiaries nor associates are categorized as Fair Value through Other Comprehensive Income (FVOCI) using the irrevocable election
available in IFRS 9 for these instruments. FVOCI equity investments (referred to as Other Investments) are recorded at fair value with all realized and unrealized gains and losses recorded permanently in OCI. These interim consolidated
financial statements were authorized for issuance by the Board of Directors on August 5, 2015.
B) |
New Accounting Standards Effective in 2015 |
Impact of Adoption of IFRS 9 (2014)
We have early adopted all of
the requirements of IFRS 9 Financial Instruments 2014 (IFRS 9) as of January 1, 2015. IFRS 9 uses a single approach to determine whether a financial asset is classified and measured at amortized cost or fair value, replacing the
multiple rules in IAS 39. The approach in IFRS 9 is based on how an entity manages its financial instruments and the contractual cash flow characteristics of the financial asset. Most of the requirements in IAS 39 for classification and measurement
of financial liabilities were carried forward in IFRS 9. IFRS 9 introduced a single expected credit loss impairment model, which is based on changes in credit quality since initial recognition. The adoption of the expected credit loss impairment
model did not have a significant impact on the companys financial statements.
IFRS 9 changes the requirements for hedge effectiveness and,
consequently for the application of hedge accounting. The IAS 39 effectiveness test is replaced with a requirement for an economic relationship between the hedged item and hedging instrument, and for the hedged ratio to be the same as
that used by the entity for risk management purposes. Certain restrictions that prevented some hedging strategies and hedging instruments from qualifying for hedge accounting were removed under IFRS 9. Generally, the mechanics of hedge accounting
remain unchanged.
As a result of the early adoption of IFRS 9, we have changed our accounting policy for financial instruments retrospectively,
except as described below. The change did not result in a change in carrying value of any of our financial instruments on transition date. The two main areas of change are the accounting for a) equity securities previously classified as available
for sale and b) derivative
|
|
|
|
|
BARRICK SECOND QUARTER 2015 |
|
62 |
|
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) |
instruments, which includes the accounting for hedging relationships that now qualify for hedge accounting and the exclusion of the time value component of options from hedging instruments.
a) |
Impact of adoption on the accounting for equity securities previously designated as available for sale |
The revised policy on the accounting for Other Investments, which represent equity securities previously designated as available for sale, is described in
note 2A). The adjustment to opening retained earnings on January 1, 2015 was $95 million with a corresponding adjustment to accumulated other comprehensive income. There was no impact on net income for 2015.
b) |
Impact of adoption on accounting for derivative instruments |
We have reassessed all of our existing hedging relationships that qualified for hedge accounting under IAS 39 upon adoption of IFRS 9 and these have
continued to qualify for hedge accounting under IFRS 9. We have also reassessed economic hedges that did not qualify for hedge accounting under IAS 39. IFRS 9 has enabled us to apply hedge accounting for most of our fuel positions, thus reducing the
volatility of reported net income. These positions previously did not qualify for hedge accounting since component hedging was not permitted under IAS 39. We have applied these changes prospectively from January 1, 2015.
Under IFRS 9, we also began separating the intrinsic value and time value of option contracts and designating only the change in intrinsic value as the
hedging instrument. IFRS 9 does not require restatement of comparatives. However, we have reflected the retrospective impact of the adoption of IFRS 9 relating to the change in accounting for time value of option contracts as an adjustment to
opening retained earnings. The adjustment to opening retained earnings on January 1, 2015 was $4 million with a corresponding adjustment to accumulated other comprehensive income. There was no impact on net income.
We recognize a financial asset or a financial liability when we become a party to the contractual provisions of the instrument. Financial assets are
initially measured at fair value and are derecognized either when we have transferred substantially all the risks and rewards of ownership of the financial asset or when cash flows expire.
We classify and measure financial assets (excluding derivatives) on initial recognition as described below:
● |
|
Cash and equivalents and restricted cash include cash, term deposits, treasury bills and money market investments with original maturities of less than 90
days. All of these are classified as financial assets at fair value through profit or loss and are measured at fair value. Unrealized gains or losses related to changes in fair value are reported in income; |
● |
|
Trade and other receivables are classified as and measured at amortized cost using the effective interest method, less impairment allowance, if any;
|
● |
|
Equity instruments are designated as financial assets at fair value through other comprehensive income and are recorded at fair value on the settlement date,
net of transaction costs. Future changes in fair value are recognized in other comprehensive income and are not recycled into income. |
Financial liabilities (excluding derivatives) are derecognized when the obligation specified in the contract is discharged, cancelled or expired. For
financial liabilities, IFRS 9 retains most of the IAS 39 requirements and since we do not have any financial liabilities designated at fair value through profit or loss, the adoption of IFRS 9 did not impact our accounting policies for financial
liabilities.
C) |
New Accounting Standards Issued But Not Yet Effective |
IFRS 15 Revenue from Contracts with Customers
In May 2014, the
IASB issued IFRS 15 Revenue from Contracts with Customers, which covers principles that an entity shall apply to report useful information to users of financial statements about the nature, amount, timing, and uncertainty of revenue and cash flows
arising from a contract with a customer. In July 2015, the IASB deferred the effective date of the standard to annual reporting periods beginning on or after January 1, 2018, with earlier application permitted. We are currently assessing the
impact on our consolidated financial statements along with the planned timing of our adoption of IFRS 15.
3 > SIGNIFICANT JUDGMENTS, ESTIMATES, ASSUMPTIONS
AND RISKS
The judgments, estimates, assumptions and risks discussed here reflect updates from the most recently filed annual consolidated
financial statements for the year ended December 31, 2014. For judgments, estimates, assumptions and risks related to other areas not discussed in these interim consolidated financial statements, please refer to Notes 3 and 27 of the 2014
annual consolidated financial statements.
|
|
|
|
|
BARRICK SECOND QUARTER 2015 |
|
63 |
|
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) |
A) |
Gold and Copper Mineral Reserves |
At the end of each fiscal year, as part of our annual business cycle, we prepare estimates of the proven and probable reserves and the portion of
resources expected to be extracted economically for each mineral property. We prospectively revise calculations of depreciation of property, plant and equipment and also transfer amounts allocated to non-depreciable mining interest to mining
interest subject to depreciation based on the ounces/pounds that have become probable of being economically extracted. The effect of changes in the proven and probable reserves and the portion of resources expected to be extracted economically on
depreciation expense for the three months ended June 30, 2015 was an increase of $92 million (2014: $48 million increase ) and for the six months ended June 30, 2015 was an increase $187 million (2014: $93 million increase ). The effect of
transfers to mining interest subject to depreciation on depreciation expense for the three months ended June 30, 2015 was an increase of $2 million (2014: $2 million increase ) and for the six months ended June 30, 2015 was an increase of
$5 million (2014: $3 million increase).
B) |
Provision for Environmental Rehabilitation (PER) |
Provisions are updated each reporting period for changes to expected cash flows and for the effect of changes in the discount rate, foreign exchange rate
and the change in estimate is added or deducted from the related asset and depreciated over the expected economic life of the operation to which it relates. We recorded a decrease of $122 million (2014: $93 million increase) to the PER at our
minesites for the three months ended June 30, 2015 primarily due to an increase in the discount rate.
C) |
Impairment and reversal of impairment for non-current assets and impairment of goodwill |
Non-current assets other than goodwill are tested for impairment, or reversal of impairment, when events or changes in circumstances suggest that the
carrying amount may not be fully recoverable, or an impairment loss recognized in prior periods for an asset other than goodwill may no longer exist or may have decreased. We conduct an annual test for impairment of goodwill in the fourth quarter of
each fiscal year and at any other time of the year if an indicator of impairment or reversal of impairment is identified. We recorded $35 million (2014: $512 million) of impairment charges for the three months ended June 30, 2015 and $40
million (2014: $524 million) of impairment charges for the six months ended June 30, 2015.
We have not identified any indicators that prior
impairments are required to be tested for reversal in the three months ended June 30, 2015.
Liquidity risk is
the risk of loss from not having access to sufficient funds to meet both expected and unexpected cash demands. We manage our exposure to liquidity risk by maintaining cash reserves, access to undrawn credit facilities and access to public debt
markets, by staggering the maturities of outstanding debt instruments to mitigate refinancing risk and by monitoring of forecast and actual cash flows.
As part of our capital allocation strategy, we evaluate our capital expenditures in order to ensure they generate an appropriate risk-adjusted return. We
work towards divesting assets that do not meet our capital allocation criteria.
Our primary source of liquidity is our operating cash flow. Other
options to enhance liquidity include drawing the $4.0 billion available under our 2012 Credit Facility (subject to compliance with covenants and the making of certain representations and warranties, this facility is available for drawdown as a
source of financing), further asset sales and issuances of debt or equity securities in the public markets or to private investors, which could be undertaken for liquidity enhancement and/or in connection with establishing a strategic partnership.
Many factors, including but not limited to general market conditions and then prevailing metals prices, could impact our ability to issue securities on acceptable terms, as could our credit ratings. Moodys and S&P currently rate our
long-term debt Baa2 (negative) and BBB- (stable), respectively. Our credit rating was downgraded by S&P on March 2, 2015, to BBB- (stable) which is the lowest investment grade rating. Changes in our ratings could affect the trading prices
of our securities or our cost of capital. If we were to borrow under our 2012 Credit Facility, the applicable interest rate on the amounts borrowed would be based, in part, on our credit ratings at the time. The key financial covenant in the 2012
Credit Facility (undrawn as at June 30, 2015) requires Barrick to maintain a consolidated tangible net worth (CTNW) of at least $3.0 billion (Barricks CTNW was $5.7 billion as at June 30, 2015).
|
|
|
|
|
BARRICK SECOND QUARTER 2015 |
|
64 |
|
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) |
4 > DIVESTITURES
A)
Assets and liabilities as held for sale
On July 23, 2015, we completed the sale of our Cowal mine in Australia for cash
consideration of $550 million. As at June 30, 2015, all of the assets and liabilities of Cowal were classified as held for sale.
On
May 26, 2015, we announced the sale of 50% of our interest in the Porgera mine in Papua New Guinea to Zijin Mining Group Company (Zijin) for cash consideration of $298 million. As at June 30, 2015, all of the assets and
liabilities of Porgera were classified as held for sale as the transaction will result in a loss of control. The transaction is expected to close in third quarter 2015.
B) Disposition of 50 percent interest in Jabal Sayid
On July 13, 2014, Barrick entered into an agreement to form a joint venture with Maaden to operate the Jabal Sayid copper project.
Maaden, which is 50 percent owned by the Saudi Arabian government, acquired its 50 percent interest in the new joint venture company for cash consideration of $216 million. The transaction closed on December 3, 2014. As at June 30,
2014, all of the assets and liabilities of Jabal Sayid were classified as held for sale, as the transaction resulted in a loss of control. Consequently the assets and liabilities were written down to their fair value less costs of disposal, which
resulted in an impairment loss of $514 million, including $316 million of goodwill. Refer to note 17 for further details of the impairment loss.
C) Disposition of Australian assets
On
January 31, 2014, we closed the sale of our Plutonic mine for total cash consideration of $22 million. In addition, on March 1, 2014, we completed the sale of our Kanowna mine for total cash consideration of $67 million. The transactions
resulted in a loss of $5 million in 2014.
D) Disposition of 10 percent interest in Acacia
On March 11, 2014, we completed the divestment of 41 million ordinary shares in Acacia, representing 10 percent of the issued ordinary share
capital of Acacia for net cash proceeds of $186 million. Subsequent to the divestment, we continue to retain a controlling financial interest in Acacia and continue to consolidate Acacia. We accounted for the divestment as an equity transaction and,
accordingly, recorded the difference between the proceeds received and the carrying value of $179 million as $7 million of additional paid-in capital in shareholders equity.
E) Disposition of Marigold mine
On April 4,
2014, we completed the divestiture of our minority interest in the Marigold mine, for total cash consideration of $86 million. The transaction resulted in a gain of $21 million, which we recorded in 2014.
F) Disposition of 50 percent interest in Zaldivar
On July 30, 2015, we announced the sale of 50% of our Zaldívar copper mine in Chile to Antofagasta Plc for total cash consideration of $1.005
billion. As a result, we expect to record a goodwill impairment of approximately $400 million in third quarter 2015. The transaction is expected to be completed in late 2015 and is subject to customary closing conditions.
|
|
|
|
|
BARRICK SECOND QUARTER 2015 |
|
65 |
|
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) |
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
Barricks 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. For segment reporting purposes, we present our reportable operating segments as
follows: eight individual gold mines, two individual copper mines, Acacia and our Pascua-Lama project. The remaining operating segments have been grouped into an other category consisting of our remaining gold mines.
Segment performance is evaluated based on a number of measures including operating income before tax, production levels and unit production costs.
Certain costs are managed on a consolidated basis and are therefore not reflected in segment income. Starting January 1, 2015, we updated the allocation of our general and administration costs to individual mine sites to reflect the removal of
all regional oversight and have the mine sites directly accountable for the cost of the functional services they require to run their business. The prior period has been restated to reflect the change in presentation.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated Statement of Income Information |
|
|
|
|
|
|
|
|
Cost of Sales |
|
|
|
|
|
|
|
|
|
|
For the three months ended June 30, 2015 |
|
Revenue |
|
|
Direct mining, royalties and community relations |
|
|
Depreciation |
|
|
Exploration, evaluation and project expenses |
|
|
Other expenses (income)1 |
|
|
Segment income (loss) |
|
|
|
|
|
|
|
|
|
|
Goldstrike |
|
|
$ 193 |
|
|
|
$ 85 |
|
|
|
$ 28 |
|
|
|
$ 6 |
|
|
|
$ 2 |
|
|
|
$ 72 |
|
|
|
|
|
|
|
|
Cortez |
|
|
241 |
|
|
|
121 |
|
|
|
74 |
|
|
|
(1) |
|
|
|
4 |
|
|
|
43 |
|
|
|
|
|
|
|
|
Pueblo Viejo |
|
|
315 |
|
|
|
154 |
|
|
|
70 |
|
|
|
- |
|
|
|
- |
|
|
|
91 |
|
|
|
|
|
|
|
|
Lagunas Norte |
|
|
195 |
|
|
|
57 |
|
|
|
46 |
|
|
|
1 |
|
|
|
1 |
|
|
|
90 |
|
|
|
|
|
|
|
|
Veladero |
|
|
178 |
|
|
|
84 |
|
|
|
26 |
|
|
|
- |
|
|
|
1 |
|
|
|
67 |
|
|
|
|
|
|
|
|
Turquoise Ridge |
|
|
64 |
|
|
|
31 |
|
|
|
6 |
|
|
|
- |
|
|
|
1 |
|
|
|
26 |
|
|
|
|
|
|
|
|
Porgera |
|
|
150 |
|
|
|
114 |
|
|
|
12 |
|
|
|
1 |
|
|
|
3 |
|
|
|
20 |
|
|
|
|
|
|
|
|
Kalgoorlie |
|
|
98 |
|
|
|
65 |
|
|
|
13 |
|
|
|
1 |
|
|
|
1 |
|
|
|
18 |
|
|
|
|
|
|
|
|
Acacia |
|
|
230 |
|
|
|
153 |
|
|
|
34 |
|
|
|
5 |
|
|
|
2 |
|
|
|
36 |
|
|
|
|
|
|
|
|
Lumwana |
|
|
132 |
|
|
|
127 |
|
|
|
9 |
|
|
|
- |
|
|
|
2 |
|
|
|
(6) |
|
|
|
|
|
|
|
|
Zaldivar |
|
|
125 |
|
|
|
85 |
|
|
|
16 |
|
|
|
- |
|
|
|
2 |
|
|
|
22 |
|
|
|
|
|
|
|
|
Pascua-Lama |
|
|
- |
|
|
|
- |
|
|
|
6 |
|
|
|
23 |
|
|
|
(2) |
|
|
|
(27) |
|
|
|
|
|
|
|
|
Other Mines2 |
|
|
298 |
|
|
|
163 |
|
|
|
68 |
|
|
|
2 |
|
|
|
27 |
|
|
|
38 |
|
|
|
|
|
|
|
|
|
|
|
|
|
$ 2,219 |
|
|
|
$ 1,239 |
|
|
|
$ 408 |
|
|
|
$ 38 |
|
|
|
$ 44 |
|
|
|
$ 490 |
|
|
|
|
|
|
|
|
BARRICK SECOND QUARTER 2015 |
|
66 |
|
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated Statement of Income Information |
|
|
|
|
|
|
|
|
Cost of Sales |
|
|
|
|
|
|
|
|
|
|
For the three months ended June 30, 2014 |
|
Revenue |
|
|
Direct mining, royalties and community relations |
|
|
Depreciation |
|
|
Exploration, evaluation and project expenses |
|
|
Other expenses (income)1 |
|
|
Segment income (loss) |
|
|
|
|
|
|
|
|
|
|
Goldstrike |
|
|
$ 264 |
|
|
|
$ 107 |
|
|
|
$ 30 |
|
|
|
$ - |
|
|
|
$ 2 |
|
|
|
$ 125 |
|
|
|
|
|
|
|
|
Cortez |
|
|
293 |
|
|
|
108 |
|
|
|
63 |
|
|
|
- |
|
|
|
1 |
|
|
|
121 |
|
|
|
|
|
|
|
|
Pueblo Viejo |
|
|
383 |
|
|
|
152 |
|
|
|
66 |
|
|
|
- |
|
|
|
1 |
|
|
|
164 |
|
|
|
|
|
|
|
|
Lagunas Norte |
|
|
155 |
|
|
|
50 |
|
|
|
11 |
|
|
|
- |
|
|
|
1 |
|
|
|
93 |
|
|
|
|
|
|
|
|
Veladero |
|
|
276 |
|
|
|
136 |
|
|
|
36 |
|
|
|
1 |
|
|
|
2 |
|
|
|
101 |
|
|
|
|
|
|
|
|
Turquoise Ridge |
|
|
58 |
|
|
|
22 |
|
|
|
4 |
|
|
|
- |
|
|
|
1 |
|
|
|
31 |
|
|
|
|
|
|
|
|
Porgera |
|
|
153 |
|
|
|
114 |
|
|
|
19 |
|
|
|
1 |
|
|
|
1 |
|
|
|
18 |
|
|
|
|
|
|
|
|
Kalgoorlie |
|
|
103 |
|
|
|
65 |
|
|
|
10 |
|
|
|
- |
|
|
|
(1) |
|
|
|
29 |
|
|
|
|
|
|
|
|
Acacia |
|
|
227 |
|
|
|
137 |
|
|
|
35 |
|
|
|
6 |
|
|
|
5 |
|
|
|
44 |
|
|
|
|
|
|
|
|
Lumwana |
|
|
63 |
|
|
|
60 |
|
|
|
13 |
|
|
|
- |
|
|
|
1 |
|
|
|
(11) |
|
|
|
|
|
|
|
|
Zaldivar |
|
|
175 |
|
|
|
108 |
|
|
|
15 |
|
|
|
- |
|
|
|
2 |
|
|
|
50 |
|
|
|
|
|
|
|
|
Pascua-Lama |
|
|
- |
|
|
|
- |
|
|
|
6 |
|
|
|
30 |
|
|
|
5 |
|
|
|
(41) |
|
|
|
|
|
|
|
|
Other Mines2 |
|
|
303 |
|
|
|
188 |
|
|
|
76 |
|
|
|
10 |
|
|
|
19 |
|
|
|
10 |
|
|
|
|
|
|
|
|
|
|
|
|
|
$ 2,453 |
|
|
|
$ 1,247 |
|
|
|
$ 384 |
|
|
|
$ 48 |
|
|
|
$ 40 |
|
|
|
$ 734 |
|
|
|
Consolidated Statement of Income Information |
|
|
|
|
|
|
|
|
Cost of Sales |
|
|
|
|
|
|
|
|
|
|
For the six months ended June 30, 2015 |
|
Revenue |
|
|
Direct mining, royalties and community relations |
|
|
Depreciation |
|
|
Exploration, evaluation and project expenses |
|
|
Other expenses (income)1 |
|
|
Segment income (loss) |
|
|
|
|
|
|
|
|
|
|
Goldstrike |
|
|
$ 430 |
|
|
|
$ 202 |
|
|
|
$ 60 |
|
|
|
$ 6 |
|
|
|
$ 4 |
|
|
|
$ 158 |
|
|
|
|
|
|
|
|
Cortez |
|
|
432 |
|
|
|
247 |
|
|
|
144 |
|
|
|
1 |
|
|
|
6 |
|
|
|
34 |
|
|
|
|
|
|
|
|
Pueblo Viejo |
|
|
681 |
|
|
|
316 |
|
|
|
139 |
|
|
|
- |
|
|
|
(2) |
|
|
|
228 |
|
|
|
|
|
|
|
|
Lagunas Norte |
|
|
400 |
|
|
|
115 |
|
|
|
87 |
|
|
|
1 |
|
|
|
3 |
|
|
|
194 |
|
|
|
|
|
|
|
|
Veladero |
|
|
379 |
|
|
|
186 |
|
|
|
52 |
|
|
|
1 |
|
|
|
- |
|
|
|
140 |
|
|
|
|
|
|
|
|
Turquoise Ridge |
|
|
119 |
|
|
|
57 |
|
|
|
11 |
|
|
|
- |
|
|
|
1 |
|
|
|
50 |
|
|
|
|
|
|
|
|
Porgera |
|
|
294 |
|
|
|
207 |
|
|
|
27 |
|
|
|
1 |
|
|
|
4 |
|
|
|
55 |
|
|
|
|
|
|
|
|
Kalgoorlie |
|
|
174 |
|
|
|
122 |
|
|
|
22 |
|
|
|
1 |
|
|
|
2 |
|
|
|
27 |
|
|
|
|
|
|
|
|
Acacia |
|
|
443 |
|
|
|
294 |
|
|
|
67 |
|
|
|
10 |
|
|
|
3 |
|
|
|
69 |
|
|
|
|
|
|
|
|
Lumwana |
|
|
258 |
|
|
|
246 |
|
|
|
27 |
|
|
|
- |
|
|
|
2 |
|
|
|
(17) |
|
|
|
|
|
|
|
|
Zaldivar |
|
|
266 |
|
|
|
180 |
|
|
|
35 |
|
|
|
- |
|
|
|
2 |
|
|
|
49 |
|
|
|
|
|
|
|
|
Pascua-Lama |
|
|
- |
|
|
|
- |
|
|
|
8 |
|
|
|
56 |
|
|
|
(13) |
|
|
|
(51) |
|
|
|
|
|
|
|
|
Other Mines2 |
|
|
588 |
|
|
|
331 |
|
|
|
142 |
|
|
|
4 |
|
|
|
21 |
|
|
|
90 |
|
|
|
|
|
|
|
|
|
|
|
|
|
$ 4,464 |
|
|
|
$ 2,503 |
|
|
|
$ 821 |
|
|
|
$ 81 |
|
|
|
$ 33 |
|
|
|
$ 1,026 |
|
|
|
|
|
|
|
|
BARRICK SECOND QUARTER 2015 |
|
67 |
|
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated Statement of Income Information |
|
|
|
|
|
|
|
|
Cost of Sales |
|
|
|
|
|
|
|
|
|
|
For the six months ended June 30, 2014 |
|
Revenue |
|
|
Direct mining, royalties and community relations |
|
|
Depreciation |
|
|
Exploration, evaluation and project expenses |
|
|
Other expenses (income)1 |
|
|
Segment income (loss) |
|
|
|
Goldstrike |
|
|
$ 624 |
|
|
|
$ 270 |
|
|
|
$ 72 |
|
|
|
$ 1 |
|
|
|
$ 3 |
|
|
|
$ 278 |
|
Cortez |
|
|
544 |
|
|
|
185 |
|
|
|
115 |
|
|
|
- |
|
|
|
4 |
|
|
|
240 |
|
Pueblo Viejo |
|
|
788 |
|
|
|
321 |
|
|
|
120 |
|
|
|
- |
|
|
|
- |
|
|
|
347 |
|
Lagunas Norte |
|
|
356 |
|
|
|
106 |
|
|
|
26 |
|
|
|
- |
|
|
|
4 |
|
|
|
220 |
|
Veladero |
|
|
456 |
|
|
|
226 |
|
|
|
66 |
|
|
|
1 |
|
|
|
4 |
|
|
|
159 |
|
Turquoise Ridge |
|
|
131 |
|
|
|
45 |
|
|
|
8 |
|
|
|
- |
|
|
|
1 |
|
|
|
77 |
|
Porgera |
|
|
303 |
|
|
|
226 |
|
|
|
41 |
|
|
|
1 |
|
|
|
1 |
|
|
|
34 |
|
Kalgoorlie |
|
|
219 |
|
|
|
139 |
|
|
|
21 |
|
|
|
- |
|
|
|
1 |
|
|
|
58 |
|
Acacia |
|
|
442 |
|
|
|
269 |
|
|
|
65 |
|
|
|
11 |
|
|
|
7 |
|
|
|
90 |
|
Lumwana |
|
|
197 |
|
|
|
183 |
|
|
|
36 |
|
|
|
- |
|
|
|
2 |
|
|
|
(24) |
|
Zaldivar |
|
|
346 |
|
|
|
201 |
|
|
|
33 |
|
|
|
- |
|
|
|
2 |
|
|
|
110 |
|
Pascua-Lama |
|
|
- |
|
|
|
- |
|
|
|
8 |
|
|
|
74 |
|
|
|
9 |
|
|
|
(91) |
|
Other Mines2 |
|
|
685 |
|
|
|
414 |
|
|
|
161 |
|
|
|
21 |
|
|
|
16 |
|
|
|
73 |
|
|
|
|
|
|
$ 5,091 |
|
|
|
$ 2,585 |
|
|
|
$ 772 |
|
|
|
$ 109 |
|
|
|
$ 54 |
|
|
|
$ 1,571 |
|
|
|
1 |
Other expenses include accretion expense, which is included within finance costs in the consolidated statement of income. For the three months ended
June 30, 2015, accretion expense was $12 million (2014: $14 million) and for the six months ended June 30, 2015, accretion expense was $23 million (2014: $28 million). |
2 |
Includes exploration and evaluation expense and losses from equity investees. |
Reconciliation of Segment Income to Income Before Income Taxes
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the three months ended June 30 |
|
|
For the six months ended June 30 |
|
|
|
|
|
2015 |
|
|
2014 |
|
|
2015 |
|
|
2014 |
|
|
|
Segment income |
|
|
$ 490 |
|
|
|
$ 734 |
|
|
|
$ 1,026 |
|
|
|
$ 1,571 |
|
Other revenue1 |
|
|
12 |
|
|
|
5 |
|
|
|
12 |
|
|
|
14 |
|
Other cost of sales/amortization1,2 |
|
|
(42) |
|
|
|
- |
|
|
|
(73) |
|
|
|
7 |
|
Exploration, evaluation and project
expenses not attributable to segments |
|
|
(59) |
|
|
|
(57) |
|
|
|
(102) |
|
|
|
(96) |
|
General and administrative
expenses |
|
|
(70) |
|
|
|
(82) |
|
|
|
(137) |
|
|
|
(185) |
|
Other (expense) income not attributable to
segments |
|
|
- |
|
|
|
9 |
|
|
|
(4) |
|
|
|
(10) |
|
Impairment charges not attributable to
segments |
|
|
(35) |
|
|
|
(512) |
|
|
|
(40) |
|
|
|
(524) |
|
Loss on currency translation |
|
|
(33) |
|
|
|
(31) |
|
|
|
(31) |
|
|
|
(110) |
|
Closed mine rehabilitation |
|
|
19 |
|
|
|
(27) |
|
|
|
11 |
|
|
|
(49) |
|
Finance income |
|
|
2 |
|
|
|
3 |
|
|
|
4 |
|
|
|
6 |
|
Finance costs (includes non segment
accretion) |
|
|
(182) |
|
|
|
(186) |
|
|
|
(367) |
|
|
|
(373) |
|
(Loss) gain on non-hedge
derivatives |
|
|
(8) |
|
|
|
44 |
|
|
|
(11) |
|
|
|
65 |
|
|
|
Income (loss) before income taxes |
|
|
$ 94 |
|
|
|
$ (100) |
|
|
|
$ 288 |
|
|
|
$ 316 |
|
|
|
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 SECOND QUARTER 2015 |
|
68 |
|
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital Expenditures Information |
|
Segment capital expenditures1 |
|
|
|
|
|
|
|
|
For the three months ended June 30 |
|
|
For the six months ended June 30 |
|
|
|
2015 |
|
|
2014 |
|
|
2015 |
|
|
2014 |
|
|
|
Goldstrike |
|
|
$ 37 |
|
|
|
$ 138 |
|
|
|
$ 130 |
|
|
|
$ 254 |
|
Cortez |
|
|
57 |
|
|
|
66 |
|
|
|
90 |
|
|
|
120 |
|
Pueblo Viejo |
|
|
28 |
|
|
|
40 |
|
|
|
61 |
|
|
|
71 |
|
Lagunas Norte |
|
|
18 |
|
|
|
19 |
|
|
|
31 |
|
|
|
43 |
|
Veladero |
|
|
68 |
|
|
|
33 |
|
|
|
136 |
|
|
|
64 |
|
Turquoise Ridge |
|
|
10 |
|
|
|
9 |
|
|
|
16 |
|
|
|
15 |
|
Porgera |
|
|
26 |
|
|
|
7 |
|
|
|
54 |
|
|
|
13 |
|
Kalgoorlie |
|
|
6 |
|
|
|
10 |
|
|
|
23 |
|
|
|
26 |
|
Acacia |
|
|
42 |
|
|
|
59 |
|
|
|
83 |
|
|
|
115 |
|
Lumwana |
|
|
29 |
|
|
|
59 |
|
|
|
43 |
|
|
|
91 |
|
Zaldivar |
|
|
15 |
|
|
|
22 |
|
|
|
28 |
|
|
|
52 |
|
Pascua-Lama |
|
|
(4) |
|
|
|
(12) |
|
|
|
- |
|
|
|
31 |
|
Other Mines |
|
|
77 |
|
|
|
36 |
|
|
|
168 |
|
|
|
92 |
|
|
|
Segment total |
|
|
$ 409 |
|
|
|
$ 486 |
|
|
|
$ 863 |
|
|
|
$ 987 |
|
Other items not allocated to
segments |
|
|
5 |
|
|
|
16 |
|
|
|
7 |
|
|
|
24 |
|
|
|
Total |
|
|
$ 414 |
|
|
|
$ 502 |
|
|
|
$ 870 |
|
|
|
$ 1,011 |
|
|
|
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. For the three months ended June 30, 2015, cash expenditures were $499 million (2014: $616 million) and the decrease in accrued expenditures was $85 million (2014: $114 million decrease). For the six
months ended June 30, 2015, cash expenditures were $1,013 million (2014: $1,232 million) and the decrease in accrued expenditures was $143 million (2014: $221 million decrease). |
6 > REVENUE
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the three months ended June 30 |
|
|
For the six months ended June 30 |
|
|
|
|
|
2015 |
|
|
2014 |
|
|
2015 |
|
|
2014 |
|
|
|
Gold bullion sales |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Spot market sales |
|
|
$ 1,848 |
|
|
|
$ 2,088 |
|
|
|
$ 3,702 |
|
|
|
$ 4,317 |
|
Concentrate sales |
|
|
73 |
|
|
|
62 |
|
|
|
138 |
|
|
|
112 |
|
|
|
|
|
|
$ 1,921 |
|
|
|
$ 2,150 |
|
|
|
$ 3,840 |
|
|
|
$ 4,429 |
|
Copper sales |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Copper cathode sales |
|
|
$ 125 |
|
|
|
$ 174 |
|
|
|
$ 266 |
|
|
|
$ 345 |
|
Concentrate sales |
|
|
132 |
|
|
|
63 |
|
|
|
258 |
|
|
|
197 |
|
|
|
|
|
|
$ 257 |
|
|
|
$ 237 |
|
|
|
$ 524 |
|
|
|
$ 542 |
|
|
|
Other sales1 |
|
|
$ 53 |
|
|
|
$ 71 |
|
|
|
$ 112 |
|
|
|
$ 134 |
|
|
|
Total |
|
|
$ 2,231 |
|
|
|
$ 2,458 |
|
|
|
$ 4,476 |
|
|
|
$ 5,105 |
|
|
|
1 |
Revenues include the sale of by-products for our gold and copper mines and energy sales from Monte Rio. |
Provisional Copper and Gold Sales
We have provisionally priced
sales for which price finalization, referenced to the relevant copper and gold index, is outstanding at the balance sheet date. Our exposure at June 30, 2015 to the impact of movements in market commodity prices for provisionally priced sales
is set out in the following table:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Volumes subject to final pricing Copper (millions) Gold (000s) |
|
|
Impact on net income before taxation of 10% movement
in market price US$ |
|
|
|
For the six months ended June 30 |
|
2015 |
|
|
2014 |
|
|
2015 |
|
|
2014 |
|
|
|
Copper pounds |
|
|
61 |
|
|
|
18 |
|
|
|
$ 16 |
|
|
|
$ 6 |
|
Gold ounces |
|
|
20 |
|
|
|
17 |
|
|
|
2 |
|
|
|
2 |
|
|
|
For the three months ended June 30, 2015, our provisionally priced copper sales included provisional pricing losses
of $12 million (2014: $4 million gains ) and our provisionally priced gold sales included provisional pricing adjustments of $nil million (2014: $1 million losses). For the six months ended June 30, 2015, our provisionally priced copper sales
included provisional pricing losses of $24 million (2014: $15 million losses ) and our provisionally priced gold sales included provisional pricing losses of $1 million (2014: $2 million gains).
At June 30, 2015, our provisionally priced copper and gold sales subject to final settlement were recorded at average prices of $2.61/lb (2014:
$3.19/lb) and $1,182/oz (2014: $1,278/oz), respectively. The sensitivities in the above table show the impact of a 10 percent change in commodity prices, while holding all other variables constant.
|
|
|
|
|
BARRICK SECOND QUARTER 2015 |
|
69 |
|
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) |
7 > COST OF SALES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the three months ended June 30 |
|
|
For the six months ended June 30 |
|
|
|
|
|
2015 |
|
|
2014 |
|
|
2015 |
|
|
2014 |
|
|
|
Direct mining cost1,2 |
|
|
$ 1,164 |
|
|
|
$ 1,139 |
|
|
|
$ 2,350 |
|
|
|
$ 2,367 |
|
Depreciation |
|
|
419 |
|
|
|
400 |
|
|
|
840 |
|
|
|
802 |
|
Royalty expense |
|
|
89 |
|
|
|
73 |
|
|
|
179 |
|
|
|
148 |
|
Community relations |
|
|
17 |
|
|
|
19 |
|
|
|
28 |
|
|
|
33 |
|
|
|
|
|
|
$ 1,689 |
|
|
|
$ 1,631 |
|
|
|
$ 3,397 |
|
|
|
$ 3,350 |
|
|
|
1 |
Direct mining cost includes charges to reduce the cost of inventory to net realizable value as follows: $33 million for the three months ended June 30,
2015 (2014: $25 million) and $88 million for the six months ended June 30, 2015 (2014: $41 million). |
2 |
Direct mining cost includes the costs of extracting by-products. |
Beginning in January 1, 2015, we updated the allocation of general & administration (G&A) costs to individual mine sites to
reflect the removal of all regional oversight and have the mine sites directly accountable for the cost of the functional services they require to run their business. These costs now form part of mine site G&A costs which is included within
direct mining costs.
8 > EXPLORATION, EVALUATION AND PROJECT EXPENSES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the three months ended June 30 |
|
|
For the six months ended June 30 |
|
|
|
|
|
2015 |
|
|
2014 |
|
|
2015 |
|
|
2014 |
|
|
|
Exploration |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Minesite exploration |
|
|
$ 12 |
|
|
|
$ 10 |
|
|
|
$ 19 |
|
|
|
$ 17 |
|
Global programs |
|
|
34 |
|
|
|
37 |
|
|
|
68 |
|
|
|
59 |
|
|
|
|
|
|
$ 46 |
|
|
|
$ 47 |
|
|
|
$ 87 |
|
|
|
$ 76 |
|
Evaluation costs |
|
|
6 |
|
|
|
6 |
|
|
|
10 |
|
|
|
9 |
|
|
|
Exploration and evaluation expense1 |
|
|
$ 52 |
|
|
|
$ 53 |
|
|
|
$ 97 |
|
|
|
$ 85 |
|
Advanced project costs: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pascua-Lama |
|
|
22 |
|
|
|
25 |
|
|
|
54 |
|
|
|
67 |
|
Jabal Sayid |
|
|
- |
|
|
|
7 |
|
|
|
- |
|
|
|
17 |
|
Other project related costs: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cerro Casale |
|
|
2 |
|
|
|
3 |
|
|
|
4 |
|
|
|
6 |
|
Kainantu |
|
|
- |
|
|
|
1 |
|
|
|
- |
|
|
|
2 |
|
Reko Diq |
|
|
- |
|
|
|
3 |
|
|
|
- |
|
|
|
5 |
|
Corporate Development |
|
|
20 |
|
|
|
8 |
|
|
|
26 |
|
|
|
16 |
|
Community relations related to projects |
|
|
1 |
|
|
|
5 |
|
|
|
2 |
|
|
|
7 |
|
|
|
Exploration, evaluation and project expenses |
|
|
$ 97 |
|
|
|
$ 105 |
|
|
|
$ 183 |
|
|
|
$ 205 |
|
|
|
1 |
Approximates the impact on operating cash flow.
|
9 > EARNINGS (LOSS) PER SHARE
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the three months ended June 30 |
|
|
For the six months ended June 30 |
|
|
|
|
|
|
|
|
2015 |
|
|
2014 |
|
|
2015 |
|
|
2014 |
|
|
|
($ millions, except shares in millions and per share amounts in dollars) |
|
Basic |
|
|
Diluted |
|
|
Basic |
|
|
Diluted |
|
|
Basic |
|
|
Diluted |
|
|
Basic |
|
|
Diluted |
|
|
|
Net income (loss) |
|
|
$ (9) |
|
|
|
$ (9) |
|
|
|
$ (223) |
|
|
|
$ (223) |
|
|
|
$ 80 |
|
|
|
$ 80 |
|
|
|
$ (96) |
|
|
|
$ (96) |
|
Net income attributable to non-controlling interests |
|
|
- |
|
|
|
- |
|
|
|
(46) |
|
|
|
(46) |
|
|
|
(32) |
|
|
|
(32) |
|
|
|
(85) |
|
|
|
(85) |
|
|
|
Net income (loss) attributable to equity holders of Barrick Gold Corporation |
|
|
$ (9) |
|
|
|
$ (9) |
|
|
|
$ (269) |
|
|
|
$ (269) |
|
|
|
$ 48 |
|
|
|
$ 48 |
|
|
|
$ (181) |
|
|
|
$ (181) |
|
|
|
Weighted average shares outstanding |
|
|
1,165 |
|
|
|
1,165 |
|
|
|
1,165 |
|
|
|
1,165 |
|
|
|
1,165 |
|
|
|
1,165 |
|
|
|
1,165 |
|
|
|
1,165 |
|
|
|
Earnings per share data attributable to the equity holders of Barrick Gold Corporation |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) |
|
|
$ (0.01) |
|
|
|
$ (0.01) |
|
|
|
$ (0.23) |
|
|
|
$ (0.23) |
|
|
|
$ 0.04 |
|
|
|
$ 0.04 |
|
|
|
$ (0.16) |
|
|
|
$ (0.16) |
|
|
|
|
|
|
|
|
BARRICK SECOND QUARTER 2015 |
|
70 |
|
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) |
10 > OTHER EXPENSES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the three months
ended June 30 |
|
|
For the six months
ended June 30 |
|
|
|
|
|
2015 |
|
|
2014 |
|
|
2015 |
|
|
2014 |
|
|
|
|
|
|
|
|
Other expense: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consulting fees |
|
|
$ 3 |
|
|
|
$ 13 |
|
|
|
$ 5 |
|
|
|
$ 19 |
|
|
|
|
|
|
Bank charges |
|
|
4 |
|
|
|
4 |
|
|
|
11 |
|
|
|
9 |
|
Mine site severance and non-operational costs |
|
|
1 |
|
|
|
2 |
|
|
|
1 |
|
|
|
8 |
|
|
|
|
|
|
Office closure costs |
|
|
27 |
|
|
|
15 |
|
|
|
27 |
|
|
|
15 |
|
Management Fee |
|
|
1 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Toll Milling |
|
|
4 |
|
|
|
2 |
|
|
|
4 |
|
|
|
1 |
|
World Gold Council fees |
|
|
- |
|
|
|
1 |
|
|
|
- |
|
|
|
2 |
|
Pension and other post-retirement benefit expense |
|
|
1 |
|
|
|
- |
|
|
|
2 |
|
|
|
3 |
|
|
|
Total other expense |
|
|
$ 41 |
|
|
|
$ 37 |
|
|
|
$ 50 |
|
|
|
$ 57 |
|
|
|
|
|
|
|
|
Other income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain on sale of long-lived assets |
|
|
$ (2) |
|
|
|
$ (22) |
|
|
$ |
(26) |
|
|
|
$ (23) |
|
Insurance recovery |
|
|
(1) |
|
|
|
(1) |
|
|
|
(1) |
|
|
|
- |
|
Royalty income |
|
|
(1) |
|
|
|
- |
|
|
|
(2) |
|
|
|
(1) |
|
Miscellaneous write offs (recovery) |
|
|
(4) |
|
|
|
3 |
|
|
|
(4) |
|
|
|
3 |
|
Incidental income |
|
|
(1) |
|
|
|
- |
|
|
|
(3) |
|
|
|
- |
|
|
|
Total other income |
|
|
$ (9) |
|
|
|
$ (20) |
|
|
$ |
(36) |
|
|
|
$ (21) |
|
|
|
Total |
|
|
$ 32 |
|
|
|
$ 17 |
|
|
|
$ 14 |
|
|
|
$36 |
|
|
|
B Impairment Charges
|
|
|
|
For the three months
ended June 30 |
|
|
For the six months
ended June 30 |
|
|
|
|
|
2015 |
|
|
2014 |
|
|
2015 |
|
|
2014 |
|
|
|
|
|
|
|
|
Impairment of long-lived assets |
|
|
$ 35 |
|
|
|
$ 182 |
|
|
|
$ 40 |
|
|
|
$ 185 |
|
Impairment of other intangibles |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
7 |
|
|
|
|
|
|
$ 35 |
|
|
|
$ 182 |
|
|
|
$ 40 |
|
|
|
$ 192 |
|
Impairment of goodwill |
|
|
- |
|
|
|
316 |
|
|
|
- |
|
|
|
316 |
|
Impairment of other investments |
|
|
- |
|
|
|
14 |
|
|
|
- |
|
|
|
16 |
|
|
|
Total |
|
|
$ 35 |
|
|
|
$ 512 |
|
|
|
$ 40 |
|
|
|
$ 524 |
|
|
|
11 > FINANCE COSTS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the three months ended June 30 |
|
|
For the six months ended June 30 |
|
|
|
|
|
2015 |
|
|
2014 |
|
|
2015 |
|
|
2014 |
|
|
|
Interest |
|
|
$ 181 |
|
|
|
$ 184 |
|
|
|
$ 365 |
|
|
|
$ 366 |
|
Amortization of debt issue costs |
|
|
5 |
|
|
|
5 |
|
|
|
10 |
|
|
|
10 |
|
Losses (gains) on interest rate hedges |
|
|
1 |
|
|
|
(1) |
|
|
|
1 |
|
|
|
(1) |
|
Interest capitalized |
|
|
(8) |
|
|
|
(7) |
|
|
|
(17) |
|
|
|
(14) |
|
Accretion |
|
|
15 |
|
|
|
19 |
|
|
|
31 |
|
|
|
40 |
|
|
|
Total |
|
|
$ 194 |
|
|
|
$ 200 |
|
|
|
$ 390 |
|
|
|
$ 401 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12 > INCOME TAX EXPENSE |
|
|
|
For the three months ended June 30 |
|
|
For the six months ended June 30 |
|
|
|
|
|
2015 |
|
|
2014 |
|
|
2015 |
|
|
2014 |
|
|
|
Current |
|
|
$ 84 |
|
|
|
$ 201 |
|
|
|
$ 186 |
|
|
|
$ 395 |
|
Deferred |
|
|
19 |
|
|
|
(78) |
|
|
|
22 |
|
|
|
17 |
|
|
|
|
|
|
$ 103 |
|
|
|
$ 123 |
|
|
|
$ 208 |
|
|
|
$ 412 |
|
|
|
The tax rate for income in the six months ended June 30, 2015 was 72% (2014: 130%). After adjusting for the impact
of de-recognition of a deferred tax asset, net currency translation losses on deferred tax balances, the impact of impairments, asset sales and non-hedge derivatives and the impact of non-deductible foreign exchange losses, the underlying effective
tax rate for ordinary income in the six months ended June 30, 2015 was 53% (2014: 50%).
Currency Translation
Deferred tax balances are subject to remeasurement for changes in currency exchange rates each period. The most significant balances are Argentinean net
deferred tax liabilities. In the six months ended June 30, 2015 and 2014, tax expense of $12 million and $44 million respectively primarily arose from translation losses on tax balances in Argentina, due to the weakening of the Argentinean peso
against the US dollar. These translation gains/losses are included within deferred income tax expense/recovery.
De-Recognition of a Deferred Tax Asset
In second quarter 2015, we recorded a deferred tax expense of $20 million related to de-recognition of a deferred tax asset in Pueblo Viejo.
Restructure of Internal Debt to Equity
In second quarter 2014,
a deferred tax recovery of $112 million arose from a restructure of internal debt to equity in subsidiary corporations, which resulted in the release of a deferred tax liability and a net increase in deferred tax assets.
|
|
|
|
|
BARRICK SECOND QUARTER 2015 |
|
71 |
|
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) |
13 > CASH FLOW OTHER ITEMS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
A Operating Cash Flows Other Items |
|
For the three months ended June 30 |
|
|
For the six months ended June 30 |
|
|
|
|
|
2015 |
|
|
2014 |
|
|
2015 |
|
|
2014 |
|
|
|
|
|
|
|
|
Adjustments for non-cash income statement items: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net currency translation losses |
|
|
$ 33 |
|
|
|
$ 31 |
|
|
|
$31 |
|
|
|
$ 110 |
|
|
|
|
|
|
RSU expense |
|
|
9 |
|
|
|
4 |
|
|
|
16 |
|
|
|
12 |
|
|
|
|
|
|
Stock option expense (recovery) |
|
|
- |
|
|
|
(7) |
|
|
|
1 |
|
|
|
(7) |
|
|
|
|
|
|
Change in estimate of rehabilitation costs at closed mines |
|
|
(19) |
|
|
|
27 |
|
|
|
(11) |
|
|
|
49 |
|
|
|
|
|
|
Net inventory impairment charges (note 15) |
|
|
33 |
|
|
|
25 |
|
|
|
88 |
|
|
|
41 |
|
|
|
|
|
|
Cash flow arising from changes in: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts receivable |
|
|
52 |
|
|
|
15 |
|
|
|
54 |
|
|
|
1 |
|
|
|
|
|
|
Other current assets |
|
|
4 |
|
|
|
84 |
|
|
|
(61) |
|
|
|
14 |
|
|
|
|
|
|
Accounts payable |
|
|
74 |
|
|
|
(17) |
|
|
|
(80) |
|
|
|
(294) |
|
|
|
|
|
|
Other current liabilities |
|
|
(49) |
|
|
|
(19) |
|
|
|
(83) |
|
|
|
(22) |
|
|
|
|
|
|
Other assets and liabilities |
|
|
10 |
|
|
|
(107) |
|
|
|
7 |
|
|
|
(90) |
|
|
|
|
|
|
Settlement of rehabilitation obligations |
|
|
(26) |
|
|
|
(20) |
|
|
|
(50) |
|
|
|
(39) |
|
|
|
|
|
|
|
|
Other net operating activities |
|
|
$ 121 |
|
|
|
$ 16 |
|
|
|
$ (88) |
|
|
|
$ (225) |
|
|
|
|
|
|
B Investing Cash Flows Other Items |
|
For the three months ended June 30 |
|
|
For the six months ended June 30 |
|
|
|
|
|
2015 |
|
|
2014 |
|
|
2015 |
|
|
2014 |
|
|
|
|
|
|
|
|
Value added tax recoverable on project capital expenditures |
|
|
$ - |
|
|
|
$(39) |
|
|
|
$ - |
|
|
|
$ (58) |
|
|
|
|
|
|
Other |
|
|
(6) |
|
|
|
- |
|
|
|
(7) |
|
|
|
(21) |
|
|
|
|
|
|
|
|
Other net investing activities |
|
|
$ (6) |
|
|
|
$(39) |
|
|
|
$ (7) |
|
|
|
$ (79) |
|
|
|
|
|
|
|
|
BARRICK SECOND QUARTER 2015 |
|
72 |
|
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) |
14 > EQUITY ACCOUNTING METHOD INVESTMENT CONTINUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kabanga |
|
|
Jabal Sayid1 |
|
|
Total |
|
|
|
|
|
|
|
At January 1, 2014 |
|
|
$ 27 |
|
|
|
$ - |
|
|
|
$ 27 |
|
|
|
|
|
Funds invested |
|
|
1 |
|
|
|
178 |
|
|
|
179 |
|
|
|
|
|
|
|
At December 31, 2014 |
|
|
$ 28 |
|
|
|
$ 178 |
|
|
|
$ 206 |
|
|
|
|
|
Funds invested |
|
|
2 |
|
|
|
- |
|
|
|
2 |
|
|
|
|
|
|
|
At June 30, 2015 |
|
|
$ 30 |
|
|
|
$ 178 |
|
|
|
$ 208 |
|
|
|
|
|
|
|
Publicly traded |
|
|
No |
|
|
|
No |
|
|
|
|
|
|
|
1 |
A $164 million non-interest bearing shareholder loan due from the Jabal Sayid JV as a result of the divestment of 50 percent interest in Jabal Sayid is
presented as part of Other Assets in the Consolidated Financial Statements. |
15 > INVENTORIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gold |
|
|
Copper |
|
|
|
|
|
|
|
|
As at June 30, 2015 |
|
|
As at December 31, 2014 |
|
|
As at June 30, 2015 |
|
|
As at December 31, 2014 |
|
|
|
Raw materials |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ore in stockpiles |
|
|
$ 1,706 |
|
|
|
$ 2,036 |
|
|
|
$166 |
|
|
|
$182 |
|
Ore on leach pads |
|
|
389 |
|
|
|
357 |
|
|
|
400 |
|
|
|
392 |
|
Mine operating supplies |
|
|
744 |
|
|
|
875 |
|
|
|
120 |
|
|
|
132 |
|
Work in process |
|
|
214 |
|
|
|
245 |
|
|
|
8 |
|
|
|
7 |
|
Finished products |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gold doré |
|
|
62 |
|
|
|
129 |
|
|
|
- |
|
|
|
- |
|
Copper cathode |
|
|
- |
|
|
|
- |
|
|
|
22 |
|
|
|
12 |
|
Copper concentrate |
|
|
- |
|
|
|
- |
|
|
|
15 |
|
|
|
28 |
|
Gold concentrate |
|
|
7 |
|
|
|
11 |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
$ 3,122 |
|
|
|
$ 3,653 |
|
|
|
$731 |
|
|
|
$753 |
|
|
|
|
|
|
Non-current ore in stockpiles1 |
|
|
(1,301) |
|
|
|
(1,584) |
|
|
|
(87) |
|
|
|
(100) |
|
|
|
|
|
|
$ 1,821 |
|
|
|
$ 2,069 |
|
|
|
$644 |
|
|
|
$653 |
|
|
|
1 |
Ore that we do not expect to process in the next 12 months is classified as long-term. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the three months ended June 30 |
|
|
For the six months ended June 30 |
|
|
|
|
|
2015 |
|
|
2014 |
|
|
2015 |
|
|
2014 |
|
|
|
Inventory impairment charges1 |
|
|
$ 34 |
|
|
|
$ 25 |
|
|
|
$ 89 |
|
|
|
$ 41 |
|
Inventory impairment charges reversed |
|
|
(1) |
|
|
|
- |
|
|
|
(1) |
|
|
|
- |
|
|
|
1 |
Impairment charges in 2015 and 2014 primarily relates to impairments at Cortez. |
Purchase Commitments
At June 30, 2015, we had purchase
obligations for supplies and consumables of $1,483 million.
|
|
|
|
|
BARRICK SECOND QUARTER 2015 |
|
73 |
|
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) |
16 > PROPERTY, PLANT AND EQUIPMENT
|
|
|
|
|
|
|
|
|
|
|
As at June 30, 2015 |
|
|
As at December 31, 2014 |
|
|
|
Depreciable assets |
|
|
$ 14,428 |
|
|
|
$ 14,947 |
|
Non-depreciable assets |
|
|
|
|
|
|
|
|
Projects |
|
|
|
|
|
|
|
|
Pascua-Lama |
|
|
1,883 |
|
|
|
1,910 |
|
Cerro Casale1 |
|
|
444 |
|
|
|
444 |
|
Donlin Gold |
|
|
143 |
|
|
|
138 |
|
Construction-in-progress2 |
|
|
1,276 |
|
|
|
1,490 |
|
Acquired mineral resources and exploration potential |
|
|
157 |
|
|
|
264 |
|
|
|
|
|
|
$ 18,331 |
|
|
|
$ 19,193 |
|
|
|
1 |
Amount presented on a 100% basis and includes our partners non-controlling interest. |
2 |
Represents assets under construction at our operating mine sites. |
Capital Commitments
In addition to entering into various
operational commitments in the normal course of business, we had capital commitments of $121 million at June 30, 2015.
17 > IMPAIRMENT OF GOODWILL AND
OTHER ASSETS
In accordance with our accounting policy, goodwill is tested for impairment in the fourth quarter and also when there is an
indicator of impairment. Non-current assets are tested for impairment when events or changes in circumstances suggest that the carrying amount may not be recoverable. Refer to note 20 of the 2014 annual consolidated financial statements for further
information.
Summary of impairments (reversals)
For the
three months ended June 30, 2015, we recorded impairment losses of $35 million (2014: $196 million) for non-current assets and $nil million (2014: $316 million) for goodwill, as summarized in the following table:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the three months ended June 30 |
|
|
For the six months ended June 30 |
|
|
|
|
|
2015 |
|
|
2014 |
|
|
2015 |
|
|
2014 |
|
|
|
|
|
|
|
|
Copper goodwill |
|
|
$ - |
|
|
|
$ 316 |
|
|
|
$ - |
|
|
|
$ 316 |
|
|
|
|
|
|
Jabal Sayid |
|
|
- |
|
|
|
198 |
|
|
|
- |
|
|
|
198 |
|
|
|
|
|
|
Lumwana |
|
|
- |
|
|
|
4 |
|
|
|
- |
|
|
|
4 |
|
|
|
|
|
|
Cortez |
|
|
2 |
|
|
|
- |
|
|
|
2 |
|
|
|
- |
|
|
|
|
|
|
Goldstrike |
|
|
6 |
|
|
|
- |
|
|
|
8 |
|
|
|
- |
|
|
|
|
|
|
Golden Sunlight |
|
|
6 |
|
|
|
- |
|
|
|
6 |
|
|
|
- |
|
|
|
|
|
|
PV |
|
|
18 |
|
|
|
(22) |
|
|
|
18 |
|
|
|
(22) |
|
|
|
|
|
|
Exploration (Kainantu) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
7 |
|
|
|
|
|
|
Other investments |
|
|
- |
|
|
|
14 |
|
|
|
- |
|
|
|
16 |
|
|
|
|
|
|
Other |
|
|
3 |
|
|
|
2 |
|
|
|
6 |
|
|
|
5 |
|
|
|
|
|
|
|
|
Total |
|
|
$ 35 |
|
|
|
$ 512 |
|
|
|
$ 40 |
|
|
|
$ 524 |
|
|
|
Indicators of impairment
Second Quarter
2015
In second quarter 2015, we determined that we expect to sell the Monte Rio power asset at our Pueblo Viejo mine. Power supply to Pueblo
Viejo is not impacted by this disposition. As a result we recorded an impairment loss of $18 million to reduce its carrying value down to its net realizable value.
Subsequent events
Subsequent to quarter end, the trading price
of the companys shares declined such that the carrying value of our net assets exceeded our market capitalization, which is a potential indicator of impairment. If this potential indicator of impairment exists at the end of third quarter 2015,
we may be required to conduct an impairment assessment.
In late July 2015, the Zambian government passed legislation that amended the countrys
mining tax regime. In third quarter 2015 we will evaluate the potential for a reversal of previous impairments recorded in fourth quarter 2014.
Second Quarter
2014
As at June 30, 2014, our Jabal Sayid project in Saudi Arabia met the criteria as an asset held for sale. Accordingly, we were required
to allocate goodwill from the Copper Operating Unit to Jabal Sayid and test the Jabal Sayid group of assets for impairment. We determined that the carrying value exceeded the Fair Value Less Costs of Disposal (FVLCD), and consequently
recorded $514 million in impairment charges, including the full amount of goodwill allocated on a relative fair value basis, of $316 million. Subsequent to quarter end, on July 13, 2014 we
|
|
|
|
|
BARRICK SECOND QUARTER 2015 |
|
74 |
|
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) |
signed an agreement to sell a 50% interest of Jabal Sayid for cash proceeds of $216 million.
We reached an agreement to sell a power-related asset at our Pueblo Viejo mine for proceeds that exceeded its carrying value. This asset had previously
been impaired in fourth quarter 2012 and therefore we recognized an impairment reversal of $22 million.
Key assumptions
The key assumptions and estimates used in determining the FVLCD are related to commodity prices, discount rates, NAV multiples for gold assets, operating
costs, exchange rates and capital expenditures. In addition, assumptions related to comparable entities, market values per ounce and per pound and the inclusion of reserves and resources in market multiples calculations are used. For further details
refer to note 20 of the Annual Consolidated Financial Statements.
The key assumptions used in our impairment testing in second quarter 2014 are
summarized in the table below:
|
|
|
|
|
|
|
|
|
Second Quarter 2014 |
|
|
|
Gold price per oz |
|
|
N/A |
|
Silver price per oz |
|
|
N/A |
|
Copper price per lb |
|
|
$3.25 |
|
WACC - gold (range) |
|
|
N/A |
|
WACC - gold (avg) |
|
|
N/A |
|
WACC - copper (range) |
|
|
7% - 9% |
|
WACC - copper (avg) |
|
|
7% |
|
NAV multiple - gold (avg) |
|
|
N/A |
|
LOM years - gold (range) |
|
|
N/A |
|
LOM years - gold (avg) |
|
|
N/A |
|
LOM years - copper (range) |
|
|
14 - 24 |
|
LOM years - copper (avg) |
|
|
18 |
|
|
|
Sensitivities
Based on the results of our last impairment test performed in fourth quarter 2014, the carrying value of the operating segments and CGUs that are most
sensitive to the change in sales prices used in the annual test are:
|
|
|
|
|
|
|
As at June 30, 2015 |
|
Carrying value |
|
|
|
Cortez1 |
|
|
$ 3,824 |
|
Zaldivar1,2 |
|
|
2,420 |
|
Pascua-Lama2 |
|
|
1,263 |
|
Veladero1 |
|
|
1,090 |
|
Bald Mountain2 |
|
|
522 |
|
Cerro Casale2 |
|
|
514 |
|
Lumwana2 |
|
|
335 |
|
Round Mountain2 |
|
|
151 |
|
|
|
1 |
Carrying value includes goodwill. |
2 |
These CGUs have been impaired or had an impairment reversal in 2014 and therefore their fair value approximates carrying value.
|
|
|
|
|
|
BARRICK SECOND QUARTER 2015 |
|
75 |
|
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) |
18 > 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.
A Cash and Equivalents
Cash and equivalents include cash, term deposits, treasury bills and money market funds with original maturities of less than 90 days. Cash and
equivalents also include $589 million cash held at Acacia and Pueblo Viejo, which may not be readily deployed outside of Acacia and/or Pueblo Viejo.
B Debt
|
|
|
|
|
|
|
|
|
|
|
As at June 30, 2015 |
|
|
As at December 31, 2014 |
|
|
|
|
|
|
2.9%/4.4%/5.7% notes1 |
|
|
$ 2,409 |
|
|
|
$ 2,409 |
|
3.85%/5.25% notes |
|
|
1,984 |
|
|
|
1,983 |
|
5.80% notes |
|
|
395 |
|
|
|
395 |
|
5.75%/6.35% notes |
|
|
856 |
|
|
|
855 |
|
Other fixed rate notes2 |
|
|
2,723 |
|
|
|
2,720 |
|
Project financing |
|
|
739 |
|
|
|
850 |
|
Capital leases3 |
|
|
321 |
|
|
|
354 |
|
Other debt obligations |
|
|
673 |
|
|
|
794 |
|
2.5%/4.10%/5.75% notes4 |
|
|
2,581 |
|
|
|
2,579 |
|
Acacia credit facility5 |
|
|
142 |
|
|
|
142 |
|
|
|
|
|
|
$ 12,823 |
|
|
|
$ 13,081 |
|
Less: current portion |
|
|
(462) |
|
|
|
(333) |
|
|
|
|
|
|
$ 12,361 |
|
|
|
$ 12,748 |
|
|
|
1 |
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. |
2 |
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. |
3 |
Consists primarily of capital leases at Pascua-Lama $193 million and Lagunas Norte $106 million (2014: $199 million and $123 million, respectively). |
4 |
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. |
5 |
Consists of an export credit backed term loan facility. |
Jabal Sayid Financing Facility
On April 2, 2015, Maaden Barrick Copper Company signed a financing agreement with the Saudi British Bank to finance the Jabal Sayid copper
project (an equity method investment for Barrick) for SAR 750 million ($200 million USD). Barrick has provided a guarantee equal to our proportionate ownership interest (50%).
|
|
|
|
|
BARRICK SECOND QUARTER 2015 |
|
76 |
|
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) |
C Derivative Instruments at June 30, 2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Notional amount by term to maturity |
|
|
Accounting classification by notional amount |
|
|
|
|
|
|
|
|
|
|
|
Within 1 year |
|
|
2 to 3 years |
|
|
4+ years |
|
|
Total |
|
|
Cash flow hedge |
|
|
Non-hedge |
|
|
Fair value (USD) |
|
|
|
US dollar interest rate contracts |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total receive - float swap positions |
|
|
$ 28 |
|
|
|
$ 57 |
|
|
|
$ 57 |
|
|
|
$ 142 |
|
|
|
$ 142 |
|
|
|
$ - |
|
|
|
$ - |
|
|
|
Currency contracts |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
A$:US$ contracts (A$ millions) |
|
|
250 |
|
|
|
- |
|
|
|
- |
|
|
|
250 |
|
|
|
187 |
|
|
|
63 |
|
|
|
(60) |
|
C$:US$ contracts (C$ millions) |
|
|
120 |
|
|
|
- |
|
|
|
- |
|
|
|
120 |
|
|
|
120 |
|
|
|
- |
|
|
|
(9) |
|
CLP:US$ contracts (CLP millions) |
|
|
51,000 |
|
|
|
- |
|
|
|
- |
|
|
|
51,000 |
|
|
|
45,346 |
|
|
|
5,654 |
|
|
|
(6) |
|
ZAR:US$ contracts (ZAR millions) |
|
|
171 |
|
|
|
- |
|
|
|
- |
|
|
|
171 |
|
|
|
171 |
|
|
|
- |
|
|
|
- |
|
|
|
Commodity contracts |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fuel contracts (thousands of barrels)1 |
|
|
2,844 |
|
|
|
3,991 |
|
|
|
540 |
|
|
|
7,375 |
|
|
|
6,840 |
|
|
|
535 |
|
|
|
(151) |
|
|
|
1 Fuel contracts represent a combination of WTI swaps and Brent options.
These derivatives hedge physical supply contracts based on the price of fuel across our operating mine sites plus a spread. WTI represents West Texas Intermediate and BRENT represents Brent Crude Oil.
Fair Values of Derivative Instruments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Asset Derivatives |
|
|
Liability Derivatives |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated Balance Sheet Classification |
|
|
Fair Value at June 30, 2015 |
|
|
Fair Value at December 31, 2014 |
|
|
Consolidated Balance Sheet Classification |
|
|
Fair Value at June 30, 2015 |
|
|
Fair Value at December 31, 2014 |
|
|
|
Derivatives designated as hedging instruments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
US dollar interest rate contracts |
|
|
Other assets |
|
|
|
$ 1 |
|
|
|
$ 2 |
|
|
|
Other liabilities |
|
|
|
$ 1 |
|
|
|
$ 1 |
|
Currency contracts |
|
|
Other assets |
|
|
|
- |
|
|
|
- |
|
|
|
Other liabilities |
|
|
|
46 |
|
|
|
71 |
|
Commodity contracts1 |
|
|
Other assets |
|
|
|
- |
|
|
|
- |
|
|
|
Other liabilities |
|
|
|
141 |
|
|
|
- |
|
|
|
Total derivatives classified as hedging instruments |
|
|
|
|
|
|
$ 1 |
|
|
|
$ 2 |
|
|
|
|
|
|
|
$ 188 |
|
|
|
$ 72 |
|
|
|
|
|
|
|
|
|
|
Derivatives not designated as hedging instruments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
US dollar interest rate contracts |
|
|
Other assets |
|
|
|
$ - |
|
|
|
$ - |
|
|
|
Other liabilities |
|
|
|
$ - |
|
|
|
$ - |
|
Currency contracts |
|
|
Other assets |
|
|
|
4 |
|
|
|
4 |
|
|
|
Other liabilities |
|
|
|
33 |
|
|
|
30 |
|
Commodity contracts |
|
|
Other assets |
|
|
|
- |
|
|
|
3 |
|
|
|
Other liabilities |
|
|
|
10 |
|
|
|
185 |
|
|
|
Total derivatives not designated as hedging instruments |
|
|
|
|
|
|
$ 4 |
|
|
|
$ 7 |
|
|
|
|
|
|
|
$ 43 |
|
|
|
$ 215 |
|
|
|
Total derivatives |
|
|
|
|
|
|
$ 5 |
|
|
|
$ 9 |
|
|
|
|
|
|
|
$ 231 |
|
|
|
$ 287 |
|
|
|
1 |
Majority of our fuel contracts are now being designated as hedging instruments as a result of adoption of IFRS 9. These contracts did not qualify for hedge
accounting prior to Jan 1, 2015. |
|
|
|
|
|
BARRICK SECOND QUARTER 2015 |
|
77 |
|
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) |
As of June 30, 2015, we had 22 counterparties to our derivative positions. We proactively manage our
exposure to individual counterparties in order to mitigate both credit and liquidity risks. We have 3 counterparties with which we hold a net asset position of $0.4 million, and 19 counterparties with which we are in a net liability position, for a
total net liability of $226 million. On an ongoing basis, we monitor our exposures and ensure that none of the counterparties with which we hold outstanding contracts has declared insolvency.
Cash Flow Hedge Gains (Losses) in Accumulated Other Comprehensive Income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commodity price hedges |
|
|
Currency hedges |
|
|
Interest rate hedges |
|
|
|
|
|
|
Gold/Silver |
|
|
Copper |
|
|
Fuel |
|
|
Operating costs |
|
|
Administration/ other costs |
|
|
Capital expenditures |
|
|
Long-term debt |
|
|
Total |
|
|
|
At December 31, 2014 |
|
|
$ 18 |
|
|
|
$ - |
|
|
|
$ - |
|
|
|
$ (79) |
|
|
|
$ (3) |
|
|
|
$ - |
|
|
|
$ (25) |
|
|
|
$ (89) |
|
Impact of adopting IFRS 9 on January 1, 2015 |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(5) |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(5) |
|
Effective portion of change in fair value of hedging instruments |
|
|
- |
|
|
|
- |
|
|
|
(14) |
|
|
|
(6) |
|
|
|
(14) |
|
|
|
- |
|
|
|
- |
|
|
|
(34) |
|
Transfers to earnings: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
On recording hedged items in earnings/PP&E1 |
|
|
(5) |
|
|
|
- |
|
|
|
4 |
|
|
|
45 |
|
|
|
6 |
|
|
|
- |
|
|
|
1 |
|
|
|
51 |
|
|
|
At June 30, 2015 |
|
|
$ 13 |
|
|
|
$ - |
|
|
|
$ (10) |
|
|
|
$ (45) |
|
|
|
$ (11) |
|
|
|
$ - |
|
|
|
$ (24) |
|
|
|
$ (77) |
|
|
|
1 |
Realized gains (losses) on qualifying currency hedges of capital expenditures are transferred from OCI to PP&E on settlement. |
D Gains (Losses) on Non-hedge Derivatives
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the three months ended June 30 |
|
|
For the six months
ended June 30 |
|
|
|
|
|
2015 |
|
|
2014 |
|
|
2015 |
|
|
2014 |
|
|
|
|
|
|
|
|
Commodity contracts |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Silver |
|
|
$ - |
|
|
|
$ - |
|
|
|
$ 5 |
|
|
|
$ - |
|
|
|
|
|
|
Copper |
|
|
- |
|
|
|
(1) |
|
|
|
- |
|
|
|
1 |
|
|
|
|
|
|
Fuel |
|
|
1 |
|
|
|
58 |
|
|
|
- |
|
|
|
72 |
|
|
|
|
|
|
Currency contracts |
|
|
(12) |
|
|
|
- |
|
|
|
(16) |
|
|
|
(2) |
|
|
|
|
|
|
$ (11) |
|
|
|
$ 57 |
|
|
|
$ (11) |
|
|
|
$ 71 |
|
|
|
|
|
|
|
|
Gains (losses) attributable to copper option collar hedges1 |
|
|
$ - |
|
|
|
$ (17) |
|
|
|
$ - |
|
|
|
$ (2) |
|
Gains (losses) attributable to currency option collar hedges1 |
|
|
- |
|
|
|
4 |
|
|
|
- |
|
|
|
2 |
|
Hedge ineffectiveness |
|
|
3 |
|
|
|
- |
|
|
|
- |
|
|
|
(6) |
|
|
|
|
|
|
|
|
|
|
|
$ 3 |
|
|
|
$ (13) |
|
|
|
$ - |
|
|
|
$ (6) |
|
|
|
|
|
|
|
|
|
|
|
$ (8) |
|
|
|
$ 44 |
|
|
|
$ (11) |
|
|
|
$ 65 |
|
|
|
1 |
Represents unrealized gains (losses) attributable to changes in the time value of the collars, which were excluded from the hedge effectiveness assessment in
2014. |
19 > FAIR VALUE MEASUREMENTS
A Assets and Liabilities Measured at Fair Value on a Recurring Basis
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As at June 30, 2015 |
|
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 |
|
|
$ 2,122 |
|
|
|
$ - |
|
|
|
$ - |
|
|
|
$ 2,122 |
|
Other investments |
|
|
12 |
|
|
|
- |
|
|
|
- |
|
|
|
12 |
|
Derivatives |
|
|
- |
|
|
|
(226) |
|
|
|
- |
|
|
|
(226) |
|
Receivables from provisional copper and gold sales |
|
|
- |
|
|
|
154 |
|
|
|
- |
|
|
|
154 |
|
|
|
|
|
|
$ 2,134 |
|
|
|
$ (72) |
|
|
|
$ - |
|
|
|
$ 2,062 |
|
|
|
|
|
|
|
|
BARRICK SECOND QUARTER 2015 |
|
78 |
|
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) |
B Fair Values of Financial Assets and Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As at Jun. 30, 2015 |
|
|
As at Dec. 31, 2014 |
|
|
|
|
|
Carrying amount |
|
|
Estimated fair value |
|
|
Carrying amount |
|
|
Estimated fair value |
|
|
|
Financial assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other receivables |
|
|
$ 404 |
|
|
|
$ 404 |
|
|
|
$ 385 |
|
|
|
$ 385 |
|
Other investments1 |
|
|
12 |
|
|
|
12 |
|
|
|
35 |
|
|
|
35 |
|
Derivative assets |
|
|
5 |
|
|
|
5 |
|
|
|
9 |
|
|
|
9 |
|
|
|
|
|
|
$ 421 |
|
|
|
$ 421 |
|
|
|
$ 429 |
|
|
|
$ 429 |
|
|
|
Financial liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Debt2 |
|
|
$ 12,823 |
|
|
|
$ 12,884 |
|
|
|
$ 13,081 |
|
|
|
$ 13,356 |
|
Derivative liabilities |
|
|
231 |
|
|
|
231 |
|
|
|
287 |
|
|
|
287 |
|
Other liabilities |
|
|
282 |
|
|
|
282 |
|
|
|
360 |
|
|
|
360 |
|
|
|
|
|
|
$ 13,336 |
|
|
|
$ 13,397 |
|
|
|
$ 13,728 |
|
|
|
$ 14,003 |
|
|
|
1 |
Recorded at fair value. Quoted market prices are used to determine fair value. |
2 |
Debt is generally recorded at amortized cost. 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.
Valuation Techniques
Other investments
The fair value of other investments is determined based on the closing price of each security at the balance sheet date. The closing price is a quoted
market price obtained from the exchange that is the principal active market for the particular security, and therefore other investments are classified within Level 1 of the fair value hierarchy.
Derivative Instruments
The fair value of derivative
instruments is determined using either present value techniques or option pricing models that utilize a variety of inputs that are a combination of quoted prices and market-corroborated inputs. The fair value of all our derivative contracts includes
an adjustment for credit risk. For counterparties in a net asset position, credit risk is based upon the observed credit default swap spread for each particular counterparty, as appropriate. For counterparties in a net liability position, credit
risk is based upon Barricks observed credit default swap spread. The fair value of US dollar interest rate and currency swap contracts is determined by discounting contracted cash flows using a discount rate derived from observed LIBOR and
swap rate curves and CDS rates. In the case of currency contracts, we convert non-US dollar cash flows into US dollars using an exchange rate derived from currency swap curves and CDS rates. The fair value of commodity forward contracts is
determined by discounting contractual cash flows using a discount rate derived from observed LIBOR and swap rate curves and CDS rates. Contractual cash flows are calculated using a forward pricing curve derived from observed forward prices for
each commodity. Derivative instruments are classified within Level 2 of the fair value hierarchy.
Receivables from Provisional Copper and Gold Sales
The fair
value of receivables rising from copper and gold sales contracts that contain provisional pricing mechanisms is determined using the appropriate quoted forward price from the exchange that is the principal active market for the particular metal. As
such, these receivables, which meet the definition of an embedded derivative, are classified within Level 2 of the fair value hierarchy.
C Assets Measured at Fair Value on a Non-Recurring Basis
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As at June 30, 2015 |
|
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 |
|
|
$ - |
|
|
|
$ - |
|
|
|
$ 45 |
|
|
|
$ 45 |
|
|
|
1 |
Property, plant and equipment were written down by $40 million which was included in earnings this period, to their fair value less costs of disposal of $45
million. |
20 > CAPITAL STOCK
A Authorized Capital Stock
Our
authorized capital stock includes an unlimited number of common shares (issued 1,164,669,758 common shares); an unlimited number of first preferred shares issuable in series (the first series is designated as the First Preferred Shares, Series
A and consists of 10,000,000 first preferred shares (issued nil); the second series is designated as the First Preferred Shares, Series B and consists of 10,000,000 first preferred shares (issued nil); and the third series is
designated as the First Preferred Share, Series C Special Voting Share and consists of 1 Special Voting Share (issued nil)); and an unlimited number of second preferred shares issuable in series (the first series is designated as the
Second Preferred Shares, Series A and consists of 15,000,000 second preferred shares (issued nil)). Our common shares have no par value.
B Dividends
The Companys practice
has been to declare dividends after a quarter end in the announcement of the results for the quarter. Dividends declared are paid in the same quarter.
|
|
|
|
|
BARRICK SECOND QUARTER 2015 |
|
79 |
|
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) |
21 > NON-CONTROLLING INTERESTS
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
|
|
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|
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Pueblo Viejo |
|
|
Acacia |
|
|
Cerro Casale |
|
|
Other |
|
|
Total |
|
|
|
At January 1, 2015 |
|
|
$ 1,521 |
|
|
|
$ 758 |
|
|
|
$ 319 |
|
|
|
$ 17 |
|
|
|
$2,615 |
|
Share of income (loss) |
|
|
29 |
|
|
|
5 |
|
|
|
(1) |
|
|
|
(1) |
|
|
|
32 |
|
Cash contributed |
|
|
- |
|
|
|
- |
|
|
|
1 |
|
|
|
21 |
|
|
|
22 |
|
Increase (decrease) in non-controlling interest1 |
|
|
(64) |
|
|
|
(4) |
|
|
|
- |
|
|
|
2 |
|
|
|
(66) |
|
|
|
At June 30, 2015 |
|
|
$ 1,486 |
|
|
|
$ 759 |
|
|
|
$ 319 |
|
|
|
$ 39 |
|
|
|
$2,603 |
|
|
|
1 |
Primarily represents disbursements made to non-controlling interest at Pueblo Viejo. |
22 > CONTINGENCIES
Certain conditions may exist as of the
date the financial statements are issued that may result in a loss to the Company, but which will only be resolved when one or more future events occur or fail to occur. The impact of any resulting loss from such matters affecting these financial
statements and noted below may be material.
Except as noted below, no material changes have occurred with respect to the matters disclosed in Note
35 Contingencies to the Companys audited consolidated financial statements for the year ended December 31, 2014 (the Audited Annual Financial Statements), and no new contingencies have occurred that are material to
the Company since the issuance of the Audited Annual Consolidated Financial Statements.
The description set out below should be read in conjunction
with Note 35 Contingencies to the Audited Consolidated Financial Statements.
a) Litigation and Claims Update
U.S. Shareholder Class Action
On April 1, 2015, the Court
issued its ruling on the Defendants motion to dismiss. The Court dismissed the plaintiffs claims relating to the cost and scheduling of the Project. However, the Court allowed the plaintiffs claims relating to the environmental
risks of the Project and alleged internal control failures to go forward. The Court denied Barricks motion for reconsideration of certain aspects of that ruling on June 2, 2015, and the parties have commenced discovery in the case.
Proposed Canadian Securities Class Actions
On May 21,
2015, the Divisional Court affirmed the lower court decision that determined which of the competing counsel groups will take the lead in the Ontario litigation. The losing counsel group is seeking leave to appeal to the Court of Appeal for Ontario.
Pascua-Lama - SMA Regulatory Sanctions
On April 22, 2015, Chiles environmental regulator reopened the administrative proceeding against Compañía Minera Nevada,
Barricks Chilean subsidiary that holds the Chilean portion of the Pascua-Lama project, in accordance with the Environmental Court Decision. CMN has filed a petition to limit the scope of this administrative proceeding to the original
allegations before the environmental regulator at the time it issued the May 2013 Resolution. A decision from the SMA is pending in this matter.
Also on April 22, 2015, CMN was notified that the SMA has initiated a new administrative proceeding for alleged deviations from certain requirements
of the Projects environmental approval, including with respect to the Projects environmental impact and a series of monitoring requirements. In May 2015, CMN submitted a compliance program to address certain of the allegations and
presented its defense to the remainder of the alleged deviations. The SMA rejected CMNs proposed compliance program on June 24, 2015. CMN filed an administrative appeal of this decision on July 3, 2015. A decision from the SMA on the
administrative appeal and on CMNs defense to the remainder of the alleged deviations is pending. Further submissions may be required if CMNs administrative appeal is denied. The new administrative proceeding against CMN is separate from
the original administrative proceeding described above, and could result in additional sanctions including new administrative fines and/or the revocation of the Projects environmental permit.
Pascua-Lama - Environmental Damage Claim
On March 23,
2015, the Environmental Court ruled in favor of CMN in this matter, finding that the Pascua-Lama project has not damaged glaciers in the Project area. The plaintiffs did not file an appeal and the matter is now closed.
Pueblo Viejo - Amparo Action
On June 25, 2015, the
Trial Court rejected the Petitioners amparo action, finding that the Petitioner failed to produce evidence to support his allegations. The Petitioner appealed the Trial Courts decision to the Constitutional Court on July 21,
2015. On July 28, 2015, PVDC filed a motion to challenge the timeliness of this appeal as it was submitted after the expiration of the applicable filing deadline.
Marinduque Complaint
On June 11, 2015, the Nevada Supreme
Court affirmed the trial courts decision to dismiss the action on the grounds of forum non conveniens (improper choice of forum). The matter is now closed.
|
|
|
|
|
BARRICK SECOND QUARTER 2015 |
|
80 |
|
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) |
23 > SUBSEQUENT EVENTS
Streaming Agreement
On August 5, 2015 we announced that
we had entered into a gold and silver streaming agreement with Royal Gold, Inc. (Royal Gold) for production linked to Barricks 60 percent interest in the Pueblo Viejo mine. In return, Royal Gold has agreed to make an upfront cash
payment of $610 million plus continuing cash payments for gold and silver delivered under the agreement.
Under the terms of the agreement, Barrick
will sell gold and silver to Royal Gold equivalent to:
|
● |
|
7.5 percent of Barricks interest in the gold produced at Pueblo Viejo until 990,000 ounces of gold have been delivered, and 3.75 percent thereafter.
|
|
● |
|
75 percent of Barricks interest in the silver produced at Pueblo Viejo until 50 million ounces have been delivered, and 37.5 percent thereafter.
Silver will be delivered based on a fixed recovery rate of 70 percent. Silver above this recovery rate is not subject to the stream. |
Ongoing cash payments to Barrick are tied to prevailing spot prices rather than fixed in advance, maintaining material exposure to higher gold and silver
prices in the future. Barrick will receive ongoing cash payments from Royal Gold equivalent to 30 percent of the prevailing spot prices for the first 550,000 ounces of gold and 23.1 million ounces of silver delivered. Thereafter payments will
double to 60 percent of prevailing spot prices for each subsequent ounce of gold and silver delivered.
|
|
|
|
|
BARRICK SECOND QUARTER 2015 |
|
81 |
|
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) |
|
|
|
|
|
HEAD OFFICE
Barrick Gold Corporation Brookfield Place
TD Canada Trust Tower 161 Bay Street, Suite 3700
Toronto, Ontario M5J 2S1
Telephone: +1 416 861-9911 Toll-free: 1-800-720-7415
Fax: +1 416 861-2492 Email:
investor@barrick.com Website: www.barrick.com
SHARES LISTED
ABX The New York Stock Exchange
The Toronto Stock Exchange
INVESTOR CONTACT:
Susan Muir Senior Director
Investor Relations Telephone: +1 416 307-5107
Email: s.muir@barrick.com |
|
TRANSFER AGENTS AND REGISTRARS
CST Trust Company P.O. Box 700, Postal Station B
Montreal, Quebec H3B 3K3 or
American Stock Transfer & Trust Company, LLC
6201 15 Avenue Brooklyn, New York 11219
Telephone: 1-800-387-0825
Fax: 1-888-249-6189 Email:
inquiries@canstockta.com Website: www.canstockta.com
MEDIA CONTACT:
Andy Lloyd Senior Vice President
Communications Telephone: +1 416 307-7414
Email: alloyd@barrick.com |
|
|
CAUTIONARY STATEMENT ON FORWARD-LOOKING INFORMATION
Certain information contained or incorporated by reference in this Second Quarter 2015 Report, 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, project, continue, budget, estimate, potential, may, will,
can, could and similar expressions identify forward-looking statements. In particular, this Second Quarter Report 2015 contains forward-looking statements with respect to cash flow forecasts, projected capital, operating and
exploration expenditure, targeted cost reductions, mine life and production rates, potential mineralization and metal or mineral recoveries, and information pertaining to Barricks Value Realization project (including potential improvements to
financial and operating performance and mine life at Barricks Lagunas Norte and Pueblo Viejo mines that may result from certain Value Realization initiatives). Forward-looking statements are necessarily based upon a number of estimates and
assumptions that, while considered reasonable by the company in light of managements experience and perception of current conditions and expected developments, are inherently subject to significant business, economic and competitive
uncertainties and contingencies. Known and unknown factors could cause actual results to differ materially from those projected in the forward-looking statements. 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, liquefied natural gas and electricity); the speculative nature of mineral exploration and development; changes in mineral production performance, exploitation and
exploration successes; risks associated with the fact that Value Realization initiatives are still in the early stages of evaluation and additional engineering and other analysis is required to fully assess their impact; diminishing quantities or
grades of reserves; increased costs, delays, suspensions and technical challenges associated with the construction of capital projects; operating or technical difficulties in connection with mining or development activities, including disruptions in
the maintenance or provision of required infrastructure and information technology systems; uncertainty whether some or all of the Value Realization initiatives will meet the companys capital allocation objectives; 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; 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; 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; 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; increased costs and risks related to the potential impact of climate change; damage to the companys reputation due to the actual or perceived occurrence of any number of events, including negative publicity with respect
to the companys handling of environmental matters or dealings with community groups, whether true or not; 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 Second Quarter 2015 Report 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.
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