FOR: BARRICK GOLD CORPORATION
PARIS, NYSE, TSX, Swiss SYMBOL: ABX
LSE SYMBOL: BGD
August 3, 2006
Barrick Reports Record Earnings and Cash Flow; Legacy Placer Dome Gold Hedge Position Eliminated
TORONTO, ONTARIO--(CCNMatthews - Aug. 3, 2006) - Barrick Gold Corporation
(NYSE:ABX)(TSX:ABX)(LSE:BGD)(SWX:ABX)(EURONEXT PARIS:ABX) -
SECOND QUARTER REPORT 2006 - AUGUST 2, 2006
Based on US GAAP and expressed in US dollars
For a full explanation of results, the Financial Statements and Management Discussion & Analysis, and
mine statistics, please see the Company's website, www.barrick.com/Investors/Annual&QuarterlyReports/.
Highlights
- Q2 net income was $459 million ($0.53 per share) and operating cash flow was $643 million ($0.73 per
share), both Company records and substantially higher than the prior-year period's net income of $47
million ($0.09 per share) and operating cash flow of $101 million ($0.19 per share).
- Equity gold production was 2.1 million ounces at total cash costs of $281 per ounce(1), and copper
production was 100 million pounds at total cash costs of $0.76 per pound(1). The Company expects gold
production for the second half of 2006 to increase due to stronger operating performances.
- During Q2, the remaining legacy Placer Dome gold hedge position was eliminated. Year-to-date, the
Company has reduced its corporate gold sales position by a total of 7.7 million ounces.
- During Q2, Barrick concluded the sale of four Placer Dome mines and other agreed interests to
Goldcorp Inc. for net cash proceeds of approximately $1.6 billion.
- The Company is on track to meet its full-year gold production guidance of 8.6 - 8.9 million ounces
at total cash costs of $275 - $290 per ounce, and has revised upwards its copper production guidance
from 350 million pounds to 370 million pounds and is maintaining total cash costs guidance of about
$0.75 - $0.80 per pound.
- On July 24, 2006, Barrick announced all-cash offers for NovaGold Resources Inc. and Pioneer Metals
Corporation in order to consolidate the ownership to 100% of the Donlin Creek project and add Galore
Creek to its unrivalled project pipeline.
Barrick Gold Corporation today reported net income of $459 million ($0.53 per share) for second
quarter 2006, up significantly from net income of $47 million ($0.09 per share) in the year-earlier
period. Second quarter 2006 net income was positively impacted by $30 million ($0.03 per share) of
special items (see page 9 of Management's Discussion and Analysis for further details).
Operating cash flow for second quarter 2006 was $643 million ($0.73 per share), compared with the
prior-year period of $101 million ($0.19 per share).
"As gold and copper prices rose in the second quarter, our operating margins expanded and had a direct
positive impact on our bottom line," said Greg Wilkins, President and CEO. "The result was record
earnings and cash flow per share."
PRODUCTION AND COSTS
In second quarter 2006, Barrick produced 2.1 million ounces of gold at total cash costs of $281 per
ounce, compared to 1.2 million ounces produced at total cash costs of $243 per ounce for the prior-
year quarter. The increase in production year-over-year is due to the successful acquisition of Placer
Dome and the contribution from Barrick's new generation of mines.
Barrick's financial results benefited from the strong gold price, as it realized $592 per ounce on its
gold sales, a 40% increase over the prior-year period. As a result, the Company's margin over its
total cash costs increased to over $300 per ounce in the current quarter, versus $181 per ounce in the
prior-year period. The Company also produced 100 million pounds of copper during the second quarter
2006, and realized $3.49 per pound on its copper sales relative to its total cash costs of $0.76 per
pound.
HEDGE BOOK REDUCTION
Barrick believes the long-term outlook for gold prices is positive and has aggressively reduced its
gold hedge program. During the second quarter, the remaining legacy Placer Dome gold hedge position
was eliminated, for a total reduction of 7.7 million ounces year-to-date. The total cost of reducing
the Placer Dome gold hedge position was approximately $1.8 billion, of which $0.3 billion remains to
be paid. During the second quarter, the Company's realized price on its gold sales was reduced by $35
per ounce, primarily as a result of hedge accounting adjustments related to the acquired Placer Dome
hedge position. The corporate gold sales contract position currently totals 2.8 million ounces, and
the Company intends to continue to reduce this position opportunistically, such that it is eliminated
by no later than the end of 2009.
REGIONAL RESULTS
North America
The North America region's second-quarter gold production was 0.8 million ounces at total cash costs
of $293 per ounce versus 0.6 million ounces at total cash costs of $257 per ounce in the prior-year
period. The Company expects North American gold production for the second half of 2006 to be slightly
higher primarily due to planned mine sequencing at Bald Mountain and Cortez. Total cash costs for the
region increased over the same period primarily due to the mix of production from the acquired mines,
higher prices of diesel fuel and higher royalties. Goldstrike's total cash costs were reduced in the
quarter due to Barrick's new power plant. The Goldstrike property passed a milestone in May 2006 when
it poured its 30 millionth ounce of gold since its acquisition 20 years ago.
At the Cortez Hills project, open-pit mining equipment is being procured, commissioning of a water
supply system is ongoing, and development of twin declines for underground exploration continues to
advance. During the second quarter, 659 meters of development were advanced, for a total of 1,087
meters of development project-to-date.
At the Pueblo Viejo project, the Company continues to update the feasibility analysis prepared by
Placer Dome prior to the acquisition, while concurrently undertaking government and community
relations, and environmental permitting. As well, work began on a 3,000-meter, 10-hole diamond drill
program to test the extension of mineralization between two ore zones.
Since acquiring control of Placer Dome earlier this year, Barrick has moved decisively at the Donlin
Creek project to ensure that the appropriate financial, technical and human resources are being
devoted to the timely completion of the required feasibility study. The 2006 budget has been increased
from $30 million to $56 million. The number of drills operating at the site have been significantly
increased to insure that the 80,000 meters of drilling planned for this year can be completed,
ensuring that sufficient drilling information is available to complete the feasibility study. In
addition, Barrick has assigned to this project the best qualified technical personnel from both inside
of Barrick and externally to ensure that the challenges and opportunities of the project are properly
assessed and exploited.
South America
The South America region produced 0.5 million ounces of gold at total cash costs of $176 per ounce in
the second quarter 2006 versus 0.2 million ounces of gold at $138 per ounce in 2005 as a result of the
start-up of two of Barrick's new generation of mines in the last year. At Lagunas Norte, which has
produced over one million ounces of gold since its start-up in June 2005, primary crusher capacity has
been increased from 42,000 tonnes per day to 54,000 tonnes per day. As a result of this increased
capacity and higher recovery rates, the mine continues to target production of over one million ounces
in 2006. At Veladero, ore grades for leaching are expected to increase as the mine transitions from
mining lower grade ore from the Filo Mario pit to higher grade ore from the Amable pit in the second
half of 2006. The Zaldivar copper mine produced 82 million pounds of copper during second quarter 2006
at total cash costs of $0.61 per pound. The Company has increased its 2006 copper production guidance
at Zaldivar from 280 million pounds to 300 million pounds due to higher grades.
At the Pascua-Lama project in Chile/Argentina, the Chilean environmental regulatory authorities
provided definitive approvals of the development project, when the appeal process was completed in
June. In addition, during the quarter, the Argentine evaluation commission reviewing the project's
environmental impact assessment requested the submission of a report consolidating all environmental
impact assessment and related documentation, which resulted in an adjustment of the target for
approvals to the fourth quarter of 2006.
Australia Pacific
The Australia Pacific region's second-quarter gold production was 0.6 million ounces at total cash
costs of $306 per ounce versus 0.2 million ounces at total cash costs of $257 per ounce in the prior-
year period. At Kalgoorlie, lower production was due to reduced throughput because of mill shutdowns
which resulted in higher total cash costs. At Cowal, production commenced in late April, and is
expected to ramp up in the second half of the year as throughput and recovery levels increase. Total
cash costs for the region increased over the prior-year period due to the new mix of mines, higher
prices of input commodities, and consumables, higher energy costs and higher foreign exchange rates.
Africa
The Africa region produced 0.2 million ounces of gold in the quarter at total cash costs of $368 per
ounce versus 0.1 million ounces at total cash costs of $344 per ounce in the prior-year period. At
North Mara, production is expected to increase in the second half of the year due to accessing higher-
grade areas of the pit. On May 4, 2006, a loaded skip and 6.7 kilometers of rope fell 1.6 kilometers
down the South Deep mine's Twin Shaft complex during routine maintenance, causing extensive damage but
no injuries. As a result, the mine site's hoisting capacity has been reduced to 40% for the remainder
of the year, and the Company is adjusting its full-year guidance for South Deep to about 150,000
ounces of gold production at total cash costs of $560 per ounce. The Company is insured for property
damage and a portion of business interruption losses, and has initiated the claims process in
connection with this event. The mine's Twin Shaft complex is expected to be back in operation by early
2007.
EXPLORATION UPDATE(2)
The Company is pleased with the year-to-date progress on its exploration programs. Based on successful
work to date, the Company has increased its budgets at South Arturo and Cortez.
At the South Arturo deposit, the 2006 drill program has been expanded due to success to date. New
mineralization along the Hinge Zone has been discovered and the exploration budget has been doubled to
$10 million (100% basis). Four drill rigs continue to drill targets with objectives to better define
the ore with infill and extension drilling.
At the Cortez property, the Company is focusing on the Gold Acres Window and other favorable
geological terrains. Based on year-to-date success, an additional $8.5 million (100% basis) in funding
has been allocated to these drill programs. At Gold Acres, the drill program is working on resource
delineation of oxide and refractory mineralization near existing pits as well as targeting new
mineralization.
CORPORATE DEVELOPMENT
During the second quarter, the Company concluded the sale of the shares of Placer Dome (CLA) Limited,
which owns four Placer Dome mines and other agreed interests, to Goldcorp Inc. Net cash proceeds from
the sale were approximately $1.6 billion. There is no impact to earnings nor Barrick's projected 2006
gold production as a result of the transaction.
On July 24, 2006, Barrick announced all-cash offers for NovaGold Resources Inc. and Pioneer Metals
Corporation in order to consolidate the ownership to 100% of the Donlin Creek project and add Galore
Creek to its unrivalled project pipeline. The proposed NovaGold transaction is valued at approximately
$1.29 billion (or $1.53 billion on a fully-diluted basis), while the proposed Pioneer transaction is
valued at about C$60.1 million (or C$64.7 million on a fully-diluted basis).
"Having successfully acquired and integrated the Placer Dome mines into our portfolio, the acquisition
of NovaGold fits with our strategic plans to further strengthen our project pipeline and meet the
challenge of growing our reserve and resource base," said Mr. Wilkins. "Our strong balance sheet gives
us the ability to finance this acquisition with cash, thereby increasing our per share leverage to
gold and copper."
PLACER DOME INTEGRATION AND 2006 OUTLOOK
The integration of the Placer Dome mines has been completed and the Company has done detailed reviews
of all significant operations. Numerous improvements have been identified highlighting 'value add'
opportunities in addition to the integration synergies, and will be implemented in the coming months.
The $200 million annual synergies have been specifically identified, and the Company expects to reach
the $200-million run rate in 2007.
The Company is reiterating its 2006 gold production guidance of 8.6 - 8.9 million ounces at $275 -
$290 per ounce. Full-year copper production guidance has been increased to approximately 370 million
pounds and total cash costs guidance has been maintained at about $0.75 - $0.80 per pound. The Company
expects gold production for the second half of 2006 to be stronger due to better performances from
Veladero, Lagunas Norte, Cortez and North Mara. The Company now expects its 2006 exploration expense
to be in the range of $180 - $190 million, project development expense to be about $150 million, and
its tax rate to be about 28% - 30%.
Barrick's vision is to be the world's best gold company by finding, acquiring, developing and
producing quality reserves in a safe, profitable and socially responsible manner. Barrick's shares are
traded on the Toronto, New York, London, Euronext-Paris and Swiss stock exchanges.
(1) Total cash costs is defined as cost of sales divided by ounces of gold sold or pounds of copper
sold. Total cash costs exclude amortization expense and inventory purchase accounting adjustments. For
further information on this performance measure see pages 15 to 17 of the Company's MD&A.
(2) Barrick's exploration programs are designed and conducted under the supervision of Alexander J.
Davidson, P. Geo., Executive Vice President, Exploration and Corporate Development of Barrick. For
information on the geology, exploration activities generally, and drilling and analysis procedures on
Barrick's material properties, see Barrick's most recent Annual Information Form/Form 40-F on file
with Canadian provincial securities regulatory authorities and the US Securities and Exchange
Commission.
/T/
Key Statistics
Three months ended Six months ended
(in United States dollars) June 30, June 30,
-------------------------------------
(Unaudited) 2006 2005 2006 2005
---------------------------------------------------------------------
Operating Results
Gold production (thousands of
ounces)(1) 2,085 1,159 4,041 2,303
Gold sold (thousands of ounces)(1) 1,998 1,085 3,938 2,214
Per ounce data
Average spot gold price $ 627 $ 427 $ 590 $ 427
Average realized gold price(5) 592 424 565 426
Total cash costs(2) 281 243 282 242
Amortization(3) 73 81 77 79
Total production costs 354 324 359 321
Copper production (millions
of pounds) 100 n/a 172 n/a
Copper sold (millions of pounds) 98 n/a 177 n/a
Per pound data
Average spot copper price $ 3.27 n/a $ 2.75 n/a
Average realized copper price 3.49 n/a 2.96 n/a
Total cash costs(2) 0.76 n/a 0.76 n/a
Amortization(3) 0.25 n/a 0.47 n/a
Total production costs 1.01 n/a 1.23 n/a
---------------------------------------------------------------------
Financial Results (millions)
Sales $ 1,556 $ 463 $ 2,810 $ 947
Net income 459 47 683 113
Operating cash flow 643 101 1,021 225
Per Share Data (dollars)
Net income (diluted) 0.53 0.09 0.82 0.21
Operating cash flow (diluted) 0.73 0.19 1.22 0.42
Weighted average diluted
common shares (millions)(4) 878 536 835 536
As at
As at December
June 30, 31,
------------------
2006 2005
---------------------------------------------------
Financial Position (millions)
Cash and equivalents $ 1,430 $ 1,037
Non-cash working capital 54 151
Long-term debt 2,893 1,721
Shareholders' equity 13,258 3,850
---------------------------------------------------
(1) Includes equity gold ounces in Tulawaka and South Deep.
Production also includes equity gold ounces in Highland Gold.
(2) Represents equity cost of goods sold plus royalties, production
taxes and accretion expense, less by-product revenues, divided
by equity ounces of gold sold or pounds of copper sold. For
further information on this performance measure, refer to pages
15 to 17. Excludes amortization and inventory purchase
accounting adjustments.
(3) Represents equity amortization expense and inventory purchase
accounting adjustments at the Company's producing mines divided
by equity ounces of gold sold or pounds of copper sold.
(4) Fully diluted, includes dilutive effect of stock options,
convertible debt and preferred shares.
(5) Calculated as consolidated gold sales divided by consolidated
ounces sold.
Production and Cost Summary
Gold Production (attributable ounces) (000's)
---------------------------------------------
Three months ended Six months ended
June 30, June 30,(1)
---------------------------------------------
(Unaudited) 2006 2005 2006 2005
---------------------------------------------------------------------
North America 821 620 1,673 1,277
South America 461 197 884 343
Australia Pacific 564 233 1,046 487
Africa 230 106 419 184
Russia/Central Asia 9 3 19 12
---------------------------------------------------------------------
Total 2,085 1,159 4,041 2,303
---------------------------------------------------------------------
Total Cash Costs (US$/oz)
---------------------------------------------
Three months ended Six months ended
June 30, June 30,(1)
---------------------------------------------
(Unaudited) 2006 2005 2006 2005
---------------------------------------------------------------------
North America $ 293 $ 257 $ 292 $ 254
South America 176 138 184 130
Australia Pacific 306 257 312 244
Africa 368 344 365 351
Russia/Central Asia 494 323 422 268
---------------------------------------------------------------------
Total $ 281 $ 243 $ 282 $ 242
---------------------------------------------------------------------
Copper Production (attributable pounds) (Millions)
--------------------------------------------------
Three months ended Six months ended
June 30, June 30,(1)
--------------------------------------------------
(Unaudited) 2006 2005 2006 2005
---------------------------------------------------------------------
South America 82 - 142 -
Australia Pacific 18 - 30 -
---------------------------------------------------------------------
Total 100 - 172 -
---------------------------------------------------------------------
Total Cash Costs (US$/lb)
Three months ended Six months ended
June 30, June 30,(1)
---------------------------------------
(Unaudited) 2006 2005 2006 2005
---------------------------------------------------------------------
South America $ 0.61 $ - $ 0.60 $ -
Australia Pacific 1.46 - 1.41 -
---------------------------------------------------------------------
Total $ 0.76 $ - $ 0.76 $ -
---------------------------------------------------------------------
Total Production Costs (US$/oz)
-------------------------------------
Three months ended Six months ended
June 30, June 30,
-------------------------------------
(Unaudited) 2006 2005 2006 2005
---------------------------------------------------------------------
Direct mining costs at
market foreign exchange rates $ 286 $ 286 $ 288 $ 279
Gains realized on currency and
commodity hedge contracts (12) (25) (12) (24)
By-product credits (19) (35) (18) (30)
---------------------------------------------------------------------
Cash operating costs 255 226 258 225
Royalties 19 12 17 12
Production taxes 4 2 4 2
Accretion and other costs 3 3 3 3
---------------------------------------------------------------------
Total cash costs(2) 281 243 282 242
Amortization 73 81 74 79
Inventory purchase accounting
adjustments - - 3 -
---------------------------------------------------------------------
Total production costs $ 354 $ 324 $ 359 $ 321
---------------------------------------------------------------------
Total Copper Production Costs (US$/lb)
---------------------------------------
Three months ended Six months ended
June 30, June 30,
---------------------------------------
(Unaudited) 2006 2005 2006 2005
---------------------------------------------------------------------
Cash operating costs $ 0.75 $ - $ 0.74 $ -
Royalties 0.01 - 0.02 -
---------------------------------------------------------------------
Total cash costs(2) 0.76 - 0.76 -
Amortization 0.13 - 0.13 -
Inventory purchase
accounting adjustments 0.12 - 0.34 -
---------------------------------------------------------------------
Total production costs $ 1.01 $ - $ 1.23 $ -
---------------------------------------------------------------------
(1) Barrick's share of acquired Placer Dome mines' production and
total cash costs for the period January 20, 2006 to June 30,
2006.
(2) Total cash costs per ounce/pound excludes amortization and
inventory purchase accounting adjustments. Total cash costs per
ounce/pound is a performance measure that is used throughout
this Second Quarter Report 2006. For more information see pages
15 to 17 of the Company's MD&A.
CORPORATE OFFICE TRANSFER AGENTS AND REGISTRARS
Barrick Gold Corporation CIBC Mellon Trust Company
BCE Place, TD Canada Trust Tower, P.O. Box 7010,
Suite 3700 Adelaide Street Postal Station
161 Bay Street, P.O. Box 212 Toronto, Ontario M5C 2W9
Toronto, Canada M5J 2S1 Tel: (416) 643-5500
Tel: (416) 861-9911 Toll-free throughout
Fax: (416) 861-0727 North America: 1-800-387-0825
Toll-free within Canada and Fax: (416) 643-5660
United States: 1-800-720-7415 Email: inquiries@cibcmellon.ca
Email: investor@barrick.com Website: www.cibcmellon.com
Website: www.barrick.com
SHARES LISTED Mellon Investor Services L.L.C.
ABX - The Toronto Stock Exchange 480 Washington Blvd.
The New York Stock Exchange Jersey City, NJ 07310
The Swiss Stock Exchange Email: shrrelations@mellon.com
Euronext - Paris Website: www.mellon-investor.com
BGD - The London Stock Exchange
INVESTOR CONTACT MEDIA CONTACT
James Mavor Vincent Borg
Vice President, Senior Vice President,
Investor Relations Corporate Communications
Tel: (416) 307-7463 Tel: (416) 307-7477
Email: jmavor@barrick.com Email: vborg@barrick.com
/T/
ADDITIONAL INFORMATION
Investors and security holders are advised to read the tender offer statement by Barrick Gold
Corporation related to the proposed tender offer for the outstanding common shares of NovaGold
Resources Inc. when it becomes available, because it will contain important information. Investors and
security holders may obtain a free copy of the tender offer statement when it becomes available and
other documents filed by Barrick Gold Corporation with the SEC at the SEC's website at www.sec.gov.
The tender offer statement may also be obtained for free when it becomes available from Barrick Gold
Corporation on the website or by directing a request to Barrick Gold Corporation's investor relations
department.
CAUTIONARY STATEMENT ON FORWARD-LOOKING INFORMATION
Certain information included in this press release, including any information as to our future
financial or operating performance and other statements that express management's expectations or
estimates of future performance, constitute "forward-looking statements." The words "expect", "will",
"intend", "estimate" and similar expressions identify forward-looking statements. Forward-looking
statements are necessarily based upon a number of estimates and assumptions that, while considered
reasonable by management, are inherently subject to significant business, economic and competitive
uncertainties and contingencies. The Company cautions the reader that such forward-looking statements
involve known and unknown risks, uncertainties and other factors that may cause the actual financial
results, performance or achievements of Barrick to be materially different from the Company's
estimated future results, performance or achievements expressed or implied by those forward-looking
statements and the forward-looking statements are not guarantees of future performance. These risks,
uncertainties and other factors include, but are not limited to: changes in the worldwide price of
gold or certain other commodities (such as copper, silver, fuel and electricity) and currencies;
changes in U.S. dollar interest rates or gold lease rates; risks arising from holding derivative
instruments; ability to successfully integrate acquired assets; legislative, political or economic
developments in the jurisdictions in which the Company carries on business; operating or technical
difficulties in connection with mining or development activities; employee relations; the speculative
nature of gold exploration and development, including the risks of diminishing quantities or grades of
reserves, adverse changes in our credit rating, contests over title to properties, particularly title
to undeveloped properties; and the risks involved in the exploration, development and mining business.
These factors are discussed in greater detail in the Company's most recent Form 40-F/Annual
Information Form on file with the US Securities and Exchange Commission and Canadian provincial
securities regulatory authorities.
The Company disclaims any intention or obligation to update or revise any forward-looking statements
whether as a result of new information, future events or otherwise, except as required by applicable
law.
-30-
FOR FURTHER INFORMATION PLEASE CONTACT:
Barrick Gold Corporation
Vincent Borg
Senior Vice President, Corporate Communications
(416) 307-7477
(416) 861-1509 (FAX)
vborg@barrick.com
-0-
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