Barrick Reports Q3 2011 Financial and Operating Results
TORONTO, ONTARIO -- (Marketwire) -- 10/27/11 -- Barrick Gold Corporation (NYSE: ABX)(TSX: ABX) -
THIRD QUARTER REPORT 2011
Based on IFRS and expressed in US dollars
For a full explanation of results, the Financial Statements and Management Discussion & Analysis, please see the Company's website, www.barrick.com.
Highlights
Financial and Operating Results
- Reported net earnings for Q3 rose 45% to a record $1.37 billion ($1.37 per share) from $942 million ($0.96 per share) in the prior year period. Q3 adjusted net earnings increased 52% to $1.39 billion ($1.39 per share)(1) from $912 million ($0.93 per share) in Q3 2010, reflecting higher gold and copper prices along with higher copper sales volumes, resulting in an annualized return on equity of approximately 25%(1).
- Q3 EBITDA increased 47% to $2.46 billion(1) from $1.67 billion in the same prior year period. Q3 operating cash flow rose 35% to a record $1.89 billion from $1.40 billion and adjusted operating cash flow increased 33% to $1.92 billion(1) from $1.44 billion in Q3 2010.
- Q3 gold production was 1.93 million ounces at total cash costs of $453 per ounce and net cash costs of $328 per ounce(1). The Company is on track to meet its full year operating guidance, with production expected to be 7.6-7.8 million ounces at total cash costs of $460-$475 per ounce, within original guidance ranges. Net cash costs for 2011 are anticipated to be $330-$350 per ounce(2), reflecting a lower copper price assumption than previously assumed. Copper production is expected to be 450-460 million pounds at total cash costs of $1.60-$1.70 per pound in 2011.
- Gold cash margins expanded significantly in the third quarter, highlighting Barrick's leverage to higher gold prices. Gold cash margins increased 55% to $1,290 per ounce(1) from $834 per ounce in Q3 2010 and net cash margins rose 51% to $1,415 per ounce(1) from $939 per ounce in the same prior year period.
Increasing Gold and Copper Reserves and Resources through Exploration and Selective Acquisitions
- During the quarter, Barrick announced two significant gold discoveries on the Cortez property in Nevada, Red Hill and Goldrush. Recent drilling continues to expand the mineralization at these two discoveries. In addition, infill drilling between the two deposits is successfully finding new mineralization, advancing the possibility that they will merge into a single deposit. A total of 264,000 feet of drilling is planned in 2011 and the program is approximately 80% complete.
- At Lumwana in Zambia, drilling activity has been ramped up with 11 drill rigs active and an additional four rigs being mobilized. Areas of focus include resource definition drilling at the Chimiwungo deposit to convert inferred resources into indicated resources as well as extensional drilling to expand the mineralization. Drilling at Chimiwungo East commenced in September and results received from initial drill holes are in line with expectations. In addition, Barrick is advancing an expansion study that could potentially double processing rates.
Investing in and Developing High Return Projects
- The development of the Pueblo Viejo(3) and Pascua-Lama mines advanced during the third quarter with first production on track to commence in mid-2012 and mid-2013, respectively.
- Pueblo Viejo and Pascua-Lama are anticipated to contribute 1.4-1.5 million ounces of average annual gold production over the first full five years of operation at total cash costs significantly lower than Barrick's overall current cash cost profile(4).
Continually Improving Corporate Social Responsibility (CSR) Practices to Maintain License to Operate
- During the quarter, Barrick was ranked as a global leader in CSR for the fourth consecutive year by the Dow Jones Sustainability Index. Barrick is included on both the Dow Jones Sustainability World Index and North American Index for 2011.
Returning Captial to Shareholders
- Consistent with Barrick's practice of paying a progressive dividend, the Board of Directors has authorized a quarterly dividend of 15 cents per share, which represents a 25% increase from the previous dividend. The Company's strong earnings and operating cash flows, combined with its positive outlook on the gold price, enables it to continue to make high return investments in its project pipeline and also increase its dividend. Over the last five years, Barrick has had a consistent track record of returning capital to shareholders, increasing its dividend by more than 170%(5) on a quarterly basis.
FINANCIAL AND OPERATING RESULTS
Q3 production was 1.93 million ounces of gold at total cash costs of $453 per ounce and net cash costs of $328 per ounce. The Company is on track to achieve its original full year operating guidance and has narrowed expected gold production and cash cost ranges to 7.6-7.8 million ounces at total cash costs of $460-$475 per ounce. Net cash costs for 2011 are expected to be $330-$350 per ounce, reflecting a lower copper price assumption than previously assumed. In 2012, total cash costs are expected to be approximately 10% higher, primarily due to inflationary cost pressures, as well as a change in the production mix. Gold production in 2012 is anticipated to be comparable to 2011.
Q3 gold cash margins increased 55% to $1,290 per ounce from $834 per ounce in Q3 2010 and net cash margins rose 51% to $1,415 per ounce from $939 per ounce in the same prior year period. This margin expansion demonstrates the Company's exceptional leverage to higher gold prices.
Third quarter copper cash margins of $1.63 per pound included a full quarter of production from the recently acquired Lumwana mine in Zambia. The Company's Q3 average realized copper price was negatively impacted by about $58 million in provisional pricing adjustments due to the significant decrease in market copper prices at the end of September. The sales price for copper is determined based on market copper prices at a future date set by the customer, generally one to six months after the initial date of sale. The prices on these sales are marked-to-market at the balance sheet date based on the forward copper price for the relevant quotational period. All mark-to-market adjustments are recorded in copper sales revenues. As a result, the Company's Q3 average realized copper price of $3.54 was below the average market copper price of $4.07 per pound. As at quarter-end, there were approximately 82 million pounds of copper sales that were provisionally priced at the closing market copper price of $3.27 per pound, which are expected to settle by year end. Future changes in market copper prices will continue to affect the final realized prices.
Q3 adjusted net earnings rose 52% to a record $1.39 billion ($1.39 per share) compared to adjusted net earnings of $912 million ($0.93 per share) in the prior year period, reflecting higher gold and copper realized prices and higher copper sales volumes. Q3 adjusted net earnings translate to an annualized return on equity of approximately 25%. Q3 reported net earnings were $1.37 billion ($1.37 per share) before net adjustments of approximately $20 million. Q3 EBITDA increased 47% to $2.46 billion from $1.67 billion in the same prior year period. Q3 operating cash flow rose 35% to a record $1.89 billion from $1.40 billion in the prior year period and adjusted operating cash flow increased 33% to $1.92 billion from $1.44 billion in Q3 2010.
'Today, the Company reported another strong quarter of operational and financial results,' said Aaron Regent, Barrick's President and CEO. 'We remain on track to achieve our original full year operating targets including one of the lowest cash cost profiles amongst the senior gold producers. We are making good progress constructing our high return Pueblo Viejo and Pascua-Lama mines and are pleased with further positive exploration results at Goldrush and Red Hill, our new gold discoveries in Nevada.'
The North America region continued to perform well in Q3, producing 0.84 million ounces at total cash costs of $415 per ounce. The Cortez property performed on plan with production of 0.35 million ounces at total cash costs of $230 per ounce in Q3. The Cortez Hills open pit continues to be in a higher waste stripping phase, which is expected to result in lower production in Q4 before it returns to a higher grade area in Q1 2012.
The Goldstrike operation produced 0.26 million ounces at total cash costs of $516 per ounce in Q3 as it transitioned to a higher stripping phase in the second half of 2011 as previously disclosed. Full year 2011 production guidance for the North America region is expected to be 3.30-3.40 million ounces, within the previous guidance range, at the previous total cash cost guidance of $425-$450 per ounce.
The South American business unit performed ahead of plan with production of 0.48 million ounces at total cash costs of $358 per ounce in Q3. Lagunas Norte production of 0.22 million ounces at total cash costs of $260 per ounce was ahead of plan, primarily due to changes in mine sequencing, which resulted in higher production in Q3, which had previously been anticipated in Q4. Veladero contributed 0.22 million ounces at total cash costs of $380 per ounce in Q3. In 2011, the South America region is expected to produce 1.85-1.90 million ounces at total cash costs of $360-$380 per ounce, within the previous production and cost guidance ranges.
The Australia Pacific business unit produced 0.47 million ounces at total cash costs of $609 per ounce in Q3. The Porgera mine, which produced 0.13 million ounces at total cash costs of $545 per ounce, was impacted by lower underground production, primarily due to equipment availability issues and unplanned maintenance. The Australia Pacific region is expected to produce about 1.90 million ounces in 2011, within the previous guidance range, at the previous total cash cost guidance of $610-$635 per ounce.
Attributable production from African Barrick Gold plc in Q3 was 0.14 million ounces at total cash costs of $687 per ounce. Barrick's share of 2011 production is expected to be 0.515-0.560 million ounces at total cash costs of $675-$700 per ounce.
Q3 copper production of 140 million pounds at total cash costs of $1.91 per pound included the first full quarter of production from the newly acquired Lumwana mine in Zambia, which produced 75 million pounds at total cash costs of $2.13 per pound. Lumwana is expected to produce approximately 155 million pounds of copper at total cash costs of $1.95-$2.10 per pound from June 1 until year end. Production and cash cost guidance for 2011 reflects the impact of plant availability issues, lower grades primarily related to dilution, the mill shut down for maintenance in Q4 previously scheduled for Q1 2012, and higher costs related to labor and power. Areas of focus at Lumwana include mill de-bottlenecking, pit re-optimization, changes to mine sequencing, dilution control, equipment availability and leveraging Barrick's supply chain agreements. An infill drill program at the producing Malundwe deposit is underway to improve dilution control and more accurately model ore body characteristics. The Zaldivar copper mine in Chile produced 65 million pounds at total cash costs of $1.67 per pound in Q3 and is expected to produce approximately 300 million pounds of copper at $1.40-$1.50 per pound in 2011. Zaldivar's Q3 performance was impacted by unplanned primary crusher maintenance which affected throughput. In 2011, the Company's total copper production is expected to be 450-460 million pounds, which is slightly lower than the previous guidance of 455-475 million pounds. Total copper cash costs in 2011 are expected to be $1.60-$1.70 per pound, within the previous guidance range of $1.55-$1.70 per pound. In 2012, copper total cash costs are anticipated to be higher due to inflationary cost pressures and the impact of a full year of production from Lumwana.
Utilizing option collar strategies, the Company put in place floor protection on substantially all of the remaining expected copper production for 2011 at an average floor price of approximately $3.45 per pound, with upside participation to an average of approximately $4.85 per pound(6). The Company also put in place floor protection on just under half of the expected copper production for 2012 at an average floor price of $3.75 per pound and has sold call options on approximately 40% of the expected 2012 production at an average price of approximately $5.50 per pound(7). The remaining copper production is subject to market prices.
Approximately 60% of Barrick's consolidated production costs are denominated in US dollars. The Company's largest single currency exposure is the Australian dollar/US dollar exchange rate. Barrick is hedged on substantially all of the expected remaining Australian expenditures in 2011 and the expected 2012 Australian expenditures at effective average rates of $0.76 and $0.82, respectively, and also has substantial coverage for the following two years at rates at or below $0.80.
The Company has also mitigated the impact of higher oil prices through the use of financial contracts and production from Barrick Energy such that a $10 change in WTI crude oil prices is only expected to impact 2011, 2012 and 2013 total cash costs by about $1 per ounce. The Barrick Energy contribution, along with the financial contracts, provides hedge protection for approximately 80% of expected remaining 2011 fuel consumption and approximately 90% of expected 2012 and 2013 fuel consumption. Financial contracts also provide substantial hedge coverage in 2014 and production from Barrick Energy is expected to continue to provide long term natural offsets to changes in energy prices.
INCREASING GOLD AND COPPER RESERVES AND RESOURCES THROUGH EXPLORATION(8) AND SELECTIVE ACQUISITIONS
Barrick's 2011 exploration guidance is $370-$390 million and is weighted towards resource additions and reserve conversion at and around mine sites, while also providing for earlier stage exploration to support longer term growth for the Company. Major exploration programs are underway in all regions, with the focus on Nevada and the Lumwana property.
In Nevada, recent drilling continues to expand the mineralization at Red Hill and Goldrush. The Company's confidence in the potential and continuity of the mineralization has increased. In addition, infill drilling between both deposits is successfully finding new mineralization and there is the possibility that the two deposits will merge into a single deposit. Step out holes north of Red Hill have intersected mineralization a further 2,000 feet beyond the currently outlined resource as well as extended mineralization at least 1,000 feet to the southwest. Highlights of major step-out drilling include 120 feet at 0.17 ounces per ton (opt), 60 feet at 0.20 opt, 80 feet at 0.16 opt, and 30 feet at 0.25 opt. Step-out drilling south of Goldrush is now underway to test the southern extension of the mineralized zone. A total of 264,000 feet of drilling is planned at Red Hill and Goldrush in 2011 and the program is approximately 80% complete.
At the 75%-owned Turquoise Ridge operation in Nevada, work is advancing on the potential to develop a large scale open pit in order to mine the lower grade halo around the high grade underground ore, which could significantly increase annual production. A prefeasibility study is expected to be completed by the end of 2012. Nine drill rigs are currently active on the property. The focus of open pit drilling is on upgrading resources and mineral inventory. Surface drilling has intersected significant new mineralization, particularly in the south area of the planned pit where the cover is shallower, which could positively impact economics. Underground drilling is also yielding strong results, intersecting higher grades than expected in some areas and zones are open up-dip and to the northwest.
At Lumwana, drilling activity has been ramped up with 11 drill rigs active and an additional four rigs being mobilized. Areas of focus include resource definition drilling at Chimiwungo to convert inferred resources into indicated resources as well as extensional drilling to expand the mineralization. Drilling across the in-pit portion of Chimiwungo East commenced in September and results received from initial drill holes indicate the thickness of the shoot is increasing, in line with expectations. Barrick is advancing an expansion study that could potentially double processing rates. An induced polarization survey is underway in the Chimiwungo South/Mutoma area and a drill program is planned to commence in Q4 2011 to test the potential for shallow mineralization in this area.
INVESTING IN AND DEVELOPING HIGH RETURN PROJECTS IN CONSTRUCTION
Barrick has targeted growth in production to approximately 9 million ounces of gold within the next five years(9). Total cash costs are expected to benefit from its large, low cost projects, primarily Pueblo Viejo and Pascua-Lama, as these mines come on stream. Once at full capacity, these two mines are expected to contribute 1.4-1.5 million ounces of average annual production over the first full five years of operation at low cash costs.
At the Pueblo Viejo project in the Dominican Republic, first production is anticipated in mid-2012. Barrick's share of annual gold production in the first full five years of operation is expected to average 625,000-675,000 ounces at total cash costs of $275-$300 per ounce(10).
Total mine construction capital is estimated at $3.6-$3.8 billion(10) (100%), or $2.2-$2.3 billion (Barrick's 60% share) of which 80% has been committed at the end of the third quarter. Overall construction at the Pueblo Viejo project is now more than 75% complete. Remediation of the starter tailings dam progressed during Q3 with the Company in receipt of all necessary approvals to allow construction of the dam to its full height. At the end of the third quarter, brick lining of all four autoclaves was completed. Nearly all of the concrete has been poured, about 95% of the steel has been erected and more than 7.6 million tonnes of ore have been stockpiled. Work continues toward achieving key milestones, including the connection of power to the site.
As part of a longer-term, optimized power solution for Pueblo Viejo, the Company is advancing a plan to construct a dual fuel power plant at an estimated incremental cost of approximately $300 million (100% basis) or $180 million (Barrick's share). The power plant would commence operations utilizing heavy fuel oil, but have the ability to subsequently transition to lower cost liquid natural gas. The new plant is expected to provide lower cost, long term power to the project.
Pascua-Lama is a high quality, world class resource, expected to achieve first production in mid-2013. Average annual gold production is expected to be 800,000-850,000 ounces in its first full five years of operation at negative total cash costs of $225-$275 per ounce(11), assuming a silver price of $25 per ounce. Average annual silver production for the first full five years is expected to be about 35 million ounces. For every $1 per ounce increase in the silver price, total cash costs are expected to decrease by approximately $35 per ounce over this period. Total mine construction capital is estimated at $4.7-$5.0 billion(11), with approximately 50% of the capital committed at the end of the third quarter. In Chile, earthworks are about 80% complete. In Argentina, good progress was made on earthworks, which are approximately 60% complete at the end of Q3. Civil concrete works continue for the structures at the stockpile, grinding and pebble crusher areas, and have started in the Merrill Crowe process plant area. Concrete and steel works continued on the processing facilities in the third quarter.
At the Barriales camp in Chile, the former exploration camp has been demolished and construction is nearing completion on various facilities. The Los Amarillos camp in Argentina, which is targeted to house about 5,500 beds, currently houses 2,680 beds, with a targeted capacity of 3,500 beds to be completed by year end.
The Jabal Sayid copper project in Saudi Arabia is expected to enter production in the second half of 2012 at a total capital cost of approximately $400 million. Initial production is expected from Lode 2 and total average annual copper production is expected to be 100-130 million pounds over the first full five years of operation. Good potential exists for material extensions to known deposits and new discoveries from an ongoing evaluation of the entire Jabal Sayid site. Current exploration is focused on testing Lode 4 at depth, where mineralization has been intersected in several previous drill holes, including an intercept of 111 meters at 2.67% copper. Several geophysical surveys are also in progress.
At the end of the third quarter, construction is over 60% complete with more than 70% of the capital committed. Bulk earthworks are about 85% complete, underground services are more than 50% complete and concrete poured is 90% complete.
PROJECTS IN FEASIBILITY
At the Cerro Casale project in Chile, the Environmental Impact Assessment was submitted in the third quarter. The permitting process is anticipated to be approximately 18 months, at which time Barrick will consider a construction decision and commence detailed engineering. Exploration programs will continue in parallel with completing basic engineering and permitting. Discussions with the government and meetings with local communities and indigenous groups are continuing in conjunction with these activities.
Barrick's 75% share of average annual production is anticipated to be 750,000-825,000 ounces of gold and 190-210 million pounds of copper in the first full five years of operation at total cash costs of $125-$175 per ounce(12). Estimated total mine construction capital is approximately $6 billion (100% basis)(12).
At the 50%-owned Donlin Gold project in Alaska, feasibility study revisions, which include updated costs and the utilization of natural gas, are being finalized for submission to the Board of Donlin Gold LLC in Q4 2011. Mine construction capital is expected to be approximately $6 billion (100% basis) with an additional $1 billion (100% basis) for the construction of a natural gas pipeline, which is anticipated to lower long term power costs and offer a better environmental and operational solution for power connection to the site. Permitting is expected to commence in the first half of 2012.
At the Reko Diq copper-gold project, in which Barrick holds a 37.5% interest, the Supreme Court of Pakistan affirmed the jurisdiction of the provincial Government of Baluchistan (GoB) to grant the mining license in the third quarter. In September 2011, the GoB informed Tethyan Copper Company (TCC), the project company, that it considered the mining lease application to be incomplete and unsatisfactory. TCC has recently responded to the government's comments on the application and will take appropriate steps to protect its interest in the property, including through international arbitration if necessary.
At the 50%-owned Kabanga nickel project in Tanzania, the draft feasibility study is being reviewed by the partners. The Environmental Impact Assessment is expected to be submitted in Q4 2011. Preliminary engineering will continue for the remainder of 2011, as well as initiating negotiations to develop a Mineral Development Agreement with the Tanzanian government, prior to making a construction decision in the second half of 2012.
RETURNING CAPITAL TO SHAREHOLDERS
At September 30, 2011, Barrick had a cash balance of $3 billion(13) and $1 billion available for drawdown under its credit facilities, as well as the gold industry's highest credit rating. The Company generated approximately $4.3 billion in adjusted operating cash flow in the first nine months of 2011. Barrick's strong earnings and operating cash flows, combined with its positive outlook on the gold price, enables it to continue to make high return investments in its project pipeline and also increase the dividend. The Board of Directors has authorized a quarterly dividend of 15 cents per share, which represents a 25% increase from the previous dividend. Over the last five years, Barrick has had a consistent track record of returning capital to shareholders, increasing its dividend by more than 170% on a quarterly basis(14). The quarterly dividend is payable on December 15, 2011 to shareholders on record as of the close of business on November 30, 2011.
Barrick's vision is to be the world's best gold company by finding, acquiring, developing and producing quality reserves in a safe, profitable and socially responsible manner. Barrick's shares are traded on the Toronto and New York stock exchanges.
(1) Adjusted net earnings, adjusted operating cash flow, EBITDA, return on equity, total cash costs, net cash costs, cash margins and net cash margins per ounce/pound are non-GAAP financial measures. See pages 55-62 of Barrick's Third Quarter 2011 Report.
(2) Assumes a market copper price of $3.25/lb for Q4 2011, which will result in a realized price of about $3.40/lb, including the impact of the copper collars.
(3) Barrick has a 60% interest in the Pueblo Viejo mine.
(4) Based on the estimated combined average annual production in the first full five years of operation.
(5) Calculated based on converting the 2006 semi-annual dividend of 11 cents per share to a quarterly equivalent.
(6) The realized price on remaining 2011 production is expected to be reduced by $0.06/lb as a result of the net premium paid on these positions.
(7) The realized price on 2012 production is expected to be reduced by $0.12/lb as a result of the net premium paid on these positions.
(8) Barrick's exploration programs are designed and conducted under the supervision of Robert Krcmarov, Senior Vice President, Global Exploration of Barrick. For information on the geology, exploration activities generally, and drilling and analysis procedures on Barrick's material properties, see Barrick's most recent Annual Information Form/Form 40-F on file with Canadian provincial securities regulatory authorities and the U.S. Securities and Exchange Commission.
(9) The target of 9 Moz of annual production within five years reflects a current assessment of the expected production and timeline to complete and commission Barrick's projects currently in construction (Pueblo Viejo and Pascua-Lama) and the Company's current assessment of existing mine site opportunities, some of which are sensitive to metal price and various capital and input cost assumptions.
(10) Based on gold and oil price assumptions of $1,300/oz and $90/bbl, respectively.
(11) Based on gold, silver and oil price assumptions of $1,300/oz, $25/oz, and $90/bbl, respectively and assuming a Chilean peso f/x rate of 475:1.
(12) Based on gold, copper and oil price assumptions of $1,300/oz, $3.25/lb and $90/bbl, respectively and assuming a Chilean peso f/x rate of 475:1.
(13) Includes $525 million cash held at ABG, which may not be readily deployed outside ABG. It also includes $6 million held at Pueblo Viejo as a result of the first and second draw on the project financing. These funds are to be used to fund the further construction of the project and are not readily deployable by Barrick for other purposes.
(14) The declaration and payment of dividends remains at the discretion of the Board of Directors and will depend on the Company's financial results, cash requirements, future prospects and other factors deemed relevant by the Board.
Key Statistics
Barrick Gold Corporation Three months ended Nine months ended
(in United States dollars) September 30, September 30,
-----------------------------------------------
(Unaudited) 2011 2010 2011 2010
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Operating Results
Gold production (thousands of
ounces)(1) 1,928 2,060 5,862 6,065
Gold sold (thousands of
ounces) 1,908 1,949 5,685 5,911
Per ounce data
Average spot gold price $ 1,702 $ 1,227 $ 1,534 $ 1,178
Average realized gold
price(2) 1,743 1,237 1,550 1,184
Net cash costs(2) 328 298 325 297
Total cash costs(2) 453 403 445 399
Depreciation(3) 153 141 149 138
Other(4) 16 7 16 6
Total production costs 622 551 610 543
Copper credits 125 105 120 102
Copper production (millions
of pounds) 140 84 308 286
Copper sold (millions of
pounds) 146 90 309 288
Per pound data
Average spot copper price $ 4.07 $ 3.29 $ 4.20 $ 3.25
Average realized copper
price(2) 3.54 3.43 3.87 3.20
Total cash costs(2) 1.91 1.12 1.65 1.10
Depreciation(3) 0.29 0.25 0.27 0.22
Total production costs 2.20 1.37 1.92 1.32
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Financial Results (millions)
Revenues $ 4,007 $ 2,788 $ 10,523 $ 7,990
Net earnings(5) 1,365 942 3,525 2,621
Adjusted net earnings(2) 1,385 912 3,506 2,499
EBITDA(2) 2,460 1,669 6,378 4,751
Operating cash flow 1,889 1,397 4,014 3,635
Adjusted operating cash
flow(2) 1,918 1,441 4,295 3,719
Per Share Data (dollars)
Net earnings (basic) 1.37 0.96 3.53 2.66
Adjusted net earnings
(basic)(2) 1.39 0.93 3.51 2.54
Net earnings (diluted) 1.36 0.94 3.52 2.63
Weighted average basic common
shares (millions) 1,000 986 999 985
Weighted average diluted
common shares (millions)(6) 1,001 998 1,001 997
Return on equity(2) 25% 21% 22% 20%
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As at As at
September 30, December 31,
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2011 2010
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Financial Position (millions)
Cash and equivalents $ 2,965 $ 3,968
Non-cash working capital 1,991 1,696
Adjusted debt(2) 13,049 6,392
Net debt(2) 10,086 2,427
Average shareholders' equity 20,924 17,352
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(1) Production includes our equity share of gold production at Highland
Gold.
(2) Realized price, net cash costs, total cash costs, adjusted net earnings,
EBITDA, adjusted operating cash flow, adjusted debt, net debt and return on
equity are non-GAAP financial performance measures with no standard
definition under IFRS. See pages 55 - 62 of the Company's MD&A.
(3) Represents equity amortization expense divided by equity ounces of gold
sold or pounds of copper sold.
(4) Represents the impact of Barrick Energy and realized gains and losses on
non-hedge commodity contracts at the Company's producing mines divided by
equity ounces of gold sold or pounds of copper sold.
(5) Net earnings represents net income attributable to the equity holders of
the Company.
(6) Fully diluted includes dilutive effect of stock options and convertible
debt.
Production and Cost Summary
Gold Production
(attributable ounces)
(000's) Total Cash Costs ($/oz)
---------------------------- ----------------------------------
Three months Nine months Three months Nine months
ended ended ended ended
September 30, September 30, September 30, September 30,
------------- ------------- ----------------- ---------------
(Unaudited) 2011 2010 2011 2010 2011 2010 2011 2010
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North America 836 929 2,621 2,413 $ 415 $ 394 $ 405 $ 426
South America 475 518 1,426 1,743 358 213 358 196
Australia
Pacific 472 483 1,394 1,454 609 587 601 567
African
Barrick
Gold(3) 135 122 391 431 687 618 666 552
Other 10 8 30 24 475 494 475 494
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Total 1,928 2,060 5,862 6,065 $ 453 $ 403 $ 445 $ 399
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Copper Production
(attributable pounds)
(Millions) Total Cash Costs ($/lb)
---------------------------- ----------------------------------
Three months Nine months Three months Nine months
ended ended ended ended
September 30, September 30, September 30, September 30,
------------- ------------- ----------------- ---------------
(Unaudited) 2011 2010 2011 2010 2011 2010 2011 2010
-------------------------- ------------- ----------------- ---------------
South America 65 78 209 236 1.67 $ 1.12 $ 1.44 $ 1.08
Australia
Pacific 75 6 99 50 2.13 1.11 2.08 1.19
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Total 140 84 308 286 $ 1.91 $ 1.12 $ 1.65 $ 1.10
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Total Gold Production Costs ($/oz)
----------------------------------
Three months Nine months
ended ended
September 30, September 30,
----------------- ---------------
(Unaudited) 2011 2010 2011 2010
----------------------------------------------------------- ---------------
Direct mining costs at market foreign
exchange rates $ 500 $ 398 $ 493 $ 396
Gains realized on currency hedge and
commodity hedge/economic hedge contracts (58) (11) (53) (10)
Adjustments to direct mining costs(2) (16) (7) (16) (6)
By-product credits (18) (11) (18) (14)
Copper credits (125) (105) (120) (102)
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Cash operating costs, net basis 283 264 286 264
Royalties 45 34 39 33
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Net cash costs(1) 328 298 325 297
Copper credits 125 105 120 102
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Total cash costs(1) 453 403 445 399
Depreciation 153 141 149 138
Adjustments to direct mining costs(2) 16 7 16 6
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Total production costs $ 622 $ 551 $ 610 $ 543
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Total Copper Production Costs
($/lb)
----------------------------------
Three months Nine months
ended ended
September 30, September 30,
----------------- ---------------
(Unaudited) 2011 2010 2011 2010
----------------------------------------------------------- ---------------
Cash operating costs $ 1.83 $ 1.11 $ 1.60 $ 1.08
Royalties 0.08 0.01 0.05 0.02
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Total cash costs(1) 1.91 1.12 1.65 1.10
Depreciation 0.29 0.25 0.27 0.22
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Total production costs $ 2.20 $ 1.37 $ 1.92 $ 1.32
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(1)Total cash costs and net cash costs are non-GAAP financial performance
measures with no standard meaning under IFRS. See page 57 of the Company's
MD&A.
(2)Represents realized gains and losses on non-hedge currency and commodity
contracts and the impact of Barrick Energy's net contribution.
(3)Figures relating to African Barrick Gold are presented on a 100% basis up
to March 31, 2010 and a 73.9% basis thereafter, which reflects our equity
share of production.
Consolidated Statements of Income
Barrick Gold Corporation
(in millions of United States
dollars, except per share Three months ended Nine months ended
data) (Unaudited) September 30, September 30,
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2011 2010 2011 2010
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Revenue (notes 5 and 6) $ 4,007 $ 2,788 $ 10,523 $ 7,990
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Costs and expenses
Cost of sales (notes 5 and 7) 1,730 1,301 4,583 3,831
Corporate administration 43 37 123 115
Exploration and evaluation
(note 8) 94 56 248 156
Other expense (note 10A) 135 96 391 330
Impairment charges
(reversals) (note 10B) 19 (29) 23 (53)
----------------------------------------------------------------------------
2,021 1,461 5,368 4,379
Other income (note 10C) 76 35 238 92
Income (loss) from equity
investees (note 14) 8 (3) 13 (27)
Gain (loss) on non-hedge
derivatives (note 18E) 32 (4) 8 84
----------------------------------------------------------------------------
Income before finance items
and income taxes 2,102 1,355 5,414 3,760
Finance items (note 11)
Finance income 3 5 10 11
Finance costs (68) (40) (148) (153)
----------------------------------------------------------------------------
Income before income taxes 2,037 1,320 5,276 3,618
Income tax expense (note 12) (654) (376) (1,698) (1,052)
----------------------------------------------------------------------------
Income from continuing
operations 1,383 944 3,578 2,566
Income from discontinued
operations (note 4G) - 11 - 82
----------------------------------------------------------------------------
Net income $ 1,383 $ 955 $ 3,578 $ 2,648
----------------------------------------------------------------------------
Attributable to:
Equity holders of Barrick
Gold Corporation $ 1,365 $ 942 $ 3,525 $ 2,621
Non-controlling interests
(note 22) $ 18 $ 13 $ 53 $ 27
----------------------------------------------------------------------------
Earnings per share data
attributable to the equity
holders of Barrick Gold
Corporation (note 9)
Income from continuing
operations
Basic $ 1.37 $ 0.94 $ 3.53 $ 2.58
Diluted $ 1.36 $ 0.93 $ 3.52 $ 2.55
----------------------------------------------------------------------------
Income from discontinued
operations
Basic $ - $ 0.02 $ - $ 0.08
Diluted $ - $ 0.01 $ - $ 0.08
----------------------------------------------------------------------------
Net income
Basic $ 1.37 $ 0.96 $ 3.53 $ 2.66
Diluted $ 1.36 $ 0.94 $ 3.52 $ 2.63
----------------------------------------------------------------------------
The notes to these unaudited interim consolidated financial statements,
which are contained in the Third Quarter Report 2011 available on our
website are an integral part of these consolidated financial statements.
Consolidated Statements of Comprehensive Income
Barrick Gold Corporation
(in millions of United Three months ended Nine months ended
States dollars) (Unaudited) September 30, September 30,
----------------------------------------------------------------------------
2011 2010 2011 2010
----------------------------------------------------------------------------
Net income $ 1,383 $ 955 $ 3,578 $ 2,648
Other comprehensive income,
net of taxes
Unrealized gains (losses) on
available-for-sale ('AFS')
financial securities, net
of tax $10, $3, $7, $1 (75) 28 (70) 27
Realized (gains) losses and
impairments on AFS
financial securities, net
of tax $1, $1, $6, $nil (6) (7) (50) (8)
Unrealized gains (losses) on
derivatives designated as
cash flow hedges, net of
tax $4, $118, $17, $76 (162) 435 165 294
Realized gains on
derivatives designated as
cash flow hedges, net of
tax $3, $4, $49, $13 (124) (15) (300) (52)
Currency translation
adjustments, net of tax
$nil, $nil, $nil, $nil (94) 14 (61) 1
----------------------------------------------------------------------------
Total other comprehensive
income (loss) (461) 455 (316) 262
----------------------------------------------------------------------------
Total comprehensive income $ 922 $ 1,410 $ 3,262 $ 2,910
----------------------------------------------------------------------------
Attributable to:
Equity holders of Barrick
Gold Corporation $ 904 $ 1,397 $ 3,209 $ 2,883
Non-controlling interests $ 18 $ 13 $ 53 $ 27
----------------------------------------------------------------------------
The notes to these unaudited interim consolidated financial statements,
which are contained in the Third Quarter Report 2011 available on our
website are an integral part of these consolidated financial statements.
Consolidated Statements of Cash Flow
Barrick Gold Corporation
(in millions of United
States dollars) Three months ended Nine months ended
(Unaudited) September 30, September 30,
----------------------------------------------------------------------------
2011 2010 2011 2010
----------------------------------------------------------------------------
OPERATING ACTIVITIES
Net income $ 1,383 $ 955 $ 3,578 $ 2,648
Adjusted for the
following items:
Depreciation 376 316 1,017 936
Accretion 16 5 40 17
Impairment charges
(reversals) (note 10B) 19 (29) 23 (53)
Income tax expense
(note 12) 654 376 1,698 1,052
Increase in inventory (199) (110) (455) (242)
Gain on
sale/acquisition of
long-lived
assets/investments (69) (16) (225) (66)
Other (note 13A) 234 148 (62) 120
----------------------------------------------------------------------------
Operating cash flows
before interest and
income taxes 2,414 1,645 5,614 4,412
Net interest paid (55) (97) (106) (208)
Income taxes paid (470) (151) (1,494) (569)
----------------------------------------------------------------------------
Net cash provided by
operating activities 1,889 1,397 4,014 3,635
----------------------------------------------------------------------------
INVESTING ACTIVITIES
Property, plant and
equipment
Capital expenditures
(note 5) (1,514) (907) (3,653) (2,467)
Sales proceeds 15 27 48 35
Acquisitions (note 4) (337) (61) (7,677) (813)
Investments
Purchases (63) (26) (72) (28)
Sales 9 10 80 10
Other investing
activities (note 13B) (8) (12) (81) (44)
----------------------------------------------------------------------------
Net cash used in
investing activities (1,898) (969) (11,355) (3,307)
----------------------------------------------------------------------------
FINANCING ACTIVITIES
Proceeds on exercise of
stock options 10 18 41 49
Proceeds from public
issuance of common
shares by a subsidiary
(note 4E) - - - 884
Long-term debt
Proceeds - - 6,659 782
Repayments (16) (72) (365) (147)
Dividends (119) (118) (359) (315)
Funding from non-
controlling interests 119 28 298 12
Deposit on silver sale
agreement 138 137 138 137
Other financing
activities (note 13C) (2) (4) (67) (22)
----------------------------------------------------------------------------
Net cash provided by
(used in) financing
activities 130 (11) 6,345 1,380
----------------------------------------------------------------------------
Effect of exchange rate
changes on cash and
equivalents (19) 13 (7) 9
----------------------------------------------------------------------------
Net increase (decrease)
in cash and equivalents 102 430 (1,003) 1,717
Cash and equivalents at
beginning of period
(note 18A) 2,863 3,851 3,968 2,564
----------------------------------------------------------------------------
Cash and equivalents at
end of period (note
18A) $ 2,965 $ 4,281 $ 2,965 $ 4,281
----------------------------------------------------------------------------
The notes to these unaudited interim consolidated financial statements,
which are contained in the Third Quarter Report 2011 available on our
website are an integral part of these consolidated financial statements.
Consolidated Balance Sheets
Barrick Gold Corporation
(in millions of United States As at As at As at
dollars) (Unaudited) September 30, December 31, January 1,
----------------------------------------------------------------------------
2011 2010 2010
----------------------------------------------------------------------------
ASSETS
Current assets
Cash and equivalents (note 18A) $ 2,965 $ 3,968 $ 2,564
Accounts receivable 444 370 259
Inventories (note 15) 2,249 1,798 1,488
Other current assets 906 935 518
----------------------------------------------------------------------------
Total current assets (excluding
assets classified as held for sale) 6,564 7,071 4,829
Assets classified as held for sale - - 100
----------------------------------------------------------------------------
Total current assets 6,564 7,071 4,929
Non-current assets
Equity in investees (note 14) 440 396 1,124
Other investments 188 171 62
Property, plant and equipment (note
16) 27,007 17,890 13,378
Goodwill (note 17) 9,557 6,096 5,197
Intangible assets 500 475 275
Deferred income tax assets 537 625 601
Other assets 2,034 1,913 1,358
----------------------------------------------------------------------------
Total assets $ 46,827 $ 34,637 $ 26,924
----------------------------------------------------------------------------
LIABILITIES AND EQUITY
Current liabilities
Accounts payable 1,890 1,511 1,221
Debt 198 14 54
Current income tax liabilities 451 550 104
Other current liabilities 354 416 366
----------------------------------------------------------------------------
Total current liabilities (excluding
liabilities classified as held for
sale) 2,893 2,491 1,745
Liabilities classified as held for
sale - - 49
----------------------------------------------------------------------------
Total current liabilities 2,893 2,491 1,794
Non-current liabilities
Debt (note 18B) 13,185 6,624 6,124
Provisions (note 20) 2,137 1,768 1,408
Deferred income tax liabilities 3,396 1,971 960
Other liabilities (note 19) 752 566 884
----------------------------------------------------------------------------
Total liabilities 22,363 13,420 11,170
----------------------------------------------------------------------------
Equity
Capital stock (note 21) 17,873 17,820 17,392
Retained earnings (deficit) 3,777 611 (2,535)
Accumulated other comprehensive
income 411 727 232
Other 314 314 143
----------------------------------------------------------------------------
Total equity attributable to Barrick
Gold Corporation shareholders 22,375 19,472 15,232
Non-controlling interests (note 22) 2,089 1,745 522
----------------------------------------------------------------------------
Total equity 24,464 21,217 15,754
----------------------------------------------------------------------------
Contingencies and commitments (note
16 and 23)
----------------------------------------------------------------------------
Total liabilities and equity $ 46,827 $ 34,637 $ 26,924
----------------------------------------------------------------------------
The notes to these unaudited interim consolidated financial statements,
which are contained in the Third Quarter Report 2011 available on our
website are an integral part of these consolidated financial statements.
Consolidated Statements of Changes in Equity
Barrick Gold Corporation Attributable to equity holders of the company
----------------------------------------------------------------------------
Accumulated
(in millions of United Retained other
States dollars) Capital earnings comprehensive
(Unaudited) stock (deficit) income (loss) Other(1)
----------------------------------------------------------------------------
At January 1, 2011 $ 17,820 $ 611 $ 727 $ 314
----------------------------------------------------------------------------
Net income - 3,525 - -
Total other comprehensive
income (loss) - - (316) -
----------------------------------------------------------------------------
Total comprehensive income - 3,525 (316) -
----------------------------------------------------------------------------
Transactions with owners
Dividends - (359) - -
Issued on exercise of
stock options 41 - - -
Recognition of stock
option expense 12 - - -
Funding from non-
controlling interests - - - -
Other decrease in non-
controlling interests - - - -
----------------------------------------------------------------------------
Total transactions with
owners 53 (359) - -
----------------------------------------------------------------------------
At September 30, 2011 $ 17,873 $ 3,777 $ 411 $ 314
----------------------------------------------------------------------------
At January 1, 2010 $ 17,392 $ (2,535) $ 232 $ 143
----------------------------------------------------------------------------
Net income - 2,621 - -
Total other comprehensive
income - - 262 -
----------------------------------------------------------------------------
Total comprehensive income - 2,621 262 -
----------------------------------------------------------------------------
Transactions with owners
Dividends - (315) - -
Issued on exercise of
stock options 49 - - -
Recognition of stock
option expense 12 - - -
Recognized on initial
public offering of
African Barrick Gold
(note 4E) - - - 276
Funding from non-
controlling interests - - - -
Other increase in non-
controlling interests - - - -
----------------------------------------------------------------------------
Total transactions with
owners 61 (315) - 276
----------------------------------------------------------------------------
At September 30, 2010 $ 17,453 $ (229) $ 494 $ 419
----------------------------------------------------------------------------
Consolidated Statements of Changes in Equity
Attributable
to equity
holders of the
Barrick Gold Corporation company
------------------------------------------
Total equity
(in millions of United attributable
States dollars) to Non-controlling Total
(Unaudited) shareholders interests equity
---------------------------------------------------------------------------
At January 1, 2011 $ 19,472 $ 1,745 $ 21,217
---------------------------------------------------------------------------
Net income 3,525 53 3,578
Total other comprehensive
income (loss) (316) - (316)
---------------------------------------------------------------------------
Total comprehensive income 3,209 53 3,262
---------------------------------------------------------------------------
Transactions with owners
Dividends (359) - (359)
Issued on exercise of
stock options 41 - 41
Recognition of stock
option expense 12 - 12
Funding from non-
controlling interests - 298 298
Other decrease in non-
controlling interests - (7) (7)
---------------------------------------------------------------------------
Total transactions with
owners (306) 291 (15)
---------------------------------------------------------------------------
At September 30, 2011 $ 22,375 $ 2,089 $ 24,464
---------------------------------------------------------------------------
At January 1, 2010 $ 15,232 $ 522 $ 15,754
---------------------------------------------------------------------------
Net income 2,621 27 2,648
Total other comprehensive
income 262 - 262
---------------------------------------------------------------------------
Total comprehensive income 2,883 27 2,910
---------------------------------------------------------------------------
Transactions with owners
Dividends (315) - (315)
Issued on exercise of
stock options 49 - 49
Recognition of stock
option expense 12 - 12
Recognized on initial
public offering of
African Barrick Gold
(note 4E) 276 - 276
Funding from non-
controlling interests - 12 12
Other increase in non-
controlling interests - 1,061 1,061
---------------------------------------------------------------------------
Total transactions with
owners 22 1,073 1,095
---------------------------------------------------------------------------
At September 30, 2010 $ 18,137 $ 1,622 $ 19,759
---------------------------------------------------------------------------
(1)Includes additional paid-in capital as at September 30, 2011: $276
million (December 31, 2010: $276 million; September 30, 2010: $276 million;
January 1, 2010: $nil) and convertible borrowings - equity component as at
September 30, 2011: $38 million (December 31, 2010: $38 million; September
30, 2010: $143 million; January 1, 2010: $143 million).
The notes to these unaudited interim consolidated financial statements, which are contained in the Third Quarter Report 2011 available on our website are an integral part of these consolidated financial statements.
CORPORATE OFFICE TRANSFER AGENTS AND REGISTRARS
Barrick Gold Corporation CIBC Mellon Trust Company(i)
Brookfield Place, TD Canada Trust P.O. Box 7010, Adelaide Street Postal
Tower Station
Suite 3700 Toronto, Canada M5C 2W9
161 Bay Street, P.O. Box 212 or American Stock Transfer
Toronto, Canada M5J 2S1 & Trust Company, LLC
Tel: (416) 861-9911 6201 - 15th Avenue
Fax: (416) 861-0727 Brooklyn, NY 11219
Toll-free throughout North
America: 1-800-720-7415
Email: investor@barrick.com Tel: 1-800-387-0825
Website: www.barrick.com Toll-free throughout North America
Fax: (416) 643-5501
SHARES LISTED Email: inquiries@canstockta.com
ABX - The New York Stock Exchange Website: www.canstockta.com
The Toronto Stock Exchange
(i)Effective November 2010, shareholder
records are maintained by Canadian Stock
Transfer ('CST') as administrative agent
for CIBC Mellon Trust Company.
CAUTIONARY STATEMENT ON FORWARD-LOOKING INFORMATION
Certain information contained in this Third Quarter Report 2011, including any information as to our strategy, projects, plans or future financial or operating performance and other statements that express management's expectations or estimates of future performance, constitute 'forward-looking statements'. All statements, other than statements of historical fact, are forward-looking statements. The words 'believe', 'expect', 'will', 'anticipate', 'contemplate', 'target', 'plan', 'continue', 'budget', 'may', 'intend', 'estimate' and similar expressions identify forward-looking statements. Forward-looking statements are necessarily based upon a number of estimates and assumptions that, while considered reasonable by management, are inherently subject to significant business, economic and competitive uncertainties and contingencies. The Company cautions the reader that such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual financial results, performance or achievements of Barrick to be materially different from the Company's estimated future results, performance or achievements expressed or implied by those forward-looking statements and the forward-looking statements are not guarantees of future performance. These risks, uncertainties and other factors include, but are not limited to: the impact of global liquidity and credit availability on the timing of cash flows and the values of assets and liabilities based on projected future cash flows; changes in the worldwide price of gold, copper or certain other commodities (such as silver, fuel and electricity); fluctuations in currency markets; changes in U.S. dollar interest rates; risks arising from holding derivative instruments; the ability of the Company to complete or successfully integrate an announced acquisition proposal; legislative, political or economic developments in the jurisdictions in which the Company carries on business, including Zambia and Saudi Arabia; operating or technical difficulties in connection with mining or development activities; employee relations; availability and costs associated with mining inputs and labor; the speculative nature of exploration and development, including the risks of obtaining necessary licenses and permits and diminishing quantities or grades of reserves; changes in costs and estimates associated with our projects; adverse changes in our credit rating, level of indebtedness and liquidity, contests over title to properties, particularly title to undeveloped properties; the organization of our previously held African gold operations under a separate listed entity; the risks involved in the exploration, development and mining business. Certain of these factors are discussed in greater detail in the Company's most recent Form 40-F/Annual Information Form on file with the U.S. Securities and Exchange Commission and Canadian provincial securities regulatory authorities.
The Company disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise, except as required by applicable law.
Contacts:
INVESTOR CONTACT: Deni Nicoski
Vice President, Investor Relations
(416) 307-7410
dnicoski@barrick.com
MEDIA CONTACT: Andy Lloyd
Senior Manager, Communications
(416) 307-7414
alloyd@barrick.com
