Barrick Announces Third Quarter 2012 Results
TORONTO, ONTARIO -- (Marketwire) -- 11/01/12 -- THIRD QUARTER REPORT 2012
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.
Barrick Gold Corporation (NYSE: ABX)(TSX: ABX) (Barrick or the "company") today reported net earnings of $0.62 billion ($0.62 per share) compared to net earnings of $1.37 billion ($1.37 per share) in the same prior year quarter. Adjusted net earnings were $0.85 billion ($0.85 per share)(1) compared to $1.38 billion ($1.38 per share) in the third quarter of 2011. Operating cash flow of $1.73 billion and adjusted operating cash flow of $1.27 billion(1) for the quarter compared to operating cash flow of $1.90 billion and adjusted operating cash flow of $2.00 billion, respectively, in the same prior year period.
Operating Highlights
-- Gold and copper production of 1.78 million ounces and 112 million
pounds, respectively
-- Gold total cash costs of $592 per ounce(1) and net cash costs of $537
per ounce(1)
-- Gold total cash margins of $1,063 per ounce(1), and net cash margins of
$1,118 per ounce(1)
-- C1 cash costs of $2.33 per pound(1) and C1 cash margins of $1.19 per
pound(1)
2012 Outlook
-- The company expects 2012 gold production of 7.3-7.5 million ounces(2),
within the original guidance range of 7.3-7.8 million ounces. Total cash
costs for gold are anticipated to be $575-$585 per ounce, compared to
the previous guidance of $550-$575 per ounce, primarily due to higher
cash costs from Australia Pacific and African Barrick Gold (ABG). Net
cash costs are anticipated to be $480-$500 per ounce(3), within the
previous guidance of $460-$500 per ounce.
-- Full year 2012 copper production is expected to be about 450 million
pounds as a result of the delay in first production at Jabal Sayid in
Saudi Arabia. C1 cash costs in 2012 are still anticipated to be $2.10-
$2.30 per pound.
Pueblo Viejo First Gold Production on Schedule and Budget
-- During the third quarter, the Pueblo Viejo mine in the Dominican
Republic poured its first gold on schedule and within capital guidance.
The mine is currently undergoing commissioning, with commercial
production anticipated in December 2012. Barrick's 60 percent share of
average annual gold production is anticipated to be 625,000-675,000
ounces at total cash costs of $300-$350 per ounce(4) in its first full
five years of operation.
Pascua-Lama Project Update
-- During the quarter, Barrick made substantial progress at Pascua-Lama.
Along with construction advancement at site, the company strengthened
the construction management team and hired Fluor to assume overall
project management. Fluor is a global leader in construction of large
mining projects, and the same firm that successfully managed
construction of our recently completed Pueblo Viejo mine.
-- In July, the company announced preliminary results of a review
indicating an increase in capital costs to $7.5-$8.0 billion and a delay
in first production to mid-2014. Since then, Barrick has been working
with Fluor on a more comprehensive top-to-bottom review. This review
will be complete by our 2012 year-end results release; however, work to
date suggests capital costs will be closer to $8.0-$8.5 billion, with
first production in the second half of 2014.
Disciplined Capital Allocation Framework
-- As a result of Barrick's on-going portfolio review and cost control
focus, the company has cut or deferred approximately $1.0 billion in
capex from the initial sustaining and minesite expansion budget for
2013. Despite additional spending at Pascua-Lama, and continued
inflationary industry cost pressures, Barrick expects 2013 capex to be
largely in line with 2012.
"We are on track to achieve our production guidance with higher production expected in the fourth quarter," said Jamie Sokalsky, President and Chief Executive Officer. "Despite some cost pressures, Barrick remains the lowest cost senior gold producer. We poured first gold on schedule and budget at Pueblo Viejo and made substantial progress at Pascua-Lama, which remains our top priority. Both are world-class assets that together are expected to produce about 1.5 million ounces(5) at low operating costs. We're also making progress in support of our disciplined capital allocation framework. We've cut or deferred significant capital expenditures that were previously budgeted and we're continuing to work toward optimizing our asset portfolio. As I have said, returns will drive production; production will not drive returns."
FINANCIAL RESULTS
Reported net earnings were $0.62 billion or $0.62 per share compared to $1.37 billion or $1.37 per share in the same prior year quarter. Net adjusting items in the quarter totaled $231 million, largely related to:
-- $148 million in impairment charges primarily related to an exploration
property in Papua New Guinea, acquired as a result of the Kainantu
acquisition in 2007; and
-- $71 million in unrealized losses on non-hedge derivative instruments.
Third quarter 2012 adjusted net earnings were $0.85 billion or $0.85 per share compared to $1.38 billion or $1.38 per share in the same prior year period. The lower net earnings and adjusted net earnings primarily reflect lower gold and copper sales volumes, higher cost of sales applicable to gold, and lower realized gold prices.
Operating cash flow of $1.73 billion and adjusted operating cash flow of $1.27 billion for the quarter compare to operating cash flow of $1.90 billion and adjusted operating cash flow of $2.00 billion, respectively, in the third quarter of 2011. Adjusted operating cash flow excludes the impact of approximately $0.5 billion of net proceeds related to the settlement of a portion of our Australian dollar hedge positions.
Third quarter EBITDA was $1.50 billion(6) compared to $2.46 billion in the same prior year period, reflecting the same factors affecting net earnings.
The third quarter realized gold price was $1,655 per ounce(6), five percent lower than the same prior year quarter. Gold total cash margins and net cash margins were $1,063 per ounce and $1,118 per ounce, respectively, compared to $1,290 per ounce and $1,420 per ounce in the third quarter of 2011. C1 cash margins were $1.19 per pound compared to $1.71 per pound in the prior year period. C1 cash costs of $2.33 per pound compared to $1.83 per pound in the prior year period as lower cost production from the Zaldivar mine contributed to a lesser proportion of total copper sales. During the third quarter, sales from Zaldivar were impacted by a labor strike at the port of Antofagasta, which delayed shipment of 26 million pounds. The strike has ended and these sales will be recorded in the fourth quarter.
OPERATING RESULTS
North America Regional Business Unit
The North America Regional Business Unit (RBU) produced 0.80 million ounces at total cash costs of $508 per ounce in the third quarter. Cortez produced 0.23 million ounces at total cash costs of $293 per ounce, in line with expectations, and is anticipated to return to higher production levels in the fourth quarter primarily as a result of mine sequencing.
Goldstrike production of 0.35 million ounces at total cash costs of $507 per ounce benefited, as anticipated, from increased productivity following maintenance improvements in the first half of the year and from access to higher grades in the open pit. We expect full year production for the region to be 3.425-3.55 million ounces at total cash costs of $475-$525 per ounce, both within the previous guidance ranges.
South America Regional Business Unit
South America produced 0.39 million ounces at total cash costs of $440 per ounce in the third quarter. The Veladero mine produced 0.17 million ounces at total cash costs of $523 per ounce, reflecting the impact of lower recoveries due to lower leach pad kinetics during the third quarter. Leach recoveries have improved with higher solution rates and better ore permeability, which is expected to continue and result in higher fourth quarter production. Lagunas Norte produced 0.19 million ounces at total cash costs of $337 per ounce with access to higher grades following the completion of pit dewatering. We expect full year production for the region to be 1.55-1.65 million ounces at total cash costs of $430-$480 per ounce, both within the previous guidance ranges.
Australia Pacific Regional Business Unit
Australia Pacific produced 0.48 million ounces at total cash costs of $815 per ounce in the third quarter. The Porgera mine produced 0.12 million ounces at total cash costs of $1,026 per ounce, primarily reflecting lower equipment availability and lower underground tons mined. Full year production for Australia Pacific is expected to be about 1.80 million ounces at total cash costs of approximately $800 per ounce, both in line with previous guidance.
Third quarter attributable production from ABG was 0.11 million ounces at total cash costs of $965 per ounce. Production and cash costs have been mainly impacted by mill maintenance shutdowns and lower grades at Buzwagi together with equipment availability issues at Bulyanhulu. While production from North Mara was in line with expectations during the quarter, lower equipment availability has delayed access to higher grade ore. As a result, Barrick's share of 2012 production is expected to be 5-10 percent below the low end of the previous guidance range of 0.500-0.535 million ounces, at total cash costs of $900-$950 per ounce, compared to the previous guidance of $790-$860 per ounce.
Copper
During the third quarter, Barrick strengthened its Global Copper Business Unit (CBU) in line with its objective of maximizing returns and free cash flow from its assets. The changes will further assist in efforts to address the near-term challenges at Lumwana and Jabal Sayid and to evaluate the expansion opportunities at Lumwana and Zaldivar. The copper assets now report to a new senior leadership team led by a CBU President, Mark Fisher. Mr. Fisher and his team will focus exclusively on optimizing the copper business. "Mark has been an exceptional leader at various large scale Barrick operations and has over 30 years of global mining experience," said Jamie Sokalsky. "I am confident that this new team is best positioned to maximize the value of the copper assets in the CBU through the realization of operational efficiencies and synergies, and its dedicated focus on managing all aspects of this significant business."
The Zaldivar copper mine in Chile produced 66 million pounds at C1 cash costs of $1.63 per pound in the third quarter. The Lumwana mine in Zambia produced 45 million pounds of copper at C1 cash costs of $2.90 per pound.
Expected 2012 production for Lumwana is 155-165 million pounds, within prior guidance of 145-165 million pounds, at previously guided C1 cash costs of $3.30-$3.50 per pound. In the second quarter of 2012, we determined the need to advance a number of key initiatives in an effort to achieve better longer-term results. The migration to an owner maintained operation to improve maintenance practices and equipment availability is progressing. Additional staffing and training is underway and maintenance technicians have been redeployed from other sites to assist with the transition. Infrastructure improvements to help mitigate the impact of the annual rainy season have been completed.
Overall higher grades at Lumwana are expected in 2013, with production anticipated to be about 250 million pounds at lower C1 cash costs. The scale of the Chimiwungo ore body is expected to allow for more productive mining and it will be the primary future supply of ore for the operation. Exploration results to date continue to confirm the upside potential of Chimiwungo. We are nearing completion of a substantial in-fill drilling program to provide a more precise model of the ore body for mine planning purposes. We continue to expect completion of these programs at the end of the year and the results will form the basis for an updated resource base and life-of-mine plan. They will also be incorporated into a prefeasibility study on the expansion opportunity for Lumwana, which has the potential to double processing rates.
At the recently constructed Jabal Sayid copper mine, a dedicated EPCM team is working toward achieving full compliance with standards for safety and security in order to commence production. During the quarter, the company was notified the operation is not in compliance with standards for safety and security in Saudi Arabia. The previous owner originally designed the mine in compliance with Western Australia standards. The operation is currently expected to achieve full compliance in 2014, at which time production will start. Initial testing has been completed and about 440,000 tonnes of ore at an average grade of 2.25% copper have been stockpiled to date. Average annual production from Jabal Sayid is expected to be 100-130 million pounds at C1 cash costs of $1.50-$1.70 per pound(7) in its first full five years of operation. Total project capital expenditures are still anticipated to be about $400 million(8).
The company has floor protection on approximately 60 percent of its expected copper production for the remainder of 2012 at an average floor price of $3.75 per pound(9) and has full participation to any upside in copper prices.
COST MANAGEMENT
Barrick continues to employ key risk management strategies, which have helped manage our cost exposures, maximize margins and give predictability to our earnings.
The largest currency exposure for the company is the Australian dollar/US dollar exchange rate. During the quarter, with the Australian dollar trading at historically elevated levels against the US dollar, and based on our currency outlook, the company opportunistically unwound approximately AUD$2.6 billion of our Australian dollar hedges at an average spot price of $1.05. We realized net cash proceeds of approximately $0.5 billion upon the settlement of these contracts in the third quarter. The corresponding accounting gains will be recognized in the consolidated statement of income based on the original hedge contract maturity dates, which are between 2012 and 2014, with locked-in gains of approximately $90 million, $280 million, and $110 million positively impacting our total reported cash costs per ounce in Q4 2012, 2013 and 2014, respectively. For the remainder of 2012, every $0.01 movement in the Australian dollar will have a $2 per ounce impact on our consolidated total cash costs. As of the end of the third quarter, the company continues to have approximately AUD$1.8 billion hedged, primarily in 2014-2016, at an average rate of about $0.92.
The company has largely mitigated the direct impact of higher crude oil prices through the use of financial contracts and production from Barrick Energy. The contribution from Barrick Energy, along with the financial contracts, provides hedge protection for approximately 75 percent of the expected remaining 2012 fuel consumption.
EXPLORATION UPDATE
The 2012 exploration guidance is $450-$490 million(10). We have over 100 exploration drill rigs operating globally, with over one third of these at Goldrush and Lumwana.
In Nevada, over 50 drill rigs are currently operating, 12 of which are located at Goldrush. Drilling continues to expand the footprint. The mineralized corridor has now almost doubled, delineated along seven kilometers in strike length. The scale and continuity of the system, and the extent of high grade zones being defined, is providing multiple development scenarios. Based on results to date, we expect significant increases in the already defined indicated and inferred resources by the end of 2012.
At Lumwana, the full contingent of 25 exploration drill rigs is operating at Chimiwungo. As the in-fill drilling program nears completion, results are expected to increase reserves by the end of 2012.
PROJECT UPDATE
Pueblo Viejo
During the third quarter, Pueblo Viejo poured first gold on schedule and within capital guidance of $3.6-$3.8 billion (100% basis). The company's 60 percent 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 $300-$350 per ounce(11).
The mine is ramping up to commercial production, which is expected in December 2012. Pueblo Viejo is anticipated to produce about 80,000 ounces of gold to Barrick in 2012, however, actual results will vary depending on how the ramp up progresses.
As part of planned start up activities, the first three autoclaves have been tested at 50 percent to 100 percent of design capacity, with results that are in line with expectations for the initial ramp up period. The fourth autoclave is currently undergoing pre-commissioning testing, prior to planned commissioning in the fourth quarter. Construction of the tailings starter dam achieved its full height of 182.5 meters and the oxygen plant has been commissioned. Over 2.0 million contained ounces of gold have been stockpiled to date. The operations staff have been hired and trained by experienced personnel from our North America RBU.
Construction progress also continued on a 215 MW dual fuel power plant at an estimated net incremental cost of approximately $300 million (100 percent basis) or $180 million (Barrick's 60 percent share). The power plant is expected to commence operations in 2013 utilizing heavy fuel oil, but have the ability to subsequently transition to lower cost liquid natural gas.
Pascua-Lama
Pascua-Lama is expected to be one of the world's largest, lowest cost mines and, once in production, is expected to contribute significant free cash flow to the company for many years to come.
During the third quarter, we strengthened the project management and construction teams, and made significant progress in a number of key areas:
-- commenced transfer of project management from Barrick to Fluor, the
leading global EPCM contractor that successfully managed our recently
completed Pueblo Viejo project;
-- reorganized and strengthened the Barrick project team, including a new
project director and the hiring of experienced construction industry
experts to improve the oversight and leadership of the project;
-- increased the quantity and quality of skilled labor, with approximately
1,900 new hires over the past quarter primarily from the province of San
Juan and the rest of Argentina;
-- advanced review of all major contracts, material quantities and prices,
unit costs, installation rates and productivity; and
-- progressed a detailed review of project schedule, including related
logistics (e.g. transportation, camps).
To date, approximately $3.7 billion has been spent. The tunnel is approximately 60 percent complete and 90 percent of the required material and equipment for the process plant has been committed. Plans are progressing to increase the camp capacity to provide additional project construction flexibility.
As disclosed with Barrick's second quarter report, preliminary results of a review indicated an increase in capital costs to $7.5-$8.0 billion and a delay in first production to mid-2014. Since then, the company has been working with Fluor to carry out a more comprehensive top-to-bottom review. This review will be complete by our 2012 year-end results release; however, work to date suggests capital costs will be closer to $8.0-$8.5 billion, with first production in the second half of 2014.
Delays in the earthworks and underground works for the process plant are the main reason for the shift in schedule to the second half of 2014. The indicated increase in capital costs is split, roughly evenly, among: i) the impact of the delay of first gold to the second half of 2014; ii) increased labor hours and installation rates after being reviewed in more detail with Fluor during this quarter; and iii) incremental payments to Fluor to assume project and additional construction management, as well as increased incentives for Fluor and other contractors to come in on time and on budget.
Pascua-Lama is a world class resource of nearly 18 million ounces of proven and probable gold reserves and 676 million ounces of silver contained within the gold reserves and a mine life of 25 years. It is expected to produce an average of 800,000-850,000 ounces of gold and 35 million ounces of silver in its first full five years of production. Expected total cash costs remain in the range of $0 to negative $150 per ounce(12) using a silver price assumption of $25 per ounce. The company expects to update production and total cash cost guidance for Pascua-Lama with its year-end 2012 results.
2012 OUTLOOK
Barrick expects 2012 gold production of 7.3-7.5 million ounces, within its original guidance of 7.3-7.8 million ounces.
Total cash costs for gold are anticipated to be $575-$585 per ounce, compared to the previous guidance of $550-$575 per ounce, primarily as a result of higher cash costs from Australia Pacific and ABG. Net cash costs are expected to be $480-$500 per ounce, within the previous guidance of $460-$500 per ounce.
Full year 2012 copper production is expected to be about 450 million pounds, as a result of the delay in first production at Jabal Sayid. C1 cash costs in 2012 are still anticipated to be $2.10-$2.30 per pound.
DISCIPLINED CAPITAL ALLOCATION FRAMEWORK
Barrick's renewed focus on maximizing shareholder value will be achieved through a disciplined approach to capital allocation based on maximizing returns on investment and free cash flow. Under this approach, all capital allocation options, which include organic investment in exploration and projects, and acquisitions or divestitures to improve the quality of our portfolio, will be assessed on the basis of maximizing risk-adjusted returns. Our increased emphasis on free cash flow will position the company, in the future, with the potential to return more capital to shareholders, repay debt, and make additional attractive return investments to upgrade our portfolio.
In June 2012, we initiated a full review of our operations and projects. This portfolio review is an on-going, dynamic process. Cost control is also a vital part of this review and an integral component of our capital allocation framework. The company has been reviewing company-wide costs and evaluating ways to reduce these, including sustaining capital and general and administrative expenses.
Barrick has made significant progress in support of its renewed focus on disciplined capital allocation. In the second quarter:
-- The company cut or deferred about $3 billion in capex that was budgeted
over a four year period as a result of recalibrating longer-term
production to higher quality, more profitable levels.
-- Annual gold production is expected to be about 8 million ounces by
2016.
-- Annual copper production is expected to be about 600 million pounds
by 2015 with the opportunity to increase to more than 1 billion
pounds if we proceed with the Zaldivar sulfides and Lumwana
expansions.
During the third quarter:
-- Barrick cut or deferred about $1.0 billion in capex from the initial
sustaining and minesite expansion budget for 2013 as a result of the
company's on-going portfolio review and cost control focus. Despite
additional spending at Pascua-Lama, and continued inflationary industry
cost pressures, Barrick expects 2013 capex to be largely in line
with 2012.
-- Barrick confirmed it entered into discussions with China National Gold
Group related to the potential sale of its 73.9% equity holding in ABG,
which is in line with the focus on portfolio optimization.
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 net earnings per share, adjusted
operating cash flow, gold total cash costs and net cash costs per
ounce, gold total cash margins and net cash margins per ounce, C1 cash
costs and C1 cash margins per pound are non-GAAP financial measures.
See pages 42-47 of Barrick's Q3 2012 Report. See page 42 of Barrick's
Q3 2012 report for a change to the definition of adjusted operating
cash flow.
(2) All production numbers for Barrick, including expectations for the
longer-term outlook, are inclusive of the company's 73.9% equity
interest in ABG.
(3) Based on an assumed realized copper price of $3.50/lb for Q4 2012.
(4) Based on gold and WTI oil price assumptions of $1,300/oz and $90/bbl,
respectively. Does not include escalation for future inflation.
(5) Based on Barrick's share of the estimated combined average annual
production in the first full five years of operation.
(6) EBITDA and realized gold price per ounce are non-GAAP financial
measures. See pages 42-47 of Barrick's Q3 2012 Report.
(7) Does not include escalation for future inflation.
(8) Does not include escalation for future inflation.
(9) The average realized price on total 2012 production is expected to be
reduced by approximately $0.17 per pound as a result of the net
premium paid for these positions.
(10) Barrick's exploration programs are designed and conducted under the
supervision of Robert Krcmarov, Senior Vice President, Global
Exploration of Barrick.
(11) Based on gold and WTI oil price assumptions of $1,300/oz and $90/bbl,
respectively. Does not include escalation for future inflation.
(12) First full five year average. Based on gold, silver and WTI oil price
assumptions of $1,300/oz, $25/oz and $90/bbl, respectively, and
assuming a Chilean Peso assumption of 475:1. Inflation escalation
assumptions are as of Q2 2012, and do not include escalation for
future inflation.
Key Statistics
Barrick Gold Corporation Three months ended Nine months ended
(in United States dollars) September 30, September 30,
-------------------------------------------------
(Unaudited) 2012 2011 2012 2011
----------------------------------------------------------------------------
Operating Results
Gold production (thousands
of ounces)(1) 1,779 1,928 5,402 5,862
Gold sold (thousands of
ounces) 1,792 1,908 5,265 5,685
Per ounce data
Average spot gold price $ 1,652 $ 1,702 $ 1,652 $ 1,534
Average realized gold
price(2) 1,655 1,743 1,652 1,550
Net cash costs(2) 537 323 501 322
Total cash costs(2) 592 453 584 445
Depreciation(3) 190 153 184 149
Other(4) 11 16 12 16
Total production costs 793 622 780 610
Copper credits 55 130 83 123
Copper production (millions
of pounds) 112 140 338 308
Copper sold (millions of
pounds) 84 146 318 309
Per pound data
Average spot copper price $ 3.50 $ 4.07 $ 3.61 $ 4.20
Average realized copper
price(2) 3.52 3.54 3.59 3.87
C1 cash costs(2) 2.33 1.83 2.22 1.60
Depreciation(3) 0.53 0.29 0.50 0.27
Other(5) 0.42 0.58 0.22 0.34
C3 fully allocated
costs(2) 3.28 2.70 2.94 2.21
----------------------------------------------------------------------------
Financial Results
(millions)
Revenues $ 3,436 $ 3,971 $ 10,358 $ 10,474
Net earnings(6) 618 1,365 2,397 3,525
Adjusted net earnings(2) 849 1,379 2,719 3,500
EBITDA(2) 1,499 2,460 5,010 6,378
Operating cash flow 1,732 1,902 3,767 4,091
Adjusted operating cash
flow(2) 1,267 2,004 3,404 4,381
Per Share Data (dollars)
Net earnings (basic) 0.62 1.37 2.40 3.53
Adjusted net earnings
(basic)(2) 0.85 1.38 2.72 3.50
Net earnings (diluted) 0.62 1.36 2.40 3.52
Weighted average basic
common shares (millions) 1,001 999 1,001 999
Weighted average diluted
common shares
(millions)(7) 1,001 1,001 1,001 1,001
----------------------------------------------------------------------------
As at As at
September 30, December 31,
---------------------------
2012 2011
----------------------------------------------------------------------------
Financial Position
(millions)
Cash and equivalents $ 2,530 $ 2,745
Non-cash working capital 2,890 2,335
Adjusted debt(2) 13,681 13,058
Net debt(2) 11,169 10,320
Average shareholders'
equity 24,268 21,418
----------------------------------------------------------------------------
(1) Production includes our equity share of gold production at Highland Gold
up to April 26, 2012, the effective date of our sale of Highland Gold.
(2) Realized price, net cash costs, total cash costs, C1 cash costs, C3
fully allocated costs, adjusted net earnings, EBITDA, adjusted operating
cash flow, adjusted debt, and net debt are non-GAAP financial
performance measures with no standard definition under IFRS. See pages
42-47 of the Company's MD&A.
(3) Represents equity depreciation expense divided by equity ounces of gold
sold or pounds of copper sold.
(4) Represents the Barrick Energy gross margin divided by equity ounces of
gold sold.
(5) For a breakdown, see reconciliation of cost of sales to C1 cash costs
and C3 fully allocated costs per pound on page 45 of the Company's MD&A.
(6) Net earnings represents net income attributable to the equity holders of
the Company.
(7) Fully diluted includes dilutive effect of stock options.
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) 2012 2011 2012 2011 2012 2011 2012 2011
------------------------------- -------------- -------------- --------------
Gold
North America 795 836 2,537 2,621 $ 508 $ 415 $ 506 $ 405
South America 394 475 1,172 1,426 440 358 437 358
Australia
Pacific 481 472 1,352 1,394 815 609 804 601
African Barrick
Gold(1) 109 135 329 391 965 687 946 666
Other(2) - 10 12 30 - - - -
----------------------------------------------------------------------------
Total 1,779 1,928 5,402 5,862 $ 592 $ 453 $ 584 $ 445
----------------------------------------------------------------------------
Copper Production
(attributable pounds)
(Millions) C1 Cash Costs ($/lb)
----------------------------- -----------------------------
Three months Nine months Three months Nine months
ended ended ended ended
September 30, September 30, September 30, September 30,
-------------- -------------- -------------- --------------
(Unaudited) 2012 2011 2012 2011 2012 2011 2012 2011
----------------------------------------------------------------------------
Total 112 140 338 308 $ 2.33 $ 1.83 $ 2.22 $ 1.60
----------------------------------------------------------------------------
Total Gold Production Costs ($/oz)
-------------------------------------------
Three months ended Nine months ended
September 30, September 30,
---------------------- --------------------
(Unaudited) 2012 2011 2012 2011
------------------------------------------------------- --------------------
Direct mining costs at market
foreign exchange rates $ 617 $ 500 $ 618 $ 493
Gains realized on currency
hedge and commodity
hedge/economic hedge contracts (46) (58) (48) (53)
Other(3) (11) (16) (12) (16)
By-product credits (16) (18) (17) (18)
Copper credits (55) (130) (83) (123)
----------------------------------------------------------------------------
Cash operating costs, net basis 489 278 458 283
Royalties 48 45 43 39
----------------------------------------------------------------------------
Net cash costs(4) 537 323 501 322
Copper credits 55 130 83 123
----------------------------------------------------------------------------
Total cash costs(4) 592 453 584 445
Depreciation 190 153 184 149
Other(3) 11 16 12 16
----------------------------------------------------------------------------
Total production costs $ 793 $ 622 $ 780 $ 610
----------------------------------------------------------------------------
Total Copper Production Costs ($/lb)
---------------------------------------
Three months ended Nine months ended
September 30, September 30,
-------------------- ------------------
(Unaudited) 2012 2011 2012 2011
--------------------------------------------------------- ------------------
C1 cash costs(4) $ 2.33 $ 1.83 $ 2.22 $ 1.60
Depreciation 0.53 0.29 0.50 0.27
Other(5) 0.42 0.58 0.22 0.34
----------------------------------------------------------------------------
C3 fully allocated costs(4) $ 3.28 $ 2.70 $ 2.94 $ 2.21
----------------------------------------------------------------------------
(1) Figures relating to African Barrick Gold are presented on a 73.9% basis,
which reflects our equity share of production.
(2) Includes our equity share of gold production at Highland Gold up to
April 26, 2012, the effective date of our sale of Highland Gold.
(3) Represents the Barrick Energy gross margin divided by equity ounces of
gold sold.
(4) Total cash costs, net cash costs, C1 cash costs and C3 fully allocated
costs are non-GAAP financial performance measures with no standard
meaning under IFRS. See pages 44-45 of the Company's MD&A.
(5) For a breakdown, see reconciliation of cost of sales to C1 cash costs
and C3 fully allocated costs per pound on page 45 of the Company's MD&A.
Consolidated Statements of Income
Barrick Gold Corporation
(in millions of United States
dollars, except per share data) Three months ended Nine months ended
(Unaudited) September 30, September 30,
----------------------------------------------------------------------------
2012 2011 2012 2011
----------------------------------------------------------------------------
Revenue (notes 4 and 5) $ 3,436 $ 3,971 $ 10,358 $ 10,474
----------------------------------------------------------------------------
Costs and expenses
Cost of sales (notes 4 and 6) 1,825 1,694 5,425 4,534
Corporate administration 45 43 134 123
Exploration and evaluation (note 7) 108 94 306 248
Other expense (note 9A) 142 135 359 391
Impairment charges (note 9B) 152 19 274 23
----------------------------------------------------------------------------
2,272 1,985 6,498 5,319
Other income (note 9C) 4 76 41 238
Income (loss) from equity investees
(note 13) (3) 8 (9) 13
Gain (loss) on non-hedge derivatives
(note 17D) (75) 32 (75) 8
----------------------------------------------------------------------------
Income before finance items and
income taxes 1,090 2,102 3,817 5,414
Finance items (note 10)
Finance income 3 3 9 10
Finance costs (33) (68) (133) (148)
----------------------------------------------------------------------------
Income before income taxes 1,060 2,037 3,693 5,276
Income tax expense (note 11) (438) (654) (1,278) (1,698)
----------------------------------------------------------------------------
Net income $ 622 $ 1,383 $ 2,415 $ 3,578
----------------------------------------------------------------------------
Attributable to:
Equity holders of Barrick Gold
Corporation $ 618 $ 1,365 $ 2,397 $ 3,525
Non-controlling interests (note 21) $ 4 $ 18 $ 18 $ 53
----------------------------------------------------------------------------
Earnings per share data attributable
to the equity holders of Barrick
Gold Corporation (note 8)
Net income
Basic $ 0.62 $ 1.37 $ 2.40 $ 3.53
Diluted $ 0.62 $ 1.36 $ 2.40 $ 3.52
----------------------------------------------------------------------------
The notes to these unaudited interim financial statements, which are
contained in the Third Quarter Report 2012 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 States Three months ended Nine months ended
dollars) (Unaudited) September 30, September 30,
----------------------------------------------------------------------------
2012 2011 2012 2011
----------------------------------------------------------------------------
Net income $ 622 $ 1,383 $ 2,415 $ 3,578
Other comprehensive income (loss),
net of taxes
Unrealized gains (losses) on
available-for-sale ("AFS")
financial securities, net of tax
$2, $10, $1, $7 13 (75) (24) (70)
Realized (gains) losses and
impairments on AFS financial
securities, net of tax $nil, $1,
$2, $6 1 (6) 29 (50)
Unrealized gains (losses) on
derivatives designated as cash flow
hedges, net of tax $16, $4, $14,
$17 82 (162) 141 165
Realized (gains) on derivatives
designated as cash flow hedges, net
of tax $25, $3, $70, $49 (81) (124) (240) (300)
Currency translation adjustments,
net of tax $nil, $nil, $nil, $nil 36 (94) 37 (61)
----------------------------------------------------------------------------
Total other comprehensive income
(loss) 51 (461) (57) (316)
----------------------------------------------------------------------------
Total comprehensive income $ 673 $ 922 $ 2,358 $ 3,262
----------------------------------------------------------------------------
Attributable to:
Equity holders of Barrick Gold
Corporation $ 669 $ 904 $ 2,340 $ 3,209
Non-controlling interests $ 4 $ 18 $ 18 $ 53
----------------------------------------------------------------------------
The notes to these unaudited interim financial statements, which are
contained in the Third Quarter Report 2012 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 Three months ended Nine months ended
dollars) (Unaudited) September 30, September 30,
----------------------------------------------------------------------------
2012 2011 2012 2011
----------------------------------------------------------------------------
OPERATING ACTIVITIES
Net income $ 622 $ 1,383 $ 2,415 $ 3,578
Adjusted for the following items:
Depreciation 413 376 1,211 1,017
Finance costs (excludes accretion) 22 52 92 108
Impairment charges (note 9B) 152 19 274 23
Income tax expense (note 11) 438 654 1,278 1,698
Increase in inventory (282) (199) (615) (455)
Proceeds from settlement of
Australian dollar hedge contracts 465 - 465 -
(Gain) loss on non-hedge
derivatives 75 (32) 75 (8)
(Gain) on sale of long-lived
assets/investments 2 (69) (18) (225)
Other (note 12A) 81 243 (120) (45)
----------------------------------------------------------------------------
Operating cash flows before interest
and income taxes 1,988 2,427 5,057 5,691
Interest paid (6) (55) (73) (106)
Income taxes paid (250) (470) (1,217) (1,494)
----------------------------------------------------------------------------
Net cash provided by operating
activities 1,732 1,902 3,767 4,091
----------------------------------------------------------------------------
INVESTING ACTIVITIES
Property, plant and equipment
Capital expenditures (note 4) (1,561) (1,514) (4,458) (3,653)
Sales proceeds 5 15 14 48
Acquisitions (note 3) - (337) (15) (7,677)
Investments
Purchases - (63) - (72)
Sales 2 9 169 80
Other investing activities (note
12B) (52) (21) (212) (158)
----------------------------------------------------------------------------
Net cash used in investing
activities (1,606) (1,911) (4,502) (11,432)
----------------------------------------------------------------------------
FINANCING ACTIVITIES
Proceeds on exercise of stock
options 1 10 6 41
Long-term debt
Proceeds - - 2,000 6,659
Repayments - (16) (1,446) (365)
Dividends (200) (119) (550) (359)
Funding from non-controlling
interests 132 119 390 298
Deposit on silver sale agreement 137 138 137 138
Other financing activities (note
12C) - (2) (25) (67)
----------------------------------------------------------------------------
Net cash provided by (used in)
financing activities 70 130 512 6,345
----------------------------------------------------------------------------
Effect of exchange rate changes on
cash and equivalents 4 (19) 8 (7)
----------------------------------------------------------------------------
Net increase (decrease) in cash and
equivalents 200 102 (215) (1,003)
Cash and equivalents at beginning of
period (note 17A) 2,330 2,863 2,745 3,968
----------------------------------------------------------------------------
Cash and equivalents at end of
period (note 17A) $ 2,530 $ 2,965 $ 2,530 $ 2,965
----------------------------------------------------------------------------
The notes to these unaudited interim financial statements, which are
contained in the Third Quarter Report 2012 available on our website are an
integral part of these consolidated financial statements.
Consolidated Balance Sheets
Barrick Gold Corporation
(in millions of United States dollars) As at As at
(Unaudited) September 30, December 31,
----------------------------------------------------------------------------
2012 2011
----------------------------------------------------------------------------
ASSETS
Current assets
Cash and equivalents (note 17A) $ 2,530 $ 2,745
Accounts receivable 361 426
Inventories (note 14) 2,851 2,498
Other current assets 632 876
----------------------------------------------------------------------------
Total current assets 6,374 6,545
Non-current assets
Equity in investees (note 13) 255 440
Other investments 98 161
Property, plant and equipment (note 15) 32,412 28,979
Goodwill (note 16) 9,629 9,626
Intangible assets 453 569
Deferred income tax assets 378 409
Non-current portion of inventory (note 14) 1,553 1,153
Other assets 932 1,002
----------------------------------------------------------------------------
Total assets $ 52,084 $ 48,884
----------------------------------------------------------------------------
LIABILITIES AND EQUITY
Current liabilities
Accounts payable 2,260 2,083
Debt (note 17B) 1,299 196
Current income tax liabilities 148 306
Other current liabilities 257 326
----------------------------------------------------------------------------
Total current liabilities 3,964 2,911
Non-current liabilities
Debt (note 17B) 12,642 13,173
Provisions (note 19) 2,522 2,326
Deferred income tax liabilities 4,299 4,231
Other liabilities (note 18) 907 689
----------------------------------------------------------------------------
Total liabilities 24,334 23,330
----------------------------------------------------------------------------
Equity
Capital stock (note 20) 17,911 17,892
Retained earnings 6,409 4,562
Accumulated other comprehensive income 538 595
Other 314 314
----------------------------------------------------------------------------
Total equity attributable to Barrick Gold
Corporation shareholders 25,172 23,363
Non-controlling interests (note 21) 2,578 2,191
----------------------------------------------------------------------------
Total equity 27,750 25,554
----------------------------------------------------------------------------
Contingencies and commitments (notes 14, 15 and
22)
----------------------------------------------------------------------------
Total liabilities and equity $ 52,084 $ 48,884
----------------------------------------------------------------------------
The notes to these unaudited interim financial statements, which are
contained in the Third Quarter Report 2012 available on our website are an
integral part of these consolidated financial statements.
Consolidated Statements of Changes in Equity
------------------------------------
Attributable to equity holders of
Barrick Gold Corporation the company
----------------------------------------------------------------------------
Accumulated
(in millions of Common other
United States Shares (in Capital Retained comprehensive
dollars) (Unaudited) thousands) stock earnings income
----------------------------------------------------------------------------
At January 1, 2012 1,000,423 $ 17,892 $ 4,562 $ 595
----------------------------------------------------------------------------
Net income - - 2,397 -
Total other comprehensive
income (loss) - - - (57)
----------------------------------------------------------------------------
Total comprehensive income - - 2,397 (57)
----------------------------------------------------------------------------
Transactions with owners
Dividends - - (550) -
Issued on exercise of
stock options 204 6 - -
Recognition of stock
option expense - 13 - -
Funding from non-
controlling interests - - - -
Other decrease in non-
controlling interests - - - -
----------------------------------------------------------------------------
Total transactions with
owners 204 19 (550) -
----------------------------------------------------------------------------
At September 30, 2012 1,000,627 $ 17,911 $ 6,409 $ 538
----------------------------------------------------------------------------
----------------------------------------------------------------------------
At January 1, 2011 998,500 $ 17,820 $ 609 $ 729
----------------------------------------------------------------------------
Net income - - 3,525 -
Total other comprehensive
income - - - (316)
----------------------------------------------------------------------------
Total comprehensive income - - 3,525 (316)
----------------------------------------------------------------------------
Transactions with owners
Dividends - - (359) -
Issued on exercise of
stock options 1,295 41 - -
Recognition of stock
option expense - 12 - -
Funding from non-
controlling interests - - - -
Other increase in non-
controlling interests - - - -
----------------------------------------------------------------------------
Total transactions with
owners 1,295 53 (359) -
----------------------------------------------------------------------------
At September 30, 2011 999,795 $ 17,873 $ 3,775 $ 413
----------------------------------------------------------------------------
Consolidated Statements of Changes in Equity
------------------------
Attributable to equity
Barrick Gold Corporation holders of the company
----------------------------------------------------
Total equity
(in millions of attributable Non-
United States Other to controlling Total
dollars) (Unaudited) (1) shareholders interests equity
----------------------------------------------------------------------------
At January 1, 2012 $ 314 $ 23,363 $ 2,191 $ 25,554
----------------------------------------------------------------------------
Net income - 2,397 18 2,415
Total other comprehensive
income (loss) - (57) - (57)
----------------------------------------------------------------------------
Total comprehensive income - 2,340 18 2,358
----------------------------------------------------------------------------
Transactions with owners
Dividends - (550) - (550)
Issued on exercise of
stock options - 6 - 6
Recognition of stock
option expense - 13 - 13
Funding from non-
controlling interests - - 390 390
Other decrease in non-
controlling interests - - (21) (21)
----------------------------------------------------------------------------
Total transactions with
owners - (531) 369 (162)
----------------------------------------------------------------------------
At September 30, 2012 $ 314 $ 25,172 $ 2,578 $ 27,750
----------------------------------------------------------------------------
----------------------------------------------------------------------------
At January 1, 2011 $ 314 $ 19,472 $ 1,745 $ 21,217
----------------------------------------------------------------------------
Net income - 3,525 53 3,578
Total other comprehensive
income - (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 increase in non-
controlling interests - - (7) (7)
----------------------------------------------------------------------------
Total transactions with
owners - (306) 291 (15)
----------------------------------------------------------------------------
At September 30, 2011 $ 314 $ 22,375 $ 2,089 $ 24,464
----------------------------------------------------------------------------
(1) Includes additional paid-in capital as at September 30, 2012: $276
million (December 31, 2011: $276 million; September 30, 2011: $276 million)
and convertible borrowings - equity component as at September 30, 2012: $38
million (December 31, 2011: $38 million; September 30, 2011: $38 million).
The notes to these unaudited interim financial statements, which are
contained in the Third Quarter Report 2012 available on our website are an
integral part of these consolidated financial statements.
CORPORATE OFFICE TRANSFER AGENTS AND REGISTRARS
Barrick Gold Corporation CIBC Mellon Trust Company
Brookfield Place, TD Canada Trust c/o Canadian Stock Transfer Company
Tower Inc.,
Suite 3700 as administrative agent
161 Bay Street, P.O. Box 212 P.O. Box 700, Postal Station B
Toronto, Canada M5J 2S1 Montreal, Quebec, Canada H3B 3K3
Tel: (416) 861-9911 or American Stock Transfer
Fax: (416) 861-0727 & Trust Company, LLC
Toll-free throughout North America: 6201 - 15 Avenue
1-800-720-7415 Brooklyn, NY 11219
Email: investor@barrick.com Tel: (416) 682-3860
Website: www.barrick.com Fax: (514) 985-8843
Toll-free throughout North America:
Tel: 1-800-387-0825
SHARES LISTED Fax: 1-888-249-6189
ABX - The New York Stock Exchange Email: inquiries@canstockta.com
The Toronto Stock Exchange Website: www.canstockta.com
CAUTIONARY STATEMENT ON FORWARD-LOOKING INFORMATION
Certain information contained or incorporated by reference in this Third Quarter Report 2012, including any information as to our strategy, projects, plans or future financial or operating performance, constitutes "forward-looking statements". All statements, other than statements of historical fact, are forward-looking statements. The words "believe", "expect", "anticipate", "contemplate", "target", "plan", "intend", "continue", "budget", "estimate", "may", "will", "schedule" and similar expressions identify forward-looking statements. Forward-looking statements are necessarily based upon a number of estimates and assumptions that, while considered reasonable by the company, are inherently subject to significant business, economic and competitive uncertainties and contingencies. Known and unknown factors could cause actual results to differ materially from those projected in the forward-looking statements. Such factors include, but are not limited to: fluctuations in the spot and forward price of gold and copper or certain other commodities (such as silver, diesel fuel and electricity); diminishing quantities or grades of reserves; the impact of inflation; changes in national and local government legislation, taxation, controls, regulations, expropriation or nationalization of property and political or economic developments in Canada, the United States and other jurisdictions in which the company does or may carry on business in the future; 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;
fluctuations in the currency markets; changes in U.S. dollar interest rates; risks arising from holding derivative instruments; risk of loss due to acts of war, terrorism, sabotage and civil disturbances; business opportunities that may be presented to, or pursued by, the company; the ability of the company to successfully integrate acquisitions or complete divestitures; operating or technical difficulties in connection with mining or development activities; employee relations; availability and increased costs associated with mining inputs and labor; increased costs and technical challenges associated with the construction of capital projects; litigation; the speculative nature of mineral exploration and development, including the risks of obtaining necessary licenses and permits; adverse changes in our credit rating; contests over title to properties, particularly title to undeveloped properties; 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 or copper cathode 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 Third Quarter Report 2012 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.
Contacts:
INVESTOR CONTACT: Greg Panagos
Senior Vice President
Investor Relations and Communications
(416) 309-2943
gpanagos@barrick.com
MEDIA CONTACT: Andy Lloyd
Director, Media Relations
(416) 307-7414
alloyd@barrick.com
