Barrick Reports First Quarter 2014 Results

TORONTO, ONTARIO--(Marketwired - Apr 30, 2014) - Barrick Gold Corp. (NYSE:ABX) (TSX:ABX) (Barrick or the company) today reported first quarter net earnings of $88 million ($0.08 per share). Adjusted net earnings were $238 million ($0.20 per share). Operating cash flow and adjusted operating cash flow was $585 million.

"Barrick is a considerably different company today than it was a year ago - leaner, stronger and more financially flexible. Our first quarter all-in sustaining costs of $833 per ounce, $100 per ounce below the prior year quarter, demonstrate that our efforts to reduce costs are delivering tangible results," said Jamie Sokalsky, Barrick's President and CEO. "We continue to focus on assets that can generate the most attractive risk-adjusted returns and free cash flow for Barrick and its shareholders, and we are decisively addressing our under-performing operations. It's clear that Barrick's optimized portfolio continues to deliver solid results, and we are pursuing a number of opportunities in Nevada to unlock further value from our high quality asset base."

• Maintaining 2014 gold production guidance and all-in sustaining cost (AISC) guidance, the lowest costs among the senior peer group
• Five core mines produced 0.94 million ounces of gold at an average AISC of $672 per ounce. These mines are expected to contribute about 60 percent of total production in 2014 at an average AISC of $750-$800 per ounce
• On track to achieve run rate for targeted $500 million in annual savings by the end of 2014

• Barrick continues to optimize its portfolio and lower costs. The company has divested non-core assets for a total consideration of over $1 billion since July 2013, including the sale of the Kanowna and Plutonic mines in Australia and its 33 percent stake in the Marigold mine in Nevada in 2014
• Reduced equity interest in African Barrick Gold (ABG) by 10 percent during the quarter, capitalizing on the substantial improvement in ABG's share price in 2014 and creating additional liquidity in ABG
• Completing advanced scenario plans for a range of metal price environments, which will allow Barrick to respond and adapt quickly to changes in market conditions. Options under consideration include preserving cash, downsizing, closing, expanding or accelerating certain operations depending on market conditions. This will result in a more optimized portfolio that maximizes profitability in a lower metal price environment and better positions the company to capitalize on the strength of its asset base in the event of a price recovery

• Cash and cash equivalents of $2.7 billion as at March 31, 2014
• Operating cash flow of $585 million in the first quarter of 2014
• $4.0 billion available under undrawn credit facility extended to January 2019
• $300 million of debt maturing in the next two years, and approximately $1 billion due in the next four years

FINANCIAL DISCUSSION

First quarter 2014 adjusted net earnings were $238 million ($0.20 per share)(1) compared to $923 million ($0.92 per share) in the prior year period. The decrease primarily reflects the impact of lower metal prices and lower gold sales volumes. Net earnings for the first quarter were $88 million ($0.08 per share) compared to net earnings of $847 million ($0.85 per share) in the prior year quarter.

Significant adjusting items for the quarter include:

• $113 million in unrealized foreign currency translation losses
• $30 million in demobilization costs related to the ramp-down of Pascua-Lama
• $18 million in realized and unrealized gains on non-hedge derivative instruments

First quarter operating cash flow of $585 million compares to $1.09 billion in the prior year period. The decrease primarily reflects lower net earnings, partially offset by a decrease in income tax payments. Adjusted operating cash flow of $585 million¹ compares to $1.16 billion in the prior year period.

GOLDRUSH AND OTHER OPPORTUNITIES IN NEVADA

Nevada is a cornerstone of Barrick's success, and a number of growth opportunities are under consideration. The Goldrush project near the Cortez mine is in the pre-feasibility stage and the study remains on schedule for completion in mid-2015. The company is evaluating a number of development options, including underground mining or a combination of both underground and open pit mining. Recent drilling has encountered deep, very high grade mineralization, including an intersection of 103 feet averaging 0.725 ounces per ton, which continues to expand the size and grade potential to the north. Barrick is assessing the feasibility of an exploration decline to better define the existing resource and test for additional mineralization beyond the northern extent of the deposit.

At Cortez Hills, drilling in the Lower Zone is in the final stages of a program to upgrade and expand the resource base. The Lower Zone is characterized by strong and continuous ore zones. Following completion of the scoping study, a pre-feasibility study to evaluate deeper mining below the currently permitted level is expected to be completed by late 2015. Below this level, the Lower Zone is mostly oxide and higher grade than the zones above. Drilling has yet to determine the limits of the Lower Zone and further drilling is planned for the second quarter. Results to date have met or exceeded expectations.

Turquoise Ridge contains over 6.7 million ounces (100 percent basis) in reserves at an average grade of 0.51 ounces per ton, the highest reserve grade deposit in the company's operating portfolio. This exceptional reserve base provides an excellent opportunity to both accelerate and expand production, but the operation is currently restricted by haulage and ventilation constraints. One option being considered is an additional shaft to reduce haulage distances. This could increase production by 75 percent for five to eight years. A pre-feasibility study on this scenario is expected to be completed in late 2014.

The Cortez District continues to yield promising exploration opportunities beyond Goldrush. Barrick has earned a 70 percent interest in the Spring Valley project approximately 60 miles west of Cortez by conducting exploration drilling and scoping activities. The project has advanced to the pre-feasibility stage and could potentially be a new stand-alone gold mine. The company also recently secured the last remaining block of prospective land in the Cortez District. In addition, it has the option to attain a 75 percent interest in the Gold Ridge project, located just north of the Pipeline deposit at Cortez, by completing a scoping study. This is an earlier stage opportunity in a key district which has encouraging geological characteristics.

PASCUA-LAMA RAMP-DOWN ON SCHEDULE

During the fourth quarter of 2013, Barrick announced the temporary suspension of construction at Pascua-Lama, except for activities required for environmental and regulatory compliance. The ramp-down is on schedule for completion by mid-2014 and the majority of demobilization has already occurred. The company expects to incur costs of about $300 million² this year for the ramp-down and environmental and social obligations.

A decision to restart development will depend on improved economics and reduced uncertainty related to legal and regulatory requirements. Remaining development will take place in distinct stages with specific work programs and budgets to facilitate more efficient execution and improved cost control. Barrick continues to explore opportunities to improve the project's risk-adjusted returns, including strategic partnerships or royalty and other income streaming agreements.

INDUSTRY-LEADING EXECUTIVE COMPENSATION PLAN IMPLEMENTED FOR 2014

Barrick's new 2014 executive compensation program fundamentally aligns compensation practices with the long-term interests of shareholders based on the principle of pay-for-performance. Under the revised program, participating executives will be assessed on their collective performance, as measured against a transparent scorecard disclosed to shareholders in advance. The company's long-term scorecard will assess participating executives on eight performance measures including return on invested capital, dividends to shareholders, capital project performance and free cash flow. Scores will be published to shareholders at the end of each year, ensuring transparency.

If earned, a majority of compensation awarded will be long-term in nature, and paid out in units that ultimately convert into Barrick common shares. These shares cannot be sold until a participating executive retires or leaves the company. Shares will be purchased on behalf of participating executives on the open market, resulting in no dilution to shareholders. The company has also adopted new minimum share ownership requirements that are among the highest of any Canadian public company and a Clawback Policy for incentive compensation that goes beyond the yet-to-be implemented requirements of the US Dodd-Frank Act.

OPERATING RESULTS DISCUSSION

Cortez

Cortez is one of the lowest cost, long-life gold assets in the world and is located in the stable and prospective jurisdiction of Nevada. The mine produced 0.23 million ounces at AISC of $648 per ounce in the first quarter on lower grades and recoveries. Production in 2014 is forecast at 0.925-0.975 million ounces. AISC are expected to be $750-$780 per ounce, reflecting lower production and higher sustaining capital related to waste stripping for the next phase of the Cortez Hills open pit.

Goldstrike

Goldstrike produced 0.26 million ounces in the first quarter at AISC of $755 per ounce, reflecting higher than anticipated open pit and underground grades. The autoclave facility is undergoing modifications that will enable Goldstrike to accelerate the cash flow from about 4.0 million stockpiled ounces through the addition of a thiosulfate process. The modified autoclaves are forecast to contribute an average of 0.350-0.450 million ounces of annual production at a similar AISC to the overall operation in the first full five years following implementation of this process. First production is on track for the fourth quarter of 2014. Production at Goldstrike in 2014 is anticipated to be 0.865-0.915 million ounces at AISC of $920-$950 per ounce. In 2015, production is expected to exceed 1.0 million ounces³.

Pueblo Viejo

Barrick's 60 percent share of production from Pueblo Viejo in the first quarter was 0.16 million ounces at AISC of $588 per ounce. The mine is on track to reach full capacity in the first half of 2014 following completion of debottlenecking modifications to the lime circuit. Barrick's share of production in 2014 is anticipated to be 0.600-0.700 million ounces at AISC of $510-$610 per ounce.

Lagunas Norte

Lagunas Norte produced 0.13 million ounces at AISC of $519 per ounce in the first quarter, reflecting lower grades as anticipated in the mine plan. Production for 2014 is forecast at 0.570-0.610 million ounces at AISC of $640-$680 per ounce.

Veladero

Veladero produced 0.16 million ounces in the first quarter. AISC of $811 per ounce benefited from lower costs for fuel and consumables and the devaluation of the Argentine peso. Production in 2014 is anticipated to be 0.650-0.700 million ounces at AISC of $940-$990 per ounce.

North America Portfolio

Barrick's other North American mines consist of Bald Mountain, Round Mountain, Turquoise Ridge, Golden Sunlight, Ruby Hill and Hemlo. This segment produced 0.22 million ounces in the first quarter at AISC of $954 per ounce and is anticipated to produce 0.795-0.845 million ounces in 2014 at AISC of $1,075-$1,100 per ounce.

Australia Pacific

Australia Pacific produced 0.31 million ounces at AISC of $847 per ounce in the first quarter. The Porgera mine contributed 0.11 million ounces at AISC of $955 per ounce. Production for Australia Pacific in 2014 is forecast at 1.000-1.080 million ounces. AISC in 2014 are expected to be $1,050-$1,100 per ounce.

African Barrick Gold (ABG)

First quarter attributable production from ABG was 0.12 million ounces at AISC of $1,131 per ounce. Barrick's share of 2014 production from ABG is now anticipated to be 0.430-0.460 million ounces, reflecting its lower equity interest following the partial divestment in the first quarter. AISC for 2014 continue to be expected at $1,100-$1,175 per ounce.

Global Copper

Copper production in the first quarter was 104 million pounds at C1 cash costs of $2.11 per pound. Lumwana contributed 51 million pounds at C1 cash costs of $2.58 per pound, reflecting the effects of an extended and unusually heavy rainy season. Subsequent to quarter end, a partial collapse of the terminal end of the main conveyor occurred. The company is assessing the cause of the failure, the extent of damage and the time to repair the conveyor in order to resume production. Current estimates are that copper production is likely to resume by the end of the third quarter. In the interim, mining will continue and stockpiled ore will be processed once the plant re-starts. Barrick has comprehensive property and business interruption insurance for Lumwana and believes the incident will not have a material economic impact.

The Zaldívar mine produced 53 million pounds in the first quarter at C1 cash costs of $1.63 per pound. Production is anticipated to be lower in 2014 relative to 2013 on fewer tons mined and processed in line with the mine plan, and due to lower recoveries related to processing a higher percentage of secondary sulfide material. C1 cash costs in 2014 are expected to increase relative to 2013 due to the impact of relatively stable fixed costs spread over lower overall copper production.

Copper production guidance for 2014 has been revised to 410-440 million pounds to reflect the processing disruption at Lumwana. C1 cash cost guidance remains unchanged at $1.90-$2.10 per pound.

¹ Adjusted net earnings and adjusted net earnings per share, adjusted operating cash flow, all-in sustaining costs per ounce, and C1 cash costs per pound are non-GAAP financial performance measures with no standardized definition under IFRS. See pages 36-41 of Barrick's First Quarter 2014 Report.

² About 25 percent is expected to be capitalized. Actual expenditures will be dependent on a number of factors, including environmental and regulatory requirements.

³ Actual results will vary depending on how the ramp-up of the thiosulfate project progresses.

CAUTIONARY STATEMENT ON FORWARD-LOOKING INFORMATION

Certain information contained or incorporated by reference in this First Quarter Report 2014, 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, copper or certain other commodities (such as silver, diesel fuel and electricity); changes in national and local government legislation, taxation, controls or regulations and/or changes in the administration of laws, policies and practices, expropriation or nationalization of property and political or economic developments in Canada, the United States and other jurisdictions in which the Company does or may carry on business in the future; failure to comply with environmental and health and safety laws and regulations; timing of receipt of, or failure to comply with, necessary permits and approvals; diminishing quantities or grades of reserves; increased costs, delays, suspensions and technical challenges associated with the construction of capital projects; the impact of global liquidity and credit availability on the timing of cash flows and the values of assets and liabilities based on projected future cash flows;
adverse changes in our credit rating; the impact of inflation; operating or technical difficulties in connection with mining or development activities; the speculative nature of mineral exploration and development; risk of loss due to acts of war, terrorism, sabotage and civil disturbances; fluctuations in the currency markets; changes in U.S. dollar interest rates; risks arising from holding derivative instruments; litigation; contests over title to properties, particularly title to undeveloped properties, or over access to water, power and other required infrastructure; business opportunities that may be presented to, or pursued by, the company; our ability to successfully integrate acquisitions or complete divestitures; employee relations; availability and increased costs associated with mining inputs and labor; and the organization of our previously held African gold operations and properties under a separate listed company. In addition, there are risks and hazards associated with the business of mineral exploration, development and mining, including environmental hazards, industrial accidents, unusual or unexpected formations, pressures, cave-ins, flooding and gold bullion, copper cathode or gold or copper concentrate losses (and the risk of inadequate insurance, or inability to obtain insurance, to cover these risks). Many of these uncertainties and contingencies can affect our actual results and could cause actual results to differ materially from those expressed or implied in any forward-looking statements made by, or on behalf of, us. Readers are cautioned that forward-looking statements are not guarantees of future performance. All of the forward-looking statements made in this First Quarter Report 2014 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.