UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

Form 6-K

REPORT OF FOREIGN PRIVATE ISSUER

PURSUANT TO RULE 13a-16 OR 15d-16 UNDER THE

SECURITIES EXCHANGE ACT OF 1934

For the month of May 2020

Commission File Number: 1-9059

Barrick Gold Corporation

(Registrant’s name)

Brookfield Place, TD Canada Trust Tower, Suite 3700

161 Bay Street, P.O. Box 212

Toronto, Ontario M5J 2S1 Canada

(Address of principal executive offices)

 

 

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

Form 20-F              Form 40-F  

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):  

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):  


INCORPORATION BY REFERENCE

Exhibit 99.1 to this report on Form 6-K is furnished, not filed, and will not be incorporated by reference into any registration statement.

Exhibit 99.2 to this report on Form 6-K is hereby incorporated by reference into the Registration Statements on Form F-3 (File No. 333-206417), Form S-8 (File No. 333-224560) and Form F-10 (File No. 333-230235).


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

   BARRICK GOLD CORPORATION

Date:    May 6, 2020

 

  

By:

 

 

    /s/ Richie Haddock

         Name: Richie Haddock
         Title:    General Counsel


EXHIBIT INDEX

 

Exhibits

 

Description

99.1   2020 Q1 Report Press Release dated May 6, 2020
99.2   Barrick Gold Corporation’s Comparative Unaudited Financial Statements prepared in accordance with International Financial Reporting Standards and the notes thereto for the three months ended March 31, 2020 and Management’s Discussion and Analysis for the same period.
EX-99.1

Exhibit 99.1

LOGO

Barrick 2020 Q1 Report Toronto, May 6, 2020 — Barrick Gold Corporation (NYSE:GOLD)(TSX:ABX) built on the solid foundation it laid last year with a robust first quarter performance from all operations in the face of the challenges presented by the global Covid-19 pandemic. Q1 gold production and costs were consistent with full year guidance; debt net of cash was reduced by a further 17% from the end of Q4 to $1.85 billion with no significant maturities until 2033; operating cash flow increased to $889 million and free cash flow1 to $438 million from Q4; net earnings per share was 22 cents; adjusted net earnings per share2 was 16 cents; and the quarterly dividend of 7 cents per share was maintained. President and CEO Mark Bristow said operational and financial delivery were on plan despite the fact that the group’s prime focus during the latter part of the quarter had been on ensuring the safety of Barrick’s people, communities and business in the face of the novel coronavirus pandemic, while also coping with the restrictive conditions imposed by governments. “Our sustainability and regional teams have done a great job in taking timely action to introduce comprehensive and carefully considered measures at all our sites and offices to manage and mitigate any impacts of Covid-19 on our employees and contractors. A key focus of this plan is on prevention, and all sites are working actively to head off an outbreak,” he said. Q1Report 2020 4 6 8 CLEAN ENERGY CURBS COSTS EXPLORATION DRIVE EXTENDS ASSET BASE PEERLESS RECORD OF STRATEGIC DELIVERY CONTINUED ON PAGE 2 ALL AMOUNTS EXPRESSED IN US DOLLARS STEPPING UP COVID-19 RESPONSE 3 QUARTERLY $0.07 DIVIDEND MAINTAINED PER SHARE MASSAWA SALE CREATES VALUE FOR ALL STAKEHOLDERS OPERATING CASH FLOW $889MILLION FREE CASH FLOW $438MILLION DEBT %* NET OF CASH TO $1.85 BILLION h17 * QUARTER ON QUARTER BARRICK MAKES SOLID START TO YEAR Prompt and Effective Actions Shield People and Business from Pandemic 1

 


Key Performance Indicators

 

Financial and Operating Highlights

 

       

 

  Financial Results

 

    Q1 2020       Q4 2019       Q1 2019  

  Realized gold price3,4

  ($ per ounce)

    1,589       1,483       1,307  

  Net earnings5

  ($ millions)

    400       1,387       111  

  Adjusted net earnings2

  ($ millions)

    285       300       184  

  Net cash provided by operating

  activities ($ millions)

    889       875       520  

  Free cash flow1

  ($ millions)

    438       429       146  

  Net earnings per share

  ($)

    0.22       0.78       0.06  

  Adjusted net earnings

  per share2 ($)

    0.16       0.17       0.11  

  Total attributable capital

  expenditures6 ($ millions)

    364       393       361  
       

  Operating Results

    Q1 2020       Q4 2019       Q1 2019  

 

  Gold

  Production4

  (000s of ounces)

    1,250       1,439       1,367  

  Cost of sales (Barrick’s share)4,7

  ($ per ounce)

    1,020       1,046       947  

  Total cash costs4,8

  ($ per ounce)

    692       692       631  

  All-in sustaining costs4,8

  ($ per ounce)

    954       923       825  

  Copper

                       

  Production9

  (millions of pounds)

    115       117       106  

  Cost of sales (Barrick’s share)9,10

  ($ per pound)

    1.96       2.26       2.21  

  C1 cash costs9,11

  ($ per pound)

    1.55       1.90       1.66  

  All-in sustaining costs9,11

  ($ per pound)

    2.04       2.82       2.46  

Solid start to the year from all operations

 

Gold production and costs were consistent with full year guidance

 

Debt, net of cash, down a further 17% to $1.85 billion with no significant maturities until 2033

 

Operating Cash Flow increased to $889 million and Free Cash Flow1 to $438 million from Q4

 

Net earnings per share of 22 cents and adjusted net earnings per share2 of 16 cents for the quarter

 

Copper costs per pound significantly lower demonstrating resilience of business

 

Successful completion of Massawa sale creates value for all stakeholders

 

Signing of framework agreement in Tanzania paves way for exporting concentrate

 

Continued focus on safety delivers improvements in injury rates

 

2019 Annual Report highlights ten-year plan as Barrick looks to next phase of value creation

 

Proactive engagement with all stakeholders ensures protection of our people and supports sustainability of the business during Covid-19 pandemic

 

Barrick’s sustainability vision demonstrated by publication of industry-first ESG scorecard

 

Brownfields exploration success points to life of mine extensions

 

Global exploration portfolio expanded with new projects and targets

 

Barrick declares $0.07 quarterly dividend per share

 

 

CONTINUED FROM PAGE 1

“In Barrick’s spirit of partnership, we have extended Covid-19 support to our local communities and our host countries and are working closely with their health authorities. To date we have donated more than $20 million to our host countries, many of whom have limited healthcare facilities, to fund the purchase of medical equipment and PPE.”

Highlights of the quarter included the closing of the sale of the Massawa project, which has created immediate value for all stakeholders, including Barrick. In Tanzania, the signing of the

framework agreement with the government paved the way for the resumption of concentrate exports.

Brownfields exploration continues to replenish reserves depleted by mining while Barrick’s generative exploration programs are identifying new projects and targets, and expanding its global reach. Among other things, Barrick has formed an alliance with Japan Gold, holder of the largest exploration property portfolio in Japan.

Since the end of the quarter, the government of Papua New Guinea has announced that it will not renew Barrick Niugini Limited’s 20-year Special Mining Lease for the Porgera gold

 

 

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mine. Barrick has said it will contest the move, which it regards as tantamount to nationalization without due process. In the meantime, BNL has placed Porgera on temporary care and maintenance. In addition, due to the uncertainty related to the timing and scope of future developments on the mine’s operating outlook, we are withdrawing our full year 2020 guidance for Porgera at this time. As this is a rapidly evolving situation, we will reassess on an ongoing basis and provide further updates in due course, while maintaining operational readiness.

Bristow said regardless of new discoveries, organic growth from its existing asset base — which includes six Tier One gold mines — would sustain Barrick’s recently published ten-year plan that projects annual production of around five million ounces of gold (subject to adjustment based on the outcome of the process with the Government of Papua New Guinea with respect to the Porgera Special Mining Lease extension). A Tier One gold mine is one which has a life of at least 10 years and produces more than 500,000 ounces of gold per annum in the lower half of the industry cost range.

Barrick has also published an industry-first ESG scorecard to transparently report on its performance in terms of health and

safety; social and economic development; human rights; the environment; and governance.

“Overall we scored a B grade, which we believe accurately reflects our improvement in sustainability performance over the year but also acknowledges that there is still some work to be done,” Bristow said.

Conference Call and Webinar

Please join us for an interactive webinar today at 11:00 EDT/ 15:00 UTC to discuss the results.

Webinar

US and Canada, 1 800 319 4610

UK, 0808 101 2791

International, +1 416 915 3239

The webinar will remain on the website for later viewing and the conference call will be available for replay by telephone at 1 855 669 9658 (US and Canada toll-free) and +1 604 674 8052 (international toll), access code 4363.

 

 

LOGO

PRO-ACTIVE PREPARATION, RAPID RESPONSE BUFFER

COVID-19 IMPACT

 

Barrick’s deeply embedded health and safety culture, combined with its flat organizational structure and agile management style, cushioned the initial impact of the coronavirus pandemic on its people, communities and business.

President and CEO Mark Bristow says while crises of one kind or another are endemic in big mining organizations, Covid-19 is a true Black Swan event.

“Fortunately, Barrick had the management capacity to take immediate and effective action based on well-established health and safety resources and procedures. The streamlined corporate structure we introduced last year, the strong regional executive teams we established, and the transfer of greater authority to the operations all contributed to fast decision-making and prompt execution. We could also draw on the experience Randgold gained in dealing with two Ebola outbreaks in Africa,” he says.

 

 

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Group sustainability executive Grant Beringer says Barrick is employing a ‘4 P’ strategy to protect its employees, contractors and communities. The four Ps are Proactive Response, Preparedness, Prevention and Perspective.

Among many other things, these headings cover updating Emergency Response Plans at each site, introducing a Trigger/Threat Action Response Plan and the establishment of Outbreak Control Teams for all mines. Temperature screening is carried out at all access points to the sites and offices, rapid antibody test kits are being rolled out across the group, and social distancing and hygiene protocols have been put in place.

“We believe that education and communication are key components of an effective Covid-19 campaign. Our workforce is regularly updated on the latest developments and our plans. Fact sheets with specific information on symptoms, hygiene and social distancing, designed to prevent scaremongering or self-medication with potentially hazardous substances, have been distributed to everybody at Barrick. Daily situation reports from each region are circulated throughout the organization.”

Beringer says Barrick is also engaging closely with its host authorities and communities to support them in their fight

against the pandemic. To date, Barrick has provided host governments with funding of more than $20 million, mainly to acquire specialized medical equipment. In addition, the company’s operations and subsidiaries have also been individually involved in a number of diverse but effective local charitable initiatives where the need for intervention has been identified.

Barrick has also taken steps to ensure that its operations continue to enjoy an uninterrupted supply chain, proactively engaging with key suppliers to mitigate volatility and uncertainty. With an integrated supply chain stretching over multiple continents, dedicated international logistics partners and strong relationships with key suppliers, Barrick has been afforded the flexibility to deal with the challenges in an agile manner.

“Not only have we focused on remaining active in ensuring we have alternate procurement and logistic arrangements in place, we have also increased the stocks of consumables and other fast moving items at our mines. At the same time, the team has been there to assist in procuring those often scarce PPE and other medical supplies needed by our host countries,” says Barrick’s group supply chain and commercial executive Riaan Grobler.

 

 

LOGO

CLEARING THE AIR, CURBING THE COST

 

Barrick’s clean energy strategy is playing a significant and growing part in reducing the impact of its operations on the environment. At the same time, it is also steadily reducing their cost profile.

Metallurgy, engineering and capital projects executive John Steele says the company is investing in cleaner energy projects across all its operations with the aim of cutting more than 1.5 million tonnes of CO2 per year from their GHG emissions. This marks a major advance in a journey that has taken Barrick and legacy company Randgold from diesel and

 

 

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coal through heavy fuel oil and then to natural gas, hydro electric and solar power.

The group’s second solar power plant is currently being installed at Loulo in Mali. When the 20MW station is commissioned in September this year, it is expected to reduce diesel consumption by 10 million litres and CO2 emissions by 27,000 tonnes per year.

Kibali in the DRC relies mainly on the hydropower generated by its three stations, but in a move to further reduce diesel consumption, a 9MW battery has been installed to provide power surge capacity which is currently supplied by generators. This will reduce the need for thermal power top-ups at an estimated saving of 4.5 million litres of diesel and 8,000 tonnes of CO2 per year. Despite its remote location, the inclusion of seasonal hydro power allows Kibali to deliver power at an annual average of 10 cents per kWh.

Nevada Gold Mines (NGM) has two power generation facilities in northern Nevada with the TS Power Plant in Dunphy and the Western 102 Power Plant outside of Reno. The TS Power Plant began operations in 2008 and has a capacity of 215MW power generation from its original coal-fired process. The Western 102 Power Plant has a capacity of 115MW, supplying power from natural gas fired generators, and a 1MW Solar Facility.

NGM has embarked on a project to replace the last of its coal-powered stations with natural gas to achieve an estimated

annual CO2 saving of 650,000 tonnes. Permit approval is expected in the fourth quarter of this year. NGM has also started a permitting process for a 200MW solar plant. The 100MW first phase of the project is expected to save 130,000 tonnes of CO2 annually.

“Nevada Gold Mines is committed to providing its operations low-cost, secure power generation through northeastern Nevada’s power grid now and into the future. The conversion of NGM’s TS Power Plant and the potential for an additional solar power facility illustrates this commitment while reducing the mines’ carbon emissions,” said Greg Walker, executive managing director, NGM.

In the Dominican Republic, the Quisqueya 1 power plant has been converted to accept natural gas instead of heavy fuel oil. It is expected to cut Pueblo Viejo’s CO2 emissions by 260,000 tonnes per year.

In Latin America, construction of the 23 kilometre cross-Andes powerline, which will link Veladero in Argentina with the Chilean grid, is underway. Sustainable power from the Chilean grid — which globally has the largest percentage of renewable energy in its supply — will replace 25MW of diesel-fired generation on site. This is expected to save 32 million litres of fuel per year, as well as the considerable cost of trucking it up the Andes, and cut CO2 emissions by 83,000 tonnes.

 

 

LOGO

 

BARRICK PUBLISHES INDUSTRY-FIRST ESG SCORECARD

 

Long before ESG became a metric, its principles were embedded in every aspect of Barrick’s and Randgold’s businesses, helping management to make better decisions, de-risk projects, discover new opportunities, maintain a social license and deliver real value to stakeholders.

Following the very comprehensive post-merger Sustainability Report Barrick published last year, this year’s even more detailed report features the mining industry’s first ESG

scorecard. Developed with the assistance of independent sustainability consultants, it rates Barrick’s performance against its peers on social and economic development; health and safety; the environment and human rights; and governance.

Group sustainability executive Grant Beringer says Barrick is committed to transparently measuring and reporting its performance.

 

 

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“The 2019 scorecard gave Barrick a B grade, which reflects the improvements in sustainability performance we have made across the group through the year; however, we have not yet met all the high standards we have set for ourselves, and there is still work to be done,” he says.

“We are committed to improving our performance and our grade, and will be tracking our progress on a monthly basis. An updated scorecard will be published at the end of Q2 this year.”

 

 

LOGO

 

GOLDEN SUNLIGHT CLOSURE SOLUTION SECURES

SULPHIDE FEEDSTOCK FOR NGM

 

Conventional closure methods would have left Barrick’s Golden Sunlight mine in Montana with the burden of water treatment in perpetuity.

Barrick engineers worked out, however, that the tailings were a significant sulphide resource (as well as containing some gold) that could be used to produce a sulphide concentrate through flotation. This would remove a potential ground water pollutant, minimizing its post-closure water treatment needs and reducing the mine’s overall environmental liability.

In addition, in a unique win-win deal, Nevada Gold Mines has agreed to purchase the concentrate from Golden Sunlight. Golden Sunlight will receive a stable long-term price for its concentrate while NGM has secured a new fuel supply (with a gold price upside) for its refractory process plants for at least the next five years.

 

 

LOGO

NEW EXPLORATION DRIVE EXTENDS ASSET BASE,

BRINGS NEXT TIER ONE DISCOVERY CLOSER

 

Since geology was reinstated as the flywheel of the Barrick engine, the group’s exploration teams have made significant advances in replenishing the company’s

reserves as well as stepping up the search for the next big discovery.

 

 

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“As a geology centric organization, we understand that major discoveries are increasingly rare,” says executive VP exploration and growth Rob Krcmarov. “What is required now is a much deeper geological insight at both the orebody and district level.”

During the past quarter, significant advances have been made on three projects. At Turquoise Ridge in Nevada, upgrading the geological understanding has already identified multiple targets, including open-ended mineralization and untested structural intersections in favorable host rock below the mine. In the DRC, new trends that have emerged in the central and northern parts of the Kibali permit have shown the potential for high grade mineralization. In Tanzania, a full relog and remodel of the Gokona/Nyabigena deposit has materially changed the understanding of the controls on mineralization, leading to the identification of multiple open targets with the potential to grow the resources beyond depletion for the foreseeable future.

President and CEO Mark Bristow says in order for Barrick to be a global leader it needs a global presence.

“We’re already on the ground in all of the world’s major gold destinations aside from Russia and East Europe. We’re looking at a future built around our existing big operations in Central, East and West Africa, in Nevada, the world’s most prolific goldfield, in the massively underexplored Dominican Republic, and along the Andean trend. But we’re also looking at new frontiers such as Japan, where we’ve formed an alliance with the holder of the largest exploration portfolio in the country. What’s particularly interesting to us is that while Japan hosts one of the world’s highest-grade gold mines, it has seen no modern exploration,” he says.

 

 

LOGO

REVITALIZED VELADERO POISED FOR NEW FUTURE

 

The life of the Veladero gold mine in Argentina has been extended to at least 10 years following a comprehensive review of its strategy and business plan, says Barrick president and CEO Mark Bristow.

Bristow was briefing an Argentinian audience of local media, government authorities and local business and community leaders on the mine’s progress from Barrick’s offices in Chile, via a video conference to comply with the Covid-19 related travel restrictions imposed by Argentina.

“Our review included the reinterpretation of the mine’s geology and an ongoing infill drilling campaign. We established exploration and resource management teams to identify satellite orebodies with the potential to deliver an increase in resources and reserves. Our aim is to extend Veladero’s life of mine beyond 2030 and elevate it to a Tier One mine,” he said. Barrick defines a Tier One mine as one that will produce at least 500,000 ounces per annum, has a life of more than

ten years and total cash costs per ounce8 at the lower half of the industry range.

Bristow said the next step in Veladero’s transformation would be to connect the mine to cleaner, cheaper power from the grid in neighboring Chile. Once commissioned in the second half of this year, this could halve the mine’s carbon footprint and potentially reduce its cut-off grade, creating an opportunity to further increase the mineable reserves.

Projects related to revitalizing Veladero, such as the leach pad expansion, have created new employment opportunities, with the number of direct employees and contractors rising by 1,400 to almost 5,000 since January 2019, and the number of local suppliers increasing almost threefold12. In line with Barrick’s local employment policy, 99% of Barrick’s workforce at Veladero are Argentinian.

Since 2005, Veladero has contributed some $9.5 billion to the Argentinian economy through taxes, royalties, salaries and

 

 

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payments to local suppliers. The mine has established a new community fund which, depending on production, is expected to generate more than $88 million for local infrastructure development over the next decade.

“Argentina has the potential to rebuild its economy for its people and Veladero can make a significant contribution to

that process. Realizing that potential requires the government and the industry to work together towards long-term goals and to guard against short-term fiscal measures which could destroy this opportunity,” Bristow said.

 

 

LOGO

A PEERLESS RECORD OF STRATEGIC DELIVERY

 

In the 15 months since the Randgold merger, Barrick’s Strategic Matters Group has driven the historic Nevada Gold Mines joint venture transaction, and the successful sales of Kalgoorlie in Western Australia and the Massawa project in Senegal. It also worked with Barrick’s Africa and Middle East team to secure the Acacia minorities buyout, create a new joint venture with the government of Tanzania and settle all outstanding disputes.

The group is led by senior executive vice-president Kevin Thomson, who describes it as a small team of highly experienced people, based in the Toronto corporate office, with a deep industry knowledge and uniquely specialized, diversified and complementary skillsets that enable it to go well beyond a typical corporate development function.

“It operates on a tightly integrated basis with the rest of the organization, and interacts constantly with Barrick’s technical, exploration, tax, financial and legal teams across the globe, as well as leading banks and law firms,” he says.

“The group has an unparalleled record of success in executing and delivering major strategic initiatives. Among other things, it has achieved some of the highest transaction multiples in the industry through the divestment of non-core assets over the past five years.”

Barrick Completes Massawa Transaction

In line with its strategy of focusing on Tier One assets, Barrick has completed the transaction of combining its Massawa gold project in Senegal with Teranga Gold Corporation’s Sabodala gold mine. Barrick and its Senegalese partner previously held a 90% interest in the Massawa project.

Mark Bristow said Massawa was one of the largest unexploited gold deposits in West Africa and its legacy company, Randgold Resources, had developed this over a period of years to the point where its value could now be optimally realized for the benefit of all its stakeholders which includes the Senegal Government.

“Teranga is best placed to achieve this as it already owns the nearby Sabodala mine and Sabodala’s combination with Massawa is expected to deliver significant synergies. Barrick will participate in the upside of the combined asset through the 11% interest it acquired in Teranga through this transaction,” he said.

 

 

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THE LONG GAME WINS

 

In another first for the gold mining industry, Barrick has published its ten-year plans in its 2019 annual report which appeared in March.

They show that the company’s strong asset foundation will support its targeted production for at least the next ten years through organic growth. Only capital related to our current operating assets, sustaining projects in progress as well as existing exploration and mineral resource management initiatives will be required, which will be funded by cash flows at a $1,200/oz average gold price. The plans will be rolled on an annual basis.

The ten-year mine plans are based on reserves and geologically understood resource extensions. A $1,200/oz long-term gold price is currently used to allocate capital.

President and CEO Mark Bristow says Barrick is making its plans public to provide investor confidence in its sustainability and to demonstrate that it’s the “go-to” gold company for gearing on the high gold price.

“Barrick has been able to make this confident statement of intent thanks to the work we’ve done to strengthen the geology function and introduce mineral resource management across the organization. At the same time, we’ve transferred ownership of and responsibility for the orebodies to the mines. Geological updates are regularly used to update mine plans and real Life of Mine optimization is based on high-confidence geological models as well as operating plans, ounce profiles, and operating and capital cost forecasts,” he says.

“Our long-term strategy prizes quality above quantity, hence its focus on Tier One assets. We define a Tier One mine as one that will produce at least 500,000 ounces per annum, has a life of more than ten years and total cash costs per ounce8 at the lower half of the industry range. The fact that we have six of these mines in our portfolio is the surest guarantor of our ten-year production forecast.”

 

 

 

LOGO

i Gold capital expenditures includes project and sustaining capital expenditures across all gold operations but does not include capital expenditure related to the copper operations.

ii Excludes Porgera.

iii Costs per ounce and total capital expenditures are stated prior to any adjustment related to Porgera.

iv Production attributable to Porgera is based on the assumption that the mine’s current care and maintenance status will be temporary, and that the suspension of operations will not have a significant impact on Barrick’s future production.

Barrick’s ten-year gold production profile is based on its current operating asset portfolio, sustaining projects in progress and exploration/mineral resource management initiatives in execution (subject to adjustment based on the outcome of the process with the Government of Papua New Guinea with respect to the Porgera Special Mining Lease extension). Additional asset optimization, further exploration growth, new project initiatives and divestitures are not included. This ten-year outlook is subject to change and is based on the same assumptions as the current five-year outlook detailed in endnote 25 for the initial five years. The subsequent five years is also subject to change and assumes attributable production from Fourmile (starting in 2028) as well as exploration and mineral resource management projects in execution at Nevada Gold Mines, Hemlo and Porgera.

Barrick is closely monitoring the global Covid-19 pandemic and Barrick’s guidance may be impacted if the operation or development of our mines and projects is disrupted due to efforts to slow the spread of the virus.

 

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LOGO

PUEBLO VIEJO’S EXPANSION TO BOOST DOMINICAN ECONOMY FOR DECADES TO COME

 

The proposed expansion of the Pueblo Viejo gold mine will extend its life as well as its significant contribution to the Dominican Republic’s economy until 2040 and beyond, says Mark Bristow, president and CEO of operator Barrick.

Speaking to local media and businessmen, Bristow said the project would require an initial investment of $1.3 billion to expand the process plant and the tailings facility14. Extending its life would unlock the mine’s potential to increase exports by $22 billion and generate more than $4 billion in taxes at a gold price of $1,500 per ounce. The mine’s workforce (which is 97% Dominican) is expected to grow as the project develops and it will increase opportunities for women (currently 12% of the workforce). It will also further promote the development of the local economy based on the mine’s suppliers and contractors.

“Our aim is to continue contributing to the social and economic development of the Dominican Republic by applying our sustainability philosophy to create long-term value for all our stakeholders, especially the governments and people of our host countries. Without this project, mining at Pueblo Viejo would have ceased in the next two years,” he said.

The expansion will enable the mine to exploit the lower grades in the orebody and is not intended to process ore from outside the current concession area.

In the meantime, Bristow noted, the conversion of the mine’s Quisqueya 1 power plant to natural gas had successfully been commissioned. This will cut greenhouse gases by an estimated 30% and nitrogen oxide by 85%, further reducing

Pueblo Viejo’s impact on the environment. An agribusiness project is also planned as an additional benefit for the communities impacted by the expansion.

Pueblo Viejo pays another $185 million in taxes, bringing its total cash distribution to the Dominican Government to +$2 billion

In the first four months of 2020, the Pueblo Viejo gold mine paid $185 million in direct taxes and $9 million in indirect taxes to the Dominican Government. These payments include advances of income taxes, net profit interest and royalties on the sales of gold and silver paid in the first quarter of 2020, as well as the final settlement of the 2019 fiscal year.

In an early payment in April to help contribute to the stability of the Dominican economy and aid the country in combating and containing the spread of the Covid-19 pandemic, Pueblo Viejo paid $113 million to the Internal Tax Collector, despite the Dominican Government extending its deadline for certain tax declarations. This brings Pueblo Viejo’s total tax payments to the Government to more than $2 billion since 2013.

Pueblo Viejo’s exports in the first quarter of this year represented 37% of the country’s total exports of national goods, with a value of $399 million of a total of $1,081 million15.

Pueblo Viejo has also committed nearly $1 million in supporting actions to mitigate the impact of Covid-19 in the Dominican Republic and the communities near its operations.

 

 

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LOGO

MODERNIZING AND STREAMLINING OPERATIONS AT HEMLO

 

Hemlo has moved to an underground contracting mining model in order to secure the mine’s future viability and to extend its Life of Mine.

Barminco, a leader in modern underground mining skills, won the tender and will be providing contract mining services, with the objective of improving productivity through industry-leading technology and more efficient mining methods at the underground operation.

Barminco’s scope includes undertaking mine development, production and haulage, and utilizing mining equipment

provided by Barrick. The Barminco plan includes employing more than 300 local people at the operation.

Having recognized the importance of changing the way the mine operates and committing to a more modern mining methodology to ensure Hemlo’s future profitability, Barrick, together with contractor Barminco, consulted closely with employees, the Biigtigong Nishnaabeg and Netmizaagamig Nishnaabeg First Nations groups, as well as representatives of the Marathon, Manitouwadge and White River communities, before signing the letter of intent for contract mining services.

 

 

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Appendix 1

2020 Operating and Capital Expenditure Guidance

 

 GOLD PRODUCTION AND COSTS
         
      2020 forecast
attributable production
(000s ozs)
   2020 forecast cost
of sales16 ($/oz)
   2020 forecast total
cash costs8 ($/oz)
  

2020 forecast all-in

  sustaining costs8 ($/oz)  

Carlin (61.5%)17

   1,000 - 1,050    920 - 970    760 - 810    1,000 - 1,050

Cortez (61.5%)

   450 - 480    980 - 1,030    640 - 690    910 - 960

Turquoise Ridge (61.5%)

   430 - 460    900 - 950    540 - 590    690 - 740

Phoenix (61.5%)

   100 - 120    1,850 - 1,900    700 - 750    920 - 970

Long Canyon (61.5%)

   130 - 150    910 - 960    240 - 290    450 - 500

Nevada Gold Mines (61.5%)

   2,100 - 2,250    970 - 1,020    660 - 710    880 - 930

Hemlo

   200 - 220    960 - 1,010    800 - 850    1,200 - 1,250
         

  North America

   2,300 - 2,450    970 - 1,020    660 - 710    900 - 950

Pueblo Viejo (60%)

   530 - 580    840 - 890    520 - 570    720 - 770

Veladero (50%)

   240 - 270    1,220 - 1,270    670 - 720    1,250 - 1,300

Porgera (47.5%)18

                   

  Latin America & Asia Pacific

   800 - 900    930 - 980    610 - 660    890 - 940

 

Loulo-Gounkoto (80%)

   500 - 540    1,050 - 1,100    620 - 670    970 - 1,020

Kibali (45%)

   340 - 370    1,030 - 1,080    600 - 650    790 - 840

North Mara (84%)19

   240 - 270    750 - 800    570 - 620    830 - 880

Tongon (89.7%)

   240 - 260    1,390 - 1,440    680 - 730    740 - 790

Bulyanhulu (84%)19

   30 - 50    1,210 - 1,260    790 - 840    1,110 - 1,160

Buzwagi (84%)19

   80 - 100    850 - 900    820 - 870    850 - 900

  Africa & Middle East

   1,450 - 1,600    1,040 - 1,090    640 - 690    870 - 920

  Total Attributable to Barrick20,21,22

   4,600 - 5,000    980 - 1,030    650 - 700    920 - 970
                     
 COPPER PRODUCTION AND COSTS
         
      2020 forecast
attributable production
(M lbs)
   2020 forecast cost
of sales16 ($/lb)
   2020 forecast C1
cash costs11 ($/lb)
   2020 forecast all-in
sustaining costs11 ($/lb)

Lumwana

   250 - 280    2.20 - 2.40    1.50 - 1.70    2.30 - 2.60

Zaldívar (50%)

   120 - 135    2.40 - 2.70    1.65 -1.85    2.30 - 2.60

Jabal Sayid (50%)

   60 - 70    1.75 - 2.00    1.40 -1.60    1.50 - 1.70

  Total Copper

   440 - 500    2.10 - 2.40    1.50 - 1.80    2.20 - 2.50
                     

 

 ATTRIBUTABLE CAPITAL EXPENDITURES

 
   
        ($ millions)    

Attributable minesite sustaining

     1,300 - 1,500    

Attributable project

     300 - 400    

  Total attributable capital expenditures23

     1,600 - 1,900    

2020 Outlook Assumptions and Economic Sensitivity Analysis

 

      2020 Guidance
Assumption
   Hypothetical Change    Impact on EBITDA
(millions)24
   Impact on AISC8,11

  Gold revenue, net of royalties13

   $1,350/oz    +/- $100/oz    +/- $339    +/- $3/oz

  Copper revenue, net of royalties

   $2.75/lb    +/- $0.50/lb    +/- $169    +/- $0.02/lb

 

BARRICK FIRST QUARTER 2020

  12   PRESS RELEASE


Appendix 2

Production and Cost Summary - Gold

 

                                                                                                                                           
     For the three months ended  
      3/31/20      12/31/19      % Change      3/31/19      % Change  

  Nevada Gold Mines LLC (61.5%)a

              

 

Gold produced (000s oz attributable basis)

     526        585        (10)%        572        (8)%  

 

Gold produced (000s oz 100% basis)

     855        951        (10)%        598        43 %  

 

Cost of sales ($/oz)

     995        1,038        (4)%        780        28 %  

 

Total cash costs ($/oz)b

     690        711        (3)%        542        27 %  

 

All-in sustaining costs ($/oz)b

     952        944        1 %        678        40 %  

 

Carlin (61.5%)c

              

 

Gold produced (000s oz attributable basis)

     253        276        (8)%        233        9 %  

 

Gold produced (000s oz 100% basis)

     411        449        (8)%        233        76 %  

 

Cost of sales ($/oz)

     970        975        (1)%        947        2 %  

 

Total cash costs ($/oz)b

     776        766        1 %        671        16 %  

 

All-in sustaining costs ($/oz)b

     1,007        965        4 %        891        13 %  

 

Cortez (61.5%)d

              

 

Gold produced (000s oz attributable basis)

     128        133        (4)%        262        (51)%  

 

Gold produced (000s oz 100% basis)

     208        216        (4)%        262        (21)%  

 

Cost of sales ($/oz)

     876        945        (7)%        682        28 %  

 

Total cash costs ($/oz)b

     614        681        (10)%        433        42 %  

 

All-in sustaining costs ($/oz)b

     1,009        1,012        0 %        506        99 %  

 

Turquoise Ridge (61.5%)e

              

 

Gold produced (000s oz attributable basis)

     84        111        (24)%        77        9 %  

 

Gold produced (000s oz 100% basis)

 

     137        181        (24)%        103        33 %  

Cost of sales ($/oz)

     1,032        971        6 %        592        74 %  

 

Total cash costs ($/oz)b

     668        625        7 %        506        32 %  

 

All-in sustaining costs ($/oz)b

     806        800        1 %        592        36 %  

Phoenix (61.5%)f

              

 

Gold produced (000s oz attributable basis)

     35        31        13 %        

 

Gold produced (000s oz 100% basis)

     57        50        13 %        

 

Cost of sales ($/oz)

     1,583        2,025        (22)%        

Total cash costs ($/oz)b

     737        902        (18)%        

 

All-in sustaining costs ($/oz)b

     914        1,034        (12)%        

 

Long Canyon (61.5%)f

              

 

Gold produced (000s oz attributable basis)

     26        34        (24)%        

 

Gold produced (000s oz 100% basis)

     42        55        (24)%        

 

Cost of sales ($/oz)

     1,025        1,026        0 %        

 

Total cash costs ($/oz)b

     345        317        9 %        

 

All-in sustaining costs ($/oz)b

     561        657        (15)%                    

  Pueblo Viejo (60%)

              

 

Gold produced (000s oz attributable basis)

     143        179        (20)%        148        (3)%  

 

Gold produced (000s oz 100% basis)

     238        298        (20)%        247        (3)%  

 

Cost of sales ($/oz)

     767        660        16 %        696        10 %  

 

Total cash costs ($/oz)b

     502        422        19 %        421        19 %  

 

All-in sustaining costs ($/oz)b

     626        517        21 %        543        15 %  

 

BARRICK FIRST QUARTER 2020

  13   PRESS RELEASE


Production and Cost Summary - Gold (continued)

 

                                                                                                                                           
                     For the three months ended  
      3/31/20      12/31/19      % Change      3/31/19      % Change  

  Loulo-Gounkoto (80%)

              

 

Gold produced (000s oz attributable basis)

     141        144        (2)%        128        10 %  

 

Gold produced (000s oz 100% basis)

     177        180        (2)%        160        10 %  

 

Cost of sales ($/oz)

     1,002        1,037        (3)%        1,052        (5)%  

 

Total cash costs ($/oz)b

     614        631        (3)%        684        (10)%  

 

All-in sustaining costs ($/oz)b

     891        917        (3)%        840        6 %  

  Kibali (45%)

              

 

Gold produced (000s oz attributable basis)

     91        87        5 %        93        (2)%  

 

Gold produced (000s oz 100% basis)

     201        193        5 %        207        (2)%  

 

Cost of sales ($/oz)

     1,045        1,205        (13)%        1,202        (13)%  

 

Total cash costs ($/oz)b

     582        608        (4)%        573        2 %  

 

All-in sustaining costs ($/oz)b

     773        740        4 %        673        15 %  

  Veladero (50%)

              

 

Gold produced (000s oz attributable basis)

     75        71        6 %        70        7 %  

 

Gold produced (000s oz 100% basis)

     150        142        6 %        140        7 %  

 

Cost of sales ($/oz)

     1,182        1,138        4 %        1,195        (1)%  

 

Total cash costs ($/oz)b

     788        710        11 %        713        11 %  

 

All-in sustaining costs ($/oz)b

     1,266        1,142        11 %        1,100        15 %  

  Porgera (47.5%)

              

 

Gold produced (000s oz attributable basis)

     62        82        (24)%        66        (6)%  

 

Gold produced (000s oz 100% basis)

     131        172        (24)%        139        (6)%  

 

Cost of sales ($/oz)

     1,097        909        21 %        1,031        6 %  

 

Total cash costs ($/oz)b

     941        757        24 %        854        10 %  

 

All-in sustaining costs ($/oz)b

     1,089        894        22 %        978        11 %  

  Tongon (89.7%)

              

 

Gold produced (000s oz attributable basis)

     61        61        0 %        61        0 %  

 

Gold produced (000s oz 100% basis)

     68        68        0 %        68        0 %  

 

Cost of sales ($/oz)

     1,368        1,476        (7)%        1,451        (6)%  

 

Total cash costs ($/oz)b

     762        803        (5)%        799        (5)%  

 

All-in sustaining costs ($/oz)b

     788        867        (9)%        836        (6)%  

  Hemlo

              

 

Gold produced (000s oz)

     57        54        6 %        55        4 %  

 

Cost of sales ($/oz)

     1,119        1,632        (31)%        906        24 %  

 

Total cash costs ($/oz)b

     945        1,091        (13)%        769        23 %  

 

All-in sustaining costs ($/oz)b

     1,281        1,380        (7)%        915        40 %  

  North Marag

              

 

Gold produced (000s oz attributable basis)

     65        103        (37)%        42        55 %  

 

Gold produced (000s oz 100% basis)

     77        103        (25)%        66        17 %  

 

Cost of sales ($/oz)

     959        1,021        (6)%        1,064        (10)%  

 

Total cash costs ($/oz)b

     646        675        (4)%        755        (14)%  

 

All-in sustaining costs ($/oz)b

     816        830        (2)%        944        (14)%  

  Buzwagig

              

 

Gold produced (000s oz attributable basis)

     22        28        (21)%        18        22 %  

 

Gold produced (000s oz 100% basis)

     27        28        (4)%        28        (4)%  

 

Cost of sales ($/oz)

     1,373        1,235        11 %        1,243        10 %  

 

Total cash costs ($/oz)b

     1,275        1,144        11 %        1,164        10 %  

 

All-in sustaining costs ($/oz)b

     1,288        1,169        10 %        1,228        5 %  

 

BARRICK FIRST QUARTER 2020

  14   PRESS RELEASE


Production and Cost Summary - Gold (continued)

 

                                                                                                                                           
                     For the three months ended  
      3/31/20      12/31/19      % Change      3/31/19      % Change  

  Bulyanhulug

              

 

Gold produced (000s oz attributable basis)

     7        9        (22)%        6        17 %  

 

Gold produced (000s oz 100% basis)

     9        9        0 %        9        0 %  

 

Cost of sales ($/oz)

     1,685        1,293        30 %        1,008        67 %  

 

Total cash costs ($/oz)b

     686        752        (9)%        622        10 %  

 

All-in sustaining costs ($/oz)b

     906        909        0 %        757        20 %  

  Kalgoorlie (50%)h

              

 

Gold produced (000s oz attributable basis)

        36        (100)%        55        (100)%  

 

Gold produced (000s oz 100% basis)

        72        (100)%        110        (100)%  

 

Cost of sales ($/oz)

        1,127        (100)%        1,064        (100)%  

 

Total cash costs ($/oz)b

        940        (100)%        870        (100)%  

 

All-in sustaining costs ($/oz)b

              1,172        (100)%        1,185        (100)%  

  Total Attributable to Barricki

              

 

Gold produced (000s oz)

     1,250        1,439        (13)%        1,367        (9)%  

 

Cost of sales ($/oz)j

     1,020        1,046        (2)%        947        8 %  

 

Total cash costs ($/oz)b

     692        692        0 %        631        10 %  

 

All-in sustaining costs ($/oz)b

     954        923        3 %        825        16 %  

 

a.

Represents the combined results of Cortez, Goldstrike (including our 60% share of South Arturo) and our 75% interest in Turquoise Ridge until June 30, 2019. Commencing July 1, 2019, the date Nevada Gold Mines was established, the results represent our 61.5% interest in Cortez, Carlin (including Goldstrike and 60% of South Arturo), Turquoise Ridge (including Twin Creeks), Phoenix and Long Canyon.

b.

These are non-GAAP financial performance measures with no standardized meaning under IFRS and therefore may not be comparable to similar measures presented by other issuers. For further information and a detailed reconciliation of each non-GAAP measure used to the most directly comparable IFRS measure, please see pages 79 to 95 of our first quarter MD&A.

c.

On July 1, 2019, Barrick’s Goldstrike and Newmont’s Carlin were contributed to Nevada Gold Mines and are now referred to as Carlin. As a result, the amounts presented represent Goldstrike on a 100% basis (including our 60% share of South Arturo) up until June 30, 2019, and the combined results of Carlin and Goldstrike (including NGM’s 60% share of South Arturo) on a 61.5% basis thereafter.

d.

On July 1, 2019, Cortez was contributed to Nevada Gold Mines, a joint venture with Newmont. As a result, the amounts presented are on an 100% basis up until June 30, 2019, and on a 61.5% basis thereafter.

e.

Barrick owned 75% of Turquoise Ridge through the end of the second quarter of 2019, with our joint venture partner, Newmont, owning the remaining 25%. Turquoise Ridge was proportionately consolidated on the basis that the joint venture partners that have joint control have rights to the assets and obligations for the liabilities relating to the arrangement. The figures presented in this table are based on our 75% interest in Turquoise Ridge until June 30, 2019. On July 1, 2019, Barrick’s 75% interest in Turquoise Ridge and Newmont’s Twin Creeks and 25% interest in Turquoise Ridge were contributed to Nevada Gold Mines. Starting July 1, 2019, the results represent our 61.5% share of Turquoise Ridge and Twin Creeks, now referred to as Turquoise Ridge.

f.

A 61.5% interest in these sites was acquired as a result of the formation of Nevada Gold Mines on July 1, 2019.

g.

Formerly known as Acacia Mining plc. On September 17, 2019, Barrick acquired all of the shares of Acacia it did not own. Operating results are included at 100% from October 1, 2019 to December 31, 2019 (notwithstanding the completion of the Acacia transaction on September 17, 2019, we consolidated our interest in Acacia and recorded a non-controlling interest of 36.1% in the income statement for the entirety of the third quarter of 2019 as a matter of convenience), and on an 84% basis thereafter as the GoT’s 16% free-carried interest was made effective from January 1, 2020.

h.

On November 28, 2019, we completed the sale of our 50% interest in Kalgoorlie in Western Australia to Saracen Mineral Holdings Limited for total cash consideration of $750 million. Accordingly, these represent our 50% interest until November 28, 2019.

i.

Excludes Pierina; Lagunas Norte starting in the fourth quarter of 2019; and Golden Sunlight and Morila (40%) starting in the third quarter of 2019 which are mining incidental ounces as it enters closure.

j.

Cost of sales per ounce (Barrick’s share) is calculated as cost of sales - gold on an attributable basis (excluding sites in care and maintenance) divided by gold equity ounces sold.

 

BARRICK FIRST QUARTER 2020

  15   PRESS RELEASE


Production and Cost Summary - Copper

 

                     For the three months ended  
      3/31/20      12/31/19      % Change      3/31/19      % Change  

  Lumwana

              

 

Copper production (millions lbs)

     64        63        2 %        61        5 %  

 

Cost of sales ($/lb)

     1.94        2.22        (13)%        2.16        (10)%  

 

C1 cash costs ($/lb)a

     1.63        2.10        (22)%        1.67        (2)%  

 

All-in sustaining costs ($/lb)a

     2.26        3.41        (34)%        2.79        (19)%  

  Zaldívar (50%)

              

 

Copper production (millions lbs attributable basis)

     31        36        (14)%        28        11 %  

 

Copper production (millions lbs 100% basis)

     62        72        (14)%        56        11 %  

 

Cost of sales ($/lb)

     2.39        2.59        (8)%        2.68        (11)%  

 

C1 cash costs ($/lb)a

     1.71        1.95        (12)%        1.91        (10)%  

 

All-in sustaining costs ($/lb)a

     1.99        2.56        (22)%        2.12        (6)%  

  Jabal Sayid (50%)

              

 

Copper production (millions lbs attributable basis)

     20        18        11 %        17        18 %  

 

Copper production (millions lbs 100% basis)

     40        36        11 %        34        18 %  

 

Cost of sales ($/lb)

     1.28        1.47        (13)%        1.55        (17)%  

 

C1 cash costs ($/lb)a

     0.97        1.29        (25)%        1.10        (12)%  

 

All-in sustaining costs ($/lb)a

     1.11        1.78        (38)%        1.30        (15)%  

  Total Copper

              

 

Copper production (millions lbs attributable basis)

     115        117        (2)%        106        8 %  

 

Cost of sales ($/lb)b

     1.96        2.26        (13)%        2.21        (11)%  

 

C1 cash costs ($/lb)a

     1.55        1.90        (18)%        1.66        (7)%  

 

All-in sustaining costs ($/lb)a

     2.04        2.82        (28)%        2.46        (17)%  

 

a.

These are non-GAAP financial performance measures with no standardized meaning under IFRS and therefore may not be comparable to similar measures presented by other issuers. For further information and a detailed reconciliation of each non-GAAP measure used to the most directly comparable IFRS measure, please see pages 79 to 95 of our first quarter MD&A.

b.

Cost of sales per pound (Barrick’s share) is calculated as cost of sales - copper plus our equity share of cost of sales attributable to Zaldívar and Jabal Sayid divided by copper pounds sold.

 

BARRICK FIRST QUARTER 2020

  16   PRESS RELEASE


Technical Information

The scientific and technical information contained in this press release has been reviewed and approved by Steven Yopps, MMSA, Director - Metallurgy, North America; Craig Fiddes, Manager of Growth Projects, Nevada Gold Mines; Chad Yuhasz, P.Geo, Mineral Resource Manager, Latin America and Australia Pacific; Simon Bottoms, CGeol, MGeol, FGS, FAusIMM, Mineral Resources Manager: Africa and Middle East; Rodney Quick, MSc, Pr. Sci.Nat, Mineral Resource Management and Evaluation Executive; John Steele, CIM, Metallurgy, Engineering and Capital Projects Executive; and Rob Krcmarov, FAusIMM, Executive Vice President, Exploration and Growth — each a “Qualified Person” as defined in National Instrument 43-101 - Standards of Disclosure for Mineral Projects.

All mineral reserve and mineral resource estimates are estimated in accordance with National Instrument 43-101 - Standards of Disclosure for Mineral Projects. Unless otherwise noted, such mineral reserve and mineral resource estimates are as of December 31, 2019.

Endnotes

Endnote 1

“Free cash flow” is a non-GAAP financial performance measure which deducts capital expenditures from net cash provided by operating activities. Barrick believes this to be a useful indicator of our ability to operate without reliance on additional borrowing or usage of existing cash. Free cash flow is intended to provide additional information only and does not have any standardized meaning under IFRS and may not be comparable to similar measures of performance presented by other companies. Free cash flow should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS. Further details on this non-GAAP measure are provided in the MD&A accompanying Barrick’s financial statements filed from time to time on SEDAR at www.sedar.com and on EDGAR at www.sec.gov.

Reconciliation of Net Cash Provided by Operating Activities to Free Cash Flow

 

                                                                                                        
($ millions)    For the three months ended  
      3/31/20     12/31/19     3/31/19  

Net cash provided by operating activities

     889       875       520  

 

Capital expenditures

     (451     (446     (374

Free cash flow

     438       429       146  

Endnote 2

“Adjusted net earnings” and “adjusted net earnings per share” are non-GAAP financial performance measures. Adjusted net earnings excludes the following from net earnings: certain impairment charges (reversals) related to intangibles, goodwill, property, plant and equipment, and investments; gains (losses) and other one-time costs relating to acquisitions or dispositions; foreign currency translation gains (losses); significant tax adjustments not related to current period earnings; unrealized gains (losses) on non-hedge derivative instruments; and the tax effect and non-controlling interest of these items. The Company uses this measure internally to evaluate our underlying operating performance for the reporting periods presented and to assist with the planning and forecasting of future operating results. Barrick believes that adjusted net earnings is a useful measure of our performance because these adjusting items do not reflect the underlying operating performance of our core mining business and are not necessarily indicative of future operating results. Adjusted net earnings and adjusted net earnings per share are intended to provide additional information only and do not have any standardized meaning under IFRS and may not be comparable to similar measures of performance presented by other companies. They should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS. Further details on these non-GAAP measures are provided in the MD&A accompanying Barrick’s financial statements filed from time to time on SEDAR at www.sedar.com and on EDGAR at www.sec.gov.

Reconciliation of Net Earnings to Net Earnings per Share, Adjusted Net Earnings and Adjusted Net Earnings per Share

 

                                                                                                        
($ millions, except per share amounts in dollars)    For the three months ended  
      3/31/20     12/31/19     3/31/19  

Net earnings (loss) attributable to equity holders of the Company

     400       1,387       111  

 

Impairment charges (reversals) related to intangibles, goodwill, property, plant and equipment, and investmentsa

     (336     (566     3  

 

Acquisition/disposition (gains) lossesb

     (60     (414     0  

 

(Gain) loss on currency translation

     16       53       22  

 

Significant tax adjustmentsc

     (44     74       8  

 

Other expense adjustmentsd

     98       (845     46  

 

Tax effect and non-controlling intereste

     211       611       (6

 

Adjusted net earnings

     285       300       184  

 

BARRICK FIRST QUARTER 2020

  17   PRESS RELEASE


                                                                                                        

Net earnings per sharef

     0.22        0.78        0.06  

 

Adjusted net earnings per sharef

     0.16        0.17        0.11  
a. 

Net impairment reversals for the three month period ended March 31, 2020 primarily relate to non-current asset reversals at Bulyanhulu, offset by losses at Buzwagi and North Mara. For the three month period ended December 31, 2019, net impairment reversals primarily relate to non-current asset impairments at Pueblo Viejo, partially offset by impairment charges at Pascua-Lama.

b. 

Acquisition/disposition gains for the three month period ended March 31, 2020 primarily relate to the gain on the sale of Massawa. For the three month period ended December 31, 2019, acquisition/disposition gains mainly relate to the gain on the sale of our 50% interest in Kalgoorlie.

c. 

Significant tax adjustments for the three month period ended March 31, 2020 primarily relate to deferred tax recoveries as a result of tax reform measures in Argentina and adjustments made in recognition of the net settlement of all outstanding disputes with the Government of Tanzania. Refer to Note 10 to the Financial Statements for more information.

d. 

Other expense adjustments for the three month period ended March 31, 2020 primarily relate to the impact of changes in the discount rate assumptions on our closed mine rehabilitation provision and losses on debt extinguishment. For the three month period ended December 31, 2019, other expense adjustments primarily relate to the gain on the de-recognition of the deferred revenue liability relating to our silver sale agreement with Wheaton Precious Metals Corp. and the gain on a settlement of customs duty and indirect taxes at Lumwana.

e. 

Tax effect and non-controlling interest for the three month periods ended March 31, 2020 and December 31, 2019 primarily relates to the net impairment reversals related to long-lived assets.

f. 

Calculated using weighted average number of shares outstanding under the basic method of earnings per share.

Endnote 3

“Realized price” is a non-GAAP financial measure which excludes from sales: unrealized gains and losses on non-hedge derivative contracts; unrealized mark-to-market gains and losses on provisional pricing from copper and gold sales contracts; sales attributable to ore purchase arrangements; treatment and refining charges; export duties; and cumulative catch-up adjustments to revenue relating to our streaming arrangements. This measure is intended to enable Management to better understand the price realized in each reporting period for gold and copper sales because unrealized mark-to-market values of non-hedge gold and copper derivatives are subject to change each period due to changes in market factors such as market and forward gold and copper prices, so that prices ultimately realized may differ from those recorded. The exclusion of such unrealized mark-to-market gains and losses from the presentation of this performance measure enables investors to understand performance based on the realized proceeds of selling gold and copper production. The realized price measure is intended to provide additional information and does not have any standardized definition under IFRS and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS. Further details on these non-GAAP measures are provided in the MD&A accompanying Barrick’s financial statements filed from time to time on SEDAR at www.sedar.com and on EDGAR at www.sec.gov.

Reconciliation of Sales to Realized Price per ounce/pound

 

                                                                                                                                                                       
($ millions, except per ounce/pound information in dollars)    Gold     Copper  
                    For the three months ended  
      3/31/20     12/31/19     3/31/19     3/31/20      12/31/19      3/31/19  

Sales

     2,593       2,758       1,906       99        82        163  

 

Sales applicable to non-controlling interests

     (770     (769     (224     0        0        0  

 

Sales applicable to equity method investmentsa,b

     147       139       129       107        147        121  

 

Realized non-hedge gold/copper derivative (losses) gains

     0       0       0       0        0        0  

 

Sales applicable to sites in care and maintenancec

     (46     (56     (26     0        0        0  

 

Treatment and refinement charges

     0       0       0       39        25        31  

 

Otherd

     15       22       0       0        0        0  

 

Revenues – as adjusted

     1,939       2,094       1,785       245        254        315  

 

Ounces/pounds sold (000s ounces/millions pounds)c

     1,220       1,413       1,365       110        91        103  

 

Realized gold/copper price per ounce/pounde

     1,589       1,483       1,307       2.23        2.76        3.07  
a. 

Represents sales of $140 million for the three month periods ended March 31, 2020 (December 31, 2019: $130 million and March 31, 2019: $117 million) applicable to our 45% equity method investment in Kibali and $nil (December 31, 2019: $9 million and March 31, 2019: $12 million) applicable to our 40% equity method investment in Morila for gold. Represents sales of $72 million for the three months ended March 31, 2020 (December 31, 2019: $110 million and March 31, 2019: $81 million) applicable to our 50% equity method investment in Zaldívar and $40 million (December 31, 2019: $43 million and March 31, 2019: $44 million) applicable to our 50% equity method investment in Jabal Sayid for copper.

b. 

Sales applicable to equity method investments are net of treatment and refinement charges.

c. 

Figures exclude Pierina; Golden Sunlight and Morila starting in the third quarter of 2019; and Lagunas Norte starting in the fourth quarter of 2019, from the calculation of realized price per ounce as the mine is mining incidental ounces as it enters closure.

d. 

Represents cumulative catch-up adjustment to revenue relating to our streaming arrangements. Refer to note 2f of the 2019 Annual Financial Statements for more information.

e. 

Realized price per ounce/pound may not calculate based on amounts presented in this table due to rounding.

Endnote 4

Includes North Mara, Bulyanhulu and Buzwagi on a 84% basis starting January 1, 2020 (and on a 63.9% basis from January 1, 2019 to September 30, 2019; notwithstanding the completion of the Acacia transaction on September 17, 2019, we consolidated our interest in Acacia and recorded a non-controlling interest of 36.1% in the income statement for the entirety of the third quarter of 2019 as a matter of convenience, and on a 100% basis from October 1, 2019 to December 31, 2019), Pueblo Viejo on a 60% basis, South Arturo

 

BARRICK FIRST QUARTER 2020

  18   PRESS RELEASE


on a 36.9% basis from July 1, 2019 onwards as a result of its contribution to Nevada Gold Mines (and on a 60% basis from January 1, 2019 to June 30, 2019), Veladero on a 50% basis, Loulo-Gounkoto on an 80% basis, Kibali on a 45% basis, Tongon on an 89.7% basis, and Morila on a 40% basis until the second quarter of 2019, which reflects our equity share of production and sales. Also removes the non-controlling interest of 38.5% Nevada Gold Mines from July 1, 2019 onwards.

Endnote 5

Net earnings (loss) represents net earnings (loss) attributable to the equity holders of the Company.

Endnote 6

These amounts are presented on the same basis as our guidance and include our 60% share of Pueblo Viejo, 80% share of Loulo-Gounkoto, 89.7% share of Tongon, 45% share of Kibali, 40% share of Morila and 60% share of South Arturo (36.9% of South Arturo from July 1, 2019 onwards as a result of its contribution to Nevada Gold Mines), our 84% share of Tanzania starting January 1, 2020 (63.9% share from January 1, 2019 to September 30, 2019; notwithstanding the completion of the Acacia transaction on September 17, 2019, we consolidated our interest in Acacia and recorded a non-controlling interest of 36.1% in the income statement for the entirety of the third quarter of 2019 as a matter of convenience, and 100% share from October 1, 2019 to December 31, 2019) and our 50% share of Zaldívar and Jabal Sayid. Starting July 1, 2019, it also includes our 61.5% share of Nevada Gold Mines.

Endnote 7

Gold cost of sales (Barrick’s share) is calculated as cost of sales—gold on an attributable basis (excluding sites in care and maintenance) divided by ounces sold.

Endnote 8

“Total cash costs” per ounce, “All-in sustaining costs” per ounce and “All-in costs” per ounce are non-GAAP financial performance measures. “Total cash costs” per ounce starts with cost of sales related to gold production but removes depreciation, the noncontrolling interest of cost of sales, and includes by product credits. “All-in sustaining costs” per ounce begin with “Total cash costs” per ounce and add further costs which reflect the expenditures made to maintain current production levels, primarily sustaining capital expenditures, sustaining leases, general & administrative costs, minesite exploration and evaluation costs, and reclamation cost accretion and amortization. “All-in costs” per ounce starts with “All-in sustaining costs” per ounce and adds additional costs that reflect the varying costs of producing gold over the life-cycle of a mine, including: project capital expenditures and other nonsustaining costs. Barrick believes that the use of “total cash costs” per ounce, “all-in sustaining costs” per ounce and “All-in costs” per ounce will assist investors, analysts and other stakeholders in understanding the costs associated with producing gold, understanding the economics of gold mining, assessing our operating performance and also our ability to generate free cash flow from current operations and to generate free cash flow on an overall Company basis. “Total cash costs” per ounce, “All-in sustaining costs” per ounce and “All-in costs” per ounce are intended to provide additional information only and do not have any standardized meaning under IFRS. Although a standardized definition of all-in sustaining costs was published in 2013 by the World Gold Council (a market development organization for the gold industry comprised of and funded by 25 gold mining companies from around the world, including Barrick), it is not a regulatory organization, and other companies may calculate this measure differently. Starting from the first quarter of 2019, we have renamed “cash costs” to “total cash costs” when referring to our gold operations. The calculation of total cash costs is identical to our previous calculation of cash costs with only a change in the naming convention of this non-GAAP measure. These measures should not be considered in isolation or as a substitute for measures prepared in accordance with IFRS. Further details on these non-GAAP measures are provided in the MD&A accompanying Barrick’s financial statements filed from time to time on SEDAR at www.sedar.com and on EDGAR at www.sec.gov.

Reconciliation of Gold Cost of Sales to Total cash costs, All-in sustaining costs and All-in costs, including on a per ounce basis

 

($ millions, except per ounce information in dollars)                          For the three months ended
         
          Footnote          3/31/20      12/31/19    3/31/19

Cost of sales applicable to gold production

        1,643        1,896        1,350  

Depreciation

        (474      (549      (384

Cash cost of sales applicable to equity method investments

        52        57        62  

By-product credits

        (29      (43      (24

Realized (gains) losses on hedge and non-hedge derivatives

     a        0        1        0  

Non-recurring items

     b        0        (22      (20

Other

     c        (27      (37      (20

Non-controlling interests

     d        (316      (326      (101
         

Total cash costs

              849        977        863  

General & administrative costs

        40        31        54  

Minesite exploration and evaluation costs

     e        15        24        11  

Minesite sustaining capital expenditures

     f        370        394        253  

 

BARRICK FIRST QUARTER 2020

  19   PRESS RELEASE


Sustaining leases

        0        4        10  

Rehabilitation - accretion and amortization (operating sites)

   g      14        7        14  

Non-controlling interest, copper operations and other

   h      (125      (135      (75
         

All-in sustaining costs

          1,163        1,302        1,130  

Project exploration and evaluation and project costs

   e      56        60        63  

Community relations costs not related to current operations

        1        0        1  

Project capital expenditures

   f      76        46        120  

Rehabilitation - accretion and amortization (non-operating sites)

   g      2        3        7  

Non-controlling interest and copper operations and other

   h      (33      (28      (3
         

All-in costs

          1,265        1,383        1,318  

Ounces sold - equity basis (000s ounces)

   i      1,220        1,413        1,365  

Cost of sales per ounce

   j,k      1,020        1,046        947  

Total cash costs per ounce

   k      692        692        631  

Total cash costs per ounce (on a co-product basis)

   k,l      705        712        644  

All-in sustaining costs per ounce

   k      954        923        825  

All-in sustaining costs per ounce (on a co-product basis)

   k,l      967        943        838  

All-in costs per ounce

   k      1,035        976        964  

All-in costs per ounce (on a co-product basis)

   k,l      1,048        996        977  

 

a.

Realized (gains) losses on hedge and non-hedge derivatives

Includes realized hedge losses of $nil for the three month periods ended March 31, 2020 (December 31, 2019: $nil and March 31, 2019: $nil), and realized non-hedge losses of $nil for the three month periods ended March 31, 2020 (December 31, 2019: $1 million and March 31, 2019: $nil). Refer to note 5 to the Financial Statements for further information.

b.

Non-recurring items

Non-recurring items in 2019 relate to organizational restructuring. These costs are not indicative of our cost of production and have been excluded from the calculation of total cash costs.

c.

Other

Other adjustments for the three month period ended March 31, 2020 include the removal of total cash costs and by-product credits associated with our Pierina mine; Golden Sunlight and Morila starting in the third quarter of 2019; and Lagunas Norte starting in the fourth quarter of 2019, which all are mining incidental ounces as they enter closure of $25 million (December 31, 2019: $35 million; March 31, 2019: $18 million relating to Pierina only).

d.

Non-controlling interests

Non-controlling interests include non-controlling interests related to gold production of $466 million for the three month periods ended March 31, 2020 (December 31, 2019: $477 million and March 31, 2019: $152 million). Non-controlling interests include Pueblo Viejo, Loulo-Gounkoto, Tongon, North Mara, Bulyanhulu, Buzwagi (notwithstanding the completion of the Acacia transaction on September 17, 2019, we consolidated our interest in Acacia and recorded a non-controlling interest of 36.1% in the income statement for the entirety of the third quarter of 2019 as a matter of convenience) and Nevada Gold Mines starting July 1, 2019. Refer to note 5 to the Financial Statements for further information.

e.

Exploration and evaluation costs

Exploration, evaluation and project expenses are presented as minesite sustaining if it supports current mine operations and project if it relates to future projects. Refer to page 72 of this MD&A.

f.

Capital expenditures

Capital expenditures are related to our gold sites only and are split between minesite sustaining and project capital expenditures. Project capital expenditures are distinct projects designed to increase the net present value of the mine and are not related to current production. Significant projects in the current year are stripping at Rangefront declines, the Goldrush exploration declines, and construction of the third shaft at Turquoise Ridge. Refer to page 71 of this MD&A.

g.

Rehabilitation - accretion and amortization

Includes depreciation on the assets related to rehabilitation provisions of our gold operations and accretion on the rehabilitation provision of our gold operations, split between operating and non-operating sites.

h.

Non-controlling interest and copper operations

Removes general & administrative costs related to non-controlling interests and copper based on a percentage allocation of revenue. Also removes exploration, evaluation and project expenses, rehabilitation costs and capital expenditures incurred by our copper sites and the non-controlling interest of North Mara, Bulyanhulu and Buzwagi (notwithstanding the completion of the Acacia transaction on September 17, 2019, we consolidated our interest in Acacia and recorded a non-controlling interest of 36.1% in the income statement for the entirety of the third quarter of 2019 as a matter of convenience), Pueblo Viejo, Loulo-Gounkoto and Tongon operating segments and South Arturo (63.1% of South Arturo from July 1, 2019 onwards as a result of its contribution to Nevada Gold Mines). Also removes the non-controlling interest of Nevada Gold Mines starting July 1, 2019. It also includes capital expenditures applicable to equity method investments. Figures remove the impact of Pierina; Golden Sunlight and Morila starting in the third quarter of 2019; and Lagunas Norte starting in the fourth quarter of 2019.

The impact is summarized as the following:

 

  ($ millions)             For the three months ended    
       
  Non-controlling interest, copper operations and other      3/31/20      12/31/19    3/31/19

General & administrative costs

       (6      (3      (10

Minesite exploration and evaluation expenses

       (3      (6      (1

Rehabilitation - accretion and amortization (operating sites)

       (4      (1      (1

Minesite sustaining capital expenditures

       (112      (125      (63
       

All-in sustaining costs total

       (125      (135      (75

Project exploration and evaluation and project costs

       (19      (14      (2

Project capital expenditures

       (14      (14      (1

 

BARRICK FIRST QUARTER 2020

  20   PRESS RELEASE


All-in costs total

       (33      (28      (3

 

i.

Ounces sold - equity basis

Figures remove the impact of Pierina; Golden Sunlight and Morila starting in the third quarter of 2019; and Lagunas Norte starting in the fourth quarter of 2019, which are mining incidental ounces as the sites enter closure.

j.

Cost of sales per ounce

Figures remove the cost of sales impact of Pierina of $6 million for the three month periods ended March 31, 2020 (December 31, 2019: $14 million and March 31, 2019: $27 million); starting in the third quarter of 2019, Golden Sunlight of $nil for the three month periods ended March 31, 2020 (December 31, 2019: $nil and March 31, 2019: $nil) and Morila of $6 million for the three month periods ended March 31, 2020 (December 31, 2019: $13 million and March 31, 2019: $nil); and starting in the fourth quarter of 2019, Lagunas Norte of $21 million for the three month periods ended March 31, 2020 (December 31, 2019: $26 million and March 31, 2019: $nil), which are mining incidental ounces as these sites enter closure. Cost of sales per ounce excludes non-controlling interest related to gold production. Cost of sales applicable to gold per ounce is calculated using cost of sales on an attributable basis (removing the non-controlling interest of 40% Pueblo Viejo, 20% of Loulo-Gounkoto, 10.3% of Tongon, 16% North Mara, Bulyanhulu and Buzwagi starting January 1, 2020, the effective date of the GoT’s free carried interest (36.1% up until September 30, 2019; notwithstanding the completion of the Acacia transaction on September 17, 2019, we consolidated our interest in Acacia and recorded a non-controlling interest of 36.1% in the income statement for the entirety of the third quarter of 2019 as a matter of convenience) and 40% South Arturo from cost of sales (63.1% of South Arturo from July 1, 2019 onwards as a result of its contribution to Nevada Gold Mines)), divided by attributable gold ounces. The non-controlling interest of 38.5% Nevada Gold Mines is also removed from cost of sales from July 1, 2019 onwards.

k.

Per ounce figures

Cost of sales per ounce, total cash costs per ounce, all-in sustaining costs per ounce and all-in costs per ounce may not calculate based on amounts presented in this table due to rounding.

l.

Co-product costs per ounce

Total cash costs per ounce, all-in sustaining costs per ounce and all-in costs per ounce presented on a co-product basis removes the impact of by-product credits of our gold production (net of non-controlling interest) calculated as:

 

($ millions)           For the three months ended      
      3/31/20      12/31/19      3/31/19  

By-product credits

     29        43        24  

Non-controlling interest

     (15      (17      (8
       

By-product credits (net of non-controlling interest)

     14        26        16  

Endnote 9

Amounts reflect production and sales from Jabal Sayid and Zaldívar on a 50% basis, which reflects our equity share of production, and Lumwana.

Endnote 10

Copper cost of sales (Barrick’s share) is calculated as cost of sales - copper plus our equity share of cost of sales attributable to Zaldívar and Jabal Sayid divided by pounds sold.

Endnote 11

"C1 cash costs" per pound and “All-in sustaining costs” per pound are non-GAAP financial performance measures. “C1 cash costs” per pound is based on cost of sales but excludes the impact of depreciation and royalties and production taxes and includes treatment and refinement charges. “All-in sustaining costs” per pound begins with “C1 cash costs” per pound and adds further costs which reflect the additional costs of operating a mine, primarily sustaining capital expenditures, general & administrative costs and royalties and production taxes. Barrick believes that the use of “C1 cash costs” per pound and “all-in sustaining costs” per pound will assist investors, analysts, and other stakeholders in understanding the costs associated with producing copper, understanding the economics of copper mining, assessing our operating performance, and also our ability to generate free cash flow from current operations and to generate free cash flow on an overall Company basis. “C1 cash costs” per pound and “All-in sustaining costs” per pound are intended to provide additional information only, do not have any standardized meaning under IFRS, and may not be comparable to similar measures of performance presented by other companies. These measures should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS. Further details on these non-GAAP measures are provided in the MD&A accompanying Barrick’s financial statements filed from time to time on SEDAR at www.sedar.com and on EDGAR at www.sec.gov.

Reconciliation of Copper Cost of Sales to C1 cash costs and All-in sustaining costs, including on a per pound basis

 

($ millions, except per pound information in dollars)             For the three months ended    
       
        3/31/20      12/31/19    3/31/19

Cost of sales

       124        80        131  

Depreciation/amortization

       (43      (17      (42

Treatment and refinement charges

       39        25        31  

Cash cost of sales applicable to equity method investments

       66        94        66  

Less: royalties and production taxesa

       (11      (9      (12

By-product credits

       (3      (1      (3
       

C1 cash cost of sales

       172        172        171  

General & administrative costs

       3        3        5  

Rehabilitation - accretion and amortization

       3        7        3  

Royalties and production taxesa

       11        9        12  

 

BARRICK FIRST QUARTER 2020

  21   PRESS RELEASE


Minesite exploration and evaluation costs

                           1                                  2                                  2  

Minesite sustaining capital expenditures

       32          60          59  

Sustaining leases

       3          3          1  
       

All-in sustaining costs

       225          256          253  

Pounds sold - consolidated basis (millions pounds)

       110          91          103  

Cost of sales per poundb,c

       1.96          2.26          2.21  

C1 cash cost per poundb

       1.55          1.90          1.66  

All-in sustaining costs per poundb

       2.04          2.82          2.46  
a.

For the three month period ended March 31, 2020, royalties and production taxes include royalties of $11 million (December 31, 2019: $8 million and March 31, 2019: $12 million).

b.

Cost of sales per pound, C1 cash costs per pound and all-in sustaining costs per pound may not calculate based on amounts presented in this table due to rounding.

c.

Cost of sales applicable to copper per pound is calculated using cost of sales including our proportionate share of cost of sales attributable to equity method investments (Zaldívar and Jabal Sayid), divided by consolidated copper pounds (including our proportionate share of copper pounds from our equity method investments).

Endnote 12

The number of local suppliers participating in Veladero’s supply chain tendering processes has increased by 279%, as reported by the San Juan Chamber of Mining Services.

Endnote 13

Due to our hedging activities, which are reflected in these sensitivities, we are partially protected against changes in these factors.

Endnote 14

On a 100% basis. For additional detail regarding Pueblo Viejo, see the Technical Report on the Pueblo Viejo mine, Sanchez Ramirez Province, Dominican Republic, dated March 19, 2018, and filed on SEDAR at www.sedar.com and EDGAR at www.sec.gov on March 23, 2018.

Endnote 15

According to the March export report issued by the Export and Investment Center of the Dominican Republic (CEI-RD, in Spanish).

Endnote 16

Cost of sales applicable to gold per ounce is calculated using cost of sales applicable to gold on an attributable basis (removing the non-controlling interest of 38.5% of Nevada Gold Mines (including 63.1% of South Arturo), 40% Pueblo Viejo, 20% of Loulo-Gounkoto, 10.3% of Tongon, and 16% of North Mara, Bulyanhulu and Buzwagi from cost of sales and including our proportionate share of cost of sales attributable to our equity method investments in Kibali and Morila), divided by attributable gold ounces sold. Cost of sales applicable to copper per pound is calculated using cost of sales applicable to copper including our proportionate share of cost of sales attributable to our equity method investments in Zaldívar and Jabal Sayid, divided by consolidated copper pounds sold (including our proportionate share of copper pounds sold from our equity method investments).

Endnote 17

Includes our 36.9% share of South Arturo.

Endnote 18

Based on the communication we received from the Government of Papua New Guinea that the SML will not be extended, Porgera was placed on temporary care and maintenance on April 25, 2020 to ensure the safety and security of our employees and communities. Due to the uncertainty related to the timing and scope of future developments on the mine’s operating outlook, our full year 2020 guidance for Porgera has been withdrawn.

Endnote 19

Amounts are on an 84% basis as the GoT’s 16% free-carried interest was made effective from January 1, 2020.

Endnote 20

Total cash costs and all-in sustaining costs per ounce include the impact of hedges and/or costs allocated to non-operating sites.

Endnote 21

Operating unit guidance ranges reflect expectations at each individual operating unit, and may not add up to the company-wide guidance range total. Guidance ranges exclude Pierina, Lagunas Norte, Golden Sunlight and Morila (40%) which are mining incidental ounces as it enters closure.

Endnote 22

Includes corporate administration costs.

Endnote 23

 

BARRICK FIRST QUARTER 2020

  22   PRESS RELEASE


2020 Guidance includes our 61.5% share of Nevada Gold Mines, our 60% share of Pueblo Viejo, our 80% share of Loulo-Gounkoto, our 89.7% share of Tongon, our 84% share of North Mara, Bulyanhulu and Buzwagi, our 50% share of Zaldívar and Jabal Sayid, and our 45% of Kibali, and our share of joint operations.

Endnote 24

EBITDA is a non-GAAP financial measure, which excludes the following from net earnings: income tax expense; finance costs; finance income; and depreciation. Management believes that EBITDA is a valuable indicator of our ability to generate liquidity by producing operating cash flow to fund working capital needs, service debt obligations, and fund capital expenditures. Management uses EBITDA for this purpose. Adjusted EBITDA removes the effect of impairment charges; acquisition/disposition gains/losses; foreign currency translation gains/losses; other expense adjustments; unrealized gains on non-hedge derivative instruments; and the impact of the income tax expense, finance costs, finance income and depreciation incurred in our equity method accounted investments. We believe these items provide a greater level of consistency with the adjusting items included in our Adjusted Net Earnings reconciliation, with the exception that these amounts are adjusted to remove any impact on finance costs/income, income tax expense and/or depreciation as they do not affect EBITDA. We believe this additional information will assist analysts, investors and other stakeholders of Barrick in better understanding our ability to generate liquidity from our full business, including equity method investments, by excluding these amounts from the calculation as they are not indicative of the performance of our core mining business and not necessarily reflective of the underlying operating results for the periods presented. EBITDA and adjusted EBITDA are intended to provide additional information only and do not have any standardized meaning under IFRS and may not be comparable to similar measures of performance presented by other companies. They should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS. Further details on these non-GAAP measures are provided in the MD&A accompanying Barrick’s financial statements filed from time to time on SEDAR at www.sedar.com and on EDGAR at www.sec.gov.

Reconciliation of Net Earnings to EBITDA and Adjusted EBITDA

 

($ millions)             For the three months ended      
       
        3/31/20      12/31/19      3/31/19  

Net earnings (loss)

       663        1,776        140  

Income tax expense

       386        784        167  

Finance costs, neta

       88        90        100  

Depreciation

       524        572        435  

EBITDA

       1,661        3,222        842  

Impairment charges (reversals) of long-lived assetsb

       (336      (566      3  

Acquisition/disposition (gains) lossesc

       (60      (414      0  

Loss on currency translation

       16        53        22  

Other expense (income) adjustmentsd

       98        (845      46  

Income tax expense, net finance costs, and depreciation from equity investees

       87        112        89  
       

Adjusted EBITDA

       1,467        1,562        1,002  
a.

Finance costs exclude accretion.

b. 

Net impairment reversals for the three month period ended March 31, 2020 primarily relate to non-current asset reversals at Bulyanhulu, offset by losses at Buzwagi and North Mara. For the three month period ended December 31, 2019, net impairment reversals primarily relate to non-current asset impairments at Pueblo Viejo, partially offset by impairment charges at Pascua-Lama.

c. 

Acquisition/disposition gains for the three month period ended March 31, 2020 primarily relate to the gain on the sale of Massawa. For the three month period ended December 31, 2019, acquisition/disposition gains mainly relate to the gain on the sale of our 50% interest in Kalgoorlie.

d. 

Other expense adjustments for the three month period ended March 31, 2020 primarily relate to the impact of changes in the discount rate assumptions on our closed mine rehabilitation provision and losses on debt extinguishment. For the three month period ended December 31, 2019, other expense adjustments primarily relate to the gain on the de-recognition of the deferred revenue liability relating to our silver sale agreement with Wheaton Precious Metals Corp. and the gain on a settlement of customs duty and indirect taxes at Lumwana.

 

Endnote 25

 

                     
Key Assumptions      2020             2021+  

Gold Price ($/oz)

       1,350            1,200  

Copper Price ($/lb)

       2.75            2.75  

Oil Price (WTI) ($/barrel)

       65            65  

AUD Exchange Rate (AUD:USD)

       0.70            0.75  

ARS Exchange Rate (USD:ARS)

       65.00            75.00  

CAD Exchange Rate (USD:CAD)

       1.30            1.30  

CLP Exchange Rate (USD:CLP)

       725            680  

EUR Exchange Rate (EUR:USD)

       1.20              1.20  

Barrick’s five-year indicative outlook is based on our current operating asset portfolio, sustaining projects in progress and exploration/ mineral resource management initiatives in execution. Additional asset optimization, further exploration growth, new project initiatives

 

BARRICK FIRST QUARTER 2020

  23   PRESS RELEASE


and divestitures are not included. For the group gold and copper segments, and where applicable for a specific region, this indicative outlook is subject to change and assumes the following:

 

   

The inclusion of synergies identified for Nevada Gold Mines;

   

Production from Cortez Deep South by 2020, in-line with guidance;

   

Production ramping-up from the third shaft at Turquoise Ridge by 2022, in-line with guidance;

   

Production from Goldrush commencing in 2021, in-line with guidance;

   

Production from the proposed Pueblo Viejo plant expansion and tailings project by 2023, in-line with guidance. Our assumptions are subject to change following the combined feasibility study for the plant expansion and tailings project;

   

An 84% ownership interest in North Mara, Bulyanhulu and Buzwagi. At this time, we assume that Buzwagi will enter care and maintenance in 2021;

   

A restart of mining operations at Bulyanhulu by the end of 2020;

   

Tongon will enter care and maintenance during the 2022 year;

   

A sale of stockpiled concentrate related to the Tanzania assets and Lumwana by the end of 2020;

   

Production from the Zaldívar CuproChlor® Chloride Leach Project by 2022. Antofagasta is the operator of Zaldívar.

   

Production attributable to Porgera is based on the assumption that the mine’s current care and maintenance status will be temporary, and that the suspension of operations will not have a significant impact on Barrick’s future production.

This five-year indicative outlook excludes:

   

Production from Fourmile;

   

Production from assets currently in care and maintenance including Pierina, Lagunas Norte, Morila and Golden Sunlight;

   

Production from long-term greenfield optionality from Donlin, Pascua-Lama, Norte Abierto or Alturas.

Barrick’s ten-year gold production profile is also based on its current operating asset portfolio, sustaining projects in progress and exploration/mineral resource management initiatives in execution. Additional asset optimization, further exploration growth, new project initiatives and divestitures are not included. This ten-year outlook is subject to change and is based on the same assumptions as the current five-year outlook detailed above for the initial five years. The subsequent five years is also subject to change and assumes attributable production from Fourmile (starting in 2028) as well as exploration and mineral resource management projects in execution at Nevada Gold Mines, Hemlo and Porgera.

 

BARRICK FIRST QUARTER 2020

  24   PRESS RELEASE


Corporate Office    Enquiries
Barrick Gold Corporation    President and CEO

161 Bay Street, Suite 3700

  

Mark Bristow

Toronto, Ontario M5J 2S1

  

+1 647 205 7694

Canada

  

+44 788 071 1386

   Senior EVP and CFO

Telephone: +1 416 861-9911

  

Graham Shuttleworth

Email: investor@barrick.com

  

+1 647 262 2095

Website: www.barrick.com

  

+44 779 771 1338

  

+44 1534 735 333

Shares Listed    Investor and Media Relations
  

Kathy du Plessis

GOLD   

The New York Stock Exchange

  

+44 20 7557 7738

ABX   

The Toronto Stock Exchange

  

Email: barrick@dpapr.com

Transfer Agents and Registrars   
AST Trust Company (Canada)   

P.O. Box 700, Postal Station B

  

Montreal, Quebec H3B 3K3

  

or

  
American Stock Transfer & Trust Company, LLC   

6201 – 15 Avenue

  

Brooklyn, New York 11219

  

Telephone: 1-800-387-0825

  

Fax: 1-888-249-6189

  

Email: inquiries@astfinancial.com

  

Website: www.astfinancial.com

  

Cautionary Statement on Forward-Looking Information

 

Certain information contained or incorporated by reference in this press release, 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 “deliver”, “points to”, “plan”, “progresses”, “upside”, “opportunities”, “objective”, “expected”, “potential”, “strategy”, “will”, “proposed”, “aim”, “continues” and similar expressions identify forward-looking statements. In particular, this press release contains forward-looking statements including, without limitation, with respect to: Barrick’s forward-looking production guidance and estimates of future costs; cash flow forecasts; projected capital, operating and exploration expenditures, including with respect to Barrick’s 10-year production profile; Barrick’s engagement with local communities to manage the Covid-19 pandemic; Barrick’s response to the government of Papua New Guinea’s decision not to extend Porgera’s Special Mining Lease; the duration of the temporary suspension of operations at Porgera; potential mineralization, and potential discoveries of new Tier One mines; potential extensions to life of mine, including at Veladero; potential exploration targets and mineral resource potential, including reserve

replenishment; opportunities to deliver value for Barrick’s owners and stakeholders; Barrick’s energy and sustainability strategies, including potential reductions to Barrick’s carbon footprint and costs and improvements in Barrick’s sustainability performance including the timing of Barrick’s updated ESG scorecard; future investments in community projects and contributions to local economies; expected benefits of the proposed closure solution at Golden Sunlight; and expectations regarding future price assumptions, financial performance and other outlook or guidance.

Forward-looking statements are necessarily based upon a number of estimates and assumptions including material estimates and assumptions related to the factors set forth below that, while considered reasonable by the Company as at the date of this press release in light of management’s experience and perception of current conditions and expected developments, are inherently subject to significant business, economic and competitive uncertainties and contingencies. Known and unknown factors could cause actual results to differ materially from those projected in the forward-looking statements and undue reliance should not be placed on such statements and information. 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, natural gas and electricity); the speculative nature of mineral exploration and development; changes in mineral production performance, exploitation and exploration successes; risks associated with projects in the early stages of evaluation and for which additional engineering and other analysis is required; the benefits expected from recent transactions being realized, including Nevada Gold Mines; diminishing quantities or grades of reserves; increased costs, delays, suspensions and technical challenges associated with the construction of capital projects; operating or technical difficulties in connection with mining or development activities, including geotechnical challenges and disruptions in the maintenance or provision of required infrastructure and information technology systems; failure to comply with environmental and health and safety laws and regulations; non-renewal of key licenses by governmental authorities, including non-renewal of Porgera’s Special Mining Lease; timing of receipt of, or failure to comply with, necessary permits and approvals; uncertainty whether some or all of Barrick’s targeted investments and projects will meet the Company’s capital allocation objectives and internal hurdle rate; 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 ratings; the impact of inflation; fluctuations in the currency markets; changes in U.S. dollar interest rates; risks arising from holding derivative instruments; changes in national and local government legislation, taxation, controls or regulations and/or changes in the administration of laws, policies and practices, expropriation or nationalization of property and political or economic developments in Canada, the United States and other jurisdictions in which the Company or its affiliates do or may carry on business in the future; lack of certainty with respect to foreign legal systems, corruption and other factors that are inconsistent with the rule of law; risks associated with illegal and artisanal mining; risks associated with new diseases, epidemics and pandemics, including the effects and potential effects of the global Covid-19 pandemic; disruption of supply routes which may cause delays in construction and mining activities; damage to the Company’s reputation due to the actual or perceived occurrence of any number of events, including negative publicity with respect to the Company’s handling of environmental matters or dealings with community groups, whether true or not; the possibility that future exploration results will not be consistent with the Company’s expectations; risks that exploration data may be incomplete and considerable additional work may be required to complete further evaluation, including but not limited to drilling, engineering and socioeconomic studies and investment; risk of loss due to acts of war, terrorism, sabotage and civil disturbances; litigation and legal and administrative proceedings; 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, including our ability to successfully reintegrate Acacia’s operations; risks associated with working with partners in jointly controlled assets; employee relations including loss of key employees; increased costs and physical risks, including extreme weather events and resource shortages, related to climate change; and availability and increased costs

associated with mining inputs and labor. Barrick also cautions that its 2020 guidance and five and ten year plan may be impacted by the unprecedented business and social disruption caused by the spread of Covid-19. 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 press release 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 more detailed discussion of some of the factors underlying forward-looking statements and the risks that may affect Barrick’s ability to achieve the expectations set forth in the forward-looking statements contained in this press release. We disclaim any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise, except as required by applicable law.

 
EX-99.2

Exhibit 99.2

MANAGEMENT’S DISCUSSION AND ANALYSIS (“MD&A”)

QUARTERLY REPORT ON THE FIRST QUARTER OF 2020

 

This portion of the Quarterly Report provides management’s discussion and analysis (“MD&A”) of the financial condition and results of operations, to enable a reader to assess material changes in financial condition and results of operations as at, and for the three month periods ended March 31, 2020, in comparison to the corresponding prior year periods. The MD&A is intended to help the reader understand Barrick Gold Corporation (“Barrick”, “we”, “our” or the “Company”), our operations, financial performance and present and future business environment. This MD&A, which has been prepared as of May 5, 2020, is intended to supplement and complement the condensed unaudited interim consolidated financial statements and notes thereto, prepared in accordance with International Accounting Standard 34 Interim Financial Reporting (“IAS 34”) as issued by the International Accounting Standards Board (“IASB”), for the three month periods ended March 31, 2020 (collectively, the “Financial Statements”), which are included in this Quarterly Report on pages 101 to 115. You are encouraged to review the Financial Statements in conjunction with your review of this MD&A. This MD&A should be read in conjunction with both the annual audited consolidated financial statements for the two years ended December 31, 2019, the

related annual MD&A included in the 2019 Annual Report, and the most recent Form 40–F/Annual Information Form on file with the U.S. Securities and Exchange Commission (“SEC”) and Canadian provincial securities regulatory authorities. These documents and additional information relating to the Company are available on SEDAR at www.sedar.com and EDGAR at www.sec.gov. Certain notes to the Financial Statements are specifically referred to in this MD&A and such notes are incorporated by reference herein. All dollar amounts in this MD&A are in millions of United States dollars (“$” or “US$”), unless otherwise specified.

For the purposes of preparing our MD&A, we consider the materiality of information. Information is considered material if: (i) such information results in, or would reasonably be expected to result in, a significant change in the market price or value of our shares; or (ii) there is a substantial likelihood that a reasonable investor would consider it important in making an investment decision; or (iii) it would significantly alter the total mix of information available to investors. We evaluate materiality with reference to all relevant circumstances, including potential market sensitivity.

 

 

CAUTIONARY STATEMENT ON FORWARD-LOOKING INFORMATION

 

Certain information contained or incorporated by reference in this MD&A, including any information as to our strategy, projects, plans or future financial or operating performance, constitutes “forward-looking statements”. All statements, other than statements of historical fact, are forward-looking statements. The words “believe”, “expect”, “anticipate”, “target”, “plan”, “objective”, “assume”, “intend”, “project”, “pursue”, “goal”, “continue”, “budget”, “estimate”, “potential”, “may”, “will”, “can”, “could”, “would”, “should” and similar expressions identify forward-looking statements. In particular, this MD&A contains forward-looking statements including, without limitation, with respect to: Barrick’s forward-looking production guidance; estimates of future cost of sales per ounce for gold and per pound for copper, total cash costs per ounce and C1 cash costs per pound, and all-in-sustaining costs per ounce/pound; cash flow forecasts; projected capital, operating and exploration expenditures; mine life and production rates; Barrick’s engagement with local communities to manage the Covid-19 pandemic; estimated timing for construction of, and production from, new projects, including the Goldrush twin exploration declines; timing of completion of a final feasibility study for Goldrush and approval of the plan of operations; the potential for plant expansion at Pueblo Viejo to increase throughput; potential benefits of the chloride leach project at Zaldívar and the power transmission project at Veladero; the new partnership between Barrick and the Government of Tanzania (“GoT”) and the agreement to resolve all outstanding disputes between Acacia and the GoT; Barrick and Barrick Niugini Limited’s (“BNL”) response to the government of Papua New Guinea’s decision not to extend Porgera’s special mining lease and to the Internal Revenue Commission’s proposed tax adjustments; the duration of the temporary suspension of operations at Porgera; our pipeline of high confidence projects

at or near existing operations; potential mineralization and metal or mineral recoveries; our ability to convert resources into reserves; asset sales, joint ventures and partnerships; Barrick’s strategy and plans in respect of environmental and social governance issues; and expectations regarding future price assumptions, financial performance and other outlook or guidance.

Forward-looking statements are necessarily based upon a number of estimates and assumptions including material estimates and assumptions related to the factors set forth below that, while considered reasonable by the Company as at the date of this MD&A in light of management’s experience and perception of current conditions and expected developments, are inherently subject to significant business, economic and competitive uncertainties and contingencies. Known and unknown factors could cause actual results to differ materially from those projected in the forward-looking statements and undue reliance should not be placed on such statements and information. 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, natural gas and electricity); the speculative nature of mineral exploration and development; changes in mineral production performance, exploitation and exploration successes; risks associated with projects in the early stages of evaluation and for which additional engineering and other analysis is required; the benefits expected from recent transactions being realized, including Nevada Gold Mines; diminishing quantities or grades of reserves; increased costs, delays, suspensions and technical challenges associated with the construction of capital projects; operating or technical difficulties in connection with mining or development activities, including geotechnical challenges and disruptions in the

 

 


 

BARRICK FIRST QUARTER 2020    25    MANAGEMENT’S DISCUSSION AND ANALYSIS


maintenance or provision of required infrastructure and information technology systems; failure to comply with environmental and health and safety laws and regulations; non-renewal of key licenses by governmental authorities, including non-renewal of Porgera’s Special Mining Lease; timing of receipt of, or failure to comply with, necessary permits and approvals; uncertainty whether some or all of Barrick’s targeted investments and projects will meet the Company’s capital allocation objectives and internal hurdle rate; 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 ratings; the impact of inflation; fluctuations in the currency markets; changes in U.S. dollar interest rates; risks arising from holding derivative instruments; changes in national and local government legislation, taxation, controls or regulations and/or changes in the administration of laws, policies and practices, expropriation or nationalization of property and political or economic developments in Canada, the United States and other jurisdictions in which the Company or its affiliates do or may carry on business in the future; lack of certainty with respect to foreign legal systems, corruption and other factors that are inconsistent with the rule of law; risks associated with illegal and artisanal mining; risks associated with new diseases, epidemics and pandemics, including the effects and potential effects of the global Covid-19 pandemic; disruption of supply routes which may cause delays in construction and mining activities; damage to the Company’s reputation due to the actual or perceived occurrence of any number of events, including negative publicity with respect to the Company’s handling of environmental matters or dealings with community groups, whether true or not; the possibility that future exploration results will not be consistent with the Company’s expectations; risks that exploration data may be incomplete and considerable additional work may be required to complete further evaluation, including but not limited to drilling, engineering and socioeconomic studies and investment; risk of loss due to acts of war, terrorism, sabotage and civil disturbances; litigation and legal and administrative proceedings; 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, including our ability to successfully reintegrate Acacia’s operations; risks associated with working with partners in jointly controlled assets; employee relations including loss of key employees; increased costs and physical risks, including extreme weather events and resource shortages, related to climate change; and availability and increased costs associated with mining inputs and labor. Barrick also cautions that its 2020 guidance and five year outlook may be impacted by the unprecedented business and social disruption caused by the spread of Covid-19. In addition, there are risks and hazards associated with the business of mineral exploration, development and mining, including environmental hazards, industrial accidents, unusual or unexpected formations, pressures, cave-ins, flooding and gold bullion, copper cathode or gold or copper concentrate losses (and the risk of inadequate insurance, or inability to obtain insurance, to cover these risks).

Many of these uncertainties and contingencies can affect our actual results and could cause actual results to differ materially from those expressed or implied in any forward-looking statements made by, or on behalf of, us. Readers are cautioned that forward-looking statements are not guarantees of future performance. All of the forward-looking statements made in this MD&A are qualified by these cautionary statements. Specific reference is made to the most recent Form 40-F/Annual Information Form on file with the SEC and Canadian provincial securities regulatory authorities for a more detailed discussion of some of the factors underlying forward-looking statements and the risks that may affect Barrick’s ability to achieve the expectations set forth in the forward-looking statements contained in this MD&A. We disclaim any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise, except as required by applicable law.

 

 


 

BARRICK FIRST QUARTER 2020    26    MANAGEMENT’S DISCUSSION AND ANALYSIS


USE OF NON-GAAP FINANCIAL PERFORMANCE MEASURES

We use the following non-GAAP financial performance measures in our MD&A:

   

“adjusted net earnings”

   

“free cash flow”

   

“EBITDA”

   

“adjusted EBITDA”

   

“total cash costs per ounce”

   

“C1 cash costs per pound”

   

“all-in sustaining costs per ounce/pound”

   

“all-in costs per ounce” and

   

“realized price”

For a detailed description of each of the non-GAAP financial performance measures used in this MD&A and a detailed reconciliation to the most directly comparable measure under International Financial Reporting Standards (“IFRS”), please refer to the Non-GAAP Financial Performance Measures section of this MD&A on pages 79 to 95. Each non-GAAP financial performance measure has been annotated with a reference to an endnote on page 96. The non-GAAP financial performance measures set out in this MD&A are intended to provide additional information to investors and do not have any standardized meaning under IFRS, and therefore may not be comparable to other issuers, and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS.

 

INDEX

  

 

page

   

Overview

    
   

Financial and Operating Highlights

   28
   

Key Business Developments

   32
   

Environmental and Social Governance

   34
   

Outlook

   37
   

Production and Cost Summary

   39
   

Operating Divisions Performance

   41
   

Nevada Gold Mines LLC

   42
   

Carlin

   43
   

Cortez

   45
   

Turquoise Ridge

   47
   

Other Mines - Nevada Gold Mines

   49
   

Pueblo Viejo

   50
   

Loulo-Gounkoto

   52
   

Kibali

   54
   

Veladero

   56
   

Porgera

   58
   

North Mara

   60
   

Other Mines - Gold

   62
   

Other Mines - Copper

   63
   

Growth Projects

   64
   

Exploration and Mineral Resource Management

   65
   

Review of Financial Results

   69
   

Revenue

   69
   

Production Costs

   70
   

Capital Expenditures

   71
   

General and Administrative Expenses

   72
   

Exploration, Evaluation and Project Expenses

   72
   

Finance Costs, Net

   72
   

Additional Significant Statement of Income Items

   73
   

Income Tax Expense

   73
   

Financial Condition Review

   75
   

Balance Sheet Review

   75
   

Shareholders’ Equity

   75
   

Financial Position and Liquidity

   75
   

Summary of Cash Inflow (Outflow)

   76
   
Commitments and Contingencies    77
   
Review of Quarterly Results    78
   
Internal Control over Financial Reporting and Disclosure Controls and Procedures    78
   
IFRS Critical Accounting Policies and Accounting Estimates    79
   
Non-GAAP Financial Performance Measures    79
   
Technical Information    96
   
Endnotes    96
   
Financial Statements    101
   

Notes to Consolidated Financial Statements

 

   106

 

 

 


 

BARRICK FIRST QUARTER 2020    27    MANAGEMENT’S DISCUSSION AND ANALYSIS


OVERVIEW

Financial and Operating Highlights

 

     For the three months ended 
       3/31/20       12/31/19       % Change        3/31/19       % Change  

 Financial Results ($ millions)

           

 Revenues

     2,721       2,883       (6)%        2,093       30 %  

 Cost of sales

     1,776       1,987       (11)%        1,490       19 %  

 Net earningsa

     400       1,387       (71)%        111       260 %  

 Adjusted net earningsb

     285       300       (5)%        184       55 %  

 Adjusted EBITDAb

     1,467       1,562       (6)%        1,002       46 %  

 Adjusted EBITDA marginc

     54     54     0 %        48     13 %  

 Minesite sustaining capital expendituresd

     370       394       (6)%        253       46 %  

 Project capital expendituresd

     76       46       65%        120       (37)%  

 Total consolidated capital expendituresd,e

     451       446       1 %        374       21 %  

 Net cash provided by operating activities

     889       875       2 %        520       71 %  

 Net cash provided by operating activities marginf

     33     30     10 %        25     32 %  

 Free cash flowb

     438       429       2 %        146       200 %  

 Net earnings per share (basic and diluted)

     0.22       0.78       (72)%        0.06       267 %  

 Adjusted net earnings (basic)b per share

     0.16       0.17       (6)%        0.11       45 %  

 Weighted average diluted common shares (millions of shares)

     1,778       1,778       0 %        1,746       2 %  

 Operating Results

           

 Gold production (thousands of ounces)g

     1,250       1,439       (13)%        1,367       (9)%  

 Gold sold (thousands of ounces)g

     1,220       1,413       (14)%        1,365       (11)%  

 Market gold price ($/oz)

     1,583       1,481       7 %        1,304       21 %  

 Realized gold priceb,g ($/oz)

     1,589       1,483       7 %        1,307       22 %  

 Gold cost of sales (Barrick’s share)g,h ($/oz)

     1,020       1,046       (2)%        947       8 %  

 Gold total cash costsb,g ($/oz)

     692       692       0 %        631       10 %  

 Gold all-in sustaining costsb,g ($/oz)

     954       923       3 %        825       16 %  

 Copper production (millions of pounds)i

     115       117       (2)%        106       8 %  

 Copper sold (millions of pounds)i

     110       91       21 %        103       7 %  

 Market copper price ($/lb)

     2.56       2.67       (4)%        2.82       (9)%  

 Realized copper priceb,i ($/lb)

     2.23       2.76       (19)%        3.07       (27)%  

 Copper cost of sales (Barrick’s share)i,j ($/lb)

     1.96       2.26       (13)%        2.21       (11)%  

 Copper C1 cash costsb,i ($/lb)

     1.55       1.90       (18)%        1.66       (7)%  

 Copper all-in sustaining costsb,i ($/lb)

     2.04       2.82       (28)%        2.46       (17)%  
       As at 3/31/20       As at 12/31/19           % Change        As at 3/31/19       % Change  

 Financial Position ($ millions)

           

 Debt (current and long-term)

     5,179       5,536       (6)%        5,807       (11)%  

 Cash and equivalents

     3,327       3,314       0 %        2,153       55 %  

 Debt, net of cash

     1,852       2,222       (17)%        3,654       (49)%  
a. 

Net earnings represents net earnings attributable to the equity holders of the Company.

b. 

Adjusted net earnings, adjusted EBITDA, free cash flow, adjusted net earnings per share, realized gold price, all-in sustaining costs, total cash costs, C1 cash costs and realized copper price are non-GAAP financial performance measures with no standardized meaning under IFRS and therefore may not be comparable to similar measures presented by other issuers. For further information and a detailed reconciliation of each non-GAAP measure to the most directly comparable IFRS measure, please see pages 79 to 95 of this MD&A.

c. 

Represents adjusted EBITDA divided by revenue.

d. 

Amounts presented on a consolidated cash basis. Project capital expenditures are included in our calculation of all-in costs, but not included in our calculation of all-in sustaining costs.

e. 

Total consolidated capital expenditures also includes capitalized interest.

f. 

Represents net cash provided by operating activities divided by revenue.

g. 

Includes North Mara, Bulyanhulu and Buzwagi on a 84% basis starting January 1, 2020 (and on a 63.9% basis from January 1, 2019 to September 30, 2019; notwithstanding the completion of the Acacia transaction on September 17, 2019, we consolidated our interest in Acacia and recorded a non-controlling interest of 36.1% in the income statement for the entirety of the third quarter of 2019 as a matter of convenience, and on a 100% basis from October 1, 2019 to December 31, 2019), Pueblo Viejo on a 60% basis, South Arturo on a 36.9% basis from July 1, 2019 onwards as a result of its contribution to Nevada Gold Mines (and on a 60% basis from January 1, 2019 to June 30, 2019), Veladero on a 50% basis, Loulo-Gounkoto on an 80% basis, Kibali on a 45% basis, Tongon on an 89.7% basis, and Morila on a 40% basis until the second quarter of 2019, which reflects our equity share of production and sales. Also removes the non-controlling interest of 38.5% Nevada Gold Mines from July 1, 2019 onwards.

h. 

Gold cost of sales (Barrick’s share) is calculated as cost of sales - gold on an attributable basis (excluding sites in care and maintenance) divided by ounces sold.

i. 

Amounts reflect production and sales from Jabal Sayid and Zaldívar on a 50% basis, which reflects our equity share of production, and Lumwana.

j. 

Copper cost of sales (Barrick’s share) is calculated as cost of sales - copper plus our equity share of cost of sales attributable to Zaldívar and Jabal Sayid divided by pounds sold.

 


 

BARRICK FIRST QUARTER 2020    28    MANAGEMENT’S DISCUSSION AND ANALYSIS


LOGO

 

a. 

These are non-GAAP financial performance measures with no standardized meaning under IFRS and therefore may not be comparable to similar measures presented by other issuers. For further information and a detailed reconciliation of each non-GAAP measure to the most directly comparable IFRS measure, please see pages 79 to 95 of this MD&A.

b. 

Cost of sales applicable to gold per ounce is calculated using cost of sales applicable to gold on an attributable basis (removing the non-controlling interest of 40% Pueblo Viejo; 20% Loulo-Gounkoto; 10.3% Tongon; 16% North Mara, Bulyanhulu and Buzwagi starting January 1, 2020, the date the GoT’s 16% free carried interest was made effective (36.1% from January 1, 2019 to September 30, 2019; notwithstanding the completion of the Acacia transaction on September 17, 2019, we consolidated our interest in Acacia and recorded a non-controlling interest of 36.1% in the income statement for the entirety of the third quarter of 2019 as a matter of convenience); 63.1% South Arturo from cost of sales from July 1, 2019 onwards as a result of its contribution to Nevada Gold Mines (and on a 40% basis from January 1, 2019 to June 30, 2019); and our proportionate share of cost of sales attributable to equity method investments (Kibali, and Morila until the second quarter of 2019), divided by attributable gold ounces. Also removes the non-controlling interest of 38.5% Nevada Gold Mines from cost of sales from July 1, 2019 onwards. Cost of sales applicable to copper per pound is calculated using cost of sales applicable to copper including our proportionate share of cost of sales attributable to equity method investments (Zaldívar and Jabal Sayid), divided by consolidated copper pounds (including our proportionate share of copper pounds from our equity method investments).

 


 

BARRICK FIRST QUARTER 2020    29    MANAGEMENT’S DISCUSSION AND ANALYSIS


Factors affecting net earnings and adjusted net earnings1 - three months ended March 31, 2020 versus December 31, 2019

Net earnings attributable to equity holders of Barrick (“net earnings”) for the three months ended March 31, 2020 were $400 million compared to $1,387 million in the prior quarter. The significant decrease was primarily due to items occurring in the prior quarter, including:

   

a $628 million gain (no tax impact) on the de-recognition of the deferred revenue liability relating to our silver sale agreement on Pascua-Lama with Wheaton Precious Metals Corp.;

   

a gain of $408 million (no tax impact) resulting from the sale of our 50% interest in Kalgoorlie;

   

a gain of $216 million (no tax impact) on a settlement of customs duty and indirect taxes at Lumwana; and

   

net impairment charges of $22 million ($566 million net reversal before tax and non-controlling interest) relating to an impairment reversal at Pueblo Viejo and an impairment charge at Pascua-Lama.

In the current quarter, net earnings was impacted by a net impairment reversal of $115 million ($336 million before tax) resulting from the agreement with the GoT being signed and made effective in the quarter. In addition, there was a $54 million gain (no tax impact) on the sale of Massawa.

After adjusting for items that are not indicative of future operating earnings, adjusted net earnings1 of $285 million for the three months ended March 31, 2020 were 5% lower than the prior quarter. The decrease in adjusted net earnings1 was mainly from lower gold sales volumes primarily due to lower grades at North Mara, Pueblo Viejo, Turquoise Ridge and Porgera, combined with a decrease in our attributable production at North Mara, Bulyanhulu and Buzwagi from 100% to 84%, as well as the sale of our 50% interest in Kalgoorlie. This was partially offset by higher realized gold prices1 of $1,589 per ounce in the three months ended March 31, 2020 compared to $1,483 per ounce in the prior quarter.

Factors affecting net earnings and adjusted net earnings1 - three months ended March 31, 2020 versus March 31, 2019

Net earnings for the first quarter of 2020 were $400 million compared to $111 million in the same prior year period. The increase was primarily due to the higher realized gold price1 of $1,589 per ounce in the three months ended March 31, 2020 compared to $1,307 per ounce in the same prior year period. This was partially offset by lower gold sales at Cortez due to lower grades processed and the sale of our 50% interest in Kalgoorlie on November 28, 2019. Other items occurring in the current quarter include:

   

$91 million in other expense adjustments ($98 million before tax), primarily related to the impact of changes in the discount rate assumptions on our closed mine rehabilitation provision;

   

a net impairment reversal of $115 million ($336 million before tax) resulting from the agreement with the GoT being signed and made effective in the quarter; and

   

a $54 million gain (no tax impact) on the sale of Massawa.

After adjusting for items that are not indicative of future operating earnings, adjusted net earnings1 of $285 million in the first quarter of 2020 were $101 million higher than the same prior year period. The increase in adjusted net earnings1 was primarily due to the higher realized gold price1 partially offset by lower gold sales as explained in the section above.

Refer to page 80 for a full list of reconciling items between net earnings and adjusted net earnings1 for the current and previous periods.

* Numerical annotations throughout the text of this document refer to the endnotes found on page 96.

 


 

BARRICK FIRST QUARTER 2020    30    MANAGEMENT’S DISCUSSION AND ANALYSIS


Factors affecting Operating Cash Flow and Free Cash Flow1 - three months ended March 31, 2020 versus December 31, 2019

In the three months ended March 31, 2020, we generated $889 million in operating cash flow, compared to $875 million in the prior quarter. The increase of $14 million was primarily due to lower income taxes and cash interest paid, combined with higher realized gold prices1 of $1,589 per ounce in the three months ended March 31, 2020 compared to $1,483 per ounce in the prior quarter, partially offset by lower gold sales volume. Operating cash flow was further impacted by an unfavorable movement in working capital, mainly in other current assets and liabilities, partially offset by a favorable movement resulting from the timing of payments and receivables.

Free cash flow1 for the three months ended March 31, 2020 was $438 million, compared to $429 million in the prior quarter, reflecting higher operating cash flows, while capital expenditures of $451 million for the three months ended March 31, 2020 remained relatively consistent with the prior quarter of $446 million. In the first quarter of 2020, project capital expenditures increased primarily as a result of the funding of a power transmission line in Argentina, which was offset by lower minesite sustaining capital expenditures resulting from lower capitalized stripping at Turquoise Ridge and Porgera.

Factors affecting Operating Cash Flow and Free Cash Flow1 - three months ended March 31, 2020 versus March 31, 2019

In the first quarter of 2020, we generated $889 million in operating cash flow, compared to $520 million in the same prior year period. The increase of $369 million was primarily due to higher realized gold prices1 of $1,589 per ounce in the three months ended March 31, 2020 compared to $1,307 per ounce in the same prior year period, partially offset by lower gold sales volume.

In the first quarter of 2020, we generated free cash flow1 of $438 million compared to $146 million in the same prior year period. The increase primarily reflects higher operating cash flows, partially offset by higher capital expenditures. In the first quarter of 2020, capital expenditures on a cash basis were $451 million compared to $374 million in the first quarter of 2019. The increase in capital expenditures of $77 million was primarily due to the impact of the sites acquired as part of the formation of Nevada Gold Mines, which commenced on July 1, 2019, and is consolidated and included at 100%.

 


 

BARRICK FIRST QUARTER 2020    31    MANAGEMENT’S DISCUSSION AND ANALYSIS


Key Business Developments

 

Covid-19 pandemic

Barrick continues to work closely with our local communities on managing the impacts of the Covid-19 pandemic on our people and our business. Barrick has a strong culture of caring for the welfare of its employees and communities. Our well-established prevention practices and procedures, and the experience we gained from dealing with two Ebola outbreaks around our African operations, will assist us as we face this new and unprecedented challenge. We have been actively working to support government responses to the coronavirus pandemic, both financially and using our supply chain to secure key supplies for the benefit of the community.

Although we have adjusted some of our operating procedures, to date our operations have not been significantly impacted by Covid-19. Our preference for employing nationals in the countries where we operate rather than expatriates, means that we are not dependent upon a workforce traveling to a site on a regular basis from other parts of the globe.

Early and considered actions by management including social distancing and testing measures have been implemented at all our sites. This has allowed our sites to continue to produce and sell their production and keep our people and local communities safe at the same time. These actions have minimized the impacts of the pandemic at our operations and facilitated the delivery of strong operating cash flow in the first quarter. Our focus on strengthening our balance sheet in recent years has given us the financial strength to endure any short-term impacts to our operations. We have $3.3 billion in cash, an undrawn $3 billion credit facility and no significant debt repayments due until 2033, providing us with sufficient liquidity to execute on our strategic goals.

We also recognize the situation remains dynamic and as such we continue to monitor developments around the world and we believe we have positioned Barrick as best we can to weather the storm.

Sale of Massawa

On March 4, 2020, Barrick and our Senegalese joint venture partner completed the sale of our aggregate 90% interest in the Massawa project (“Massawa”) in Senegal to Teranga Gold Corporation (“Teranga”) for total consideration fair valued at $440 million on the date of closing. Barrick received 92.5% of the consideration for its interest in the Massawa project, with the balance received by Barrick’s local Senegalese partner. Barrick received a net of $256 million in cash and 19,164,403 Teranga common shares (worth $104 million at the date of closing) plus a contingent payment of up to $50 million based on the three year average gold price, which was valued at $28 million at the date of closing. The cash consideration received was net of $25 million that Barrick provided through its participation in the $225 million syndicated debt financing facility secured by Teranga in connection with the transaction. The facility has a final repayment date of December 31, 2022. The difference between the fair value of consideration received and the carrying value of the assets on closing was $54 million and has been recognized as a gain in the first quarter of 2020.

Refer to note 4 to the Financial Statements for more information.

Tanzania

On January 24, 2020, Barrick announced that the Company had ratified the creation of Twiga Minerals Corporation (“Twiga”) at a signing ceremony with the President of Tanzania, formalizing the establishment of a joint venture between Barrick and the Government of Tanzania (“GoT”) and resolution of all outstanding disputes between Barrick and the GoT, including the lifting of the previous concentrate export ban, effective immediately. Effective January 1, 2020, the GoT received a free carried shareholding of 16% in each of the Tanzania mines (Bulyanhulu, Buzwagi and North Mara), a 16% interest in the shareholder loans owed by the operating companies and will receive half of the economic benefits from the Tanzanian operations from taxes, royalties, clearing fees and participation in all cash distributions made by the mines and Twiga, after the recoupment of capital investments. Twiga will provide management services to the mines. Refer to note 13 to the Financial Statements for further information.

The terms of the signed agreement are consistent with those previously announced, including the payment of $300 million to settle all outstanding tax and other disputes (the “Settlement Payment”); the lifting of the concentrate export ban; the sharing of future economic benefits from the mines on a 50/50 basis; and a dispute resolution mechanism that provides for binding international arbitration. The 50/50 division of economic benefits will be maintained through an annual true-up mechanism, which is exclusive of the Settlement Payment.

Barrick and the GoT continue efforts to fulfill their respective obligations to satisfy all conditions of the signed agreement, primarily with respect to the execution and delivery of formal termination documents for the settlement of all outstanding disputes between the two parties. In the second quarter of 2020, exports of the concentrate stockpiled in Tanzania commenced and we expect to start recognizing these sales in revenue and cost of sales. We also expect to make a payment of $100 million to the GoT representing the first installment of the Settlement Payment in the second quarter of 2020, reducing the previously recorded Settlement Payment liability of $300 million on the balance sheet.

Operating results are included at 84% from January 1, 2020. In the first quarter of 2020, we recognized a net impairment reversal of $115 million ($336 million before tax) resulting from the agreement with the GoT being signed and made effective in the quarter. Refer to note 13 to the Financial Statements for more information.

Porgera Special Mining Lease Extension

Porgera’s current Special Mining Lease (“SML”) terminated on August 16, 2019. The Company applied for a 20-year extension of the SML in June 2017 and has been engaging with the government on this matter since then. On August 2, 2019, the National Court of Papua New Guinea ruled that the provisions of the country’s 1992 Mining Act applied to the Porgera gold mine, thus allowing it to continue operating while the application to extend its Special Mining Lease was being considered. Also in 2019, in response to a request from Papua New Guinea Prime Minister Marape, the Company proposed a benefit-sharing arrangement that would deliver more than half the economic benefits from the Porgera mine

 

 


 

BARRICK FIRST QUARTER 2020    32    MANAGEMENT’S DISCUSSION AND ANALYSIS


to Papua New Guinea stakeholders, including the Government, for 20 years.

On April 24, 2020, Barrick Niugini Limited (“BNL”), the majority owner and operator of the Porgera joint venture, received a communication from the Government of Papua New Guinea that the SML will not be extended. The Company believes the Government’s decision not to extend the SML is tantamount to nationalization without due process and in violation of the Government’s legal obligations to BNL. The Company remains willing to discuss the issue with Prime Minister Marape and his government in light of the potentially catastrophic impact of this decision for the communities at Porgera and in the Enga Province, and for the country as a whole. BNL will pursue all legal avenues to challenge the Government’s decision and to recover any damages that BNL may suffer as a result of the Government’s decision. The Company will not discuss transitional arrangements for the management of the Porgera mine, as proposed by the Government, as this is not consistent with BNL’s rights, which were confirmed by the National Court’s decision in August 2019. Based on the communication we received from the Government of Papua New Guinea that the SML will not be extended, Porgera was placed on temporary care and maintenance on April 25, 2020 to ensure the safety and security of our employees and communities.

On April 28, 2020, BNL filed a Judicial Review action against the Government of Papua New Guinea in the Papua New Guinea National Court of Justice. Judicial review is a proceeding that challenges the procedural and constitutional adequacy of government administrative actions. The Judicial Review action seeks to quash the decision not to extend the SML on the grounds that the Government did not comply with the applicable legal standards and processes. BNL asked the National Court for a stay of the decision not to extend the SML to enable BNL to stay in possession of the mine to put it on temporary care and maintenance and to protect the mine’s assets. After a hearing on April 30, 2020, the National Court ordered that BNL could stay in possession of the Porgera mine “to ensure that the environment, the integrity of the mine and

the rights of the landowners are not compromised” and ordered the Government of Papua New Guinea to cooperate with that objective. The National Court also ordered the parties to engage in substantive negotiations regarding the issues in the case and to return to the Court to report on progress on May 8, 2020.

Our priority remains the health and safety of all our employees and community stakeholders. Due to the uncertainty related to the timing and scope of future developments on the mine’s operating outlook, we are withdrawing our full year 2020 guidance for Porgera at this time. As this is a rapidly evolving situation, we will reassess on an ongoing basis and provide further updates in due course, while maintaining operational readiness.

Porgera Tax Audits

On April 9, 2020, BNL received a position paper from the Internal Revenue Commission (“IRC”) in Papua New Guinea asserting various proposed adjustments and other taxes amounting to $191 million (not including potential penalties) arising from tax audits of BNL conducted for 2006 through 2015. The IRC provided BNL with an opportunity to respond to the position paper by June 30, 2020 and BNL intends to respond by that date. The Company has reviewed the IRC position paper and concluded that there is no merit to the proposed adjustments, except for certain immaterial items for which a provision had already been made. The Company intends to defend its position vigorously and has not recorded any additional estimated amounts for the potential liability arising from the IRC position paper.

Debt Management

On January 31, 2020, Barrick paid $356 million, including $4 million of accrued and unpaid interest, to complete a make-whole repurchase of the $337 million of outstanding principal on our 3.85% Notes due April 2022. A loss on debt extinguishment of $15 million was recorded in the first quarter of 2020. The debt repayment is expected to result in an annualized interest savings of $13 million.

 

 


 

BARRICK FIRST QUARTER 2020    33    MANAGEMENT’S DISCUSSION AND ANALYSIS


Environmental and Social Governance

 

At Barrick, the focus on Environmental and Social Governance (“ESG”) is something we have been doing since we began. It is a part of our daily business and entrenched in our DNA. It is enshrined in our sustainability vision and mission as well as in our principles. We track our sustainability performance because it helps us make better decisions, helps to de-risk projects, discover new opportunities and deliver real value for our business. Sustainable development is truly at the heart of Barrick and our sustainability vision is embedded in every aspect of what we do.

To reinforce our belief in transparently disclosing our ESG performance and to better understand our performance relative to our industry peers, we developed and published our inaugural Sustainability Scorecard with the publication of our 2019 Sustainability Report released in April 2020. The scorecard ranks us against our peers, where applicable, and against our own internal metrics and aggregates that performance into an overall score. It compares our performance across our priority ESG areas: Health and Safety, Social and Economic Development, Human Rights, the Environment and Governance. After reviewing the published performance metrics from our peers, we were able to quantify our score. Overall, we scored a B grade (on a scale where A represents high performance and E represents poor performance), which we believe accurately reflected our improvements in sustainability performance through 2019.

Our sustainability vision puts four key ambitions at the center of our business: creating economic benefits; protecting health and safety; respecting human rights; and minimizing our environmental impact.

Safety

Our safety vision is “Every person going home safe and healthy every day.” In 2019, we operated with zero fatalities. However, our Total Reportable Injury Frequency Rate (“TRIFR”) increased 5%, from 2.12 to 2.24, compared to the previous year. In analyzing the incidents and frequencies, we note that the combination of assets into Nevada Gold Mines in the North America region had an impact on our performance. Specific action is being implemented at Nevada Gold Mines to improve the safety performance. The Africa and Middle East region improved year-on-year in both Lost Time Injuries (“LTI”) and TRIFR.

Barrick is fully committed to the safety, health and well-being of our people, their families and the communities in which we operate. We review safety performance and incidents, share lessons learned and communicate best practices across our business during weekly Executive Committee meetings which is the main forum for senior management to review our current safety performance. Safety performance is also reported as part of our quarterly Environmental and Social (“E&S”) Oversight Committee meetings and to the Board’s Corporate Governance & Nominating Committee.

While our group level commitments are the same, how these are translated on the ground varies, and each site has its own site-specific safety procedures, management plans and systems in place, informed by its operating context. All site systems, plans and procedures align with international best practice. Our goal is for the safety management systems at

all operational mines to be certified to the internationally recognized ISO 45001 standard by the end of 2021.

During 2019, our renewed focus on safety and reaffirmed commitment to prevent fatalities led to the company-wide roll out of new controls including our ten Fatality Prevention Commitments to help eliminate fatalities and serious injuries. Our Fatality Prevention Commitments align with the International Council on Mining and Metal’s Life Saving Controls, which are based upon lessons learned from fatal incidents within the mining industry, including Barrick’s experience. Our Commitments and Unacceptable Behaviors guideline has also been implemented, which reaffirms our zero-tolerance policy for behavior such as working on site under the influence of drugs or alcohol.

The on-going focus on safety has helped drive safety performance improvements across the group in the first quarter of 2020. The group recorded four fewer LTIs and five fewer Total Recordable Injuries (“TRI”) compared to the previous quarter. Accordingly, the related frequency rates also decreased quarter on quarter. For the first quarter of 2020, our group Lost Time Injury Frequency Rate (“LTIFR”) was 0.32 and the TRIFR was 1.64.

Environment

Barrick continues to rebuild its reputation for environmental excellence and aims to become the world’s most valued gold mining business by delivering sustainable returns for our owners and partners, including the host communities and countries in which we operate.

We have set a corporate goal for all sites to have their Environmental Management System (“EMS”) certified to the ISO 14001:2015 standard by the end of 2020. Currently, all operations, except the Jabal Sayid mine in Saudi Arabia and the three Tanzanian mines, are certified to this standard.

In 2019, we introduced a new Environmental Incident Reporting and Investigation Standard to better define the classification, reporting, responsibility and investigation of environmental incidents at Barrick sites. As defined by our new system, we had zero Class 1 (High Significance)3 environmental incidents.

During the first quarter of 2020, we maintained this performance and did not record any Class 1 environmental incidents.

Climate

Climate change, including shifts in temperature and precipitation and more frequent severe weather events, could affect the mining industry in a range of possible ways. For example, volatile climatic conditions can affect the stability and effectiveness of infrastructure and equipment; potentially impact environmental protection and site closure practices; lead to changes in the regulatory environment, including increased carbon tax regimes; and potentially impact the stability and cost of water as well as energy supplies. We therefore view climate change as a company, community, and global concern. In 2019, following our merger with Randgold (the “Merger”) and the formation of Nevada Gold Mines, we

 

 


 

BARRICK FIRST QUARTER 2020    34    MANAGEMENT’S DISCUSSION AND ANALYSIS


reviewed and updated the climate change strategy developed in 2017.

Barrick’s climate change strategy has three pillars: identify, understand and mitigate the risks associated with climate change; measure and reduce our impacts on climate change; and improve our disclosure on climate change. Action taken on each pillar in 2019 is described below.

Identify, understand and mitigate the risks associated with climate change

We continue to take steps to identify and manage risks and build resilience to climate change, as well as to position ourselves for new opportunities. In 2019, climate change- related factors continued to be incorporated into Barrick’s formal risk assessment process (for example, consideration is given to the availability of and access to water and the impact of increased precipitation, drought, or severe storms on operations as well as on communities near our operations). We have identified several climate-related risks and opportunities for our business: physical impacts of climate change, such as an increase in extended duration extreme precipitation events; an increase in regulations that seek to address climate change; and increased global investment in innovation and low-carbon technologies.

Measure and reduce the Company’s impact on climate change

Mining is an energy-intensive business, and we understand the important link between energy use and greenhouse gas (“GHG”) emissions. By effectively measuring and managing our energy use, we can reduce our draw from local energy grids, reduce our GHG emissions, achieve more efficient production, and reduce our costs. In 2019, we progressed the conversion of the Quisqueya I power generation facility in the Dominican Republic from heavy fuel oil to natural gas and we received the first liquefied natural gas deliveries in the first quarter of 2020. The conversion will help reduce the mine site’s power generation costs and is expected to reduce GHG emissions by 30%. We also advanced a power transmission project at Veladero to connect the mine to grid power and started construction of a solar plant at Loulo-Gounkoto. Each of these projects is expected to reduce the need for diesel generators, thereby reducing our emissions and power generation costs.

Additionally, at Zaldívar, our electricity supply will be from 100 percent renewable energy sources such as hydro, solar or wind starting in July 2020, which will be verified by an external party. Zaldívar is expected to be the first Chilean mine to use 100 percent renewable energy to produce copper.

Improve our disclosure on climate change

In 2019, one of our first reporting activities as a merged Company was to complete the CDP (formerly known as the Carbon Disclosure Project) emissions questionnaire which makes investor-relevant climate data widely available. Barrick received a grade of B minus on the CDP Climate Change Questionnaire. This grade places Barrick in the management scoring band with a rank higher than our sector and regional peers. Approximately 32% of companies assessed are ranked in the ‘management scoring band’. We are working to improve our performance in 2020.

Throughout 2019, the Board’s Corporate Governance and Nominating Committee, which met quarterly, was responsible

for overseeing Barrick’s policies, programs, and performance relating to the environment, including climate change. The Audit and Risk Committee assisted the Board in overseeing the Company’s management of enterprise risks as well as the implementation of policies and standards for monitoring and mitigating such risks. Climate change is built into our formal risk management process, outputs of which were reviewed by the Audit and Risk Committee throughout 2019. In addition, the Audit and Risk Committee reviewed the Company’s approach to climate change in the context of Barrick’s public disclosures.

As detailed in our 2019 Sustainability Report, Barrick has updated its GHG emissions reduction target to achieve a reduction of at least 10% by 2030 while maintaining a steady ounce production profile. The basis of this reduction is against a 2018 baseline that combines legacy Barrick and Randgold data as well as 2018 emissions from the assets over which we assumed operational control in 2019 including Nevada Gold Mines and the Tanzanian mines. Barrick’s actions to achieve this target include increasing the proportion of renewable energy sources in the company’s energy mix and switching to cleaner energy sources.

We expect our climate change activities to continue through 2020 and beyond. Site-level climate-related risks and mitigation plans will continue to be reviewed in the context of the company-wide risk assessment, and site-level plans to reduce energy and GHG emissions will be strengthened. We also expect to continue providing our climate-related disclosure. We continue to align our disclosures with the Taskforce on Climate-related Financial Disclosures (TCFD) and in 2020 will work to incorporate scenario analysis into our disclosure. Overall, based on the work completed, Barrick continues to build resilience to withstand the potential impacts of climate change and leverage potential opportunities as the global economy transitions to a low-carbon future.

Water

Our aim is to deliver enough water for the effective operation of our mines, while at the same time protecting the quality and quantity of water available to host communities and other users in our watersheds. Our commitment to responsible water use is codified in our Environmental Policy, which compels us to minimize our use of water, control and manage our impacts on water quality, and engage with stakeholders including local communities to maintain sustainable management of water resources for the benefit of all local users.

Each mine has its own site-specific water management plan, which considers: 1) the different water sources available; 2) the local climate conditions; and 3) the needs of local users and the needs of the mine. This information is supplemented by a range of international frameworks and tools such as the WWF Water Risk Filter to evaluate water risks.

We include each mine’s water risks in its operational risk register. These risks are then aggregated and incorporated into the corporate risk register. Our identified water related risks include: 1) Managing excess water in regions with high rainfall; 2) Maintaining access to water in arid areas and regions prone to water scarcity; and 3) Regulatory risks related to permitting limits as well as municipal and national regulations for water use.

 

 


 

BARRICK FIRST QUARTER 2020    35    MANAGEMENT’S DISCUSSION AND ANALYSIS


During the first quarter, our water recycling and reuse rate was 77%, which is above our annual target of 75%.

Tailings

We are committed to ensuring our tailings storage facilities (TSFs) meet global best practices for safety. Our TSFs are carefully engineered and regularly inspected, particularly those in regions with high rainfall and seismic activities.

Barrick currently manages 70 TSFs, of which 22 (31%) are operating, 47 (67%) are closed, and one is inactive. A riverine tailings disposal system is operated at the Porgera Joint Venture in Papua New Guinea. In 2020, independent reviews will be conducted at our Pueblo Viejo, Turquoise Ridge, Phoenix, Carlin, Hemlo, Loulo-Gounkoto and Tongon mines, and at the Giant Nickel and Nickel Plate closure sites.

During the first quarter of 2020, a third party review was undertaken at the Llagal TSF at Pueblo Viejo and a review of the first draft of the 2020 site investigation campaign was carried out at the Nickel Plate closure site.

Social

We regard our host communities and countries as important partners in our business, and we are committed to contributing to their social and economic development. Our sustainability policies also commit us to be transparent in our relationships with host communities, government authorities, the public and other key stakeholders as well as to conduct our business with integrity through our absolute opposition to corruption, and through requiring our suppliers to operate ethically and responsibly as a condition of doing business with us.

Community and economic development

Our commitment to social and economic development is set out in our overarching Sustainable Development Policy and our Social Performance Policy.

 

Paying our fair share of taxes - The taxes, royalties and dividends we pay provide significant income for our host countries as well as help to fund vital services and infrastructure. We report all payments to government and taxes paid transparently, primarily through the Canadian Extractive Sector Transparency Measures Act (“ESTMA”) reporting.

 

Prioritizing local hiring - The jobs we create provide valuable training and employment in regions where opportunities are often scarce, while the priority we place on buying goods and services from local communities and host countries leverages our supply chain and multiplies the economic benefits of our presence. 97% of our workers and 76% of senior management are nationals from our host countries. We have a target of 80% of senior management from host country nationals by the end of 2020.

 

Prioritizing local buying - Our procurement processes prioritize local companies, followed by those from the larger region or host country. In 2019, we procured over $4.4 billion of goods and services from suppliers based in our host countries.

 

Investing in community-led development initiatives - We believe that no one knows the needs of local communities better than the communities themselves. That is why we have set a target for all our sites to have community development committees (“CDC”). The role of the CDC is

   

to allocate the community investment budget to those projects and initiatives most needed and desired by the local communities. Each CDC is elected and is made up of a mix of local leaders, community members and representatives from local women and youth groups. In the first quarter of 2020, we spent $4.2 million on community development across the group.

Human rights

Respect for human rights is a central part of our sustainability vision. We have zero tolerance for human rights violations wherever we operate. We avoid causing or contributing to human rights violations and we facilitate access to remedies. Our commitment to respect human rights is codified in our standalone Human Rights Policy and informed by the expectations of the UN Guiding Principles on Business and Human Rights, the Voluntary Principles on Security and Human Rights, and the OECD Guidelines for Multinational Enterprises.

Our commitments to respect human rights is operationalized on the ground via our Human Rights Program, the fundamental principles of which include:

 

Monitoring and reporting

 

Due diligence

 

Training

 

Disciplinary action and remedy

We also expect the same standards from those we work with including suppliers as our supplier Code of Ethics includes human rights provisions.

Responsibility for the oversight and implementation of our human rights compliance program sits with our Group Sustainability Executive, with support from our Senior Vice President Business Assurance and Risk, and our Human Resources Executive.

Governance

At the management level, in furtherance of its commitment to sustainability, Barrick established the E&S Committee in 2019. The E&S Committee is chaired by the President and Chief Executive Officer, and includes each of the regional Chief Operating Officers, Mine General Managers and health, safety, and environment and closure leads, as well as the Group Sustainability Executive and an independent sustainability consultant. The E&S Committee meets each quarter to review the Company’s sustainability performance and compliance with its sustainability policies, as well as to identify concerns and opportunities at the Company’s operations at an early stage. The President and Chief Executive Officer reviews the reports of the E&S Committee with the Board’s Corporate Governance and Nominating Committee on a quarterly basis as part of the Committee’s mandate to oversee the policies and performance of Barrick’s environmental, safety and health, corporate social responsibility, and human rights programs.

Further to the specific focus of the E&S Committee, weekly Executive Committee review meetings allow for the discussion of opportunities and risks that may help or hinder the Company from achieving its objectives, including climate-related risks.

 

 


 

BARRICK FIRST QUARTER 2020    36    MANAGEMENT’S DISCUSSION AND ANALYSIS


Full Year 2020 Outlook

Our priority remains the health and safety of all our employees and community stakeholders. Based on the communication we received from the Government of Papua New Guinea that the SML will not be extended, Porgera was placed on temporary care and maintenance on April 25, 2020 to ensure the safety and security of our employees and communities. Due to the uncertainty related to the timing and scope of future developments on the mine’s operating outlook, we are withdrawing our full year 2020 guidance for Porgera at this time. As this is a rapidly evolving situation, we will reassess on an ongoing basis and provide further updates in due course, while maintaining operational readiness.

Exclusively due to this development at Porgera, we are adjusting our 2020 gold production guidance for the group to be 4.6 to 5.0 million ounces from 4.8 to 5.2 million ounces. Group 2020 cost guidance remains unchanged, including cost of sales of $980 - $1,030 per ounce2, total cash costs of $650 - $700 per ounce1 and all-in sustaining costs of $920 - $970 per ounce1. We continue to expect gold production in the second half of 2020 to be slightly higher than the first half. Consequently, we anticipate gold production in the second quarter to be lower than the first quarter based on mine sequencing and planned maintenance shutdowns.

Additionally, we are continuing to monitor the impact of the coronavirus pandemic. Our 2020 guidance may be further impacted if the operation or development of our mines and/ or projects are disrupted due to efforts to slow the spread of the virus.

Notwithstanding the additional risks from the coronavirus pandemic, at this stage, all remaining guidance metrics are unchanged.

Company Outlook
    ($ millions, except per ounce/pound data)
  

2020

Estimate

 

Gold production (millions of ounces)

     4.60 - 5.00  

Gold unit production costs

  

  Cost of sales - gold ($/oz)

     980 - 1,030  

  Total cash costs ($/oz)a

     650 - 700  

  Depreciation ($/oz)

     300 - 330  

  All-in sustaining costs ($/oz)a

     920 - 970  

Copper production (millions of pounds)

     440 - 500  

Copper unit production costs

  

  Cost of sales - copper ($/lb)

     2.10 - 2.40  

  C1 cash costs ($/lb)a

     1.50 - 1.80  

  Depreciation ($/lb)

     0.60 - 0.70  

  All-in sustaining costs ($/lb)a

     2.20 - 2.50  

Exploration and project expenses

     280 - 320  

  Exploration and evaluation

     210 - 230  

  Project expenses

     70 - 90  

General and administrative expenses

     ~170  

  Corporate administration

     ~130  

  Share-based compensationb

     ~40  

Other expense

     80 - 100  

Finance costs, net

     400 - 450  

Attributable capital expenditures:

  

  Attributable minesite sustaining

     1,300 - 1,500  

  Attributable project

     300 - 400  

Total attributable capital expendituresc

     1,600 - 1,900  

Effective income tax rated

     30% - 35%  

Key assumptions (used for guidance)

  

Gold Price ($/oz)

     1,350  

Copper Price ($/lb)

     2.75  

Oil Price (WTI) ($/barrel)

     65  

AUD Exchange Rate (AUD:USD)

     0.70  

ARS Exchange Rate (USD:ARS)

     65  

CAD Exchange Rate (USD:CAD)

     1.30  

CLP Exchange Rate (USD:CLP)

     725  

EUR Exchange Rate (EUR:USD)

     1.20  
a.

Total cash costs, C1 cash costs and all-in sustaining costs are non-GAAP financial performance measures with no standardized meaning under IFRS and therefore may not be comparable to similar measures of performance presented by other issuers. For further information and a detailed reconciliation of the non- GAAP measures used in this section of the MD&A to the most directly comparable IFRS measure, please see pages 79 to 95 of this MD&A.

b.

Based on US$17.51 share price.

c.

2020 Guidance includes our 61.5% share of Nevada Gold Mines, our 60% share of Pueblo Viejo, our 80% share of Loulo-Gounkoto, our 89.7% share of Tongon, our 84% share of North Mara, Bulyanhulu and Buzwagi, our 50% share of Zaldívar and Jabal Sayid, and our 45% share of Kibali, and our share of joint operations.

d.

Based on key assumptions included in this table.

 

 

BARRICK FIRST QUARTER 2020   37    MANAGEMENT’S DISCUSSION AND ANALYSIS


Operating Division Guidance

Our 2020 forecast gold and copper production, cost of sales, total cash costsa, and all-in sustaining costsa ranges by operating division are as follows:

 

Operating Division   

2020 forecast attributable

production (000s ozs)

    

2020 forecast cost of

sales($/oz)

    

2020 forecast total cash

costs($/oz)

    

2020 forecast all-in

sustaining costs($/oz)

 

 Gold

           

Carlin (61.5%)c

     1,000 - 1,050        920 - 970        760 - 810        1,000 - 1,050  

Cortez (61.5%)

     450 - 480        980 - 1,030        640 - 690        910 - 960  

Turquoise Ridge (61.5%)

     430 - 460        900 - 950        540 - 590        690 - 740  

Phoenix (61.5%)

     100 - 120        1,850 - 1,900        700 - 750        920 - 970  

Long Canyon (61.5%)

     130 - 150        910 - 960        240 - 290        450 - 500  

Nevada Gold Mines (61.5%)

     2,100 - 2,250        970 - 1,020        660 - 710        880 - 930  

Hemlo

     200 - 220        960 - 1,010        800 - 850        1,200 - 1,250  

North America

     2,300 - 2,450        970 - 1,020        660 - 710        900 - 950  

Pueblo Viejo (60%)

     530 - 580        840 - 890        520 - 570        720 - 770  

Veladero (50%)

     240 - 270        1,220 - 1,270        670 - 720        1,250 - 1,300  

Porgera (47.5%)d

                                   

Latin America & Asia Pacific

     800 - 900        930 - 980        610 - 660        890 - 940  

Loulo-Gounkoto (80%)

     500 - 540        1,050 - 1,100        620 - 670        970 - 1,020  

Kibali (45%)

     340 - 370        1,030 - 1,080        600 - 650        790 - 840  

North Mara (84%)e

     240 - 270        750 - 800        570 - 620        830 - 880  

Tongon (89.7%)

     240 - 260        1,390 - 1,440        680 - 730        740 - 790  

Bulyanhulu (84%)e

     30 - 50        1,210 - 1,260        790 - 840        1,110 - 1,160  

Buzwagi (84%)e

     80 - 100        850 - 900        820 - 870        850 - 900  

 Africa & Middle East

 

    

 

1,450 - 1,600

 

 

 

    

 

1,040 - 1,090

 

 

 

    

 

640 - 690

 

 

 

    

 

870 - 920

 

 

 

 Total Attributable to Barrickf,g,h

 

    

 

4,600 - 5,000

 

 

 

    

 

980 - 1,030

 

 

 

    

 

650 - 700

 

 

 

    

 

920 - 970

 

 

 

           
     

2020 forecast attributable

production (M lbs)

    

2020 forecast cost of

salesa ($/lb)

    

2020 forecast C1 cash

costsb ($/lb)

    

2020 forecast all-in

sustaining costs($/lb)

 

 Copper

           

Lumwana

     250 - 280        2.20 - 2.40        1.50 - 1.70        2.30 - 2.60  

Zaldívar (50%)

     120 - 135        2.40 - 2.70        1.65 - 1.85        2.30 - 2.60  

Jabal Sayid (50%)

     60 - 70        1.75 - 2.00        1.40 - 1.60        1.50 - 1.70  

 Total Copperh

     440 - 500        2.10 - 2.40        1.50 - 1.80        2.20 - 2.50  
  a.

Cost of sales applicable to gold per ounce is calculated using cost of sales applicable to gold on an attributable basis (removing the non-controlling interest of 38.5% of Nevada Gold Mines (including 63.1% of South Arturo), 40% of Pueblo Viejo, 20% of Loulo-Gounkoto, 10.3% of Tongon, and 16% of North Mara, Bulyanhulu and Buzwagi from cost of sales and including our proportionate share of cost of sales attributable to our equity method investments in Kibali), divided by attributable gold ounces sold. Cost of sales applicable to copper per pound is calculated using cost of sales applicable to copper including our proportionate share of cost of sales attributable to our equity method investments in Zaldívar and Jabal Sayid, divided by consolidated copper pounds sold (including our proportionate share of copper pounds sold from our equity method investments).

  b.

Total cash costs, all-in sustaining costs and C1 cash costs are non-GAAP financial performance measures with no standardized meaning under IFRS and therefore may not be comparable to similar measures of performance presented by other issuers. For further information and a detailed reconciliation of the non-GAAP measures used in this section of the MD&A to the most directly comparable IFRS measures, please see pages 79 to 95 of this MD&A.

  c.

Includes our 36.9% share of South Arturo.

  d.

Based on the communication we received from the Government of Papua New Guinea that the SML will not be extended, Porgera was placed on temporary care and maintenance on April 25, 2020 to ensure the safety and security of our employees and communities. Due to the uncertainty related to the timing and scope of future developments on the mine’s operating outlook, our full year 2020 guidance for Porgera has been withdrawn.

  e.

Amounts are on an 84% basis as the GoT’s 16% free-carried interest was made effective from January 1, 2020.

  f.

Total cash costs and all-in sustaining costs per ounce include the impact of hedges and/or costs allocated to non-operating sites.

  g.

Operating unit guidance ranges reflect expectations at each individual operating unit, and may not add up to the company-wide guidance range total. Guidance ranges exclude Pierina, Lagunas Norte, Golden Sunlight and Morila (40%).

  h.

Includes corporate administration costs.

 

BARRICK FIRST QUARTER 2020   38    MANAGEMENT’S DISCUSSION AND ANALYSIS


Production and Cost Summary - Gold

 

     For the three months ended    
                        3/31/20                    12/31/19                    % Change                    3/31/19                    % Change    

 Nevada Gold Mines LLC (61.5%)a

                             

Gold produced (000s oz)

        526           585           (10)%           572           (8)%  

Cost of sales ($/oz)

        995           1,038           (4)%           780           28 %  

Total cash costs ($/oz)b

        690           711           (3)%           542           27 %  

All-in sustaining costs ($/oz)b

        952           944           1 %           678           40 %  

Carlin (61.5%)c

                             

Gold produced (000s oz)

        253           276           (8)%           233           9 %  

Cost of sales ($/oz)

        970           975           (1)%           947           2 %  

Total cash costs ($/oz)b

        776           766           1 %           671           16 %  

All-in sustaining costs ($/oz)b

        1,007           965           4 %           891           13 %  

Cortez (61.5%)d

                             

Gold produced (000s oz)

        128           133           (4)%           262           (51)%  

Cost of sales ($/oz)

        876           945           (7)%           682           28 %  

Total cash costs ($/oz)b

        614           681           (10)%           433           42 %  

All-in sustaining costs ($/oz)b

        1,009           1,012           0 %           506           99 %  

Turquoise Ridge (61.5%)e

                             

Gold produced (000s oz)

        84           111           (24)%           77           9 %  

Cost of sales ($/oz)

        1,032           971           6 %           592           74 %  

Total cash costs ($/oz)b

        668           625           7 %           506           32 %  

All-in sustaining costs ($/oz)b

        806           800           1 %           592           36 %  

Phoenix (61.5%)f

                             

Gold produced (000s oz)

        35           31           13 %              

Cost of sales ($/oz)

        1,583           2,025           (22)%              

Total cash costs ($/oz)b

        737           902           (18)%              

All-in sustaining costs ($/oz)b

        914           1,034           (12)%              

Long Canyon (61.5%)f

                             

Gold produced (000s oz)

        26           34           (24)%              

Cost of sales ($/oz)

        1,025           1,026           0 %              

Total cash costs ($/oz)b

        345           317           9 %              

All-in sustaining costs ($/oz)b

              561                 657                 (15)%                                      

 Pueblo Viejo (60%)

                             

Gold produced (000s oz)

        143           179           (20)%           148           (3)%  

Cost of sales ($/oz)

        767           660           16 %           696           10 %  

Total cash costs ($/oz)b

        502           422           19 %           421           19 %  

All-in sustaining costs ($/oz)b

              626                 517                 21 %                 543                 15 %  

 Loulo-Gounkoto (80%)

                             

Gold produced (000s oz)

        141           144           (2)%           128           10 %  

Cost of sales ($/oz)

        1,002           1,037           (3)%           1,052           (5)%  

Total cash costs ($/oz)b

        614           631           (3)%           684           (10)%  

All-in sustaining costs ($/oz)b

              891                 917                 (3)%                 840                 6 %  

 Kibali (45%)

                             

Gold produced (000s oz)

        91           87           5 %           93           (2)%  

Cost of sales ($/oz)

        1,045           1,205           (13)%           1,202           (13)%  

Total cash costs ($/oz)b

        582           608           (4)%           573           2 %  

All-in sustaining costs ($/oz)b

              773                 740                 4 %                 673                 15 %  

 Veladero (50%)

                             

Gold produced (000s oz)

        75           71           6 %           70           7 %  

Cost of sales ($/oz)

        1,182           1,138           4 %           1,195           (1)%  

Total cash costs ($/oz)b

        788           710           11 %           713           11 %  

All-in sustaining costs ($/oz)b

              1,266                 1,142                 11 %                 1,100                 15 %  

 Porgera (47.5%)

                             

Gold produced (000s oz)

        62           82           (24)%           66           (6)%  

Cost of sales ($/oz)

        1,097           909           21 %           1,031           6 %  

Total cash costs ($/oz)b

        941           757           24 %           854           10 %  

All-in sustaining costs ($/oz)b

              1,089                 894                 22 %                 978                 11 %  

 

BARRICK FIRST QUARTER 2020   39    MANAGEMENT’S DISCUSSION AND ANALYSIS


Production and Cost Summary - Gold (continued)

 

     For the three months ended    
                            3/31/20                        12/31/19                    % Change                        3/31/19                    % Change    

 Tongon (89.7%)

                             

Gold produced (000s oz)

        61           61           0 %           61           0 %  

Cost of sales ($/oz)

        1,368           1,476           (7)%           1,451           (6)%  

Total cash costs ($/oz)b

        762           803           (5)%           799           (5)%  

All-in sustaining costs ($/oz)b

              788                 867                 (9)%                 836