Barrick Gold Corporation (NYSE:ABX)(TSX:ABX) -
FIRST QUARTER REPORT 2012
Based on IFRS and expressed in US dollars
For a full explanation of results, the Financial Statements and Management Discussion & Analysis, please see the Company's website, www.barrick.com.
Highlights
First Quarter 2012 Financial Highlights
- Reported net earnings of $1.03 billion ($1.03 per share), a three percent increase from $1.00 billion ($1.00 per share) in the first quarter of 2011 and adjusted net earnings of $1.09 billion ($1.09 per share)(1), an eight percent increase from $1.00 billion ($1.01 per share) in same prior year period
- EBITDA of $2.0 billion(1), a nine percent increase from $1.83 billion in the first quarter of 2011
- Operating cash flow of $1.27 billion and adjusted operating cash flow of $1.37 billion(1) compare to $1.44 billion for both reported and adjusted operating cash flow in the first quarter of 2011
First Quarter 2012 Operating Highlights
- Gold and copper production of 1.88 million ounces and 117 million pounds, respectively
- Gold total cash costs of $545 per ounce(1) and net cash costs of $432 per ounce(1)
- Gold total cash margins of $1,146 per ounce(1), up 20 percent from $952 per ounce in the first quarter of 2011 and net cash margins of $1,259 per ounce(1), up 16 percent from $1,081 per ounce in the same prior year period
- Copper C1 cash costs of $2.08 per pound(1) and copper cash margins of $1.70 per pound(1)
Full Year 2012 Operating Outlook
- Barrick maintains its full year 2012 gold production guidance of 7.3-7.8 million ounces at total cash costs of $520-$560 per ounce and net cash costs of $400-$450 per ounce(2).
- The company expects full year 2012 copper production of 550-600 million pounds at C1 cash costs of $1.90-$2.20 per pound.
Increasing Gold and Copper Reserves through Exploration and Selective Acquisitions
- The major exploration programs at Goldrush (formerly known as Red Hill-Goldrush) and Turquoise Ridge in Nevada and at the Lumwana mine in Zambia comprise about 40 percent of the 2012 budget of $450-$490 million. During the first quarter, Barrick made substantial drilling progress at each of these sites, and results to date continue to confirm expectations.
Investing in and Developing High Return Projects
- Barrick continued to advance construction at Pueblo Viejo and Pascua-Lama, with first production expected in mid-2012 and mid-2013, respectively. Combined, Pueblo Viejo and Pascua-Lama are expected to generate average annual production of 1.5 million ounces to Barrick's account with total average annual EBITDA of approximately $2.5 billion in their first full five years.
Returning Capital to Shareholders
- Consistent with Barrick's practice of paying a progressive dividend, the Board of Directors has authorized a quarterly dividend of 20 cents per share, which equates to 80 cents per share on an annualized basis and represents a 33% increase from the previous quarterly dividend of 15 cents per share. The company's strong earnings and operating cash flow, combined with its positive outlook on the gold price, enables it to continue to make high return investments in its projects and also increase its dividend. Over the last six years, Barrick has had a consistent track record of returning capital to shareholders, increasing its dividend by approximately 260%(3) on a quarterly basis.
Change in Senior Management
- The company announced today the retirement of Executive Vice President and Chief Operating Officer (COO) Peter Kinver. Igor Gonzales, previously President of Barrick's South America region, has been appointed Executive Vice President and COO effective May 2. Mr. Kinver will remain with the company until June 30 to assist in an orderly transition. He will also act as an advisor to Barrick for the duration of construction activities at the Pueblo Viejo and Pascua-Lama projects.
FINANCIAL AND OPERATING RESULTS
"We made good progress on a number of areas in the quarter," stated Aaron Regent, Barrick's President and Chief Executive Officer. "We had good operating performance, which translated into solid financial results and further advanced our projects under construction with Pueblo Viejo and Jabal Sayid to start producing this year and Pascua-Lama in the middle of next year. We also progressed our exploration program, which continues to increase our resource base, improved our liquidity and returned more capital back to shareholders with a further increase in our dividend."
First quarter 2012 adjusted net earnings increased eight percent to $1.09 billion, or $1.09 per share, from $1.00 billion, or $1.01 per share, from the same period last year, reflecting a higher average realized gold price. Reported net earnings include $93 million in impairment charges primarily related to the write down of an investment in Highland Gold, partially offset by $36 million in gains from the sale of assets, foreign exchange gains and unrealized gains on non-hedge derivative instruments. Adjusted net earnings for the quarter translated to an annualized return on equity of approximately 18 percent(4).
EBITDA increased nine percent to $2.0 billion for the first quarter from $1.83 billion in the same prior year period. Operating cash flow of $1.27 billion and adjusted operating cash flow of $1.37 billion for the quarter compare to operating cash flow and adjusted operating cash flow of $1.44 billion in the first quarter of 2011. Operating cash flow was reduced by an increase in working capital balances, primarily due to the timing of gold sales and increased income tax payments.
The realized gold price for the first quarter was $1,691 per ounce(4), 22 percent higher than the same prior year period. Gold total cash margins increased 20 percent to $1,146 per ounce from $952 per ounce in the first quarter of 2011. Net cash margins increased 16 percent to $1,259 per ounce from $1,081 per ounce in the first quarter of 2011. First quarter copper cash margins of $1.70 per pound compare to $3.00 per pound in the prior year period and reflect lower realized prices and higher C1 cash costs, primarily due to the inclusion of production from the Lumwana mine. Realized copper prices in the first quarter benefited from provisional pricing adjustments of about $0.19 per pound due to the increase in market copper prices from year end 2011 levels.
First quarter gold production was 1.88 million ounces of gold at total cash costs of $545 per ounce and net cash costs of $432 per ounce. Barrick maintains its full year gold production guidance of 7.3-7.8 million ounces at total cash costs of $520-$560 per ounce and net cash costs of $400-$450 per ounce.
Gold production in the second quarter is expected to be lower than the first quarter, primarily due to mine sequencing at Lagunas Norte and Cortez and planned maintenance of the roaster at Goldstrike. Gold production is expected to increase during the second half of 2012 mainly as a result of Goldstrike and Lagunas Norte returning to higher production levels and the commencement of production at Pueblo Viejo. Second quarter total cash costs per ounce are expected to be higher than the first quarter as a result of lower anticipated production levels; total cash costs per ounce are anticipated to decrease from second quarter levels in the second half of 2012 as lower cost mines contribute to a greater proportion of company production.
First quarter copper production was 117 million pounds at C1 cash costs of $2.08 per pound, primarily due to lower production at Lumwana as a result of poor ground conditions from the wet season, which are also having an effect on the second quarter. In addition, Q2 production is anticipated to be impacted by planned maintenance activities.
Starting in the first quarter, the company has adopted the Brook Hunt & Associates C1 cash cost methodology for calculating copper cash costs per pound in order to conform its presentation to other significant copper producers. The primary difference between C1 cash costs and the previous total cash costs per pound calculation is that royalties and non-routine charges are excluded from C1 cash costs as they are not direct production costs. Based on the C1 cash cost methodology, original copper guidance would have been in the range of $1.80-$2.10 per pound. Due to higher than expected production costs at Lumwana, full year 2012 C1 cash costs are anticipated to be $1.90-$2.20 per pound(5).
In the second half of the year, total copper production is expected to increase, primarily due to higher production at Lumwana and the start up of Jabal Sayid. Full year copper production is anticipated to be 550-600 million pounds in 2012.
PRODUCTION AND COSTS
North America Regional Business Unit
North America produced 0.89 million ounces at total cash costs of $485 per ounce in the first quarter. Cortez production of 0.42 million ounces at total cash costs of $304 per ounce in the first quarter exceeded expectations on higher than budgeted grades from the Cortez Hills underground.
Goldstrike produced 0.24 million ounces at total cash costs of $546 per ounce. During the first quarter, Goldstrike production was impacted by increased maintenance activities and construction at the autoclaves in order to accommodate the thiosulfate technology intended to extend their operational life. Second quarter production is expected to be similar to the first quarter, primarily due to planned maintenance at the roaster. Goldstrike's production is anticipated to be higher in the second half of 2012, primarily due to the mine accessing higher grade underground ore. Full year 2012 production for the North America region is expected to be 3.425-3.60 million ounces at total cash costs of $475-$525 per ounce.
South America Regional Business Unit
South America produced 0.45 million ounces at total cash costs of $421 per ounce in the first quarter. The Veladero mine produced 0.21 million ounces at total cash costs of $461 per ounce. The Lagunas Norte operation contributed 0.21 million ounces at total cash costs of $284 per ounce. The second quarter is expected to be the lowest production quarter of the year for Lagunas Norte, primarily due to mine sequencing. Production will begin ramping up to higher levels starting in the third quarter as the operation moves into a higher grade area. In 2012, South America production is expected to be 1.55-1.70 million ounces at total cash costs of $430-$480 per ounce.
Australia Pacific Regional Business Unit
Australia Pacific produced 0.43 million ounces at total cash costs of $748 per ounce in the first quarter. The Porgera mine produced 0.10 million ounces at total cash costs of $826 per ounce. Production from Porgera in the first quarter was impacted by operational disruptions, including power supply interruptions. Porgera's production is expected to increase starting in the second quarter. Australia Pacific production is anticipated to be 1.80-1.95 million ounces at total cash costs of $700-$750 per ounce in 2012.
African Barrick Gold plc (ABG)
First quarter attributable production from ABG was 0.11 million ounces at total cash costs of $925 per ounce, reflecting expected mine sequencing for 2012. Increased production levels are anticipated for the second half of the year. Barrick's share of 2012 production is expected to be 0.500-0.535 million ounces at total cash costs of $790-$860 per ounce.
Copper
The Zaldivar copper mine in Chile produced 76 million pounds at C1 cash costs of $1.51 per pound in the first quarter. The Lumwana mine in Zambia produced 41 million pounds at C1 cash costs of $3.15 per pound. Production and C1 cash costs at Lumwana were impacted by lower mining rates primarily as a result of poor ground conditions from the wet season, which are also having an effect in the second quarter. In addition, Lumwana's Q2 production is anticipated to be impacted by planned mill maintenance.
In the second half of the year, total copper production is expected to increase, primarily due to the commencement of mining at the large Chimiwungo deposit at Lumwana and the start up of Jabal Sayid.
The company has floor protection on approximately half of its expected copper production for the remainder of 2012 at an average floor price of $3.75 per pound(6) and has full participation to any upside in copper prices.
Currency and Fuel Price Protection
Approximately 60 percent of Barrick's consolidated production costs are denominated in US dollars. The largest single currency exposure for the company is the Australian dollar/US dollar exchange rate. Barrick is substantially hedged on its remaining Australian operating and administrative expenditures for 2012 at an effective average rate of $0.81. The company is also 84 percent hedged on 2013 expected Australian operating expenditures at an effective average rate of $0.79. Additional hedge coverage is also in place for 2014-2016 at levels below current rates.
The company also has mitigated the impact of higher crude oil prices through the use of financial contracts and production from Barrick Energy. The Barrick Energy contribution, along with the financial contracts, provides hedge protection for approximately 80 percent of the expected remaining 2012 fuel consumption.
INCREASING GOLD AND COPPER RESERVES THROUGH EXPLORATION AND SELECTIVE ACQUISITIONS
The 2012 exploration budget increased to $450-$490 million from the prior year actual expenditure of $350 million as a result of exploration success in 2011. The major exploration programs at Goldrush, Turquoise Ridge and Lumwana comprise about 40 percent of the budget. These programs have large drill campaigns, which are expected to add and upgrade gold and copper resources in 2012-2013.
In Nevada, over 50 drill rigs are operating currently, 11 of which are located at Goldrush. More than 20 percent of 2012 planned drilling has been completed to date (101,000 feet of 468,000 planned). Drilling 400 feet west of Goldrush and 3,000 feet to the south has revealed good indicators of strong mineralization, and the limits of the mineralized system have not yet been defined. Infill drilling to upgrade the resource is in line with expectations.
At the 75 percent-owned Turquoise Ridge operation in Nevada, resource definition drilling has ramped up to 14 drill rigs, which have completed over 91,000 feet (22 percent) of planned 2012 drilling. Drilling in 2012 is targeting resource upgrades and additions. This drilling is an important component in evaluating the potential to develop a large scale open pit that would operate simultaneously with the high grade underground mine. The open pit project has the potential to significantly increase annual production. A prefeasibility study is expected to be completed by the end of 2012.
At Lumwana, drill rates have now doubled at the Chimiwungo deposit since the fourth quarter of 2011. Approximately 35 percent of the 18 month drill program to the end of 2012 has been completed (109,000 meters of 314,000 meters planned). Results to date are in line with expectations and continue to confirm and extend the size and thickness of the mineralized zones, including the thickened, high grade Equinox and Roan ore shoots. Drilling is expected to increase and will continue to focus on upgrading and adding resources. We expect to complete a prefeasibility study by the end of 2012 on the expansion opportunity, which has the potential to double processing rates.
INVESTING IN AND DEVELOPING HIGH RETURN PROJECTS
Barrick has targeted growth in gold production to about 9 million ounces(7) in 2016, driven primarily by Pueblo Viejo and Pascua-Lama. Once at full capacity, these two mines are expected to contribute average annual gold production of approximately 1.5 million ounces. The company's total cash costs are also anticipated to benefit from new, low cost production from these two world-class assets. Together, they are expected to generate average annual EBITDA of about $2.5 billion(8) in their first full five years.
Pueblo Viejo
At the 60 percent-owned Pueblo Viejo project in the Dominican Republic, first production continues to be expected in mid-2012. Overall construction is currently about 93 percent complete. At the end of the first quarter, approximately 90 percent of the mine construction capital of $3.6-$3.8 billion(9) (100 percent basis) or $2.2-$2.3 billion (Barrick's 60 percent share) had been committed. About 15 million tonnes of ore, representing approximately 1.7 million contained gold ounces, have been stockpiled to date. The tailings facility has now received all necessary approvals to permit construction of the starter dam to its full design height. With power being connected to the site in the first quarter, the first two autoclaves are now undergoing pre-commissioning testing and along with the oxygen plant are expected to be commissioned in the second quarter. As part of a longer-term, optimized power solution for Pueblo Viejo, the company has started construction of a 215 MW dual fuel power plant at an estimated incremental cost of approximately $300 million (100 percent basis) or $180 million (Barrick's 60 percent share). The power plant would commence operations utilizing heavy fuel oil, but have the ability to subsequently transition to liquid natural gas. The new plant is expected to provide lower cost, long term power to the mine.
Pueblo Viejo is expected to contribute approximately 100,000-125,000 ounces of gold to Barrick at total cash costs of $400-$500 per ounce(10) starting mid-year 2012 as it ramps up to full production in 2013. Barrick's 60 percent share of annual gold production in the first full five years of operation is expected to average 625,000-675,000 ounces at total cash costs of $300-$350 per ounce(11).
Pascua-Lama
At the Pascua-Lama project, about 70 percent of the previously announced mine construction capital of $4.7-$5.0 billion(12) has been committed. First production is anticipated in mid-2013. The project is being impacted by labor and commodity cost pressures, primarily as a result of: high inflation in Argentina, and to a lesser extent, Chile, competition for skilled labor and lower than expected labor productivity in underground development. Barrick has added experienced supervisors and miners from its North American and South American regions to the project team, increased oversight of external contractors, accelerated procurement of long lead items and necessary equipment. In conjunction with these activities, the company intends to complete a detailed capital cost and schedule review in the second quarter of 2012.
In Chile, earthworks construction was approximately 97 percent complete and in Argentina, about 73 percent complete at the end of the first quarter. During the quarter, the initial phase of pioneering road construction was completed, which will help enable the planned commencement of pre-stripping in the second quarter. About 45 percent of the concrete has been poured at the processing facilities in Argentina and approximately 20 percent of the structural steel has been erected to date. Occupancy of the construction camps in Chile and Argentina continues to ramp up with 6,800 beds available by the end of the first quarter. The camps are expected to reach their full capacity of about 10,000 beds in mid-2012. Average annual gold production from Pascua-Lama is expected to be 800,000-850,000 ounces in the first full five years of operation at negative total cash costs of $225-$275 per ounce(12) based on a silver price of $25 per ounce. For every $1 per ounce increase in the silver price, total cash costs are expected to decrease by about $35 per ounce over this period.
Jabal Sayid
Overall construction of the Jabal Sayid copper project in Saudi Arabia was about 85 percent complete at the end of the first quarter. Subject to receipt of final permitting approvals, the operation is expected to enter production in the second half of 2012 at total mine construction capital of approximately $400 million(13), of which 80 percent had been committed at the end of the first quarter. Bulk earthworks were about 96 percent complete and approximately 214 thousand tons of underground ore have been mined, representing about 10.6 million contained pounds of copper at the end of the first quarter. Jabal Sayid is expected to produce 35-45 million pounds of copper in 2012 at C1 cash costs of $2.15-$2.50 per pound(14). Average annual production from Lodes 2 and 4 is expected to be 100-130 million pounds over the first full five years of operation at C1 cash costs of $1.50-$1.70 per pound(15).
PROJECTS IN FEASIBILITY
Cerro Casale
At the Cerro Casale project in Chile, the Environmental Impact Assessment (EIA) permitting process is expected to be completed by the end of 2012. Following the approval of the EIA, Barrick will consider a construction decision, commencement of detailed engineering and sectoral permitting.
Barrick's 75 percent share of average annual production from Cerro Casale is anticipated to be 750,000-825,000 ounces of gold and 190-210 million pounds of copper in the first full five years of operation at total cash costs of $200-$250 per ounce(16). Estimated mine construction capital is approximately $6.0 billion (100 percent basis)(16).
Donlin Gold
At the 50 percent-owned Donlin Gold project in Alaska, management is working to conclude negotiations on a surface land use agreement, at which time, the Board of Donlin Gold LLC is expected to accept the revised feasibility study. Mine construction capital is estimated to be approximately $6.7 billion (100 percent basis)(17), which includes a natural gas pipeline that is anticipated to lower long term power costs and offer a better environmental and operational solution for power. Donlin Gold is anticipated to produce an average of about 1.5 million ounces of gold annually (100 percent basis) in its first full five years of operation.
Other Projects
Prefeasibility studies are expected to be completed for the Turquoise Ridge open pit project and the Lumwana expansion by the end of 2012 and in the first quarter of 2013 for the Lagunas Norte deep sulfides and the Zaldivar deep sulfides.
RETURNING CAPITAL TO SHAREHOLDERS
Barrick continued to generate strong adjusted operating cash flow of approximately $1.4 billion in the quarter, maintains the gold industry's highest credit rating and closed the quarter with a cash balance of about $2.7 billion. Barrick's strong financial results, combined with its positive outlook on the gold price, enable it to continue to make high return investments in its projects and also increase the dividend. The Board of Directors has authorized a quarterly dividend of 20 cents per share, which represents a 33% increase from the previous quarterly dividend. Over the last six years, the company has had a consistent track record of returning capital to shareholders, increasing its dividend by about 260% on a quarterly basis(18). The quarterly dividend is payable on June 15, 2012 to shareholders on record as of the close of business on May 31, 2012.
CHANGE IN SENIOR MANAGEMENT
The company announced today the retirement of Executive Vice President and COO Peter Kinver. Igor Gonzales, previously President of Barrick's South America region, has been appointed Executive Vice President and COO effective May 2. Mr. Kinver will remain with the company until June 30 to assist in an orderly transition. He will also act as an advisor to Barrick for the duration of construction activities at the Pueblo Viejo and Pascua-Lama projects.
"Since joining in 2003, Peter has managed the company's operations through a period of significant growth. Under his leadership, Barrick has met production guidance for nine consecutive years, reflecting a strong focus on operational excellence," said Aaron Regent. "He oversaw the construction of six new mines in five different countries and successfully led the integration of Placer Dome's operations into Barrick's global portfolio."
Mr. Gonzales joined Barrick in 1998 and has served as President of the company's South America region since 2005. He has more than 30 years of experience in the mining industry and has played a key role in the successful growth of Barrick's South American business unit. Mr. Gonzales and his team have also been integral to the development of the Pascua-Lama project.
"Under Igor's leadership, the South America region has consistently demonstrated strong performance in production, cost control, project development and in the corporate social responsibility arena where he has focused on building positive relationships with local communities, through increased engagement and new initiatives to promote sustainable economic development. His background and experience make him an ideal choice for this position," said Mr. Regent.
CONTINUALLY IMPROVING CSR PRACTICES
During the first quarter, Barrick announced the establishment of its Corporate Social Responsibility (CSR) Advisory Board and named five distinguished individuals to serve as inaugural members. The Advisory Board will provide external advice and guidance to Barrick management on the company's global CSR performance and evolving best practices in CSR and also act as a sounding board on a broad range of CSR matters, including community relations, sustainable development, the environment, human rights and security and stakeholder engagement.
Advisory Board members reflect a diversity of CSR expertise and stakeholder groups. Members will provide advice in an individual capacity, rather than on behalf of any organization or stakeholder group. They have been chosen based on their in-depth knowledge of social and environmental best practices for international companies and their understanding of the key issues affecting the mining industry.
Barrick's vision is to be the world's best gold company by finding, acquiring, developing and producing quality reserves in a safe, profitable and socially responsible manner. Barrick's shares are traded on the Toronto and New York stock exchanges.
(1) Adjusted net earnings, EBITDA, adjusted operating cash flow, total cash costs and net cash costs per ounce, C1 cash costs per pound, gold total cash margins and net cash margins per ounce, and copper cash margins per pound are non-GAAP measures. See pages 37-41 of Barrick's Q1 2012 Report. Copper "total cash costs per pound" have been replaced with "C1 cash costs per pound". The primary difference between C1 cash costs per pound and the previous total cash costs per pound calculation is that royalties and non-routine charges are excluded from C1 cash costs per pound. See page 2 of Barrick's Q1 2012 press release.
(2) Based on an assumed realized copper price of $3.50 per pound in 2012.
(3) Calculated based on converting the 2006 semi-annual dividend of 11 cents per share to a quarterly equivalent.
(4) Return on equity and average realized price per ounce/pound are non-GAAP financial measures. See pages 37-41 of Barrick's Q1 2012 Report.
(5) The company has also introduced the non-GAAP measure of "C3 fully allocated costs per pound" based on Brook Hunt's methodology. C3 fully allocated costs per pound, which include C1 cash costs plus depreciation, royalties, exploration and evaluation expense, administration expense and non-routine charges, are expected to be $2.70-$3.00/lb in 2012.
(6) The average realized price on total 2012 production is expected to be reduced by approximately $0.13 per pound as a result of the net premium paid for these positions.
(7) The target of 9 Moz of annual production by 2016 reflects a current assessment of the expected production and timeline to complete and commission Barrick's projects currently in construction (Pueblo Viejo and Pascua-Lama) and the company's current assessment of existing mine site opportunities, some of which are sensitive to metal price and various capital and input cost assumptions.
(8) Based on a $1,600 per ounce gold price, a $30 per ounce silver price and a $100/bbl oil price and estimated average annual production in the first full five years once both mines are at full capacity.
(9) Based on gold and oil price assumptions of $1,300/oz and $100/bbl, respectively.
(10) Based on gold and oil price assumptions of $1,700/oz and $100/bbl, respectively. The 2012 total cash cost estimate is dependent on the rate at which production ramps up after commercial levels of production are achieved. A change in the efficiency of the ramp up could have a significant impact on this estimate.
(11) Based on gold and oil price assumptions of $1300/oz and $100/bbl, respectively. Does not include escalation for inflation.
(12) Based on gold, silver and oil price assumptions of $1,300/oz, $25/oz, and $100/bbl, respectively and assuming a Chilean peso f/x rate of 475:1. Does not include escalation for inflation.
(13) Based on copper and gold price assumptions of $3.50/lb and $1,700/oz, respectively.
(14) Based on copper and gold price assumptions of $3.50/lb and $1,700/oz, respectively. The 2012 C1 cash cost estimate is dependent on the rate at which production ramps up after commercial levels of production are achieved. A change in the efficiency of the ramp up could have a significant impact on this estimate.
(15) Based on copper and gold price assumptions of $3.50/lb and $1,700/oz, respectively. Does not include escalation for inflation.
(16) Based on gold, copper and oil prices of $1,300/oz, $3.25/lb and $100/bbl, respectively and assuming a Chilean peso f/x rate of 475:1. Does not include escalation for inflation.
(17) Does not include escalation for inflation.
(18) The declaration and payment of dividends remains at the discretion of the Board of Directors and will depend on the Company's financial results, cash requirements, future prospects and other factors deemed relevant by the Board.
Key Statistics
Barrick Gold Corporation Three months ended
(in United States dollars) March 31,
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(Unaudited) 2012 2011
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Operating Results
Gold production (thousands of ounces)(1) 1,881 1,957
Gold sold (thousands of ounces) 1,783 1,862
Per ounce data
Average spot gold price $ 1,691 $ 1,386
Average realized gold price(2) 1,691 1,389
Net cash costs(2) 432 308
Total cash costs(2) 545 437
Depreciation(3) 178 142
Other(4) 14 16
Total production costs 737 595
Copper credits 113 129
Copper production (millions of pounds) 117 75
Copper sold (millions of pounds) 119 80
Per pound data
Average spot copper price $ 3.77 $ 4.38
Average realized copper price(2) 3.78 4.25
C1 cash costs(2) 2.08 1.25
Depreciation(3) 0.46 0.24
Other(5) 0.13 (0.03)
C3 fully allocated costs(2) 2.67 1.46
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Financial Results (millions)
Revenues $ 3,644 $ 3,087
Net earnings(6) 1,029 1,001
Adjusted net earnings(2) 1,086 1,004
EBITDA(2) 1,997 1,828
Operating cash flow 1,272 1,439
Adjusted operating cash flow(2) 1,374 1,439
Per Share Data (dollars)
Net earnings (basic) 1.03 1.00
Adjusted net earnings (basic)(2) 1.09 1.01
Net earnings (diluted) 1.03 1.00
Weighted average basic common shares (millions) 1,000 999
Weighted average diluted common shares
(millions)(7) 1,002 1,001
Return on equity(2) 18% 20%
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As at As at
March 31, December 31,
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2012 2011
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Financial Position (millions)
Cash and equivalents $ 2,665 $ 2,745
Non-cash working capital 161 2,335
Adjusted debt(2) 13,062 13,058
Net debt(2) 10,411 10,320
Average shareholders' equity 23,767 21,418
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(1) Production includes our equity share of gold production at Highland
Gold.
(2) Realized price, net cash costs, total cash costs, C1 cash costs, C3
fully allocated costs, adjusted net earnings, EBITDA, adjusted operating
cash flow, adjusted debt, net debt, and return on equity are non-GAAP
financial performance measures with no standard definition under IFRS. See
pages 37-41 of the Company's MD&A.
(3) Represents equity amortization expense divided by equity ounces of gold
sold or pounds of copper sold.
(4) Represents the Barrick Energy gross margin divided by equity ounces of
gold sold.
(5) For a breakdown, see reconciliation of cost of sales to C1 cash costs
and C3 fully allocated costs per pound on page 38 of the Company's MD&A.
(6) Net earnings represents net income attributable to the equity holders of
the Company.
(7) Fully diluted includes dilutive effect of stock options.
Production and Cost Summary
Gold Production
(attributable ounces)
(000's) Total Cash Costs ($/oz)
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Three months ended Three months ended
March 31, March 31,
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(Unaudited) 2012 2011 2012 2011
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North America 888 862 $ 485 $ 396
South America 451 498 421 340
Australia Pacific 426 459 748 585
African Barrick Gold(3) 107 129 925 658
Other 9 9 - -
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Total 1,881 1,957 $ 545 $ 437
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Copper Production
(attributable pounds)
(Millions) C1 Cash Costs ($/lb)
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Three months ended Three months ended
March 31, March 31,
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(Unaudited) 2012 2011 2012 2011
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Total 117 75 $ 2.08 $ 1.25
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Total Gold Production
Costs ($/oz)
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Three months ended
March 31,
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(Unaudited) 2012 2011
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Direct mining costs at market foreign
exchange rates $ 593 $ 481
Gains realized on currency hedge and commodity
hedge/economic hedge contracts (57) (46)
Other(2) (14) (16)
By-product credits (17) (18)
Copper credits (113) (129)
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Cash operating costs, net basis 392 272
Royalties 40 36
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Net cash costs(1) 432 308
Copper credits 113 129
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Total cash costs(1) 545 437
Depreciation 178 142
Other(2) 14 16
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Total production costs $ 737 $ 595
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Total Copper Production
Costs ($/lb)
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Three months ended
March 31,
--------------------------
(Unaudited) 2012 2011
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C1 cash costs $ 2.08 $ 1.25
Depreciation 0.46 0.24
Other(4) 0.13 (0.03)
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C3 fully allocated costs $ 2.67 $ 1.46
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(1) Total cash costs, net cash costs, C1 cash costs and C3 fully allocated
costs are non-GAAP financial performance measures with no standard meaning
under IFRS. See page 37 of the Company's MD&A.
(2) Represents the Barrick Energy gross margin divided by equity ounces of
gold sold.
(3) Figures relating to African Barrick Gold are presented on a 73.9% basis,
which reflects our equity share of production.
(4) For a breakdown, see reconciliation of cost of sales to C1 cash costs
and C3 fully allocated costs per pound on page 38 of the Company's MD&A.
Consolidated Statements of Income
Barrick Gold Corporation
(in millions of United States dollars, except per Three months ended
share data) (Unaudited) March 31,
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2012 2011
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Revenue (notes 4 and 5) $ 3,644 $ 3,087
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Costs and expenses
Cost of sales (notes 4 and 6) 1,770 1,354
Corporate administration 48 42
Exploration and evaluation (note 7) 96 65
Other expense (note 9A) 94 130
Impairment charges (note 9B) 94 -
----------------------------------------------------------------------------
2,102 1,591
Other income (note 9C) 41 72
Income (loss) from equity investees (note 13) (4) 1
Gain (loss) on non-hedge derivatives (note 17D) 34 (31)
----------------------------------------------------------------------------
Income before finance items and income taxes 1,613 1,538
Finance items (note 10)
Finance income 3 3
Finance costs (48) (32)
----------------------------------------------------------------------------
Income before income taxes 1,568 1,509
Income tax expense (note 11) (529) (494)
----------------------------------------------------------------------------
Net income $ 1,039 $ 1,015
----------------------------------------------------------------------------
Attributable to:
Equity holders of Barrick Gold Corporation $ 1,029 $ 1,001
Non-controlling interests (note 21) $ 10 $ 14
----------------------------------------------------------------------------
Earnings per share data attributable to the equity
holders of Barrick Gold Corporation (note 8)
Net income
Basic $ 1.03 $ 1.00
Diluted $ 1.03 $ 1.00
----------------------------------------------------------------------------
The notes to these unaudited interim consolidated financial statements,
which are contained in the First Quarter Report 2012 available on our
website are an integral part of these consolidated financial statements.
Consolidated Statements of Comprehensive Income
Barrick Gold Corporation Three months ended
(in millions of United States dollars) (Unaudited) March 31,
----------------------------------------------------------------------------
2012 2011
----------------------------------------------------------------------------
Net income $ 1,039 $ 1,015
Other comprehensive income, net of taxes
Unrealized gains (losses) on available-for-sale
("AFS") financial securities, net of tax $nil, $4 2 10
Unrealized gains (losses) on derivatives designated
as cash flow hedges, net of tax $2, $31 (15) 142
Realized gains on derivatives designated as cash
flow hedges, net of tax $29, $16 (80) (73)
Currency translation adjustments, net of tax $nil,
$nil 14 28
----------------------------------------------------------------------------
Total other comprehensive income (loss) (79) 107
----------------------------------------------------------------------------
Total comprehensive income $ 960 $ 1,122
----------------------------------------------------------------------------
Attributable to:
Equity holders of Barrick Gold Corporation $ 950 $ 1,108
Non-controlling interests $ 10 $ 14
----------------------------------------------------------------------------
The notes to these unaudited interim consolidated financial statements,
which are contained in the First Quarter Report 2012 available on our
website are an integral part of these consolidated financial statements.
Consolidated Statements of Cash Flow
Barrick Gold Corporation Three months ended
(in millions of United States dollars) (Unaudited) March 31,
----------------------------------------------------------------------------
2012 2011
----------------------------------------------------------------------------
OPERATING ACTIVITIES
Net income $ 1,039 $ 1,015
Adjusted for the following items:
Depreciation 394 304
Impairment charges (note 9B) 94 -
Income tax expense (note 11) 529 494
Increase in inventory (212) (56)
(Gain) loss on non-hedge derivatives (34) 31
(Gain) on sale of long-lived assets/investments (10) (70)
Other (note 12A) (146) 29
----------------------------------------------------------------------------
Operating cash flows before interest and income
taxes 1,654 1,747
Gross interest paid (21) (20)
Income taxes paid (361) (288)
----------------------------------------------------------------------------
Net cash provided by operating activities 1,272 1,439
----------------------------------------------------------------------------
INVESTING ACTIVITIES
Property, plant and equipment
Capital expenditures (note 4) (1,315) (1,071)
Sales proceeds - 30
Acquisitions (note 3) - (25)
Investments
Purchases - (7)
Sales 37 20
Other investing activities (note 12B) (55) (14)
----------------------------------------------------------------------------
Net cash used in investing activities (1,333) (1,067)
----------------------------------------------------------------------------
FINANCING ACTIVITIES
Proceeds on exercise of stock options 4 21
Long-term debt
Proceeds - 159
Repayments (7) (2)
Dividends (150) (120)
Funding from non-controlling interests 140 57
Other financing activities (note 12C) (14) (15)
----------------------------------------------------------------------------
Net cash provided by (used in) financing activities (27) 100
----------------------------------------------------------------------------
Effect of exchange rate changes on cash and
equivalents 8 3
----------------------------------------------------------------------------
Net increase (decrease) in cash and equivalents (80) 475
Cash and equivalents at beginning of period (note
17A) 2,745 3,968
----------------------------------------------------------------------------
Cash and equivalents at end of period (note 17A) $ 2,665 $ 4,443
----------------------------------------------------------------------------
The notes to these unaudited interim consolidated financial statements,
which are contained in the First Quarter Report 2012 available on our
website are an integral part of these consolidated financial statements.
Consolidated Balance Sheets
Barrick Gold Corporation
(in millions of United States dollars) As at As at
(Unaudited) March 31, December 31,
----------------------------------------------------------------------------
2012 2011
----------------------------------------------------------------------------
ASSETS
Current assets
Cash and equivalents (note 17A) $ 2,665 $ 2,745
Accounts receivable 446 426
Inventories (note 14) 2,499 2,498
Other current assets 1,092 876
----------------------------------------------------------------------------
Total current assets 6,702 6,545
Non-current assets
Equity in investees (note 13) 234 440
Other investments 127 161
Property, plant and equipment (note 15) 29,891 28,979
Goodwill (note 16) 9,628 9,626
Intangible assets 572 569
Deferred income tax assets 395 409
Non-current portion of inventory (note 14) 1,334 1,153
Other assets 994 1,002
----------------------------------------------------------------------------
Total assets $ 49,877 $ 48,884
----------------------------------------------------------------------------
LIABILITIES AND EQUITY
Current liabilities
Accounts payable 1,960 2,083
Debt (note 17B) 1,245 196
Current income tax liabilities 438 306
Other current liabilities 247 326
----------------------------------------------------------------------------
Total current liabilities 3,890 2,911
Non-current liabilities
Debt (note 17B) 12,145 13,173
Provisions (note 19) 2,340 2,326
Deferred income tax liabilities 4,266 4,231
Other liabilities (note 18) 728 689
----------------------------------------------------------------------------
Total liabilities 23,369 23,330
----------------------------------------------------------------------------
Equity
Capital stock (note 20) 17,899 17,892
Retained earnings 5,441 4,562
Accumulated other comprehensive income 516 595
Other 314 314
----------------------------------------------------------------------------
Total equity attributable to Barrick Gold
Corporation shareholders 24,170 23,363
Non-controlling interests (note 21) 2,338 2,191
----------------------------------------------------------------------------
Total equity 26,508 25,554
----------------------------------------------------------------------------
Contingencies and commitments (notes 15 and 22)
----------------------------------------------------------------------------
Total liabilities and equity $ 49,877 $ 48,884
----------------------------------------------------------------------------
The notes to these unaudited interim consolidated financial statements,
which are contained in the First Quarter Report 2012 available on our
website are an integral part of these consolidated financial statements.
Consolidated Statements of Changes in Equity
Attributable to equity holders of the
Barrick Gold Corporation company
------------------------ -----------------------------------------
Accumulated
(in millions of United Common other
States dollars) Shares (in Capital Retained comprehensive
(Unaudited) thousands) stock earnings income Other(1)
----------------------------------------------------------------------------
At January 1, 2012 1,000,423 $ 17,892 $ 4,562 $ 595 $ 314
----------------------------------------------------------------------------
Net income - - 1,029 - -
Total other
comprehensive income
(loss) - - - (79) -
----------------------------------------------------------------------------
Total comprehensive
income - - 1,029 (79) -
----------------------------------------------------------------------------
Transactions with
owners
Dividends - - (150) - -
Issued on exercise of
stock options 124 4 - - -
Recognition of stock
option expense - 3 - - -
Funding from non-
controlling interests - - - - -
Other decrease in non-
controlling interests - - - -
----------------------------------------------------------------------------
Total transactions with
owners 124 7 (150) - -
----------------------------------------------------------------------------
At March 31, 2012 1,000,547 $ 17,899 $ 5,441 $ 516 $ 314
----------------------------------------------------------------------------
At January 1, 2011 998,500 $ 17,820 $ 609 $ 729 $ 314
----------------------------------------------------------------------------
Net income - - 1,001 - -
Total other
comprehensive income - - - 107 -
----------------------------------------------------------------------------
Total comprehensive
income - - 1,001 107 -
----------------------------------------------------------------------------
Transactions with
owners
Dividends - - (120) - -
Issued on exercise of
stock options 667 21 - - -
Recognition of stock
option expense - 4 - - -
Funding from non-
controlling interests - - - - -
----------------------------------------------------------------------------
Total transactions with
owners 667 25 (120) - -
----------------------------------------------------------------------------
At March 31, 2011 999,167 $ 17,845 $ 1,490 $ 836 $ 314
----------------------------------------------------------------------------
Attributable
to equity
holders of
Barrick Gold Corporation the company
-------------------------------------
Total equity
(in millions of United attributable
States dollars) to Non-controlling Total
(Unaudited) shareholders interests equity
----------------------------------------------------------------
At January 1, 2012 $ 23,363 $ 2,191 $ 25,554
----------------------------------------------------------------
Net income 1,029 10 1,039
Total other
comprehensive income
(loss) (79) - (79)
----------------------------------------------------------------
Total comprehensive
income 950 10 960
----------------------------------------------------------------
Transactions with
owners
Dividends (150) - (150)
Issued on exercise of
stock options 4 - 4
Recognition of stock
option expense 3 - 3
Funding from non-
controlling interests - 140 140
Other decrease in non-
controlling interests - (3) (3)
----------------------------------------------------------------
Total transactions with
owners (143) 137 (6)
----------------------------------------------------------------
At March 31, 2012 $ 24,170 $ 2,338 $ 26,508
----------------------------------------------------------------
At January 1, 2011 $ 19,472 $ 1,745 $ 21,217
----------------------------------------------------------------
Net income 1,001 14 1,015
Total other
comprehensive income 107 - 107
----------------------------------------------------------------
Total comprehensive
income 1,108 14 1,122
----------------------------------------------------------------
Transactions with
owners
Dividends (120) - (120)
Issued on exercise of
stock options 21 - 21
Recognition of stock
option expense 4 - 4
Funding from non-
controlling interests - 57 57
----------------------------------------------------------------
Total transactions with
owners (95) 57 (38)
----------------------------------------------------------------
At March 31, 2011 $ 20,485 $ 1,816 $ 22,301
----------------------------------------------------------------
(1) Includes additional paid-in capital as at March 31, 2012: $276 million
(December 31, 2011: $276 million; March 31, 2011: $276 million) and
convertible borrowings - equity component as at March 31, 2012: $38 million
(December 31, 2011: $38 million; March 31, 2011: $38 million).
The notes to these unaudited interim consolidated financial statements,
which are contained in the First Quarter Report 2012 available on our
website are an integral part of these consolidated financial statements.
CORPORATE OFFICE TRANSFER AGENTS AND REGISTRARS
Barrick Gold Corporation CIBC Mellon Trust Company
Brookfield Place, TD Canada Trust c/o Canadian Stock Transfer Company
Tower, Suite 3700 Inc., as administrative agent
161 Bay Street, P.O. Box 212 P.O. Box 700, Postal Station B
Toronto, Canada M5J 2S1 Montreal, Quebec, Canada H3B 3K3
Tel: (416) 861-9911 or
Fax: (416) 861-0727 American Stock Transfer
Toll-free throughout North America: & Trust Company, LLC
1-800-720-7415 6201 - 15 Avenue
Email: investor@barrick.com Brooklyn, NY 11219
Website: www.barrick.com
Tel: (416) 682-3860
SHARES LISTED Fax: (514) 985-8843
ABX - The New York Stock Exchange
The Toronto Stock Exchange Toll-free throughout North America
Tel: 1-800-387-0825
Fax: 1-888-249-6189
Email: inquiries@canstockta.com
Website: www.canstockta.com
CAUTIONARY STATEMENT ON FORWARD-LOOKING INFORMATION
Certain information contained in this First Quarter Report 2012, including any information as to our strategy, projects, plans or future financial or operating performance and other statements that express management's expectations or estimates of future performance, constitute "forward-looking statements". All statements, other than statements of historical fact, are forward-looking statements. The words "believe", "expect", "will", "anticipate", "contemplate", "target", "plan", "continue", "budget", "may", "intend", "estimate" and similar expressions identify forward-looking statements. Forward-looking statements are necessarily based upon a number of estimates and assumptions that, while considered reasonable by management, are inherently subject to significant business, economic and competitive uncertainties and contingencies.
The company cautions the reader that such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual financial results, performance or achievements of Barrick to be materially different from the company's estimated future results, performance or achievements expressed or implied by those forward-looking statements and the forward-looking statements are not guarantees of future performance. These risks, uncertainties and other factors include, but are not limited to: the impact of global liquidity and credit availability on the timing of cash flows and the values of assets and liabilities based on projected future cash flows; changes in the worldwide price of gold, copper or certain other commodities (such as silver, fuel and electricity); fluctuations in currency markets; changes in U.S. dollar interest rates; risks arising from holding derivative instruments; the ability of the company to complete or successfully integrate an announced acquisition proposal; legislative, political or economic developments in the jurisdictions in which the company carries on business; acts of war, terrorism, sabotage and civil disturbances; operating or technical difficulties in connection with mining or development activities; employee relations; availability and costs associated with mining inputs and labor; the speculative nature of exploration and development, including the risks of obtaining necessary licenses and permits and diminishing quantities or grades of reserves; changes in costs and estimates associated with our projects; inflation; adverse changes in our credit rating; level of indebtedness and liquidity; contests over title to properties, particularly title to undeveloped properties; the organization of our previously held African gold operations under a separate listed entity; the risks involved in the exploration, development and mining business. Certain of these factors are discussed in greater detail in the company's most recent Form 40-F/Annual Information Form on file with the U.S. Securities and Exchange Commission and Canadian provincial securities regulatory authorities.
The company disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise, except as required by applicable law.
Contacts:
INVESTOR CONTACT: Greg Panagos
Senior Vice President
Investor Relations and Communications
(416) 309-2943gpanagos@barrick.com
MEDIA CONTACT: Andy Lloyd
Senior Manager, Communications
(416) 307-7414alloyd@barrick.com
