TORONTO, ONTARIO
-- (Marketwired)
-- 07/27/16
Barrick Gold Corporation (NYSE:ABX)(TSX:ABX)
All amounts expressed in US dollars
-- Barrick reported net earnings of $138 million ($0.12 per share), and
adjusted net earnings(1) of $158 million ($0.14 per share) for the
second quarter. Second quarter EBITDA(2) was $881 million.
-- The company reported revenues of $2.01 billion in the second quarter,
and net cash provided by operating activities ("operating cash flow")
was $527 million. Barrick generated $274 million in free cash flow(3) in
the second quarter, marking five consecutive quarters of positive free
cash flow.
-- Gold production in the second quarter was 1.34 million ounces at a cost
of sales applicable to gold of $1.23 billion, and all-in sustaining
costs(4) of $782 per ounce.
-- Compared to the first half of 2015, cost of sales applicable to gold has
declined by 14 percent to $2.43 billion. Over the same period, we have
reduced our all-in sustaining costs(4) by 19 percent.
-- For the full year, we expect cost of sales applicable to gold to be in
the range of $5.2-$5.5 billion. All-in sustaining cost(4) guidance for
2016 has been reduced to $750-$790 per ounce, down from $760-$810 per
ounce at the end of the first quarter, and below our original 2016
guidance of $775-$825 per ounce. We continue to expect gold production
of 5.0-5.5 million ounces for the year.
-- We have reduced total debt by $968 million year-to-date, and remain on
track to achieve our $2 billion debt reduction target for the year.
-- Commercial production has commenced at the Jabal Sayid copper mine in
Saudi Arabia. Reflecting this milestone, we have increased our 2016
copper guidance to 380-430 million pounds, up from our original guidance
of 370-410 million pounds.
Barrick Gold Corporation (NYSE:ABX)(TSX:ABX) (Barrick or the company) today reported net earnings of $138 million ($0.12 per share) for the second quarter, and adjusted net earnings(1)of $158 million ($0.14 per share). Second quarter EBITDA(2) was $881 million. Second quarter revenues were $2.01 billion and operating cash flow was $527 million. The company generated $274 million in free cash flow(3) in the second quarter, marking five consecutive quarters of positive free cash flow.
Second quarter cost of sales applicable to gold was $1.23 billion, a reduction of 13 percent compared to the prior-year period. Production in the quarter was 1.34 million ounces of gold at all-in sustaining costs(4) of $782 per ounce. We continue to expect full-year production of 5.0-5.5 million ounces of gold. We expect cost of sales applicable to gold for 2016 to be in the range of $5.2-$5.5 billion. We have reduced our all-in sustaining cost(4)guidance to $750-$790 per ounce, down from our most recent range of $760-$810 per ounce.
Our operations continued to deliver robust performance in the second quarter, demonstrating capital discipline, improved operational efficiency and productivity, and stronger cost management as we target Best-in-Class performance. This is driving growing margins and profitability across the entire business, in support of our overriding objective to grow free cash flow per share. At the same time, we continue to strengthen our balance sheet with nearly $1 billion in debt repayments completed so far this year, or roughly half of our $2 billion debt reduction target for 2016. Lower debt levels have better positioned the company to withstand gold price volatility while setting us up to invest in future growth.
Barrick has the industry's largest gold reserves and resources, with an average reserve grade significantly higher than our peer group average.(5) This represents an immense source of value and optionality for the company. Our Growth Group is actively advancing a strategy to grow our free cash flow per share by allocating capital to the opportunities with the best returns. We are pursuing a multi-faceted approach that will optimize the development of our existing reserves and resources, invest in exploration to discover the next major deposit, and assess external opportunities for acquisitions, seed financing, earn-ins, and other partnerships and joint ventures. Ultimately, the investments we make will be focused on growing our free cash flow per share while maintaining strict capital discipline, such that we are continuously upgrading the long-term value of our portfolio. Our existing operations will also contribute to growth by achieving step changes in performance that will drive down our cost structure and expand margins. We will do this by leveraging innovation and new technology, which is a core pillar of our Best-in-Class philosophy.
FINANCIAL HIGHLIGHTS
Second quarter net earnings were $138 million ($0.12 per share) compared to a net loss of $9 million ($0.01 per share) in the prior year period. Adjusted net earnings(1) for the second quarter were $158 million ($0.14 per share), compared to $60 million ($0.05 per share) in the prior year period. Higher net earnings reflect a decrease in operating costs, particularly lower fuel and energy prices (even when factoring in fuel hedges above spot prices), favorable foreign exchange movements, reduced royalty expense, and the impact of Best-in-Class initiatives, including lower labor, contractor, and consumable costs, and other operating efficiencies. In addition, earnings benefited from lower exploration, evaluation, and project expenses. The company generated $881 million of EBITDA(2) in the second quarter compared to $690 million in the prior year period.
Second quarter revenues were $2.01 billion, compared to $2.23 billion in the prior year period. Operating cash flow in the second quarter was $527 million, compared to $525 million in the second quarter of 2015. Despite lower production as a result of non-core asset sales, operating cash flow remained in line with the prior year period. This was driven by higher gold prices and lower operating costs, as a result of lower energy and fuel costs, combined with lower labor, consumable, and contractor costs, and improved operating efficiencies driven by Best-in-Class initiatives. These gains were partially offset by an increase in working capital, combined with the impact of higher income taxes paid, compared to the prior year period.
Free cash flow(3) for the second quarter was $274 million, marking five consecutive quarters of positive free cash flow. This reflects our driving focus on maximizing free cash flow per share through capital discipline, improved operational efficiency and productivity, and stronger cost management.
RESTORING A STRONG BALANCE SHEET
Strengthening our balance sheet remains a top priority. In 2016, we intend to reduce our total debt by at least $2 billion by drawing on our existing cash balance, and by maximizing free cash flow from operations, as well as potential non-core asset sales.
So far this year, we have reduced our total debt by $968 million, representing approximately half of our debt reduction target for the year.
We will continue to pursue non-core asset sales with discipline, and will only proceed with transactions that make sense for the business, on terms we consider favorable to our shareholders.
In this regard, we intend to initiate a process to explore the sale of our 50 percent stake in the KCGM operation in Western Australia.
The company's liquidity position is strong and continues to improve, underpinned by free cash flow generation across the business, and modest near-term debt repayment obligations. At the end of the second quarter, Barrick had a consolidated cash balance of approximately $2.4 billion.(6) The company now has less than $150 million(7) in debt due before 2018, and about $5 billion of our outstanding debt of $9 billion does not mature until after 2032. Over the medium term, we aim to reduce our total debt to below $5 billion.
OPERATING HIGHLIGHTS AND OUTLOOK
Our over-arching objective as a business is to grow our free cash flow per share. In support of this objective, we are focused on driving industry-leading margins by improving the productivity and efficiency of our operations. This means a continuous, relentless cycle of improvement and innovation, underpinned by our Best-in-Class program. Our aspiration is to achieve all-in sustaining costs below $700 per ounce by 2019.
Barrick produced 1.34 million ounces of gold in the second quarter at a cost of sales of $1.23 billion, compared to 1.45 million ounces at a cost of sales of $1.41 billion in the prior year period. All-in sustaining costs(4) in the second quarter were $782 per ounce, compared to $895 per ounce in the second quarter of 2015. Excluding the impact of divested mines, production for the second quarter increased by 126,000 ounces.
Compared to the first half of 2015, cost of sales applicable to gold declined by 14 percent to $2.43 billion, primarily due to fewer ounces sold as a result of divestments. Cost of sales at our remaining operations was in line with the prior-year period, with higher grades and sales volumes offset by a decrease in direct mining costs. Compared to the first half of 2015, all-in sustaining costs(4) have fallen by 19 percent. These reductions reflect decreased direct mining costs, particularly lower fuel and energy prices, reduced royalty expense, and the impact of Best-in-Class initiatives, including lower labor, contractor, and consumable costs, and more predictive and precise maintenance. Lower mine site sustaining capital expenditures and a higher proportion of production from lower cost operations also contributed to lower all-in sustaining costs.
Please see page 31 of Barrick's Second Quarter 2016 Management Discussion and Analysis for individual operating segment performance details.
We continue to expect full-year gold production of 5.0-5.5 million ounces. For the full year, we expect cost of sales applicable to gold to be in the range of $5.2-$5.5 billion. We have reduced our all-in sustaining cost(4) guidance for 2016 to $750-$790 per ounce, down from $760-$810 per ounce at the end of the first quarter, and below our original 2016 guidance of $775-$825 per ounce. All-in sustaining costs are now expected to be highest in the third quarter, reflecting a shift in the timing of certain sustaining capital expenditures to the second half of the year.
Capital expenditures for 2016 are now expected to be $1.25-$1.40 billion, down from $1.35-$1.55 billion at the end of the first quarter, and below our original 2016 guidance range of $1.35-$1.65 billion.
As we continue to embed Best-in-Class across the portfolio, we expect to identify additional savings opportunities over the course of the year.
Second Quarter Current Original
Gold 2016 2016 Guidance 2016 Guidance
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Production(8) (000s of
ounces) 1,340 5,000-5,500 5,000-5,500
Cost of sales applicable to
gold ($millions) 1,227 5,200-5,500 N/A
All-in sustaining costs(4)
($per ounce) 782 750-790 775-825
Cash costs(4)($per ounce) 578 540-570 550-590
Copper
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Production(8)(millions of
pounds) 103 380-430 370-410
Cost of sales applicable to
copper ($millions) 79 275-320 N/A
All-in sustaining
costs(9)($per pound) 2.14 1.95-2.25 2.05-2.35
C1 cash costs(9)($per pound) 1.52 1.35-1.65 1.45-1.75
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Total Capital
Expenditures(10)($millions) 284 1,250-1,400 1,350-1,650
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Mine Site Guidance Updates
Based on improved operational performance, we now anticipate higher production and lower costs at both Cortez and Turquoise Ridge. Cortez is now expected to produce 980,000-1,050,000 ounces of gold at all-in sustaining costs(4) of $520-$550 per ounce, compared to our previous guidance range of 900,000-1,000,000 ounces at all-in sustaining costs of $580-$640 per ounce. At Turquoise Ridge, our share of production is now anticipated to be in the range of 240,000-260,000 ounces of gold at all-in sustaining costs of $640-$700 per ounce, compared to our previous guidance range of 200,000-220,000 ounces at all-in sustaining costs of $770-$850 per ounce.
Reflecting the impact of severe winter weather conditions in the first half of 2016, we now expect full year gold production at Veladero to be in the range of 580,000-640,000 ounces, down from our previous guidance of 630,000-690,000 ounces. All-in sustaining cost(4) guidance remains unchanged at $790-$860 per ounce.
Copper
Copper production in the second quarter was 103 million pounds at a cost of sales of $79 million, and all-in sustaining costs(9)of $2.14 per pound. The Jabal Sayid project, a 50-50 joint venture with Saudi Arabian Mining Company (Ma'aden), commenced commercial production on July 1. Barrick's share of 2016 copper production from Jabal Sayid is expected to be 10-20 million pounds at all-in sustaining costs of $2.80-$3.10 per pound. The mine is expected to ramp up to a production rate of about 100 million pounds per year in the second half of 2017, as additional underground development is completed.
Reflecting the start of commercial production at Jabal Sayid, we have increased our copper production guidance for 2016 to 380-430 million pounds, up from our original guidance of 370-410 million pounds. For the full year, we expect cost of sales applicable to copper to be in the range of $275-$320 million. Copper all-in sustaining cost(9) guidance remains unchanged at $1.95-$2.25 per pound.
In June 2016, the Zambian government passed legislation to amend the royalty tax for mining operations to a variable rate based on the prevailing copper price, effective June 1, 2016. These rates are four percent at copper prices below $2.04; five percent at copper prices between $2.04 and $2.72; and six percent at copper prices of $2.72 and above. Legislation was also passed to remove the 15 percent variable profit tax on income from mining companies. Our 2016 copper guidance takes into consideration the revised royalty rates commencing June 1.
BEST-IN-CLASS IN ACTION
Pueblo Viejo Autoclaves Case Study
Applying Creative Thinking and Knowledge to Unlock Potential
The key to unlocking the massive refractory ore body at Pueblo Viejo rests within four giant autoclaves-the largest ever used in the gold mining industry. Each autoclave weighs 780 tonnes, and is roughly 38 meters long and six meters in diameter-about as wide as a Boeing 747 fuselage. Improving the availability and throughput of the autoclaves has the potential to unlock substantial value for the mine.
Until recently, each autoclave has required, on average, a 22-day maintenance shutdown every six months. Large metal walls that separate the compartments inside each autoclave begin to fail as a result of the forces generated by continuous agitation of the ore slurry. A buckled or failed wall can interfere with normal operation, damaging the agitator blades and shafts, and accelerating the build-up of scale and sand, thereby requiring frequent maintenance.
Challenging and pushing past technical limits is a critical component of our Best-in-Class philosophy. Faced with this challenge, the team at Pueblo Viejo came up with a plan to increase autoclave availability and throughput by extending the period between maintenance shutdowns-from every six months, to every seven or potentially eight months.
To achieve this, the team applied Barrick's extensive autoclave operating experience to propose a number of critical modifications to the autoclaves. High oxidization rates inside the autoclaves implied the number of interior compartments could be reduced, thereby mitigating the build-up of scale, and the associated maintenance requirements. However, the remaining compartment walls would continue to fail at a similar rate, limiting the potential gains. To solve this problem, the team worked with an engineering partner to develop a new design for the interior compartment walls. The design better integrates the walls into the autoclaves using stronger titanium structure sections, improved bracing, and larger bolts.
The new walls have been successfully installed in two of the mine's four autoclaves. Initial results have been positive, indicating that increased run-time between shutdown maintenance is achievable. If successful in all four autoclaves, this initiative has the potential to increase throughput at Pueblo Viejo by 240,000 tonnes per year (100 percent basis), increasing autoclave availability from 84 percent to 86.5 percent-driving increased production, lower unit costs, and additional free cash flow from the operation. Other benefits include reducing materials cost for autoclave maintenance work (spare parts, valves, and ancillary equipment), and reducing contractor costs, due to fewer shutdowns per year.
Goldstrike Open Pit Haulage Case Study
When Challenging Conventional Wisdom Pays Off
Over nearly 30 years of managing one of the largest open pit gold mines in the world, conventional wisdom at Goldstrike suggested that the technical limit for open pit haul truck utilization was 79 percent, taking into account the mine runs two open pits seven miles apart. In simple terms, for every hour of potential operating time, the average truck achieved about 48 minutes of productive work time. At the end of 2015, the mine was operating a fleet of 29 Komatsu 930 haul trucks.
Motivated by a desire to challenge conventional wisdom in pursuit of Best-in-Class performance, the open pit team at Goldstrike evaluated how to increase haul truck availability to a level the mine had never achieved. Drawing on other experiences from across the industry, they came up with a concept that allows some haul trucks to be parked, while significantly increasing utilization of the trucks remaining in service. The secret was breaks-but not the brakes on the trucks. Typically, when haul truck drivers at Goldstrike were scheduled to take a break, they simply pulled over in a safe location and enjoyed a rest, usually spent inside the cab of the truck itself. This had trucks idling, rather than engaging in productive work.
Earlier this year, Goldstrike began testing a new system. The mine is in the process of installing a series of modular break rooms at strategic locations around the open pit where drivers can rest. While drivers are on break, relief drivers take over operation of the trucks. In just six months, the results have been impressive: a six percent improvement in haul truck utilization in the open pit, moving from 79 percent to 85 percent; and six haul trucks taken out of the fleet. Today, the mine is moving the same amount of material in the open pit, with fewer trucks. This initiative, combined with other improvement projects, has helped to reduce open pit mining costs at Goldstrike from $1.40 per tonne at the start of the year to $1.25 per tonne today. The shift to using properly-configured break rooms also increases safety, by promoting a more restful environment for operators.
As often happens, when you remove one bottleneck, other opportunities for improvement present themselves. The open pit team is now evaluating how to further optimize shovel use at the mine, matching the right shovels with the right haulage plans and ore types.
TECHNICAL INFORMATION
The scientific and technical information contained in this press release has been reviewed and approved by Steven Haggarty, P. Eng., Senior Director, Metallurgy of Barrick who is a "Qualified Person" as defined in National Instrument 43-101 - Standards of Disclosure for Mineral Projects.
APPENDIX 1 - Updated 2016 Operating and Capital Expenditure Guidance
GOLD PRODUCTION AND COSTS
----------------------------------------------------------------------------
All-in
Production sustaining
(millions of Cost of sales costs(4) ($ Cash costs(4)
ounces) ($ millions) per ounce) ($ per ounce)
----------------------------------------------------------------------------
Cortez 0.980-1.050 520-550 430-450
Goldstrike 0.975-1.075 780-850 560-610
Pueblo Viejo
(60%) 0.600-0.650 550-590 420-450
Lagunas Norte 0.410-0.450 580-630 410-450
Veladero 0.580-0.640 790-860 520-570
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Sub-total 3.500-3.900 650-700 480-510
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Porgera (47.5%) 0.230-0.260 850-960 650-730
Acacia (63.9%) 0.480-0.500 950-980 670-700
KCGM (50%) 0.350-0.365 670-700 610-630
Hemlo 0.215-0.230 800-850 650-690
Turquoise Ridge
(75%) 0.240-0.260 640-700 480-520
Golden Sunlight 0.030-0.045 1,080-1,130 990-1,100
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Total Gold 5.000-
5.500(11) 5,200-5,500 750-790 540-570
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COPPER PRODUCTION AND COSTS
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All-in
Production Cost of sales sustaining C1 cash
(millions of ($ millions) costs(9) ($ percosts(9) ($ per
pounds) pound) pound)
----------------------------------------------------------------------------
Zaldivar (50%) 100-120 2.20-2.40 1.70-1.90
Lumwana 270-290 1.80-2.10 1.20-1.50
Jabal Sayid
(50%) 10-20 2.80-3.10 1.90-2.20
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Total Copper 380-430 275-320 1.95-2.25 1.35-1.65
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CAPITAL EXPENDITURES
----------------------------------------------------------------------------
($ millions)
-----------------------------------------------
Mine site sustaining 1,100-1,200
Project(12) 150-200
-----------------------------------------------
Total Capital Expenditures 1,250-1,400
-----------------------------------------------
APPENDIX 2 -2016 Outlook Assumptions and Economic Sensitivity Analysis
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Impact on Impact on
2016 Impact on Cost of All-in
Guidance Hypothetical Revenue sales sustaining
Assumption Change (millions) (millions) costs(4,9)
----------------------------------------------------------------------------
Gold revenue, net
of royalties $1,250/oz +/- $100/oz +/- $258 n/a +/- $3/oz
Copper revenue,
net of royalties $2.10/lb +/- $0.50/lb +/- $98 n/a +/- $0.03/lb
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Gold all-in
sustaining
costs(4)
Gold royalties &
production
taxes $1,250/oz +/- $100/oz n/a +/- $8 +/- $3/oz
WTI crude oil
price(13) $50/bbl +/- $10/bbl n/a +/- $3 +/- $1/oz
Australian
dollar exchange
rate 0.73 : 1 +/- 10% n/a +/- $14 +/- $5/oz
Canadian dollar
exchange rate 1.30 : 1 +/- 10% n/a +/- $16 +/- $6/oz
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Copper all-in
sustaining
costs(9)
WTI crude oil
price(13) $50/bbl +/- $10/bbl n/a +/- $2 +/- $0.01/lb
Chilean peso
exchange rate 690 : 1 +/- 10% n/a +/- $4 +/- $0.02/lb
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ENDNOTES
(1) "Adjusted net earnings" and "adjusted net earnings per share" are non-
GAAP financial performance measures. Adjusted net earnings excludes
the following from net earnings: certain impairment charges
(reversals), gains (losses) and other one-time costs relating to
acquisitions or dispositions, foreign currency translation gains
(losses), significant tax adjustments not related to current period
earnings and unrealized gains (losses) on non-hedge derivative
instruments. The company uses this measure internally to evaluate our
underlying operating performance for the reporting periods presented
and to assist with the planning and forecasting of future operating
results. Barrick believes that adjusted net earnings is a useful
measure of our performance because these adjusting items do not
reflect the underlying operating performance of our core mining
business and are not necessarily indicative of future operating
results. Adjusted net earnings and adjusted net earnings per share are
intended to provide additional information only and do not have any
standardized meaning under IFRS and may not be comparable to similar
measures of performance presented by other companies. They should not
be considered in isolation or as a substitute for measures of
performance prepared in accordance with IFRS. Further details on these
non-GAAP measures are provided in the MD&A accompanying Barrick's
financial statements filed from time to time on SEDAR at
http://www.sedar.com/ and on EDGAR at http://www.sec.gov/.
Reconciliation of Net Earnings to Adjusted Net Earnings and Adjusted Net
Earnings per Share(1)
For the three For the six
($ millions, except per share amounts in months ended months ended
dollars) June 30 June 30
----------------------------------------------------------------------------
2016 2015 2016 2015
----------------------------------------------------------------------------
Net earnings (loss) attributable to
equity holders of the company $ 138 $ (9) $ 55 $ 48
Impairment charges related to
intangibles, goodwill, property, plant
and equipment, and investments 4 35 5 40
Acquisition/disposition (gains)/losses (11) (2) (2) (26)
Foreign currency translation losses 23 33 162 31
Significant tax adjustments(3) 3 26 54 32
Other expense adjustments(4) 6 2 74 28
Unrealized gains on non-hedge derivative
instruments (5) 3 (11) 4
Tax effect and non-controlling interest - (28) (52) (35)
----------------------------------------------------------------------------
Adjusted net earnings $ 158 $ 60 $ 285 $ 122
----------------------------------------------------------------------------
Net earnings (loss) per share(2) 0.12 (0.01) 0.05 0.04
Adjusted net earnings per share(2) 0.14 0.05 0.24 0.10
----------------------------------------------------------------------------
(1) Amounts presented in this table are pre-tax and non-controlling
interest.
(2) Calculated using weighted average number of shares outstanding under
the basic method of earnings per share.
(3) Significant tax adjustments for the current year primarily relate to a
tax provision booked by Acacia in Q1 2016.
(4) Other expense adjustments for the current year relate to losses on
debt extinguishment and the impact of the decrease in the discount
rate used to calculate the provision for environmental remediation at
our closed mines.
(2) "EBITDA" and "adjusted EBITDA" are non-GAAP financial performance
measures. EBITDA excludes income tax expense, finance costs, finance
income and depreciation from net earnings. Barrick believes that
EBITDA is a valuable indicator of our ability to generate liquidity by
producing operating cash flow. EBITDA is also frequently used by
investors and analysts for valuation purposes. Adjusted EBITDA removes
the effect of "impairment charges" which are not reflective of our
ability to generate liquidity by producing operating cash flow. 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 http://www.sedar.com/ and on EDGAR at
http://www.sec.gov/.
Reconciliation of Net Earnings to EBITDA and Adjusted EBITDA
($ millions, except per share amounts in For the three For the six
dollars) months ended months ended
June 30 June 30
----------------------------------------------------------------------------
2016 2015 2016 2015
----------------------------------------------------------------------------
Net earnings (loss) $ 176 $ (9) $ 104 $ 80
Income tax expense 173 103 359 208
Finance costs, net(1) 150 177 347 355
Depreciation 382 419 767 840
----------------------------------------------------------------------------
EBITDA $ 881 $ 690 $ 1,577 $ 1,483
Impairment charges 4 35 5 40
----------------------------------------------------------------------------
Adjusted EBITDA $ 885 $ 725 $ 1,582 $ 1,523
----------------------------------------------------------------------------
Reported as:
----------------------------------------------------------------------------
Cortez $ 190 $ 117 $ 402 $ 178
Goldstrike 160 100 294 218
Pueblo Viejo 193 161 419 367
Lagunas Norte 96 136 179 281
Veladero 87 93 159 192
Turquoise Ridge 46 32 72 61
Acacia 134 70 210 136
Other (21) 16 (153) 90
Impairment charges (4) (35) (5) (40)
----------------------------------------------------------------------------
EBITDA $ 881 $ 690 $ 1,577 $ 1,483
Impairment charges 4 35 5 40
----------------------------------------------------------------------------
Adjusted EBITDA $ 885 $ 725 $ 1,582 $ 1,523
----------------------------------------------------------------------------
(1) Finance costs exclude accretion.
(3) "Free cash flow" is a non-GAAP financial performance measure which
excludes 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.
Reconciliation of Net Cash Provided by Operating Activities to Free Cash
Flow
For the three months For the six months
($ millions) ended June 30 ended June 30
----------------------------------------------------------------------------
2016 2015 2016 2015
----------------------------------------------------------------------------
Net cash provided by operating
activities $ 527 $ 525 $ 978 $ 841
Capital expenditures (253) (499) (523) (1,013)
----------------------------------------------------------------------------
Free cash flow $ 274 $ 26 $ 455 $ (172)
----------------------------------------------------------------------------
(4) "Cash costs" per ounce and "All-in sustaining costs" per ounce are
non-GAAP financial performance measures. "Cash costs" per ounce is
based on cost of sales but excludes, among other items, the impact of
depreciation. "All-in sustaining costs" per ounce begins with "Cash
costs" per ounce and adds further costs which reflect the additional
costs of operating a mine, primarily sustaining capital expenditures,
general & administrative costs and minesite exploration and evaluation
costs. Barrick believes that the use of "cash costs" per ounce and
"all-in sustaining 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. "Cash costs" per ounce and "All-in sustaining
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 18 gold mining companies
from around the world, including Barrick), it is not a regulatory
organization, and other companies may calculate this measure
differently. 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 http://www.sedar.com/ and on EDGAR at http://www.sec.gov/.
Reconciliation of Gold Cost of Sales to Cash costs per ounce, All-in
sustaining costs per ounce and All-in costs per ounce
For the three For the six
months ended months ended
June 30, June 30,
----------------------------------------------------------------------------
Footnote 2016 2015 2016 2015
----------------------------------------------------------------------------
Cost of sales related to gold
production $ 1,227 $ 1,413 $ 2,430 $ 2,838
Depreciation (365) (378) (734) (752)
By-product credits 1 (46) (53) (84) (112)
Realized (gains)/losses on
hedge and non-hedge
derivatives 2 26 27 57 47
Non-recurring items 3 - - (10) -
Other 4 (6) 7 (15) 15
Non-controlling interests
(Pueblo Viejo and Acacia) (90) (100) (175) (212)
----------------------------------------------------------------------------
Cash costs $ 746 $ 916 $ 1,469 $ 1,824
----------------------------------------------------------------------------
General & administrative costs 88 70 146 137
Minesite exploration and
evaluation costs 6 9 16 16 25
Minesite sustaining capital
expenditures 7 235 361 410 714
Rehabilitation - accretion and
amortization (operating
sites) 5 14 40 25 76
Non-controlling interest,
copper operations and other 8 (82) (90) (132) (161)
----------------------------------------------------------------------------
All-in sustaining costs $ 1,010 $ 1,313 $ 1,934 $ 2,615
----------------------------------------------------------------------------
Project exploration and
evaluation and project
costs 6 47 81 95 158
Community relations costs not
related to current
operations 3 4 5 7
Project capital expenditures 7 49 45 89 139
Rehabilitation - accretion and
amortization (non-operating
sites) 5 3 3 5 6
Non-controlling interest and
copper operations 8 (15) (11) (31) (15)
----------------------------------------------------------------------------
All-in costs $ 1,097 $ 1,435 $ 2,097 $ 2,910
----------------------------------------------------------------------------
Ounces sold - equity basis
(000s ounces) 10 1,292 1,466 2,598 2,851
----------------------------------------------------------------------------
Cash costs per ounce(1) $ 578 $ 624 $ 565 $ 640
Cash costs per ounce (on a co-
product basis)(1) 9 $ 605 $ 648 $ 591 $ 666
----------------------------------------------------------------------------
All-in sustaining costs per
ounce(1) $ 782 $ 895 $ 744 $ 918
All-in sustaining costs per
ounce (on a co-product
basis)(1) 9 $ 809 $ 919 $ 770 $ 944
----------------------------------------------------------------------------
All-in costs per ounce(1) $ 849 $ 978 $ 807 $ 1,021
All-in costs per ounce (on a
co-product basis)(1) 9 $ 876 $ 1,002 $ 833 $ 1,047
----------------------------------------------------------------------------
Cash costs per ounce, all-in sustaining costs per ounce and all-in
(1) costs per ounce may not calculate based on amounts presented in this
table due to rounding.
(1) Other sales
Revenues include the sale of by-products for our gold and copper mines
for the three months ended June 30, 2016 of $32 million (2015: $33
million) and the six months ended June 30, 2016 of $60 million (2015:
$74 million) and energy sales from the Monte Rio power plant at our
Pueblo Viejo Mine for the three months ended June 30, 2016 of $14
million (2015: $20 million) and the six months ended June 30, 2016 of
$24 million (2015: $38 million).
(2) Realized (gains)/losses on hedge and non-hedge derivatives
Includes realized hedge losses of $20 million and $44 million (2015:
$21 million and $42 million, respectively) for the three and six
months ended June 30, 2016, respectively, and realized non-hedge
losses of $6 million and $13 million (2015: $6 million and $5 million,
respectively) for the three and six months ended June 30, 2016,
respectively. Refer to Note 5 of the Financial Statements for further
information.
(3) Non-recurring items
Non-recurring items consist of $10 million in abnormal costs at
Veladero. These costs are not indicative of our cost of production and
have been excluded from the calculation of cash costs.
(4) Other
Other adjustments include adding the net margins related to power
sales at Pueblo Viejo of $2 million and $4 million, respectively,
(2015: $5 million and $10 million, respectively) and adding the cost
of treatment and refining charges of $4 million and $9 million,
respectively (2015: $3 million and $6 million, respectively). 2016
includes the removal of costs associated with our Pierina mine which
is mining incidental ounces as it enters closure of $12 million and
$28 million, respectively.
(5) 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.
(6) 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 27 of Barrick's Second
Quarter 2016 MD&A.
(7) Capital expenditures
Capital expenditures are related to our gold sites only and are
presented on a 100 percent accrued basis. They 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 Arturo and Cortez Lower
Zone. Refer to page 26 of Barrick's Second Quarter 2016 MD&A.
(8) Non-controlling interest and copper operations
Removes general & administrative costs of $12 million and $22 million,
respectively, for the three and six months ended June 30, 2016 (2015:
$14 million and $26 million, respectively), exploration, evaluation
and project costs of $4 million and $10 million, respectively (2015:
$3 million and $7 million, respectively), rehabilitation costs of $2
million and $3 million, respectively (2015: $3 million and $5 million,
respectively) and capital expenditures of $78 million and $129
million, respectively (2015: $79 million and $137 million,
respectively) that are related to our copper sites and the non-
controlling interest of our Acacia and Pueblo Viejo operating segment
and Arturo. In 2016, figures remove the impact of Pierina.
(9) Costs per ounce
Amounts presented on a co-product basis remove from cost per ounce
calculations the impact of other metal sales (net of non-controlling
interest) that are produced as a by-product of our gold production.
(10) Ounces sold - equity basis
In 2016, figures remove the impact of Pierina as the mine is currently
going through closure.
(5) Comparison based on the total reserves and resources and average
overall reserve grade for Goldcorp Inc., Kinross Gold Corporation,
Newmont Mining Corporation, and Newcrest Mining Limited, as reported
in each of the reserve reports for Goldcorp Inc., Kinross Gold
Corporation, Newmont Mining Corporation, and Newcrest Mining Limited
as of December 31, 2015.
(6) Includes $699 million cash held at Acacia and Pueblo Viejo, which may
not be readily deployed outside of Acacia and/or Pueblo Viejo.
(7) Amount excludes capital leases and includes project financing payments
at Pueblo Viejo (60 percent basis) and Acacia (100 percent basis).
(8) Barrick's share.
(9) "C1 cash costs" per pound and "All-in sustaining costs" per pound are
non-GAAP financial performance measures. "C1 cash costs" per pound is
based on cost of sales but excludes the impact of depreciation and
royalties and includes treatment and refinement charges. "All-in
sustaining costs" per pound begins with "C1 cash costs" per pound and
adds further costs which reflect the additional costs of operating a
mine, primarily sustaining capital expenditures, general &
administrative costs and royalties. Barrick believes that the use of
"C1 cash costs" per pound and "all-in sustaining costs" per pound will
assist investors, analysts, and other stakeholders in understanding
the costs associated with producing copper, understanding the
economics of copper mining, assessing our operating performance, and
also our ability to generate free cash flow from current operations
and to generate free cash flow on an overall company basis. "C1 cash
costs" per pound and "All-in sustaining costs" per pound are intended
to provide additional information only, do not have any standardized
meaning under IFRS, and may not be comparable to similar measures of
performance presented by other companies. These measures should not be
considered in isolation or as a substitute for measures of performance
prepared in accordance with IFRS. Further details on these non-GAAP
measures are provided in the MD&A accompanying Barrick's financial
statements filed from time to time on SEDAR at http://www.sedar.com/
and on EDGAR at http://www.sec.gov/.
Reconciliation of Copper Cost of Sales to C1 cash costs per pound and All-
in sustaining costs per pound
For the three For the six
($ millions, except per pound months ended months ended
information in dollars) June 30 June 30
----------------------------------------------------------------------------
2016 2015 2016 2015
----------------------------------------------------------------------------
Cost of sales $ 79 $ 238 $ 169 $ 489
Depreciation/amortization (9) (26) (20) (63)
Treatment and refinement charges 38 41 84 83
Cost of sales applicable to equity
method investments(1) 43 - 84 -
Less: royalties (10) (36) (25) (69)
----------------------------------------------------------------------------
C1 cash cost of sales $ 141 $ 217 $ 292 $ 440
----------------------------------------------------------------------------
General & administrative costs 5 5 12 12
Rehabilitation - accretion and
amortization 2 2 3 4
Royalties 10 36 25 69
Minesite sustaining capital
expenditures 41 44 70 71
----------------------------------------------------------------------------
All-in sustaining costs $ 199 $ 304 $ 402 $ 596
----------------------------------------------------------------------------
Pounds sold - consolidated basis
(millions pounds) 93 112 196 233
----------------------------------------------------------------------------
C1 cash cost per pound(2) $ 1.52 $ 1.94 $ 1.49 $ 1.89
----------------------------------------------------------------------------
All-in sustaining costs per pound(2) $ 2.14 $ 2.72 $ 2.05 $ 2.56
----------------------------------------------------------------------------
(1) For the three and six month periods ended June 30, 2016, figures
include $43 million and $84 million, respectively, of cash costs
related to our 50 percent share of Zaldivar due to the divestment of
50 percent of our interest in the mine on December 1, 2015 and
subsequent accounting as an equity method investment.
(2) 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.
(10) Barrick's share on an accrued basis.
(11) Operating unit guidance ranges for production reflect expectations at
each individual operating unit, but do not add up to corporate-wide
guidance range total.
(12) We have combined our previous capital expenditure categories of
Minesite expansion and Projects into one category called Project.
(13) Due to our fuel hedging activities, which are reflected in these
sensitivities, we are partially protected against changes in this
factor.
Key Statistics
Barrick Gold Corporation
(in United States dollars) Three months ended Six months ended
June 30, June 30,
-----------------------------------------
2016 2015 2016 2015
----------------------------------------------------------------------------
Financial Results (millions)
Revenues $ 2,012 $ 2,231 $ 3,942 $ 4,476
Cost of sales 1,336 1,689 2,660 3,397
Net earnings (loss)(1) 138 (9) 55 48
Adjusted net earnings(2) 158 60 285 122
Adjusted EBITDA(2) 885 725 1,582 1,523
Total project capital
expenditures(3) 50 53 90 157
Total capital expenditures -
sustaining(3) 234 361 409 713
Operating cash flow 527 525 978 841
Free cash flow(2) 274 26 455 (172)
Per Share Data (dollars)
Net earnings (loss) (basic and
diluted) 0.12 (0.01) 0.05 0.04
Adjusted net earnings (basic)(2) 0.14 0.05 0.24 0.10
Weighted average basic and diluted
common shares (millions) 1,165 1,165 1,165 1,165
----------------------------------------------------------------------------
Operating Results
Gold production (thousands of
ounces)(4) 1,340 1,445 2,620 2,835
Gold sold (thousands of ounces)(4) 1,292 1,466 2,598 2,851
Per ounce data
Average spot gold price $ 1,260 $ 1,192 $ 1,221 $ 1,206
Average realized gold price(2) 1,259 1,190 1,219 1,204
All-in sustaining costs(2) 782 895 744 918
Copper production (millions of
pounds)(5) 103 115 214 233
Copper sold (millions of pounds) 93 112 196 233
Per pound data
Average spot copper price $ 2.14 $ 2.74 $ 2.13 $ 2.69
Average realized copper price(2) 2.14 2.66 2.16 2.60
All-in sustaining costs(2) 2.14 2.72 2.05 2.56
----------------------------------------------------------------------------
As at As at
June December
30, 31,
--------------------
2016 2015
----------------------------------------------------------------------------
Financial Position (millions)
Cash and equivalents $ 2,441 $ 2,455
Working capital (excluding cash) 1,344 1,310
----------------------------------------------------------------------------
(1) Net earnings (loss) represents net earnings attributable to the equity
holders of the Company.
(2) Realized price, all-in sustaining costs, adjusted net earnings,
adjusted EBITDA and free cash flow 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
42 - 49 of this MD&A.
(3) Amounts presented on a 100% accrued basis. Project capital
expenditures are included in our calculation of all-in costs, but not
included in our calculation of all-in sustaining costs.
(4) Production includes Acacia on a 63.9% basis and Pueblo Viejo on a 60%
basis, both of which reflect our equity share of production. Also
includes production from Bald Mountain and Round Mountain up to
January 11, 2016, the effective date of sale of the assets. 2015
includes production from Porgera on a 95% basis whereas 2016 figures
are on a 47.5% basis reflecting the sale of 50% of Porgera in third
quarter 2015. Sales include our equity share of gold sales from Acacia
and Pueblo Viejo.
(5) In 2016, reflects production from Jabal Sayid and Zaldivar on a 50%
basis, which reflects our equity share of production, and 100% of
Lumwana. 2015 production includes Zaldivar on a 100% basis prior to
the sale of 50% of the mine in fourth quarter 2015, and 100% of
Lumwana.
Production and Cost Summary
Gold Cost of
Gold Production Sales
(attributable ounces) (in millions of
(000s) USD)
--------------------------- ----------------
Three months Six months Three months
ended ended ended
June 30, June 30, June 30,
------------- ------------- ---------------
2016 2015 2016 2015 2016 2015
------------------------------------------ ------------- ---------------
Gold
Goldstrike 263 206 512 413 $ 219 $ 113
Cortez 248 193 495 326 239 195
Pueblo Viejo(1) 150 131 322 266 173 224
Lagunas Norte 124 155 224 333 77 103
Veladero 119 151 251 300 100 110
Turquoise Ridge 79 52 129 101 34 37
Acacia(2) 141 119 263 235 180 187
Other Mines - Gold(3) 216 438 424 861 205 444
-------------------------------------------------------------------------
Total 1,340 1,445 2,620 2,835 $ 1,227 $ 1,413
-------------------------------------------------------------------------
Gold Cost of
Sales
(in millions of All-in sustaining costs(5)
USD) ($/oz)
--------------- -------------------------------
Six months Three months Six months
ended ended ended
June 30, June 30, June 30,
--------------- --------------- ---------------
2016 2015 2016 2015 2016 2015
-------------------------------------------- --------------- ---------------
Gold
Goldstrike $ 431 $ 262 $ 737 $ 732 722 $ 811
Cortez 491 391 558 811 511 877
Pueblo Viejo(1) 340 455 634 682 559 673
Lagunas Norte 145 202 585 509 571 483
Veladero 205 238 744 961 709 978
Turquoise Ridge 69 68 621 780 668 747
Acacia(2) 349 361 926 1,149 941 1,133
Other Mines - Gold(3) 400 861 786 950 775 977
----------------------------------------------------------------------------
Total $ 2,430 $ 2,838 $ 782 $ 895 $ 744 $ 918
----------------------------------------------------------------------------
Copper Cost of
Copper Production Sales
(attributable pounds)(4) (in millions of
(millions) USD)
--------------------------- ----------------
Three months Six months Three months
ended ended ended
June 30, June 30, June 30,
------------- ------------- ---------------
2016 2015 2016 2015 2016 2015
-------------------------------------------------------------------------
Total 103 115 214 233 $ 79 $ 238
-------------------------------------------------------------------------
Copper Cost of
Sales
(in millions of All-in sustaining costs(5)
USD) ($/lb)
--------------- -------------------------------
Six months Three months Six months
ended ended ended
June 30, June 30, June 30,
--------------- --------------- ---------------
2016 2015 2016 2015 2016 2015
----------------------------------------------------------------------------
Total $ 169 $ 489 $ 2.14 $ 2.72 $ 2.05 $ 2.56
----------------------------------------------------------------------------
Total Gold Costs ($/oz)
----------------------------------------
Three months ended Six months ended
June 30, June 30,
------------------- --------------------
2016 2015 2016 2015
------------------------------------------------------- --------------------
Direct mining costs before impact
of hedges at market foreign
exchange rates $ 550 $ 601 $ 538 $ 618
Losses realized on currency hedge
and commodity hedge/economic
hedge contracts 20 15 21 14
By-product credits (27) (24) (26) (26)
Royalties 35 32 32 34
----------------------------------------------------------------------------
Cash costs(5) 578 624 565 640
Depreciation 253 231 253 234
----------------------------------------------------------------------------
Total production costs $ 831 $ 855 $ 818 $ 874
----------------------------------------------------------------------------
Cash costs(5) $ 578 $ 624 $ 565 $ 640
General & administrative costs 68 48 56 48
Rehabilitation - accretion and
amortization (operating sites) 11 27 10 27
Mine on-site exploration and
evaluation costs 7 11 6 9
Minesite sustaining capital
expenditures 182 246 158 250
Non-controlling interest, copper
operations and other (64) (61) (51) (56)
----------------------------------------------------------------------------
All-in sustaining costs(5) $ 782 $ 895 $ 744 $ 918
----------------------------------------------------------------------------
All-in costs(5) $ 849 $ 978 $ 807 $ 1,021
----------------------------------------------------------------------------
(1) Reflects production from Pueblo Viejo on a 60% basis, which reflects
our equity share of production.
(2) Reflects production from Acacia on a 63.9% basis, which reflects our
equity share of production.
(3) In 2016, Other Mines - Gold includes Golden Sunlight, Hemlo, Porgera
on a 47.5% basis and Kalgoorlie. Also includes production from Bald
Mountain and Round Mountain up to January 11, 2016, the effective date
of sale of these assets. In 2015, Other Mines - Gold included Bald
Mountain, Round Mountain, Golden Sunlight, Hemlo, Pierina, Cowal, Ruby
Hill, Porgera on a 95% basis, and Kalgoorlie.
(4) In 2016, reflects production from Jabal Sayid and Zaldivar on a 50%
basis, which reflects our equity share of production, and 100% of
Lumwana. 2015 production includes Zaldivar on a 100% basis prior to
the sale of 50% of the mine in fourth quarter 2015, and 100% of
Lumwana.
(5) Cash costs, all-in sustaining costs, and all-in costs 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 42 - 49 of this MD&A.
Consolidated Statements of Income
Barrick Gold Corporation
(in millions of United States
dollars, except per share data) Three months Six months
(Unaudited) ended ended
June 30, June 30,
----------------------------------------------------------------------------
2016 2015 2016 2015
----------------------------------------------------------------------------
Revenue (notes 5 and 6) $ 2,012 $ 2,231 $ 3,942 $ 4,476
----------------------------------------------------------------------------
Costs and expenses (income)
Cost of sales (notes 5 and 7) 1,336 1,689 2,660 3,397
General and administrative expenses 88 70 146 137
Exploration, evaluation and project
expenses 56 97 111 183
Impairment charges 4 35 5 40
Loss on currency translation (note
9B) 23 33 162 31
Closed mine rehabilitation 7 (19) 30 (11)
Income from equity investees (3) - (8) -
(Gain) loss on non-hedge derivatives 1 8 (3) 11
Other expense (income) (note 9A) (11) 32 3 14
----------------------------------------------------------------------------
Income before finance costs and
income taxes $ 511 $ 286 $ 836 $ 674
Finance costs, net (162) (192) (373) (386)
----------------------------------------------------------------------------
Income before income taxes $ 349 $ 94 $ 463 $ 288
Income tax expense (note 10) (173) (103) (359) (208)
----------------------------------------------------------------------------
Net income (loss) $ 176 $ (9) $ 104 $ 80
----------------------------------------------------------------------------
Attributable to:
Equity holders of Barrick Gold
Corporation $ 138 $ (9) $ 55 $ 48
Non-controlling interests (note 15) $ 38 $ - $ 49 $ 32
----------------------------------------------------------------------------
Earnings (loss) per share data attributable to the
equity holders of Barrick Gold Corporation (note 8)
Net income (loss)
Basic $ 0.12 $ (0.01) $ 0.05 $ 0.04
Diluted $ 0.12 $ (0.01) $ 0.05 $ 0.04
----------------------------------------------------------------------------
The notes to these unaudited condensed interim financial statements, which
are contained in the Second Quarter Report 2016 available on our website
are an integral part of these consolidated financial statements.
Consolidated Statements of Comprehensive Income
Barrick Gold Corporation
(in millions of United States dollars) Three months Six months
(Unaudited) ended ended
June June
30, 30,
----------------------------------------------------------------------------
2016 2015 2016 2015
----------------------------------------------------------------------------
Net income (loss) $ 176 $ (9) $ 104 $ 80
Other comprehensive income (loss), net of
taxes
Movement in equity investments fair value
reserve:
Net unrealized change on equity investments,
net of tax $nil, $nil, $nil and $nil 10 (6) 11 (11)
Net realized change on equity investments, net
of tax $nil, $nil, $nil and $nil - 1 - 18
Items that may be reclassified subsequently to
profit or loss:
Unrealized gains (losses) on derivatives
designated as cash flow hedges, net of tax
($8), ($13), ($7) and $1 22 24 12 (33)
Realized losses on derivatives designated as
cash flow hedges, net of tax ($2), $1, ($4)
and $nil 18 36 36 51
Currency translation adjustments, net of tax
$nil, $nil, $nil and $nil 2 2 93 (30)
----------------------------------------------------------------------------
Total other comprehensive income (loss) 52 57 152 (5)
----------------------------------------------------------------------------
Total comprehensive income $ 228 $ 48 $ 256 $ 75
----------------------------------------------------------------------------
Attributable to:
Equity holders of Barrick Gold Corporation $ 190 $ 48 $ 207 $ 43
Non-controlling interests $ 38 $ - $ 49 $ 32
----------------------------------------------------------------------------
The notes to these unaudited condensed interim financial statements, which
are contained in the Second Quarter Report 2016 available on our website
are an integral part of these consolidated financial statements.
Consolidated Statements of Cash Flow
Barrick Gold Corporation
(in millions of United States
dollars) (Unaudited) Three months ended Six months ended
June 30, June 30,
----------------------------------------------------------------------------
2016 2015 2016 2015
----------------------------------------------------------------------------
OPERATING ACTIVITIES
Net income (loss) $ 176 $ (9) $ 104 $ 80
Adjusted for the following items:
Depreciation 382 419 767 840
Finance costs 165 194 380 390
Impairment charges 4 35 5 40
Income tax expense (note 10) 173 103 359 208
(Gain) loss on non-hedge
derivatives 1 8 (3) 11
Gain on sale of long-lived assets (11) (2) (2) (26)
Change in working capital (note
11) (167) 40 (350) (235)
Other operating activities (note
11) 133 40 232 82
----------------------------------------------------------------------------
Operating cash flows before interest
and income taxes 856 828 1,492 1,390
Interest paid (201) (274) (268) (349)
Income taxes paid (128) (29) (246) (200)
----------------------------------------------------------------------------
Net cash provided by operating
activities 527 525 978 841
----------------------------------------------------------------------------
INVESTING ACTIVITIES
Property, plant and equipment
Capital expenditures (note 5) (253) (499) (523) (1,013)
Sales proceeds 6 7 10 19
Divestitures (note 4) (22) - 588 2
Investments sales - - - 33
Other investing activities (3) (6) (6) (7)
----------------------------------------------------------------------------
Net cash (used in) provided by
investing activities (272) (498) 69 (966)
----------------------------------------------------------------------------
FINANCING ACTIVITIES
Debt
Proceeds - 3 3 5
Repayments (127) (88) (980) (272)
Dividends (21) (58) (43) (116)
Funding from non-controlling
interests 14 21 27 22
Disbursements to non-controlling
interests - (20) (31) (64)
Debt extinguishment costs (3) - (40) -
----------------------------------------------------------------------------
Net cash used in financing
activities (137) (142) (1,064) (425)
----------------------------------------------------------------------------
Effect of exchange rate changes on
cash and equivalents - (1) 3 (7)
----------------------------------------------------------------------------
Net increase (decrease) in cash and
equivalents 118 (116) (14) (557)
Cash and equivalents at the
beginning of period 2,323 2,258 2,455 2,699
----------------------------------------------------------------------------
Cash and equivalents at the end of
period $ 2,441 $ 2,142 $ 2,441 $ 2,142
----------------------------------------------------------------------------
Less: cash and equivalents of assets
classified as held for sale at the
end of period - 20 - 20
----------------------------------------------------------------------------
Cash and equivalents excluding
assets classified as held for sale
at the end of period $ 2,441 $ 2,122 $ 2,441 $ 2,122
----------------------------------------------------------------------------
The notes to these unaudited condensed interim financial statements, which
are contained in the Second Quarter Report 2016 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) June 30, December 31,
---------------------------
2016 2015
----------------------------------------------------------------------------
ASSETS
Current assets
Cash and equivalents (note 12A) $ 2,441 $ 2,455
Accounts receivable 491 275
Inventories 1,701 1,717
Other current assets 239 263
----------------------------------------------------------------------------
Total current assets (excluding assets
classified as held for sale) $ 4,872 $ 4,710
Assets classified as held for sale - 758
----------------------------------------------------------------------------
Total current assets $ 4,872 $ 5,468
Non-current assets
Equity in investees 1,218 1,199
Property, plant and equipment 14,284 14,434
Goodwill 1,371 1,371
Intangible assets 269 271
Deferred income tax assets 1,016 1,040
Non-current portion of inventory 1,566 1,502
Other assets 1,008 1,023
----------------------------------------------------------------------------
Total assets $ 25,604 $ 26,308
----------------------------------------------------------------------------
LIABILITIES AND EQUITY
Current liabilities
Accounts payable $ 1,120 $ 1,158
Debt (note 12B) 175 203
Current income tax liabilities 124 -
Other current liabilities 301 337
----------------------------------------------------------------------------
Total current liabilities (excluding liabilities
classified as held for sale) $ 1,720 $ 1,698
Liabilities classified as held for sale - 149
----------------------------------------------------------------------------
Total current liabilities $ 1,720 $ 1,847
Non-current liabilities
Debt (note 12B) 8,825 9,765
Provisions 2,343 2,102
Deferred income tax liabilities 1,502 1,553
Other liabilities 1,554 1,586
----------------------------------------------------------------------------
Total liabilities $ 15,944 $ 16,853
----------------------------------------------------------------------------
Equity
Capital stock (note 14) $ 20,873 $ 20,869
Deficit (13,634) (13,642)
Accumulated other comprehensive loss (218) (370)
Other 321 321
----------------------------------------------------------------------------
Total equity attributable to Barrick Gold
Corporation shareholders $ 7,342 $ 7,178
Non-controlling interests (note 15) 2,318 2,277
----------------------------------------------------------------------------
Total equity $ 9,660 $ 9,455
----------------------------------------------------------------------------
Contingencies and commitments (notes 5 and 16)
----------------------------------------------------------------------------
Total liabilities and equity $ 25,604 $ 26,308
----------------------------------------------------------------------------
The notes to these unaudited condensed interim financial statements, which
are contained in the Second Quarter Report 2016 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
other
(in millions of United Common comprehensive
States dollars) Shares (in Capital Retained income
(Unaudited) thousands) stock deficit (loss)(1)
----------------------------------------------------------------------------
At January 1, 2016 1,165,081 $ 20,869 $ (13,642) $ (370)
----------------------------------------------------------------------------
Net income - - 55 -
Total other comprehensive
income - - - 152
----------------------------------------------------------------------------
Total comprehensive
income - - 55 152
----------------------------------------------------------------------------
Transactions with owners
Dividends - - (43) -
Funding from non-
controlling interests - - - -
Other decrease in non-
controlling interest - - - -
Dividend reinvestment
plan (note 14) 250 4 (4) -
----------------------------------------------------------------------------
Total transactions with
owners 250 4 (47) -
----------------------------------------------------------------------------
At June 30, 2016 1,165,331 $ 20,873 $ (13,634) $ (218)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
At January 1, 2015 1,164,670 $ 20,864 $ (10,640) $ (298)
----------------------------------------------------------------------------
Net income - - 48 -
Total other comprehensive
loss - - - (5)
----------------------------------------------------------------------------
Total comprehensive
income (loss) - - 48 (5)
----------------------------------------------------------------------------
Transactions with owners
Dividends - - (116) -
Recognition of stock
option expense - 1 - -
Funding from non-
controlling interests - - - -
Other decrease in non-
controlling interests - - - -
Other decreases - - (6) -
----------------------------------------------------------------------------
Total transactions with
owners - 1 (122) -
----------------------------------------------------------------------------
At June 30, 2015 1,164,670 $ 20,865 $ (10,714) $ (303)
----------------------------------------------------------------------------
Consolidated Statements of Changes in Equity
-------------------------
Attributable to equity
Barrick Gold Corporation holders of the company
----------------------------------------------------------------------------
Total equity
(in millions of United attributable Non-
States dollars) to controlling Total
(Unaudited) Other(2) shareholders interests equity
----------------------------------------------------------------------------
At January 1, 2016 $ 321 $ 7,178 $ 2,277 $ 9,455
----------------------------------------------------------------------------
Net income - 55 49 104
Total other comprehensive
income - 152 - 152
----------------------------------------------------------------------------
Total comprehensive
income - 207 49 256
----------------------------------------------------------------------------
Transactions with owners
Dividends - (43) - (43)
Funding from non-
controlling interests - - 27 27
Other decrease in non-
controlling interest - - (35) (35)
Dividend reinvestment
plan (note 14) - - - -
----------------------------------------------------------------------------
Total transactions with
owners - (43) (8) (51)
----------------------------------------------------------------------------
At June 30, 2016 $ 321 $ 7,342 $ 2,318 $ 9,660
----------------------------------------------------------------------------
----------------------------------------------------------------------------
At January 1, 2015 $ 321 $ 10,247 $ 2,615 $ 12,862
----------------------------------------------------------------------------
Net income - 48 32 80
Total other comprehensive
loss - (5) - (5)
----------------------------------------------------------------------------
Total comprehensive
income (loss) - 43 32 75
----------------------------------------------------------------------------
Transactions with owners
Dividends - (116) - (116)
Recognition of stock
option expense - 1 - 1
Funding from non-
controlling interests - - 22 22
Other decrease in non-
controlling interests - - (66) (66)
Other decreases - (6) - (6)
----------------------------------------------------------------------------
Total transactions with
owners - (121) (44) (165)
----------------------------------------------------------------------------
At June 30, 2015 $ 321 $ 10,169 $ 2,603 $ 12,772
----------------------------------------------------------------------------
(1) Includes cumulative translation losses at June 30, 2016: $85 million
(June 30, 2015: $152 million).
(2) Includes additional paid-in capital as at June 30, 2016: $283 million
(December 31, 2015: $283 million; June 30, 2015: $283 million) and
convertible borrowings - equity component as at June 30, 2016: $38
million (December 31, 2015: $38 million; June 30, 2015: $38 million).
The notes to these unaudited condensed interim financial statements, which
are contained in the Second Quarter Report 2016 available on our website are
an integral part of these consolidated financial statements.
HEAD OFFICE TRANSFER AGENTS AND REGISTRARS
Barrick Gold Corporation CST Trust Company
Brookfield Place P.O. Box 700, Postal Station B
TD Canada Trust Tower Montreal, Quebec H3B 3K3
161 Bay Street, Suite 3700 or
Toronto, Ontario M5J 2S1 American Stock Transfer & Trust
Company, LLC
Telephone: +1 416 861-9911 6201 - 15 Avenue
Toll-free: 1-800-720-7415 Brooklyn, New York 11219
Fax: +1 416 861-2492
Email: investor@barrick.com Telephone: 1-800-387-0825
Website: www.barrick.com Fax: 1-888-249-6189
SHARES LISTED Email: inquiries@canstockta.com
ABX - The New York Stock Exchange Website: www.canstockta.com
The Toronto Stock Exchange
CAUTIONARY STATEMENT ON FORWARD-LOOKING INFORMATION
Certain information contained or incorporated by reference in this Second Quarter Report 2016, including any information as to our strategy, projects, plans or future financial or operating performance, constitutes "forward-looking statements". All statements, other than statements of historical fact, are forward-looking statements. The words "believe", "expect", "anticipate", "contemplate", "target", "plan", "objective", "aspiration", "aim", "intend", "project", "goal", "continue", "budget", "estimate", "potential", "may", "will", "can", "should", "could", "would", and similar expressions identify forward-looking statements. In particular, this Second Quarter Report 2016 contains forward-looking statements including, without limitation, with respect to: (i) Barrick's forward-looking production guidance; (ii) estimates of future cost of sales for gold and copper; all-in-sustaining costs per ounce/pound, cash costs per ounce and C1 cash costs per pound; (iii) cash flow forecasts; (iv) projected capital, operating and exploration expenditures; (v) targeted debt and cost reductions; (vi) targeted investments by Barrick's Growth Group; (vii) mine life and production rates; (viii) potential mineralization and metal or mineral recoveries; (ix) Barrick's Best-in-Class program (including potential improvements to financial and operating performance at Barrick's Pueblo Viejo and Goldstrike mines that may result from certain Best-in-Class initiatives); (x) timing and completion of acquisitions; (xi) non-core asset sales or joint ventures; and (xii) 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 the fact that certain Best-in-Class initiatives are still in the early stages of evaluation and additional engineering and other analysis is required to fully assess their impact; 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; timing of receipt of, or failure to comply with, necessary permits and approvals; uncertainty whether some or all of the Best-in-Class initiatives and investments targeted by the Growth Group will meet the company's capital allocation objectives; 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 does 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; 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; risk of loss due to acts of war, terrorism, sabotage and civil disturbances; litigation; contests over title to properties, particularly title to undeveloped properties, or over access to water, power and other required infrastructure; business opportunities that may be presented to, or pursued by, the company; our ability to successfully integrate acquisitions or complete divestitures; 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 shortage, related to climate change; availability and increased costs associated with mining inputs and labor; and the organization of our previously held African gold operations and properties under a separate listed company. In addition, there are risks and hazards associated with the business of mineral exploration, development and mining, including environmental hazards, industrial accidents, unusual or unexpected formations, pressures, cave-ins, flooding and gold bullion, copper cathode or gold or copper concentrate losses (and the risk of inadequate insurance, or inability to obtain insurance, to cover these risks).
Many of these uncertainties and contingencies can affect our actual results and could cause actual results to differ materially from those expressed or implied in any forward-looking statements made by, or on behalf of, us. Readers are cautioned that forward-looking statements are not guarantees of future performance. All of the forward-looking statements made in this Second Quarter Report 2016 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.
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 CONTACTS: Angela Parr
Vice President, Investor Relations
+1 416 307-7426
aparr@barrick.com
MEDIA CONTACT: Andy Lloyd
Senior Vice President, Communications
+1 416 307-7414
alloyd@barrick.com
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