Barrick Achieves Strong Results in Second Quarter.TORONTO--(BUSINESS WIRE)--July 26, 2001 Production Underway At New Tanzanian Mine Barrick Gold Barrick Gold Corporation TSX: ABX NYSE: ABX is the largest pure gold mining company in the world, with its headquarters in Toronto, Ontario, Canada; and four regional business units (RBU's) located in Australia, Africa, North America and South America. Corporation Today Reported Solid Results for the Second Quarter of 2001, Reflecting Excellent Contributions From Its Key Low-cost Operations and Its Premium Gold Sales Program During the quarter, Barrick (NYSE NYSE See: New York Stock Exchange :ABX ABX Antibiotics ABX Airborne Express ABX Abstracting ABX Albury, New South Wales, Australia - Albury (Airport Code) ABX Automatic Branch Exchange ABx Non-Antibiotics ABX Asset Backed Securities Index ABX Acoustic Bass Extension ) (TSE See Tokyo Stock Exchange. TSE 1. See Tokyo Stock Exchange (TSE). 2. See Toronto Stock Exchange (TSE). :ABX.) benefited from initial production at the newly developed Bulyanhulu Mine in Tanzania Tanzania (tăn'zənē`ə, –zăn`ēə, Swahili tänzänē`ä), officially United Republic of Tanzania, republic (2005 est. pop. . On June June: see month. 25, the Company also announced a Merger Plan with Homestake Mining Company that creates a new leader in the gold industry in terms of quality and scale - the combined company is expected to be the largest by market capitalization Market Capitalization A measure of a public company's size. Market capitalization is the total dollar value of all outstanding shares. It's calculated by multiplying the number of shares times the current market price. This term is often referred to as market cap. , with the lowest costs and highest earnings and cash flow. --------------------------------------------------- -------------- Financial Highlights For the six months ended June 30, (millions of dollars, except per share data) 2001 2000 --------------------------------------------------- ------------- Revenues $649 $653 Net income 138 144 Operating cash flow 295 345 Net income per share 0.35 0.36 Operating cash flow per share 0.74 0.87 --------------------------------------------------- ------------- Barrick's net income for the second quarter was US$66 million, or US17 cents per share Cents per share The amount of a mutual fund's dividend or capital gains distributions that a shareholder will receive for each share owned. . Operating cash flow Operating cash flow Earnings before depreciation minus taxes. Measures the cash generated from operations, not counting capital spending or working capital requirements. for the quarter was US$130 million, or US32 cents per share. For the first half, net income was US$138 million, or US35 cents per share, with operating cash flow of US$295 million, or US74 cents per share. In the first half, Barrick's Premium Gold Sales Program realized an average price of US$340 an ounce ounce, in zoology ounce, in zoology: see leopard. ounce, unit of measurement ounce: see English units of measurement. , a premium of US$74 per ounce over the average spot price of US$266 per ounce. During the period, the Program generated US$139 million in additional revenue. "With strong financial results, a new low-cost mine in production, and a strategic merger with Homestake underway, we are moving on all fronts to position this Company even better for the future," said Randall Randall may refer to the following: In places:
tr.v. reg·u·lat·ed, reg·u·lat·ing, reg·u·lates 1. To control or direct according to rule, principle, or law. 2. approval. Both regulatory and Homestake shareholder approvals are expected to be completed in the fourth quarter of 2001. In the meantime Adv. 1. in the meantime - during the intervening time; "meanwhile I will not think about the problem"; "meantime he was attentive to his other interests"; "in the meantime the police were notified" meantime, meanwhile , an integration team has been assembled as·sem·ble v. as·sem·bled, as·sem·bling, as·sem·bles v.tr. 1. To bring or call together into a group or whole: assembled the jury. 2. to ensure a smooth implementation of the merger. Total production for the first half was 1,864,852 ounces of gold, including 958,362 ounces in the second quarter. Total cash costs were US$157 per ounce for the six months and US$162 for the second quarter. The Pierina Mine contributed 427,283 ounces of gold at a total cash cost of US$41 per ounce and the Goldstrike Property produced 1,203,970 ounces at US$185 for the first six months of 2001. The Bulyanhulu Mine, which began production in early April, contributed 63,579 ounces at a total cash cost of US$206 per ounce in the second quarter of 2001. The Mine is expected to contribute 250,000 ounces of gold at a total cash cost of US$175 per ounce in 2001, with production rising in 2002 to nearly 400,000 ounces a year at a total cash cost of US$130 per ounce. Development began during the quarter on the East Zone to increase production to 500,000 ounces a year, while engineering continues on the West and Deep extensions of the orebody to translate (1) To change one language into another; for example, assemblers, compilers and interpreters translate source language into machine language. (2) In computer graphics, to move an image on screen without rotating it. the growing reserve base into higher production. On the exploration front, the Company announced that proven and probable PROBABLE. That which has the appearance of truth; that which appears to be founded in reason. gold reserves at the Veladero Property, jointly owned with Homestake, have increased to 8 million ounces from 5.5 million ounces, bringing the district's total gold reserves to 25.8 million ounces (proven reserves of 2.4 million ounces and probable reserves of 23.4 million ounces), including Barrick's Pascua-Lama Property. Since the merger announcement, both companies have begun to formulate formulate /for·mu·late/ (for´mu-lat) 1. to state in the form of a formula. 2. to prepare in accordance with a prescribed or specified method. a unified development plan for the entire district. As a result, Pascua-Lama/Veladero is expected to become the first major gold district in the world to be owned and developed by one company. "We have an unmatched pipeline of potential new production at even lower costs than our existing production base," said John Carrington Carrington or Carington is a surname, and may refer to:
The officer of a firm responsible for day-to-day management, usually the president or an executive vice-president. . "At Bulyanhulu, we've we've Contraction of we have. we've have had a smooth start-up Start-up The earliest stage of a new business venture. of operations and we are having another banner Same as banner ad. 1. banner - The title page added to printouts by most print spoolers. Typically includes user or account ID information in very large character-graphics capitals. year on the exploration front at the property. At Pascua-Lama and Veladero, we've added reserves and the merger should lead to capital and operating cost synergies Cost Synergy In the context of mergers, cost synergy is the savings in operating costs expected after two companies, who compliment each other's strengths, join. Notes: The savings in operating costs usually come in the form of laying off employees. ." During 2000, Barrick produced 898,996 ounces in the second quarter at US$144 per ounce and 1,801,613 ounces of gold at a total cash cost of US$138 per ounce in the first six months. Net income was US$72 million, or US18 cents per share, in the second quarter in 2000 and US$144 million, or US36 cents per share, for the first half of the year. Operating cash flow for the second quarter was US$168 million, or US42 cents per share, and totaled US$345 million, or US87 cents per share, for the first six months. During the second quarter, the Company reduced its spot deferred position from 16.1 million ounces to 15.8 million ounces, or approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. 25 per cent of reserves, with an average realized price of US$346 per ounce. This includes gold price protection on planned production through 2002 at a minimum price of US$340 per ounce. After the proposed merger with Homestake, the percentage of reserves hedged hedge n. 1. A row of closely planted shrubs or low-growing trees forming a fence or boundary. 2. A line of people or objects forming a barrier: a hedge of spectators along the sidewalk. on a combined basis would decrease to 21 per cent, in line with the historic parameters of Barrick's Premium Gold Sales Program. Barrick expects to produce 3.75 million ounces of gold at total cash costs of US$158 an ounce in 2001. Prior to giving effect to the proposed merger with Homestake, the Company now expects earnings to be at the lower end of the US70-to-US75-cent per share range provided in earlier earnings guidance. This is primarily due to: lower production and higher costs at El Indio Indio (ĭn`dē-ō'), city (1990 pop. 36,793), Riverside co., SE Calif., in the Coachella Valley of the Colorado Desert, 22 ft (6.7 m) below sea level; founded 1876, inc. 1930. ; higher power Higher power is a term used in a 12-step program, such as Alcoholics Anonymous, to describe "a power greater than yourself." Although many participants equate their higher power with God, a belief in God or in formal religion is not mandatory; the higher power is intended as a costs at the Goldstrike Property; and lower interest income on cash balances. Third quarter earnings are expected to be US17 cents a share. Barrick is the most valued gold company, with the largest market capitalization in the industry and the only A-rated balance sheet, which has been confirmed by major rating agencies subsequent to the Merger Plan announcement. Barrick's shares are traded under the ticker symbol Ticker Symbol An arrangement of characters (usually letters) representing a particular security listed on an exchange or otherwise traded publicly. When a company issues securities to the public marketplace, it selects an available ticker symbol for its securities which investors ABX on the Toronto Toronto (tərŏn`tō), city (1998 est pop. 2,400,000), provincial capital, S Ont., Canada, on Lake Ontario. Toronto is the largest city in Canada and since the 1970s has been one of the fastest-changing cities in North America, experiencing , New York New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of , London London, city, Canada London, city (1991 pop. 303,165), SE Ont., Canada, on the Thames River. The site was chosen in 1792 by Governor Simcoe to be the capital of Upper Canada, but York was made capital instead. London was settled in 1826. and Swiss Stock Exchanges and the Paris Bourse Paris Bourse National stock market of France. .
Key Statistics
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Three months ended Six months ended
June 30, June 30,
(in United States dollars)
(Unaudited) 2001 2000 2001 2000
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Operating Results
Gold production
(ounces) 958,362 898,996 1,864,852 1,801,613
Gold sold (ounces) 980,906 898,087 1,874,679 1,780,859
Per Ounce Data
Average spot
gold price $268 $280 $266 $285
Average realized
gold price 340 360 340 360
Cash operating costs 154 135 149 130
Total cash costs (1) 162 144 157 138
Total production
costs - net (2) 217 208 211 204
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Financial Results (millions)
Revenue from
gold sales $333 $323 $637 $641
Net income for
the period 66 72 138 144
Operating cash flow 130 168 295 345
Per Share Data (dollars)
Net income for the
period (fully diluted) $0.17 $0.18 $0.35 $0.36
Operating cash flow 0.32 0.42 0.74 0.87
Common shares
(as at June 30) (millions)
Outstanding and
weighted average 396 396
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As at As at
June 30, Dec. 31,
2001 2000
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Financial Position (millions)
Cash $681 $623
Working capital 572 511
Long-term debt 725 676
Shareholders' equity 3,123 3,023
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(1) Includes royalties and production taxes.
(2) Excludes amortization of acquisition related costs.
Gold Production and Cost Summary
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Three months ended Six months ended
June 30, June 30,
(ounces and total cash
costs per ounce) 2001 2000 2001 2000
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Goldstrike Property
Betze-Post Mine 403,688 326,893 855,334 656,962
$213 $215 $205 $206
Meikle Mine 186,804 198,638 348,636 373,232
$156 $117 $137 $122
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590,492 525,531 1,203,970 1,030,194
$195 $179 $185 $175
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Pierina Property 221,517 240,243 427,283 514,551
$39 $40 $41 $39
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Bulyanhulu Property 63,579 - 63,579 -
$206 - $206 -
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Other Properties
Bousquet Mine 42,555 50,894 80,487 78,769
$218 $208 $220 $214
Holt-McDermott Mine 20,037 18,499 36,484 43,265
$185 $186 $189 $164
El Indio Mine 20,182 42,386 53,049 79,518
$304 $163 $280 $171
Tambo Mine (1) - 21,443 - 55,316
- $225 - $217
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82,774 133,222 170,020 256,868
$230 $194 $231 $193
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Total production 958,362 898,996 1,864,852 1,801,613
Total cash costs
per ounce $162 $144 $157 $138
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(1) Mine ceased operations in the second quarter of 2000.
Consolidated Production Costs per Ounce
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Three months ended Six months ended
June 30, June 30,
2001 2000 2001 2000
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Direct mining costs $154 $146 $148 $148
Applied (deferred)
stripping 11 (2) 11 (8)
By-product credits (11) (9) (10) (10)
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Cash operating costs 154 135 149 130
Royalties 7 8 7 7
Production taxes 1 1 1 1
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Total cash costs 162 144 157 138
Amortization 82 100 79 103
Reclamation 4 3 4 4
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Total production costs 248 247 240 245
Amortization -
acquisition costs (31) (39) (29) (41)
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Total production
costs - net $217 $208 $211 $204
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Management's Discussion and Analysis Management's discussion and analysis (MD&A) A report from management to shareholders that accompanies the firm's financial statements in the annual report. It explains the period's financial results and enables management to discuss topics that may not be apparent in the financial Net Income was $66 Million and Operating Cash Flow was $130 Million for the Second Quarter of 2001 Compared With Net Income of $72 Million and Operating Cash Flow of $168 Million for the Same Period of 2000. the Company Had a Solid Performance Both Operationally and Financially. It Also Reported Production From Its Newly Opened Mine, Bulyanhulu, in Tanzania. At the End of the Quarter, the Company Announced Its Planned Merger With Homestake, a Significant Step in Barrick's Future Growth Plans. Overview On June 25, 2001 Barrick announced plans to merge See mail merge and concatenate. with Homestake Mining Company ("Homestake"), an international gold mining company with operating mines in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. , Canada Canada (kăn`ədə), independent nation (2001 pop. 30,007,094), 3,851,787 sq mi (9,976,128 sq km), N North America. Canada occupies all of North America N of the United States (and E of Alaska) except for Greenland and the French islands of , and Australia Australia (ôstrāl`yə), smallest continent, between the Indian and Pacific oceans. With the island state of Tasmania to the south, the continent makes up the Commonwealth of Australia, a federal parliamentary state (2005 est. pop. at a cost of approximately $2.3 billion. This merger would create a new leader in the gold industry - in both quality and scale. The combined company is expected to have a market capitalization double that of the nearest competitor. It is expected to be the second largest gold producer with the lowest cash costs of any major producer and have approximately $900 million in cash. The merged company's earnings and cash flow are expected to be the highest in the gold industry. Under the merger agreement, Barrick is offering to exchange 0.53 of a Barrick share for each of Homestake's 263.3 million outstanding shares, which represents a value of $8.71 for each Homestake share (a 31 percent premium over the June 22, 2001 closing price of $6.65 for Homestake's shares on the NYSE). The merger document (Form F-4) was filed with the SEC for review on July July: see month. 20, 2001. The merger is subject to regulatory and Homestake shareholder approval, and the companies anticipate closing the deal in the fourth quarter of 2001. Gold Sales Revenue in the second quarter 2001 was $333 million from gold sales of 980,906 ounces, compared with $323 million on gold sales of 898,087 ounces in the corresponding period of 2000. The higher revenues relate to a 9 percent increase in gold sales, which was partially offset by a $20 per ounce decline in the realized price, as a result of redesignating certain 2001 contracts to future years. During the second quarter, Barrick realized a $72 per ounce premium over the average spot price of $268, compared with a realized price of $360 in 2000 and a premium of $80. During the second quarter, the Company replaced only 70 percent of the ounces delivered against its spot deferred contracts. As a result, at the end of the first half, the Company had 15.8 million ounces, or approximately 25 percent of reserves, in the Premium Gold Sales Program, with an average realized price of $346 per ounce. The Program includes gold price protection on planned production through 2002 at a minimum realized price of $340 per ounce. After the proposed merger with Homestake, the percentage of reserves hedged on a combined basis would decrease to 21 percent, in line with the historic parameters of Barrick's Program. (see note 3 to the unaudited financial statement). Operations Overview The Company reported total operating costs operating costs npl → gastos mpl operacionales for the three months ending June 30 of $163 million, compared with $133 million in the year-earlier period. Seventy-two percent of the increase in total cash costs relates to the amortization of deferred mining costs at Betze-Post. On a per-ounce basis, total cash costs were $162. While they remain among the lowest of any major gold producer in the industry, they were higher than the $144 per ounce for the second quarter in 2000, and marginally mar·gin·al adj. 1. Of, relating to, located at, or constituting a margin, a border, or an edge: the marginal strip of beach; a marginal issue that had no bearing on the election results. 2. ahead of plan for the first half of 2001, at $157 per ounce. This year's higher costs were due to a change in the production mix among the Company's principal mines, higher power costs at Goldstrike, lower grades at Meikle
Goldstrike Property Nevada Nevada (nəvăd`ə, –vä–), far western state of the United States. It is bordered by Utah (E), Arizona (SE), California (SW, W), and Oregon and Idaho (N). With the benefit of the new roaster roaster a young fowl for eating; weighs 5 to 7 lb at 6 months of age. facility, the Goldstrike Property produced 590,492 ounces of gold during the second quarter, an increase of 12 percent over the same period last year. The Property accounted for 62 percent of total Company production. Total cash costs were $195 per ounce compared to $179 the previous year. Year-to-date Year-to-date (YTD) The period beginning at the start of the calendar year up to the current date. production totaled 1,203,970, 17 percent higher than the previous year at total cash costs of $185 per ounce. The Goldstrike Property is expected to produce 2.3 million ounces of gold in 2001, marginally lower than the record 2.4 million ounces in 2000. Total cash costs are expected to average $195 per ounce for the year, higher than the first half as processed grades decline at Betze-Post in the second half of the year. Overall, the higher costs for the Property reflect higher power costs and lower processing grades in 2001 at Meikle and in the second half of the year at Betze-Post. Through productivity improvements the Property expects to be able to offset an unbudgeted second power cost increase totaling $10 million that took effect March 1, 2001. The higher power costs in the western United States Noun 1. western United States - the region of the United States lying to the west of the Mississippi River West Santa Fe Trail - a trail that extends from Missouri to New Mexico; an important route for settlers moving west in the 19th century are expected to persist for at least the next two years, resulting in marginally higher costs at the Property. Betze-Post Mine The Betze-Post Mine produced 403,688 ounces of gold in the second quarter, 23 percent more than in the same period last year. The increase reflects both the additional processing capacity provided by the roaster and the continuation continuation - continuation passing style of mining in the high-grade High-grade Credit quality of AAA or AA. high-grade Of, relating to, or being a bond with little risk of default on the part of the issuer. High-grade is usually reserved for bonds rated AAA or AA by the rating services. 7th West Layback lay·back n. A spin in figure skating in which the skater's upper body is arched backward. . Year-to-date the Mine produced 855,334 ounces of gold, 30 percent higher than last year. Total cash costs were $213 per ounce, compared to $215 for the second quarter of 2000. Unit mining costs declined by 11 percent year-to-date, compared to last year while tons (Transparent Optical Networking Services) A marketing term for providing dark fiber to a customer. The customer is responsible for generating the transmission signal and interpreting it at the other end. See dark fiber. mined increased by 18 percent. These results are attributable attributable emanating from or pertaining to attribute. attributable proportion see attributable risk (below). attributable risk to the addition of six 330-ton haul trucks in mid-January n. 1. the middle part of January. Noun 1. mid-January - the middle part of January period, period of time, time period - an amount of time; "a time period of 30 years"; "hastened the period of time of his recovery"; "Picasso's blue period" and to modifications to the mine sequencing, which shortened short·en v. short·ened, short·en·ing, short·ens v.tr. 1. To make short or shorter. 2. the cycle times for hauling waste rock from the 8th West Layback. Because of the new roaster, the Mine also benefited from lower processing costs. The high ore grades Ore grade is a measure that describes the concentration of a valuable natural material (such as metals or minerals) in its surrounding ore. Ore grade is used to assess the economic feasibility of a mining operation: the cost of extracting a natural material from its ore is directly mined in the first half are expected to decline towards reserve grade going forward. The Mine is on track to meet its production target of 1.6 million ounces of gold in 2001, at a total cash cost of $218 per ounce, which is in line with plan despite the second power cost increase. Meikle Mine The Meikle Mine produced 186,804 ounces of gold during the second quarter, 11,000 ounces higher than plan due to the earlier than anticipated access to Rodeo rodeo (rō`dēō, rōdā`ō), public exhibition of the skill of cowboys in various activities. Events include riding broncos, riding steers, "bulldogging" steers, roping and tying steers and calves, the use of the lasso, and and Griffin development ore ore, metal-bearing mineral mass that can be profitably mined. Nearly all rock deposits contain some metallic minerals, but in many cases the concentration of metal is too low to justify mining the ore. . During the same period of 2000, the Mine produced 198,638 ounces of gold. Total cash costs were $156 per ounce in the second quarter, compared to $117 per ounce in the same quarter of 2000. The higher costs relate to mining in lower grade areas of the Mine, as well as to mining more low-grade low-grade Of or relating to debt that has a credit rating of B or below. Low-grade debt offers an above-average yield but entails substantial risk because promised payments may not be made in a timely manner. development ore than planned. Tons mined in the second quarter were 24 percent higher than plan, due to an increase of 126,000 tons in development ore from Griffin and to the earlier than expected access to Rodeo development ore. At the end of the second quarter, 51,000 tons of ore had been stockpiled for processing later in the year. The ore was stockpiled because of scheduled maintenance at the autoclaves and roasters in the first quarter. The mining rate is now benefiting from the intensive training program instituted in 2000 to counter the underground labor shortage A Labor shortage is an economic condition in which there are insufficient qualified candidates (employees) to fill the market-place demands for employment at any price. This condition is sometimes referred to by Economists as "an insufficiency in the labor force. . Employment is now at planned levels and development productivity is the highest in the Mine's history. Production for 2001 is expected to be marginally higher than plan at 685,000 ounces with the mining of more development ore than planned. Total cash costs are expected to be $143 per ounce, $6 more than plan, because of the higher ground support costs associated with the mining of development ore. Rodeo is on budget and on schedule for production start-up in the fourth quarter. It is expected to contribute about 70,000 ounces to the Mine's total 2001 production, primarily in the fourth quarter. The exploration drift drift, deposit of mixed clay, gravel, sand, and boulders transported and laid down by glaciers. Stratified, or glaciofluvial, drift is carried by waters flowing from the melting ice of a glacier. to Banshee banshee female specter, harbinger of death. [Irish and Welsh Myth.: Walsh Classical, 45] See : Death banshee spirit with one nostril, a large projecting front tooth, and webbed feet. has been deferred until the current exploration program better defines the zone of mineralization Mineralization The process by which the body uses minerals to build bone structure. Mentioned in: Rickets mineralization, n the bioprecipitation of an inorganic substance. . Exploration also continues to focus on the deep potential of Main Meikle and on the Barrel barrel: see English units of measurement. area (west of Rodeo). Goldstrike Process Division The autoclaves processed 1,362,413 tons of ore in the second quarter, compared with 1,411,612 tons in 2000. The lower throughput The speed with which a computer processes data. It is a combination of internal processing speed, peripheral speeds (I/O) and the efficiency of the operating system and other system software all working together. 1. was due to scheduled maintenance during the quarter. Two more autoclaves are scheduled to undergo routine maintenance, one in the third quarter and the other in the fourth. Overall, unit autoclave autoclave Vessel, usually of steel, able to withstand high temperatures and pressures. The chemical industry uses various types of autoclaves in manufacturing dyes and in other chemical reactions requiring high pressures. processing costs were lower than plan and recovery rates higher than plan. This reflects higher tonnage TONNAGE, mar. law. The capacity of a ship or vessel. 2. The act of congress of March 2, 1799, s. 64, 1 Story's L. U. S. 630, directs that to ascertain the tonnage of any ship or vessel, the surveyor, &c. from Meikle and the fact that less transitional ore was processed than planned. Transitional ore requires more grinding grinding, process by which surface material is removed from an object, usually metal, by the abrasive action of a rotating wheel or a moving belt that contains abrasive grains. time, and therefore lowers throughput and increases costs. The higher tonnage from Meikle was due to the reclassification Reclassification The process of changing the class of mutual funds once certain requirements have been met. These requirements are generally placed on load mutual funds. Reclassification is not considered to be a taxable event. of high-grade material originally scheduled for the roaster. This material was routed to the autoclaves to improve the recovery rate. Construction is nearly complete on a new ball mill to increase the grinding capacity and throughput of the autoclave facility. It is scheduled for completion in the third quarter, at a cost of $7 million. As of the fourth quarter, it will provide an additional 1,600 tons per day of processing capacity, primarily benefiting Betze-Post. Roasters The roasters processed a total of 1,198,094 tons of carbonaceous car·bo·na·ceous adj. Consisting of, containing, relating to, or yielding carbon. carbonaceous Adjective of, resembling, or containing carbon Adj. 1. ore during the second quarter, averaging 13,300 tons per day compared to 878,934 tons during the corresponding period of 2000 when the facilities were commissioned. The throughput rate Throughput rate is an obsolete term[1] in the terminology of automated chemical analysis. It may mean either:
1. ^ International Union of Pure and Applied Chemistry. "throughput rate". for the first six months was 6 percent lower than the expected full year average of 12,700 tons per day, due to the voluntary five-day closure of the facility under the state of Nevada's voluntary power curtailment Curtailment The act of contracting or reducing operations of a company in the hope of bringing it financial or operational stability. This management technique is often used when a company has grown too fast and is unable to effectively manage its operations. program. Unit roaster costs for the second quarter were marginally higher than the 2001 plan and higher than 2000, due to the increase in power costs. Recovery rates were lower than plan, due to the routing of high-grade Meikle ore to the autoclaves instead of to the roaster. The decision to reroute reroute Verb [-routing, -routed] to send or direct by a different route reroute vt → desviar reroute vt [+ this ore reflects continuing work by the process division to optimize optimize - optimisation throughput, recovery rates and unit costs by rationalizing the use of the two processing facilities. Pierina Property Peru The Pierina Mine continued to report excellent results, producing 221,517 ounces of gold in the second quarter, or 23 percent of total Company production. Total cash costs were $39 per ounce, comparable to the second quarter of 2000, when 240,243 ounces were produced at a total cash cost of $40 per ounce. The mine plan was modified mod·i·fy v. mod·i·fied, mod·i·fy·ing, mod·i·fies v.tr. 1. To change in form or character; alter. 2. during the first quarter to put more low-grade material on the leach leach v. leached, leach·ing, leach·es v.tr. 1. To remove soluble or other constituents from by the action of a percolating liquid. 2. pad during the rainy rain·y adj. rain·i·er, rain·i·est Characterized by, full of, or bringing rain. rain  i·ness n.Adj. season. During the second quarter the ore grade placed on the leach pad increased to planned levels. Unit operating costs are 10 percent lower than plan due primarily to lower labor and reagent reagent /re·a·gent/ (re-a´jent) a substance used to produce a chemical reaction so as to detect, measure, produce, etc., other substances. re·a·gent n. costs in the process area and to lower administrative costs administrative costs, n.pl the overhead expenses incurred in the operation of a dental benefits program, excluding costs of dental services provided. . The Mine is on target to produce 870,000 ounces of gold at $40 per ounce in 2001, compared with 821,614 ounces in 2000 at $43 per ounce. The exploration program began work in the second quarter on three potential targets identified during last year's program, and completed 8,200 meters of the proposed 10,000-meter program. During the lead up to the election of President Alejandro Toledo Alejandro Toledo (Alejandro Celestino Toledo Manrique) (born 28 March 1946) is a Peruvian politician. He was President of Peru from 2001 to 2006. He was elected in 2001 defeating former President Alan García. in June, a number of labor disruptions occurred throughout the country. None of these disruptions impacted operations at Pierina. Bulyanhulu Property Tanzania, East Africa The Bulyanhulu Mine was completed on budget and on schedule, producing 63,579 ounces of gold at a total cash cost of $206 per ounce in its first three months of operation. Development began during the quarter on an incline to access the eastern zone, while preliminary engineering continues on the western and deep zones. In addition, the exploration program has been expanded to follow up on the strong results obtained in the first half of this year. The daily mining rate was on plan while unit-mining costs were lower than plan. Development footage is 35 percent ahead of plan through the second quarter, reflecting strong productivity by the 12 development crews. The shaft shaft (shaft) a long slender part, such as the diaphysis of a long bone. shaft n. 1. An elongated rodlike structure, such as the midsection of a long bone. 2. bottom was 676 meters below surface at the end of the second quarter, and the planned depth of 1,090 meters should be reached by the fourth quarter of 2002. Rock hoisting from the loading pocket 300 meters below surface was commissioned in April and is operating at design levels. The process facilities operated 6 percent above planned throughput levels during the first quarter of operation. Mill feed of 2,600 tons per day is being provided by a combination of underground production (1,500 tons per day) and ore stockpiles (1,100 tons per day). Unit processing Unit processing is the basic processing in chemical engineering. Together with unit operations it forms the main principle of the varied chemical industries. Each genre of unit processing follows the same chemical law much as each genre of unit operations follows the same physical costs were marginally lower than plan during the quarter. Lower grade ore was processed during the first three months of production while the process group worked on recovery rates, which are currently 8 percent lower than plan. The lower recovery rates are primarily due to higher carbon in the ore which is affecting the flotation flotation or froth flotation Most widely used process for extracting many minerals from their ores. The method separates and concentrates ores by altering their surfaces so that they are either repelled or attracted by water. circuit. It is expected to take the remainder of the year to determine the optimal reagent mix to maximize In a graphical environment, to enlarge a window to the full size of the screen. See Win Maximize windows. recovery rates. Total cash costs are expected to be $175 per ounce in 2001, declining to less than $130 per ounce in 2004 when the shaft has been sunk to its planned depth. Production for the year is expected to total 250,000 ounces, rising to close to 400,000 ounces in 2002. Total cash costs were marginally higher and production marginally lower than plan due to the lower recovery rates. The exploration program has more than doubled to 170,000 meters at an additional cost of $7 million, as a result of the success during the first half of the year. More than the originally planned 80,000 meters were drilled in the first six months of the year. As well, development of an incline began in the second quarter to access the east ore zone from the 4700 meter meter, unit of measure meter, abbr. m, fundamental unit of length in the metric system. The meter was originally defined as 1/10,000,000 of the distance between the equator and either pole; however, the original survey was inaccurate and the meter was later elevation elevation, vertical distance from a datum plane, usually mean sea level to a point above the earth. Often used synonymously with altitude, elevation is the height on the earth's surface and altitude, the height in space above the surface. level to develop the zone, while also providing a platform for additional exploration. The incline is expected to be completed by the second half of 2002, at a cost of $7 million. Preliminary engineering continues on the west and deep extensions of the orebody. The orebody is expanding at depth and along strike and the development team is focused on how to best develop this expanding reserve base. Other Properties Other Properties produced 82,774 ounces of gold, or 9 percent of Company production, in the second quarter, compared to 133,222 ounces, or 15 percent of production in the same period of 2000. Total cash costs were significantly higher than plan at $230 per ounce, compared with $194 per ounce last year. The lower production reflects the Tambo Tambo
At El Indio, lower copper grades and credits combined with lower tonnage resulted in total cash costs increasing to $304 per ounce, above the average spot price during the quarter. As a result of the higher costs, management reviewed the situation during the second quarter and rationalized the workforce by 300 workers. The El Indio mill has been shut down until September Until September is a 1984 romantic drama set in France. It stars Karen Allen as an American tourist in Paris who falls in love with a married Frenchman (Thierry Lhermitte). External links , as efforts during the South American American, river, 30 mi (48 km) long, rising in N central Calif. in the Sierra Nevada and flowing SW into the Sacramento River at Sacramento. The discovery of gold at Sutter's Mill (see Sutter, John Augustus) along the river in 1848 led to the California gold rush of winter will focus on underground drilling and development areas for fourth-quarter production. It is likely that the mine will cease operations in the first quarter of 2002, if the exploration program planned for the third quarter is not successful. As a result, the mining and processing of incremental Additional or increased growth, bulk, quantity, number, or value; enlarged. Incremental cost is additional or increased cost of an item or service apart from its actual cost. ore from Tambo, which had been deferred until 2002, will not proceed. For 2001, Other Properties had been expected to produce 417,375 ounces of gold, 11 percent of Company production, at an average total cash cost of $187 per ounce. However, because of lower than expected results at El Indio, production from Other Properties is now expected to be in the 330,000-ounce range, at higher costs than planned. In 2000, Other Properties produced 469,621 ounces of gold, at an average total cash cost of $200 per ounce. Pascua-Lama and Veladero Joint Venture Project Chile Chile (chĭl`ē, Span. chē`lā), officially Republic of Chile, republic (2005 est. pop. 15,981,000), 292,256 sq mi (756,945 sq km), S South America, west of the continental divide of the Andes Mts. / Argentina Argentina (ärjəntē`nə, Span. ärhāntē`nä), officially Argentine Republic, republic (2005 est. pop. 39,538,000), 1,072,157 sq mi (2,776,889 sq km), S South America. The Company continues with pre-construction activities such as the review of the development plan and the construction cost estimate, and it is proceeding with the permitting process. The Project received the environmental impact study approval from the Region III authorities in Chile in May. The process for permitting the mill and tailings Tailings (also known as tailings pile, tails, leach residue, or slickens[1]) are the materials left over[2] after the process of separating the valuable fraction from the worthless fraction of an ore. portion of the Project in Argentina continues and approvals are expected during the third quarter. The Veladero Joint Venture, of which Barrick owns 40 percent and Homestake 60 percent, announced reserves (probable) of 8.0 million ounces on July 20, 2001, as a result of the successful exploration season just completed on the Property, located adjacent to Pascua-Lama. The proposed merger with Homestake announced June 25, 2001, would bring the entire gold district under the control of one company. This district extends approximately 125 km along the Chilean/Argentinean border and has total reserves of 25.8 million ounces of gold (proven reserves of 2.4 million ounces and probable reserves of 23.4 million ounces) and over 700 million ounces of silver. Work on engineering studies for the Pascua-Lama mine plan and process facilities continued during the second quarter. Road construction was halted in May for the South American winter. In the first half, the Company spent $40 million on capital expenditures and capitalized interest Capitalized interest Interest that is not immediately expensed, but rather is considered as an asset and is then amortized through the income statement over time. In the context of project financing, interest that is paid by additional borrowing. on these continuing activities. For the year, capital expenditures were expected to be $67 million, including $35 million of capitalized interest. Capital expenditures for the year are now expected to be marginally higher than plan, because of the proposed merger with Homestake, which would incorporate Veladero into the development plan. The Pascua-Lama/Veladero District is a low-cost, long-life long-life Adjective (of milk, batteries, etc.) lasting longer than the regular kind Adj. 1. long-life - (of perishable goods) treated to stay fresh longer than usual; "long-life milk" asset that is expected to provide the Company with significant growth in production, earnings and cash flow in a more favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. gold and silver price environment. Exploration and Reserve Development Total exploration and reserve development expenditures for the Company were $25 million in the second quarter, compared to $30 million in the corresponding period of 2000. Of the total, $10 million was expensed, versus $9 million in the prior year's period. About 40 percent of the expensed exploration was for South America South America, fourth largest continent (1991 est. pop. 299,150,000), c.6,880,000 sq mi (17,819,000 sq km), the southern of the two continents of the Western Hemisphere. , with the balance spent in North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. , Tanzania and on business development activities. Reserve development expenditures were incurred primarily at Bulyanhulu, Pascua-Lama and Goldstrike. For 2001, the Company had planned to spend $72 million on exploration, $27 million of which was expected to be expensed. However, with the success at Bulyanhulu, and additional business development activities, the Company now expects to spend $80 million on exploration, of which $30 million would be expensed. Amortization Amortization was $51 million in the second quarter, compared to $58 million in the three months ending June 30, 2000. The lower amortization is primarily attributable to the lower percentage of total production contribution by Pierina, and the impact of the 2000 non-cash provision on amortization. Amortization - acquisition costs was $30 million, compared to $35 million in the second quarter of 2000. These costs represent the amortization associated with acquisitions when accounted for using the purchase method required under Canadian Canadian (kənā`dēən), river, 906 mi (1,458 km) long, rising in NE New Mexico. and flowing E across N Texas and central Oklahoma into the Arkansas River in E Oklahoma. generally accepted accounting principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting ("GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). "). For the year, amortization and amortization - acquisition costs are expected to total $321 million, compared to $339 million in 2000, primarily reflecting the lower amortization at Bousquet. Interest Expense The Company incurred $14 million of interest costs in the three months ended June 30, 2001, related primarily to the Company's $500 million of debentures and the Bulyanhulu project financing Project financing A form of asset-based financing in which a firm finances a discrete set of assets on a stand-alone basis. . Of the amount incurred, $4 million was expensed and the balance of $10 million capitalized Capitalized Recorded in asset accounts and then depreciated or amortized, as is appropriate for expenditures for items with useful lives longer than one year. to development and construction activities at Rodeo, Pascua-Lama and Bulyanhulu. For the year, interest cost is expected to be approximately $60 million, of which $17 million is expected to be expensed and the remainder capitalized to projects under development. The Company expects to spend $80 million on development activities at Pascua-Lama to December December: see month. 31, 2001. Accordingly, capitalized interest will be on plan for the year. Income Taxes The Company's effective tax rate for 2001 is expected to be 10 percent, compared to 14 percent in 2000. The 4 percent decline in the effective tax rate is attributable to a higher portion of earnings being earned in a lower-tax jurisdiction. Capital Expenditures Capital expenditures for the second quarter of 2001 totaled $75 million. The principal expenditures were for construction of the Bulyanhulu Mine ($27 million), construction of Rodeo at the Goldstrike Property ($16 million), and engineering and development work at Pascua-Lama ($16 million). Reserve development expenditures were $15 million. For 2001, capital and reserve development expenditures are expected to be marginally higher than the planned $357 million because of higher reserve development costs at Bulyanhulu and additional activity at Pascua-Lama to incorporate Veladero in the development plan upon completion of the merger. The largest component of the 2001 capital expenditure program is $114 million for completion of the first phase of the Bulyanhulu Mine. There is also $73 million in capital expenditures planned for ongoing development and shaft sinking shaft sinking, excavation from the surface of an opening in the earth. Shafts, which are generally vertical, are usually distinguished from tunnels, which are horizontal. at Rodeo and for development at Meikle. Cash Flow Cash flow provided by operating activities totaled $130 million for the second quarter of 2001, compared to $168 million in 2000. The lower cash flow is primarily due to the drawdown Drawdown The peak to trough decline during a specific record period of an investment or fund. It is usually quoted as the percentage between the peak to the trough. Notes: of accounts payable. For the first six months, operating cash flow totaled $295 million compared to $345 million in the same period of 2000. The lower cash flow during the quarter and first half is primarily due to the change in the production mix and lower realized prices compared to the prior year. Operating cash flow is expected to be approximately $600 million this year. The Company should continue to benefit from its Premium Gold Sales Program which has locked in a minimum realized price of $340 per ounce on 1.9 million ounces of planned production over the remainder of 2001. Capital expenditures will be funded by cash flow from operations Cash flow from operations A firm's net cash inflow resulting directly from its regular operations (disregarding extraordinary items such as the sale of fixed assets or transaction costs associated with issuing securities), calculated as the sum of net income plus noncash expenses . In the second quarter the Company drew down $49 million of the $200 million limited recourse Limited recourse A term describing a type of loan in which the lender has limited or no claim against the parent company if the collateral is insufficient to repay the debt. See:Nonrecourse. project financing for the Bulyanhulu Mine Project, bringing the total draw-down to $200 million. This financing is repayable re·pay v. re·paid , re·pay·ing, re·pays v.tr. 1. To pay back: repaid a debt. 2. in 14 semi-annual installments beginning in 2002. Outlook Prior to giving effect to the proposed merger with Homestake, the Company expects to produce 3.75 million ounces of gold in 2001 at total cash costs of $158 per ounce, marginally lower production and higher costs than plan. As a result, Barrick expects to meet the lower end of its earnings guidance range of 70 cents to 75 cents per share for the year before the impact of the proposed merger. This is due to: lower production and higher costs at El Indio, higher power costs at the Goldstrike Property, higher exploration costs and lower interest income on cash balances. These trends are expected to continue into 2002, with the closure of the El Indio Mine, higher power costs in the western United States and the continued low interest rate environment. In addition, the allocation The apportionment or designation of an item for a specific purpose or to a particular place. In the law of trusts, the allocation of cash dividends earned by a stock that makes up the principal of a trust for a beneficiary usually means that the dividends will be treated as of interest costs between expense and capital, are a function of the level of expenditures incurred on development of projects. Accordingly, the level of interest expensed and earnings would be affected by the amount of expenditures on development projects, which have not been finalized See finalization. . The proposed merger with Homestake is planned to be accounted for as a purchase for Canadian GAAP purposes and under the pooling of interests Pooling of Interests An accounting method, used in mergers and acquisitions, where the balance sheet items of the two companies are simply added together. Notes: The opposite of pooling of interests is the purchase acquisition method. method of accounting for United States ("U.S.") GAAP purposes. As a company subject to the reporting requirements of the various securities regulatory authorities Noun 1. regulatory authority - a governmental agency that regulates businesses in the public interest regulatory agency administrative body, administrative unit - a unit with administrative responsibilities in Canada, Barrick is required to prepare and file financial information in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with Canadian GAAP. Following the merger, which is expected in the fourth quarter of 2001, Barrick anticipates filing consolidated financial statements Consolidated Financial Statements The combined financial statements of a parent company and its subsidiaries. Notes: Because consolidated financial statements present an aggregated look at the financial position of a parent and its subsidiaries, they enable you to gauge prepared in accordance with U.S. GAAP with the Securities and Exchange Commission in the United States. Communications with shareholders will also be primarily focused on the financial results of the merged company, prepared in accordance with U.S. GAAP. As a result, under U.S. GAAP, the Company expects to report fourth quarter and full year results, which will include a restatement Restatement A revision in a company's earlier financial statements. Notes: The need for restating financial figures can result from fraud, misrepresentation, or a simple clerical error. of the prior periods' earnings, cash flow and financial position as if the two companies had been combined from the beginning. In addition, under U.S. GAAP the cost of the merger, including severance The act of dividing, or the state of being divided. The term severance has unique meanings in different branches of the law. Courts use the term in both civil and criminal litigation in two ways: first, when dividing a lawsuit into two or more parts, and second, when payments, advisory, legal, accounting, and other costs associated with combining the two companies will be charged to income in the current period.
Consolidated Statements of Income
(in millions of
United States dollars, Three months ended Six months ended
except per share data) June 30, June 30,
(Unaudited) 2001 2000 2001 2000
---------------------------------------------- ------------------
Revenues
Gold sales $333 $323 $637 $641
Interest and other income 8 7 12 12
---------------------------------------------- ------------------
341 330 649 653
---------------------------------------------- ------------------
Costs and expenses
Operating 163 133 302 253
Amortization 51 58 94 119
Amortization -
acquisitions 30 35 55 72
Administration 10 10 20 18
Exploration 10 9 20 20
Interest 4 2 4 4
---------------------------------------------- ------------------
268 247 495 486
---------------------------------------------- ------------------
Income before
income taxes 73 83 154 167
Income taxes (7) (11) (16) (23)
---------------------------------------------- ------------------
Net income for
the period $66 $72 $138 $144
---------------------------------------------- ------------------
Net income for the
period per share
Basic and fully diluted $0.17 $0.18 $0.35 $0.36
---------------------------------------------- ------------------
Consolidated Statements of Retained Earnings
(in millions of
United States dollars) Three months ended Six months ended
(Unaudited) June 30, June 30,
2001 2000 2001 2000
---------------------------------------------- ------------------
Retained earnings at
the beginning of period $380 $1,233 $308 $1,445
Change in accounting
for income taxes - - (284)
Net income 66 72 138 144
Dividends (44) (44) (44) (44)
---------------------------------------------- ------------------
Retained earnings at
end of period $402 $1,261 $402 $1,261
---------------------------------------------- ------------------
see accompanying notes to consolidated financial statements
Consolidated Statements of Cash Flow
(in millions of
United States dollars) Three months ended Six months ended
(Unaudited) June 30, June 30,
2001 2000 2001 2000
---------------------------------------------- ------------------
Cash provided by
(used in) operating
activities
Net income for
the period $66 $72 $138 $144
Non-cash items:
Amortization 81 93 149 191
Future income taxes (4) (2) (7) (3)
Other 14 5 24 6
---------------------------------------------- ------------------
157 168 304 338
Working capital
Bullion settlements
and other receivables 5 21 45 20
Inventories and
deferred expenses 1 (14) (11) (13)
Accounts payable and
accrued liabilities (33) (7) (43) -
---------------------------------------------- ------------------
Cash provided by
operating activities 130 168 295 345
---------------------------------------------- ------------------
Cash (used in)
development activities
Property, plant and
equipment (90) (151) (227) (286)
Other (4) - (18) (14)
---------------------------------------------- ------------------
(94) (151) (245) (300)
---------------------------------------------- ------------------
Cash provided by (used in)
financing activities
Capital stock 6 2 6 3
Long-term obligations
Proceeds 18 92 49 92
Repayments - (3) (3) (6)
Dividends (44) (44) (44) (44)
---------------------------------------------- ------------------
(20) 47 8 45
---------------------------------------------- ------------------
Increase in cash and
equivalents 16 64 58 90
Cash and equivalents at
beginning of period 665 526 623 500
---------------------------------------------- ------------------
Cash and equivalents at
end of period $681 $590 $681 $590
---------------------------------------------- ------------------
see accompanying notes to consolidated financial statements
Consolidated Balance Sheets
----------------------------------------------------------- -------
As at As at
June 30, Dec. 31,
(in millions of United States dollars) (Unaudited) 2001 2000
----------------------------------------------------------- -------
Assets
Current assets
Cash and equivalents $681 $623
Bullion settlements and other receivables 25 70
Inventories and deferred expenses 161 172
----------------------------------------------------------- -------
867 865
Property, plant and equipment 3,642 3,565
Other assets 106 105
----------------------------------------------------------- -------
$4,615 $4,535
----------------------------------------------------------- -------
Liabilities
Accounts payable and accrued liabilities - current $295 $354
Long-term debt 725 676
Reclamation and closure liabilities 144 147
Future income taxes 328 335
----------------------------------------------------------- -------
1,492 1,512
----------------------------------------------------------- -------
Shareholders' equity
Capital stock 2,721 2,715
Retained earnings 402 308
----------------------------------------------------------- -------
3,123 3,023
----------------------------------------------------------- -------
$4,615 $4,535
----------------------------------------------------------- -------
see accompanying notes to consolidated financial statements
Notes to Consolidated Financial Statements 1. Basis of Presentation The accompanying ac·com·pa·ny v. ac·com·pa·nied, ac·com·pa·ny·ing, ac·com·pa·nies v.tr. 1. To be or go with as a companion. 2. unaudited interim financial statements are prepared in accordance with generally accepted accounting principles ("GAAP") in Canada. They do not include all of the information and disclosures required by Canadian GAAP for annual financial statements. In the opinion of management, all adjustments considered necessary for fair presentation have been included in these financial statements. Operating results for the periods ended June 30, 2001 are not necessarily indicative indicative: see mood. of the results that may be expected for the full year ended December 31, 2001. For further information, see the Company's consolidated financial statements including the notes thereto there·to adv. 1. To that, this, or it. 2. Archaic In addition to that; furthermore. thereto Adverb Formal 1. to that or it 2. included in the Annual Report for the year ended December 31, 2000. 2. Business Acquisition On June 25, 2001 Barrick announced plans to merge with Homestake Mining Company ("Homestake"), an international gold mining company with operating mines in the United States, Canada and Australia at a cost of approximately $2.3 billion. Homestake is also engaged in active exploration projects in the above countries and in Argentina, Chile and the Andean region Andean region may refer to:
3. Premium Gold Sales Program During the second quarter of 2001, Barrick's Premium Gold Sales Program generated $71 million of additional revenue, realizing $340 per ounce versus the average spot price of $268 per ounce, a premium of $72 per ounce. As at June 30, 2001, Barrick's spot deferred position stands at 15.8 million ounces. The purchased call option position declined from 2.8 to 1.9 million ounces with the expiry of 0.9 million ounces during the quarter. Barrick's Premium Gold Sales Program as at June 30, 2001 is shown below. The average price of the spot deferred contracts reflects the expected future value incorporating an average lease rate assumption of 1.75 percent. Lease rates are fixed on 100 percent of the hedged position for 2001 through 2004 and on a portion beyond 2004. The weighted average lease rate on the total spot deferred position is 1.79 percent. At June 30, 2001, the mark-to-market Mark-to-market Adjustment of the book value or collateral value of a security to reflect current market value. gain on Barrick's Premium Gold Sales Program was $380 million, calculated using a spot price of $271 per ounce, prevailing market interest rates and volatilities. Spot Deferred Investments Barrick's total spot deferred position has an asset value of approximately $4.8 billion, on which it earns an interest return. The company achieves a return on this asset based on libor and the credit rating associated with this return is that of its hedging hedging, in commerce, method by which traders use two counterbalancing investment strategies so as to minimize any losses caused by price fluctuations. It is generally used by traders on the commodities market. counterparties Counterparties The parties on either side of an interest rate swap or a currency, equity or commodity swap, or to an options or futures position. (average "AA"). The company has conservatively diversified diversified (di·verˑ·s this investment by exchanging a portion of its libor return for a return based on a professionally managed diversified basket basket filled with treats, representative of feast on Easter Sunday. [Folklore: Misc.] See : Easter of bond funds/indices. At June 30, 2001, 82 percent of the position was invested with "AA" hedging counterparties and the balance of 18 percent was invested in a basket of bond funds/indices with an average credit rating of "A-". This basket is managed to ensure that there is minimal interest rate exposure. The credit quality on the entire hedge position asset of $4.8 billion is "AA-".
--------------------------------------------------------------------
2001 2002 2003 2004 2005 2006 2007+ Totals
--------------------------------------------------------------------
Spot Deferred Contracts
Ounces (000) 1,900 3,700 2,800 1,900 1,200 900 3,400 15,800
Average
Price ($/oz.) 340 340 345 350 340 341 358 346
Min-Max Contracts(1)
Ounces (000) 1,300 350 1,650
Average Floor
Price ($/oz.) 267 270 268
Average Cap
Price ($/oz.) 290 289 290
Call Options
(Purchased)(2)
Ounces (000) (1,900) (1,900)
Average Strike
($/oz.) 335
Long-Term Call
Options Sold
Ounces (000) 300 500 400 300 200 1,000 2,700
Average Strike ($/oz.) 300 351 330 334 370 360 345
Short-Term Call
Options Sold
Ounces (000) 400 500 900
Average Strike
($/oz.) 300 300 300
--------------------------------------------------------------------
(1) The min-max contracts provide a minimum starting floor price for spot deferred contracts while allowing for additional upside Upside The potential dollar amount by which the market or a stock could rise. Notes: This is basically an educated guess on how high a stock could go in the near future. See also: Bull, Downside gold price participation to the cap price. These contracts, if exercised, will be converted into spot deferred contracts at higher prices for delivery beyond 2002. (2) The call options purchased allow Barrick to capture additional gold price participation above $335 per ounce in 2001. Call Options Purchased At June 30, 2001 Barrick's purchased call option position was 1.9 million ounces. These calls provide Barrick with the right but not the obligation to purchase gold, resulting in increased leverage to higher gold prices, while still enabling the Company to maintain the security of a floor price. Barrick, therefore, can sell its production at a minimum floor price of $340 per ounce through its spot deferred program, but can now also realize further gains on any rise in the spot price above $335 per ounce in 2001. In addition, these call options also mitigate mit·i·gate v. To moderate in force or intensity. mit  i·gation n. the impact of higher gold prices on Barrick's
mark-to-market position.
Call Options Sold The call options sold can be exercised by the counterparties only on the expiry date expiry date expire n → date f d'expiration; (on label) → à utiliser avant ... expiry date expire n → Ablauftermin m and can be converted, at Barrick's option, into spot deferred contracts and rolled forward for up to 15 years. There is no requirement for Barrick to cash settle these transactions. The premiums generated from the sales of the contracts that expire expire /ex·pire/ (ek-spi´er) 1. to exhale. 2. to die. ex·pire v. 1. To breathe one's last breath; die. 2. To exhale. unexercised are recognized at the expiry date. Trading Credit Lines Barrick's Premium Gold Sales Program is not subject to margin requirements at any gold price. Other Hedged Items The Company hedges silver, copper, and Canadian dollars Noun 1. Canadian dollar - the basic unit of money in Canada; "the Canadian dollar has the image of loon on one side of the coin" loonie dollar - the basic monetary unit in many countries; equal to 100 cents to cover operating and development expenditures.
-------------------------------------------------------------------
2001 2002 2003 2004+ Totals
-------------------------------------------------------------------
SILVER
Spot Deferred Contracts
Ounces (000) 1,000 3,000 3,000 12,000 19,000
Average Price ($/oz.) 5.25 5.30 5.30 5.35 5.33
Call Options Sold
Ounces (000) 6,500 1,000 4,000 11,500
Average Strike ($/oz.) 4.86 6.00 5.50 5.18
COPPER
Min-Max Contracts
Pounds (millions) 7 7
Average Floor Price ($/lb.) 0.80 0.80
Average Cap Price ($/lb.) 0.86 0.86
Purchased Put Options
Pounds (millions) 12 12
Average Floor Price ($/lb.) 0.75 0.75
CANADIAN DOLLAR
C$ ($ millions) 41 60 40 141
Average Floor Price (US cents) 0.64 0.65 0.65 0.64
Average Cap Price (US cents) 0.68 0.68 0.68 0.68
-------------------------------------------------------------------
Notes to Consolidated Financial Statements
4. Segment Information
(in millions of United States dollars)
------------------------------------------------- -----------------
(Unaudited) Three months ended Six months ended
June 30, June 30,
2001 2000 2001 2000
------------------------------------------------- -----------------
Revenues
Gold sales
Goldstrike $203 $187 $413 $362
Pierina 80 86 145 185
Bulyanhulu 22 - 22 -
Other 28 50 57 94
------------------------------------------------- -----------------
333 323 637 641
------------------------------------------------- -----------------
Operating costs
Goldstrike 119 95 228 179
Pierina 11 11 21 23
Bulyanhulu 13 - 13 -
Other 20 27 40 51
------------------------------------------------- -----------------
163 133 302 253
------------------------------------------------- -----------------
Amortization
Goldstrike 29 30 57 59
Pierina 44 50 81 108
Bulyanhulu 6 - 6 -
Other 2 13 5 24
------------------------------------------------- -----------------
81 93 149 191
------------------------------------------------- -----------------
Segment income
Goldstrike 55 62 128 124
Pierina 25 25 43 54
Bulyanhulu 3 - 3 -
Other 6 10 12 19
------------------------------------------------- -----------------
89 97 186 197
------------------------------------------------- -----------------
Exploration (10) (9) (20) (20)
Interest (4) (2) (4) (4)
Corporate expenses, net (2) (3) (8) (6)
Income taxes (7) (11) (16) (23)
------------------------------------------------- -----------------
$66 $72 $138 $144
------------------------------------------------- -----------------
Mine Statistics
----------------------------------- --------------- ---------------
For the six months Goldstrike Total Betze-Post Meikle
ended June 30, 2001 2000 2001 2000 2001 2000
----------------------------------- --------------- ---------------
Tons mined
(thousands) 82,323 69,659 81,663 69,103 660 556
Tons milled
(thousands) 4,830 3,687 4,224 3,132 606 555
Average grade
(oz./ton) 0.281 0.309 0.233 0.235 0.619 0.728
Recovery rate
(percent) 88.6 90.3 86.8 89.3 93.0 92.3
----------------------------------- --------------- ---------------
Production (thousands
of ounces) 1,204 1,030 855 657 349 373
Production costs per ounce
Cash operating costs $173 $161 $195 $195 $120 $101
Royalties and
production taxes 12 14 10 11 17 21
----------------------------------- --------------- ---------------
Total cash costs 185 175 205 206 137 122
Amortization 46 57 47 64 43 47
Reclamation 3 3 3 3 2 2
----------------------------------- --------------- ---------------
Total production costs 234 235 255 273 182 171
Amortization
- acquisition
costs (6) (5) (7) (7) (2) (2)
----------------------------------- --------------- ---------------
Total production
costs - net $228 $230 $248 $266 $180 $169
----------------------------------- --------------- ---------------
Operating cash flow
(US$/oz.) $155 $185 $135 $154 $203 $238
----------------------------------- --------------- ---------------
Capital expenditures
(US$ millions) $55 $107 $5 $76 $50 $31
----------------------------------- --------------- ---------------
----------------------------------- --------------- ---------------
For the three Goldstrike Total Betze-Post Meikle
months ended June 30, 2001 2000 2001 2000 2001 2000
----------------------------------- --------------- ---------------
Tons mined
(thousands) 40,098 36,139 39,740 35,850 358 289
Tons milled
(thousands) 2,560 2,229 2,189 1,939 371 290
Average grade
(oz./ton) 0.263 0.263 0.215 0.191 0.547 0.742
Recovery rate
(percent) 87.5 89.7 85.6 88.1 92.0 92.4
----------------------------------- --------------- ---------------
Production (thousands
of ounces) 591 526 404 327 187 199
Production costs per
ounce
Cash operating costs $184 $165 $203 $205 $140 $94
Royalties and
production taxes 11 14 10 10 16 23
----------------------------------- --------------- ---------------
Total cash costs 195 179 213 215 156 117
Amortization 47 56 48 62 44 45
Reclamation 3 3 3 3 2 2
----------------------------------- --------------- ---------------
Total production costs 245 238 264 280 202 164
Amortization
- acquisition costs (6) (5) (8) (8) (2) (2)
----------------------------------- --------------- ---------------
Total production
costs - net $239 $233 $256 $272 $200 $162
----------------------------------- --------------- ---------------
Operating cash flow
(US$/oz.) $145 $181 $127 $145 $184 $243
----------------------------------- --------------- ---------------
Capital expenditures
(US$ millions) $26 $50 $2 $34 $24 $16
----------------------------------- --------------- ---------------
Mine Statistics
----------------------------------- --------------- ---------------
For the six months Pierina Bulyanhulu Bousquet
ended June 30, 2001 2000 2001 2000 2001 2000
----------------------------------- --------------- ---------------
Tons mined
(thousands) 14,835 14,898 128 - 505 488
Tons milled (thousands) - - 224 - 504 456
Average grade
(oz./ton) 0.100 0.133 0.355 - 0.173 0.187
Recovery rate (percent) - - 80.1 - 92.3 92.2
----------------------------------- --------------- ---------------
Production (thousands
of ounces) 427 515 64 - 81 79
Production costs per
ounce
Cash operating costs $41 $39 $198 $220 $214
Royalties and
production taxes - - 8 - - -
----------------------------------- --------------- ---------------
Total cash costs 41 39 206 - 220 214
Amortization 190 202 91 - 15 200
Reclamation 8 6 1 - 7 4
----------------------------------- --------------- ---------------
Total production costs 239 247 298 - 242 418
Amortization
- acquisition costs (112) (116) (10) - - (90)
----------------------------------- --------------- ---------------
Total production
costs - net $127 $131 $288 242 328
----------------------------------- --------------- ---------------
Operating cash flow
(US$/oz.) $299 $321 $134 120 146
----------------------------------- --------------- ---------------
Capital expenditures
(US$ millions) $7 $23 $90 2 2
----------------------------------- --------------- ---------------
----------------------------------- --------------- ---------------
For the three Pierina Bulyanhulu Bousquet
months ended June 30, 2001 2000 2001 2000 2001 2000
----------------------------------- --------------- ---------------
Tons mined
(thousands) 7,992 7,812 128 - 248 238
Tons milled (thousands) - - 224 - 263 282
Average grade
(oz./ton) 0.112 0.107 0.355 - 0.175 0.195
Recovery rate (percent) - - 80.1 - 92.6 92.4
----------------------------------- --------------- ---------------
Production (thousands
of ounces) 221 240 64 - 43 51
Production costs per
ounce
Cash operating costs $39 $40 $198 $218 $208
Royalties and
production taxes - - 8 - - -
----------------------------------- --------------- ---------------
Total cash costs 39 40 206 - 218 208
Amortization 190 202 91 - 15 200
Reclamation 8 6 1 - 8 3
----------------------------------- --------------- ---------------
Total production costs 237 248 298 - 241 411
Amortization
- acquisition costs (112) (116) (10) - - (90)
----------------------------------- --------------- ---------------
Total production
costs - net $125 $132 $288 $241 $321
----------------------------------- --------------- ---------------
Operating cash flow
(US$/oz.) $301 $320 $134 $122 $152
----------------------------------- --------------- ---------------
Capital expenditures
(US$ millions) $3 $17 $27 $1 $1
----------------------------------- --------------- ---------------
Mine Statistics
----------------------------------- --------------- ---------------
For the six months Holt-McDermott El Indio Tambo
ended June 30, 2001 2000 2001 2000 2001 2000
----------------------------------- --------------- ---------------
Tons mined (thousands) 236 265 147 181 - 2,757
Tons milled (thousands) 235 273 143 177 - 1,107
Average grade
(oz./ton) 0.162 0.166 0.405 0.484 - 0.063
Recovery rate
(percent) 95.7 95.6 91.2 93.2 - 90.0
----------------------------------- --------------- ---------------
Production (thousands
of ounces) 36 43 53 80 - 55
Production costs per
ounce
Cash operating costs $187 $160 $273 $164 $212
Royalties and
production taxes 2 4 7 7 - 5
----------------------------------- --------------- ---------------
Total cash costs 189 164 280 171 - 217
Amortization 86 96 - - - 30
Reclamation 5 5 14 - - -
----------------------------------- --------------- ---------------
Total production costs 280 265 294 171 - 247
Amortization
- acquisition costs - - - - - (9)
----------------------------------- --------------- ---------------
Total production costs
- net $280 $265 $294 $171 $238
----------------------------------- --------------- ---------------
Operating cash flow
(US$/oz.) $151 $196 $60 $189 $143
----------------------------------- --------------- ---------------
Capital expenditures
(US$ millions) $4 $2
----------------------------------- --------------- ---------------
----------------------------------- --------------- ---------------
For the three Holt-McDermott El Indio Tambo
months ended June 30, 2001 2000 2001 2000 2001 2000
----------------------------------- --------------- ---------------
Tons mined (thousands) 116 131 75 74 - 863
Tons milled (thousands) 124 134 73 87 - 505
Average grade
(oz./ton) 0.169 0.145 0.305 0.523 - 0.063
Recovery rate
(percent) 95.4 95.2 91.6 93.1 - 67.7
----------------------------------- --------------- ---------------
Production (thousands
of ounces) 20 19 20 42 - 21
Production costs per
ounce
Cash operating costs $181 $178 $295 $156 $220
Royalties and
production taxes 4 8 9 7 - 5
----------------------------------- --------------- ---------------
Total cash costs 185 186 304 163 - 225
Amortization 87 99 - - - -
Reclamation 5 4 17 - - -
----------------------------------- --------------- ---------------
Total production costs 277 289 321 163 - 225
Amortization
- acquisition costs - - - - - -
----------------------------------- --------------- ---------------
Total production
costs - net $277 $289 $321 $163 $225
----------------------------------- --------------- ---------------
Operating cash flow
(US$/oz.) $155 $174 $36 $197 $135
----------------------------------- --------------- ---------------
Capital expenditures
(US$ millions) $2 $1
----------------------------------- --------------- ---------------
Estimates of Barrick's reserves have been prepared by employees of Barrick under the supervision of Alan A`lan´ n. 1. A wolfhound. R. Hill, P. Eng P. ENG Professional Engineer P. ENG process engineer ., Executive Vice President, Development of Barrick and/or and/or conj. Used to indicate that either or both of the items connected by it are involved. Usage Note: And/or is widely used in legal and business writing. Alexender J. Davidson Da·vid·son , Jo(seph) 1883-1952. American sculptor best remembered for his vigorous portrait busts of Woodrow Wilson, Franklin D. Roosevelt, and Albert Einstein, among others. , P. Geo, Senior Vice President, Exploration. Estimates of reserves for the Veladero property have been prepared using an assumed average long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. gold price of $300 per ounce and are based on information provided by Homestake Mining Company. For a description of the key assumptions, parameters and methods used in calculating Barrick's reserves see Barrick's Annual Information Form for the year ended December 31, 2000. Certain statements included herein, including those regarding, production, realized gold prices and costs constitute "forward looking statements" within the meaning of the United States Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995. Such forward looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of Barrick or of the gold mining industry to be materially different from future results, performance or achievements expressed or implied Inferred from circumstances; known indirectly. In its legal application, the term implied is used in contrast with express, where the intention regarding the subject matter is explicitly and directly indicated. by those forward looking statements. These risks, uncertainties and other factors include, but are not limited to, changes in the worldwide price of gold or certain other commodities and currencies and the risks involved in the exploration, development and mining business. These factors are discussed in greater detail in Barrick's most recent Annual Information Form and "Management's Discussion and Analysis of Financial and Operating Results" on file with t he U.S. Securities and Exchange Commission and Canadian provincial Provincial has several meanings and may refer to:
Barrick Gold Corporation Transfer Agents and Registrars
Corporate Office CIBC Mellon Trust Company
Royal Bank Plaza P.O. Box 7010
South Tower, Suite 2700 Adelaide Street Postal Station
200 Bay Street, P.O. Box 119 Toronto, Ontario M5C 2W9
Toronto, Ontario, M5J 2J3 Telephone: (416) 643-5500
Telephone: (416) 861-9911 Toll-free throughout
Fax: (416) 861-0727 North America:
Toll-free throughout 1-800-387-0825
North America: Fax: (416) 643-5501
1-800-720-7415 Email: inquiries@cibcmellon.ca
Web site: www.cibcmellon.ca
Shares Listed (ABX) Mellon Investor Services L.L.C.
The Toronto Stock Exchange 85 Challenger Road
The New York Stock Exchange Overpeck Center
The London Stock Exchange Ridgefield Park, New Jersey 07660
The Swiss Stock Exchange Telephone: (201) 329-8660
La Bourse de Paris Toll-free number within
the United States:
1-800-589-9836
Recent Research Reports Investor Contacts
BMO Nesbitt Burns Richard Young
BNP Paribas Vice President, Investor Relations
CIBC World Markets Telephone: (416) 307-7431
Goldman Sachs & Co. Email: ryoung@barrick.com
Griffiths McBurney
J.P. Morgan Kathy Sipos
Merrill Lynch Manager, Investor Relations
Morgan Stanley Dean Witter Telephone: (416) 307-7441
National Bank Email: ksipos@barrick.com
Research Capital
Sanford C, Berstein & Co. Sandra Grabell
Scotia Capital Investor Relations Officer
TD Newcrest Telephone: (416) 307-7440
Email: sgrabell@barrick.com
Dividend
A dividend of $0.11 per share Email: investor@barrick.com
was declared on May 8, 2001 Web site: www.barrick.com
and was paid in United States
funds on June 15, 2001 to
shareholders of record at
close of business on
May 31, 2001.
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