FOR: BARRICK GOLD CORPORATION
LSE, NYSE, PARIS, Swiss, TSX SYMBOL: ABX
April 28, 2003
Barrick Earns $29 Million or $0.05 per Share in First Quarter
TORONTO, ONTARIO--
Production and Cash Costs Expected to Improve Through Year
FIRST QUARTER 2003
Based on US GAAP and expressed in US dollars.
Highlights
- Net income includes a one-time charge of $17 million, resulting from the cumulative effect of
adopting two new accounting policies and a non-hedge derivative gain of $36 million
- Income before cumulative changes in accounting policies totals $46 million, or $0.09 per share
- Operating cash flow totals $131 million for first quarter
- Operating results in line with plan - production totals 1.26 million ounces of gold for the
quarter at $194 per ounce(1) - on track to meet full year production and cost targets
- Lower production in 2003 relates to the closure of five mines in 2002, which contributed over
100,000 ounces in the first quarter of last year
- Higher cash costs in first quarter 2003 due primarily to anticipated lower grades at Betze-Post
and higher energy and royalty costs
- Deferred delivery under forward sales contracts for first time in 15 years to sell at the higher
spot price - realized gold price during the quarter of $355 per ounce compared to an average spot
price of $352 per ounce
- Forward sales program lowered by 750,000 ounces to 17.3 million ounces by quarter's end;
program further reduced to 16.3 million ounces as of April 28, 2003
- Exploration and development expense totals $29 million
(1) For an explanation of non-GAAP performance measures refer to page 13 of the
Management's Discussion and Analysis.
Barrick Gold Corporation today reported earnings of $29 million ($0.05 per share) and operating
cash flow of $131 million for the first quarter ended March 31, 2003, compared to earnings of
$46 million ($0.09 per share) and operating cash flow of $124 million in the prior year period.
The lower earnings in first quarter 2003 are due in part to a one-time charge for the cumulative
effect of changes in accounting policies for amortization of development costs of underground
mines and reclamation costs of $17 million ($0.04 per share) required under new accounting
standards. Earnings were also negatively affected by lower production due to the closure of five
mines in 2002 which contributed over 100,000 ounces to total production, lower grades at the
Betze-Post mine, as well as higher energy, royalty and exploration costs. The higher exploration
costs relate to the continued expensing of exploration and development work at Veladero. This
was partially offset by higher gold prices and a $36 million non-hedge derivatives gain recorded
in the quarter.
"Results for the quarter offered up no surprises," said Gregory Wilkins, President and Chief
Executive Officer. "While production was somewhat better than plan, costs were near the upper
end of the range due to higher gold linked expenses. We are on track for improved performance
as the year progresses."
BARRICK SELLS 100% OF PRODUCTION AT SPOT PRICES FOR MOST OF THE
QUARTER
During the quarter, spot gold prices ranged from a high of $389 per ounce to a low of $326 per
ounce, averaging $352 per ounce compared to an average spot price of $290 per ounce in the
year earlier quarter. Barrick realized $355 per ounce on its gold sales during the quarter,
delivering at spot in January, February and early March and, as gold prices declined to the $320s
per ounce in late March, delivering production against our higher $340 per ounce forward sales
contracts.
"For the first time in 15 years we were able to demonstrate the flexibility of our forward sales
program - selling 100% of production through mid-March at the higher spot gold prices and then
selling 100% of our production in late March at our higher contract price as gold prices receded,"
said Mr. Wilkins.
During the first quarter, the Company reduced its overall forward sales position by 750,000
ounces, from 18.1 million ounces to 17.3 million ounces. By late April, the position had declined
to 16.3 million ounces. At quarter's end, the unrealized mark-to-market was negative $489
million based on a spot gold price of $336 per ounce.
"While the program is working as designed," said Mr. Wilkins, "we would like to see the
program both smaller and simpler by focusing on the 'plain vanilla' spot deferred contracts."
Wilkins went on to say that the Company plans to "use time and gold's volatility to reduce the
size of the program - at minimal or no cost."
Higher gold prices in first quarter 2003 enabled the Company to further strengthen its A-rated
balance sheet, increasing its cash position by $71 million to $1.1 billion and its net cash position
(after long-term debt) to $334 million.
PRODUCTION AND COSTS TO IMPROVE THROUGH THE YEAR
For the quarter, Barrick produced 1.26 million ounces of gold at total cash costs of $194 per
ounce, compared to 1.37 million ounces of gold at total cash costs of $175 per ounce for the prior
year quarter. As expected, production was down over the prior year quarter due largely to the
closure of five mines over the course of 2002 as reserves were depleted. In first quarter 2002,
those five mines produced over 100,000 ounces. First quarter 2003 cash costs were up over the
prior year primarily as a consequence of processing more material at lower grades at Betze-Post.
Costs were also affected by higher energy prices and higher royalties and production taxes,
which are linked to the price of gold.
"Our first quarter operating results were what we expected," said John Carrington, Vice
Chairman and Chief Operating Officer. "As a result, we are on track to meet our full year
operating targets."
Production is expected to improve and costs decline in the remaining three quarters of 2003, as
mining moves to higher grade zones, principally at the Betze-Post mine. For the full year,
production is expected to total 5.4 to 5.5 million ounces at cash costs of $180 to $190 per ounce
and total production costs of $275 to $285 per ounce.
DEVELOPMENT PROJECTS UPDATE
During the quarter, the Company continued to advance its four project development pipeline. At
Veladero in Argentina, the Company submitted its Environment Impact Statement (EIS), and
began construction of the access road and camp facilities. "While permitting and building new
mines is never easy," noted Mr. Wilkins, "we have found nothing but support for Veladero from
local, provincial and the federal governments." At the nearby Pascua-Lama project, SNC-Lavalin
has been commissioned to update the feasibility study to incorporate synergies with Veladero,
the Argentine peso devaluation and optimization work that has been underway for the past two
years. At Alto Chicama in Peru, work continues on completing a final feasibility study by mid-
year, followed by submission of the EIS. At Cowal in Australia, the optimized feasibility study is
nearly complete. The Company plans periodic updates on its development pipeline as 2003
progresses.
Barrick's shares are traded under the ticker symbol ABX on the Toronto, New York, London and
Swiss stock exchanges and the Paris Bourse.
Key Statistics
(in United States dollars, US GAAP basis)
Three months ended March 31,
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(Unaudited) 2003 2002
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Operating Results
Gold production (thousands of ounces) 1,263 1,373
Gold sold (thousands of ounces) 1,292 1,452
Per Ounce Data
Average spot gold price $352 $290
Average realized gold price 355 329
Cash operating costs (3) 182 169
Total cash costs (1) (3) 194 175
Total production costs (3) 285 263
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Financial Results (millions)
Gold sales $459 $478
Income before accounting changes 46 46
Net income 29 46
Operating cash flow(4) 131 124
Per Share Data (dollars)
Income before accounting changes (basic
and diluted) 0.09 0.09
Net income (basic and diluted) 0.05 0.09
Operating cash flow 0.24 0.23
Common shares outstanding (as at Mar.
31) (millions)(2) 542 539
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As at As at
Mar. 31, Dec. 31,
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2003 2002
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Financial Position (millions)
Cash and equivalents $1,115 $1,044
Working capital 989 869
Long-term debt 761 761
Shareholders' equity 3,404 3,334
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(1) Includes royalties and production taxes.
(2) Includes shares issuable upon exchange of HCI (Homestake Canada
Inc.) exchangeable shares.
(3) For an explanation of non-GAAP performance measures refer to
pages 14-15 of management's discussion and analysis.
(4) Historically we classified deferred stripping expenditures as
part of payments for property, plant and equipment in investing
activities. In fourth quarter 2002, we reclassified these cash
outflows under operating activities for all periods presented to
reflect the operating nature of stripping activities.
Production and Cost Summary
Production Total Cash Costs
(attributable ounces) (US$/oz)
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For the three months ended March 31, 2003 2002 2003 2002
(Unaudited)
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North America
Betze-Post 285,296 341,438 $266 $219
Meikle 148,205 142,615 218 211
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Goldstrike Property Total 433,501 484,053 249 217
Eskay Creek 84,230 85,282 69 33
Round Mountain 95,815 93,572 168 188
Hemlo 68,353 60,980 227 235
Holt-McDermott 20,964 21,854 281 145
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702,863 745,741 216 191
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South America
Pierina 231,075 214,649 85 65
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Australia
Plutonic 70,254 62,227 192 188
Darlot 43,157 35,568 141 164
Lawlers 20,802 25,711 311 188
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Yilgarn District Total 134,213 123,506 206 181
Kalgoorlie 93,849 86,818 216 218
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228,062 210,324 203 196
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Africa
Bulyanhulu 90,162 85,034 192 208
Other/Mines closed in 2002 11,076 117,315 169 197
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Total 1,263,238 1,373,063 $194 $175
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Consolidated Production Costs (US$/oz)
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For the three months ended March 31, 2003 2002
(Unaudited)
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Direct mining costs $182 $179
Applied stripping 21 11
By-product credits (21) (21)
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Cash operating costs 182 169
Royalties 9 6
Production taxes 3 -
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Total cash costs 194 175
Amortization and reclamation 91 88
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Total production costs $285 $263
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Management's Discussion and Analysis of Financial and Operating Results
What follows is a discussion and analysis of the factors contributing to the results of operations
in first quarter 2003.
HIGHLIGHTS
In first quarter 2003 we met our operating targets, producing 1.26 million ounces of gold at total
cash costs of $194 per ounce, compared to 1.37 million ounces of gold at $175 per ounce in first
quarter 2002. Our existing mines produced the same amount as the year earlier, while the lower
production compared to the year earlier quarter is due to the closure of five mines over the
course of 2002, which contributed over 100,000 ounces to first quarter 2002. The higher costs in
2003 are primarily related to higher energy costs and royalties, as spot gold prices increased 20%
over the year earlier quarter. In addition, mining at Betze-Post took place in a lower grade area of
the pit. Production is expected to increase and cash costs to decline for the balance of the year, as
grades improve at the Betze-Post mine. Net income declined to $29 million ($0.05 per share),
compared to $46 million ($0.09 per share) for first quarter 2002. The 2003 results include a one-
time charge for the cumulative effect of changes in accounting policies for amortization of
development costs at underground mines and reclamation costs of $17 million ($0.04 per share).
Earnings were also negatively affected by higher exploration expense and administration costs
and lower interest income compared to the year earlier quarter.
For the first time in 15 years, spot gold prices increased above our current year forward price,
allowing us to demonstrate the flexibility of our forward sales program, as we sold all of our
production at higher spot gold prices early in the quarter and delivered all of our production into
our forward sales program during late March as gold prices receded. The decline in gold prices
and lease rates was the primary factor that resulted in a $36 million gain on non-hedge
derivatives, compared to a $1 million loss for the year earlier period. In first quarter 2003,
operating cash flows totaled $131 million, benefiting from higher gold prices, compared to $124
million for first quarter 2002, while our cash balance increased $71 million to $1.1 billion at
March 31.
GOLD SALES
Revenue for first quarter 2003 was $459 million on gold sales of 1.29 million ounces, compared
to $478 million in revenue on 1.45 million ounces for first quarter 2002. The lower revenue was
due to an 11% decrease in ounces sold during the quarter, partially offset by a $26 per ounce
(8%) increase in the average realized price. During the quarter, spot gold prices ranged from a
high of $389 to a low of $326 per ounce, averaging $352 per ounce. We realized $355 per ounce
during the quarter, delivering at spot prices in January, February and early March and, as gold
prices declined later in March, delivering production against our higher $340 per ounce forward
sales contracts.
While our forward sales program remains an important tool for the Company, particularly as a
means of securing predictable revenue given the large development program planned over the
next five years, the program is larger than we would like it to be in the current gold environment.
During the quarter, we continued to use market opportunities to bring our program down from
35% of operating mine reserves - or over three years of production - to a more optimal upper
parameter of two years of production, with the actual level determined by market conditions.
With the higher expected gold price volatility, we may opportunistically reduce the size of the
program on gold price dips but add to the program on gold price spikes in an effort to improve
the average price of the contracts in the program. Overall, over the course of the quarter, we
reduced the committed position from 18.1 million ounces to 17.3 million ounces and by late
April the program had declined to 16.3 million ounces.
REVIEW OF OPERATIONS AND DEVELOPMENT PROJECTS
For first quarter 2003, operating results were in line with plan. Operating performance is
expected to be better in the final three quarters of the year, resulting in overall production of 5.4
to 5.5 million ounces at total cash costs of $180 to $190 per ounce for 2003.
Goldstrike Property (Nevada)
Betze-Post
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Q1 2003 Q1 2002 2003E
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Production 285,296 341,438 1,495,000
Total cash cost / oz $ 266 $ 219 $ 228
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- Overall, Betze-Post is expected to produce more gold at lower cash costs (before gold related
expenses) than last year. First quarter results reflect planned mining in a lower grade area of the
pit, resulting in grades processed being 20% lower than the projected full year average.
- The high cash costs during the quarter compared to the full year average are a result of the
lower grades processed combined with higher diesel and propane prices and higher royalty and
state production taxes, which are linked to the price of gold.
- The Mine continues to experience fluctuations in autoclave recovery rates from quarter to
quarter, which stem from the metallurgical variability of certain ore types in the western area of
the pit and our stockpile ore sources. Work to improve these recoveries is underway and
improvements are anticipated in the coming quarters.
Meikle
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Q1 2003 Q1 2002 2003E
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Production 148,205 142,615 620,000
Total cash cost / oz $ 218 $ 211 $ 219
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- Cash costs before royalties were lower than the previous year quarter (down 4%), due to lower
unit mining and processing costs, although total cash costs increased as higher gold prices more
than doubled royalties and production taxes.
- Meikle recovery rates through the autoclave were negatively affected by commingling with the
Betze-Post material processed during the quarter, declining to 82% from its traditional 90%
recovery rate.
- Second quarter production is expected to be negatively affected by the loss of a backfill raise,
which is expected to reduce operating flexibility in the mine. Any lost production is expected to
be made up over the following two quarters.
Eskay Creek (British Columbia)
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Q1 2003 Q1 2002 2003E
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Production 84,230 85,282 363,000
Total cash cost / oz $ 69 $ 33 $ 64
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- While the strike continues at a third party smelter that treats Eskay's concentrate, that smelter is
now processing at pre-strike treatment levels. As a result, the strike is not expected to have any
impact on Eskay production, even if it persists through the year.
- First quarter cash costs were higher than the year earlier quarter due to higher smelter and
transportation costs, primarily related to a change in the production mix of various ores mined, as
well as lower silver grades (down 7%), which reduce the silver by-product credit against costs.
Round Mountain (Nevada) (50% share)
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Q1 2003 Q1 2002 2003E
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Production 95,815 93,572 363,000
Total cash cost / oz $ 168 $ 188 $ 198
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- The focus this year is on expanding reserves both within the current pit, and also at the nearby
Gold Hill property, where a $2.5 million exploration program is in place for 2003.
- The lower cash costs during the quarter reflect an increased percentage of production sourced
from low-cost stockpiles over the prior year.
Hemlo (Ontario) (50% share)
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Q1 2003 Q1 2002 2003E
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Production 68,353 60,980 253,000
Total cash cost / oz $ 227 $ 235 $ 231
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- The stability problems that affected Hemlo's operations in first quarter 2002 and contributed to
underperformance through the second and third quarters are largely resolved. First quarter 2003
represents the second strong quarter for the operation, meeting or exceeding production and cost
targets and achieving better dilution than planned.
- The mining team has been focused on catching up on backfilling of previously mined areas to
prevent ground stability problems in the future and increasing development activity in advance
of production.
Holt-McDermott (Ontario)
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Q1 2003 Q1 2002 2003E
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Production 20,964 21,854 97,000
Total cash cost / oz $ 281 $ 145 $ 218
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- As Holt approaches the end of its mine life, now scheduled for 2004, it is mining less
continuous, narrower ore lenses.
- Grades mined are 10-15% lower than plan and the previous year, resulting in higher cash costs.
Because of the short mine life, drilling and development costs are being expensed, pushing cash
costs higher.
- The mine will not likely meet its full year targets set out in the table above.
Pierina (Peru)
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Q1 2003 Q1 2002 2003E
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Production 231,075 214,649 908,000
Total cash cost / oz $ 85 $ 65 $ 86
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- Pierina is in its last year of production in the 900,000-ounce range before stepping down to
lower production levels as mining moves to lower grade areas in the open pit.
- Higher production compared to the year earlier quarter relates to mining more tons at higher
grade, while cash costs increased due to higher energy costs and increased employee profit
sharing.
Yilgarn District (Western Australia)
Plutonic
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Q1 2003 Q1 2002 2003E
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Production 70,254 62,227 295,000
Total cash cost / oz $ 192 $188 $ 194
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- Plutonic experienced operating shortfalls in 2002 as the mining team's targets for accessing
some of the higher-grade underground working areas of the mine proved too ambitious. Since
then, the mine has made significant progress in planning and execution, and over the past two
quarters the operation has met plan, both in terms of grade and tons mined from the underground.
- Higher production compared to the year earlier quarter reflects the higher overall grade
processed, as the majority of low-grade stockpiles that contributed to 2002 production are being
replaced with higher-grade tons mined from the underground.
Darlot
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Q1 2003 Q1 2002 2003E
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Production 43,157 35,568 143,000
Total cash cost / oz $ 141 $ 164 $ 176
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- Darlot had a strong first quarter, with significantly higher grades than plan and the prior year,
as grades mined exceeded the reserve model.
- Costs benefited from the higher grades mined and processed.
Lawlers
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Q1 2003 Q1 2002 2003E
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Production 20,802 25,711 111,000
Total cash cost / oz $ 311 $ 188 $ 213
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- Operating issues in both the Fairyland open pit and underground during the quarter resulted in
lower grades and tonnage from both areas.
- The underground experienced unplanned dilution during the first quarter in two key stopes.
Transition to owner mining proceeded on plan but first quarter costs include some extraordinary
costs associated with the transition. Mining rates will be as planned for the second quarter and
the mine expects to gain on the first quarter shortfall over the balance of the year.
- Mining at the Fairyland open pit was suspended in January due to slope stability concerns.
Mining is not expected to recommence until later in the year and as a result the mine is not
expected to meet the full year targets set out in the table above.
Kalgoorlie - Super Pit (Western Australia) (50% share)
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Q1 2003 Q1 2002 2003E
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Production 93,849 86,818 344,000
Total cash cost / oz $ 216 $ 218 $ 237
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- The Super Pit's first quarter results are encouraging, as unit costs are in line with plan and
roaster availability has improved.
- Production in first quarter 2003 was up (8%) over the year earlier period, due to higher grades
(7%) and higher recoveries (2%) due to the better availability of the roaster facility.
- The Mt. Charlotte underground, originally scheduled for closure in 2002, is expected to remain
open through the balance of the year, adding tonnage and improving the grade processed.
Bulyanhulu (Tanzania)
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Q1 2003 Q1 2002 2003E
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Production 90,162 85,034 415,000
Total cash cost / oz $192 $ 208 $ 175
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- For first quarter 2003, both production and costs were better than the prior year period due to
higher grades processed (5%) and higher recovery rates, which averaged 87.3%, up from 85.3%
for the year earlier period.
- Despite the improved results over the prior year, the mine is not likely to meet its full year
targets set out in the table above, as the underground tonnage mined is expected to fall
approximately 5% short of plan due to lower than planned equipment availability.
Other Properties
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Q1 2003 Q1 2002 2003E
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Production 11,076 117,315 45,000
Total cash cost / oz $169 $197 $170
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- The only mine remaining in this category in first quarter 2003 is the Marigold Mine, which
produced more gold than plan at cash costs below plan.
- Lower production for this category during first quarter 2003 compared to the year earlier
quarter relates to the closure of five mines in 2002 due to the depletion of reserves.
PROJECT UPDATES
In September 2002, we announced a development plan consisting of targets and timelines for
four new mines over the next five years. Each of those four projects progressed in first quarter
2003.
Alto Chicama, Peru
After further infill drilling to 50 meter centers and completion of a feasibility analysis early in
the year, probable oxide reserves stood at 6.5 million ounces.(2) Total measured and indicated
resources now stand at 2.0 million ounces of gold, with total inferred resources at 1.0 million
ounces of gold. To date, 70% of the infill drilling is complete, confirming earlier results.
Metallurgical tests continue to indicate the ore is amenable to heap leaching.
Work in first quarter 2003 focused on infill and condemnation drilling. Geotechnical and
engineering studies are being undertaken, with step-out drilling in progress to refine pit limits
and mine planning.
For the remainder of 2003, the focus of the project will be to complete the Environmental Impact
Statement and a final feasibility study.
(2) Calculated in accordance with National Instrument 43-101 as required by Canadian securities
regulatory authorities. For United States reporting purposes, Industry Guide 7 (under the
Securities Exchange Act of 1934), as interpreted by the staff of the SEC, applies different
standards in order to classify mineralization as a reserve. Accordingly, for U.S. reporting
purposes, Alto Chicama is classified as mineralized material.
Pascua/Veladero (Chile and Argentina)
The Pascua/Veladero District is one of the largest undeveloped gold districts in the world, with
over 26 million ounces of gold reserves.
The Veladero project final feasibility study was completed during third quarter 2002, providing
the basis for ongoing development. The Environmental Impact Statement for the project was
submitted in January 2003. Access road and camp infrastructure construction began in January.
During first quarter 2003, SNC-Lavalin was awarded a contract to update and optimize the
feasibility study for Pascua-Lama, incorporating synergies with Veladero and the peso
devaluation. The optimized feasibility study is expected to be completed in early 2004.
Cowal (Australia)
In first quarter 2003, we continued a comprehensive program of drilling and engineering studies
to optimize the project and update the feasibility study. Drilling continues on the property for
resource definition, to collect samples for metallurgical testing, and for engineering and
hydrological studies. We are also progressing on final permitting matters, including a number of
ancillary licenses and permits that are conditions of the development consent. The optimization
study is expected to be completed by mid-2003. Construction is expected to begin in the second
half of the year, with production start-up planned for mid-2005.
AMORTIZATION
Amortization totaled $125 million, or $91 per ounce, in the three months ended March 31, 2003,
compared to $123 million or $88 per ounce in the year earlier quarter. The increase is due largely
to the change in the production mix across our portfolio of mines, with increased contributions
from mines with higher depreciation rates per ounce (Meikle, Pierina and Bulyanhulu) and the
closure of five mines in 2002 with depreciation rates per ounce of less than $40.
Two accounting policy changes affecting amortization took effect in first quarter 2003. First,
FAS 143 changes the method for accounting for reclamation and closure costs. Amortization
increased by $2 million for the quarter to reflect the amortization of the increase to property,
plant and equipment from adopting the new standard at the beginning of this year, which was
partially offset by a gain of $4 million related to prior period reclamation costs upon adopting the
new accounting policy. The second change relates to the amortization of underground
development costs to exclude estimates of future underground development costs in the current
period amortization, which resulted in a charge of $21 million related to prior periods. The new
accounting policy for our underground mines is expected to have minimal impact on
amortization in 2003, while the new reclamation standard is expected to add $15 million to costs
in 2003 over the previous policy, in line with previous guidance. Over the life of the mines,
however, total amortization and reclamation expenses remain unchanged.
Overall amortization is expected to total between $530-$540 million in 2003, or approximately
$95 per ounce.
ADMINISTRATION
First quarter 2003 administration costs were $22 million, an increase of $5 million over the year
earlier period due to additional severance costs. Excluding severance costs, administration costs
would have been $17 million, similar to 2002. For 2003, administration costs are expected to
total $70 million.
INTEREST AND OTHER INCOME
The principal component of interest and other income is interest received on cash and short-term
investments. For first quarter 2003, interest and other income was $5 million, down $4 million
dollars compared to the prior year period. Interest and other income for the quarter included
interest income of $7 million and a gain on the sale of assets of $5 million, partially offset by a
provision for a loss of $7 million on short-term investments related to certain Homestake
management Pension obligations.
For the full year, interest income is expected to total approximately $25 million, as we have
entered into interest rate swaps on $800 million of our cash balance at an average interest rate of
3.4%, with the balance earning interest at the current short-term rate of 1.2%.
INTEREST ON LONG-TERM DEBT
We incurred $13 million in interest costs in first quarter 2003, the same as first quarter 2002,
related primarily to our $500 million of debentures, and the $200 million Bulyanhulu project
financing.
For the full year, we expect to incur about $60 million in interest costs, of which we expect to
capitalize $8 million to our construction projects.
ACCRETION EXPENSE
Accretion expense of $4 million relates to adopting the new accounting standard FAS 143 at the
beginning of the year. Accretion expense is an interest-like expense: Future reclamation
obligations are scheduled out over the next 15 to 20 years, and then discounted back to an
amount recorded on the balance sheet today. Accretion expense increases the reclamation
obligation to its estimated payout.
For the year, accretion expense is expected to total $20 million.
NON-HEDGE DERIVATIVE GAINS (LOSSES)
The principal components of the mark-to-market gains and losses are changes in currency,
commodity, and interest and lease rate contracts, and exclude our normal sales contracts.
The total mark-to-market gain on the non-hedge derivative positions included in first quarter
2003 earnings was $36 million, compared with a loss of $1 million in the prior year period. The
gain during the quarter primarily relates to lower lease rates and gold prices compared to the end
of 2002.
Our spot deferred contracts have fixed lease rates; however, for about one third of the contracts
we swapped out of the fixed lease rates for floating lease rates to take advantage of lower short
term rates. As gold prices and lease rates decline, an unrealized mark-to-market gain on these
swap contracts was recorded and flowed through earnings in the first quarter. We expect to see
ongoing fluctuations in these swap contracts in the following quarters as gold prices and lease
rates change.
INCOME TAXES
In first quarter 2003, we recorded an income tax expense of $2 million. Our low effective tax
rate for 2003 partly reflects the fact that non-hedge derivative gains were taxed in a low tax-rate
jurisdiction. Excluding non-hedge derivative gains, our effective tax rate increased to 15%,
compared to 2% in the year earlier period, primarily due to the increase in spot gold prices from
$290 per ounce in first quarter 2002 to $352 per ounce in first quarter 2003. Our tax rate rises as
gold prices rise, as a larger portion of our earnings are taxed in higher tax jurisdictions. We
estimate that if gold prices average $350 in 2003 our tax rate would be 15-20%.
STATEMENT OF COMPREHENSIVE INCOME
Comprehensive income consists of net income or loss, together with certain other economic
gains and losses that are collectively described as "other comprehensive income" and are
excluded from the income statement.
Comprehensive income totals $69 million in first quarter 2003, compared to $37 million in the
year earlier quarter. The primary reason for the increase in earnings in 2003 relates to the
increase in value of cash flow hedges in 2003 due to the increase in the Canadian and Australian
dollars, which have both strengthened against the U.S. dollar by 7%.
LIQUIDITY AND CAPITAL RESOURCES
We believe our ability to generate free cash flows - revenue generated from our existing
operations available to reinvest in our business - is one of our fundamental financial strengths.
Combined with our large cash balance of $1.1 billion at March 31, 2003 and our $1 billion
undrawn bank facility, we have sufficient access to capital resources to develop our internal
projects and maintain a strong exploration program.
OPERATING ACTIVITIES
We generated operating cash flow of $131 million in first quarter 2003, compared to $124
million in the year earlier period. Earnings and operating cash flows will fluctuate with the price
of gold. At gold prices above $340 per ounce, we expect to sell 100% of our production at the
higher spot price, while at spot gold prices below $340 per ounce, we expect to sell 100% of our
production at our forward sales price of $340 per ounce, generating additional revenue from each
gold sale.
INVESTING ACTIVITIES
Our principal investing activities are for sustaining capital at our existing operating properties,
new mine development and property and company acquisitions.
CAPITAL EXPENDITURES
Capital expenditures for first quarter 2003 totaled $66 million, compared to $51 million for the
year earlier period. The increase is due principally to spending in Australia ($21 million),
primarily for underground development and new mining equipment. Capital expenditures in first
quarter 2003 also included $23 million in North America, comprised primarily of underground
development and equipment purchases. In Tanzania, capital expenditures included $10 million
spent at the Bulyanhulu Mine on underground development, while in South America capital
expenditures totaled $7 million, primarily at Veladero ($3 million), and Pierina and Alto
Chicama ($2 million), as well as engineering and development work at Pascua-Lama ($2
million).
FINANCING ACTIVITIES
During first quarter 2003, our cash inflow from financing activities was $1 million, compared
with an inflow of $34 million in the year earlier period. The higher inflow in the year earlier
quarter principally related to proceeds from the exercise of stock options.
OUTLOOK
We believe growth opportunities exist within our existing asset base. Our objective is to grow
our business organically - running our existing operations as efficiently and effectively as
possible, as we develop our new generation of mines, and continue with the largest exploration
program in the industry.
In first quarter 2003, the flexibility in our forward sales program allowed us to fully participate
in higher gold prices, selling every ounce we produced at the higher spot prices in January,
February and early March, and when gold prices receded in late March delivering into our
contracts to sell 100% of our production at $340 per ounce. As a result, we achieved an average
$355 per ounce for all ounces sold during the quarter, compared to a spot price average of $352.
We plan to continue to take advantage of the flexibility inherent in our program and spot gold
price volatility and expect to reduce the size of our forward sales position over time, subject to
market conditions.
Overall for 2003, we remain on plan to produce 5.4 to 5.5 million ounces at an average total cash
cost of $180 to $190 per ounce and a total production cost of $275 to $285 per ounce. We expect
exploration and business development expenses to be approximately $100 to $110 million.
Administration expense for the year is expected to be approximately $70 million, reclamation
expense approximately $25 million, interest expense approximately $50 million and accretion
expense of $20 million. Interest income is expected to be approximately $25 million, while at
$350 per ounce gold our tax rate is expected to be between 15 and 20 %. Capital expenditures for
the year are expected to total about $220 million at our existing operations, and a further $160-
$170 million at the four development projects, for a total of $380-$390 million.
We finished first quarter 2003 with a strong balance sheet, a portfolio of high-quality, long-life
properties, a promising development pipeline with a strategy to bring it on stream, and a cash
position of $1.1 billion, with no net debt.
NON-GAAP MEASURES
We have included cash costs per ounce data because we understand that certain investors use this
information to determine the Company's ability to generate cash flow for use in investing and
other activities. We believe that conventional measures of performance prepared in accordance
with GAAP do not fully illustrate the ability of our operating mines to generate cash flow. The
data is intended to provide additional information and should not be considered in isolation or as
a substitute for measures of performance prepared in accordance with GAAP. The measures are
not necessarily indicative of operating profit or cash flow from operations as determined under
GAAP.
Reconciliation of Total Cash Costs Per Ounce to Financial Statements
---------------------------------------------------------------------
For the three months ended
(in millions of United States dollars Mar. 31
except per ounce amounts) 2003 2002
---------------------------------------------------------------------
Operating costs per financial statements $259 $266
Reclamation, closure and other costs (8) (11)
---------------------------------------------------------------------
Operating costs for per ounce calculation $251 $255
---------------------------------------------------------------------
Ounces sold (thousands) 1,292 1,452
Total cash costs per ounce $194 $175
---------------------------------------------------------------------
Total cash costs per ounce data is calculated in accordance with The Gold Institute Production
Cost Standard (the "Standard"). Adoption of the Standard is voluntary, and the data presented
may not be comparable to data presented by other gold producers. Cash costs per ounce are
derived from amounts included in the Statements of Income and include mine site operating
costs such as mining, processing, administration, royalties and production taxes, but exclude
amortization, reclamation costs, financing costs, and capital, development and exploration costs.
FINANCIAL RISK MANAGEMENT
Forward Sales
The estimated fair value of the gold contracts at March 31, 2003 was approximately $489 million
negative, and the fair value of silver contracts was $17 million positive. The fair value of our
foreign currency contracts at March 31, 2003 was $78 million positive. The value of gold
contracts is based on the net present value of cash flows under the contracts, based on a gold spot
price of $336 per ounce and market rates for LIBOR and gold lease rates. The year-to-date
change in the fair value of our gold contracts is detailed as follows:
Continuity Schedule of the Change in the Mark-to-Market Value of the Gold Hedge Position
(millions)
---------------------------------------------------------------------
Fair value as at December 31, 2002 - Loss $(639)
Impact of change in spot price (from $347 per
ounce to $336 per ounce) 192
Contango period to date 35
Impact of change in valuation inputs other
than spot metal prices (e.g. interest
rates, lease rates, and volatility) (77)
---------------------------------------------------------------------
Fair value as at March 31, 2003 - Loss $(489)
---------------------------------------------------------------------
The mark-to-market value of the gold contracts would approach zero (breakeven) at a spot gold
price of approximately $309 per ounce, assuming all other variables are constant.
Consolidated Statements of Income
(in millions of United States dollars, except
per share data, US GAAP basis) Three months ended March 31,
---------------------------------------------------------------------
(Unaudited) 2003 2002
---------------------------------------------------------------------
Gold sales (note 11) $459 $478
---------------------------------------------------------------------
Costs and expenses
Operating (notes 3 and 11) 259 266
Amortization (note 11) 125 123
Administration 22 17
Exploration and business development 29 20
---------------------------------------------------------------------
435 426
---------------------------------------------------------------------
Interest and other income 5 9
Interest expense (13) (13)
Accretion expense (note 2) (4) -
Non-hedge derivative gains (losses) (note 9E) 36 (1)
---------------------------------------------------------------------
Income before income taxes and other items 48 47
Income taxes (2) (1)
---------------------------------------------------------------------
Income before cumulative effect of
changes in accounting principles 46 46
Cumulative effect of changes in
accounting principles (note 2) (17) -
---------------------------------------------------------------------
Net income $29 $46
---------------------------------------------------------------------
Earnings per share data (note 4):
Income before cumulative effect of
changes in accounting principles
Basic and diluted $0.09 $0.09
Net income
Basic and diluted $0.05 $0.09
---------------------------------------------------------------------
The accompanying notes are an integral part of these unaudited
consolidated financial statements
Consolidated Statements of Cash Flow
(in millions of United States dollars,
US GAAP basis) Three months ended March 31,
---------------------------------------------------------------------
(Unaudited) 2003 2002
---------------------------------------------------------------------
OPERATING ACTIVITIES
Net income for the period $29 $46
Amortization 125 123
Changes in capitalized mining costs 19 9
Deferred income taxes (9) (15)
Other items (note 12) (33) (39)
---------------------------------------------------------------------
Net cash provided by operating
activities 131 124
---------------------------------------------------------------------
INVESTING ACTIVITIES
Property, plant and equipment (66) (51)
Short-term investments - 72
Other items 5 -
---------------------------------------------------------------------
Net cash provided by (used in) investing
activities (61) 21
---------------------------------------------------------------------
FINANCING ACTIVITIES
Capital stock 1 35
Long-term debt repayments - (1)
---------------------------------------------------------------------
Net cash provided by financing
activities 1 34
---------------------------------------------------------------------
Increase in cash and equivalents 71 179
Cash and equivalents at beginning of
period 1,044 574
---------------------------------------------------------------------
Cash and equivalents at end of period $1,115 $753
---------------------------------------------------------------------
The accompanying notes are an integral part of these unaudited
consolidated financial statements
Consolidated Balance Sheets
(in millions of United States dollars, As at As at
US GAAP basis) March 31, Dec. 31,
(Unaudited) 2003 2002
---------------------------------------------------------------------
ASSETS
Current assets
Cash and equivalents $1,115 $1,044
Short-term investments 28 30
Accounts receivable 72 72
Inventories and other current assets (note 6) 189 206
---------------------------------------------------------------------
1,404 1,352
Property, plant and equipment 3,276 3,322
Capitalized mining costs, net 253 272
Other assets 418 315
---------------------------------------------------------------------
Total assets $5,351 $5,261
---------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable $163 $164
Other current liabilities 252 319
---------------------------------------------------------------------
415 483
Long-term debt 761 761
Other long-term obligations 472 422
Net deferred income tax liabilities 299 261
---------------------------------------------------------------------
Total liabilities 1,947 1,927
---------------------------------------------------------------------
Shareholders' equity
Capital stock 4,149 4,148
Deficit (660) (689)
Accumulated other comprehensive loss (note 5) (85) (125)
---------------------------------------------------------------------
Total shareholders' equity 3,404 3,334
---------------------------------------------------------------------
Commitments and contingencies (note 10)
---------------------------------------------------------------------
Total liabilities and shareholders' equity $5,351 $5,261
---------------------------------------------------------------------
The accompanying notes are an integral part of these unaudited
consolidated financial statements
Consolidated Statements of Shareholders'
Equity and Comprehensive Income
STATEMENT OF SHAREHOLDERS' EQUITY
(in millions of United States dollars, US GAAP basis)(Unaudited) 2003
---------------------------------------------------------------------
Common shares (number in millions)
At January 1 542
Issued for cash/on exercise of stock options -
---------------------------------------------------------------------
At March 31 542
---------------------------------------------------------------------
Common shares (amount in millions)
At January 1 $4,148
Issued for cash/on exercise of stock options 1
---------------------------------------------------------------------
At March 31 $4,149
---------------------------------------------------------------------
Deficit
At January 1 $(689)
Net income 29
---------------------------------------------------------------------
At March 31 $(660)
---------------------------------------------------------------------
Accumulated other comprehensive loss (note 5) (85)
---------------------------------------------------------------------
Total shareholders' equity at March 31 $3,404
---------------------------------------------------------------------
STATEMENT OF COMPREHENSIVE INCOME Three months ended March 31,
---------------------------------------------------------------------
(in millions of United States dollars, US GAAP basis)
(Unaudited) 2003 2002
---------------------------------------------------------------------
Net income $29 $46
Foreign currency translation adjustments (5) (8)
Transfers of realized gains on derivative
instruments to earnings (9) (3)
Change in fair value of cash flow hedges 48 2
Transfers of realized losses on available-for-sale
securities to earnings 7 -
Unrealized losses on available for sale securities (1) -
---------------------------------------------------------------------
Comprehensive income $69 $37
---------------------------------------------------------------------
The accompanying notes are an integral part of these
unaudited consolidated financial statements
Notes to Unaudited Interim Consolidated Financial Statements
(US GAAP)
Tabular dollar amounts in millions of United States dollars, unless otherwise indicated, US
GAAP basis. References to C$ and A$ are to Canadian and Australian dollars, respectively.
1 BASIS OF PREPARATION
The United States dollar is the principal currency of our operations. We prepare and file our
primary consolidated financial statements in United States dollars and under United States
generally accepted accounting principles ("US GAAP"). The accompanying unaudited interim
consolidated financial statements have been prepared in accordance with US GAAP for the
preparation of interim financial information. Accordingly, they do not include all of the
information and disclosures required by US GAAP for annual consolidated financial statements.
Except as disclosed in note 2, the accounting policies used in the preparation of the
accompanying unaudited interim consolidated financial statements are the same as those
described in our audited consolidated financial statements and the notes thereto for the three
years ended December 31, 2002.
In the opinion of management, all adjustments considered necessary for fair presentation of
results for the periods presented have been reflected in these financial statements. Operating
results for the period ended March 31, 2003 are not necessarily indicative of the results that may
be expected for the full year ending December 31, 2003. These unaudited interim consolidated
financial statements should be read in conjunction with the audited annual financial statements
and the notes thereto for the three years ended December 31, 2002.
The preparation of financial statements under US GAAP requires us to make estimates and
assumptions that affect:
- the reported amounts of assets and liabilities;
- disclosures of contingent assets and liabilities; and
- revenues and expenses recorded in each reporting period.
The most significant estimates and assumptions that affect our financial position and results of
operations are those that use estimates of proven and probable gold reserves, and/or assumptions
of future gold prices. Such estimates and assumptions affect:
- the value of inventories (which are stated at the lower of average cost and net realizable value);
- decisions as to when exploration and mine development costs should be capitalized or
expensed;
- whether property, plant and equipment and capitalized mining costs may be impaired;
- our ability to realize income tax benefits recorded as deferred income tax assets; and
- the rate at which we charge amortization to earnings.
We also estimate:
- costs associated with reclamation and closure of mining properties;
- remediation costs for inactive properties;
- the fair values of derivative instruments; and
- the likelihood and amounts associated with contingencies.
We regularly review the estimates and assumptions that affect our financial statements, however,
what actually happens could differ from those estimates and assumptions.
2 ACCOUNTING CHANGES
A FAS 143, Accounting for asset retirement obligations
On January 1, 2003, we adopted FAS 143 and changed our accounting policy for recording
obligations relating to the retirement of long-lived assets. FAS 143 applies to legal obligations
associated with the retirement of long-lived assets that result from the acquisition, construction,
development and/or the normal operation of a long-lived asset. Under FAS 143 we record the
fair value of a liability for an asset retirement obligation in the period in which it is incurred.
When the liability is initially recorded, we capitalize the cost by increasing the carrying amount
of the related long-lived asset. Over time, the liability is increased to reflect an interest element
(accretion) considered in its initial measurement at fair value, and the capitalized cost is
amortized over the useful life of the related asset. Upon settlement of the liability, we will record
a gain or loss if the actual cost incurred is different than the liability recorded. On adoption of
FAS 143 in our balance sheet we recorded an increase in property, plant and equipment by $39
million; an increase in other long-term obligations by $32 million; and an increase in deferred
income tax
liabilities by $3 million. In the three month period ended March 31, 2003, we recorded in our
income statement a $4 million credit for the cumulative effect of this accounting change.
Following the adoption of FAS 143, the total amount of recognized liabilities for asset retirement
obligations was $334 million. These liabilities mainly relate to obligations at our active and
inactive mines to perform reclamation and remediation activities to meet existing environmental
laws and regulations that govern our mining properties.
The comparative amount of these liabilities would have been $353 million at December 31,
2001, using the principles of FAS 143, and using current information, assumptions and interest
rates.
For the three-month period ended March 31, 2003, the effect on earnings in addition to the
cumulative effect of adopting FAS 143 was a decrease in net income by $4 million ($0.01 per
share).
For the three-month period ended March 31, 2002, the effect of adopting FAS 143 would have
been a decrease in net income by $1 million ($nil per share).
B Amortization of underground development costs
Effective January 1, 2003, we changed our accounting policy for amortization of underground
mine development costs to exclude estimates of future underground development costs. Future
underground development costs, which are significant, are necessary to develop our underground
ore bodies, expected to be mined in some cases over the next 25 years.
Previously, we amortized the total of historical capitalized costs and estimated future costs using
the units of production method over total proven and probable reserves at our underground
mining operations. This accounting change was made to better match amortization with ounces
of gold sold and to remove the inherent uncertainty in estimating future development costs from
amortization calculations.
Under our revised accounting policy, costs incurred to access specific ore blocks or areas, and
that only provide benefit over the life of that area, are amortized over the proven and probable
reserves within the specific ore block or area. Infrastructure and other common costs which have
a useful life over the entire mine continue to be amortized over total proven and probable
reserves.
The cumulative effect of this change at January 1, 2003, was to decrease property, plant and
equipment by $19 million, and increase deferred income tax liabilities by $2 million. In the
three-month period ended March 31, 2003 we recorded in our income statement a $21 million
charge for the cumulative effect of this change.
For the three-month period ended March 31, 2003, the effect on earnings in addition to the
cumulative effect of adopting this accounting change was a decrease in net income by $0.2
million ($nil per share).
If the comparative income statements had been adjusted for the retroactive application of this
change in amortization policy, there would have been no effect on net income for the three-
month period ended March 31, 2002.
3 OPERATING COSTS
-----------------------------------------------------------------
For the three months ended March 31 2003 2002
-----------------------------------------------------------------
Cost of goods sold $ 227 $ 242
Amortization of capitalized mining costs 36 36
By-product revenues (27) (30)
Royalty expenses 12 8
Production taxes 4 1
Reclamation and closure costs 7 9
-----------------------------------------------------------------
$ 259 $ 266
-----------------------------------------------------------------
Amortization of capitalized mining costs
We charge most mine operating costs to inventory as incurred. However, we defer and amortize
certain mining costs associated with open-pit deposits that have diverse ore grades and waste-to-
ore ton ratios over the mine life. These mining costs arise from the removal of waste rock at our
open-pit mines, and we commonly refer to them as "deferred stripping costs." We record
amortization of amounts deferred based on a "stripping ratio" using the units-of-production
method. This accounting method results in the smoothing of these costs over the life of mine,
rather than expensing them as incurred. Some mining companies expense these costs as incurred,
which may result in the reporting of greater volatility in period to period results of operations.
The application of our deferred stripping accounting policy in the three months ended March 31,
2003 resulted in an increase in operating costs by $18 million compared to actual costs incurred
(three months ended March 31, 2002 - $9 million increase).
Capitalized mining costs represent the excess of costs capitalized over amortization recorded,
although it is possible that a liability could arise if cumulative amortization exceeds costs
capitalized. The carrying amount of capitalized mining costs is included with related mining
property, plant and equipment for impairment testing purposes.
Average stripping ratios (1)
-----------------------------------------------------------------
For the three months ended March 31 2003 2002
-----------------------------------------------------------------
Betze-Post (Goldstrike) 112:1 112:1
Pierina 48:1 48:1
-----------------------------------------------------------------
(1) The stripping ratio is calculated as the ratio of total tons
(ore and waste) of material to be moved compared to total
recoverable proven and probable gold reserves.
The average remaining life of the above mentioned open-pit mine operations for which we
capitalize mining costs is 9 years. The full amount of stripping costs incurred will be expensed
by the end of the mine lives.
4 EARNINGS PER SHARE
Net income per share was calculated on the basis of the weighted average number of common
shares outstanding for the three months ended March 31, 2003 which amounted to 541 million
shares (2002 -536 million shares).
Diluted net income per share reflects the dilutive effect of the exercise of the common share
purchase options outstanding as at the end of the period. The number of shares for the diluted net
income per share calculation for the three months ended March 31, 2003 and 2002 was 542
million shares and 537 million shares, respectively.
5 COMPREHENSIVE INCOME
Comprehensive income consists of net income or loss and other gains and losses that are
excluded from net income or loss. Other gains and losses consist mainly of gains and losses on
derivative instruments accounted for as cash flow hedges; unrealized gains and losses on
investments; and foreign currency translation adjustments.
Parts of comprehensive income (loss)
---------------------------------------------------------------------
For the three months ended March 31 2003 2002
---------------------------------------------------------------------
Pre-tax Tax Pre-tax Tax
amount effect amount effect
---------------------------------------------------------------------
Foreign currency translation adjustments $ (5) $ - $ (8) $ -
Transfers of realized gains
on cash flow hedges to earnings (note 9F) (14) 5 (1) -
Change in fair value
of cash flow hedges (note 9F) 78 (30) - -
Transfers of losses on available-for-sale
securities to earnings 7 - - -
Unrealized losses
on available-for-sale securities (1) - - -
---------------------------------------------------------------------
$ 65 $ (25) $ (9) $ -
---------------------------------------------------------------------
Accumulated other comprehensive income (loss) (OCI)
---------------------------------------------------------------------
At March 31, 2003 At December 31, 2002
---------------------------------------------------------------------
Pre-tax Tax Total Pre-tax Tax Total
amount effect amount effect
---------------------------------------------------------------------
Foreign currency
translation adjustments $(149) $- $(149) $(144) $- $(144)
Derivative instruments 113 (42) 71 49 (17) 32
Additional minimum
pension liability (7) - (7) (7) - (7)
Unrealized losses on
available-for-sale
securities - - - (6) - (6)
---------------------------------------------------------------------
$(43) $(42) $(85) $(108) $(17) $(125)
---------------------------------------------------------------------
6 INVENTORIES AND OTHER CURRENT ASSETS
---------------------------------------------------------------------
At March 31, At Dec. 31,
2003 2002
---------------------------------------------------------------------
Gold in process and ore in stockpiles $ 87 $ 100
Mine operating supplies 60 59
Derivative assets (note 9) 35 37
Prepaid expenses 7 10
---------------------------------------------------------------------
$ 189 $ 206
---------------------------------------------------------------------
Gold in process and ore in stockpiles excludes $77 million
(December 31, 2002 - $61 million) of stockpiled ore which is not
expected to be processed in the following 12 months. This amount is
included in other assets.
7 CAPITAL STOCK
Homestake Canada Inc. ("HCI") Exchangeable shares
In connection with a 1998 acquisition, HCI issued 11.1 million HCI exchangeable shares. Each
HCI exchangeable share is exchangeable for 0.53 of a Barrick common share at any time at the
option of the holder and has essentially the same voting, dividend (payable in Canadian dollars),
and other rights as 0.53 of a Barrick common share. HCI is a subsidiary that holds our interest in
the Hemlo and Eskay Creek Mines.
At March 31, 2003, 1.6 million HCI exchangeable shares were outstanding, which are equivalent
to 0.8 million Barrick common shares. The equivalent common share amounts are reflected in
the number of common shares outstanding.
At any time on or after December 31, 2008, or when fewer than 1.4 million HCI exchangeable
shares are outstanding, we have the right to require the exchange of each outstanding HCI
exchangeable share for 0.53 of a Barrick common share. While there are exchangeable shares
outstanding, we are required to present summary consolidated financial information relating to
HCI for holders of exchangeable shares.
Summarized financial information for HCI
-----------------------------------------------
Three months
ended
March 31,
2003
-----------------------------------------------
Total revenues and other income $ 52
Less costs and expenses 53
-----------------------------------------------
Loss before taxes $ (1)
-----------------------------------------------
Net loss $ (22)
-----------------------------------------------
-----------------------------------------------------------------
At March 31, At December 31,
2003 2002
-----------------------------------------------------------------
Current assets $ 88 $ 91
Non-current assets 291 236
-----------------------------------------------------------------
Total assets 379 327
-----------------------------------------------------------------
Other current liabilities 16 75
Notes payable 430 407
Other long-term liabilities 77 18
Deferred income taxes 131 122
Shareholders' equity (275) (295)
-----------------------------------------------------------------
Total liabilities
and shareholders' equity $ 379 $ 327
-----------------------------------------------------------------
8 EMPLOYEE STOCK-BASED COMPENSATION
Common stock options
Stock option activity (shares in millions)
--------------------------------------------------------------------
Common Weighted Common Weighted
shares average shares average
(number) price (C$) (number) price (US$)
--------------------------------------------------------------------
At December 31, 2002 18.9 3.1
Granted 0.5 $ 23.99 - -
Cancelled or expired (0.2) $ 34.36 (0.1) $ 23.28
--------------------------------------------------------------------
At March 31, 2003 19.2 3.0
--------------------------------------------------------------------
Under APB 25, we recognize compensation cost for stock options in earnings based on the
excess, if any, of the quoted market price of the stock at the grant date of the award over the
option exercise price. Generally, the exercise price for stock options granted to employees equals
the fair market value of our common stock at the date of grant, resulting in no compensation
cost.
FASB Statement No. 123 (Accounting for Stock-Based Compensation) (FAS 123) encourages,
but does not require, companies to record compensation cost for stock-based employee
compensation plans based on the fair value of options granted. We have elected to continue to
account for stock-based compensation using the intrinsic value method prescribed in Accounting
Principles Board Opinion No. 25 (Accounting for Stock Issued to Employees) (APB 25) and its
related interpretations, and to provide disclosures of the pro forma effects of adoption had we
recorded compensation expense under the fair value method.
Stock option expense (per share amounts in dollars)
---------------------------------------------------------------------
For the three months ended March 31 2003 2002
---------------------------------------------------------------------
Pro forma effects
Net income, as reported $29 $46
Stock-option expense (6) (5)
---------------------------------------------------------------------
Pro forma net income $23 $41
---------------------------------------------------------------------
Net income per share
As reported (1) $0.05 $0.09
Pro forma (1) $0.04 $0.08
---------------------------------------------------------------------
(1) basic and diluted
9 DERIVATIVE INSTRUMENTS
A Derivative instruments
We use derivative financial instruments to reduce or eliminate the inherent risks of certain
identifiable transactions and balances that occur in the normal course of our business. The
inherent risks in these transactions and balances arise from changes in: commodity prices,
interest rates and foreign currency exchange rates. The purpose of our derivative program is to
ensure that disadvantageous changes in the values or cash flows from these transactions and
balances are offset by changes in the values of the derivatives. We do not hold derivatives for the
purpose of speculation; our derivative program is designed to enable us to plan our operations on
the basis of secure assumptions that will not be jeopardized by future movements of gold and
silver prices, interest rates and currency exchange rates. For a more detailed description of the
types of derivative instruments we use, and our accounting policy for derivative instruments,
refer to note 23 of our audited consolidated financial statements for the three years ended
December 31, 2002.
B Gold and silver contracts outstanding at March 31, 2003
---------------------------------------------------------------------
Maturity/Scheduled
for delivery in 2003 2004 2005 2006 2007 2008+ Total
---------------------------------------------------------------------
Gold contracts
Spot deferred contracts
Ounces (thousands) 4,120 800 900 900 900 8,000 15,620
Average price per ounce $340 $331 $330 $331 $335 $339 $338
Variable price gold sales
and option contracts
Ounces (thousands) 225 350 300 250 - 600 1,725
Average price per ounce
at cap expiry date $321 $310 $317 $332 - $367 $336
---------------------------------------------------------------------
Total gold ounces
(thousands) 4,345 1,150 1,200 1,150 900 8,600 17,345
Average price per ounce $339 $325 $327 $331 $335 $341 $337
---------------------------------------------------------------------
Silver contracts
Spot deferred contracts
Ounces (thousands) 8,690 9,000 9,000 3,000 3,000 - 32,690
Average price
per ounce $4.95 $5.14 $5.14 $5.19 $5.19 - $5.10
Written silver
call options
Ounces (thousands) 2,750 3,000 2,000 - - - 7,750
Average exercise price
per ounce $5.00 $5.40 $5.00 - - - $5.15
---------------------------------------------------------------------
Total silver ounces
(thousands) 11,440 12,000 11,000 3,000 3,000 - 40,440
Average price per ounce $4.96 $5.21 $5.11 $5.19 $5.19 - $5.11
---------------------------------------------------------------------
In addition to the above-noted contracts, we also have: (1) off-take contracts for the sale of 1.4
million ounces of gold spread over the next 10 years, at then prevailing spot prices; and (2)
receive fixed gold lease rate swaps on 5.8 million ounces of gold spread from 2004 to 2012,
mainly for gold contracts with expected delivery dates beyond 2006.
The largest single counterparty as of March 31, 2003 made up 13% of the ounces of outstanding
gold sales commitments.
Spot deferred gold sales contracts
We have entered into spot deferred gold sales contracts, with various counterparties, that fix
selling prices at interim delivery dates for future gold production and that fix price adjustment
mechanisms based on market gold price in the case of any rescheduling of delivery dates. These
contracts act as an economic hedge against possible price fluctuations in gold. The contracts
have final delivery dates of up to 15 years from their start date, but we have the right to set a
delivery date for any time during this period. At the time an interim delivery date is rescheduled,
the contract price is adjusted based on the difference between the prevailing forward gold market
price and the original contract price.
The average price of the spot deferred gold sales contracts in the table above reflects fixed prices
at interim delivery dates and expected future price assumptions for periods where expected
delivery dates differ from interim delivery dates. The large majority of contracts are fixed
through 2006. The expected contract prices are determined based on estimated gold forward
market prices. Forward gold market prices are principally influenced by the spot price of gold,
gold lease rates and U.S. dollar interest rates. In estimating these forward prices, we have
incorporated an average gold lease rate assumption of 1.5% and assumptions of U.S. dollar
interest rates consistent with market quotations for such rates. Variations between the estimated
and actual forward price, influenced by variations between estimated and actual gold lease rates
and U.S. dollar interest rates, will affect the final realized selling price.
Gold lease rate contracts
We use receive-fixed pay-floating gold lease rate swap contracts to manage our gold lease rate
exposure on our spot deferred gold sales contracts. These economic hedges do not qualify for
hedge accounting under FAS 133 and therefore the economic impact flows through our earnings
each quarter as part of non-hedge derivative gains (losses).
Variable price gold sales contracts
Variable price gold sales contracts are contracts to deliver a specified quantity of gold on a future
date determined by us. The contracts have final delivery dates of up to 15 years from their start
date, but we have the right to set a delivery date at any time during this period. All of the variable
price gold sales contracts have expected delivery dates beyond 2007. The contract price equals
the gold spot price on the interim delivery date subject to a specified maximum ("cap") based on
market conditions in the years shown in the table above, plus a fixed premium payable to us. The
contract has a price adjustment mechanism that operates in the same manner as price adjustments
to spot deferred contracts for the period from these interim delivery dates to the expected
delivery date beyond 2007.
Spot deferred silver sales contracts and written silver call options
Spot deferred silver sales contracts have similar delivery terms and pricing mechanisms as spot
deferred gold sales contracts. A group of these contracts totaling 13.7 million ounces of silver are
accounted for as normal sales contracts, as we physically deliver silver production into the
contracts. For a separate group of contracts totaling 19 million ounces, we are unable to
physically deliver under the contracts, and therefore they are accounted for as derivatives under
FAS 133. We designated these contracts as cash flow hedges beginning on November 8, 2002.
Changes in fair value of our written silver call options are recorded in earnings as they occur.
C Other derivative instruments outstanding as at March 31, 2003
---------------------------------------------------------------------
Maturity 2003 2004 2005 2006 2007 2008+ Total
---------------------------------------------------------------------
Interest rate contracts
Receive fixed
- swaps and swaptions
Notional amount (millions) - $150 $75 $100 $525 $200 $1,050
Fixed rate (%) - 3.6% 2.7% 3.0% 5.4% 3.7% 4.4%
Pay fixed - swaps and swaptions
Notional amount (millions) - - - - - $344 $344
Fixed rate (%) - - - - - 5.6% 5.6%
---------------------------------------------------------------------
Net notional position - $150 $75 $100 $525 $(144) $706
---------------------------------------------------------------------
Total return swaps
Notional amount (millions) - - $10 - - - $10
---------------------------------------------------------------------
Foreign currency contracts
Canadian Dollar Forwards
C$ (millions) $17 $255 $206 - - - $478
Average Price (US cents) 0.64 0.64 0.64 - - - 0.64
Canadian Dollar
Min-Max Contracts
C$ (millions) $155 - - - - - $155
Average Cap Price
(US cents) 0.65 - - - - - 0.65
Average Floor Price
(US cents) 0.63 - - - - - 0.63
A$ (millions) $83 $376 $288 $135 $20 $19 $921
Average Price (US cents) 0.51 0.52 0.52 0.56 0.53 0.53 0.53
Australian Dollar
Min-Max Contracts
A$ (millions) $238 $ 20 $10 $ 10 - - $278
Average Cap Price
(US cents) 0.56 0.52 0.52 0.52 - - 0.56
Average Floor Price
(US cents) 0.52 0.51 0.51 0.51 - - 0.52
Fuel contracts
Barrels WTI (thousands) 180 - - - - - 180
Cap $30 - - - - - $30
---------------------------------------------------------------------
Our interest rate and foreign currency contracts are recorded at fair value on our balance sheet,
with changes in fair value recorded in earnings as they occur, with the following exceptions:
- we have elected cash flow hedge accounting treatment for Canadian dollar foreign currency
contracts with a total notional amount of C$633 million, and Australian dollar foreign currency
contracts with a total notional amount of A$1,199 million;
- we have elected receive fixed interest rate swaps with a total notional amount of $800 million
to be accounted for as cash flow hedges of expected future interest receipts arising on our cash
and short-term investments; and we have elected receive fixed interest rate swaps with a total
notional amount of $250 million to be accounted for as a fair value hedge of fixed-rate
debentures.
- we have elected an amortizing pay fixed interest rate swap with a total notional amount of $194
million as at March 31, 2003 to be accounted for as a cash flow hedge of future interest
payments relating to the project financing for Bulyanhulu.
D Unrealized fair value of derivative instruments (excluding normal
sales contracts)
------------------------------------------------------------------
For the three months ended March 31 2003 2002
------------------------------------------------------------------
At January 1 $ 29 $ (16)
Derivative instruments entered into or settled (16) (15)
Change in fair value of derivative instruments:
Non-hedge derivative gains (losses) 36 (1)
Cash flow hedges 78 2
------------------------------------------------------------------
At March 31 $ 127 $ (30)
------------------------------------------------------------------
The fair values of recorded derivative related assets and
liabilities reflect the netting of the fair values of individual
derivative instruments, and amounts due to/from counterparties that
arise from derivative instruments, when the conditions of FIN No.
39, Offsetting of Amounts Related to Certain Contracts, have been
met. Amounts receivable from counterparties that have been offset
against derivative liabilities totaled $16 million at March 31,
2003.
E Non-hedge derivative gains (losses)
------------------------------------------------------------------
For the three months ended March 31 2003 2002
------------------------------------------------------------------
Commodity contracts $ 1 $ (10)
Currency contracts 1 2
Interest and lease rate contracts 34 7
------------------------------------------------------------------
$ 36 $ (1)
------------------------------------------------------------------
F Change in fair value of cash flow hedge contracts
---------------------------------------------------------------------
Commodity Foreign Interest-rate Total
contracts currency contracts
contracts
---------------------------------------------------------------------
As at January 1, 2003 $ 9 $ 26 $ 14 $ 49
Change in fair value 7 63 8 78
Gains transferred to earnings (3)a (8)b (3)c (14)
---------------------------------------------------------------------
As at March 31, 2003 $ 13 $ 81 $ 19 $ 113
---------------------------------------------------------------------
a. Included under revenues and by-product credits
b. Included under operating expenses
c. Included under interest income
In the next twelve months, we expect to transfer gains of $60 million from OCI to earnings. For
the three months ended March 31, 2003, the amount of the change in fair value of cash flow
hedges attributable to hedge ineffectiveness that was recorded and recognized in non-hedge
derivative gains was a loss of $0.5 million.
10 CONTINGENCIES
Certain conditions may exist as of the date the financial statements are issued, which may result
in a loss to the Company but which will only be resolved when one or more future events occur
or fail to occur. Management and, where appropriate, legal counsel assess such contingent
liabilities, which inherently involves an exercise of judgement. In assessing loss contingencies
related to legal proceedings that are pending against us or unasserted claims that may result in
such proceedings, the Company and its legal counsel evaluate the perceived merits of any legal
proceedings or unasserted claims as well as the perceived merits of the amount of relief sought or
expected to be sought.
If the assessment of a contingency suggests that it is probable that a material loss has been
incurred and the amount of the liability can be estimated, then the estimated liability is accrued
in the financial statements. If the assessment suggests that a potentially material loss contingency
is not probable but is reasonably possible, or is probable but cannot be estimated, then the nature
of the contingent loss, together with an estimate of the range of possible loss, if determinable, is
disclosed. Loss contingencies considered remote are generally not disclosed unless they involve
guarantees, in which case we disclose the nature of the guarantee.
A Environmental
Our mining and exploration activities are subject to various federal, provincial and state laws and
regulations governing the protection of the environment. These laws and regulations are
continually changing and generally becoming more restrictive. We conduct our operations so as
to protect public health and the environment, and we believe that our operations are materially in
compliance with all applicable laws and regulations. We have made, and expect to make in the
future, expenditures to meet such laws and regulations.
The Comprehensive Environmental Response, Compensation and Liability Act imposes heavy
liabilities on persons who discharge hazardous substances. The Environmental Protection
Agency publishes a National Priorities List ("NPL") of known or threatened releases of such
substances. Homestake's former uranium millsite near Grants, New Mexico is listed on the NPL.
B Litigation and claims
Inmet litigation
In October 1997, Homestake Canada Inc. ("HCI"), a wholly-owned subsidiary of Barrick,
entered into an agreement with Inmet Mining Corporation ("Inmet") to purchase the Troilus mine
in Quebec for $110 million plus working capital. In December 1997, HCI terminated the
agreement after deciding that, on the basis of due diligence studies, conditions to closing the
arrangement would not be satisfied.
On February 23, 1998, Inmet filed suit against HCI in the British Columbia Supreme Court,
disputing the termination of the agreement and alleging that HCI had breached the agreement.
On January 15, 2002, the Supreme Court of British Columbia released its decision in the matter
and found in favour of Inmet and against HCI. Specifically, the Court held that Inmet should be
awarded equitable damages in the amount of C$88.2 (US $59) million, which was accrued at
December 31, 2001. The Court did not award Inmet pre-judgement interest. Inmet requested the
Court to re-open the trial to let Inmet make submissions on its claim for pre-judgement interest
from the date of the breach by HCI. The request to re-open was denied by the Court on May 17,
2002.
On February 7, 2002, HCI filed a Notice of Appeal of the decision with the British Columbia
Court of Appeal. Inmet filed a Cross-Appeal of the decision regarding pre-judgment interest. A
letter of credit of about C$95 million was posted on August 20, 2002 by HCI with the British
Columbia Court of Appeal, pending a decision on the appeal. The Appeal of HCI and the Cross-
Appeal of Inmet will be heard beginning on June 2, 2003 and continuing through June 10, 2003.
Bre-X Minerals
On April 30, 1998, we were added as a defendant in a class action lawsuit initiated against Bre-X
Minerals Ltd., certain of its directors and officers or former directors and officers and others in
the United States District Court for the Eastern District of Texas, Texarkana Division. The class
action alleges, among other things, that statements made by us in connection with our efforts to
secure the right to develop and operate the Busang gold deposit in East Kalimantan, Indonesia
were materially false and misleading and omitted to state material facts relating to the
preliminary due diligence investigation undertaken by us in late 1996.
On July 13, 1999, the Court dismissed the claims against us and several other defendants on the
grounds that the plaintiffs had failed to state a claim under United States securities laws. On
August 19, 1999, the plaintiffs filed an amended complaint restating their claims against us and
certain other defendants and on June 14, 2000 filed a further amended complaint, the Fourth
Amended Complaint.
On March 31, 2001, the Court granted in part and denied in part our Motion to Dismiss the
Fourth Amended Complaint. As a result, we remain a defendant in the case. We believe that the
remaining claims against us are without merit. We filed our formal answer to the Fourth
Amended Complaint on April 27, 2001 denying all relevant allegations of the plaintiffs against
us. Discovery in the case has been stayed by the Court pending the Court's decision on whether
or not to certify the case as a class action. The amount of potential loss, if any, which we may
incur arising out of the plaintiffs' claims is not presently determinable.
On March 31, 2003, the Court denied all of the Plaintiffs' motions to certify the case as a class
action. Plaintiffs have not filed an interlocutory appeal of the Court's decision denying class
certification to the Fifth Circuit Court of Appeals. The Plaintiffs' case against the Defendants
may now proceed in due course, but not on behalf of a class of Plaintiffs but only with respect to
the specific claims of the Plaintiffs named in the lawsuit. Having failed to certify the case as a
class action, we believe that the likelihood of any of the named Defendants succeeding against
Barrick with respect to their claims for securities fraud is remote.
Blanchard complaint
On January 7, 2003, we were served with a Complaint for Injunctive Relief by Blanchard and
Company, Inc. ("Blanchard"), and Herbert Davies ("Davies"). The complaint, which is pending
in the U. S. District Court for the Eastern District of Louisiana, also names J. P. Morgan Chase &
Company ("J.P. Morgan") as the defendant, along with an unspecified number of additional
defendants to be named later. The complaint alleges that we and bullion banks with which we
entered into spot deferred contracts have manipulated the price of gold, in violation of U.S.
antitrust laws and the Louisiana Unfair Trade Practices and Consumer Protection Law.
Blanchard alleges that it has been injured as a seller of gold due to reduced interest in gold as an
investment. Davies, a customer of Blanchard, alleges injury due to the reduced value of his gold
investments. The complaint does not seek damages, but seeks an injunction terminating certain
of our trading agreements with J. P. Morgan and other bullion banks. We have applied to the
Court for dismissal of this action and we intend to defend the action vigorously.
Peruvian tax assessment
On December 27, 2002, one of our Peruvian subsidiaries received an income tax assessment of
$41 million, excluding interest and penalties, from the Peruvian tax authority SUNAT. The tax
assessment relates to a recently completed tax audit of our Pierina Mine for the 1999-2000 fiscal
years. The assessment mainly relates to the revaluation of the Pierina mining concession and
associated tax basis. Under the valuation proposed by SUNAT, the tax basis of Pierina assets
would change from what we have previously assumed with a resulting increase in current and
deferred income taxes. While we believe the tax assessment is incorrect and we will appeal the
decision, the full life of mine effect on our current and deferred income tax liabilities of $141
million is recorded at December 31, 2002, as well as other payments of about $21 million due for
periods through 2002.
We intend to pursue all available administrative and judicial appeals. If we are successful on
appeal and our original asset valuation is confirmed as the appropriate tax basis of assets, we
would benefit from a $141 million reduction in tax liabilities recorded at December 31, 2002.
The effect of this contingent gain, if any, will be recorded in the period the contingency is
resolved.
Under Peruvian law, we are not required to make payment of disputed taxes for prior years
pending the outcome of the appeal process, which routinely takes several years.
We have not provided for $51 million of potential interest and penalties assessed in the audit.
Even if the tax assessment is upheld, we believe that we will prevail on the interest and penalties
part, because the assessment runs counter to applicable law and previous Peruvian tax audits.
The potential amount of interest and penalties will increase over time while we contest the tax
assessment. A liability for interest and penalties will only be recorded should it become probable
that SUNAT's position on interest and penalties will be upheld, or if we exhaust our appeals.
Other
From time to time, we are involved in various claims, legal proceedings and complaints arising
in the ordinary course of business. We are also subject to reassessment for income and mining
taxes for certain years. We do not believe that adverse decisions in any pending or threatened
proceedings related to any potential tax assessments or other matters, or any amount which we
may be required to pay by reason thereof, will have a material adverse effect on our financial
condition or future results of operations.
11 SEGMENT INFORMATION
We operate in the gold mining industry and our operations are managed on a district basis. The
Goldstrike District includes the Betze-Post and Meikle Mines in the United States. Our "other"
segment includes mainly operations which have been, or are being, closed.
Income statement information
---------------------------------------------------------------------
Segment income
Gold Operating (loss) before
Sales costs income taxes
---------------------------------------------------------------------
For the three months ended
March 31 2003 2002 2003 2002 2003 2002
---------------------------------------------------------------------
Goldstrike $183 $165 $129 $109 $13 $22
Pierina 69 70 16 16 18 15
Bulyanhulu 33 27 18 18 4 1
Kalgoorlie 33 29 20 20 8 4
Eskay Creek 30 28 6 3 13 14
Hemlo 23 25 14 18 6 4
Plutonic 25 20 13 12 10 6
Round Mountain 29 33 14 20 10 8
Other 34 81 29 50 (7) 15
---------------------------------------------------------------------
$459 $478 $259 $266 $75 $89
---------------------------------------------------------------------
Asset information
---------------------------------------------------------------------
Segment capital
Amortization expenditures
---------------------------------------------------------------------
For the three months ended March 31 2003 2002 2003 2002
---------------------------------------------------------------------
Goldstrike $41 $34 $12 $13
Pierina 35 39 1 1
Bulyanhulu 11 8 10 16
Kalgoorlie 5 5 1 2
Eskay Creek 11 11 2 2
Hemlo 3 3 3 1
Plutonic 2 2 5 3
Round Mountain 5 5 1 -
Pascua/Veladero - - 5 3
Cowal - - 4 -
Alto Chicama - - 1 -
Other 12 16 21 10
---------------------------------------------------------------------
$125 $123 $66 $51
---------------------------------------------------------------------
Reconciliation of segment income to enterprise net income
---------------------------------------------------------------------
For the three months ended March 31 2003 2002
---------------------------------------------------------------------
Segment total $75 $89
Exploration and business development (29) (20)
Corporate expenses, net (34) (21)
Non-hedge derivative gains (losses) 36 (1)
Income taxes (2) (1)
Cumulative effect of changes in accounting principles (17) -
---------------------------------------------------------------------
Net income $29 $46
---------------------------------------------------------------------
12 COMPONENTS OF OTHER NET OPERATING ACTIVITIES
---------------------------------------------------------------------
For the three months ended March 31 2003 2002
---------------------------------------------------------------------
Non-cash charges (credits):
Reclamation costs $- $9
Losses on short-term investments 7 4
Gains on sale of property, plant and equipment (5) -
Cumulative effect of changes in accounting policies 17 -
Accretion expense 4 -
Changes in operating assets and liabilities:
Accounts receivable - (32)
Inventories and other current assets 15 52
Accounts payable and other current liabilities (34) -
Payments of merger related costs - (28)
Derivative instruments (34) 8
Payments of reclamation and closure costs (13) (18)
Other items 10 (34)
---------------------------------------------------------------------
Other net operating activities $(33) $(39)
---------------------------------------------------------------------
Mine Statistics
UNITED STATES
---------------------------------------------------------------------
Goldstrike Round
Three months ended Betze-Post Meikle Total Mountain
March 31, 2003 2002 2003 2002 2003 2002 2003 2002
---------------------------------------------------------------------
Tons mined
(thousands) 37,480 37,221 410 390 37,890 37,611 7,319 8,134
Tons processed
(thousands) 2,602 2,421 407 382 3,009 2,803 7,464 8,235
Average grade
(ounces per ton) 0.136 0.170 0.418 0.414 0.174 0.203 0.019 0.018
Recovery rate
(percent) 80.5% 82.9% 87.0% 90.1% 82.7% 85.1%
---------------------------------------------------------------------
Production
(thousands
of ounces) 285 341 148 143 433 484 96 94
Production costs per
ounce
Cash operating
costs $247 $213 $194 $202 $229 $210 $149 $178
Royalties and
production taxes 19 6 24 9 20 7 19 10
---------------------------------------------------------------------
Total cash costs 266 219 218 211 249 217 168 188
Amortization and
reclamation 60 55 117 109 80 71 57 67
---------------------------------------------------------------------
Total production
costs $326 $274 $335 $320 $329 $288 $225 $255
---------------------------------------------------------------------
Capital expenditures
(US$millions) $6 $2 $6 $11 $12 $13 $1 $-
---------------------------------------------------------------------
AUSTRALIA
---------------------------------------------------------------------
Three months ended Plutonic Darlot Lawlers Kalgoorlie
March 31, 2003 2002 2003 2002 2003 2002 2003 2002
---------------------------------------------------------------------
Tons mined
(thousands) 3,338 3,066 221 200 535 158 11,19511,647
Tons processed
(thousands) 778 864 210 208 186 182 1,637 1,746
Average grade
(ounces per ton) 0.101 0.087 0.210 0.179 0.116 0.147 0.067 0.062
Recovery rate
(percent) 89.0% 88.9% 97.6% 97.3% 96.0% 96.2% 85.6% 84.2%
---------------------------------------------------------------------
Production
(thousands
of ounces) 70 62 43 36 21 26 94 87
Production costs
per ounce
Cash operating
costs $184 $178 $133 $157 $303 $179 $208 $211
Royalties and
production taxes 8 10 8 7 8 9 8 7
---------------------------------------------------------------------
Total cash costs 192 188 141 164 311 188 216 218
Amortization and
reclamation 18 34 49 47 21 41 52 59
---------------------------------------------------------------------
Total production
costs $210 $222 $190 $211 $332 $229 $268 $277
---------------------------------------------------------------------
Capital expenditures
(US$millions) $5 $3 $2 $1 $9 $1 $1 $2
---------------------------------------------------------------------
Mine Statistics
CANADA
---------------------------------------------------------------------
Hemlo Eskay Holt-
Creek McDermott
Three months ended March 31, 2003 2002 2003 2002 2003 2002
---------------------------------------------------------------------
Tons mined (thousands) 990 987 68 62 144 128
Tons processed (thousands) 455 471 66 62 139 128
Average grade (ounces per ton) 0.158 0.139 1.437 1.433 0.160 0.180
Recovery rate (percent) 95.0% 93.5% 93.4% 93.7% 94.5% 94.8%
---------------------------------------------------------------------
Production (thousands of ounces) 68 61 84 85 21 22
Production costs per ounce
Cash operating costs $220 $228 $65 $29 $280 $145
Royalties and production taxes 7 7 4 4 1 -
---------------------------------------------------------------------
Total cash costs 227 235 69 33 281 145
Amortization and reclamation 37 41 136 128 123 121
---------------------------------------------------------------------
Total production costs $264 $276 $205 $161 $404 $266
---------------------------------------------------------------------
Capital expenditures (US$millions)$3 $1 $2 $2 $- $2
---------------------------------------------------------------------
PERU TANZANIA
---------------------------------------------------------------------
Pierina Bulyanhulu
Three months ended March 31, 2003 2002 2003 2002
---------------------------------------------------------------------
Tons mined (thousands) 8,544 7,162 241 194
Tons processed (thousands) 3,622 3,427 259 262
Average grade (ounces per ton) 0.083 0.067 0.399 0.381
Recovery rate (percent) - - 87.3% 85.3%
---------------------------------------------------------------------
Production (thousands of ounces) 231 215 90 85
Production costs per ounce
Cash operating costs $85 $65 $181 $200
Royalties and production taxes - - 11 8
---------------------------------------------------------------------
Total cash costs 85 65 192 208
Amortization and reclamation 183 191 117 95
---------------------------------------------------------------------
Total production costs $268 $256 $309 $303
---------------------------------------------------------------------
Capital expenditures (US$millions) $1 $1 $10 $16
---------------------------------------------------------------------
CORPORATE OFFICE TRANSFER AGENTS AND REGISTRARS
Barrick Gold Corporation CIBC Mellon Trust Company
BCE Place, Canada Trust Tower, P.O. Box 7010, Adelaide Street
Suite 3700 Postal Station
161 Bay Street, P.O. Box 212 Toronto, Ontario M5C 2W9
Toronto, Canada M5J 2S1 Tel: (416) 643-5500
Tel: (416) 861-9911 Toll-free throughout North
Fax: (416) 861-0727 America: 1-800-387-0825
Toll-free within Canada Fax: (416) 643-5501
and United States: Email: inquiries@cibcmellon.ca
1-800-720-7415 Web site: www.cibcmellon.com
Email: investor@barrick.com
Web site: www.barrick.com
SHARES LISTED (ABX) Mellon Investor Services L.L.C.
The Toronto Stock Exchange 85 Challenger Road, Overpeck Center
The New York Stock Exchange Ridgefield Park, New Jersey 07660
The London Stock Exchange Tel: (201) 329-8660
The Swiss Stock Exchange Toll-free number within the
La Bourse de Paris United States:
1-800-589-9836
Web site: www.mellon-investor.com
RECENT RESEARCH REPORTS INVESTOR CONTACTS: MEDIA CONTACT:
Bear Stearns Richard Young Vincent Borg
BMO Nesbitt Burns Vice President, Vice President,
CIBC World Markets Investor Corporate
Credit Suisse First Boston Relations Communications
First Associates Tel: (416) 307-7431 Tel: (416) 307-7477
Griffiths McBurney & Partners Email: Email:
HSBC ryoung@barrick.com vborg@barrick.com
JP Morgan
Merrill Lynch Kathy Sipos
Morgan Stanley Manager, Investor Relations
National Bank Tel: (416) 307-7441
Prudential Financial Email: ksipos@barrick.com
Research Capital
RBC Capital Markets Sandra Grabell
Salomon Smith Barney Investor Relations Specialist
Scotia Capital Tel: (416) 307-7440
UBS Warburg Email: sgrabell@barrick.com
Westwind Partners
Certain statements included herein, including those regarding production and costs and other
statements that express management's expectations or estimates of our future performance,
constitute "forward-looking statements" within the meaning of the United States Private
Securities Litigation Reform Act of 1995. The words "believe", "expect", "anticipate",
"contemplate", "target", "plan", "intends", "continue", "budget", "estimate", "may", "will",
"schedule", and similar expressions identify forward-looking statements. Forward-looking
statements are necessarily based upon a number of estimates and assumptions that, while
considered reasonable by management are inherently subject to significant business, economic
and competitive uncertainties and contingencies. In particular, our Management's Discussion and
Analysis includes many such forward-looking statements and we caution you that such forward-
looking statements involve known and unknown risks, uncertainties and other factors that may
cause the actual financial results, performance or achievements of Barrick to be materially
different from our estimated future results, performance or achievements expressed or implied by
those forward-looking statements and our forward-looking statements are not guarantees of
future performance. These risks, uncertainties and other factors include, but are not limited to:
changes in the worldwide price of gold or certain other commodities (such as silver, copper,
diesel fuel and electricity) and currencies; changes in interest rates or gold lease rates that could
impact realized prices under our forward sales program; legislative, political or economic
developments in the jurisdictions in which Barrick carries on business; operating or technical
difficulties in connection with mining or development activities; the speculative nature of gold
exploration and development, including the risks of diminishing quantities or grades of reserves;
and the risks involved in the exploration, development and mining business. These factors are
discussed in greater detail in Barrick's most recent Form 40-F/Annual Information on file with
the U.S. Securities and Exchange Commission and Canadian provincial securities regulatory
authorities.
Barrick expressly disclaims any intention or obligation to update or revise any forward-looking
statements whether as a result of new information, events or otherwise.
-30-
FOR FURTHER INFORMATION PLEASE CONTACT:
Barrick Gold Corporation
Vincent Borg
Vice President, Corporate Communications
(416) 307-7477
(416) 861-1509 (fax)
media@barrick.com