p. 1

barrick annual report 2001

[close]

p. 2

barrick 1983 north america 1994 south america

[close]

p. 3

built to last while entrepreneurial verve has provided the spirit financial discipline has provided the foundation beneath barrick s rapid growth in the form of an a-rated balance sheet and the $2 billion in added revenues generated by the forward sales program these lasting strengths have driven barrick s expansion from its beginnings in north america to its south american holdings in peru chile and argentina to bulyanhulu its first mine in africa and to australia together a global platform for profitable growth 1999 africa 2001 australia

[close]

p. 4

profile b arrick gold corporation is a leading international gold company with among the largest market capitalizations in the industry the company has operating mines and development projects in the united states peru tanzania chile argentina australia and canada barrick produced 6.1 million ounces of gold in 2001 at a total cash cost of $162 per ounce with the industry s only a-rated balance sheet a portfolio of long-life low-cost properties on four continents and proven and probable gold reserves of 82.3 million ounces as well as significant exploration programs currently underway the company is well positioned for growth barrick s shares trade under the ticker symbol abx on the toronto new york london and swiss stock exchanges as well as the paris bourse contents financial highlights 4 chairman s message 6 letter to shareholders 8 detailed financial table of contents 24 management s discussion and analysis 25 financial statements 58 notes to financial statements 62 directors and officers 94 shareholder information 96 corporate information 98 all dollar amounts given in united states dollars unless otherwise indicated.

[close]

p. 5

highlights significant events first quarter · joint operating agreement with newmont ended allowing greater flexibility within the betze-post pit ­ increasing the mining rate and lowering unit mining costs · homestake acquired the advanced-stage cowal project in australia third quarter · set integration plans in 3.1 3.1 3.0 3.2 3.7 59.3 3.7 58.5 57.8 24.5 82.3 3.7 gold production millions of ounces motion three review teams 1.6 2.3 financial and administration 1.3 operations and pascualama/veladero development · operations review team visited all eight major operating properties on four continents · homestake/barrick joint venture announced updated 92 93 94 95 96 97 98 99 00 01 barrick homestake mineral reserves gold millions of ounces second quarter · production began at bulyanhulu barrick s newest mine on an entirely new continent ­ africa · announced the largest transaction in company history ­ homestake merger capital and operating cost 51.1 50.3 51.5 parameters for the veladero 37.6 36.5 project 25.7 28.4 fourth quarter · completed rodeo part of the meikle underground mine at goldstrike · completed homestake merger · announced new management structure · adopted us gaap for communicating financial results to investment community 92 93 94 95 96 97 98 99 00 01 barrick homestake 2.4 6.1

[close]

p. 6

highlights change us gaap basis financial highlights in millions of dollars except per share data gold sales net income loss for the year operating cash flow cash and short-term investments shareholders equity net income loss per share diluted operating cash flow per share dividends per share operating highlights gold production thousands of ounces total cash costs per ounce total production costs per ounce reserves proven and probable thousands of ounces 5,801 152 247 78,049 5,950 155 240 79,300 6,124 162 247 82,272 +3 +5 +3 +4 2,057 244 820 766 4,514 0.45 1.55 0.20 1,936 1,189 940 822 3,190 2.22 1.76 0.22 1,989 96 721 733 3,192 0.18 1.35 0.22 -23 -23 -11 +3 1999 2000 2001 2000-2001

[close]

p. 7

built to last chairman s message s ome companies enjoy success ­ briefly ­ because they happen to be in peter munk chairman our goal is not to be the largest gold producer but to be the most profitable gold producer ­ one capable of competing with the best companies in the world 6 the right place at the right time real long-term success is another matter for that to happen a company needs a clear consistent and well-articulated mission at barrick we have never wavered from our original mission since founding the company in 1983 we ve been committed to operating barrick as a business first and as a mining company second our corporate strategy ­ our vision ­ does not alter with every fleeting trend in the gold market instead our top priorities have always been financial performance and discipline with a commitment to corporate responsibility the result despite our brief history barrick has the strongest balance sheet in the industry with a large low-cost diverse asset base and most importantly more growth opportunities available than any of our peers in 2001 with gold at its lowest average price since 1978 the strength of our operating philosophy was put to the test i m happy to report we emerged from 2001 stronger than ever barrick used its financial strength to take advantage of weak industry conditions to increase our reach from two continents to four becoming a truly global company in the process we opened our first mine in africa and through the purchase of the 125-year-old homestake mining company took over four mines in australia buying homestake ­ one of the world s larger and lower-cost gold producers ­ not only allowed us to expand into a new continent but also increased barrick s gold reserve base by 36 percent and unified our neighboring development properties in latin america barrick annual report 2001 north america barrick entered gold business acquired camflo ­ and with it an operating team led by bob smith acquired the mercur mine in utah the company s largest producer at the time acquired the small heap leach goldstrike property and began drilling its deep potential announced the $365 million betze development plan exploration crew discovered the meikle deposit on the goldstrike property vvvv 1983 1984 1985 1986 1987 1988 1989

[close]

p. 8

our many longtime shareholders will recall that when barrick started with a single mine at goldstrike nevada our goal was to be the north american alternative to south african gold companies as times changed and the company grew we expanded strategically first to south america and now to africa and australia despite this change in our geographic focus the hallmark of barrick s success ­ our keen entrepreneurial approach ­ has remained unchanged even as we ve become one of the largest and most profitable gold companies in the world we continue to size up valuable opportunities and seize them quickly we have steadfastly refused to gamble the company s financial health on the price of a volatile commodity the results of this fiscal responsibility are clear year in and year out our forward sales program has ensured a strong predictable cash flow contributed more than $2 billion in additional revenues over 14 years and helped barrick achieve the only a credit rating in the gold mining industry what do i see looking out through 2002 more consolidation for one thing i welcome this trend consolidation not only forces the industry to adopt greater financial discipline it offers tremendous opportunities to companies that have the wherewithal to grab them ultimately i believe there will be only a few companies left in the business my goal is to make sure that barrick is one of them barrick is getting bigger certainly but our goal is not to produce more ounces of gold than anyone else ­ that yardstick is outdated and one-dimensional instead we believe that success today is about managing the risks inherent in mining a commodity with unpredictable price swings ­ and in so doing maximizing profitability and returns on capital it is not an accident that barrick stands out in so many ways from its peers after all barrick is the only global gold producer today whose founders are still actively in place that helps explain why this company adheres to the very principles that made it and continues to be driven by entrepreneurial verve a strong sense of spirit and a commitment to generating sustained value for shareholders as always our quest to create exceptional returns remains unabated we re proud to be unlike any other company in our industry thank you all for your continued support chairman s message barrick annual report 2001 peter munk chairman march 8 2002 entered into the joint operating agreement with newmont to develop the high-grade post ore body expanding the betze-post mine completed the betze-post mine ­ produced 1.4 million ounces south america acquired lac minerals ltd and a large land package in south america acquired arequipa resources and the pierina exploration project completed the second mine on the goldstrike property ­ the high-grade meikle mine 1990 1991 1992 1993 1994 1995 1996 7 vvvvv

[close]

p. 9

fellow shareholders letter to shareholders 2 001 was a year of strong initiatives for our company as barrick transformed itself from randall oliphant president chief executive officer our entrepreneurial spirit and financial strength have created what i believe is the strongest asset base in the industry with more opportunities than ever before 8 a leading mining company in north and south america into a truly global producer with eight major low-cost mining operations on four continents we expanded our geographic reach into africa with the opening of our newest mine ­ bulyanhulu ­ in april and into australia through the merger with homestake as a result we now have more options and opportunities for achieving profitable growth and strong returns for our shareholders than ever before in our brief 18-year history in this letter i d like to welcome former homestake shareholders to barrick and introduce all of our shareholders old and new to today s barrick ­ which i believe is stronger and better-positioned than we were 12 months ago to grow earnings cash flow and return on equity regardless of the gold price my confidence is based on our tried and true strengths ­ our quality asset base balance sheet and premium gold sales program ­ and on the opportunities i see ahead in the next few pages i want to discuss with you our current assets the opportunities we see in today s environment and the value we re going to create as we bring those assets and opportunities together with the addition of homestake we start 2002 as the gold industry s leader in both quality and scale with a $10 billion market capitalization over $700 million in cash and shortterm investments virtually no net debt and the lowest political risk profile of any major producer we re also looking at our lowest capital expenditures in 14 years on track to generate the highest free cash flows in company history on the operational side we re building on a low-cost long-life reserve base in fact we ve increased our reserves to a record 82 million ounces after 6 million ounces of low-cost production in 2001 while this production profile makes us one of the world s largest gold producers our focus is not on producing the most ounces but rather the most profitable ounces our yardstick for success is strong consistent financial returns barrick annual report 2001 completed the pierina mine in 31 months from date of discovery ­ entered production in november africa acquired sutton resources including the bulyanhulu property and the kabanga nickel project expanding barrick s presence to a third continent ­ africa 1997 v 1998 v v 1999 v

[close]

p. 10

in 2001 despite an average gold price at its lowest level since the late 1970s our earnings before merger and related charges were $245 million and $96 million after the charges our operating cash flows totaled a healthy $721 million while at 8 percent our return on equity equaled our cost of capital we should do better and we re working now to do just that for 2002 we are projecting about 5.7 million ounces of gold production at a total cash cost of $167 per ounce marginally lower production than 2001 at comparable costs as we continue closing down six of our older highercost mines but if you freeze frame 2002 and look at those numbers in isolation you won t see the true value of barrick going forward in strategic terms 2001 was what i call a positioning year 2002 is the year we begin the task of taking our promising new projects forward in south america australia and africa and capitalizing on the larger stronger barrick during this period of consolidation and rationalization as we proceed our focus is on three key financial objectives · increasing earnings and cash flow · improving return on equity and · maintaining a strong balance sheet of course these objectives are grounded in the disciplined management approach that guides us this is exemplified by our focus on acquiring exploring developing and operating the lowest-cost mines maintaining and enhancing the income-generating power of our completed the state-of-the-art roaster facility at the goldstrike property to increase processing flexibility acquired pangea goldfields which fit the company s district development program in tanzania australia completed the homestake merger and extended barrick s reach to a fourth continent ­ australia completed construction of rodeo at goldstrike and bulyanhulu in tanzania v 2000 v v 2001 vvvvv

[close]

p. 11

the homestake merger is what i call an `enabler transaction one that doesn t just add attractive assets but also strengthens our options to carry out other accretive transactions premium gold sales program and 10 advantage of every opportunity to improve returns and reduce risk rather than simply being a play on the price of gold a key component of this strategy the prudent use of debt all of which combine to create the strongest balance sheet in the gold industry letter to shareholders disciplined management our premium gold sales program has generated about $1.7 billion in additional revenues since 1996 which we used to strengthen our balance sheet and expand our asset base we deployed $500 million to acquire two companies for cash a further $1.2 billion to build meikle pierina rodeo bulyanhulu and our goldstrike roaster and paid nearly a half billion dollars in dividends all this during a period when gold prices declined from the $400-per-ounce range to an average of $271 last year it s fair to say that this program truly differentiates barrick from other companies the premium gold sales program is our unique hedging activity that increases revenue from our main asset ­ our gold reserves this program has allowed us to maximize returns with a 14-year track record of generating a premium to the spot gold price as well as contributing to our a credit rating while maximizing returns it also minimizes downside exposure to volatile gold prices we believe that in today s sophisticated markets management of global public companies must have a business strategy that takes has always been to maintain flexibility this enables us to fine tune our program to fit prevailing market conditions in light of the homestake merger the current gold price and interest rate environment we announced an adjustment to our delivery schedule to reflect prevailing market conditions the size of the program remains unchanged at about 18 million ounces or 22 percent of reserves thus maintaining its income-generating capacity but our delivery schedules have been lengthened thereby extending the benefits of accruing higher income and price protection over a longer period of time this year barrick will sell 50 percent of production at the spot price with the balance being sold at $365 an ounce as always this will provide a minimum floor price one that ensures strong earnings and provides us with cash flow sufficient to cover cash requirements for the year including capital expenditures and dividends it s an approach that gives us security and predictability while ensuring that if gold prices strengthen the benefits should go straight to our bottom line barrick annual report 2001

[close]

p. 12

a vision rooted in north america b arrick s north american operations establish the company as the continent s largest gold producer contributing over 3.3 million ounces of gold ­ 55 percent of the company s overall 2001 production ­ at $179 per ounce 2001 saw record results at round north american contribution to production ­ 2001 mountain eskay creek s second-best year ever and another solid year at our 55 flagship goldstrike property which produced over 2 million ounces north american contribution to reserves ­ 2001 opportunities to create value within the company s north american portfolio include continued exploration around existing mines 34 consolidation of joint ventures and property acquisitions.

[close]

p. 13

in 2001 barrick transformed itself from a leading mining company in north and south america into a truly global producer with eight major low-cost mining operations on four continents 12 assets and opportunities the combination of our entrepreneurial spirit and financial strength has created what i believe is the strongest asset base in the industry with more opportunities than ever before elsewhere in these pages you ll see snapshots of our key properties in the americas africa and australia ­ a mix of quality assets that gives barrick a strong base to build on in 2002 and beyond in addition to these proven performers in our current portfolio we ve got some significant opportunities for organic growth on the horizon they include · pascua-lama/veladero ­ with its 25 million-ounce gold reserve the world s largest undeveloped gold property with the homestake merger veladero ­ previously a joint venture ­ is now 100 percent barrick s and the proximity of the property to pascua-lama allows us to take a unified approach to developing this district in 2002 we re putting a plan in place for a phase one heap leach operation followed by full-scale development of pascua-lama as gold and silver prices improve or our economies of scale lower costs and improve economic returns we see this district as being capable of producing 1.5 million ounces annually at about $125 an ounce · in canada at eskay creek we see substantial opportunities to expand both production and reserves in the u.s exploration at the meikle mine at banshee and at the ren property promises to breathe new life into the underground ­ offering the prospect of low-cost production close to existing infrastructure · moving from the americas to africa at bulyanhulu our district development program will build on a base of increased production as well as on excellent results at several exploration projects in the region in fact kabanga our exciting large nickel deposit ­ acquired with bulyanhulu in the sutton acquisition ­ is fast becoming a significant asset in its own right offering us a variety of options to realize its value · in australia continued exploration makes us increasingly optimistic about cowal and its nearly 3 million ounces of reserves we also think 2002 could be the year that our commitment to earlystage exploration within our district development program pays off in a big way taken together we have a variety of organic growth opportunities at various stages barrick annual report 2001 letter to shareholders

[close]

p. 14

meeting the challenges in south america b arrick s premier south american operation the pierina mine in peru was the company s second-largest cash flow generator ­ producing over 900,000 ounces of gold at cash costs of $40 per ounce in 2001 and in the process setting property records a development plan is underway for our veladero project part of the pascua-lama/veladero district newly unified with the homestake merger into a single 25 million-ounce district straddling the chile/argentina border it ranks as one of the largest undeveloped gold districts in the world the development of veladero and pascualama as well as advanced-stage exploration projects in peru have the potential to provide barrick with the ability to create substantial value through its south american properties south american contribution to production ­ 2001 south american contribution to reserves ­ 2001 17 34%

[close]

p. 15

in today s time of change controlling costs is the only constant of development they offer the potential for significant growth in earnings and cash flow and improved return on equity as these projects 14 reserves averaging over an ounce of gold and 55 ounces of silver per ton homestake also brought barrick the hemlo and round mountain joint ventures in ontario and nevada respectively both are good solid low-cost producers have lower cash and total production costs than our current asset base letter to shareholders the value of homestake the organic growth opportunities i ve outlined are just one way we re building value at barrick for another consider the homestake merger to begin with homestake was a strong fit in terms of corporate culture as a company that was both value and values-driven homestake shared barrick s commitment to corporate responsibility our common emphasis on worker safety environmental responsibility and community building is a calling card wherever we operate in the world and that cultural fit was matched by the compatibility of our assets and operations when we looked at homestake we saw an opportunity to increase production by 50 percent at the same low costs by issuing 35 percent more stock which we believe will lead to growth in earnings and cash flow per share and improve our return on equity consider that the merger brought together barrick s three world-class assets ­ goldstrike pierina and bulyanhulu ­ with five new homestake properties in north america they include eskay creek a truly premier property in british columbia with high-grade in australia homestake s holdings comprised a group of quality lowcost mines capable of generating about a million ounces of gold at $186 per ounce half of the kalgoorlie super pit australia s largest gold mine and three mines that make up the yilgarn properties on the administration front we have more than achieved our original estimate of administration and financial synergies with $60 million in after-tax savings built into the 2002 plan we foresee achieving this amount and more on a sustainable basis going forward ­ and beyond that we see additional benefits on the operational side case in point with the homestake merger barrick acquired 20 million ounces of future production our goal is to create on a per ounce basis about $100 of additional profit from this asset base here s how we plan to do it · of that $100 per ounce profit onethird will come from finance and administration cost savings that s our $60 million in synergies spread across a little less than 2 million ounces of production or about $33 per ounce barrick annual report 2001

[close]