SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 40-F
 
o         Registration statement pursuant to Section 12 of the Securities Exchange Act of 1934
 
or
 
x         Annual report pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934

For Fiscal year ended: December 31, 2010	 	Commission File number: No. 1-9059	
 
BARRICK GOLD CORPORATION
(Exact name of registrant as specified in its charter)

Ontario
 (Province or other jurisdiction of
incorporation or organization)	 	1041
 (Primary standard industrial
classification code number,
if applicable)	 	Not Applicable
 (I.R.S. employer
identification number, if applicable)	
 
Brookfield Place
TD Canada Trust Tower
Suite 3700
161 Bay Street, P.O. Box 212
Toronto, Canada M5J 2S1
(800) 720-7415
 (Address and telephone number of registrant’s principal executive office)
 
Barrick Goldstrike Mines Inc.
P.O. Box 29, Elko, Nevada 89803
(702) 738-8043
 (Name, address and telephone number of agent for service in the United States)
 
Securities registered pursuant to Section 12(b) of the Act:

Title of each class:	 	Name of each exchange on which registered:	
Common Shares	 	New York Stock Exchange	

Securities registered or to be registered pursuant to Section 12(g) of the Act:	 	None	 	
 	 	 	 	
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:	 	None	 	
 	 	 	 	
For annual reports, indicate by check mark the information filed with this form:

x	 	Annual Information Form	 	x	 	Audited Annual Financial Statements	 	
 
Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report:
 
Common Shares 998,499,673
 
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13(d) or 15(d) of the Exchange Act during the proceeding 12 months (or for such shorter period that the registrant was required to file such reports); and (2) has been subject to such filing requirements in the past 90 days.

 	Yes	x	 	No	o	
 
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

 	Yes	x	 	No	o	

 

 
INTERNAL CONTROL OVER FINANCIAL REPORTING AND DISCLOSURE CONTROLS AND PROCEDURES
 
The disclosure provided under “Internal Control Over Financial Reporting and Disclosure Controls and Procedures” on page 130 of Exhibit 99.1, Barrick’s Annual Information Form, is incorporated by reference herein.
 
MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
 
Barrick’s “Management’s Report on Internal Control Over Financial Reporting” contained in Exhibit 99.2 is incorporated by reference herein.
 
ATTESTATION REPORT OF THE REGISTERED PUBLIC ACCOUNTING FIRM
 
The disclosure provided under “Independent Auditors’ Report” on pages 102 through 103 of Exhibit 99.3, Barrick’s Comparative Audited Consolidated Financial Statements, is incorporated by reference herein.
 
AUDIT COMMITTEE
 
The disclosure provided under “Composition of the Audit Committee” on page 129 of Exhibit 99.1, Barrick’s Annual Information Form, is incorporated by reference herein. Barrick has a separately-designated standing audit committee established in accordance with Section 3(a)(58)(A) of the Securities Exchange Act of 1934, as amended.
 
CODE OF ETHICS
 
Barrick has adopted a code of ethics entitled, “Barrick Gold Corporation Code of Business Conduct and Ethics”. The Code of Business Conduct and Ethics applies to all directors, officers and employees of Barrick, including Barrick’s principal executive officer, principal financial officer and principal accounting officer. The Code of Business Conduct and Ethics is available at Barrick’s Internet website, www.barrick.com, in the Company — Corporate Governance section and is available in print to any shareholder upon written request to the Secretary of Barrick.
 
PRINCIPAL ACCOUNTANT FEES AND SERVICES
 
The disclosure provided under “External Auditor Service Fees” on pages 129 through 130 of Exhibit 99.1, Barrick’s Annual Information Form, is incorporated by reference herein.
 
AUDIT COMMITTEE PRE-APPROVAL POLICIES AND PROCEDURES
 
The disclosure provided under “Audit Committee Pre-Approval Policies and Procedures” on page 129 of Exhibit 99.1, Barrick’s Annual Information Form, is incorporated by reference herein. No audit-related fees, tax fees or other non-audit fees were approved by the Audit Committee pursuant to paragraph (c)(7)(i)(C) of Regulation S-X.
 
OFF-BALANCE SHEET ARRANGEMENTS
 
Barrick has no off-balance sheet arrangements that have, or are reasonably likely to have, a material effect on Barrick’s financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.
 
CONTRACTUAL OBLIGATIONS
 
The disclosure provided under “Contractual Obligations and Commitments” on page 71 of Exhibit 99.4, Management’s Discussion and Analysis of Financial and Operating Results, is incorporated by reference herein.
 
MINE SAFETY DISCLOSURE
 
The disclosure provided in Exhibit 99.10, Dodd-Frank Act Disclosure of Mine Safety and Health Administration Safety Data, is incorporated by reference herein.
 
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UNDERTAKING AND CONSENT TO SERVICE OF PROCESS
 
A.            Undertaking
 
The Registrant undertakes to make available, in person or by telephone, representatives to respond to inquiries made by the Commission staff, and to furnish promptly, when requested to do so by the Commission staff, information relating to: the securities in relation to which the obligation to file an annual report on Form 40-F arises; or transactions in said securities.
 
B.            Consent to Service of Process
 
The Registrant has previously filed with the Commission a Form F-X in connection with the Common Shares.
 
3 

 
INCORPORATION BY REFERENCE
 
Barrick’s annual report on Form 40-F (other than the section entitled “Ratings” in Exhibit 99.1) is incorporated by reference into Barrick’s Registration Statements on Form S-8 (File Nos. 333-121500, 333-131715, 333-135769).

 
SIGNATURES
 
Pursuant to the requirements of the Exchange Act, the Registrant certifies that it meets all of the requirements for filing on Form 40-F and has duly caused this annual report to be signed on its behalf by the undersigned, thereto duly authorized.

 	 	BARRICK GOLD CORPORATION	
 	 	 	 	
 	 	By:	/s/ Sybil E. Veenman	
 	 	 	 	
 	 	Name:	Sybil E. Veenman	
 	 	Title:	Senior Vice President and General
 Counsel	
 	 	Dated:	March 31, 2011	
 
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EXHIBIT INDEX

Exhibits	 	Description	
99.1	 	Annual Information Form dated as of March 31, 2011	
99.2	 	Management’s Report on Internal Control Over Financial Reporting	
99.3	 	Barrick Gold Corporation’s Comparative Audited Consolidated Financial Statements prepared in accordance with U.S. generally accepted accounting principles (“US GAAP”), including the Notes thereto, as at December 31, 2010 and 2009 and for the years ended December 31, 2010, 2009 and 2008, together with the Independent Auditors’ report thereon	
99.4	 	Barrick Gold Corporation’s Management’s Discussion and Analysis (US GAAP) for the year ended December 31, 2010	
99.5	 	Consent of PricewaterhouseCoopers LLP	
99.6	 	Certification of Aaron W. Regent required by Rule 13a-14(a) or Rule 15d-14(a), pursuant to Section 302 of Sarbanes-Oxley Act of 2002	
99.7	 	Certification of Jamie C. Sokalsky required by Rule 13a-14(a) or Rule 15d-14(a), pursuant to Section 302 of Sarbanes-Oxley Act of 2002	
99.8	 	Certification of Aaron W. Regent pursuant to 18 U.S.C. Section 1350, as enacted pursuant to Section 906 of Sarbanes-Oxley Act of 2002	
99.9	 	Certification of Jamie C. Sokalsky pursuant to 18 U.S.C. Section 1350, as enacted pursuant to Section 906 of Sarbanes-Oxley Act of 2002	
99.10	 	Dodd-Frank Act Disclosure of Mine Safety and Health Administration Safety Data	
101	 	The following financial information from Barrick Gold Corporation’s Comparative Audited Consolidated Financial Statements, formatted in XBRL (Extensible Business Reporting Language) and furnished electronically herewith: (i) the Consolidated Statements of Income; (ii) the Consolidated Statements of Cash Flow; (iii) the Consolidated Balance Sheets; (iv) the Consolidated Statements of Equity; (v) the Consolidated Statements of Comprehensive Income; and (vi) the Notes to the Comparative Audited Consolidated Financial Statements, tagged as blocks of text	
 
5 

Exhibit 99.1

 

 
BARRICK GOLD CORPORATION
Brookfield Place
TD Canada Trust Tower, Suite 3700
P.O. Box 212
161 Bay Street
Toronto, Ontario
M5J 2S1

 
ANNUAL INFORMATION FORM

For the year ended December 31, 2010
 
Dated as of March 31, 2011

 
BARRICK GOLD CORPORATION
ANNUAL INFORMATION FORM
 
TABLE OF CONTENTS

 	 	
GLOSSARY OF TERMS	3	
 	 	
REPORTING CURRENCY, FINANCIAL AND RESERVE INFORMATION	8	
 	 	
INTERNATIONAL FINANCIAL REPORTING STANDARDS	9	
 	 	
FORWARD-LOOKING INFORMATION	9	
 	 	
SCIENTIFIC AND TECHNICAL INFORMATION	10	
 	 	
GENERAL INFORMATION	10	
 	 	
Incorporation	10	
Subsidiaries	11	
Areas of Interest	11	
General Development of the Business	11	
Transactions	16	
 	 	
NARRATIVE DESCRIPTION OF THE BUSINESS	20	
 	 	
Production	20	
Capital Projects Group	20	
Regional Business Units and ABG	21	
North America	21	
South America	21	
Australia Pacific	22	
African Barrick Gold	22	
Mineral Reserves and Mineral Resources	24	
Marketing and Distribution	35	
Employees and Labor Relations	36	
Competition	36	
Corporate Social Responsibility	37	
 	 	
MATERIAL PROPERTIES	37	
 	 	
Goldstrike Property	37	
Cortez Property	44	
Lagunas Norte Mine	50	
Veladero Mine	55	
Zaldívar Mine	60	
Porgera Mine	65	
Pueblo Viejo Project	73	
Pascua-Lama Project	79	
 	 	
EXPLORATION AND EVALUATIONS	84	
 	 	
ENVIRONMENT AND CLOSURE	86	
 	 	
ENTERPRISE RISK-MANAGEMENT	89	
Financial Risk-Management	89	
 
i 

 

LEGAL MATTERS	92	
 	 	
Government Controls and Regulations	92	
Legal Proceedings	95	
 	 	
RISK FACTORS	99	
 	 	
MANAGEMENT’S DISCUSSION AND ANALYSIS OF	 	
FINANCIAL CONDITION AND RESULTS OF OPERATIONS	110	
 	 	
CONSOLIDATED FINANCIAL STATEMENTS	110	
 	 	
CAPITAL STRUCTURE	110	
 	 	
RATINGS	113	
 	 	
MARKET FOR SECURITIES	114	
 	 	
MATERIAL CONTRACTS	115	
 	 	
TRANSFER AGENTS AND REGISTRARS	116	
 	 	
DIVIDEND POLICY	117	
 	 	
DIRECTORS AND OFFICERS OF THE COMPANY	117	
 	 	
AUDIT COMMITTEE	124	
 	 	
Audit Committee Mandate	124	
Purpose	124	
Committee Responsibilities	125	
Responsibilities of the Committee Chair	127	
Powers	128	
Composition	128	
Meetings	128	
Composition of the Audit Committee	129	
Participation on Other Audit Committees	129	
Audit Committee Pre-Approval Policies and Procedures	129	
External Auditor Service Fees	129	
 	 	
INTERNAL CONTROL OVER FINANCIAL REPORTING AND DISCLOSURE CONTROLS AND PROCEDURES	130	
 	 	
NON-GAAP FINANCIAL MEASURES	131	
 	 	
Total Cash Costs and Net Cash Costs per Ounce	131	
Realized Price	133	
Adjusted Net Income (Adjusted Net Income per Share) and Return on Equity	134	
 	 	
INTERESTS OF EXPERTS	136	
 	 	
ADDITIONAL INFORMATION	136	
 
ii 

 
GLOSSARY OF TERMS
 
Assay
Analysis to determine the amount or proportion of the element of interest contained within a sample.
 
Adjusted net income
See “Non-GAAP Financial Measures — Adjusted Net Income (Adjusted Net Income per Share) and Return on Equity”.
 
Autoclave system
Oxidation process in which high temperatures and pressures are applied within a pressurized closed vessel to convert refractory sulphide mineralization into amenable oxide ore.
 
Ball mill
A horizontal rotating steel cylinder which grinds ore to fine particles. The grinding is carried out by the pounding and rolling of a charge of steel balls carried within the cylinder.
 
By-product
A secondary metal or mineral product that is recovered along with the primary metal or mineral product during the ore concentration process.
 
Barrels of oil equivalent (boe)
Barrels of oil equivalent, determined using a ratio of six (6) thousand cubic feet of natural gas to one (1) barrel of condensate or crude oil, unless otherwise indicated.
 
Carbonaceous
Containing carbon or coal, especially shale or other rock containing small particles of carbon distributed throughout the mass.
 
Carbon-in-leach (CIL)
A process step wherein granular activated carbon particles much larger than the ground ore particles are introduced into the ore pulp. Cyanide leaching and precious metals adsorption onto the activated carbon occurs simultaneously. The loaded activated carbon is mechanically screened to separate it from the barren pulp, processed to remove the precious metals and finally prepared for reuse.
 
Concentrate
A processing product containing the valuable ore mineral from which most of the waste mineral has been eliminated.
 
Contained ounces
Represents total ounces in a mineral reserve before reduction to account for ounces not able to be recovered by the applicable metallurgical process.
 
Crushing
Breaking of ore from the size delivered from the mine into smaller and more uniform fragments to be then fed to grinding mills or to a leach pad.
 
Cut-off grade
The minimum metal grade at which material can be economically mined and processed (used in the calculation of ore reserves).
 
3 

 
Development
Work carried out for the purpose of opening up a mineral deposit. In an underground mine, this includes shaft sinking, crosscutting, drifting and raising. In an open pit mine, development includes the removal of overburden and/ or waste rock.
 
Dilution
Sub-economic material that is unavoidably included with the mined ore, lowering the mined grade.
 
Doré
Unrefined gold and silver bullion bars usually consisting of approximately 90% precious metals that will be further refined to almost pure metal.
 
Drift
A horizontal tunnel generally driven within or alongside an orebody and aligned parallel to the long dimension of the ore.
 
Drift-and-fill
A method of underground mining used for flat-lying mineralization or where ground conditions are less competent.
 
Drilling
Core: a drilling method that uses a rotating barrel and an annular-shaped, diamond-impregnated rock-cutting bit to produce cylindrical rock cores and lift such cores to the surface, where they may be collected, examined and assayed.
 
Reverse circulation: a drilling method that uses a rotating cutting bit within a double-walled drill pipe and produces rock chips rather than core. Air or water is circulated down to the bit between the inner and outer wall of the drill pipe. The chips are forced to the surface through the centre of the drill pipe and are collected, examined and assayed.
 
Conventional rotary:  a drilling method that produces rock chips similar to reverse circulation except that the sample is collected using a single-walled drill pipe. Air or water circulates down through the center of the drill pipe and returns chips to the surface around the outside of the pipe.
 
In-fill: The collection of additional samples between existing samples, used to provide greater geological detail and to provide more closely-spaced assay data.
 
Exploration
Prospecting, sampling, mapping, diamond-drilling and other work involved in locating the presence of economic deposits and establishing their nature, shape and grade.
 
Flotation
A process by which some mineral particles are induced to become attached to bubbles and float, and other particles to sink, so that the valuable minerals are concentrated and separated from the uneconomic gangue or waste.
 
Grade
The amount of metal in each ton of ore, expressed as troy ounces per ton or grams per tonne for precious metals and as a percentage for most other metals.
 
4 

 
Grinding (Milling)
Powdering or pulverising of ore, by pressure or abrasion, to liberate valuable minerals for further metallurgical processing.
 
Heap leaching
A process whereby gold is extracted by “heaping” broken ore on sloping impermeable pads and continually applying to the heaps a weak cyanide solution which dissolves the contained gold. The gold-laden solution is then collected for gold recovery.
 
Lode
A mineral deposit, consisting of a zone of veins, veinlets or disseminations, in consolidated rock as opposed to a placer deposit.
 
Long-hole open stoping
A method of underground mining involving the drilling of holes up to 30 meters or longer into an ore bearing zone and then blasting a slice of rock which falls into an open space. The broken rock is extracted and the resulting open chamber may or may not be filled with supporting material.
 
Metric conversion

Troy ounces	 	×	 	31.10348	 	=	 	Grams	
Troy ounces per short ton	 	×	 	34.28600	 	=	 	Grams per tonne	
Pounds	 	×	 	0.00045	 	=	 	Tonnes	
Tons	 	×	 	0.90718	 	=	 	Tonnes	
Feet	 	×	 	0.30480	 	=	 	Meters	
Miles	 	×	 	1.60930	 	=	 	Kilometers	
Acres	 	×	 	0.40468	 	=	 	Hectares	
Fahrenheit	 	(°F-32) × 5 ¸ 9	 	 	 	=	 	Celsius	
 
Mill
A processing facility where ore is finely ground and thereafter undergoes physical or chemical treatment to extract the valuable metals. Also the device used to perform grinding (milling).
 
Mineral reserve
See “Narrative Description of the Business — Gold Mineral Reserves and Mineral Resources”.
 
Mineral resource
See “Narrative Description of the Business — Gold Mineral Reserves and Mineral Resources”.
 
Mining claim
That portion of applicable mineral lands that a party has staked or marked out in accordance with applicable mining laws to acquire the right to explore for and exploit the minerals under the surface.
 
Net cash costs
See “Non-GAAP Financial Measures — Total Cash Costs and Net Cash Costs Per Ounce”.
 
Net profits interest royalty
A royalty based on the profit remaining after recapture of certain operating, capital and other costs.
 
5 

 
Net smelter return royalty
A royalty based on a percentage of valuable minerals produced with settlement made either in kind or in currency based on the spot sale proceeds received less all of the offsite smelting, refining and transportation costs associated with the purification of the economic metals.
 
Open pit mine
A mine where materials are removed entirely from a working that is open to the surface.
 
Ore
Rock, generally containing metallic or non-metallic minerals, which can be mined and processed at a profit.
 
Orebody
A sufficiently large amount of ore that is contiguous and can be mined economically.
 
Oxide ore
Mineralized rock in which some of the original minerals have been oxidized. Oxidation tends to make the ore more amenable to cyanide solutions so that minute particles of gold will be readily dissolved.
 
Qualified Person
See “Scientific and Technical Information”.
 
Realized Price
See “Non-GAAP Financial Measures — Realized Price”.
 
Reclamation
The process by which lands disturbed as a result of mining activity are modified to support beneficial land use. Reclamation activity may include the removal of buildings, equipment, machinery and other physical remnants of mining, closure of tailings storage facilities, leach pads and other mine features, and contouring, covering and re-vegetation of waste rock and other disturbed areas.
 
Reclamation and Closure Costs
The cost of reclamation plus other costs, including without limitation certain personnel costs, insurance, property holding costs such as taxes, rental and claim fees, and community programs associated with closing an operating mine.
 
Recovery rate
A term used in process metallurgy to indicate the proportion of valuable material physically recovered in the processing of ore. It is generally stated as a percentage of the material recovered compared to the total material originally present.
 
Refining
The final stage of metal production in which impurities are removed from the molten metal.
 
Refractory material
Mineralized material in which the metal is not amenable to recovery by conventional cyanide methods without any pre-treatment. The refractory nature can be due to either silica or sulphide encapsulation of the metal or the presence of naturally occurring carbons or other constituents that reduce gold recovery.
 
6 

 
Roasting
The treatment of sulphide ore by heat and air, or oxygen enriched air, in order to oxidize sulphides and remove other elements (carbon, antimony or arsenic).
 
Shaft
A vertical passageway to an underground mine for ventilation, moving personnel, equipment, supplies and material including ore and waste rock.
 
Tailings
The material that remains after all economically and technically recoverable precious metals have been removed from the ore during processing.
 
Tailings storage facility
A natural or man-made confined area suitable for depositing the material that remains after the treatment of ore.
 
Tons
Short tons (2,000 pounds).
 
Total cash costs
See “Non-GAAP Financial Measures — Total Cash Costs and Net Cash Costs Per Ounce”.
 
7 

 
REPORTING CURRENCY, FINANCIAL AND RESERVE INFORMATION
 
All currency amounts in this Annual Information Form are expressed in United States dollars, unless otherwise indicated.  References to “C$” are to Canadian dollars.  References to “A$” are to Australian dollars.  For Canadian dollars to U.S. dollars, the average exchange rate for 2010 and the exchange rate at December 31, 2010 were one Canadian dollar per 0.9709 and 1.0054 U.S. dollars, respectively.  For Australian dollars to U.S. dollars, the average exchange rate for 2010 and the exchange rate at December 31, 2010 were one Australian dollar per 0.9208 and 1.0233 U.S. dollars, respectively.
 
For the year ended December 31, 2010 and for the comparative prior periods identified in this Annual Information Form, Barrick Gold Corporation (“Barrick” or the “Company”) prepared its financial statements in accordance with United States generally accepted accounting principles (“U.S. GAAP”). Accordingly, unless otherwise indicated (see “International Financial Reporting Standards”), financial information in this Annual Information Form is presented in accordance with U.S. GAAP. The audited consolidated financial statements of the Company for the year ended December 31, 2010 (the “Consolidated Financial Statements”) are incorporated by reference in this Annual Information Form. The Consolidated Financial Statements are available electronically from the Canadian System for Electronic Document Analysis and Retrieval (“SEDAR”) at www.sedar.com and from the U.S. Securities and Exchange Commission’s (the “SEC”) Electronic Document Gathering and Retrieval System (“EDGAR”) at www.sec.gov.
 
Mineral reserves (“reserves”) and mineral resources (“resources”) have been calculated as at December 31, 2010 in accordance with National Instrument 43-101 – Standards of Disclosure for Mineral Projects (“National Instrument 43-101”), as required by Canadian securities regulatory authorities. For United States reporting purposes, Industry Guide 7 (under the Securities and Exchange Act of 1934 ), as interpreted by Staff of the SEC, applies different standards in order to classify mineralization as a reserve (See Note 7 of “ - Notes to the Mineral Reserves, Resources and Reconciliation Tables” in “Narrative Description of the Business – Mineral Reserves and Mineral Resources”).  For U.S. reporting purposes, as at December 31, 2010, the mineralization at Cerro Casale is classified as mineralized material.  In addition, while the terms “measured”, “indicated” and “inferred” mineral resources are required pursuant to National Instrument 43-101, the SEC does not recognize such terms. Canadian standards differ significantly from the requirements of the SEC, and mineral resource information contained herein is not comparable to similar information regarding mineral reserves disclosed in accordance with the requirements of the SEC. Investors should understand that “inferred” mineral resources have a great amount of uncertainty as to their existence and as to their economic and legal feasibility. In addition, investors are cautioned not to assume that all or any part of Barrick’s mineral resources constitute or will be converted into reserves.
 
Changes in Definitions of Non-GAAP Measures
 
Barrick uses certain non-GAAP financial measures in its financial reports. In 2010, Barrick changed the how it defines “total cash costs”.  For a description of the change in the definition of “total cash costs”, please see pages 80 to 81 of Barrick’s Management’s Discussion and Analysis of Financial and Operating Results for the year ended December 31, 2010 contained in Barrick’s 2010 Annual Report (the “MD&A”).  See also “Non-GAAP Financial Measures” for a detailed discussion of each of the non-GAAP measures used in this Annual Information Form.
 
8 

 
INTERNATIONAL FINANCIAL REPORTING STANDARDS
 
As of January 1, 2011, Barrick adopted International Financial Reporting Standards (“IFRS”) as its basis for accounting.  Unless otherwise stated, all information presented in this Annual Information Form which relates to prior periods, including the year-ended December 31, 2010, has been prepared in accordance with US GAAP.  All 2011 financial guidance has been prepared in accordance with IFRS.  For additional information regarding Barrick’s adoption of IFRS and its transition process, please refer to pages 85 to 98 of the MD&A.  For a description of key IFRS accounting policies that differ significantly from the comparable US GAAP policies and that Barrick has applied in preparing its preliminary unaudited balance sheets as of January 1, 2010 and operating results as at December 31, 2010 under IFRS, please refer to pages 93 to 99 of the MD&A.
 
FORWARD-LOOKING INFORMATION
 
Certain information contained or incorporated by reference in this Annual Information Form, including any information as to Barrick’s strategy, plans or future financial or operating performance, constitutes “forward-looking statements”. All statements, other than statements of historical fact, are forward-looking statements. The words “believe”, “expect”, “anticipate”, “contemplate”, “target”, “plan”, “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 us, are inherently subject to significant business, economic and competitive uncertainties and contingencies. Known and unknown factors could cause actual results to differ materially from those projected in the forward-looking statements. Such factors include, but are not limited to: the impact of global liquidity and credit availability on the timing of cash flows and the values of assets and liabilities based on projected future cash flows; fluctuations in the currency markets (such as Canadian and Australian dollars, Chilean peso, Argentine peso, Peruvian sol and Papua New Guinean kina versus U.S. dollar); fluctuations in the spot and forward price of gold, copper or certain other commodities (such as silver, diesel fuel and electricity); changes in U.S. dollar interest rates that could impact the mark-to-market value of outstanding derivative instruments and ongoing payments/receipts under interest rate swaps and variable rate debt obligations; risks arising from holding derivative instruments (such as credit risk, market liquidity risk and mark-to-market risk); changes in national and local government legislation, taxation, controls, regulations and political or economic developments in Canada, the United States, Dominican Republic, Australia, Papua New Guinea, Chile, Peru, Argentina, United Kingdom, Tanzania, Pakistan or Barbados or other countries in which we do or may carry on business in the future; business opportunities that may be presented to, or pursued by, us; our ability to successfully integrate acquisitions; operating or technical difficulties in connection with mining or development activities; employee relations; availability and costs associated with mining inputs and labor; the speculative nature of mineral exploration and development, including the risks of obtaining necessary licenses and permits; diminishing quantities or grades of reserves; adverse changes in our credit rating; contests over title to properties, particularly title to undeveloped properties; and the organization of Barrick’s previously held African gold operations and properties under a separate listed company. In addition, there are risks and hazards associated with the business of mineral exploration, development and mining, including environmental hazards, industrial accidents, unusual or unexpected formations, pressures, cave-ins, flooding and gold bullion or copper cathode losses (and the risk of inadequate insurance, or inability to obtain insurance, to cover these risks). Many of these uncertainties and contingencies can affect our actual results and could cause actual results to differ materially from those expressed or implied in any forward-looking statements made by, or on behalf of, us. Readers are cautioned that forward-looking statements are not guarantees of future performance. All of the forward-looking statements made in this Annual Information Form are qualified by these cautionary statements. Specific reference is made to “Narrative Description of the Business – Mineral
 
9 

 
Reserves and Mineral Resources” and “Risk Factors” and to the “Management’s Discussion and Analysis of Financial and Operating Results for the year ended December 31, 2010” incorporated by reference herein for a discussion of some of the factors underlying forward-looking statements.
 
The Company may, from time to time, make oral forward-looking statements. The Company advises that the above paragraph and the risk factors described in this Annual Information Form and in the Company’s other documents filed with the Canadian securities commissions and the SEC should be read for a description of certain factors that could cause the actual results of the Company to materially differ from those in the oral forward-looking statements. The Company disclaims any intention or obligation to update or revise any oral or written forward-looking statements whether as a result of new information, future events or otherwise, except as required by applicable law.
 
SCIENTIFIC AND TECHNICAL INFORMATION
 
Unless otherwise indicated, scientific or technical information in this Annual Information Form relating to mineral reserves or mineral resources is based on information prepared by employees of Barrick, its joint venture partners or its joint venture operating companies, as applicable, in each case under the supervision of, or has been reviewed by, Rick Sims, Senior Director, Resources and Reserves of Barrick, Chris Woodall, Senior Director, Mining of Barrick or John Lindsay, Senior Director, Metallurgy of Barrick.
 
Scientific or technical information in this Annual Information Form relating to the geology of particular properties and exploration programs is based on information prepared by employees of Barrick, its joint venture partners or its joint venture operating companies, as applicable, in each case under the supervision of Robert Krcmarov, Senior Vice President, Global Exploration of Barrick.
 
Each of Messrs. Sims, Woodall, Lindsay and Krcmarov is a “Qualified Person” as defined in National Instrument 43-101. A “Qualified Person” means an individual who is an engineer or geoscientist with at least five years of experience in mineral exploration, mine development or operation or mineral project assessment, or any combination of these, has experience relevant to the subject matter of the mineral project, and is a member in good standing of a professional association.
 
Each of Messrs. Sims, Woodall, Lindsay and Krcmarov is an officer or employee of Barrick and/or an officer, director or employee of one or more of its associates or affiliates.  No such person received or will receive a direct or indirect interest in any property of Barrick or any of its associates or affiliates.  As of the date hereof, each such person owns beneficially, directly or indirectly, less than 1% of any outstanding class of securities of Barrick and less than 1% of the outstanding securities of any class of Barrick’s associates or affiliates.
 
GENERAL INFORMATION
 
Incorporation
 
Barrick is a corporation governed by the Business Corporations Act (Ontario) resulting from the amalgamation, effective July 14, 1984, of Camflo Mines Limited, Bob-Clare Investments Limited and the former Barrick Resources Corporation. By articles of amendment effective December 9, 1985, the Company changed its name to American Barrick Resources Corporation. Effective January 1, 1995, as a result of an amalgamation with a wholly-owned subsidiary, the Company changed its name from American Barrick Resources Corporation to Barrick Gold Corporation. On December 7, 2001, in connection with its acquisition of Homestake Mining Company (“Homestake”), the Company amended
 
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its articles to create a special voting share, which has special voting rights designed to permit holders of Barrick Gold Inc. (formerly Homestake Canada Inc.) (“BGI”) exchangeable shares to vote as a single class with the holders of Barrick common shares. In March 2009, in connection with Barrick’s redemption of all of the outstanding BGI exchangeable shares, the single outstanding special voting share was redeemed and cancelled.   In connection with its acquisition of Placer Dome Inc. (“Placer Dome”), Barrick amalgamated with Placer Dome pursuant to articles of amalgamation dated May 9, 2006 (see “ – General Development of the Business”).  In connection with the acquisition of Arizona Star Resource Corp. (“Arizona Star”), Barrick amalgamated with Arizona Star pursuant to articles of amalgamation dated January 1, 2009.  Barrick’s head and registered office is located at Brookfield Place, TD Canada Trust Tower, 161 Bay Street, Suite 3700, Toronto, Ontario, M5J 2S1.
 
Subsidiaries
 
A significant portion of Barrick’s business is carried on through its subsidiaries. A chart showing Barrick’s mines, projects, related operating subsidiaries, other significant subsidiaries and certain associated subsidiaries as at March 28, 2011 and their respective locations or jurisdictions of incorporation, as applicable, is set out at the end of this “General Information” section. All subsidiaries, mines and projects referred to in the chart are 100% owned, unless otherwise noted.
 
Areas of Interest
 
A map showing Barrick’s mining operations and projects as at March 28, 2011, including those mines held through Barrick’s equity interest in African Barrick Gold plc, is set out at the end of this “General Information” section.
 
General Development of the Business
 
Barrick entered the gold mining business in 1983 and is now the leading gold mining company in the world in terms of production, reserves and market capitalization. The Company has operating mines or projects in Canada, the United States, Dominican Republic, Australia, Papua New Guinea, Peru, Chile, Argentina, Pakistan and Tanzania. The Company’s principal products and sources of earnings are gold and copper.
 
During its first ten years, Barrick focused on acquiring and developing properties in North America, notably the Company’s Goldstrike property on the Carlin Trend in Nevada. Since 1994, Barrick has strategically expanded beyond its North American base and now also operates in Chile, Peru, Argentina, the Dominican Republic, Tanzania, Australia, Papua New Guinea and Pakistan.
 
Barrick has employed a strategy that involves acquisitions, a district development program and exploration. In 2006, Barrick completed the acquisition of Placer Dome, which included twelve mines and four significant projects.  In connection with the acquisition of Placer Dome, Barrick completed the sale to Goldcorp Inc. (“Goldcorp”) of all of Placer Dome’s Canadian properties and operations, including all historic mining, reclamation and exploration properties, Placer Dome’s interest in the La Coipa mine in Chile, and a 40% interest in the Pueblo Viejo project.  Barrick sold its interest in the South Deep mine, acquired in connection with the Placer Dome acquisition, in late 2006.  In 2007, Barrick increased its interest in the Porgera mine from 75% to 95%. In 2007, Barrick also acquired a 51% interest in the Cerro Casale copper-gold deposit in Chile through the acquisition of Arizona Star.  In 2008, Barrick increased its ownership in the Cortez property from 60% to 100%. In 2008, Barrick also acquired all of the issued and outstanding shares of Cadence Energy Inc. as well as certain oil and gas assets at Sturgeon Lake, Alberta from Daylight Resources Trust. The Cadence Energy Inc. and Daylight Resources Trust
 
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acquisitions together comprise Barrick Energy Inc. (formerly Cadence Energy Inc.) (“Barrick Energy”), which was formed as part of Barrick’s long-term strategy to economically hedge its exposure to oil prices.
 
In September 2009, Barrick entered into an agreement (the “Silver Purchase Agreement”) with Silver Wheaton Corp. (“Silver Wheaton”) for the sale of an amount of silver equivalent to the amount of silver produced from three of its current operating mines until Pascua-Lama reaches operation, and thereafter for the equivalent of 25% of the amount of silver produced from Pascua-Lama.  Also in September 2009, Barrick announced its intention to eliminate its outstanding gold hedges and forward sales positions.  Shortly after that announcement, Barrick issued 109 million common shares for net proceeds of approximately $3.9 billion which was used to eliminate its fixed price (non-participating) gold forward sales contracts (the “Gold Hedges”) and a significant portion of its floating spot-price (fully-participating) gold forward sales contracts (the “Floating Contracts”).   During 2010, the remaining obligation relating to the Floating Contracts was repaid in full (see “Enterprise Risk Management - Financial Risk-Management – Gold Sales”).
 
In early 2010, Barrick’s Board of Directors approved a plan to create African Barrick Gold plc (“ABG”), a new company, to hold Barrick’s African gold mines, gold projects and gold exploration properties.  On March 24, 2010, ABG issued approximately 25% of its equity to investors on the London Stock Exchange (“LSE”) through an initial public offering. In April 2010, the over-allotment option was partially exercised, resulting in a 1.1% dilution of Barrick’s interest in ABG to 73.9%.  Also in April 2010, Barrick and Goldcorp finalized terms for $1.035 billion (100% basis) in non-recourse project financing for the Pueblo Viejo project.  In March 2010, Barrick completed the acquisition of an additional 25% interest in the Cerro Casale project from Kinross Gold Corporation (“Kinross”).  In 2010, Barrick Energy completed three acquisitions, increasing its 2010 annual production to 2.1 million boe from its initial 2010 forecast of 1.5 million boe.  For additional information regarding certain of Barrick’s recent acquisitions, dispositions and other transactions, see “General Information – Transactions” and see “Narrative Description of the Business”.
 
Barrick’s exploration activity is focused on prospective land positions and Barrick prioritizes exploration targets to optimize the investment in exploration programs. Barrick’s exploration program continues to focus both on areas around our existing mines and early stage exploration activities. For additional information regarding Barrick’s exploration programs, see “Exploration and Evaluations”.
 
Through a combination of acquisitions and its exploration program, Barrick has several projects at varying stages of development.  The successful development of Barrick’s projects is expected to have a significant impact on Barrick’s future operations.  The Cortez Hills project entered into production in early 2010 and has contributed significantly to Barrick’s annual production in its first year of operation (see “Material Properties – Cortez Property”).  Barrick expects to have two new mines entering production in the next three years - Pueblo Viejo in 2012 and Pascua-Lama in 2013.  For 2011, subject to permitting and other matters, the timing of which are not in Barrick’s control, Barrick expects to spend approximately $2.1 to $2.3 billion on capital expenditures for its projects on an IFRS basis (2010: $1.7 billion).  Construction activities are expected to accelerate significantly in 2011 at Pascua-Lama, while certain preliminary engineering is expected to commence a Cerro Casale.  In addition, the Company has identified a number of brownfield development projects at Barrick’s existing operations, including significant opportunities at Turquoise Ridge, Lagunas Norte and Zaldivar. For additional information regarding Barrick’s projects and brownfield development opportunities, see “Exploration and Evaluations”.
 
Total revenues in 2010, including revenues from discontinued operations, were $11.2 billion, an increase of $2.8 billion, or 33%, compared to 2009, primarily due to higher realized gold and copper prices and higher gold and copper sales volumes.  Realized gold prices of $1,228 per ounce in 2010 were
 
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25% higher than in 2009, principally due to higher market gold prices (see “Non-GAAP Financial Measures – Realized Price”).  In 2010, Barrick reported net income of $3,274 million compared to a net loss of $4,274 million in 2009, which included a $5,901 million charge related to the elimination of the gold sales contracts.  Adjusted net income was $3,279 million in 2010, compared to $1,810 million recorded in the prior year (for an explanation of adjusted net income, see “Non-GAAP Financial Measures – Adjusted Net Income”).  The significant adjusting items in 2010 include: a $29 million gain related to the re-measurement of Barrick’s 50% interest in Cerro Casale on closing the acquisition of an additional 25% interest in 2010; $32 million of unrealized hedge gains primarily relating to Chilean peso contracts; partially offset by $43 million in restructuring charges relating to costs for a long-term tire supply contract and severance arrangements and $34 million in unrealized foreign currency translation losses related to deferred income tax and working capital balances in our regional business units.
 
In 2009, Barrick produced 7.40 million ounces of gold and 393 million pounds of copper.  In 2010, Barrick’s gold production was 7.77 million ounces, 5% higher than 2009 gold production, with total cash costs of $457 per ounce, net cash costs of $341 and cost of sales of $3.80 billion.  Barrick’s copper production in 2010 was 368 million pounds of copper, 6% lower than 2009 copper production, with total cash costs of $1.11 per pound and cost of sales of $433 million.  For an explanation of net cash costs and total cash costs per ounce/pound, refer to “Non-GAAP Financial Measures – Total Cash Costs and Net Cash Costs Per Ounce”.  See also “Narrative Description of the Business – Production”.
 
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The following table summarizes Barrick’s interest in its producing mines and its share of gold production from these mines:

Gold Mines 	 	Ownership(1)	 	2010	 	2009	 	
 	 	 	 	(thousands
of ounces)	 	(thousands
of ounces)	 	
North America	 	 	 	 	 	 	 	
Goldstrike Property, Nevada(2)	 	100	%	1,239	 	1,419	 	
Round Mountain Mine, Nevada(3) 	 	50	%	178	 	209	 	
Hemlo Property, Ontario(4) 	 	100	%	242	 	275	 	
Marigold Mine, Nevada(3)	 	33	%	46	 	49	 	
Bald Mountain Mine, Nevada	 	100	%	59	 	75	 	
Cortez Mine, Nevada	 	100	%	1,141	 	518	 	
Turquoise Ridge Mine, Nevada(3)	 	75	%	124	 	133	 	
Golden Sunlight Mine, Montana	 	100	%	—	 	28	 	
Ruby Hill Mine, Nevada	 	100	%	81	 	104	 	
 	 	 	 	3,110	 	2,810	 	
South America	 	 	 	 	 	 	 	
Veladero Mine, Argentina	 	100	%	1,121	 	611	 	
Pierina Mine, Peru	 	100	%	191	 	271	 	
Lagunas Norte Mine, Peru	 	100	%	808	 	1,007	 	
 	 	 	 	2,120	 	1,889	 	
Australia Pacific	 	 	 	 	 	 	 	
Plutonic Mine, Western Australia	 	100	%	136	 	144	 	
Yilgarn South, Western Australia(5) 	 	100	%	314	 	325	 	
Kalgoorlie Mine, Western Australia(3)	 	50	%	394	 	345	 	
Kanowna Mine, Western Australia	 	100	%	251	 	284	 	
Osborne Mine, Queensland, Australia(6)	 	100	%	27	 	43	 	
Henty Mine, Tasmania(7)	 	100	%	—	 	26	 	
Cowal Mine, Central New South Wales, Australia	 	100	%	298	 	233	 	
Porgera Mine, Papua New Guinea(3)	 	95	%	519	 	550	 	
 	 	 	 	1,939	 	1,950	 	
 
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Africa (8)	 	 	 	 	 	 	 	
Bulyanhulu Mine, Tanzania	 	73.90	%	208	 	249	 	
Tulawaka Mine, Tanzania(3)	 	51.73	%	34	 	66	 	
North Mara Mine, Tanzania	 	73.90	%	171	 	212	 	
Buzwagi Mine, Tanzania(9) 	 	73.90	%	151	 	189	 	
 	 	 	 	564	 	716	 	
Other	 	 	 	31	 	31	 	
Company Total	 	 	 	7,765	 	7,397	 	

(1)        Barrick’s interest is subject to royalty obligations at certain mines.
 
(2)                          Effective in the first quarter of 2010, the Storm mine has been consolidated under the Goldstrike Property for reporting purposes.  Storm mine production in 2009 and 2010 (in 000s of ounces) was 65 and 74, respectively.
 
(3)                          Barrick’s proportional share.
 
(4)                          In April 2009, Barrick increased its interest in the Hemlo mine from 50% to 100%.  Production includes an additional 50% interest in Hemlo from January 1, 2009 onwards.
 
(5)                          Effective in the first quarter of 2008, the Darlot, Lawlers and Granny Smith mines have been consolidated under Yilgarn South for reporting purposes.
 
(6)                          In September 2010, Barrick completed the divestiture of its Osborne mine.
 
(7)                          In July 2009, Barrick sold the Henty mine to Bendigo Mining Limited.
 
(8)                          Figures relating to ABG are stated at 100% up to March 31, 2010 and at 73.9% thereafter.
 
(9)                          The Buzwagi mine commenced production in May 2009.
 
The following table summarizes Barrick’s interest in its principal producing copper mines and its share of copper production from these mines:

Copper Mines 	 	Ownership	 	2010	 	2009	 	
 	 	 	 	(millions of
pounds)	 	(millions of
pounds)	 	
Zaldívar Mine, Chile	 	100	%	318	 	302	 	
Osborne Mine, Queensland, Australia(1)	 	100	%	50	 	91	 	
Company Total	 	 	 	368	 	393	 	

(1)                          In September 2010, Barrick completed the divestiture of its Osborne mine.
 
See “Narrative Description of the Business” in this Annual Information Form, Note 4 “Segment Information” to the Consolidated Financial Statements and the MD&A for further information on the Company’s operating and geographic segments.  See “Narrative Description of the Business — Mineral Reserves and Mineral Resources” for information on the Company’s mineral reserves and resources.
 
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Transactions
 
IPO of African Gold Mining Operations
 
In March 2010, the initial public offering (“IPO”) for ABG closed and ABG’s approximately 404 million shares were admitted to the Official List of the UK Listing Authority and to trading on the LSE’s main market for listed securities.  ABG sold approximately 101 million ordinary shares in the offering, or about 25% of its equity, and Barrick retained an interest in approximately 303 million shares, or about 75% of the equity of ABG.  In April 2010, the over-allotment option was partially exercised, resulting in a 1.1% dilution of Barrick’s interest in ABG to 73.9%.  The net proceeds received from the IPO and the exercise of the over-allotment option were approximately $884 million.
 
Pueblo Viejo Project Financing
 
In April 2010, Barrick and Goldcorp finalized terms for $1.035 billion (100% basis) in non-recourse project financing for the Pueblo Viejo project.  The lending syndicate is comprised of international finance institutions, including two export credit agencies, and a syndicate of commercial banks.  The financing is divided into three tranches of $400 million, $375 million and $260 million, with terms of 15, 15 and 12 years, respectively.  Barrick and Goldcorp have each provided a guarantee for their proportionate share, which will terminate upon Pueblo Viejo meeting certain operating completion tests and is subject to a carve out for certain political risk events.  In June 2010, Pueblo Viejo Dominicana Corporation, the entity which owns the Pueblo Viejo project, received $782 million (100% basis) in the first draw on this financing arrangement and the funds are being used to fund ongoing construction at the project. On March 29, 2011, PVDC drew an additional $159 million (100% basis) of the facility.
 
Acquisition of Additional 25% Interest in Cerro Casale
 
In March, 2010, Barrick completed the acquisition of an additional 25% interest in the Cerro Casale project from Kinross for cash consideration of $474 million, comprised of $454 million in cash and the elimination of a $20 million contingent obligation, which was payable by Kinross to Barrick on a construction decision.  Barrick’s interest in the project is now 75% and Barrick has obtained control of the project.
 
Barrick Energy Acquisitions
 
In 2010, Barrick Energy completed three acquisitions.  In May 2010, Barrick Energy acquired all of the outstanding shares of Bountiful Resources (“Bountiful”), a privately held corporation, for approximately $109 million.  In June 2010, Barrick Energy acquired the Puskwa property from Galleon Energy Inc. (“Puskwa”) for approximately $130 million.  In September 2010, Barrick Energy acquired the assets of Dolomite Resources (“Dolomite”) for approximately $25 million.  The properties acquired in these transactions are in close proximity to Barrick Energy’s existing operations and it is expected that operational synergies will be realized once these properties have been fully integrated.  Barrick Energy provides a natural economic hedge against Barrick’s fuel price exposure and, with the benefit of these transactions, Barrick Energy’s total production for 2010 increased to approximately 2.1 million boe from the initial 2010 forecast of 1.5 million boe.
 
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Disposition of Sedibelo
 
In March 2010, Barrick disposed of its 10% interest in the Sedibelo platinum project (“Sedibelo”) and certain assets to the Bakgatla-Ba-Kgafela Tribe (“BBK”), the owner of the remaining 90% interest in Sedibelo, and transferred certain long lead items required for the development of Sedibelo to Newshelf 1101 (Proprietary) Limited, for total consideration of approximately $44 million.  In addition, Barrick settled various outstanding matters between Barrick and the BBK regarding Sedibelo and their respective interests.
 
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NARRATIVE DESCRIPTION OF THE BUSINESS
 
Barrick is engaged in the production and sale of gold, as well as related activities such as exploration and mine development.  Barrick also produces significant amounts of copper, principally from the Zaldívar mine, and oil and gas through its Barrick Energy division in Canada, (see “Enterprise Risk Management – Financial Risk Management – Currency, Interest Rate and Other Commodity Hedge Programs”) and holds other interests, including a nickel development project located in Africa and a copper-gold project in Pakistan.  Unless otherwise specified, the description of Barrick’s business, including products, principal markets, distribution methods, employees and labor relations contained in this Annual Information Form, applies to each of its regional business units (“RBU”) (as described below), its 73.9% equity interest in ABG, which includes Barrick’s previously held African gold mines and exploration properties, and Barrick as a whole.  For an explanation of total cash costs per ounce/pound, refer to “Non-GAAP Financial Measures – Total Cash Costs and Net Cash Costs Per Ounce”.
 
Production
 
For the year-ended December 31, 2010, Barrick produced 7.77 million ounces of gold at average total cash costs of $457 per ounce, net cash costs of $341 per ounce and cost of sales attributed to gold of $3.80 billion.  Barrick also produced 368 million pounds of copper at average total cash costs of $1.11 per pound and cost of sales attributed to copper of $433 million. Barrick’s 2011 gold production is targeted at approximately 7.6 to 8.0 million ounces, which is in a similar range of 2010 gold production.  Barrick expects average total cash costs in 2011 of $450 to $480 per ounce, net cash costs of $340 to $380 per ounce and cost of sales in the range of $5.1 to $5.3 billion, all on an IFRS basis, assuming a market gold price of $1,300 per ounce, a market oil price of $85 per barrel and an Australian dollar exchange rate of 0.95:1.  Gold production in North America is expected to increase due to an increase in tons processed and higher average head grades at Cortez Hills and the recommencement of production at Golden Sunlight after a two-year mine development period.  The increase in North America is offset by lower production in South America, primarily due to lower ore grades at Veladero.  Production in Australia Pacific and Barrick’s share of ABG production are expected to be in line with 2010 production levels.  2011 copper production is targeted at approximately 300 million pounds at expected total cash costs of approximately $1.35 to $1.45 per pound on an IFRS basis.  Lower copper production in 2011 is due primarily to the disposition of the Osborne mine in 2010.  Cost of sales applicable to copper in 2011 is expected to be in the range of $500 to $520 million on an IFRS basis.  See “Forward-Looking Information”.
 
Capital Projects Group
 
In 2007, reflecting the importance of its projects, Barrick expanded the capacity of the group responsible for the development and construction of projects through the addition of experienced staff with the necessary specialized skill set associated with project management.  In 2008, Barrick formed a dedicated Capital Projects group that is distinct from the RBUs to focus on managing large projects and building new mines.  This specialized group is intended to manage, in close coordination with the RBUs, the development of Barrick’s projects from project design, permitting, construction and commissioning through to the commencement of commercial operations, at which point primary responsibility for the project’s operations transfer to the RBUs.  Efforts will continue in 2011 to enhance Barrick’s capacity to deliver on its significant projects in the coming years (for additional information regarding Barrick’s projects, see
 
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“Material Properties – Pueblo Viejo Project”, “Material Properties – Pascua-Lama Project” and “Exploration and Evaluations”).
 
Regional Business Units and ABG
 
As of December 31, 2010, Barrick had three RBUs: North America, Australia Pacific and South America.  Barrick also holds a 73.9% equity interest in ABG, which includes Barrick’s previously held gold mines and exploration properties in Africa.  Barrick’s regional business unit structure reflects how Barrick manages its business and how it classifies its operations for planning and measuring performance. Set out below is a brief description of the mines and projects of each RBU as well as a description of Barrick’s interests in Africa, which includes its equity interest in ABG.  Each RBU receives direction from Barrick’s corporate office, but has responsibility for certain aspects of its business, such as strategy and sustainability of mining operations, including exploration, production and closure.  ABG has a greater amount of independence in comparison to Barrick’s other RBUs, as further described below.
 
For details regarding 2010 production for the mines in each RBU and within ABG, see “General Information – General Development of the Business”.  For additional details regarding each RBU’s reserves and resources, and the reserves and resources held in ABG, see “ – Mineral Reserves and Resources”.   See also Note 4 “Segment Information” to the Consolidated Financial Statements and the MD&A for further financial and other information on the Company’s operating and geographic segments.
 
North America
 
Barrick’s North American operations consist of its Goldstrike property (a material property for the purposes of this Annual Information Form, see “Material Properties – Goldstrike Property”), its Cortez property (consisting of the Cortez mine and Cortez Hills mine, and also a material property for purposes of this Annual Information Form, see “Material Properties – Cortez Property”), its 50% interest in the Round Mountain mine, its Ruby Hill mine, its Hemlo property, its 33% interest in the Marigold mine, its Bald Mountain mine, its Golden Sunlight mine and its 75% interest in the Turquoise Ridge mine. Barrick’s North American projects are its 60% interest in the Pueblo Viejo project (a material property for the purposes of this Annual Information Form, see “Material Properties – Pueblo Viejo Project”) and its 50% interest in the Donlin Creek project (see “Exploration and Evaluations”).  In 2010, the region produced approximately 3.1 million ounces of gold at total cash costs of $489 per ounce and cost of sales at $1.5 billion, compared to approximately 2.8 million ounces of gold at total cash costs of $504 per ounce and cost of sales of approximately $1.4 billion produced in the region in 2009.  In 2011, Barrick expects gold production from its North American operations in the range of 3.30 to 3.46 million ounces.  Production is expected to be higher than 2010 primarily due to an increase in tons processed and higher head grades from the Cortez Hills open pit mine and the recommencement of production at Golden Sunlight after a two-year period of mine development.  2011 production at Goldstrike is expected to be lower than 2010 due to a significant waste stripping campaign and the processing of lower grade stockpile ore.  Total cash costs are expected to be $425 to $450 per ounce compared to $429 per ounce in 2010 on an IFRS basis.
 
South America
 
The South American RBU’s Lagunas Norte mine in Peru, Veladero mine in Argentina, and Zaldívar copper mine in Chile are each material properties for the purposes of this Annual
 
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Information Form (see “Material Properties – Lagunas Norte, – Veladero, and – Zaldívar”). Its other operation consists of its Pierina mine in Peru. Barrick’s South American projects consist of its Pascua-Lama project in Chile and Argentina (a material property for the purposes of this Annual Information Form, see “Material Properties – Pascua-Lama Project”) and its 75% interest in the Cerro Casale project in Chile (see “Exploration and Evaluations”). In 2010, the region produced approximately 2.1 million ounces of gold, at total cash costs of $243 per ounce and cost of sales at $515 million, and 318 million pounds of copper, at total cash costs of $1.09 per pound and cost of sales at $345 million.  In 2009, the region produced approximately 1.9 million ounces of gold, at total cash costs of $265 per ounce and cost of sales at $499 million, and 302 million pounds of copper, at total cash costs of $1.17 per pound and cost of sales at $361 million.  In 2011, the South American RBU is expected to produce 1.8 to 1.935 million ounces of gold.  Production is expected to be lower than 2010 primarily due to the mining of lower grade areas at Veladero and lower recoveries at Lagunas Norte due to leaching of more carbonaceous materials as well as longer leach cycles compared to 2010.  Total cash costs are expected to be $350 to $380 per ounce compared to $208 per ounce in 2010 on an IFRS basis.  The increase in total cash costs per ounce of gold from 2010 levels is primarily due to higher labour costs and the processing of lower ore grades at Veladero.  Copper production for 2010 increased by 5% compared to the prior year, mainly due to increased tons processed and higher grades as a result of mining higher grade areas of the open pit and improved recoveries from the leach pad.  The decrease in total cash costs per pound in 2010 was mainly due to lower cost of sales and higher production and sales volume.  Barrick expects 2011 copper production to be approximately 300 million pounds, with total cash costs in the range of $1.35 to $1.45 per pound on an IFRS basis.  Cash costs are expected to increase in 2011 due to an increase in the price of sulfuric acid and lower grades at Zaldivar.
 
Australia Pacific
 
Barrick’s Australia Pacific operations consist of its 95% interest in the Porgera mine in Papua New Guinea (a material property for purposes of this Annual Information Form, see “Material Properties – Porgera Mine”), its Cowal mine, its 50% interest in the Kalgoorlie mine, its operating mines referred to as Yilgarn South and located in the Yilgarn District in Western Australia (Plutonic, Darlot and Lawlers), its Granny Smith mine and its Kanowna mine.  In September 2010, Barrick’s Australia Pacific RBU completed the sale of its Osborne mine .  In 2010, the region produced approximately 1.9 million ounces of gold at total cash costs of $613 per ounce and cost of sales of $1.3 billion compared to approximately 2.0 million ounces of gold at total cash costs of $581 per ounce and cost of sales of $1.1 billion produced in the region in 2009.  In 2011, the region is expected to produce 1.85 to 2.0 million ounces of gold, which is in a similar range of 2010 production.  Total cash costs are expected to be $610 to $625 per ounce compared to $576 per ounce in 2010 on an IFRS basis.
 
African Barrick Gold
 
In connection with the listing of ABG on the LSE and the issuance of shares to the public in 2010, Barrick no longer has an Africa RBU; however, for reporting purposes ABG will continue to be treated as an operating segment within Barrick.  Barrick currently holds a 73.9% equity interest in ABG.  The assets, liabilities, operating results and cash flows of ABG will be consolidated by Barrick.  ABG’s operations consist of its Bulyanhulu mine, its 70% interest in the Tulawaka mine, its North Mara mine and its Buzwagi mine, all located in Tanzania.  ABG’s main exploration projects include the Golden Ridge prospect, the Jomu prospect, the North Mara Gokona-Nyabigena prospect and the Nyanzaga project.  In April 2010, ABG completed the
 
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acquisition of Tusker Gold Limited (“Tusker”) for net aggregate consideration of approximately $74 million.  Tusker’s principal asset was its 49% interest in the Nyanzaga project in Tanzania; a subsidiary of ABG held the other 51% interest in that project.  With the acquisition of Tusker ABG owns 100% of the Nyanzaga project.
 
In 2010, Barrick’s equity interest in ABG’s gold production was approximately 564,000 ounces of gold at total cash costs of $646 per ounce and cost of sales of $390 million.  In 2009, the African region produced, on a 100% basis, approximately 716,000 ounces of gold at total cash costs of $545 per ounce and cost of sales of $377 million.
 
In 2011, Barrick expects equity gold production from ABG, reflecting Barrick’s 73.9% equity interest, in the range of 515,000 to 560,000 ounces.  Production is expected to be slightly lower than 2010, as Barrick’s full year share of production in 2010 was about 80%, due to the recognition of 100% ownership in the first quarter and 73.9% ownership for the remainder of the year.  Total cash costs are expected to be $590 to $650 per ounce compared to $570 per ounce in 2010 on an IFRS basis.  Buzwagi production is expected to be higher in 2011 due to successfully addressing production hurdles that arose in 2010, which included issues relating to fuel theft at site, while production at North Mara is expected to be lower due to increased waste stripping and production from lower grade stockpile ore.  Total cash costs are expected to be higher due to lower North Mara grades and an increase in energy, labour and contractor costs at most sites.
 
Barrick and its affiliates provide certain services to ABG and its subsidiaries for the ongoing operation of ABG’s business pursuant to a services agreement entered into by the parties.  In addition, Barrick and ABG are also parties to a relationship agreement that regulates various aspects of the ongoing relationship between the two companies.  The principal purpose of the relationship agreement is to ensure that ABG is capable of carrying on its business independently of Barrick and that any transactions and relationships with Barrick occur at arm’s length and under normal commercial terms.  Under that agreement, so long as Barrick maintains at 40% equity interest in ABG, Barrick is entitled to appoint the greater of (i) three non-executive directors to ABG’s board of directors; and (ii) the maximum number of non-executive directors that may be appointed to ABG’s board of directors, while ensuring ABG is compliant with the UK Combined Code of Corporate Governance. If Barrick’s shareholding in ABG falls below 40%, there is a sliding scale as to the number of directors it may appoint.  As of March 28, 2011, ABG had nine directors, two of which were appointed by Barrick.  The relationship agreement will remain in force as long as ABG’s shares are listed on the LSE and Barrick maintains at least a 15% equity interest.  The relationship agreement contains a number of other commitments and restrictions, including a non-competition clause pursuant to which (i) Barrick agrees it will not pursue any gold or silver mining project in Africa, as such terms are defined in the relationship agreement, and (ii) ABG agrees it will not pursue any gold or silver mining project outside of Africa, as such terms are defined in the relationship agreement.  The non-competition clause is subject to various exceptions and only applies for so long as Barrick holds at least a 30% equity interest in ABG.  If either Barrick or ABG wants to pursue a project which is subject to the non-competition restriction (the “Notifying Party”), they are required to notify the other party and, if the other party waives the opportunity or fails to respond in a timely fashion, the Notifying Party will be entitled to pursue the project described in the notice. For additional information regarding ABG’s IPO, see “General Information - Transactions”.
 
Barrick’s Kabanga nickel project is not included in the assets held by ABG.  Barrick continues to directly hold its 50% interest in the Kabanga project, which is located in Tanzania (see “Exploration and Evaluations”).
 
23 

 
Mineral Reserves and Mineral Resources
 
At December 31, 2010, Barrick’s total proven and probable gold mineral reserves were 139.8 million ounces. In aggregate, Barrick increased its total reserves by approximately 9.2 million ounces, which offset the depletion of 9.2 million ounces from 2010 production.  The increase primarily reflects incremental reserves due to the acquisition of an additional 25% interest in Cerro Casale and reserve additions at Goldstrike, Cortez, Veladero and Ruby Hill, partially offset by a decrease as a result of the disposition of Barrick’s 26.1% interest in ABG (see “ – Reconciliation of Mineral Reserves”).  At December 31, 2010, Barrick’s total proven and probable copper reserves were 6.5 billion pounds. During 2010, Barrick produced 368 million pounds of copper (577 million contained pounds) as compared to approximately 393 million pounds of copper at December 31, 2009 (675 million contained pounds) .
 
Except as noted below, 2010 reserves have been calculated using an assumed gold price of $1000 per ounce , an assumed silver price of $ 16.00 per ounce, an assumed copper price of $ 2.00 per pound and exchange rates of $ 1.05 C$/U.S.$ and $ 0.85 U.S.$/A$. Reserve calculations incorporate current and/or expected mine plans and cost levels at each property.
 
Unless otherwise noted, Barrick’s reserves and resources have been calculated as at December 31, 2010 in accordance with definitions adopted by the Canadian Institute of Mining, Metallurgy and Petroleum and incorporated into National Instrument 43-101 (see “Definitions” below).  Varying cut-off grades have been used depending on the mine, methods of extraction and type of ore contained in the reserves. Mineral resource metal grades and material densities have been estimated using industry-standard methods appropriate for each mineral project with support of various commercially available mining software packages. For the cut-off grades used in the calculation of reserves, see “ – Notes to the Mineral Reserves, Resources and Reconciliation Tables”. Barrick’s normal data verification procedures have been employed in connection with the calculations. Sampling, analytical and test data underlying the stated mineral resources and reserves have been verified by employees of Barrick, its joint partners or its joint venture operating companies, as applicable, under the supervision of Qualified Persons, and/or independent Qualified Persons (see “Scientific and Technical Information”). Verification procedures include industry-standard quality control practices. For details of data verification and quality control practices at each material property, see “Material Properties”.
 
Barrick reports its reserves in accordance with National Instrument 43-101, as required by Canadian securities regulatory authorities and, for United States reporting purposes, Industry Guide 7 under the U.S. Securities Exchange Act of 1934 .  Industry Guide 7 (as interpreted by the Staff of the SEC) applies different standards in order to classify mineralization as a reserve (see Note 7 of the “ – Notes to the Mineral Reserves, Resources and Reconciliation Tables”).  For U.S. reporting purposes, as at December 31, 2010, the mineralization at Cerro Casale was classified as mineralized material.  In addition, while the terms “measured”, “indicated” and “inferred” mineral resources are required pursuant to National Instrument 43-101, the SEC does not recognize such terms. Canadian standards differ significantly from the requirements of the SEC, and mineral resource information contained herein is not comparable to similar information regarding mineral reserves disclosed in accordance with the requirements of the SEC. Investors should understand that “inferred” mineral resources have a great amount of uncertainty as to their existence and as to their economic and legal feasibility. In addition, investors are cautioned not to assume that all or any part of Barrick’s mineral resources constitute or will be converted into reserves.  Mineral resources that are not mineral reserves do not have demonstrated economic viability.
 
24 

 
Although the Company has carefully prepared and verified the mineral reserve figures presented below and elsewhere in this Annual Information Form, such figures are estimates, which are, in part, based on forward-looking information and certain assumptions, and no assurance can be given that the indicated level of mineral will be produced. Estimated reserves may have to be recalculated based on actual production experience. Market price fluctuations of gold, copper and silver, as well as increased production costs or reduced recovery rates and other factors, may render the present proven and probable reserves unprofitable to develop at a particular site or sites. See “Risk Factors” and “Forward-Looking Information” for additional details concerning factors and risks that could cause actual results to differ from those set out below.
 
Definitions
 
A mineral resource is a concentration or occurrence of diamonds, natural solid inorganic material, or natural solid fossilized organic material including base and precious metals, coal, and industrial minerals in or on the Earth’s crust in such form and quantity and of such a grade or quality that it has reasonable prospects for economic extraction. The location, quantity, grade, geological characteristics and continuity of a mineral resource are known, estimated or interpreted from specific geological evidence and knowledge. Mineral resources are sub-divided, in order of increasing geological confidence, into inferred, indicated and measured categories.
 
An inferred mineral resource is that part of a mineral resource for which quantity and grade or quality can be estimated on the basis of geological evidence and limited sampling and reasonably assumed, but not verified, geological and grade continuity. The estimate is based on limited information and sampling gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes.
 
An indicated mineral resource is that part of a mineral resource for which quantity, grade or quality, densities, shape and physical characteristics can be estimated with a level of confidence sufficient to allow the appropriate application of technical and economic parameters, to support mine planning and evaluation of the economic viability of the deposit. The estimate is based on detailed and reliable exploration and testing information gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes that are spaced closely enough for geological and grade continuity to be reasonably assumed.
 
A measured mineral resource is that part of a mineral resource for which quantity, grade or quality, densities, shape and physical characteristics are so well established that they can be estimated with confidence sufficient to allow the appropriate application of technical and economic parameters, to support production planning and evaluation of the economic viability of the deposit. The estimate is based on detailed and reliable exploration, sampling and testing information gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes that are spaced closely enough to confirm both geological and grade continuity.
 
A mineral reserve is the economically mineable part of a measured or indicated mineral resource demonstrated by at least a preliminary feasibility study. This study must include adequate information on mining, processing, metallurgical, economic and other relevant factors that demonstrate, at the time of reporting, that economic extraction can be justified. A mineral reserve includes diluting materials and allowances for losses that may occur when the material is
 
25 

 
mined. Mineral reserves are sub-divided in order of increasing confidence into probable mineral reserves and proven mineral reserves.
 
A probable mineral reserve is the economically mineable part of an indicated and, in some circumstances, a measured mineral resource demonstrated by at least a preliminary feasibility study. This study must include adequate information on mining, processing, metallurgical, economic and other relevant factors that demonstrate, at the time of reporting, that economic extraction can be justified.
 
A proven mineral reserve is the economically mineable part of a measured mineral resource demonstrated by at least a preliminary feasibility study. This study must include adequate information on mining, processing, metallurgical, economic and other relevant factors that demonstrate, at the time of reporting, that economic extraction is justified.
 
26 

 
GOLD MINERAL RESERVES (1),(3),(4),(7),(10),(11)

As at December 31, 2010	 	PROVEN	 	PROBABLE	 	TOTAL	 	
 	 	Tons	 	Grade	 	Contained ozs	 	Tons	 	Grade	 	Contained ozs	 	Tons	 	Grade	 	Contained ozs	 	
Based on attributable ounces	 	(000’s)	 	(oz/ton)	 	(000’s)	 	(000’s)	 	(oz/ton)	 	(000’s)	 	(000’s)	 	(oz/ton)	 	(000’s)	 	
NORTH AMERICA	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Goldstrike Open Pit	 	60,555	 	0.097	 	5,874	 	35,310	 	0.107	 	3,782	 	95,865	 	0.101	 	9,656	 	
Goldstrike Underground	 	4,543	 	0.346	 	1,571	 	6,329	 	0.219	 	1,387	 	10,872	 	0.272	 	2,958	 	
Goldstrike Property Total	 	65,098	 	0.114	 	7,445	 	41,639	 	0.124	 	5,169	 	106,737	 	0.118	 	12,614	 	
Pueblo Viejo (60.00%)	 	8,864	 	0.097	 	857	 	159,553	 	0.084	 	13,338	 	168,417	 	0.084	 	14,195	 	
Cortez	 	38,350	 	0.081	 	3,104	 	278,731	 	0.041	 	11,390	 	317,081	 	0.046	 	14,494	 	
Bald Mountain	 	76,886	 	0.021	 	1,604	 	169,825	 	0.019	 	3,144	 	246,711	 	0.019	 	4,748	 	
Turquoise Ridge (75.00%)	 	4,182	 	0.458	 	1,914	 	5,072	 	0.455	 	2,310	 	9,254	 	0.456	 	4,224	 	
Round Mountain (50.00%)	 	26,909	 	0.021	 	563	 	46,108	 	0.016	 	756	 	73,017	 	0.018	 	1,319	 	
South Arturo (60.00%)	 	—	 	—	 	—	 	27,358	 	0.051	 	1,391	 	27,358	 	0.051	 	1,391	 	
Ruby Hill	 	1,273	 	0.082	 	104	 	15,909	 	0.064	 	1,018	 	17,182	 	0.065	 	1,122	 	
Hemlo	 	5,397	 	0.107	 	580	 	12,991	 	0.060	 	782	 	18,388	 	0.074	 	1,362	 	
Marigold Mine (33.33%)	 	9,348	 	0.019	 	175	 	38,495	 	0.016	 	600	 	47,843	 	0.016	 	775	 	
Golden Sunlight	 	2,355	 	0.065	 	154	 	7,294	 	0.053	 	385	 	9,649	 	0.056	 	539	 	
SOUTH AMERICA	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Cerro Casale (75.00%)(12)	 	191,429	 	0.019	 	3,575	 	811,293	 	0.017	 	13,802	 	1,002,722	 	0.017	 	17,377	 	
Pascua-Lama	 	43,395	 	0.050	 	2,160	 	380,536	 	0.041	 	15,685	 	423,931	 	0.042	 	17,845	 	
Veladero	 	27,785	 	0.031	 	875	 	455,396	 	0.023	 	10,416	 	483,181	 	0.023	 	11,291	 	
Lagunas Norte	 	16,498	 	0.038	 	635	 	193,606	 	0.031	 	5,983	 	210,104	 	0.031	 	6,618	 	
Pierina	 	37,163	 	0.014	 	533	 	22,784	 	0.011	 	258	 	59,947	 	0.013	 	791	 	
AUSTRALIA PACIFIC	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Porgera (95.00%)	 	46,963	 	0.086	 	4,047	 	36,648	 	0.092	 	3,385	 	83,611	 	0.089	 	7,432	 	
Kalgoorlie (50.00%)	 	30,173	 	0.046	 	1,387	 	40,687	 	0.059	 	2,393	 	70,860	 	0.053	 	3,780	 	
Cowal	 	13,851	 	0.024	 	339	 	57,199	 	0.037	 	2,139	 	71,050	 	0.035	 	2,478	 	
Plutonic	 	110	 	0.227	 	25	 	1,968	 	0.201	 	395	 	2,078	 	0.202	 	420	 	
Kanowna Belle	 	3,630	 	0.176	 	640	 	3,183	 	0.140	 	446	 	6,813	 	0.159	 	1,086	 	
Darlot	 	1,860	 	0.112	 	209	 	1,381	 	0.140	 	194	 	3,241	 	0.124	 	403	 	
Granny Smith	 	805	 	0.160	 	129	 	3,213	 	0.152	 	488	 	4,018	 	0.154	 	617	 	
Lawlers	 	387	 	0.163	 	63	 	1,737	 	0.166	 	289	 	2,124	 	0.166	 	352	 	
Henty(13)	 	—	 	—	 	—	 	—	 	—	 	—	 	—	 	—	 	—	 	
AFRICA(14)	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Bulyanhulu (73.90%)	 	976	 	0.322	 	314	 	22,927	 	0.342	 	7,833	 	23,903	 	0.341	 	8,147	 	
North Mara (73.90%)	 	6,949	 	0.076	 	531	 	15,553	 	0.101	 	1,565	 	22,502	 	0.093	 	2,096	 	
Buzwagi (73.90%)	 	3,425	 	0.033	 	112	 	41,852	 	0.048	 	2,025	 	45,277	 	0.047	 	2,137	 	
Tulawaka (51.73%)	 	163	 	0.123	 	20	 	98	 	0.296	 	29	 	261	 	0.188	 	49	 	
OTHER	 	147	 	0.395	 	58	 	63	 	0.413	 	26	 	210	 	0.400	 	84	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
TOTAL	 	664,371	 	0.048	 	32,152	 	2,893,099	 	0.037	 	107,634	 	3,557,470	 	0.039	 	139,786	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
COPPER MINERAL RESERVES (1),(3),(4),(7),(10),(11)	
 	
As at December 31, 2010	 	PROVEN	 	PROBABLE	 	TOTAL	 	
 	 	Tons	 	Grade	 	Contained lbs	 	Tons	 	Grade	 	Contained lbs	 	Tons	 	Grade	 	Contained lbs	 	
Based on attributable pounds	 	(000’s)	 	(%)	 	(millions)	 	(000’s)	 	(%)	 	(millions)	 	(000’s)	 	(%)	 	(millions)	 	
Zaldivar	 	403,813	 	0.544	 	4,394	 	209,024	 	0.507	 	2,120	 	612,837	 	0.531	 	6,514	 	
TOTAL	 	403,813	 	0.544	 	4,394	 	209,024	 	0.507	 	2,120	 	612,837	 	0.531	 	6,514	 	
 
See “—Notes to the Mineral Reserves, Resources, and Reconciliation Tables.
 
27 

 

GOLD MINERAL RESOURCES (1),(2),(3),(5)	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
As at December 31, 2010	 	MEASURED (M) 	 	INDICATED (I)	 	(M) + (I)	 	INFERRED	 	
 	 	Tons 	 	Grade 	 	Contained ozs	 	Tons	 	Grade	 	Contained ozs	 	Contained ozs	 	Tons	 	Grade	 	Contained ozs	 	
Based on attributable ounces	 	(000’s) 	 	(oz/ton) 	 	(000’s) 	 	(000’s)	 	(oz/ton)	 	(000’s)	 	(000’s)	 	(000’s)	 	(oz/ton)	 	(000’s)	 	
NORTH AMERICA	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Goldstrike Open Pit	 	793	 	0.037	 	29	 	3,901	 	0.037	 	144	 	173	 	1,344	 	0.065	 	87	 	
Goldstrike Underground	 	1,613	 	0.347	 	560	 	5,158	 	0.283	 	1,460	 	2,020	 	3,047	 	0.298	 	908	 	
Goldstrike Property Total	 	2,406	 	0.245	 	589	 	9,059	 	0.177	 	1,604	 	2,193	 	4,391	 	0.227	 	995	 	
Pueblo Viejo (60.00%)	 	2,692	 	0.059	 	160	 	94,115	 	0.059	 	5,515	 	5,675	 	5,191	 	0.064	 	332	 	
Cortez	 	3,844	 	0.055	 	210	 	56,619	 	0.073	 	4,110	 	4,320	 	50,337	 	0.103	 	5,174	 	
Bald Mountain	 	43,133	 	0.012	 	514	 	108,811	 	0.011	 	1,166	 	1,680	 	60,636	 	0.011	 	686	 	
Turquoise Ridge (75.00%)	 	2,847	 	0.234	 	666	 	61,372	 	0.126	 	7,749	 	8,415	 	32,570	 	0.160	 	5,200	 	
Round Mountain (50.00%)	 	12,990	 	0.028	 	366	 	37,875	 	0.020	 	741	 	1,107	 	24,870	 	0.018	 	441	 	
South Arturo (60.00%)	 	—	 	—	 	—	 	16,041	 	0.043	 	692	 	692	 	6,974	 	0.018	 	126	 	
Ruby Hill	 	705	 	0.026	 	18	 	60,825	 	0.023	 	1,372	 	1,390	 	12,885	 	0.024	 	307	 	
Hemlo	 	1,601	 	0.117	 	187	 	2,583	 	0.043	 	112	 	299	 	1,362	 	0.156	 	212	 	
Marigold Mine (33.33%)	 	1,351	 	0.016	 	22	 	25,491	 	0.014	 	365	 	387	 	15,546	 	0.014	 	217	 	
Golden Sunlight	 	306	 	0.056	 	17	 	925	 	0.044	 	41	 	58	 	2,494	 	0.035	 	87	 	
Donlin Creek (50.00%)	 	4,692	 	0.067	 	316	 	317,793	 	0.060	 	19,041	 	19,357	 	43,499	 	0.069	 	2,995	 	
SOUTH AMERICA	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Cerro Casale (75.00%)(12)	 	14,643	 	0.011	 	164	 	185,199	 	0.012	 	2,212	 	2,376	 	384,355	 	0.011	 	4,350	 	
Pascua-Lama	 	19,956	 	0.033	 	666	 	211,634	 	0.026	 	5,594	 	6,260	 	32,290	 	0.036	 	1,178	 	
Veladero	 	4,053	 	0.010	 	42	 	47,077	 	0.012	 	558	 	600	 	75,183	 	0.008	 	581	 	
Lagunas Norte	 	1,185	 	0.020	 	24	 	39,344	 	0.019	 	732	 	756	 	7,951	 	0.015	 	117	 	
Pierina	 	10,333	 	0.017	 	172	 	7,955	 	0.013	 	101	 	273	 	19,934	 	0.003	 	58	 	
AUSTRALIA PACIFIC	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Porgera (95.00%)	 	6,119	 	0.057	 	351	 	13,416	 	0.082	 	1,098	 	1,449	 	13,840	 	0.090	 	1,243	 	
Kalgoorlie (50.00%)	 	1,934	 	0.064	 	124	 	44,973	 	0.023	 	1,028	 	1,152	 	1,109	 	0.146	 	162	 	
Cowal	 	—	 	—	 	—	 	47,349	 	0.032	 	1,503	 	1,503	 	12,686	 	0.031	 	395	 	
Plutonic	 	564	 	0.121	 	68	 	2,566	 	0.293	 	752	 	820	 	4,049	 	0.307	 	1,242	 	
Kanowna Belle	 	4,022	 	0.115	 	462	 	3,179	 	0.138	 	439	 	901	 	4,133	 	0.101	 	419	 	
Darlot	 	290	 	0.152	 	44	 	1,386	 	0.153	 	212	 	256	 	555	 	0.162	 	90	 	
Granny Smith	 	830	 	0.161	 	134	 	2,589	 	0.180	 	465	 	599	 	4,855	 	0.239	 	1,162	 	
Lawlers	 	—	 	—	 	—	 	1,118	 	0.249	 	278	 	278	 	687	 	0.319	 	219	 	
Reko Diq (37.50%)	 	718,521	 	0.009	 	6,466	 	514,465	 	0.006	 	3,040	 	9,506	 	1,192,569	 	0.005	 	6,399	 	
AFRICA(14)	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Bulyanhulu (73.90%)	 	—	 	—	 	—	 	9,011	 	0.236	 	2,128	 	2,128	 	7,180	 	0.344	 	2,472	 	
North Mara (73.90%)	 	2,055	 	0.071	 	146	 	13,128	 	0.092	 	1,209	 	1,355	 	1,515	 	0.055	 	84	 	
Buzwagi (73.90%)	 	61	 	0.033	 	2	 	14,666	 	0.028	 	415	 	417	 	5,119	 	0.035	 	181	 	
Tulawaka (51.73%)	 	—	 	—	 	—	 	422	 	0.159	 	67	 	67	 	76	 	0.145	 	11	 	
OTHER	 	—	 	—	 	—	 	163	 	0.307	 	50	 	50	 	192	 	0.349	 	67	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
TOTAL	 	861,133	 	0.014	 	11,930	 	1,951,149	 	0.033	 	64,389	 	76,319	 	2,029,033	 	0.018	 	37,202	 	

COPPER MINERAL RESOURCES (1),(2),(3),(5)	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
As at December 31, 2010	 	MEASURED (M)	 	INDICATED (I)	 	(M) +(I)	 	INFERRED	 	
 	 	Tons	 	Grade	 	Contained lbs	 	Tons	 	Grade	 	Contained lbs	 	Contained lbs	 	Tons	 	Grade	 	Contained lbs	 	
Based on attributable pounds	 	(000’s)	 	(%)	 	(millions)	 	(000’s)	 	(%)	 	(millions)	 	(millions)	 	(000’s)	 	(%)	 	(millions)	 	
Zaldivar	 	80,445	 	0.433	 	697	 	66,148	 	0.443	 	586	 	1,283	 	69,308	 	0.545	 	756	 	
Reko Diq (37.50%)	 	718,521	 	0.536	 	7,697	 	514,465	 	0.392	 	4,034	 	11,731	 	1,192,569	 	0.352	 	8,393	 	
TOTAL	 	798,966	 	0.525	 	8,394	 	580,613	 	0.398	 	4,620	 	13,014	 	1,261,877	 	0.363	 	9,149	 	

See “- Notes to the Mineral Reserves, Resources, and Reconciliation Tables
 
28 

 
CONTAINED SILVER WITHIN REPORTED GOLD RESERVES (1),(A)

For the year ended Dec. 31, 2010	 	IN PROVEN GOLD RESERVES	 	IN PROBABLE GOLD RESERVES	 	TOTAL	 	
 	 	Tons	 	Grade	 	Contained ozs	 	Tons	 	Grade	 	Contained ozs	 	Tons	 	Grade	 	Contained ozs	 	Process	 	
Based on attributable ounces	 	(000s)	 	(oz/ton)	 	(000s)	 	(000s)	 	(oz/ton)	 	(000s)	 	(000s)	 	(oz/ton)	 	(000s)	 	recovery  %	 	
NORTH AMERICA	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Pueblo Viejo (60.00%)	 	8,864	 	0.64	 	5,664	 	159,553	 	0.52	 	82,714	 	168,417	 	0.52	 	88,378	 	86.9	%	
SOUTH AMERICA	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Cerro Casale (75.00%)(12)	 	191,429	 	0.05	 	10,482	 	811,293	 	0.04	 	33,564	 	1,002,722	 	0.04	 	44,046	 	 	 	
Pascua-Lama	 	43,395	 	1.72	 	74,563	 	380,536	 	1.57	 	596,932	 	423,931	 	1.58	 	671,495	 	81.6	%	
Lagunas Norte	 	16,498	 	0.13	 	2,149	 	193,606	 	0.11	 	21,034	 	210,104	 	0.11	 	23,183	 	21.2	%	
Veladero	 	27,785	 	0.39	 	10,814	 	455,396	 	0.44	 	199,857	 	483,181	 	0.44	 	210,671	 	6.4	%	
Pierina	 	37,163	 	0.37	 	13,678	 	22,784	 	0.37	 	8,369	 	59,947	 	0.37	 	22,047	 	36.8	%	
AFRICA(14)	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Bulyanhulu (73.90%)	 	976	 	0.23	 	220	 	22,927	 	0.27	 	6,292	 	23,903	 	0.27	 	6,512	 	75.0	%	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
TOTAL	 	326,110	 	0.36	 	117,570	 	2,046,095	 	0.46	 	948,762	 	2,372,205	 	0.45	 	1,066,332	 	61.5	%	

(A) Silver is accounted for as a by-product credit against reported or projected gold production costs.

CONTAINED COPPER WITHIN REPORTED GOLD RESERVES (1),(A)	
 	
For the year ended Dec. 31, 2010	 	IN PROVEN GOLD RESERVES	 	IN PROBABLE GOLD RESERVES	 	TOTAL	 	
 	 	Tons	 	Grade	 	Contained lbs	 	Tons	 	Grade	 	Contained lbs	 	Tons	 	Grade	 	Contained lbs	 	Process	 	
Based on attributable pounds	 	(000s)	 	(%)	 	(millions)	 	(000s)	 	(%)	 	(millions)	 	(000s)	 	(%)	 	(millions)	 	recovery %	 	
NORTH AMERICA	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Pueblo Viejo (60.00%)	 	8,864	 	0.120	 	21.3	 	159,553	 	0.093	 	297.9	 	168,417	 	0.095	 	319.2	 	79.5	%	
SOUTH AMERICA	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Cerro Casale (75.00%)(12)	 	191,429	 	0.189	 	722.0	 	811,293	 	0.223	 	3,614.4	 	1,002,722	 	0.216	 	4,336.4	 	81.2	%	
Pascua-Lama	 	43,395	 	0.096	 	83.2	 	380,536	 	0.075	 	574.4	 	423,931	 	0.078	 	657.6	 	62.9	%	
AFRICA(14)	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Bulyanhulu (73.90%)	 	976	 	0.415	 	8.1	 	22,927	 	0.673	 	308.5	 	23,903	 	0.662	 	316.6	 	95.0	%	
Buzwagi (73.90%)	 	3,425	 	0.006	 	0.4	 	41,852	 	0.125	 	104.3	 	45,277	 	0.116	 	104.7	 	76.5	%	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
TOTAL	 	248,089	 	0.168	 	835.0	 	1,416,161	 	0.173	 	4,899.5	 	1,664,250	 	0.172	 	5,734.5	 	79.6	%	

(A) Copper is accounted for as a by-product credit against reported or projected gold production costs.
 
See “—Notes to the Mineral Reserves, Resources, and Reconciliation Tables.
 
29 

 
CONTAINED SILVER WITHIN REPORTED GOLD RESOURCES (1)

For the year ended Dec. 31, 2010	 	MEASURED (M)	 	INDICATED (I)	 	(M) + (I)	 	INFERRED	 	
 	 	Tons	 	Grade	 	Contained ozs	 	Tons	 	Grade	 	Contained ozs	 	Ounces	 	Tons	 	Grade	 	Contained ozs	 	
Based on attributable ounces	 	(000’s)	 	(oz/ton)	 	(000’s)	 	(000’s)	 	(oz/ton)	 	(000’s)	 	(000’s)	 	(000’s)	 	(oz/ton)	 	(000’s)	 	
NORTH AMERICA	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Pueblo Viejo (60.00%)	 	2,692	 	0.39	 	1,058	 	94,115	 	0.34	 	32,217	 	33,275	 	5,191	 	0.53	 	2,746	 	
SOUTH AMERICA	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Cerro Casale (75.00%)(12)	 	14,643	 	0.04	 	637	 	185,199	 	0.03	 	5,848	 	6,485	 	384,355	 	0.03	 	11,636	 	
Pascua-Lama	 	19,956	 	0.74	 	14,865	 	211,634	 	0.71	 	150,720	 	165,585	 	32,290	 	0.45	 	14,676	 	
Lagunas Norte	 	1,185	 	0.08	 	96	 	39,344	 	0.07	 	2,751	 	2,847	 	7,951	 	0.06	 	473	 	
Veladero	 	4,053	 	0.19	 	750	 	47,077	 	0.33	 	15,703	 	16,453	 	75,183	 	0.31	 	23,663	 	
Pierina	 	10,333	 	0.34	 	3,515	 	7,955	 	0.35	 	2,824	 	6,339	 	19,934	 	0.32	 	6,320	 	
AFRICA(14)	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Bulyanhulu (73.90%)	 	—	 	—	 	—	 	9,011	 	0.21	 	1,906	 	1,906	 	7,180	 	0.30	 	2,133	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
TOTAL	 	52,862	 	0.40	 	20,921	 	594,335	 	0.36	 	211,969	 	232,890	 	532,084	 	0.12	 	61,647	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
CONTAINED COPPER WITHIN REPORTED GOLD RESOURCES (1)	 	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
For the year ended Dec. 31, 2010	 	IN MEASURED (M) GOLD RESOURCES	 	IN INDICATED (I) GOLD RESOURCES	 	(M) + (I)	 	INFERRED	 	
 	 	Tons	 	Grade	 	Contained lbs	 	Tons	 	Grade	 	Contained lbs	 	Contained lbs	 	Tons	 	Grade	 	Contained lbs	 	
Based on attributable pounds	 	(000’s)	 	(%)	 	(millions)	 	(000’s)	 	(%)	 	(millions)	 	(millions)	 	(000’s)	 	(%)	 	(millions)	 	
NORTH AMERICA	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Pueblo Viejo (60.00%)	 	2,692	 	0.10	 	5.4	 	94,115	 	0.082	 	154.2	 	159.6	 	5,191	 	0.098	 	10.2	 	
SOUTH AMERICA	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Cerro Casale (75.00%)(12)	 	14,643	 	0.152	 	44.6	 	185,199	 	0.181	 	670.6	 	715.2	 	384,355	 	0.197	 	1,514.4	 	
Pascua-Lama	 	19,956	 	0.067	 	26.9	 	211,634	 	0.056	 	237.8	 	264.7	 	32,290	 	0.046	 	30.0	 	
AFRICA(14)	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Buzwagi (73.90%)	 	61	 	0.08	 	0.1	 	14,666	 	0.082	 	24.1	 	24.2	 	5,119	 	0.079	 	8.1	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
TOTAL	 	37,352	 	0.103	 	77.0	 	505,614	 	0.107	 	1,086.7	 	1,163.7	 	426,955	 	0.183	 	1,562.7	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
NICKEL MINERAL RESOURCES (1)	 	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
For the year ended Dec. 31, 2010	 	MEASURED (M)	 	INDICATED (I)	 	(M) + (I)	 	INFERRED	 	
 	 	Tons	 	Grade	 	Contained lbs	 	Tons	 	Grade	 	Contained lbs	 	Contained lbs	 	Tons	 	Grade	 	Contained lbs	 	
Based on attributable pounds	 	(000’s)	 	(%)	 	(millions)	 	(000’s)	 	(%)	 	(millions)	 	(millions)	 	(000’s)	 	(%)	 	(millions)	 	
AFRICA	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Kabanga (50.00%)	 	7,606	 	2.490	 	378.8	 	12,897	 	2.720	 	701.6	 	1,080.4	 	11,464	 	2.600	 	596.1	 	
 
See “- Notes to the Mineral Reserves, Resources, and Reconciliation Tables.
 
30 

 

Reconciliation of Mineral Reserves (1),(7),(10),(11)	 	 	 	 	 	 	 	 	 	
Based on attributable ounces	 	 	 	 	 	 	 	 	 	
Gold	 	Mineral Reserves	 	 	 	Increase	 	Mineral Reserves	 	
Property (000’s of ounces) (9)	 	12/31/2009	 	Processed in 2010	 	(decrease)	 	12/31/2010	 	
NORTH AMERICA	 	 	 	 	 	 	 	 	 	
Goldstrike Open Pit	 	9,296	 	1,083	 	1,443	 	9,656	 	
Goldstrike Underground	 	2,860	 	320	 	418	 	2,958	 	
Goldstrike Property Total	 	12,156	 	1,403	 	1,861	 	12,614	 	
Pueblo Viejo (60.00%)	 	14,244	 	0	 	-49	 	14,195	 	
Cortez	 	14,100	 	1,224	 	1,618	 	14,494	 	
Bald Mountain	 	4,489	 	84	 	343	 	4,748	 	
Turquoise Ridge (75.00%)	 	4,072	 	135	 	287	 	4,224	 	
Round Mountain (50.00%)	 	1,466	 	322	 	175	 	1,319	 	
South Arturo (60.00%)	 	1,350	 	0	 	41	 	1,391	 	
Ruby Hill	 	702	 	121	 	541	 	1,122	 	
Hemlo	 	1,325	 	256	 	293	 	1,362	 	
Marigold Mine (33.33%)	 	807	 	65	 	33	 	775	 	
Golden Sunlight	 	508	 	0	 	31	 	539	 	
Donlin Creek (50.00%)	 	0	 	0	 	0	 	0	 	
 	 	 	 	 	 	 	 	 	 	
SOUTH AMERICA	 	 	 	 	 	 	 	 	 	
Cerro Casale (75.00%)	 	11,585	 	0	 	5,792	 	17,377	 	
Pascua-Lama	 	17,839	 	0	 	6	 	17,845	 	
Veladero	 	12,008	 	1,483	 	766	 	11,291	 	
Lagunas Norte	 	7,501	 	867	 	-16	 	6,618	 	
Pierina	 	648	 	233	 	376	 	791	 	
 	 	 	 	 	 	 	 	 	 	
AUSTRALIA PACIFIC	 	 	 	 	 	 	 	 	 	
Porgera (95.00%)	 	7,683	 	599	 	348	 	7,432	 	
Kalgoorlie (50.00%)	 	4,205	 	450	 	25	 	3,780	 	
Cowal	 	2,697	 	364	 	145	 	2,478	 	
Plutonic	 	771	 	154	 	-197	 	420	 	
Kanowna Belle	 	1,233	 	278	 	131	 	1,086	 	
Darlot	 	444	 	96	 	55	 	403	 	
Granny Smith	 	510	 	163	 	270	 	617	 	
Lawlers	 	486	 	82	 	-52	 	352	 	
Osborne	 	19	 	30	 	11	 	0	 	
Reko Diq (37.50%)	 	0	 	0	 	0	 	0	 	
 	 	 	 	 	 	 	 	 	 	
AFRICA	 	 	 	 	 	 	 	 	 	
Bulyanhulu (73.90%)	 	10,320	 	226	 	-1,947	 	8,147	 	
North Mara (73.90%)	 	2,949	 	207	 	-646	 	2,096	 	
Buzwagi (73.90%)	 	3,401	 	187	 	-1,077	 	2,137	 	
Tulawaka (51.73%)	 	93	 	36	 	-8	 	49	 	
 	 	 	 	 	 	 	 	 	 	
OTHER (3)	 	140	 	88	 	32	 	84	 	
 	 	 	 	 	 	 	 	 	 	
TOTAL	 	139,751	 	9,153	 	9,188	 	139,786	 	

Copper	 	Mineral Reserves	 	 	 	Increase	 	Mineral Reserves	 	
Property (million pounds) (9)	 	12/31/2009	 	Processed in 2010	 	 (decrease)	 	12/31/2010	 	
 	 	 	 	 	 	 	 	 	 	
Zaldivar	 	6,032	 	524	 	1,006	 	6,514	 	
Osborne	 	31	 	53	 	22	 	0	 	
 	 	 	 	 	 	 	 	 	 	
TOTAL	 	6,063	 	577	 	1,028	 	6,514	 	
 
31 

 

Notes to the Mineral Reserves, Resources and Reconciliation Tables
 
(1)                               Reflects Barrick’s ownership share where ownership interest is less than 100%.
 
(2)                               These mineral resources are in addition to mineral reserves.  Mineral resources that are not mineral reserves do not have demonstrated economic viability when calculated using mineral reserve assumptions.
 
(3)                               Mineral reserves and resources have been calculated as at December 31, 2010, unless otherwise indicated.
 
(4)                               Mineral reserves as at December 31, 2010 have been calculated using an assumed gold price of $1000 (A$1180) per ounce, an assumed silver price of $16.00 per ounce, an assumed copper price of $2.00 per pound and exchange rate of $0.85 $U.S./A$.  Reserve calculations incorporate current and/or expected mine plans and cost levels at each property. Reserves at Round Mountain have been calculated using an assumed long-term average gold price of $900 per ounce. Reserves at Pueblo Viejo have been calculated using an assumed gold price of $975 per ounce and an assumed silver price of $15.50 per ounce.
 
(5)                               Mineral resources as at December 31, 2010 have been estimated using varying cut-off grades, depending on both the type of mine, its maturity and ore type at each property.  An assumed gold price of $1200 (A$1410) per ounce, an assumed silver price of $19.00 per ounce and an assumed copper price of $2.50 per pound have been used in estimating resources. Resources at Pueblo Viejo have been calculated using an assumed gold price of $1100 per ounce and an assumed silver price of $16.50 per ounce.
 
(6)                               Mineral reserves as at December 31, 2009 have been calculated using an assumed gold price of $825 (A$1030) per ounce, a silver price of $14.00 per ounce, a copper price of $2.00 per pound and an exchange rate of $0.80 $U.S./A$. Reserve calculations incorporate current and/or expected mine plans and cost levels at each property.
 
(7)                               Mineral reserves have been 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 Staff of the SEC, applies different standards in order to classify mineralization as a reserve.  For U.S. reporting purposes, as at December 31, 2010, the mineralization at Cerro Casale was classified as mineralized material.  In addition, while the terms “measured”, “indicated” and “inferred” mineral resources are required pursuant to National Instrument 43-101, the SEC does not recognize such terms. Canadian standards differ significantly from the requirements of the SEC, and mineral resource information contained herein is not comparable to similar information regarding mineral reserves disclosed in accordance with the requirements of the SEC.  Investors should understand that “inferred” mineral resources have a great amount of uncertainty as to their existence and as to their economic and legal feasibility. In addition, investors are cautioned not to assume that all or any part of Barrick’s mineral resources constitute or will be converted into reserves.
 
(8)                               Grade represents an average, weighted by reference to tons of ore type where several recovery processes apply.
 
(9)                               Ounces or pounds, as applicable, estimated to be present in the tons of ore which would be mined and processed.  Mill recovery rates have not been applied in calculating the contained ounces or pounds.
 
(10)                         Mineral reserves as at December 31, 2010 include stockpile material totalling approximately 159 million tons, containing approximately 11.2 million ounces.
 
32 

 
                                            Properties at which stockpile material exceeds 30 thousand ounces and represents more than 5% of the reported reserves are as follows:

 	 	Tons	 	Grade	 	Contained
Ounces	 	
Property	 	(000’s)	 	(oz/ton)	 	(000’s)	 	
 	 	 	 	 	 	 	 	
North Mara	 	2,929	 	0.054	 	159	 	
Cowal	 	13,724	 	0.023	 	319	 	
Kalgoorlie	 	16,753	 	0.031	 	527	 	
Porgera	 	37,064	 	0.075	 	2,788	 	
Goldstrike Open Pit	 	52,084	 	0.089	 	4,636	 	
 
(11)                         The metallurgical recovery applicable at each property and the cut-off grades used to determine mineral reserves as at December 31, 2010 are as follows:

 	 	Metallurgical	 	 	 	
 	 	Recovery	 	Cut-off Grade	 	
Gold Mine	 	(%)	 	(oz/ton)	 	
Goldstrike Property	 	 	 	 	 	
Open Pit	 	81.7	%	0.040 - 0.050	 	
Underground	 	87.9	%	0.153 - 0.175	 	
Pueblo Viejo	 	92.4	%	0.029 - 0.054	 	
Cortez	 	79.9	%	0.003 - 0.222	 	
Bald Mountain	 	70.6	%	0.003 - 0.009	 	
Turquoise Ridge	 	92.0	%	0.211 - 0.253	 	
Round Mountain	 	73.4	%	0.006 - 0.046	 	
South Arturo	 	70.0	%	0.004 - 0.038	 	
Ruby Hill	 	76.2	%	0.006 - 0.014	 	
Hemlo Property	 	 	 	 	 	
David Bell	 	92.4	%	0.109 - 0.131	 	
Williams	 	92.6	%	0.019 - 0.096	 	
Marigold	 	73.0	%	0.007	 	
Golden Sunlight	 	77.3	%	0.015 - 0.018	 	
Cerro Casale	 	69.6	%	0.009 - 0.011	 	
Pascua-Lama	 	86.2	%	0.032 - 0.094	 	
Veladero	 	74.9	%	0.005 - 0.013	 	
Lagunas Norte	 	67.3	%	0.005 - 0.034	 	
Pierina	 	82.6	%	0.0040 - 0.0044	 	
 
33 

 

Porgera	 	86.2	%	0.021 - 0.102	 	
Kalgoorlie	 	82.9	%	0.016 - 0.058	 	
Cowal	 	78.9	%	0.010 - 0.011	 	
Plutonic	 	85.6	%	0.106 - 0.216	 	
Kanowna	 	89.6	%	0.026 - 0.198	 	
Darlot	 	94.9	%	0.097 - 0.130	 	
Granny Smith	 	90.9	%	0.103 - 0.116	 	
Lawlers	 	96.0	%	0.070 - 0.122	 	
Bulyanhulu	 	92.3	%	0.157 - 0.185	 	
North Mara	 	86.5	%	0.031 - 0.039	 	
Buzwagi	 	90.0	%	0.018 - 0.021	 	
Tulawaka	 	93.0	%	0.092 - 0.137	 	

 	 	Metallurgical	 	 	 	
 	 	Recovery	 	Cut-off Grade	 	
Copper Mine	 	(%)	 	(%)	 	
Zaldívar	 	66.8	%	0.23 - 0.60	 	
 
(12)                         2009 reserves and resources for the Cerro Casale project reflect Barrick’s then 50% interest.  In March 2010, Barrick acquired an additional 25% of Cerro Casale.  2010 reserves and resources reflect Barrick’s 75% interest.
 
(13)                         In July 2009, Barrick sold its Henty mine to Bendigo Mining Limited.
 
(14)                         In March 2010, Barrick created ABG to hold its African gold mines, gold projects and gold exploration properties.  Barrick’s current equity interest in ABG is approximately 73.9%.
 
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Marketing and Distribution
 
Gold
 
Gold can be readily sold on numerous markets throughout the world and it is not difficult to ascertain its market price at any particular time.  Benchmark prices are generally based on the London gold market quotations.  Gold bullion is held as an asset class for a variety of reasons, including as a store of value and safeguard against the collapse of paper assets such as stocks, bonds and other financial instruments that are traded in fiat currencies not exchangeable into gold (at a fixed rate) under a “gold standard”, hedges against future inflation and portfolio diversification.  Governments, central banks and other official institutions hold significant quantities of gold as a component of exchange reserves. Since there are a large number of available gold purchasers, Barrick is not dependent upon the sale of gold to any one customer.
 
The price of gold is subject to volatile price movements over short periods of time and is affected by numerous industry and macroeconomic factors that are beyond Barrick’s control.  Gold price volatility remained high in 2010, with the price ranging from $1,045 to $1,431 per ounce during the year.  The average market price for the year of $1,225 per ounce was an all-time high.  The financial crisis of 2008, the subsequent slow pace of the economic recovery, and government stimulus measures adopted in response by the largest developed economies, including the United States, the Eurozone and Japan, has resulted in large fiscal deficits in these jurisdictions.  These deficits have triggered concerns of sovereign debt defaults, particularly in the Eurozone.  Further, the world’s most prominent central banks remain very accommodative in their monetary policies in an attempt to increase the rate of economic growth and reduce unemployment levels.  The continuing uncertain macroeconomic environment and loose monetary policies have resulted in gold performing its traditional role as a store of value and an alternative to fiat currency.  Consequently, gold continues to be viewed as a safe haven investment, which has resulted in a strong increase in investment demand.  Throughout 2010, there has continued to be increased interest in the holding of gold for investment purposes.  A continuation of these trends is supportive of high gold prices in the long term.
 
Barrick’s gold is currently being refined to market delivery standards by several refiners throughout the world.  The gold is sold to various gold bullion dealers at market prices.  Certain of Barrick’s operations also produce gold concentrate, which is sold to various smelters.  The Company believes that, because of the availability of alternative smelters or refiners, no material adverse effect would result if the Company lost the services of any of its current smelters or refiners.
 
Product fabrication and bullion investment are two principal sources of gold demand.  The introduction of more readily accessible and more liquid gold investment vehicles has further facilitated investment in gold and has been highly successful.  As of December 31, 2010, gold exchange traded funds held approximately 68.7 million ounces compared to holdings of 57.7 million ounces at 2009 year end — an increase of 19%.  Within the fabrication category, there are a wide variety of end uses, the largest of which is the manufacture of jewelry.  Other fabrication purposes include official coins, electronics, miscellaneous industrial and decorative uses, dentistry, medals and medallions.
 
Copper
 
Copper is a metal with inherent characteristics of excellent electrical conductivity, heat transfer and resistance to corrosion.  Copper is used principally in telecommunications, power infrastructure, automobiles, construction, and in consumer durables.  Copper is traded on the London Metal Exchange (LME), the New York Commodity Exchange (COMEX) and the Shanghai Futures Exchange (SHFE). 
 
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The price of copper as reported on these exchanges is influenced by numerous factors, including (i) the worldwide balance of copper demand and supply, (ii) rates of global economic growth, trends in industrial production and conditions in the housing and automotive industries, all of which correlate with demand for copper, (iii) economic growth and political conditions in China, which has become the largest consumer of refined copper in the world, and other major developing economies, (iv) speculative investment positions in copper and copper futures, (v) the availability and cost of substitute materials, and (vi) currency exchange fluctuations, including the relative strength of the U.S. dollar.
 
The copper market is volatile and cyclical.  Over the last 15 years to the end of 2010, LME prices per pound have ranged from a low of 57 cents to a high, reached on December 31, 2010, of $4.42.  Copper prices generally rose throughout 2010, particularly in the second half, as LME copper prices traded in a wide range of $2.74 to an all-time high of $4.42 per pound, averaging $3.42 per pound.  Barrick’s realized price of $3.41 per pound in 2010 was in line with market prices, with volatility from spot prices resulting from quotational pricing adjustments and hedging activities (see “Non-GAAP Financial Measures — Realized Price”).  Copper’s rise to all-time highs occurred mainly as a result of strong demand from emerging markets, especially China, decreasing exchange stockpiles and increasing investor interest in base metals with strong forward-looking supply and demand fundamentals.  Copper prices should continue to be positively influenced by demand from Asia, global economic growth, the limited availability of scrap metal and production levels of mines and smelters in the future.
 
At the Zaldívar mine, copper cathode is sold to copper product manufacturers and copper traders in Europe, North America, South America and Asia, while concentrate is sold to a local smelter in Chile.  Since there are a large number of available copper cathode purchasers, Barrick is not dependent upon the sale of copper to any one customer.
 
Employees and Labor Relations
 
As at December 31, 2010, excluding contractors, Barrick employed approximately 16,000 employees worldwide, as well as approximately 2,500 employees at operations jointly owned by Barrick, substantially all of whom are employed in the United States, Canada, Australia, Chile, Peru, Argentina, Papua New Guinea, Tanzania and the Dominican Republic. Unions represent approximately 6,000 persons at the Company’s operations. Generally, management believes that labor relations at all locations are good.
 
Despite generally good labour relations, recent increased demand for skilled workers in the resource industry and increased demand for higher wages have led to high employee turnover and increasing costs at certain of Barrick’s operations.  Certain Barrick mines may be adversely impacted if either the increased demand for higher wages leads to work stoppages or the Company is unable to retain a sufficient number of qualified employees for such operations.
 
Competition
 
The Company competes with other mining and exploration companies in connection with the acquisition of mining claims and leases and in connection with the recruitment and retention of qualified employees (see “ — Employees and Labor Relations”).
 
There is significant competition for mining claims and leases and, as a result, the Company may be unable to continue to acquire attractive assets on terms it considers acceptable.
 
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Corporate Social Responsibility
 
In 2010, Barrick renewed and increased its focus on Corporate Social Responsibility (“CSR”) initiatives.  Barrick announced two new CSR initiatives to further strengthen the Company’s CSR performance.  Barrick has nominated Dambisa Moyo as an independent director with CSR experience to stand for election at Barrick’s upcoming Annual Meeting of Shareholders on April 27, 2011.  The Company futher intends to establish an external CSR Advisory Board to provide advice and guidance on challenging social and environmental issues and encourage further innovation and leadership in CSR.
 
Also in November 2010, Barrick announced that it was the first Canadian mining company to join the Voluntary Principles on Security and Human Rights (“Voluntary Principles”), a set of guidelines by which companies in the extractive sector can maintain the safety and security of their operations, while ensuring respect for human rights and fundamental freedoms.  The Company is advancing the implementation of the Voluntary Principles, engaging in the tripartite process with non-governmental organizations, extractive companies and government members.  The advancement of this process is particularly important in certain jurisdictions in which the Company currently operates and faces ongoing challenges in ensuring compliance with these standards.
 
Barrick’s performance on CSR initiatives continues to receive international recognition.  In 2010, the Company was listed for the third consecutive year in the Dow Jones World Sustainability Index and, for the first time, was included in the NASDAQ Global Sustainability Index.  In addition, the Carbon Disclosure Project named Barrick a climate disclosure leader for the Company’s climate change strategy and reporting practices (see “Environment and Closure” for additional information on Barrick’s environmental standards and practices).
 
MATERIAL PROPERTIES
 
For the purposes of this Annual Information Form, Barrick has identified its Goldstrike, Cortez, Lagunas Norte, Veladero, Zaldívar and Porgera mines and its Pueblo Viejo and Pascua-Lama projects as material properties. The following is a description of Barrick’s material properties.
 
Goldstrike Property
 
General Information
 
The Goldstrike property is located in Elko and Eureka Counties in north central Nevada, approximately 40 kilometers north of the town of Carlin, at an elevation of 1,700 meters in the hilly terrain of the Tuscarora Mountains. Access to the property is provided by certain access agreements with Newmont Mining Corporation (“Newmont”) that allow for the use of various roads in the area, and a right-of-way issued by the Bureau of Land Management. Such roads are accessed from Elko, Nevada by traveling west on U.S. Interstate 80 to Carlin, Nevada and then by approximately 40 kilometers of local roads north of Carlin. The Northern Nevada climate is fairly arid and has little impact on the mine’s operations.
 
PanCana Minerals Ltd. (“PanCana”) first mined the property for gold in 1976. In 1978, Western States Minerals Corporation (“WSMC”) became the operator in a 50/50 joint venture with PanCana. Barrick acquired a 50% interest and assumed management of the Goldstrike property on December 31, 1986 with the acquisition of WSMC’s 50% interest in the property.  It completed the acquisition of 100%
 
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ownership of the property pursuant to a plan of arrangement entered into with PanCana in January 1987. At the time of acquisition, mining operations on the property were concentrated on various shallow oxide deposits. The principal known deposit was the Post surface oxide deposit, which then contained approximately half a million ounces of gold. The property was operated as an open pit, heap leach operation. Reserves for the Post deposit were delineated during 1986 and mining of the Post deposit commenced in 1987. Following acquisition, two sulphide ore zones were identified (the Betze and Deep Post deposits). During the first two years after acquisition, a CIL mill and ancillary facilities, as well as a crushing and agglomeration plant designed to improve recoveries from low grade oxide ore, were constructed. In January 1989, Barrick announced the four-year Betze Development Plan to develop the Post oxide and Betze sulphide reserves. The plan, which called for the development of a large open pit and the expansion of the milling facilities, was completed in 1993 with the commissioning of the final three of the total of six autoclaves. Goldstrike’s underground mine (Meikle deposit), which was discovered in 1989, commenced production in 1996. During 2000, the Company completed construction of a roaster facility for the treatment of carbonaceous ore on the property. The roaster increased the property’s processing capacity by approximately 16,000 tons per day. In 2001, an intensive development program to bring the Rodeo deposit, part of the underground mine, into production was completed and a new ball mill was added to increase autoclave recovery.  A total of approximately 1,600 employees work at the Goldstrike property.
 
As of December 31, 2010, the Goldstrike property comprised approximately 4,197 hectares of surface rights ownership/control (3,420 hectares private and 778 hectares public), and approximately 3,535 hectares of mineral rights ownership/control (2,741 hectares private and 794 hectares public).  These rights are owned or controlled through various forms of patents issued by the United States of America and by ownership of unpatented mining and millsite claims that are held subject to the paramount title of the United States of America.  Patenting is the process that transfers fee simple title from the federal government to the applicant. The Goldstrike property includes a total of 298 unpatented mining and millsite claims to control the public acreage.  Unpatented mining claims are renewed on an annual basis and all fees necessary are paid prior to August 31 st  of each year.  All mining leases and subleases are reviewed on a monthly basis and all payments and commitment are paid as required by the specific agreements.   The Goldstrike open pit and underground mines and the majority of the beneficiation and processing facilities at the Goldstrike property are situated on land owned by Barrick.  The necessary permits to provide sufficient surface rights have been obtained for current operations at the property.
 
Geology
 
The property is located on the Carlin Trend, one of North America’s most prolific gold producing areas. The area of the Goldstrike property consists of folded and faulted Paleozoic sedimentary rocks, which were intruded by the diorite to granodiorite Goldstrike stock of the Jurassic Age. Mesozoic folding and thrust faults form important structural traps for the mineralization in the Betze-Post pit. Tertiary faulting developed ranges and basins, which were subsequently filled with volcanic and sedimentary rocks during the Tertiary time. The gold mineralization occurred at the onset of Tertiary volcanism, approximately 39 million years ago.
 
The major gold deposits — Post Oxide, Betze, Rodeo and Meikle — are all hosted in sedimentary rocks of the Silurian to Devonian ages. The Post Oxide orebody occurs in the siliceous siltstones, mudstones, argillites and minor limestones of the Rodeo Creek Formation. Betze and Rodeo are found in the silty limestones and debris flows of the Popovich Formation. The Meikle deposit occurs in hydrothermal and solution collapse breccias in the Bootstrap Limestone of the Roberts Mountains Formation.  The gold at Goldstrike was carried into the various orebodies by hot hydrothermal fluids, and deposited with very fine pyrite and silica. Over time, the pyrite oxidized, freeing the gold and making its extraction relatively easy,
 
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as in the Post Oxide deposit. In the deeper deposits — Betze, Rodeo and Meikle — the gold is still locked up with the iron sulphide and an additional processing step (autoclaving or roasting) is required to free the gold.
 
The gold mineralization at the open pit is controlled by favorable stratigraphy, structural complexities in the form of faults and folds, and the contact of the Goldstrike intrusive. The deposit represents many styles of mineralization occurring within numerous rock types and alteration assemblages.  The favored host for gold mineralization is the Popovich Limestone followed by the Rodeo Creek unit, Goldstrike sill complex and Roberts Mountains Formation.  Some ore occurs below sills, which act as dams to the ascending hydrothermal fluids. Alteration is characterized by decalcification of limestone, silicification of all rock types and clay development in structurally disturbed areas. Overall, the Betze-Post ore zones extend for 1,829 meters in a northwest direction and average 183 to 244 meters in width and 122 to 183 meters in thickness.
 
Carbonate breccias and limestones of the Devonian Popovich Formation and various intrusive rocks host the orebodies that comprise the Goldstrike underground mine. In contrast to the Goldstrike open pit area, the overlying mudstones and argillites of the Devonian Rodeo Creek Member are generally unmineralized. Gold-bearing fluids have ascended faults and fractures and have deposited gold and other minerals, such as pyrite and barite, in permeable horizons in the breccias and limestones. These breccias were formed by a combination of collapse, tectonic and hydrothermal processes, and display excellent continuity of grade both down dip and along strike. The fluids have been focused below a steep dipping monzonite porphyry dyke and the overlying relatively impermeable Rodeo Creek Member. Since silicification is the dominant alteration, the bulk of the ore is quite hard and competent.
 
Mining and Processing
 
Goldstrike’s open pit mine is an open pit truck-and-shovel operation, using standard, proven equipment. Two different underground mining methods are used at the underground mine, long-hole open stoping and drift-and-fill (used for flat-lying mineralization or where ground conditions are less competent).  The underground mine is a trackless operation.  Goldstrike’s production in total was 1,239 thousand ounces of gold in 2010 at cash costs of $530 per ounce compared to 1,419 thousand ounces of gold in 2009 at cash costs of $464 per ounce. Based on existing reserves and production capacity, the expected remaining mine life is 12 years for underground mining, 15 years for open pit mining and 15 years for processing operations.  The reduction in the expected remaining life of processing operations to 15 years (2009: 26 years) is mainly a result of the extension of the operating life of the autoclaves.  The extension of the operating life of the autoclaves is due to the conversion of the pressure oxidation process from an acid circuit to an alkaline circuit and the introduction of thiosulfate processing, both of which are further described below.  By extending the operating life of the autoclaves, Goldstrike will be able to process certain ore at an earlier stage using the autoclaves instead of processing that same ore at later stage using the roaster.
 
The underground mine includes two major orebodies: Meikle and Rodeo. The Meikle orebody, located 1.6 kilometers north of the open pit mine, is a high grade orebody which was discovered in 1989 and started production in 1996.  The Meikle orebody incorporates 5 mineralized zones: the Main Meikle, Meikle Extension, South Meikle, Griffin, and West Griffin. The Rodeo orebody, located 0.5 kilometers northwest of the open pit mine, is a moderate grade orebody discovered in 1988 and brought into production in 2002.  The Rodeo orebody includes four mineralized zones: Upper Rodeo, Lower Rodeo, West Rodeo, and Barrel. The Meikle and Rodeo orebodies are interconnected by two haulage drifts and can be accessed from two shafts and by a decline at the bottom of the open pit mine.
 
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The property has two processing facilities: an autoclave installation, which is used to treat the property’s non-carbonaceous sulphide (refractory) ore; and the roaster, which is used to treat the property’s carbonaceous ore (whose active carbon content responds poorly to autoclaving). The combined capacity of these two facilities is approximately 33,000 to 35,000 tons per day. These process facilities treat the ore from Goldstrike’s open pit and underground mines. Gold contained in recovered ore is processed into doré on-site and shipped to outside refineries for processing into gold bullion.  All material permits to conduct operations at the mine have been obtained and are in good standing. In December 2005, Barrick began operating a 115 megawatt natural gas-fired power plant that provides a portion of Goldstrike’s power requirements.  The remaining power requirements are satisfied by open market purchases of electricity.
 
Due to increasing levels of carbonate in the ore being mined at the Goldstrike property, certain necessary changes to the autoclaves are being made to convert the pressure oxidation process from an acid circuit to an alkaline circuit. This technology, which was tested at Goldstrike in 2009, has a lower recovery than the acid autoclave configuration, but has better economics with increased levels of carbonate.  The autoclaves are scheduled to start up in the alkaline mode in mid-2011.  Barrick has also successfully operated a demonstation plant using a technology that will allow treatment of carbonaceous material through the autoclaves.  This technology uses thiosulphate to leach the gold after pressure oxidation rather than cyanide and resin to collect the dissolved gold rather than carbon.  Conversion to this new process is underway and will allow the autoclaves to continue to operate through the remaining life of the mine.
 
Dewatering of the Betze Pit is accomplished through the use of perimeter wells located peripheral to the pit area, in-pit wells, horizontal drains installed for passive dewatering of pit walls, and water collection sumps installed in the bottom of the pit. Dewatering activities are conducted in compliance with its approved water appropriations issued by the Nevada State Engineer’s Office.
 
Groundwater pumping for dewatering at the Goldstrike property is primarily from the carbonate rock aquifer, with very small amounts of pumping from shallower siltstones and unconsolidated basin fill deposits.
 
Water is conveyed by pipelines to various use areas such as mining and milling at the Goldstrike property, delivered to Barrick’s Meikle mine, or delivered to Newmont for mining and milling use. Water that is not used for mining or milling purposes is delivered to the 72-inch-diameter gravity flow pipeline to the TS Ranch Reservoir.  Barrick is authorized by a discharge permit issued by the Nevada Division of Environmental Protection to discharge water produced by its groundwater pumping operations to groundwaters of the state via percolation, infiltration, and irrigation.
 
The State of Nevada imposes a 5% net proceeds tax on the value of all minerals severed in the State.   This tax is calculated and paid based on a prescribed net income formula which is different from book income.
 
Environment
 
The Goldstrike property operating facilities have been designed to mitigate environmental impacts.  The operations have processes, procedures or facilities in place to manage substances that have the potential to be harmful to the environment.  In order to prevent and control spills and protect water quality, the mine utilizes multiple levels of spill containment procedures and routine inspection and monitoring of its facilities.  The mine has installed air pollution control devices on its facilities consistent with and, in some cases, exceeding legal requirements.  The mine also has various programs to reuse and
 
40 

 
conserve water at its operations.  In order to mitigate the impact of dust produced by its operations, the mine uses several different dust suppression techniques, including a stockpile cover at the roaster, reducing both the consumption of water and the carbon footprint.  In 2010, all activities at the Goldstrike property were, and continue to be, in compliance in all material respects with applicable corporate standards and environmental regulations.  The mine’s operations are compliant with the requirements of the International Cyanide Management Code.
 
At December 31, 2010, the recorded amount of estimated future reclamation and closure costs that were also asset retirement obligations, as defined in FAS 143 (as described in Note 22 to the Consolidated Financial Statements), for the property was $48.2 million.  In connection with the reclamation of the mine area, Barrick has provided the financial security as required by governmental authorities.  Major expenditure items covered by the asset retirement obligation are long term care and monitoring, surface contouring, waste dump closure and process facility demolition.  See “Environment and Closure”.
 
Exploration, Drilling and Analysis
 
In 2010, Goldstrike exploration activities focused on resource delineation drilling at Deep North Post underground and drill testing in the Corona area.  Nine surface reverse circulation holes totaling 4,266 meters were completed at Corona, which is 300 to 1000 meters west of Meikle.  Four of the nine holes returned significant underground grades.  Cross section and target delineation work will continue for the area in 2011.  The Deep North Post Program completed 35 meters of drift and 5,358 meters of drilling in 55 underground core holes.  The Program drilled out most of the Deep North Post mineralization on 30 meter drill spacing.  This mineralization is a continuation of the Lower Rodeo deposit.  Approximately 50% of the ounces are below the current water table.
 
In 2011, Goldstrike plans to drill two deep underground core holes totaling 1,340 meters from the 3,790 elevation to test the down rake extension of Rodeo and Deep North Post mineralization.  The exploration group will assist with logistics and supervision of drill programs, planned by the Goldstrike geology group, totaling 84,500 meters of reverse circulation drilling in and proximal to the Betze-Post open pit.  Additional work includes the extrapolation and interpretation of geology, geochemistry and geophysics to further delineate viable targets on the Goldstrike property.
 
More than 6,600 drill holes have been completed within and around the Betze-Post deposit.  Approximately 70% of the total drill holes are reverse circulation and rotary drill holes and the remaining are diamond core holes.  Drill spacing through the Betze, West Betze and Screamer deposits is approximately 53 meters and at Post is 46 meters.  Drill spacing in the North Screamer and West Barrel deposits is approximately 30 meters.  Almost all of the total drillhole footage has been sampled on 1.5 meter intervals and assayed for gold by the fire assay method on 1 AT with an AA finish.  All assaying is checked and verified under a comprehensive, multi-level quality assurance and quality control program that includes external laboratory check assays.
 
Underground drilling at the Meikle deposit (Meikle, South Meikle, Griffin, Extension and West Griffin) commenced in 1995 and a total of 441,566 meters in 7,684 underground holes had been completed in and around the deposit as of December 31, 2010.  A total of 338 surface holes, for 157,608 meters, have been drilled in and around the Meikle deposit.  Additional Banshee drilling commenced in 2007.  A total of 92 surface holes, for 47,591 meters and 204 underground holes for 30,127 meters have been drilled in Banshee as of December 31, 2010.
 
Underground drilling commenced at the Rodeo deposit (Rodeo, West Rodeo, and Barrel) in 1998 and, as of December 31, 2010, a total of 4,227 underground holes totaling 246,592 meters had been drilled in
 
41 

 
and around the deposit.  A total of 230 surface holes, for 104,943 meters, have been drilled in and around the Rodeo deposit.  Underground drilling commenced at the North Post deposit (North Post and Deep North Post) in 2005 and a total of 40,863 meters in 422 underground core and reverse circulation holes have been drilled as of December 31, 2010.  There are an additional 142 North Post surface holes for 53,201 meters.
 
Underground drilling is by both core and reverse circulation methods. The majority of drilling performed in 2010 was based on the reverse circulation method.  Both reverse circulation and core return favorable results, but reverse circulation lends to a much faster penetration rate and is one-fifth the cost.  All surface drilling ore intercepts are core.  Drill spacing through the Meikle deposit is 8 to 26 meters.  Some of the wider-spaced core holes are sampled on six meter intervals (chip samples) and 1.5 meter whole or split core in mineralized intervals.  All samples are fire-assayed with an atomic absorption spectrometer finish followed by a gravimetric finish for samples with AuFA greater than 0.438 ounces of gold per ton.  Most sampling and assaying is done on-site with both internal check assays and external check assays performed by independent laboratories.
 
Drill samples collected for use in the geologic modeling and mineral resource estimation are under the direct supervision of the geology department at Goldstrike.  Sample preparation and analyses are conducted by the Barrick Goldstrike lab and by independent laboratories.  Procedures are employed to ensure security of samples during their delivery from the drill rig to the laboratory.  All drill hole collar, survey and assay information used in modeling and resource estimation are manually verified and approved by staff geologists prior to entry into the mine-wide database.
 
The quality assurance procedures and assay protocols used in connection with drilling and sampling on the Goldstrike property conform to industry accepted quality control methods.
 
Regular internal auditing of the mineral reserve and mineral resource estimation processes and procedures are conducted.
 
Royalties
 
Most of the property comprising the open pit mine is subject to net smelter return and net profits interest royalties payable on the valuable minerals produced from the property. The maximum third party royalties payable on the Betze deposit are a 4% net smelter return and a 6% net profits interest.  The maximum royalties payable on the Meikle deposit are a 4% net smelter return and a 5% net profits interest.
 
Production Information
 
The following table summarizes certain production and financial information for the Goldstrike property for the periods indicated:
 
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 	 	Year ended
December 31, 2010	 	Year ended
December 31, 2009	 	
Tons mined (000’s)	 	123,681	 	132,038	 	
Tons of ore processed (000’s)	 	7,993	 	9,592	 	
Average grade processed (ounces per ton)	 	0.187	 	0.172	 	
Recovery rate (%)	 	83.0	%	83.7	%	
Ounces of gold produced (000’s)	 	1,239	 	1,419	 	
Average total cash costs per ounce (2)	 	$	530	 	$	464	 	

(1)    Effective Q1 2010, Storm has been consolidated with Goldstrike for reporting purposes.  The figures set forth above for Goldstrike include production from Storm for 2009 and 2010.
 
(2)    For an explanation of total cash costs per ounce, refer to “Non-GAAP Financial Measures — Total Cash Costs and Net Cash Costs Per Ounce”.
 
The map below shows the design and layout of the Goldstrike property.

 
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Cortez Property
 
General Information
 
The Cortez mine is located 100 kilometers southwest of Elko, Nevada in Lander County and currently employs approximately 1,000 people. The Pipeline property is 11 kilometers northwest and the Cortez Hills property is 4 kilometers southeast of the original Cortez milling complex.  Cortez is accessed via Nevada State Highway 306, which extends southward from U.S. Interstate 80, both of which are paved roads. The climate is fairly arid and has little impact on the mine’s operations.  The elevation at the Pipeline site is 1,600 meters and about 1,850 meters at the Cortez Hills site.
 
In 1964, the Cortez joint venture was formed to explore the Cortez area. In 1969, the original Cortez mine went into production.  From 1969 to 1997, gold ore was sourced from open pits at Cortez, Gold Acres, Horse Canyon and Crescent.  In 1991, the Pipeline and South Pipeline deposits were discovered, with development approval received in 1996. In 1998, the Cortez Pediment was discovered with the Cortez Hills discovery announced in April 2003. The Cortez Hills development was approved by Placer Dome and Kennecott in September 2005 and confirmed by Barrick in 2006.  Reflecting its acquisition of Placer Dome and the purchase of Kennecott Explorations (Australia) Ltd. 40% interest, Barrick Cortez Inc. is the 60% joint venture interest owner and is the operator of the Cortez joint venture (“Cortez”). The remaining 40% interest is held by Barrick Gold Finance Inc.
 
The Cortez joint venture directly controls an area of interest of about 100,561 hectares.  The property rights controlled by Cortez, either from outright ownership or by lease, consist of 78,890 hectares of unpatented mining claims held subject to the paramount title of the United States of America and 21,671 hectares of patented mining claims and fee mineral and surface land, owned or controlled through various patents issued by the United States of America. All mining claims are renewed on an annual basis and all necessary fees are paid prior to August 31st of each year.  All mining leases and subleases are reviewed on a monthly basis and all payments and commitments are paid as required by the specific agreements.
 
Geology
 
The Cortez property is situated along the Cortez/Battle Mountain trend in north-central Nevada. The principal gold deposits and mining operations are located on the southwest and south sides of Crescent Valley, which was formed by basin and range extensional tectonism. Mineralization is sedimentary rock-hosted and consists of micron-sized free gold particles that are disseminated throughout the host rock, commonly in association with secondary silica, iron oxides or pyrite.
 
The Pipeline Complex, Gold Acres, Cortez Hills Complex and Horse Canyon areas are the key projects that are part of the Cortez property. Principal lithologic units identified within the Pipeline Complex and the Cortez Hills Complex deposit areas include early-Silurian to late-Devonian-aged carbonate rocks.   The Silurian Roberts Mountains Formation is characterized by thin-bedded, planar-laminated, dark gray to black carbonate-dominated sediments and turbidites.  The Devonian package is comprised of Wenban Limestone, characterized by thin- to thick-bedded planar to wispy laminated gray to black carbonate sediments, turbidites and debris flow, and Horse Canyon Formation is characterized by thin, rhythmically bedded, planar-laminated gray calcareous siltstone, mudstone, and chert.
 
Stage 9 of the Pipeline deposit is hosted by the middle to lower portions of the Devonian Wenban Limestone and the upper portion of the Silurian Roberts Mountains Formation.  The Cortez Hills deposit has a strike length of more than 500 meters, and is approximately 200 meters wide. The mineralized zone
 
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 starts approximately 120 meters below surface and continues up to 600 meters. Exploration to fully delineate the extent of the deposit is ongoing.
 
Mining and Processing
 
Deposits within the Pipeline Complex are being mined by conventional open pit methods.   The first eight stages of mining occurred in the Pipeline deposit over a period of 12 years (1996 — 2007).  Mining at the Cortez Hills Complex is scheduled through 2017.  Conventional open pit methods will be employed for all six phases of the Cortez Hills deposit with underhand cut and fill being the method for the underground operation.  Mining production rates (open pit and underground combined) for all mining activity at Cortez will average about 130 million tonnes.
 
Three different metallurgical processes are employed for the recovery of gold; run-of-mine heap leach, conventional mill (CIL) and refractory roaster and/or autoclave.  The process used for a particular ore is determined based on the grade and metallurgical character of that ore.  Lower grade run-of-mine oxide ore is heap leached on existing facilities, while higher-grade non-refractory ore is treated in a conventional mill (nominal 9,100 tonnes per day) using cyanidation and a CIL process.  Refractory ore is stockpiled on site in designated areas.
 
Water for process use at the Pipeline Complex is supplied from the open pit dewatering system.  Electric power at the Pipeline and Cortez Hills Complexes is purchased in the open market and supplied through a 73 kilometer transmission line.
 
The State of Nevada imposes a 5% net proceeds tax on the value of all minerals severed in the State.   This tax is calculated and paid based on a prescribed net income formula which is different from book income.
 
All material permits to conduct operations at the Pipeline Complex and Cortez Hills Complex have been obtained and are in good standing.  Commencing in April 2010, the mine had been operating under a tailored injunction which allowed mining operations to continue subject to certain restrictions on ore transportation and dewatering pending completion of a supplemental environmental impact statement (“EIS”) to address those elements of the project.   On March 15, 2011 BLM issued its record of decision which approved the supplemental EIS and removed those restrictions, thereby enabling the Cortez mine to revert to its original operating scope.  For additional information on the legal proceedings related to Cortez s ee “Legal Matters — Legal Proceedings — Cortez Hills Complaint”.
 
In 2010, Cortez produced 1,140,975 ounces of gold at average total cash costs of $312 per ounce sold compared to 518,000 ounces of gold in 2009 at cash costs of $510 per ounce. Based on existing reserves and production capacity, the expected remaining mine life is approximately 9 years for underground mining, 12 years for open pit mining and 17 years for processing operations.  The reduction in the expected remaining life of processing operations to 17 years (2009: 24 years) is largely a result of the extension of the operating life of the Goldstrike autoclaves, resulting in increased trucking of ore to Barrick’s Goldstrike property for processing.  Higher trucking assumptions and higher mill throughput assumptions for future periods also contributed to the decrease in the remaining life of processing operations at Cortez.
 
Environment
 
The mine’s dewatering operations have been improved with the addition of several new rapid infiltration sites. Current dewatering operations focus on bedrock water production. A portion of the
 
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dewatering water is utilized for mining and milling and a portion is utilized at a local ranch on a seasonal basis for irrigation purposes.  The balance is returned to the basin through the rapid infiltration basins or consumed in processing activities (i.e., dust suppression and process makeup water).
 
Cortez’s operating facilities have been designed to mitigate environmental impacts.  The operations have processes, procedures or facilities in place to manage substances that have the potential to be harmful to the environment.  In order to prevent and control spills and protect water quality, the mine utilizes multiple levels of spill containment procedures and routine inspection and monitoring of its facilities.  The mine also has various programs to reuse and conserve water at its operations.  In order to mitigate the impact of dust produced by its operations, the mine uses several different dust suppression techniques.  In 2010, all activities at Cortez were, and have continued to be, in compliance in all material respects with applicable corporate standards and environmental regulations.
 
At December 31, 2010, the amount of estimated future reclamation and closure costs that were also asset retirement obligations, as defined in FAS 143 (as described in Note 22 to the Consolidated Financial Statements), for the property was approximately $45.9 million.  In connection with the reclamation of the mine area, Barrick has provided the financial security as required by governmental authorities. See “Environment and Closure”.
 
Exploration, Drilling and Analysis
 
In 2010, approximately 50,687 meters in 212 exploration holes was drilled.  Of this drilling, 10% was directed to the Pipeline Complex, 28% to the Cortez Hills Complex and 62% to other targets.  Spacing ranged from nominal 100 meters for earlier stage projects to 30 meter spacing for reserve delineation programs.  Drilling in the area of the Cortez Hills Complex is conducted as underground platforms are developed.  Mineralization remains open at depth to the south and west.  Other areas that were drilled in 2010 include the Horse Canyon area, Gold Acres, North Fox and other areas within the claim block.
 
In 2011, exploration activities on the Cortez property will focus the majority of the drilling program on reserve delineation.  The remainder of the drilling activities on the Cortez property will be spread across the claim block at historic past producers, including Hilltop and Buckhorn.  More than 105,000 meters of drilling is planned in 2011.  Additional work includes the extrapolation and interpretation of geology, geochemistry and geophysics to further delineate viable targets across the Cortez claim block.
 
Approximately 16,106 drill holes have been drilled at the Cortez property; however, the existing database does not include all historic drilling or competitor drill holes.  Mud-rotary drills have been used to drill relatively thick sections of alluvium over the Crossroads deposit or in areas being condemned for waste dump and processing facilities.  Core tools were used to complete the bedrock sections of these holes.  Reverse circulation drilling is currently used during the initial phases of exploration and reverse circulation holes encountering mineralization are redrilled with core holes to produce sampling in mineralization that is the highest quality.  Core drilling is typically undertaken as development drilling.
 
Collar surveys have been determined by optical surveys (1960s through late 1980s), field estimates, Brunton compass and pacing, compass-and-string distance, and most recently the use of laser survey or global positioning system (GPS) measurements.  Down-hole surveying began with the first reverse circulation hole drilled on the Pipeline deposit in 1991.  Significant deviations were shown; therefore, down-hole surveying was routinely undertaken from that time on.  Significant work was carried out to determine the accuracy of the instruments of each drill or survey contractor.
 
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Drill holes typically have a vertical orientation.  Angle core holes were drilled at Cortez Hills to confirm the orientation of relatively high-grade gold-mineralized zones and to obtain geotechnical information for the planned Cortez Hills pit.  Several angle core holes were drilled at NW Deep, Pipeline and South Pipeline to provide geotechnical data and further delineate areas of mineralization. Assay data used for modeling and mineral resource estimation are predominantly from core drill samples and the remainder from reverse circulation drill samples.  The Pipeline Complex is drilled on 43 meter centres and the Cortez Hills Complex on 30 meter centres.
 
Underground ore is delineated by nominal 15 meter spaced core holes with additional in-fill reverse circulation drilling as required to define ore boundaries.  Industry standard best practice is applicable for logging and sampling. Both reverse circulation and core drilling is used to delineate mineralization.  The main mineralized bodies of the deposit are drilled almost exclusively with core holes.  Geologic models are developed based on the drill hole database.
 
Internal audits and outside audits from independent contractors have reviewed the sampling and analytical protocol of the drill samples from the deposit areas, including collection through final analysis and the quality control programs meet industry standards.  All analytical data is verified by the Cortez technical staff prior to use in resource estimation.
 
The quality assurance procedures and assay protocols used in connection with drilling and sampling on the Cortez property conform to industry accepted quality control methods.
 
Regular internal auditing of the mineral reserve and mineral resource estimation processes and procedures are conducted.
 
Royalties
 
All production by Pipeline is subject to a 1.4% gross smelter return royalty payable to the former shareholders of Idaho Mining Corporation.  In addition, Royal Gold Inc. holds a gross smelter return royalty over a portion of the Pipeline Complex (graduating from 0.4% to 5.0% based on the price of gold) and ECM, Inc. holds a net value royalty of 5% (shared between ECM, Inc. and Royal Crescent Valley, Inc.) over a portion of the Pipeline Complex.
 
All other production by Cortez, including Cortez Hills, is subject to a 1.3% gross smelter return royalty payable to the former shareholders of Idaho Mining Corporation.
 
In addition, there is a royalty payable to Kennecott Explorations (Australia) Ltd. (graduating from 0% to 3%, depending on the gold price, of the gross value of gold delivered, minus certain deductions for pre-existing royalties) that would cover 40% of production from Cortez, but only after the total amount of gold delivered to Barrick from Cortez after January 1, 2008 exceeds 15 million ounces.
 
Production Information
 
The following table summarizes certain production and financial information for the Cortez mine for the periods indicated:
 
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 	 	Year ended
December 31, 2010	 	Year ended
December 31, 2009	 	
Tons mined (000’s)	 	121,913	 	121,543	 	
Tons of ore processed (000’s)	 	4,860	 	16,049	 	
Average grade processed (ounces per ton)	 	0.252	 	0.038	 	
Ounces of gold produced (000’s)	 	1,141	 	518	 	
Average total cash costs per ounce (1)	 	$	312	 	$	510	 	

(1)  For an explanation of total cash costs per ounce, refer to “Non-GAAP Financial Measures — Total Cash Costs and Net Cash Costs Per Ounce”.
 
The diagram on the following page shows the design and layout of the Cortez mine.
 
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Lagunas Norte Mine
 
General Information
 
The Lagunas Norte mine is an open pit, heap leaching operation.  The mine is located in the Alto Chicama mining district and is 140 kilometers east of the coastal city of Trujillo, Peru, and 175 kilometers north of Barrick’s Pierina mine.  The property is located on the western flank of the Peruvian Andes and is at an elevation of 4,000 to 4,260 meters above sea level.  The area is considered to have a mountain climate.  Generally, the climate of the area does not impact on the mine’s operations.  Vegetation consists of small shrubs and grasses.  The property is accessible year round by road from both Trujillo and Huamachuco, Peru.
 
The Alto Chicama region has been actively mined for coal since the 19th century, principally for domestic consumption. In 1990, Minero Peru S.A,. the State mining company, constructed a camp to re-evaluate the previous coal operations. The Alto Chicama region hosts a low grade anthracite coal deposit, but it was not developed due to the availability of cheaper sources of energy elsewhere.
 
In 2002, Barrick acquired the three primary mining concessions, named “Derechos Especiales del Estado No. 1, 2 and 3”, respectively, from Centromin pursuant to an international bid process. In 2004, these three concessions were consolidated into a single mining concession called “Acumulacion Alto Chicama” with an extension of 18,002 hectares, within which the existing open pit and process plant are located.  Three additional mining concessions named “Los Angeles”, “Lagunas 15” and “Lagunas 16” were subsequently acquired directly by Barrick.  The Alto Chicama mining property encompasses the above mentioned four mining concessions totaling 19,774 hectares.  The mining rights have an expiry date if production is not commenced within certain timeframes. Additionally, to keep the mining rights in good standing, rights holders are required to pay annual land fees (currently $3.00 per hectare) and additional penalty payments during any period the properties are not in production.  Currently, production activities are being carried out on the “Acumulacion Alto Chicama”. The necessary permits to provide sufficient surface rights have been obtained for current operations at the property.
 
Peruvian authority approval of both the mine’s Environmental Impact Study (“EIS”) and principal construction permit were received in April 2004.  Barrick commenced construction of the mine facilities in April 2004. In June 2005, Barrick obtained approval from the Peruvian authorities with respect to mine production start-up.  Total capital construction cost for the mine was $323 million. All material permits to conduct the operation of the Lagunas Norte mine have been obtained and are in good standing.  The mine has approximately 590 employees.
 
On December 29, 2004, Barrick entered into a Legal Stability Agreement with the Peruvian government. The Legal Stability Agreement provides increased certainty with respect to foreign exchange and the fiscal and administrative regime for 15 years.  The 15 year period commenced January 1, 2006.
 
In February 2010, Barrick filed an amendment to the EIS which proposed certain modifications to some of the mine facilities at the Lagunas Norte mine.  This EIS amendment was duly approved by the environmental mining authority on August 6, 2010. Barrick is currently carrying out preliminary construction activities and expects to commence shortly on construction of a new leach pad area (Phases 4C and 5) and new operational ponds.  Barrick currently expects to complete all of this construction activity by 2013.
 
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Geology
 
The regional geology of the Alto Chicama area is dominated by a thick sequence of Mesozoic marine clastic and carbonate sedimentary rocks and andesitic and dacitic volcanic rocks of the Tertiary Calipuy Group.  The Mesozoic sequence is unconformably overlain by the Tertiary Calipuy volcanic rocks and cut by numerous small intrusive bodies. The Mesozoic sequence has been affected by at least one and probably two stages of compressive deformation during Andean orogenesis.
 
The Lagunas Norte mineralization occurs on the 185 square kilometer Alto Chicama property. The mineralization is of the high sulphidation type. It is disseminated and hosted in variably brecciated sedimentary rocks as well as in volcanic breccias and tuffs. The mineralization outcrops and has been defined by drilling over an area of 1,000 meters long by 2,000 meters with up to 300 meters depth.
 
Mining and Processing
 
The orebody is being mined as an open pit, truck-and-shovel operation, at an average mining rate of 80,000 tonnes per day. Ore is crushed and then transported via truck to the leach pad.  Run-of-mine ore is trucked directly to the leach pad. Gold and silver recovered from the leached ore is smelted into doré on-site and shipped to an outside refinery for processing into bullion. Power is provided by a utility company through a 138 kilovolt line connected to the Trujillo Norte substation, located in the costal city of Trujillo, approximately 95 kilometers from the mine. The East waste dump and leach pad facilities are contained within one valley, limiting potential environmental impacts. The effects of the operation on surface water and ground water resources are carefully monitored and controlled to ensure that residents downstream of the site are not adversely affected.  Barrick has obtained property rights for the surface land required for the operation of the Lagunas Norte mine. Based on existing reserves and production capacity, the expected mine life is 10 years.
 
In 2010, mining activity at the Lagunas Norte mine focused on Phase 2 (located at the north area of the orebody), Phase 3 (located at the southern part of the orebody) and Phase 4 (located at the eastern part of the orebody), the last two are high grade areas of the mine site.  Phase 3 and Phase 4 mining were accelerated during the second half of 2010.  The 2011 mine plan includes mining activity at Phase 3, Phase 4 and Phase 5 (located in the Josefa east pit limit area).
 
Environment
 
Lagunas Norte’s operating facilities were designed to mitigate environmental impacts. The operation facilities are managed with procedures in place to manage hazardous substances potentially harmful to the environment.  In order to prevent and control spills and protect water quality, the site uses multiple levels of spill containment, infrastructure and procedures as well as field controls like daily inspections and water, air and emissions monitoring.  The site also has many programs to reuse and conserve water in all its processes.  In order to mitigate the impact generated by dust, the site uses several different dust suppression techniques. In 2010, all activities at Lagunas Norte were in material compliance and continue to be with respect to applicable corporate standards and environmental regulations.
 
In 2010, Lagunas Norte received the International Cyanide Code Management recertification and maintained its ISO 14001 certification.  The Peruvian Ministry of Energy and Mines approved the Closure Plan for the Lagunas Norte mine on August 19, 2009. At December 31, 2010, the recorded amount of estimated future reclamation and closure costs that were also asset retirement obligations, as defined in FAS 143 (as described in Note 22 to the Consolidated Financial Statements), for the property was US$ 86 million.  See “Environment and Closure”.
 
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Exploration, Drilling and Analysis
 
As of December 31, 2010, a total of 1,412 holes and 218,696 meters have been drilled at Lagunas Norte with approximately 43,820 meters of reverse circulation and over 174,876 meters of diamond drill. The drill program at Lagunas Norte has been completed at an average of approximately 50 meter centers. Drill hole collars have been surveyed, and down-hole Sperry Sun surveys conducted on the holes, with data collected approximately every 50 meters and down hole Maxibor II surveys and Gyrosmart surveys conducted on the holes of the 2008 and 2009 drilling campaigns respectively, with data collected approximately every 3 meters.  Core is placed in metal trays at the drill site and transported to the core facility.  Geological logs of all core and rock chips are then compiled on handheld computers, using standardized rock codes and descriptive information developed by Barrick geologists.  Data recorded on the handheld computers are downloaded to the main server at the end of every shift, reviewed, field checked if necessary, and then incorporated into the main database.  Generally, sample lengths vary from 0.3 meters to 4.0 meters.  A total of 164,755 samples have been taken during these drill programs.  The average sample length is 1.5 meters.  During the exploration and definition stages of the drilling, all samples were prepared on-site and fire assayed at an independent laboratory in Lima, Peru.  The on-site laboratory performed all required analysis during the 2009 and 2010 drilling campaigns, employing industry standard quality assurance and quality control procedures. Quality assurance and quality control procedures are reviewed by Barrick’s technical services department who have been responsible for the insertion of standards, duplicates and check assay controls which have been employed since early exploration at the Lagunas Norte mine site.
 
The 2010 drilling program had as its objectives to complete in-fill reverse circulation to confirm mineralization continuity and increase geological information as part of ongoing definition. Additional in-fill reverse circulation drilling will be completed during 2011 to complete the infill drilling program. Other projects and opportunities in the Alto Chicama district, including Lagunas Sur and Tres Cruces, are also being evaluated.
 
Regular internal auditing of the mineral reserve and mineral resource estimation processes and procedures are conducted.
 
Royalties
 
Under the terms of the agreement with Centromin, Barrick paid Centromin an advance contractual royalty of $2 million, which was credited against Centromin’s retained net smelter royalty of 2.51% in 2005.  In December 2006, Centromin transferred all of its rights and obligations (including the foregoing royalty) with respect to the mine to Activos Mineros S.A.C, a State mining company (“Activos”).  In 2010, $26 million was paid to Activos under the terms of this royalty.
 
Financing
 
Minera Barrick Misquichilca S.A. (“MBM”), a wholly-owned subsidiary of Barrick, has established a number of capital lease programs with certain financial institutions to partially finance the construction of certain assets at Lagunas Norte.  At December 31, 2010, the aggregate amount outstanding under these capital lease programs was $53 million. The effective interest rate in 2010 for the aggregate capital leases was 3.8%.
 
In November 2004, MBM filed an initial shelf prospectus relating to up to $150 million aggregate principal amount of bonds with CONASEV, the National Supervisory Commission of Companies and Securities in Peru.  As at December 31, 2010, MBM has issued $100 million aggregate principal amount
 
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of bonds. MBM used all the proceeds from the bond issuance for mine development and general corporate purposes.  The effective interest rate in 2010 for the first bond issuance of $50 million was LIBOR plus 1.7% and the effective interest rate in 2010 for the second bond issuance of $50 million was LIBOR plus 1.5%.
 
Production Information
 
The following table summarizes certain production and financial information for the Lagunas Norte mine for the periods indicated:

 	 	Year ended
December 31, 2010	 	Year ended
December 31, 2009	 	
Tons mined (000’s)	 	29,376	 	30,395	 	
Tons of ore processed (000’s)	 	22,052	 	25,313	 	
Average grade processed (ounces per ton)	 	0.039	 	0.048	 	
Ounces of gold produced (000’s)	 	808	 	1,007	 	
Average total cash costs per ounce (1)	 	$	182	 	$	138	 	

(1)       For an explanation of total cash costs per ounce, refer to “Non-GAAP Financial Measures — Total Cash Costs and Net Cash Costs Per Ounce”.
 
The diagram on the following page sets out the design and layout of the Lagunas Norte mine.
 
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Veladero Mine
 
General Information
 
The Veladero mine is an open pit mine using heap leaching. The Veladero mine includes the mining of gold and silver from two original open pits: the Filo Federico pit and the Amable pit. Waste stripping at a third open pit, called Argenta, commenced in 2010. The Argenta pit is located in the south east sector of the leach field in the mining operation. The new pit will require for its processing a mobile crushing system and a new waste dump. The rest of the processing will be carried out in the mine’s current facilities. No additional water will be required for the expansion of the new open pit.
 
Full construction of the Veladero mine commenced in the fourth quarter of 2003 and the first gold pour occurred in September 2005.  The Veladero property is located entirely in San Juan Province, Argentina, immediately to the south of Barrick’s Pascua-Lama project, approximately 370 kilometers by road northwest of the city of San Juan.  The mine site is located at elevations of between 4,000 and 4,850 meters above sea level.  The area is considered to have a sub-arid, sub-polar, mountain climate. During the winter months, extreme weather may create a challenging operating environment.  Recognizing this issue, the potential impact of possible extreme weather conditions, to the extent possible, has been incorporated into the mine’s operating plan.  Access to the property is via a combination of public highways and an upgraded private gravel road.
 
From 2009, after the signature of the Addendum N° 3 to the Exploitation Contract between the Provincial Mining Exploration and Exploitation Institute (“IPEEM”), and Minera Argentina Gold S.A. (“MAGSA”), a subsidiary of Barrick in Argentina, in July 2003, the Veladero mine comprises the following mining properties: (i) the Veladero mining group, consisting of eight mining concessions owned by IPEEM and operated MAGSA pursuant to applicable provincial law and the Exploitation Contract, and (ii) the Filo Norte mining group, consisting of five mining concessions owned by MAGSA, which are: a) Ursulina Sur; b) Florencia 1; c) Gaby M; d) Río 2 and e) Río 3. With the execution of Addendum N° 3, the Veladero mining properties cover an area of approximately 14,898 hectares.
 
Pursuant to the Argentina Mining Code, mining concessions do not have an expiry date, however, to keep them in good standing concession holders are required to pay certain annual fees and meet minimum capital investment requirements.  As of December 31, 2010, the Veladero mine has complied with these requirements with respect to its current mining properties.
 
Sufficient surface rights have been obtained for current operation at the property.  Barrick has an undivided 90% interest in “Campo Las Taguas”, which encompasses the surface property affected by Veladero’s mining facilities.  With respect to the 10% interest of “Campos Las Taguas” owned by third parties, Barrick and IPEEM have obtained all necessary easements for access over surface property.  Certain other mine related facilities are located in Campo Colangui, which is also owned by Barrick. The Argenta pit is also located at the Campo Las Taguas.
 
The Veladero mine received environmental impact study (“EIS”) approval in November 2003 from the Mining Authority of the San Juan Province. This study has since been updated in each of 2005, 2007 and 2009. Additional permits required for the mine’s current operation, such as water concessions and hazardous substances handling, have been obtained, and some are in the process of being renewed. Barrick expects to obtain such renewals in due course. The third update of the EIS, which incorporates the new Argenta pit and its facilities as part of the mine, was approved in 2010.  In 2010, Barrick also received the associated sectorial permits to develop the Argenta pit.
 
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Also, during 2010, final authorization for the new crushing system was obtained. Other final sectorial permits associated with the mine’s expansion, such as conveyor belt and some expansion of leach pad areas, among others, have been filed before the competent authorities and Barrick expects to obtain them in due course. Finally, it is expected that operational sectoral permits relating to Argenta will be submitted during 2011, after the completion of the construction works.
 
Barrick implemented a comprehensive recruitment and training program for personnel required for the operation prioritizing the local labor market.  As at December 31, 2010, the mine had approximately 1,200 employees.
 
Geology
 
The Veladero deposit is an oxidized, high sulfidation gold-silver deposit hosted by volcaniclastic sediments, tuffs, and volcanic breccias related to a Miocene diatreme-dome complex. Disseminated precious metals mineralization forms a broad, 3 kilometer long tabular blanket localized between the 4,000 and 4,350 meter elevations.  The mineralized envelope encompassing greater than 0.4 grams per tonne gold is oriented along a 345°-trending regional structural corridor.  Higher grade zones within this envelope occupy northeast-striking faults and fracture zones.  Hydrothermal alteration is typical of high sulfidation gold deposits, with a silicified core grading outward into advanced argillic alteration, then into peripheral argillic and propylitic alteration haloes.  Gold occurs as fine native grains, and is dominantly associated with silicification and with iron oxide or iron sulfate fracture coatings.  Silver mineralization is distinct from gold, and occurs as a broader, more diffuse envelope, probably representing a separate mineralizing event.  Copper and other base metals are insignificant, and sulphide mineralization is negligible.  Principal controls on gold mineralization are structures, brecciation, alteration, host rocks, and elevation.
 
The Veladero deposit comprises four orebodies: Amable in the south; Cuatro Esquinas in the center; Filo Federico in the north and Argenta.  Much of the Veladero deposit is covered by up to 170 meters of overburden.
 
A variety of volcanic explosion breccias and tuffs are the principal host rocks at the two northern orebodies, where alteration consists of intense silicification.  The Amable orebody is hosted within bedded pyroclastic breccias and tuffs, which are affected by silicification and advanced argillic alteration.
 
The Argenta orebody is located approximately 7 kilometers south east of the leach pad. The genesis of the geology for Argenta is similar to the other Veladero orebodies. The lithology comprises a series of breccias and tuff with an intensive silicification process, which overprints the primary texture. Gold is associated to silver and vuggy silica hosts most of the mineralization.
 
Mining and Processing
 
The Veladero mine is an open pit mine with a valley-fill heap leach operation and two-stage crushing process.  Recovered gold is smelted into doré on-site and shipped to an outside refinery for processing into bullion. Construction of a four kilometer overland conveyor belt was fully commissioned in Q1 2010. The recently completed crusher expansion has increased the crushing capacity at the Veladero mine to 85,000 metric tonnes per day . Veladero self generates electric power using a diesel power plant (permanently-installed diesel-generator sets) with a 9.5 megawatt capacity in Veladero I and 3.8 megawatt capacity in Veladero II; adding a further 6.8 megawatt capacity (PLS and Booster pumps project) in Veladero III, and a 2-megawatt wind-generation turbine.  Based on existing reserves and production capacity, the expected mine life is approximately 15 years.
 
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Environment
 
In November 2005, Barrick submitted the first biannual update of the Veladero EIS to the San Juan mining authority.  The EIS update outlines the mine’s environmental management results for the 2003 to 2005 period, updates information related to the mine’s environmental management plan and the production plan and sets out the mine’s planned increase in processing capacity. This first biannual update was approved in April 2007.
 
In November 2007, Barrick submitted a second biannual update of the Veladero EIS to the San Juan mining authority. This document outlines the mine’s environmental management results for the 2005 to 2007 period and was approved in March 2009.
 
In December 2009, the third biannual update of Veladero EIS was submitted to the San Juan mining authorities. This third EIS update outlines the environmental management results for the 2007 to 2009 period, and sets out the mine planned new pit (Argenta). This document was approved in October 2010.
 
Veladero’s operating facilities have been designed to minimize and mitigate environmental impacts.  The operations have processes, procedures or facilities in place to manage substances that have the potential to be harmful to the environment.  In order to prevent and control spills and protect water quality, the mine utilizes multiple levels of spill containment procedures and routine inspection and monitoring of its facilities.  The mine also has various programs to reuse and conserve water at its operations.  In order to mitigate the impact of dust produced by its operations, the mine uses several different dust suppression techniques.   In 2010, all activities at Veladero continued to be in compliance in all material respects with applicable corporate standards and environmental regulations.
 
In August 2007, Barrick obtained the ISO 14001 certification for the entire Veladero operation, and in November 2007, the Veladero operation obtained the International Cyanide Management Code certification.
 
Argentina recently passed a federal glacier protection law that restricts mining in areas on or near the nation’s glaciers.  Barrick’s activities at Veladero do not take place on glaciers, and are undertaken pursuant to existing environmental approvals issued on the basis  of comprehensive environmental impact studies that fully considered potential impacts on water resources, glaciers and other sensitive environmental areas around the project.  Barrick has implemented a comprehensive range of measures to protect such areas and resources.  Further, the Company believes that the new federal law is unconstitutional, as it seeks to legislate matters that are within the constitutional domain of the provinces. The Province of San Juan, where Barrick’s operations are located, previously enacted glacier protection legislation with which Barrick complies.  The Company believes it is legally entitled to continue its current activities on the basis of existing approvals.  In this regard, the Federal Court in San Juan has granted injunctions, based on the unconstitutionality of the federal law, suspending its application in the Province and in particular to Veladero, pending consideration of the constitutionality of the law by the Supreme Court of Argentina.  See also “Legal Matters — Legal Proceedings — Argentina Glacer Legislation”.
 
At December 31, 2010, the recorded amount of estimated future reclamation and closure costs that were also asset retirement obligations, as defined in FAS 143, for the property was $37.3 million (as described in Note 22 to the Consolidated Financial Statements). See “Environment and Closure”.
 
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Exploration, Drilling and Analysis
 
During 2010, 12 reverse circulation drill holes were performed reaching a total of 2,572 meters in the Federico area in order to increase reserves and resources, and provide upgraded information for the block model.  In addition, 5 diamond drill holes were performed for geotechnical study. The objective was to gather further information about rock quality to analyze possible changes in pit wall angles.
 
For the Amable pit, a total of 3,759 meters of reverse circulation drilling comprising 18 drill holes was conducted in 2010. The objective of the program was to increase reserves and resources. Two diamond holes were drilled as part of the pit slope design study.
 
The 2010 exploration plan included an infill drilling programme in the Argenta pit to further define the orebody. In 2010, 11 reverse circulation drill holes totalling 1,780 metres were completed. The outcome mesh resulted in 50m x 50m drill hole spacing. A new block model was released and an open pit optimization was also completed.  A feasibility study for the geotechnical design of Argenta pit was completed.  Activity at the new Argenta pit was limited to stripping waste material during 2010.
 
At December 31, 2010, the Veladero database (including Argenta) comprises 279,227 meters of reverse circulation drill holes and 48,602 meters of diamond core drill holes totaling 3,975 meters of channel samples from declines.  Drill spacing within mineralized zones varies from 30 meters to 100 meters, and averages approximately 35 meters in the main pit.
 
Sampling has been done with reverse circulation and core drill holes. Reverse circulation samples were collected on 1 meter intervals.
 
Rock chip samples are delivered by mine personnel to the ALS Chemex sample preparation facility at the mine, where the lab assumes sample custody.  Veladero’s standard assay protocol for rock chips involves initial assaying for gold by fire assay fusion of a 50 gram pulp and analysis by atomic absorption. Analytical results are received from the lab in an electronic format and are entered into the database without external manipulation.
 
Veladero’s quality assurance and quality control program utilizes field blanks to monitor contamination, pulp standards to monitor accuracy, and field duplicates, preparation duplicates and pulp duplicates to monitor precision.  Quality control samples are included with sample submittals from reverse circulation chips, drill core, and chip or channel sampling.  A detailed quality control report is prepared at least annually, or after each major sampling program is completed.  External quality assurance and quality control reviews have been conducted periodically. All of these reviews concluded that Veladero’s quality assurance and quality control procedures meet or exceed industry standards.
 
Regular internal auditing of the mineral reserve and mineral resource estimation processes and procedures are conducted.
 
Royalties
 
Pursuant to federal legislation which implemented law 24.196 in May 1993, operating mines are required to pay a royalty of up to 3% (“Boca Mina”) for the mineral extracted from Argentinean soil. The federal “Boca Mina” is defined as the sales value of the extracted minerals less certain permitted expenses .   In addition to the abovementioned royalty, under the terms of the Exploitation Contract between Barrick and IPEEM, a 0.75% “Boca Mina” royalty is payable to IPEEM for the metals produced from the Veladero property, including future production from the Argenta deposit.  Finally, and only for
 
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the Argenta deposit, an additional royalty fee of 1.5% on sales will be levied and payable in favor of a Provincial trustfund under the terms of the approved  EIS.
 
Production Information
 
The following table summarizes certain production and financial information for the Veladero mine for the periods indicated:

 	 	Year ended­
December 31, 2010	 	Year ended
December 31, 2009	 	
Tons mined (000’s)	 	79,995	 	99,793	 	
Tons of ore processed (000’s)	 	33,837	 	31,127	 	
Average grade processed (ounces per ton)	 	0.044	 	0.034	 	
Ounces of gold produced (000’s)	 	1,121	 	611	 	
Average total cash costs per ounce (1) 	 	$	256	 	$	438	 	

(1) For an explanation of total cash costs per ounce, refer to “Non-GAAP Financial Measures — Total Cash Costs and Net Cash Costs Per Ounce”.
 
Financing
 
During 2004, MAGSA secured a variable rate, limited recourse $250 million loan facility for Veladero, which was fully drawn down by the end of 2007, and was fully repaid in June 2010.
 
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The following diagram sets out the current mine facilities and planned expansion:

 
Zaldívar Mine
 
General Information
 
Zaldívar is an open pit heap leach copper mine located in northern Chile.  The mine is located in the Andean Precordillera in Region II of northern Chile, approximately 1,400 kilometers north of Santiago and 175 kilometers southeast of the port city of Antofagasta.  The site is accessible by highway from the port of Antofagasta.  The Antofagasta-Salta railway also services the site.  Zaldívar employs approximately 815 employees and 1,541 contractors.
 
The climate is characterized by very low relative humidity and practically no precipitation and has little impact on the mine’s operations.  The surface topography lies at an average elevation of 3,300 meters above mean sea level.  There is little or no vegetation.  The property is within a 1,295-hectare claim area covered by 248 exploitation concessions.  Exploitation concessions are registered in the Conservador de Minas (Mining Property Registrar) and Sernageomin (National Service of Geology and Mines).  The necessary permits to provide sufficient surface rights have been obtained for current operations at the property. The mining and surface rights have no expiry date as long as the applicable
 
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annual land payments are made. Environmental permits are issued and registered with the Conama (National Environmental Commission).
 
In 1979, the initial declaration or statement of discovery (manifestacion minera) was presented to the First Civil Court of Antofagasta by Mr. Pedro Buttazzoni Alvarez.  In 1981, Mr. Buttazzoni, through his company Sociedad Contractual Minera Varillas (“SCMV”), formed the company Sociedad Legal Minera Zaldívar 262 de Zaldívar. Shareholders in this new company were: SCMV, 88.33%, and Minera Utah de Chile Inc. and Getty Mining (Chile) Inc. jointly holding the other 11.67%.  In 1989, as a result of various transactions during the previous eight years, SCMV held 51% and Minera Escondida Limitada owned the other 49%. In March 1989, the mining rights were sold to Sociedad Minera La Cascada Limitada (“SMCL-Pudahuel”).  In that same year, a sales contract was executed between SMCL-Pudahuel and Outokumpu Resources (Services) Limited (“Outokumpu”). The mining claims were then transferred to Minera Outokumpu Chile Limitada in November 1989.  Outokumpu announced the formation of a 50/50 joint venture with Placer Dome in December 1992, at which time a joint venture company, Compañía Minera Zaldívar (“CMZ”), was formed.  Commercial production began in November 1995, after completion of construction at a cost of $574 million.  Placer Dome acquired the remaining 50% interest in CMZ from Outokumpu effective December 13, 1999 at a cost of $251 million.  Barrick acquired Zaldívar in connection with its acquisition of Placer Dome in March 2006. Based on existing reserves and production capacity, the expected mine life is approximately 17 years.
 
Geology
 
The Zaldívar porphyry copper deposit is situated on the western margin of the Atacama Plateau in northern Chile. The deposit is part of a large Tertiary porphyry copper system which includes the Escondida porphyry copper deposit. This porphyry complex occurs within the large West Fissure structural system which controls most of the large porphyry copper deposits in Chile.  The Zaldívar porphyry system is at the intersection of the West Fissure and a series of Northwest and Northeast striking faults. The deposit is generally centered on a Northeast striking granodiorite porphyry body that intrudes andesites and rhyolites, and cuts across the north-south striking Portezuelo fault.  Although the geology and the Zaldívar mineral deposit are generally continuous from east to west, the orebody was arbitrarily divided into two zones: the Main zone (area east of 93,000E) and the Pinta Verde zone (area west of 93000E).
 
The Zaldívar orebody contains both sulphide and oxide copper mineralization. The majority of the copper occurs in a blanket of oxide and secondary sulphide ore which overlays deeper primary sulphide mineralization of lower grade.  The economically important mineralization types are secondary sulphide (chalcocite), oxide (brochantite and chrysocolla) and a mixed mineralization type of combined sulphide and oxide copper minerals. Primary sulphide mineralization consists of pyrite, chalcopyrite, bornite and molybdenite.
 
In the Main zone orebody, to the east of the Portezuelo fault, rhyolite is the host rock and secondary sulphide mineralization is dominant (85% to 90%) with the balance of the copper present as oxide minerals. West of the fault, andesite and granodiorite are the host rocks and the copper is present as a mixture of both oxide and secondary sulphide minerals.
 
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Mining and Processing
 
The open pit contemplates mining the remaining mineral reserves in six stages, referred to as Stage 6 through to Stage 11.  During 2010, ore production came from Stage 8 and 10 of the Main zone.  Conventional methods of open pit mining are used.  During 2010, Zaldívar focused on improving operational efficiencies and reliability of key process crushing productivity. For the first half of 2011, ore production is expected to come from Stages 8 and 11. For the second half of 2011, due to the completion of stage 8, mineral from stage 10 is planned to be mined and sent to the crusher, starting the stripping of the stage 9 area.
 
Pure cathode copper is produced by three stages of crushing and stacking of ore, followed by heap leaching and bacterial activity to remove the copper from the ore into solution.  Run of mine dump leach material is placed on the old sulphide ore pad, and is also leached.  A solvent extraction and electrowinning process then removes the copper from solution and produces the cathode copper.  The electrowinning plant has been modified to produce 331 million pounds (150,000 tonnes) of cathode copper per year, 20% over the original design capacity.  A flotation plant is also used to recover copper, in the form of copper concentrate, contained in the fine fraction of the crushed ore.
 
Copper recoveries and leaching kinetics have improved for treated ores by more than 20% in the last 8 years and leach cycle times are currently approximately 365 days. Notwithstanding these improvements, declining head grades mean that more material must be placed on the leach pads and more capital investment is required to sustain current copper production rates. Zaldívar will concentrate on improving leaching kinetics and accelerating the oxidation of sulphide ores to minimize future capital requirements and maximize cathode production.
 
Process water is being supplied from ground water at Negrillar, 120 kilometers east of Zaldívar. Water is drawn from six production wells and pumped along the 120-kilometer route to a fresh water pond located near the tertiary crushing facility at the plant site. Zaldívar receives power from the SING, the regional electricity grid system, and purchases electricity from one of the electrical utilities operating on the SING system. A 230 kilometer transmission line was constructed in conjunction with Minera Escondida Limitada between the Zaldívar and Escondida plant sites and the SING system substation at El Crucero.
 
In 2005, the Chilean Congress passed a new mining sector specific tax of 5% on operating profits derived from the sale of mineral products. Companies protected from income tax increases under Chile’s DL 600 foreign investment law, which was the case for CMZ, which holds the Zaldívar mine, had the option to either wait for their DL 600 contract to expire, after which their investment would be subject to the new tax, or renounce their status under the existing DL 600 regime, before November 30, 2005, and face a reduced 4% tax in return for a 12 year mining tax invariability clause.  The new tax honours all existing contracts between mining companies and the state, which are protected under Chile’s DL 600 foreign investment law, and would not be applied to such companies while their current tax contracts remain in force.  In November 2005, CMZ opted out of its then current DL 600 regime and entered into the new DL 600 regime, the terms of which include the 4% tax and a 12 year tax invariability clause. Following the earthquake in Chile in the first quarter of 2010, the Chilean government presented a package of certain tax increases to the Chilean Congress for approval.  With respect to corporate income taxes, a temporary first tier income tax increase from 17% to 20% in 2011, and 18.5% in 2012 was presented to and approved by the Chilean Congress.  The income tax changes were enacted in the third quarter 2010.
 
In addition, in October 2010, the Chilean government enacted legislation for a new specific mining tax. Under the new specific mining tax, for new projects, the applicable rates would change from 5% of
 
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operating margin after depreciation to a range of 5% - 14% based on the level of operating margin.  For those companies currently operating under a stabilized regime such as CMZ (stabilized at 4% until approximately 2017), the law contemplates an option to voluntarily apply a rate of 4% - 9% for 2010-2012, and then return to the stabilized rate of 4% until the current stability period ends, and obtain an extension of the stability period at rates in the range of 5% - 14% for an additional 6 years.  In January 2011, CMZ voluntarily adopted the new specific mining tax which, as noted above, impacted CMZ’s tax rates for the 2010 calendar year.
 
Environment
 
Zaldívar operates in an environmentally responsible manner to mitigate environmental impacts. Zaldívar’s heap leaching process, for example, operates entirely as a closed circuit with no discharge to the environment. There are programs that continuously monitor the process and surrounding areas, including leak detection wells, to detect any potential circuit failures.
 
On February 8, 2010, Zaldívar obtained approval from the Regional Environmental Commission of a modification to its environmental permit to reflect current production and processing rates and several operational changes.  On December 9, 2010, Zaldívar obtained its operational permits from the National Service of Geology and Mines and expects to obtain other associated sectoral permits in due course.
 
Zaldívar’s ISO 14001 certification was renewed in December 2009 for a three-year term.  At December 31, 2010, the recorded amount of estimated future reclamation and closure costs that were also asset retirement obligations, as defined in FAS 143 (as described in Note 22 to the Consolidated Financial Statements), for the property was $39.7 million.  See “Environment and Closure”.
 
Exploration, Drilling and Analysis
 
The Zaldívar orebody has been extensively drilled.  Reverse circulation drilling has been done in order to develop a geological model. Exploration drill holes are sampled at 2 meter intervals comprising whole core sampling.  All holes are logged for lithology, alteration, mineralization and structure.  In 2010, 129 reverse circulation holes were drilled for 34,442 meters.  The plan for 2011 is to drill 65 reverse circulation holes totalling 18,984 metres. Sampling and analysis of diamond and reverse circulation drill holes and blast holes comply with industry standards.  Blank sample protocols are used in the normal row of samples sent to the Zaldívar laboratory.  Controls exist on biases and the product is checked with the security sampling curves.  As well, external laboratories have been used to verify results.  Databases generated with these results are thoroughly reviewed and cross checked before being used in the mineral resource/mineral reserve estimation processes. Regular internal auditing of the mineral reserve and mineral resource estimation processes and procedures are conducted.
 
Special field controllers ensure that the samples collected for modeling and mineral resource estimation have been delivered under secure conditions to the laboratory.
 
Royalties
 
The Zaldívar mine is not subject to any royalties.
 
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Production Information
 
The following table summarizes certain production and financial information for the Zaldívar mine for the periods indicated:

 	 	Year ended
December 31, 2010	 	Year ended
December 31, 2009	 	
Tons mined (000’s)	 	71,690	 	76,305	 	
Tons of ore processed (000’s)	 	44,751	 	47,342	 	
Average grade processed (% of TCu)	 	0.586	 	0.55	 	
Pounds of copper produced (000,000’s)	 	318	 	302	 	
Average total cash costs per pound (1)	 	$	1.09	 	$	1.17	 	

(1)   For an explanation of total cash costs per pound, refer to “Non-GAAP Financial Measures - Total Cash Costs and Net Cash Costs Per Ounce”.
 
The diagram on the following page sets out the design and layout of the Zaldívar mine.
 
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Porgera Mine
 
General Information
 
Barrick (Niugini) Limited is the Manager of and holds a 95% participating interest in the Porgera Joint Venture (“PJV”), which owns and operates the Porgera Gold Mine at Porgera in the Enga Province of Papua New Guinea.
 
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The Porgera mine is located in Enga Province in the highlands of Papua New Guinea (“PNG”), about 130 kilometres west of the established town of Mount Hagen, 600 kilometres northwest of Port Moresby, and about 680 kilometres by road from the coastal port of Lae from which all materials are shipped.  The road is partly paved and passes through unstable mountainous terrain with many major river crossings.  Personnel are transported by bus, fixed wing aircraft and helicopter.  The workforce at Porgera comprises approximately 2,600 employees.  In addition, there are approximately 500 contractors. Of the total employee workforce, 94% are PNG citizens (64% local employees and 30% from other parts of PNG).
 
The mine is located at an altitude of 2,200 to 2,700 meters.  Temperatures range from 10 to 25 degrees Celsius and rainfall averages 3,650 millimetres per year.  The vegetation is largely rainforest with interspersed food produce gardens below 2,400 meters elevation.  Weather in the region can at times produce heavy rainfall and dense fog that can impact operations.  The mine has mitigation plans in place, which include water handling facilities, to reduce the impact of these weather related events.
 
Alluvial gold was first reported at Porgera in 1938.  In 1975, Placer Dome became the operator and owner of a 2/3 interest in an exploration venture with Mount Isa Mines Limited (now MIM Holdings Ltd.). In 1979, a joint venture agreement was signed whereby Placer Dome, MIM Holdings Ltd. and New Guinea Goldfields Ltd. (“Goldfields”, an eventual subsidiary of AurionGold) each held a one third interest in the PJV and the Independent State of Papua New Guinea (the “State”) had the right to acquire, at cost, up to a 10% interest in the PJV if Porgera was developed.
 
In 1989, a Special Mining Lease was approved, a mining development contract between the State and the PJV was executed, construction commenced and the State acquired a 10% interest, diluting each of the other joint venture participants down to 30%. Commercial production commenced in 1990.  Also in 1989, MIM Holdings Ltd. sold its 30% interest to Highlands Gold Properties Ltd. (“Highlands Gold Properties”). In 1996, with effect from 1993, Placer (PNG) Limited, Goldfields and Highlands Gold Properties each sold a further 5% to the State.  In 1997, Placer’s participating interest in the PJV was increased from 25% to 50% following its completion of the acquisition of Highlands Gold Properties. In 2002, Placer increased its interest in the PJV to 75% through the acquisition of AurionGold (the beneficial owner of the Goldfields interest).  In 2002, DRDGOLD Limited acquired a 20% interest from Oil Search Limited (originally the interest held by the State).  In 2005, Emperor Mines Ltd. (“Emperor”) acquired DRDGOLD Limited’s 20% interest.  Barrick acquired Placer Dome in 2006.  In 2007, Barrick acquired Emperor’s 20% share, increasing its ownership to 95%.  The remaining 5% joint venture interest is held by Mineral Resources Enga Limited (“MRE”) and divided between the Enga Provincial government (2.5%) and local landowners (2.5%).
 
The PJV has approval to mine the Porgera deposit within the agreed development plan under the terms of the Porgera Mining Development Contract (the “MDC”) between the State and the Participating Interest Holders in the PJV. The Special Mining Lease (the “SML”), which expires in 2019 and is renewable, encompasses approximately 2,347 hectares including the mine area and the areas in which some of the project infrastructure is located.  There is no expiration date for the MDC, but it is tied to the continuation of the SML.  Leases for Mining Purposes (“LMP”) have also been awarded by the State for land use associated with the mining operation such as waste dumps, campsites and water supplies.  The PJV Participants also hold a Mining Lease for the operation of a limestone quarry for the supply of lime to the process plant. Permits are held for water use, including run-off from unconsolidated surfaces, such as the open pit, the underground mine and the waste dumps.  Barrick Niugini Limited, the current manager of the PJV, also maintains two Exploration Leases (“EL”) which border on to the SML (EL 454 and EL 858 and some key LMPs). The ELs are the subject of ongoing exploration expenditure. The PJV Participants hold mining easements for utilities such as power transmission lines and water supply pipelines.  The necessary permits to provide sufficient surface rights have been obtained for current operations at the property.
 
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Open pit mining is currently in Stages 5, 5B and 5C of a 5-stage open pit mining plan. Stage 4 was completed in 2006, after which Stage 5 and stockpile ore became the principal ore sources. During 2004, failure and erosion of soft mudstone material onto the Stage 5 working bench hampered both development and ore production.  Remediation work continues on the West Wall to deal with slope instability.   The South West Dyke failure mobilised in 2009 and remediation and mitigation processes are currently being put in place. Open pit operations are expected to cease in 2019. Underground mining was recommenced in 2002, and is expected to cease in 2019. The mill will continue to process accumulated lower grade ore stockpiles through to 2023.
 
Due to a number of economic and social issues, the Porgera mine has a greater level of political and economic risk compared to many of Barrick’s other operations.  Civil disturbances and criminal activities such as trespass, illegal mining, theft and vandalism have occasionally caused disruptions to operations at Porgera.  The law and order situation in Papua New Guinea and, in particular, around the Porgera mine, presents a complex and challenging operating environment.  The Company has undertaken additional steps in 2010 to ensure that its personnel, including mine security staff, respond appropriately to civil disturbances and criminal activities in accordance with the standards the Company has committed to uphold, including, without limitation, the Voluntary Principles (see also “Narrative Description of the Business — Corporate Social Responsibility”.)   Illegal mining, which involves trespass into the operating area of the mine, is both a security and safety issue at the Porgera mine.  The illegal miners from time to time have clashed with mine security staff and law enforcement personnel who have attempted to move them away from the facilities.  The presence of the illegal miners, given the nature of the mine’s operations, creates a safety issue for both the illegal miners and Porgera employees and can cause disruptions to mine operations.
 
On March 11, 2011, Barrick was notified by the Canadian National Contact Point (the “NCP”) for the OECD Guidelines for Multinational Enterprises (“OECD Guidelines”) that the NCP had received a formal request for review (the “Request”) under the OECD Guidelines relating to Barrick and the Porgera mine.   The substance of the Request is that Barrick has failed to comply with applicable OECD Guidelines in operating the Porgera mine.  The Company is reviewing the Request and will provide a formal written submission to the NCP regarding the matters described therein.  Thereafter, the NCP will begin an initial assessment and consider whether the matters described in the Request warrant further examination.
 
The Porgera mine has, on occasion, experienced delays in the granting of operating permits and licenses necessary to conduct lawful operations.  Although the Porgera mine has never experienced an interruption to operations due to an issue of this nature, if at any time in the future permits essential to lawful operations are not obtained or exemptions are not granted, there is a risk that the Porgera mine may not be able to operate for a period of time.  All material permits to conduct the operation of the Porgera mine have been obtained and are in good standing.
 
Geology
 
The Porgera gold deposit is spatially associated with a Pliocene (5.9 to 6.1 Ma) mafic alkalic intrusive complex (Porgera Intrusive Complex; PIC) intruded within a Late Carboniferous deep water mudstone sequence. The intrusions consist of small hornblende porphyritic gabbro plugs and, more mafic augite porphyritic gabbro, dominantly oriented north-east, steeply south-east dipping and north-west, steeply north-east dipping. The hornblende porphyritic gabbro intrusions present extensive phyllic alteration haloes within the host sediments. In contrast, the augite-porphyritic gabbro tends to present much less extensive phyllic alteration haloes.
 
The PIC cuts through several south dipping thrust faults and associated folds that are part of the New Guinea fold and thrust belt deformation event. A crustal scale, arc oblique, north-east trending transfer fault is the key regional scale control on the emplacement of the PIC. At the mine scale the transfer structure is expressed as north-east trending strike slip faults, which have a clear control on the distribution of individual intrusions.
 
Stage 1 of the mineralisation paragenesis is characterised by pyrite-sphalerite-carbonate veins, dominantly north east trending and concentrated directly above and in the top part of the intrusions. Stage 1 veins are generally low grade and account for a minor part of the Porgera gold endowment.  These veins have mineralogical and geochemical affinity with the D-veins typically documented in porphyry systems.
 
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They also have similar spatial distribution and have associated phyllic alteration selvedges. The presence of carbonate in the vein selvedge and the veins themselves is the distinctive feature of alkalic systems. Late normal faults host stage 2, high grade low sulphidation alkalic epithermal mineralisation, characterised by millimetre to centimetre scale quartz veins, typically vuggy, with dark green roscoelite selvedges and associated pyrite-carbonate and gold. The alkalic epithermal vein system is telescoped on the intrusion-related sulphide-rich veins and continuous for at least 1km depth.
 
The alkalic epithermal veins are hosted in a network of mineralized structures, which approximate the geometry of an extensional fault-fracture mesh, combining conjugate sets of moderately-dipping (S and N) normal faults, along which individual fault-segments are separated by steeply-dipping extensional segments. The main fault, hosting gold mineralisation, is a south dipping west south-west trending listric normal fault (Roamane fault). The bulk of the gold mineralisation is concentrated in the upper steep part of the fault, and in associated fault splays. Another mineralised listric normal fault situated in the footwall of the Roamane fault and slightly discordant in strike, also hosts significant gold mineralisation over a 1.5 kilometer strike. In addition, several other subsidiary faults oriented east-west and north-east moderately to steeply dipping also host significant mineralisation. Economic grade gold mineralisation is concentrated where these normal faults cut through competent host rocks consisting of intrusions and intensely phyllic altered sediments. High grade ore shoots are concentrated at the intersections of major faults with splays and in fault flexures.
 
The PIC is bordered to the south by an east-west to north-west trending north dipping fault with 1-2 kilometer of normal dip slip motion, the Western Boundary Fault. This fault is interpreted, based on stratigraphic relationships, as an early basinal fault. This fault may have deviated the north-east transfer structure and caused the extension that locates the PIC. The PIC and the Porgera deposit are located in the hanging wall of this fault, and spatially associated with a north-west jog of this dominantly east-west fault. The intersection of the crustal scale north-east trending transfer structure with a pre-existing west-northwest basinal structure forms the camp-scale control on the location of the PIC. At the mine scale, late normal motion on the Western boundary fault may explain the dominance of conjugate south dipping normal faults in the hanging wall of this structure. This also supports a magmatic source and fluid conduit at depth slightly north and in the footwall of the main mineralised structures rather than directly below.
 
Based on existing reserves, stockpiles and production capacity, the expected mine life of the Porgera mine is 12 years.
 
Mining and Processing
 
The Porgera deposit is currently being extracted using open pit and underground mining methods.  In 2010, mill feed, on a tonnage basis, was sourced 23% from open pit and 41% run of mine stockpiled ore, and 36% from underground.
 
Open pit mining is currently directed at pit stages 5, 5B and 5C by way of a typical hard rock operation utilizing 10 meter benches. Utilizing conventional mining equipment, the open pit operations has a nominal mining production capacity of approximately 40 million tonnes per annum.
 
Mill feed material from the open pit will be direct feed to crusher (at an elevated cut off grade) when possible. Long term stockpile material will be used to supplement crusher feed as required. Low grade material mined from the open pit will be stockpiled until end of mine life, when it will be processed.
 
The underground mine is comprised of three zones that are accessed using a general-purpose decline from surface. The mine is a highly mechanized bulk mining operation. The North Zone dips at 55 to 70 degrees and is mined using predominantly a down hole bench retreat method, with sublevels reduced to
 
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25 metre intervals due to the dip of the ore body. Some isolated areas of the ore body that are wide will be mined using a transverse mining method. Up hole retreat mining will be used to recover crown pillars. Eastern Deeps will be mined using a down hole bench retreat mining method at 30 meter level intervals. Production rates in the Eastern Deeps have been limited to date owing to ventilation constraints, geotechnical challenges and difficult mining due to complex geology and structure.  East Zone mining will be dependent on paste fill due to the dip of the ore body, at 45 to 50 degrees, and ground support concerns.
 
Currently open stopes are filled with unconsolidated development waste, and cemented aggregate in strategic locations to create crown pillars.
 
Development of a Twin Decline continues to provide both long term access to the underground operation and provide replacement ventilation airways.  These declines are designed at increased dimensions to the existing drives to accommodate larger trucks.
 
The mill has undergone several stages of improvement and expansion.  A concentrator and leach/carbon-in-pulp (“CIP”) circuit commenced operation in 1990, producing gravity concentrate and sulphur flotation concentrate for leaching to recover gold and silver.  A pressure oxidation circuit was added to allow the processing of the sulphide flotation concentrate and previously stockpiled concentrate.  In 2009, the leach circuit was converted to CIL.  Gold liberated by pressure oxidation is recovered through a CIL and a CIP cyanide leach circuit, followed by site refining into doré.  In 1996, a second semi-autogenous mill and large ball mill was added, increasing nominal mill throughput from 10,000 tonnes per day to 17,700 tonnes per day.
 
The main water supply for the mine is the Waile Creek Dam, located approximately 7 kilometers from the mine. Water for the grinding circuit is also extracted from Kogai Creek, which is located adjacent to the grinding circuit. The mine operates four water treatment plants for potable water and five sewage treatment plants.
 
Porgera’s principal source of power is supplied by a 73-kilometre transmission line from the gas fired and PJV-owned Hides Power Station. The station has a total output of 62 megawatts. A back up diesel power station is located at the mine and has an output of 13 megawatts. The average power requirement of the mine is about 60 megawatts.
 
Environment
 
The PJV runs an extensive environmental monitoring program to ensure compliance with the requirements of its permit.  All requisite licenses and permits are kept in good standing. The PJV has an ‘Environmental Discharge and Abstraction Permit’ valid until 31 December 2053.   The PJV was certified as being fully compliant with the International Cyanide Management Code in November 2009.
 
The Porgera mine is located in extremely rugged mountainous terrain, subject to seismic activity, high rainfall and landslides. Competent waste rock is stored in two stable waste dumps, to the south (Kogai stable dump) and east (Anawe North stable dump) of the open pit. In addition, there are two erodible dumps containing soft, incompetent waste rock, Anjolek and Anawe.
 
A tailings impoundment was considered to be very difficult in the Porgera environment and the risk of an engineering failure was assessed to be very high. Therefore, the PNG Government approved riverine disposal as an appropriate method for treated tailing and incompetent waste rock under the circumstances that exist at the particular site.  Since acquiring the Porgera mine with the acquisition of Placer Dome, Barrick has completed a study to examine the feasibility of building a large tailings storage
 
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facility and other alternatives to mitigate environmental impacts.  The study identified significant risk factors in ensuring a stable foundation for a large tailings storage facility.  As a result, the Porgera mine will continue to use riverine tailings disposal while implementing a number of continuous improvements, including (i) construction of a new paste backfill plant during 2010, which is expected to be operational by Q2 2011, that will enable up to 8 percent per annum of the tailings that would have been released to be blended with cement and stored permanently underground; and (ii) an anticipated increase in ore production from the underground mine, which would permit storage of a greater amount of tailings underground in the mine as backfill.
 
PJV implemented a riverine monitoring program in 1984, which was considerably expanded in 1990 , and this has continued to the present.
 
At December 31, 2010, the recorded amount of estimated future reclamation and closure costs that were also asset retirement obligations, as defined in FAS 143 (as described in Note 22 to the Consolidated Financial Statements), for the property was $163.3 million.  See “Environment and Closure”.
 
Exploration, Drilling and Analysis
 
Exploration work in 2010 concentrated on increasing underground inferred resources at Upper East Zone and Lower North Zones, in addition to testing a number of exploration targets in the mine environment. This led to further exploration drilling at Alipis, Tawasikale, Tupegai, Project X and AHD targets.
 
The 2010 to 2011 exploration programs have been designed based on a review of current in mine exploration targets by ranking them based on their accessibility from existing infrastructure and their respective economic benefits. An assessment of the exploration targets has been completed and preliminary financial evaluations undertaken. A primary objective was to schedule future exploration and development activities on known and emerging targets so that gold production is optimised with respect to the life of mine production schedule.
 
The drill hole database for Porgera consists of some 10,110 drill holes and 1,343,754 meters of drilling that includes underground and surface diamond drill core.  Face sampling and reverse circulation percussion drill samples are also included in the database.
 
Exploration drilling in 2010 achieved an improvement in the geological knowledge of gold mineralization controls at Porgera.  Drilling targeted Alipis, Peruk, Tupegai, Central Zone East, Link zone, Project X and AHD Down Dip.
 
Planned drilling for 2011 will focus on seven identified advanced targets and four other zones of known mineralization.  Five of the advanced targets (AHD Up Dip, Wangima Rowdy, Tupegai, Far North and Central Zone south west) will be in the drill testing BMX pipeline stage (drilling a grid of approximately 80x80m).  The other two advanced targets (AHD Lens 4 Foot wall and P Zone (drilling a grid of approximately 40x40m)) are in the advanced exploration BMX pipeline stage. The four other targets of known mineralization are North Zone West, Project X, Central Zone South and Link Zone.  This drilling is classified as advanced drilling in the BMX pipeline stage which will close the gap in the existing drill spacing to a grid of at least 40x40m.  In total, 55,520 meters is planned for diamond drilling from underground and in the open pit for this drilling campaign.
 
Diamond drilling is also planned as in-fill drilling for AHD, North and East zone.  This drilling will be approximately 16,400 meters.  The rest of the planned drilling for 2011 will consist of 6,000 meters of geotechnical drilling to establish pit wall stability parameters.
 
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Open pit delineation and exploration drilling is, on average, on a 30 by 50 meter pattern spacing. Whole core samples are taken over two meter down-the-hole intervals for the entire drill hole except in the North Zone and East Zone where the sampling interval was decreased to 1 meter intervals to increase the sample density and geology detail for underground mineral resource evaluation. Half of the core is kept for one or two holes per section and all pulps are kept. All holes are logged for lithology, alteration, fractures, mineralization and structure.
 
Drill core sample security was maintained throughout the year with geological supervision of transport of the core from the drill site, through to the logging facility and to the on-site NATA (National Association of Testing Authorities) accredited assay laboratory.
 
Drilling, sampling, analysis, data stewardship, orebody modeling, and mine planning are carried out in accordance with industry standards. Regular internal auditing of the mineral reserve and mineral resource estimation processes and procedures are conducted.  The sampling and analytical methods are believed to be appropriate for the style and type of mineralization.  Databases used to generate the geological models and mineral resource estimates have been verified by mine geological staff.
 
Royalties
 
Production by the Porgera mine is subject to a 2% net smelter royalty payable to the National Government Department of Mining, which is then distributed to the Enga Provincial government, the Porgera District Authority and local landowners.
 
Production Information
 
The following table summarizes certain production and financial information for the Porgera mine (Barrick’s proportional share) for the periods indicated:

 	 	Year ended
December 31, 2010	 	Year ended
December 31, 2009	 	
Tonnes mined (000’s)	 	35,212	 	38,052	 	
Tonnes of ore processed (000’s)	 	5,446	 	5,682	 	
Average grade processed (ounces per tonne)	 	0.110	 	0.110	 	
Ounces of gold produced (000’s)	 	519	 	550	 	
Average total cash costs per ounce (1)	 	$	582	 	$	515	 	

(1)   For an explanation of total cash costs per pound, refer to “Non-GAAP Financial Measures — Total Cash Costs and Net Cash Costs Per Ounce”.
 
The diagram on the following page sets out the design and layout of the Porgera mine.
 
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Pueblo Viejo Project
 
General
 
The Pueblo Viejo project is located in the central part of the Dominican Republic on the Caribbean island of Hispaniola in the province of Sanchez Ramirez. The project is 15 kilometres west of the provincial capital of Cotui and approximately 100 kilometres northwest of the national capital of Santo Domingo.
 
The Pueblo Viejo project site has been a non-operating gold mine since June 1999.  Early mining activity at the project site dates back to the 1500s.  Subsequent to that early mining activity, Rosario Dominicana S.A. commenced mining operations on the property in 1975. In 1979, the Central Bank of the Dominican Republic purchased all foreign-held shares in the mine.  Gold and silver production from oxide, transitional, and sulphide ores occurred from 1975 to 1999.  The mine ceased operations in 1999.  In 2000, the Dominican Republic invited international bids for the leasing and mineral exploitation of the Pueblo Viejo project site. On July 2, 2001, Pueblo Viejo Dominicana Corporation (“PVDC”)(then known as Placer Dome Dominicana Corporation), an affiliate of Placer Dome, was awarded the bid.  PVDC and the Dominican Republic subsequently negotiated a special lease agreement (the “SLA”) for the Montenegro Fiscal Reserve in which the project is situated. The SLA was subsequently ratified by the Dominican National Congress and became effective on July 29, 2003.  In February 2006, Barrick acquired Placer Dome and in May 2006 amalgamated the companies. At the same time, Barrick sold a 40% stake in the Pueblo Viejo project to Goldcorp. On February 26, 2008, PVDC delivered the Project Notice to the Government of the Dominican Republic pursuant to the SLA and delivered the Pueblo Viejo Feasibility Study to the Government.  In 2009, the Dominican Republic and PVDC agreed to amend the terms of the SLA.  The amendment became effective on November 13, 2009 following its ratification by the Dominican National Congress.
 
The Pueblo Viejo project is situated on the Montenegro Fiscal Reserve which covers an area of 4,880 hectares and is located at the head of the Arroyo Margajita Valley in the eastern portion of the Cordillera Central where local topography ranges from 565 metres at Loma Cuaba to approximately 65 metres at the Hatillo Reservoir. The site is characterized by rugged and hilly terrain covered with subtropical wet forest and scrub cover. Forest capacity is limited by slope, topography, and soil movement.  Access to the Pueblo Viejo project from Santo Domingo is by a four lane, paved highway (Autopista Duarte) that is the main route between Santo Domingo and the second largest city, Santiago. This highway connects to a single lane, secondary Highway #17 at the town of Piedra Blanca, approximately 78 kilometres from Santo Domingo. This secondary highway is a two lane, paved highway that passes through the towns of Piedra Blanca and Maimón on the way to Cotui.
 
The SLA between the Dominican State and PVDC governs the development and operation of the Pueblo Viejo project. The SLA provides PVDC with the right to operate the Pueblo Viejo project for a 25 year period commencing from the date on which PVDC delivered the Project Notice under the SLA. PVDC has the right to automatically renew the term of the lease for an additional 25 years at its sole option (50 years in total). The agreement provides for another 25 year extension with mutual agreement between both parties (75 years in total).
 
Development
 
The Pueblo Viejo project is being developed as an open pit mining operation, with two main open pits, and with processing facilities having a designed throughput capacity of 24,000 tonnes per day.  Due to the composition of the ore, the mine will use whole ore autoclaving (pressure oxidation) followed by CIL cyanidation for recovery of gold and silver.
 
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In December 2010, the Environmental Impact Assessment for the 240 kV power transmission line was approved allowing associated construction activities to commence.  Alternate temporary power sources are being secured which will allow project commissioning in the fourth quarter of 2011.  First production is expected in the first quarter of 2012. Overall construction is about 50% complete, approximately 75% of the capital has been committed and all four of the autoclaves are on site, have been placed on their footings and are in the process of being bricklined. The main columns for the 4,000 tonne per day oxygen plant have been erected.  About 80% of the planned concrete has been poured, 55% of the steel has been erected and more than 600,000 tons of ore have been stockpiled. Work continues toward achieving key milestones including the connection of power to the site.  A circuit to recover up to three billion pounds of zinc is under evaluation and the Company continues to explore options for longer term, lower cost power alternatives.
 
Pre-production capital is expected to range between $3.3-$3.5 billion (100% basis).  Barrick’s 60% share of annual gold production in the first full five years of operation is expected to average 625,000-675,000 ounces at total cash costs of $275-$300 per ounce assuming a gold price of $1,100 per ounce and an oil price of $85 per barrel.
 
Geology
 
The Pueblo Viejo precious and base metal deposit consists of high sulphidation or acid sulphate epithermal gold, silver, copper, and zinc mineralization that were formed during the Cretaceous Age island arc volcanism. The two main areas of alteration and mineralization are the Monte Negro and Moore deposits.
 
Pueblo Viejo is situated in the Los Ranchos Formation, a series of volcanic and volcaniclastic rocks that extend across the eastern half of the Dominican Republic, generally striking northwest and dipping southwest. The Pueblo Viejo Member of the Los Ranchos is a restricted sedimentary basin approximately 3 kilometers north-south by 2 kilometers east-west. The basin is filled with lacustrine deposits that range from coarse conglomerate deposited at the edge of the basin, to thinly bedded, carbonaceous sandstone, siltstone, and mudstone deposited further from the paleo-shoreline. To the south, the Pueblo Viejo Member is unconformably overlain by the Hatillo Limestone Formation by means of a low angle, southwest dipping thrust fault.
 
The Moore deposit is located at the eastern margin of the Pueblo Viejo member sedimentary basin. Stratigraphy consists of finely bedded carbonaceous siltstone and mudstone (PV sediments) overlying horizons of spilite (basaltic-andesite flows), volcanic sandstone, and fragmental volcaniclastics. The Monte Negro deposit is located at the northwestern margin of the sedimentary basin. Stratigraphy consists of interbedded carbonaceous sediments ranging from siltstone to conglomerate that are interlayered with volcaniclastic flows. Metallic mineralization in the deposit areas is primarily pyrite with lesser amounts of sphalerite and enargite. Pyrite mineralization occurs as disseminations, layers, replacements, and veins. Sphalerite and enargite mineralization is primarily in veins, but disseminated sphalerite has been noted in core.
 
Studies have determined that there were two stages of advanced argillic alteration, both associated with precious metal mineralization. A third stage of mineralization occurred when hydro-fracturing of the silica cap produced pyrite-sphalerite-enargite (Stage III) veins with silicified haloes. Individual Stage III veins have a mean width of 4 centimetres and are typically less than 10 centimetres wide. Stage III veins contain the highest precious and base metal values and are more widely distributed in the upper portions of the deposits. The most common vein minerals are pyrite, sphalerite, and quartz with lesser amounts of enargite, barite, and pyrophyllite.
 
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Gold is intimately associated with pyrite veins, disseminations, replacements, and layers within the zones of advanced argillic alteration. Gold values generally are the highest in zones of silicification or strong quartzpyrophyllite alteration. These gold-bearing alteration zones are widely distributed in the upper parts of the deposits and tend to funnel into narrow feeder zones. Stage III sulphide veins also have higher gold values than replacement style mineralization. The most common form of gold is sub-microscopic gold within pyrite, where it is present as both solid solution within the crystal structure of the pyrite and as colloidal-size microinclusions (<0.5 microns). The proportions of the different forms and carriers of gold vary significantly throughout the Moore and Monte Negro deposits. Generally, the majority of gold is found as sub-microscopic gold in microcrystalline, disseminated, or porous pyrite. Of all the elements, assays for silver consistently have the strongest correlation with gold. Silver has a strong association with Stage III sulphide veins where it occurs as the minerals silver, Sb-sulphides (pyrargyrite), silver-tellurides (hessite), gold, silver-tellurides (sylvanite, petzite), and silver-bearing tetrahedrite. The majority of the zinc occurs as sphalerite; primarily in Stage III sulphide veins and secondary as disseminations. The majority of copper occurs as enargite hosted in Stage III sulphide veins. Only trace amounts of chalcocite and chalcopyrite have been recorded.
 
Many rock types based on both lithological and structural domain boundaries were used in the geological block model. However, rock types were divided into five different categories based on metallurgical properties.
 
Mining and Processing
 
The Pueblo Viejo deposits are located in two major areas, the Monte Negro pit and the Moore pit.  The ore deposits are complex and pose a particular challenge in finding an economical process for gold and silver recovery. Most of the gold and silver in the ore are intimately associated, and mostly in solid solution, with the pyrite. As a result, chemical breakdown of the sulphide minerals, as well as removal of reactive and cyanide-consuming copper and zinc minerals, is required to achieve good gold and silver recoveries. Many chemical processing techniques were investigated, but only pressure oxidation of the whole ore followed by cyanidation of gold and silver in a CIL circuit produced satisfactory and optimum results.
 
PVDC has selected a process based on pressure oxidation of the whole ore followed by CIL cyanidation for recovery of the gold and silver. One innovation, a hot cure on the slurry from the autoclave, is designed to reduce lime consumption by solid basic ferric sulphate in the cyanide leaching circuit, in favour of the neutralization of dissolved ferric sulphate in the liquid phase by limestone in the high density sludge (HDS) circuit. Autoclaving of the whole ore entails greater capital and operating costs than treating a concentrate but the increment in operating cost is limited because of its dependence more on sulphur throughput rather than total solid throughput.
 
The autoclave circuit will be designed to oxidize initially an average of 1,200 tonnes per day of sulphur, with 1,600 tonnes per day capacity after expansion. As a result of the varying sulphur content of the mill feed, the processing rate will range from 12,000 tonnes per day (high sulphur) to 18,000 tonnes per day (low sulphur) to 24,000 tonnes per day (after expansion). The rest of the process plant will be designed to handle the maximum process throughput.
 
The first stage pit is located in the existing Monte Negro pit. There is no need for pre-stripping of this pit before operations start as the ore is already exposed. There is, however, a need for pre-stripping of the plant limestone quarry to provide access, and to produce aggregates needed for road construction. The access ramp east of the Moore pit will have to be developed during pre-production to provide access to the primary crushers.
 
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The tailings storage area will be located in the El Llagal valley located approximately 3.5 kilometres south of the plant site. The ultimate storage capacity of the tailings impoundment facility is expected to be 383 million cubic meters, sufficient to contain all of the tailings, waste rock and HDS precipitate to be generated over the life of the Pueblo Viejo project, and runoff water from the design flood event.  In addition to solids storage, each cell in the tailings facility is sized to provide storage for an operating pond and for extreme precipitation events. The project is situated in a seismically active area. The design of the dams at site was based on the maximum credible earthquake.
 
The Hatillo and Hondo Reservoirs are expected to supply fresh water for the process plant. Reclaimed water from the El Llagal tailings containment pond is expected to be used as supplementary water supply.
 
Operational power requirements will vary from 150 MW at a process rate of 18,000 tonnes per day to 200 MW at 24,000 tonnes per day.  During mine operation, emergency power is expected to be provided by diesel generators that support critical loads. It is anticipated that power during commissioning and initial periods of operation will be sourced, in part, from the national grid and that the project’s permanent power supply will begin to be phased in upon completion of the private transmission line in 2012.
 
Environment
 
In September 2005, PVDC completed a Feasibility Study on the Pueblo Viejo project. An Environmental Impact Assessment (“EIA”) for the mine was completed in late 2005 and presented to the Dominican State in November 2005. Approval of the EIA was received in December 2006 from the Ministry of Environment.  An Expansion Environmental Report was filed in 2008 and approved in December 2010.
 
The Pueblo Viejo project is being designed and constructed to to mitigate potential environmental impacts.  In order to prevent and control spills and protect water quality, the project will utilize multiple levels of spill containment procedures and routine inspection and monitoring of its facilities.
 
The Pueblo Viejo project site is affected by a number of significant legacy environmental issues resulting from the conduct of operations at site prior to Barrick’s involvement in the project. Under the terms of the SLA, the Dominican State is obligated, at its sole cost and expense, to remediate and rehabilitate, or otherwise mitigate all historic environmental matters. PVDC has agreed to cover the capital costs related to such remediation up to $75 million. Subject to the verification of certain conditions, PVDC has agreed to act as an agent of the Dominican State to remediate the historical environmental liabilities that correspond to such State. However, upon PVDC giving the Dominican State a Project Notice, which was issued by PVDC in 2008, PVDC assumed the responsibilities for all historic environmental matters within the boundaries of the “Development Areas”, except for hazardous substances at the Rosario’s plant site which shall remain responsibility of the Dominican State.  In addition, the Dominican State is required under the SLA, in compliance with the applicable Environmental and Social Guidelines and Policies, and at its sole cost and expense, to relocate and pay all indemnification and other compensation due to certain persons with valid claims to land within the Montenegro Fiscal Reserve. Under the SLA, PVDC and the Dominican State, respectively, have up until November 2014 to remediate the historical environmental matters for which they are responsible under that agreement.
 
At December 31, 2010, the recorded amount of estimated future reclamation and closure costs that were also asset retirement obligations, as defined in FAS 143, for the property was $60.5 million (as described in Note 22 to the Consolidated Financial Statements).  See “Environment and Closure”.
 
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Exploration, Drilling and Analysis
 
As of December 31, 2010, the drill hole database used to support the development of mineral resources for the Pueblo Viejo property contains 2,320 drill holes, 974 diamond drill core holes, 331 percussion, 84 reverse circulation, 6 geotechnical drill holes, 49 DCPT, 331 percussion holes and 876 rotary samples. Samples totaling 178,499 meters from diamond drill holes, 54,525 meters from rotary drill holes, 8,518 meters from percussion holes, and 13,588 meters from reverse circulation. In addition 1,487 closed spaced reverse circulation grade control drill holes, totaling 55,160 meters were used to estimate the gold, copper and silver resources.  The drill hole spacing is variable ranging from 50 to 70 meters.
 
Pueblo Viejo samples were analyzed for gold, silver and copper by independent laboratories in Santiago, Chile and Peru. The quality assurance procedures and assay protocols followed by Barrick in connection with drilling and sampling on the Pueblo Viejo property conform to industry accepted quality control methods.
 
Quality control and assurance protocols included controls during sampling, transport, laboratory preparation and analysis.  All samples remained in the possession of Barrick employees until delivery to third party laboratories.  A final check by statistical means indicated that sampling methodologies were accurate and precise without contamination.  Only when all data was checked were results introduced into the data base.  Additionally, the data base was checked against the original data before use in the reserve model.
 
Regular internal auditing of the mineral reserve and mineral resource estimation processes and procedures are conducted.
 
Royalties
 
Under the SLA, PVDC is obligated to make the following payments to the Dominican Republic: certain fixed payments due upon achieving certain milestones; a Net Smelter Return Royalty of 3.2%; a Net Profits Interest of 28.75%; a tax on income, and a withholding tax on interest paid on loans and on payments abroad. In addition, an Environmental Reserve Fund to be held in an offshore escrow account is to be funded during operations until the escrowed funds are adequate to discharge PVDC’s closure reclamation obligations.
 
Financing
 
During 2010, PVDC secured a variable rate $1.035 billion loan facility for the Pueblo Viejo project.  Barrick and Goldcorp have each provided a guarantee for the loan, in proportion to their ownership interests in the project, until the mine has achieved specified operational and technical requirements, after which the loan will become non-recourse.  This facility is insured for political risks by a branch of the Canadian government. Substantially all the assets of PVDC, including the Pueblo Viejo project property and related assets, have been pledged as security under the loan. The effective interest cost for 2010 was approximately 4.12%. As of December 31, 2010, PVDC had drawn $782 million (100% basis) of the facility. On March 29, 2011, PVDC drew an additional $159 million (100% basis) of the facility.
 
The diagram on the following page sets out the design and layout of the Pueblo Viejo project.
 
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Pascua-Lama Project
 
General Information
 
The Pascua-Lama property is located in the Frontera District in Chile’s Region III and Argentina’s San Juan Province. It straddles the Chile-Argentina border and is approximately 150 kilometers southeast of the city of Vallenar, Chile, 380 kilometers by road northwest of the city of San Juan, Argentina and approximately 10 kilometers from the Veladero mine. The total project area consists of approximately 45,500 hectares in Chile and Argentina.  The Chilean part of the deposit, which is at an elevation of approximately 4,300 to 5,250 meters above sea level, was acquired by Barrick through its acquisition of Lac Minerals Ltd. (“Lac Minerals”) in 1994. Lac Minerals acquired its interest in the property from Bond Gold International in 1989.  Exploration on the property dates back as far as 1977.  With respect to the portion of the project located in Argentina, Barrick acquired certain of the mining concessions that form part of the project in 1995.  It acquired the remaining project mining concessions through its acquisition of Exploraciones Mineras Argentinas S.A. from Minera S.A. in 1997.
 
In both Chile and Argentina, Barrick, through its wholly-owned Argentinean subsidiary, Barrick Exploraciones S.A., and its wholly-owned Chilean subsidiary, Compañia Minera Nevada SpA, owns the mining property in the project area. The legislatures of both Chile and Argentina completed the ratification of a Mining Treaty between the two countries in 2000.  The Specific Additional Protocol for the Pascua-Lama project under the Mining Treaty was signed into law by both countries in the third quarter of 2004.  The Pascua-Lama project is within the area subject to the Mining Treaty and the project is entitled to enjoy the benefits to cross-border mining operations that are granted by the Mining Treaty.  I n April 2009, the authorities of Chile and Argentina reached an agreement specific to the Pascua-Lama project, which avoids double taxation for the project.
 
The Pascua-Lama property area is characterized by high mountain ranges and deep valleys with natural slopes of 20 to 40 degrees.  Surface material consists of rock outcrops, alluvial and colluvial materials, which are primarily gravel, sand, silt and clay. Vegetation is sparse. The area is considered to have a sub-arid, sub-polar, mountain climate.  During the winter months, extreme weather may create a challenging operating environment.  Recognizing this issue, the potential impact of possible extreme weather conditions, to the extent possible, will be incorporated into the project’s operating plan.  Access to the property is pursuant to a combination of public highways and private roads from both Vallenar, Chile and San Juan, Argentina.
 
Primary road access in Chile will initially be via a 126 kilometers public road (route C 485) from the city of Vallenar, through the town of Alto del Carmen and several small communities to the Barrick property and 44 kilometers on Barrick private road to the Protocol Area access control point at Tres Quebradas.  The project scope includes upgrading 70 kilometers of an existing public road from Punta Colorada and construction of 48 kilometers of new road to join the road from Alto del Carmenon which runs to the Barrick property. Once inside the Protocol Area the road continues an additional 23 kilometers up to the entry to the mine site at La Mesa.
 
Primary access in Argentina will be by public highways to Tudcum, some 200 kilometers north of the San Juan Province capital city of San Juan and from there 157 kilometers on an existing private road to the access gate to Barrick´s Veladero Mine and another 30 kilometers through the Veladero property to the Protocol Area. Once inside the Protocol Area, the road continues another 5 kilometers to the plant site.
 
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Development
 
The Pascua-Lama project is being designed as a large-scale open pit operation with processing facilities having a designed throughput capacity of 45,000 tonnes per day.  Non-refractory ore produced by the mine will be subject to cyanide leaching, while refractory ore will be subjected to flotation prior to cyanide leaching.  The development of the processing facilities has been staged to reflect the expected composition of the ore over the mine life.
 
Production from Phase I of the project is expected to commence in the first half of 2013 with construction of Phase II to commence shortly thereafter.   Approximately 40% of the project’s capital has been committed, securing the mining fleet, processing mills, camp accommodation and earthworks contractors.  Detailed engineering and procurement for the project are about 90% complete.  About 60% of the earthworks necessary for the process plant and mining support facilities have been completed. Construction of the power transmission line has commenced and the new access road is almost 75% complete. Development of the tunnel, which connects the mine in Chile and the process plant in Argentina, is progressing on both sides. Occupancy of the construction camps in Chile and Argentina continues to ramp up with more than 2,000 housed on site.
 
Pascua-Lama’s pre-production capital is expected to be between $3.3-$3.6 billion.  First production is expected in the first half of 2013. Average annual gold production from Pascua-Lama is expected to be 750,000—800,000 ounces in the first full five years of operation at total cash costs of $20-$50 per ounce based on a silver price of $16 per ounce (based on gold price and oil price assumptions of $1,100 per ounce and $85 per barrel, respectively, and assuming a Chilean peso exchange rate of 500:1).  For every $1 per ounce increase in the silver price, total cash costs are expected to decrease by about $35 per ounce over this period.
 
In 2009, Barrick entered into the Silver Purchase Agreement with Silver Wheaton whereby it sold 25% of the life-of-mine Pascua-Lama silver production from the later of January 1, 2014 or completion of project construction, and 100% of silver production from the Lagunas Norte, Pierina and Veladero mines until that time. Silver Wheaton will make up front payments totaling $625 million ($350 million received as at December 31, 2010). Silver Wheaton will also make ongoing payments of $3.90 per ounce in cash (subject to a 1% annual inflation adjustment starting three years after completing construction at Pascua-Lama) for each ounce of silver delivered under the Silver Purchase Agreement.
 
Geology
 
The Pascua-Lama property is located in the high Andean Mountains, in what has been designated as the Eastern Belt of Hydrothermal Alteration. The gold, silver and copper mineralization at Pascua-Lama is part of a mineralized acid sulfate system that was structurally controlled within intrusive and volcanic rock sequences of Upper Paleozoic and Middle Tertiary age.
 
Basement rocks in the Pascua-Lama area are dominated by a multiphase granite pluton that may be a slightly younger upper Permian or lower Triassic phase of the Permian Guanaco Sonso sequence of intrusive and volcanics. In the deposit area, the granite intrudes older diorites and volcanic pyroclastic units and is, in turn, intruded by diorite stocks and dykes of mid-Tertiary Bocatoma age. During Tertiary time, all of the previously described rocks were cut by sub-vertical fault zones and hydrothermal breccias located at complex fault intersections.
 
Numerous breccias bodies occur in the Esperanza, Quebrada de Pascua and Lama areas. At the surface, these breccias vary in size from outcrops measured in centimeters up to hundreds of meters. Typically the breccias show a strong correlation to zones of intersection of two or more major structural
 
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zones.  Breccia Central, the large inter mineral breccias pipe, occurs in the Quebrada de Pascua area. On the surface, this breccia body is about 650 meters long and up to 250 meters in width, while underground, between 200 and 400 meters below the surface, the composite body measures about 550 meters in length and up to 130 meters in width. It extends to at least 700 meters below surface. This well mineralized breccia pipe is evidence of an explosive hydrothermal event related to the formation of the Quebrada de Pascua ore deposit.  Breccia Oeste and Breccia Sur are the two large post mineralization breccias pipe complexes located in the mine area.  Oriented north/south along the Breccia Oeste fault zone in the Esperanza area, the Breccia Oeste pipe measures up to 500 meters long, up to 150 meters wide, and extends up to 300 meters below surface.
 
Mining and Processing
 
The Pascua-Lama mine is being designed as an open pit, centered at an elevation of 4,800 meters. The project will produce both non-refractory oxide and refractory sulfide ores.  Construction on the Pascua-Lama project began in 2009.  The Project is being developed in two phases due to the nature and distribution of ore types (non-refractory and refractory).   Both ore types will be ground and washed, with non-refractory ore being subjected to direct cyanide leaching only. Washed refractory sulfides will be subjected to flotation prior to cyanide leaching of the flotation tailings. Final products from the process include doré bullion and Cu-Au-Ag flotation concentrates.
 
The plant consists of primary crushing, wet grinding in autogenous (AG) mills, ball milling, CCD washing, pre-aeration, oxygen assisted cyanide leaching, CCD thickening for pregnant solution recovery, cyanide destruction, cementation using Merrill-Crowe , mercury retorting, and smelting. For the treatment of the refractory ore, a flotation circuit will be added.  The processing plant is designed to operate 24 hours a day, 365 days per year.  The average design throughput is approximately 2,000 tonnes per hour.
 
During years 1 and 2, the process facility is designed to process 45,000 tonnes per day of non-refractory ore through three mill lines (Phase 1).  In the late first quarter of year 3, a flotation facility will be added and refractory ore will be introduced to one of the mill lines at the rate of 15,000 tonnes per day (Phase 2). During this phase, which continues throughout the remainder of the mine life, the remaining two mill lines continue to process non-refractory ore at 30,000 tonnes per day.  Recovered gold and silver from the leach circuit will be smelted into doré on-site and shipped to an outside refinery for processing into bullion.
 
Until permanent power is available at site, temporary construction power will be provided by diesel generator.   The temporary construction generators will be suitable for use as emergency back up generators during operations in the event of a primary power failure.  Permanent electrical power for the project will be provided by a single circuit 220 kV 106 km line from a main substation connected to the Chile main Central Interconnected grid System (SIC) near Punta Colorada (Coquimbo Region) to a substation near the Protocol Area Access Control point in Chile.  From there, separate 220 kV lines will be provided for power supply to the substations located at the process plant in Argentina (47 km) and the mine facilities in Chile (23 km). The construction of the primary power supply system is planned to be completed by Q1 2012 in Chile and Q4 2012 in Argentina.
 
The Company is aware of a number of actions that have been initiated variously against the Province of San Juan in Argentina relating to approvals granted in respect of or actions affecting the Pascua-Lama project.  Barrick is not a party to such actions and has limited information with respect to the nature or status of the claims or complaints.  In addition, certain other complaints and actions relating to the project have been brought against subsidiaries of Barrick.  Based on the information currently available to the Company, none of these actions or complaints is believed to present a significant risk to the construction of the Pascua-Lama project.
 
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In 2007, the Huascoaltinos Agricultural Community filed a petition against the State of Chile before the Inter-American Commission on Human Rights (“IACHR”) claiming that certain of the Community’s rights under the American Convention of Human Rights had been violated as a result of, amongst other things, the State’s issuance of certain environmental approvals relating to the project.  The case has been briefed by the petitioner Community and the respondent State before the IACHR.  Barrick is not a party to the proceedings, however, it has been invited by the State to provide information regarding the case and it has been cooperating in this respect.  Barrick believes that the petitioner’s claims are without merit and it intends to support the State in its defense.  Depending on the decision which is reached by the IACHR, the IACHR could, amongst other things, potentially impose precautionary measures on the State or recommend alterations to the conditions under which the project was approved or reopen its environmental review. Any such decision could limit or suspend Barrick’s ability to develop the project, and could potentially affect Barrick’s ability to complete the project as it is currently designed.
 
Environment
 
The Pascua-Lama project environmental permit was submitted to both Chilean and Argentine authorities in 2000. The Pascua-Lama project received Environmental Impact Assessment (“EIA”) approval from appropriate authorities in Chile in May 2001 and, in December 2004, Barrick submitted a second EIA in respect of modifications of the project. In 2005, three addenda were submitted in response to questions and concerns raised by the communities and authorities.  Barrick received approval of the EIA from Chilean environmental regulatory authorities in February 2006.
 
As noted above, the Environmental Impact Statement (“EIS”) prepared for the portion of the mine, mill and tailings storage facility for the project located in Argentina was submitted in 2000 and updated in 2004 to incorporate the cumulative impacts of the construction and development of the nearby Veladero project. This updated EIS was submitted in November 2004. In December 2006, Barrick received approval of the EIS from the San Juan, Argentina, provincial environmental regulatory authority.  In April 2009, Barrick submitted a first biannual update of the EIS to the Province of San Juan’s environmental regulatory authority.  The EIS outlines the project’s environmental management results and any project updates from the previously approved EIS.  The first biannual update was approved in December 2009.  In May 2010, Barrick submitted a second biannual update of the EIS to the Province of San Juan’s environmental regulatory authority and is currently awaiting its approval.  Having obtained approval of the EIS, Barrick will also need to obtain various sectoral permits for the construction and operation of the project.
 
In Chile, Barrick owns the surface land required for the facilities of the project and has obtained sufficient water rights for the project’s needs.  In Argentina, Barrick has an undivided 90% interest in “Campos Las Taguas” which is the surface property affected by the mining facilities of the project.   In 2008, the majority of remaining key sectorial permits, including water rights, including an easement with respect to the 10% interest of “Campos Las Taguas” owned by third parties, were granted by the government of the San Juan Province in Argentina.
 
The Pascua-Lama project will handle ore or rock which has the potential to be acid generating and will use cyanide in the processing of ore.  The project has been designed to manage the handling of ore and rock to reduce the potential volume of acid rock drainage.  Such considerations include diversion and containment systems for the collection, storage and treatment of drainage and closure and reclamation plans designed to minimize water infiltration.  The process facilities that use cyanide have been designed to prevent process solutions from being released to surface water or groundwater.  These facilities will be lined and will include seepage detection and collection systems.  The facilities will also include treatment for cyanide removal and destruction.  Management procedures for cyanide handling, monitoring and transportation in accordance with the International Cyanide Management Code will be implemented for the project.
 
Argentina recently passed a federal glacier protection law that restricts mining in areas on or near the nation’s glaciers.  Barrick’s activities at the Pascua-Lama Project do not take place on glaciers, and are
 
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undertaken pursuant to existing environmental approvals issued on the basis of comprehensive environmental impact studies that fully considered potential impacts on water resources, glaciers and other sensitive environmental areas around the project.  Barrick has implemented a comprehensive range of measures in place to protect such areas and resources.  Further, the Company believes that the new federal law is unconstitutional, as it seeks to legislate matters that are within the constitutional domain of the provinces. The Province of San Juan, where Barrick’s operations are located, previously enacted glacier protection legislation with which Barrick complies.  The Company believes it is legally entitled to continue its current activities on the basis of existing approvals.  In this regard, the Federal Court in San Juan has granted injunctions, based on the unconstitutionality of the federal law, suspending its application in the Province and in particular to Pascua-Lama, pending consideration of the constitutionality of the law by the Supreme Court of Argentina.  See also “Legal Matters — Legal Proceedings — Argentina Glacer Legislation”.
 
At December 31, 2010, the recorded amount of estimated future reclamation and closure costs that were also asset retirement obligations, as defined in FAS 143, for the property was $34.5 million (as described in Note 22 to the Consolidated Financial Statements).  See “Environment and Closure”.
 
Exploration, Drilling and Analysis
 
As of December 31, 2010, the drill hole database used to support the development of mineral resources for the Pascua-Lama property contains 1,240 reverse circulation holes, 605 diamond drill core holes, 2,060 underground channel samples, 383 surface channel samples, 157 metallurgical samples and 20 muck samples. The gold and silver resources have been estimated from representative samples taken from 333,415 meters of reverse circulation holes, 159,212 meters of diamond drill holes, 24,503 meters of underground channel samples and 12,704 meters of road channel samples.  The drill hole spacing is variable, approximately 40 meters in the Esperanza area and 40 to 60 meters in the Quebrada de Pascua area.
 
Pascua-Lama samples were analyzed for gold, silver and copper by independent laboratories in Santiago, Chile. The quality assurance procedures and assay protocols followed by Barrick in connection with drilling and sampling on the Pascua-Lama property conform to industry accepted quality control methods.
 
Quality control and assurance protocols included controls during sampling, transport, laboratory preparation and analysis.  All samples remained in the possession of Barrick employees until delivery to third party laboratories.  A final check by statistical means indicated that sampling methodologies were accurate and precise without contamination.  Only when all data was checked were results introduced into the data base.  Additionally, the data base was checked against the original data before use in the reserve model.
 
Regular internal auditing of the mineral reserve and mineral resource estimation processes and procedures are conducted.
 
Royalties
 
Pursuant to legislation passed by the government of the San Juan Province, all gold and silver, among other ores, extracted from the property within the San Juan Province are subject to a royalty, payable to the government of the Province of San Juan, of 3% of the value of the ore at the “mine mouth”.  In addition, Barrick is obligated to pay a gross proceeds sliding scale royalty on gold produced from the Pascua-Lama properties located in Chile ranging from 1.47% to 9.8% and a 1.96% net smelter royalty on copper produced from the properties. In addition, a step-scale 5% or 7.5% gross proceeds royalty on gold
 
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produced and a sliding scale net smelter royalty of 0.5% to 6% on all products other than gold and silver is payable in respect of certain portions of the property located in Argentina.  The sliding scale and step-scale royalties on gold increase with rising spot gold prices.
 
The following diagram sets out the proposed design and layout of the Pascua-Lama mine.

 
EXPLORATION AND EVALUATIONS
 
Barrick has historically grown its reserve base through a combination of acquisitions and an exploration strategy that includes a district development program, which focuses on exploration in and around its operating properties, as well as an early-stage exploration program.  The Company’s strategy is to maintain a geographic mix of projects at different stages in the exploration and development sequence.  In 2010, Barrick spent $333 million on its exploration, development and business development activities (2009 — $226 million). Of the $180 million spent on exploration in 2010, approximately $76 million was spent in North America, approximately $22 million was spent in South America, approximately $54 million was spent in the Australia Pacific region, and approximately $22 million was spent in Africa.  Development expenditures in 2010, consisting of mine development and non-capitalizable project costs, totaled approximately $153 million (2009: $85 million). Business development costs in 2010 totaled approximately $50 million (2009: $24 million).
 
Barrick’s exploration growth strategy is a balanced, three-fold approach which focuses on: finding new discoveries; adding reserves and resources at Barrick’s existing mines; and identifying and delivering exploration upside following acquisitions. Exploration is directed from Barrick’s head office in Toronto and is conducted through its RBUs and exploration offices around the world.  Barrick’s success can be largely attributed to the fact that Barrick has extensive land positions on many of the world’s most prospective trends and a disciplined approach to exploration. The Company has maintained a commitment to exploration by providing consistent funding through the years. In addition, Barrick’s exploration team
 
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 is integrated and aligned with the corporate development team to identify early-stage opportunities, acquire them, and then find the reserves and resources.
 
In 2011, Barrick expects to spend approximately $320 to 340 million on exploration. The budget supports a deep pipeline of projects and is weighted towards near-term resource additions and conversion at Barrick’s existing mines, while still providing support for earlier-stage exploration in Barrick’s operating districts.  North America remains a key priority in 2011 with 43% of the total budget allocated to the region. In 2011, Barrick expects to expense project costs of approximately $330 to $350 million for its share of expenditures.  In 2011, Barrick’s expected project expenses are primarily attributable to on-going minesite reserve and resource development programs, principally at Cortez, Porgera, Lagunas Norte, Granny Smith and Goldstrike.  Project expenses also includes non-capitalizable project costs at Pueblo Viejo, Pasua-Lama and Cerro Casale.
 
In 2010, the Company identified a number of brownfield development opportunities which have the potential to contribute organic long-term production growth and extend the mine life of certain existing operations.  At Turqouise Ridge (75% owned by Barrick), the Company identified a potential large scale open pit to mine the lower grade halo around the existing high grade core.  A scoping study is currently underway which is expected to be completed in 2012 and which will be followed by a feasibility study in 2013.  Additional organic growth opportunities have been identified at Lagunas Norte and Zaldivar, each of which involves larger sulfide deposits under the existing ore bodies, which have the potential to contribute to increased production in the long term and extend the mine life of both operations.  In 2011, Barrick intends to further advance studies regarding these opportunities, as well as other brownfield development opportunities, to surface additional value at its existing operations.
 
As a result of the continued development of its more advanced projects (Pueblo Viejo, Pascua-Lama and Cerro Casale) Barrick expects 2011 capital expenditures to increase to a range of $2.1 to $2.3 billion on an IFRS basis (2010: $1.691 billion).  Based on the current portfolio of development projects and mine plans, total capital expenditures are expected to decrease in 2012.  The Pueblo Viejo project and the Pascua-Lama project are described in further detail above in the Material Properties section (see “Material Properties - Pueblo Viejo Project” and “Material Properties — Pascua-Lama Project”).  Certain of Barrick’s other current development projects, which are at various stages of development, are described below.
 
Acquired in connection with Barrick’s acquisition of Arizona Star in 2007, Cerro Casale is a large, undeveloped gold and copper deposit located in the Maricunga district of Region III in Chile, 145 km southeast of Copiapo.  In March 2010, Barrick completed its acquisition of an additional 25% interest in Cerro Casale from Kinross for total cash consideration of $454 million and the elimination of a $20 million contingent obligation which was payable by Kinross to Barrick on a production decision (for additional details see “General Information — Transactions — Acquistion of Additional 25% Interest in Cerro Casale”).  Barrick now has a 75% interest in the project and has obtained control over the project.  Barrick’s 75% share of average annual production is anticipated to be about 750,000 to 825,000 ounces of gold and 170 to 190 million pounds of copper in its first five years of operation at total cash costs of about $240 to $ 260 per ounce. The foregoing estimate is based on gold price, copper price and oil price assumptions of $ 1,100 per ounce, $ 2.75 per pound and $85 per barrel, respectively, and assuming a Chilean peso foreign exchange rate of 500:1.
 
The Cerro Casale project is currently undertaking a review of any additional permitting requirements prior to advancing the project to a construction decision.  This review is being conducted alongside discussions with representatives of government and meetings with local communities and indigenous peoples impacted by the project.  Detailed engineering is about 30% complete. A review is currently underway to determine the impact of a stronger Chilean peso and higher labor costs in Chile on expected
 
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capital and operating costs.  Preliminary estimates indicate an increase of about 20-25% in pre-production capital from the previous estimate of $4.2 billion.
 
The Donlin Creek project is a large refractory gold deposit located in Southwestern Alaska.  In December 2007, Barrick entered into an agreement with NovaGold Resources Inc. (“NovaGold”) to form a jointly owned limited liability company, Donlin Creek LLC, on a 50/50 basis to advance the project.  The project’s feasibility study update was approved by the Board of Donlin Creek LLC in second quarter of 2009.  Further optimization studies are underway, primarily focused on the potential to utilize natural gas to reduce operating costs.   These studies are expected to be completed by mid-2011for consideration by the Board of Donlin Creek LLC.
 
In 2006, Barrick acquired a 50% interest in Atacama Copper Pty Ltd., which in turn has a 75% interest in the Reko Diq project in Pakistan and associated mineral interests.  Reko Diq is a large copper-gold porphyry mineral resource located in southwest Pakistan in the province of Balochistan.  The feasibility study indicates pre-production capital of approximately $3.3 billion (100% basis) on a 120,000 ton per day processing plant, which is capable of future expansions.  Barrick’s share of average annual production for the first five full years is expected to be about 100,000 ounces of gold and 150 to 160 million pounds of copper.  A copy of the feasibility study has been delivered to the Government of Balochistan (“GOB”), partners in the project, in accordance with the terms of a joint venture agreement.  Currently, the Supreme Court of Pakistan is hearing several constitutional petitions which, among other things, challenge the GOB’s right to grant a mining lease to the project company.  On February 3, 2011, the Supreme Court issued an interim order providing, among other things, that the GOB shall not issue a mining lease to the project company until the matters before the Supreme Court are decided.  The Supreme Court also permitted the project company to apply for a mining lease, which the project company then filed on February 15, 2011.  For additional details on the Supreme Court proceedings see “Legal Matters — Legal Proceedings — Pakistani Constitutional Litigation”.
 
Barrick is party to a joint-venture agreement with Xstrata with respect to the Kabanga nickel deposit and related concession in Tanzania.  During 2008, Xstrata earned its 50% interest in the project under the earn-in agreement and is currently the operator of the project.  Expenditures are funded equally by Xstrata and Barrick.  Xstrata Nickel, a business division of Xstrata plc, is currently the operator of the project.  A peer review of the draft Social, Environmental Impact Assessment (SEIA) report was completed and the report is being revised concurrently with the draft feasibility report.  Both reports are not expected to be submitted in the first half of 2011.
 
ENVIRONMENT AND CLOSURE
 
The Company’s mining, exploration and development activities are subject to various levels of federal, provincial or state, and local laws and regulations relating to protection of the environment, including requirements for closure and reclamation of mining properties (see “Legal Matters — Government Controls and Regulations”). Barrick’s investment in environmental management systems is aimed at eliminating or mitigating environmental risks as they are identified. The governance aspects of Barrick’s systems are designed to inform management early enough to respond to risks as they arise.
 
Barrick has a policy of conducting environmental audits of its business activities, on a regular and scheduled basis, in order to evaluate compliance with: applicable laws and regulations; permit and license requirements; company policies and management standards including guidelines and procedures; and adopted codes of practice.  All operating mines and selected project sites are subject to triennial audits, with certain sites being audited more frequently.  Starting in 2010, Barrick began submitting closure sites and certain project sites to environmental audits.  Barrick anticipates that one to two of its closure and project sites will be audited on a risk-priority basis in 2011.  A committee of Barrick’s Board of Directors
 
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reviews the Company’s environmental policies and programs and oversees Barrick’s environmental performance.
 
In 2005, Barrick became a signatory to the United Nations (“UN”) Global Compact, which represents the world’s largest voluntary corporate citizenship initiative.  Among its principles, the UN Global Compact encourages businesses to support a precautionary approach to environmental challenges, undertake initiatives to promote greater environmental responsibility, and encourage the development and diffusion of environmentally friendly technologies.  Barrick has also developed and is continuing to develop specific performance standards relating to environmental matters.  Barrick’s Global Water Conservation Standard, completed in 2008, is being implemented as a company-wide priority.  As of December 31, 2010, eighteen Barrick mines are zero water discharge operations, with all water recycled and reused for mining processes at site.  In 2011, Barrick intends to conduct water conservation pilot projects at certain of its sites and will further participate in the Water Disclosure Project to contribute to greater understanding of global industrial water use.
 
In 2009, Barrick finalized three additional standards: a Biodiversity Standard, a Mine Closure Standard and an Incident Reporting Standard.  In 2010, the Company prepared a Biodiversity Guidance document that will be rolled out in 2011 through a pilot program at several sites.  Barrick’s South American and Australia-Pacific RBUs assessed existing operations with reference to the Mine Closure Standard in 2010 and are currently planning to implement additional measures in 2011 to ensure compliance with the new standard.  It is expected that Barrick’s North American RBU and ABG will separately complete similar assessments in 2011.  The Incident Reporting Standard has been implemented at the Company’s operating sites and material projects.
 
Also in 2009, Barrick completed a risk assessment to identify and address the business risks associated with climate change, while continuing to improve overall energy efficiency of its operations and in 2010, Barrick adopted a Global Climate Change Standard.  Barrick expects to complete the implementation of this new standard in 2011.  In addition, Barrick plans to develop a global energy and climate change strategy in 2011.
 
In certain respects, the standards developed by the Company exceed regulatory requirements and represent industry best practices.  In particular, the Company strives to ensure that its standards are consistent with international best practice, including applicable International Finance Corporation (“IFC”) Performance Standards.  It is expected that once the new IFC Performance Standards are finalized and released, expected in 2011, Barrick will review its corporate environmental standards to address any material inconsistencies between those standards and the amended IFC Performance Standards.
 
To provide further guidance toward achieving its environmental objectives, Barrick developed an Environmental Management System Standard (“EMSS”) in 2005 that was updated in 2008 to fully conform with ISO 14001.  Each mine was required to substantially implement the EMSS in 2010 and become compliant with designated elements of the EMSS in 2011, by which time full compliance could be achieved.  Most Barrick mines are already substantially compliant with the EMSS by virtue of their existing systems. For example, Zaldívar, Lagunas Norte, Veladero and Pierina are ISO 14001 certified.  All Barrick facilities have staff and systems in place to manage Barrick’s regulatory and permit obligations.
 
Each year, Barrick issues a Responsibility Report that outlines its environmental, health and safety and social responsibility performance for the year.
 
During 2010, there were no material notices of violations, fines or convictions relating to environmental matters at any of the Company’s operations.
 
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As part of Barrick’s goal to minimize the impact on the environmental and social aspects of its projects and operations, it develops comprehensive closure and reclamation plans as part of its initial project planning and design.  If it acquires a property that lacks a closure plan, Barrick requires preparation of a closure plan.  The Company periodically reviews and updates closure plans to account for additional knowledge acquired in respect of a property or for changes in applicable laws or regulations. The Company has estimated future site reclamation and closure obligations, which it believes will meet current regulatory requirements. See Note 2 and 22 of the Notes to the Consolidated Financial Statements.
 
The Company’s operating facilities have been designed to mitigate environmental impacts.  The operations have processes, procedures or facilities in place to manage substances that have the potential to be harmful to the environment.  In order to prevent and control spills and protect water quality, Barrick utilizes multiple levels of spill containment procedures and routine inspection and monitoring of its facilities.  The Company also has various programs to reuse and conserve water at its operations.  In order to mitigate the impact of dust produced by its operations, Barrick uses several different dust suppression techniques at its properties.  The Company also installs air pollution controls on air pollution point sources, such as roaster and autoclave stacks, that meet or exceed applicable legal standards.  The Company has also implemented safeguards at its properties that are designed to protect wildlife in the surrounding areas.  Such safeguards include fencing and netting or other coverings of ponds and tanks, bird hazing techniques, such as mechanized scarecrows or noisemakers, and the establishment of alternate water sources and habitats for wildlife.
 
Certain of the Company’s operating properties handle ore or rock which has the potential to be acid generating, and hence has the potential to contaminate water by the leaching of metals and salts. Other operating properties lack acid generating potential, but still present the potential for leaching of certain salts, such as sulfates, or metalloids, such as arsenic, by water that might run off of the property.  The Company has implemented programs to manage the handling of ore and rock to reduce the potential for contamination of surface or groundwater by either acid or neutral drainage. Such procedures include segregation of rock with potential for leaching, containment systems for the collection and treatment of drainage and reclamation and closure steps designed to minimize water infiltration and oxygen flux.  Where necessary, the Company installs and operates water treatment facilities to manage drainage.
 
Many of the Company’s operating properties use cyanide.  Those facilities are designed and constructed to prevent process solutions from being released to surface water or groundwater.  Typically, those facilities include leak detection systems and have the ability to collect and treat seepage that may occur.  The tailings storage facilities are typically fenced and process ponds are typically netted or other procedures implemented to deter access.  In September 2005, the Company became a signatory to the International Cyanide Management Code (“Code”), which is administered by the International Cyanide Management Institute (the “ICMI”).  The ICMI is an independent body that was established by a multi-stakeholder group under the auspices of the United Nations Environmental Programme. The Code establishes operating standards for manufacturers, transporters and mines and provides for third-party certification of facilities’ compliance with the Code.  Under the Code, each of the mines that use cyanide must receive a third party certification inspection. The Company listed all of its mines that use cyanide for Code certification.  The Golden Sunlight mine, which was acquired as part of the Placer Dome acquisition, will pursue Code certification as part of the re-commencement of operations in 2011.  Barrick has achieved certification of 20 of its operations under the Code, nine of which have been re-certified under the Code, with a further two mines on track for certification in the future.
 
Certain of the Company’s operations produce mercury as a result of the ore that is processed at those sites.  Those operations currently sell this mercury, which is captured at each of these sites by air pollution control devices.  The Company is committed to the operation of state-of-the-art controls on all
 
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sources of mercury emissions.  Site specific management procedures for mercury handling, monitoring and transportation exist at each of the operations that produce mercury as a co-product. Further, employees receive training in the safe use and proper management of cyanide, mercury and other hazardous materials.  Consistent with U.S. law, Barrick will cease the export of mercury from US facilities in 2013. The Company is currently exploring options for storing mercury produced at these sites commencing in 2013.  The Company is tracking the development of an international treaty on mercury which is anticipated to come into force by 2017.  The Company anticipates ceasing export and sales of mercury at the time the treaty comes into force .
 
ENTERPRISE RISK-MANAGEMENT
 
In 2010, the Company developed and implemented a standardized Enterprise Risk Management (ERM) process to ensure that risks to the Company were identified, assessed, prioritized and mitigation strategies were monitored at the appropriate levels of the organization.
 
The Barrick ERM process is intended to ensure that all business and operational risks identified by the RBUs (whether at the site or regional level), within ABG or at the corporate functional level are prioritized and escalated according to a standardized risk ranking criteria. In addition, each risk and mitigation strategy is monitored and escalated to the appropriate level of management based upon organizational impact. The highest ranking priority risks from each region and corporate functional lead are presented to Barrick management for final consolidation and prioritization as part of the Company’s annual planning process.
 
Barrick has committed to developing an ERM policy framework in 2011 to support the existing ERM process.  The ERM policy is intended to reflect the practices and procedures which have developed in connection with initial deployment of the ERM process. In addition, the Company expects to develop auditing protocols, supporting procedures and related policies, as required, to support the deployment of the ERM process and the ERM policy within the organization. Barrick further intends to complete a requirements assessment to confirm whether additional resources are required to support this deployment.
 
Financial Risk-Management
 
The Company has mining operations in eight principal countries which produce gold and/or copper, as well as other minerals such as silver.  The Company’s activities expose it to a variety of market risks, including risks related to the effects of changes in gold and copper prices, the price of certain other metals, currencies, interest rates and other commodity prices.  This financial exposure is monitored and managed by the Company as an integral part of its overall risk-management program.  The Company’s risk-management program focuses on the unpredictability of commodity prices and uses financial markets and financial instruments to mitigate significant, unanticipated earnings and cash flow fluctuations that may arise from volatility in commodity prices, currencies and interest rates.
 
Gold Sales
 
For most of Barrick’s history, gold forward sales were a significant element in providing the Company with relatively stable revenue that helped fuel its growth.  In 2002, Barrick began to take steps to simplify and reduce the size of its gold forward sales program.  In late 2003, Barrick adopted a “no-new-hedge” gold policy such that it would not add new ounces to its gold forward sales program.  In 2007, in anticipation of building its projects, the Company allocated 9.5 million ounces of gold forward sales contracts specifically to its projects’ future gold production and eliminated its remaining gold forward sales contracts not specifically allocated to its projects’ future gold production.
 
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In 2009, Barrick announced its plan to eliminate its Gold Hedges and a significant portion of its Floating Contracts (the Floating Contracts and Gold Hedges are collectively referred to herein as the “Gold Sales Contracts”). Given an increasingly positive outlook on the gold price and continuing robust gold supply/demand fundamentals, Barrick made this strategic decision in order to gain full leverage to the gold price on all its future production.  As a result of its decision to eliminate the Gold Hedges and a portion of its Floating Contracts through means other than physical delivery, these contracts no longer qualified as normal sales contracts and were instead accounted for as derivative financial instruments on a prospective basis.  As a result of this change in accounting treatment, a mark-to-market position of approximately $5.6 billion attributable to the Gold Sales Contracts was recorded on the balance sheet as a liability in third quarter 2009 with a corresponding charge to earnings.
 
As at December 31, 2009, Barrick had eliminated its Gold Hedges and the obligation relating to the Floating Contracts had been reduced to approximately $0.6 billion.  During 2010, the remaining obligation relating to the Floating Contracts was repaid in full.
 
In 2010, Barrick’s entire gold production was delivered into the spot market.  The Company realized an average price of $1,228 per ounce compared with the average London P.M. Fix for the year of $1,225 per ounce.  In 2009, the Company realized an average gold price of $985 per ounce compared with the average London P.M. Fix for the year of $972 per ounce.  The Company enters into derivative contracts, primarily purchased and written contracts, with the primary objective of increasing reported gold and copper revenue (see Note 20D “Other Use of Derivative Instruments” to the Company’s 2010 Consolidated Financial Statements and MD&A for further information).
 
Copper Sales
 
Utilizing option collar strategies, Barrick has put in place floor protection on approximately 60% of its expected copper production for 2011 at an average floor price of $3.00 per pound.  In addition, Barrick has sold net call options on approximately 70% of its 2011 production at an average price of approximately $4.85 per pound.  The remaining copper production is subject to market prices.  Barrick’s realized price on its entire copper production is expected to be negatively impacted by approximately $0.12 per pound in 2011 as a result of the net premium paid on option hedging strategies.
 
Silver Sales
 
Barrick currently produces silver as a by-product at certain of its operating mines.  In 2010, Barrick designated silver collar contracts totalling 15 million ounces as hedges against silver bullion sales from the Company’s mines and projects.  The contracts contain purchased put and sold call options with weighted average strike prices of $20 per ounce and $55 per ounce, respectively.  For collars designated against silver bullion sales, the hedged items are identified as the first stated quantity of ounces of forecasted sales in a future month.  For additional information on Barrick’s hedges against silver bullion sales, see Note 20E to the Notes to the Consolidated Financial Statements for the year ended December 31, 2010.
 
Currency, Interest Rate and Other Commodity Hedge Programs
 
The Company also monitors and manages exposures related to fluctuations in currencies, interest rates and other commodity prices.  Currency risk mainly arises on non-U.S. dollar cash expenditures at the Company’s Australian, Canadian, South American and Papua New Guinean mines that are denominated in local currencies.  Interest rate risk mainly relates to interest income receipts on cash balances and interest payments on variable-rate debt obligations.  Commodity price risk arises in respect of commodities such nickel at its Kabanga project, and the costs of electricity, acid, diesel fuel, natural
 
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gas and other inputs consumed at each of the Company’s operations.  The Company mainly uses forward foreign exchange contracts, interest rate swaps and forward commodity contracts to mitigate the impact of volatility in currency exchange rates, interest rates and commodity prices on its business.
 
Barrick’s currency hedge position has provided benefits to it in the form of hedge gains recorded within its operating costs when contract exchange rates are compared to prevailing market exchange rates as follows: 2010 - $146 million; 2009 — $27 million; and 2008 — $106 million.  Barrick also recorded hedge gains/losses as an offset to corporate administration costs as follows: 2010 — $33 million gain; 2009 — $7 million loss; and 2008 — $11 million gain.  For 2011, Barrick’s average Australian and Canadian dollar hedge rates are favorable in comparison to the current market rates for these currencies.  The average hedge rates vary depending on when the contracts were put in place.  Barrick has hedged approximately A$1,638 million and C$353 million in 2011 for expected Australian and Canadian operating costs and sustainable and eligible project capital expenditures at average rates of $0.79 and $1.02, respectively.  As a result, Barrick is approximately 92% and 74% hedged, respectively.  In addition, Barrick has hedged approximately 84%, 72%, and 46% of its total expected 2012, 2013, and 2014 Australian dollar expenditures at average rates of $0.75, $0.72, and $0.75, respectively.  Assuming market exchange rates at the December 31, 2010 levels of $1.02 for A$ and $1.00 for C$, Barrick expects to record gains on operating expenditures of approximately $360 million in 2011 ($340 million for the Australian dollar; $10 million for the Canadian dollar; and $10 million for the Chilean peso), or approximately $45-$47 per ounce based on total expected 2011 production.  Barrick also expects to record gains on its capital expenditures of approximately $30 million in 2011.  As part of Barrick’s currency hedge position, there are Chilean peso contracts in place to hedge a portion of its operating expenditures, primarily at the Zaldívar mine, and its capital expenditures, primarily at the Pascua-Lama project.
 
As of December 31, 2010, Barrick had forward contracts in place totaling 4.7 million barrels of oil, which represents approximately 56% of its total estimated direct consumption in 2011 and 34% of its total estimated direct consumption over the following two years.  Those contracts are primarily designated for Barrick’s Nevada-based mines, and as of December 31, 2010 had average prices below forward prices.  In 2010, Barrick recorded hedge losses in earnings of approximately $28 million on its fuel hedge positions (2009: $97 million loss; 2008: $33 million gain).  Assuming market rates at the December 31, 2010 level of $91 per barrel, Barrick expects to realize hedge gains of approximately $20 million in 2011 from its financial fuel contracts.
 
In 2011, Barrick expects Barrick Energy to produce about 2.9 million boe. The net contribution from Barrick Energy production is expected to provide a natural offset to consumption of about 1.0 million boe due primarily to the impact of royalties.  The Barrick Energy contribution, along with Barrick’s financial fuel hedges, provides hedge protection for approximately 92% of the Company’s estimated fuel consumption for 2011.
 
Barrick continues to enter into other financial and commodity instruments to mitigate the effect of other risks that are inherent in its business, and also to take advantage of opportunities to secure attractive pricing for currencies, interest rates and other commodities.
 
For a summary of the Company’s derivative instruments used in the Company’s currency, interest rate and commodity hedge programs, see Notes 5 and 20 of the Notes to the Consolidated Financial Statements for the year ended December 31, 2010, pages 69 to 71 of the Company’s Annual Report — Financial Report 2010 to Shareholders for the year ended December 31, 2010 and “Risk Factors”.
 
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Oversight and Control Over Financial Risk-Management Activities
 
The Company’s financial risk-management activities are subject to the management, direction and control of its Finance Committee as part of that Committee’s oversight of the Company’s investment activities and treasury function.  The Finance Committee, which is comprised of four members of the Company’s Board of Directors, reports to the Board of Directors on the scope of the Company’s risk-management strategy and other activities.  The Finance Committee approves corporate policy that defines the Company’s risk-management objectives and philosophy relating to financial risk-management activities and provides guidance for financial instrument usage.  The Finance Committee also approves hedging strategies that are developed by management through its analysis of risk exposures to which the Company is subject, and commodity, foreign exchange and interest rate market analysis from internal and industry sources.  The resulting hedging strategies are then incorporated into the Company’s overall risk-management strategies.
 
Responsibility for the implementation of hedging and financial risk-management strategies is delegated to the Company’s treasury function.  A report on Barrick’s hedge positions, detailing the size of the positions by contract type, diversification of the position among counterparties, each counterparty’s recent credit rating and the latest fair value of each group of contracts, is prepared bi-monthly and distributed to the Chief Financial Officer and the Chairman of the Finance Committee.  The Finance Committee and the Board of Directors also receive a report on Barrick’s hedging and overall risk-management position at each of their regularly scheduled meetings.
 
Barrick maintains segregation of duties of personnel responsible for entering into hedging transactions from personnel responsible for recording and reporting transactions.  In addition, the Company’s Treasury group regularly monitors gold sales and hedging transactions entered into by the Company.  Confirmations and settlements of transactions are processed and checked independently of the Treasury group.  Responsibility for entering into gold sales and hedging transactions is limited to a small group of experienced treasury personnel.  Summaries of each individual transaction, setting out the terms of the transactions and the identity of the individual executing each transaction, are generated by the Treasury group and delivered to the compliance function on a daily basis.
 
LEGAL MATTERS
 
Government Controls and Regulations
 
The Company’s business is subject to various levels of government controls and regulations, which are supplemented and revised from time to time.
 
In the U.S., certain of Barrick’s mineral reserves and operations occur on unpatented lode mining claims and mill sites that are on federal lands that are subject to federal mining and other public land laws. Changes in such laws or regulations promulgated under such laws could affect mine development and expansion and significantly increase regulatory obligations and compliance costs with respect to exploration, mine development, mine operations and closure and could prevent or delay certain operations by the Company.  Changes to the mining laws are frequently proposed in the US Congress.  The most recent proposed changes to the mining law were contained in President Obama’s proposed budget, which included a proposal to replace the land tenure provisions of the mining law with a leasing program and to impose a 5% gross royalty on minerals produced under the new leasing system.  The proposal appears to grandfather existing rights.  The budget proposal included no legislative language so the exact parameters of the proposal are uncertain.  It is uncertain whether the proposal will be part of any budget that is ultimately approved.
 
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In November 2009, a lawsuit was filed by a coalition of environmental groups challenging regulations promulgated under the federal mining law: Earthworks, et al. vs. U.S. Department of the Interior (District of Columbia, Case No. 1:09-cv-01972). The lawsuit seeks to impose different rules on millsite claims and unpatented lode claims and seeks an injunction of all permitting of mines on federal lands until new rules are promulgated.  An unfavorable outcome in that litigation could also result in changes in the mining law.
 
In December 2010, the US Environmental Protection Agency promulgated a new rule relating to mercury emissions from gold mining facilities. The new rule, known as the gold mining mercury MACT (Maximum Achievable Control Technology) imposes new permitting monitoring and control requirements on gold recovery air pollution sources.  Due to the Company’s own voluntary control efforts and the State of Nevada’s groundbreaking mercury control regulations promulgated with the Company’s support in 2006, the Company believes that its operations are well-placed to be able to comply with the new rule.
 
In 2002, as an emergency measure, Argentina adopted a 5% export duty on certain mineral products, including gold.  At the time, the duty was described as “temporary”.  Veladero’s export of gold dore is currently subject to this duty.   It is possible that the Argentinean government could attempt to further increase the export duty rates or otherwise impose additional taxes or burdens on the Company’s mineral production as additional revenue enhancement measures.  Should export duties continue to be in place at the time that the Company commences production from Pascua-Lama, only production from ore extracted in Argentina will be subjected to such duties.
 
On September 30, 2010, the National Law on Minimum Requirements for the Protection of Glaciers was enacted at the federal level in Argentina, coming in force in early November 2010. The federal law bans all new mining exploration and exploitation activities on glaciers and in the “peri-glacial” environment, and subjects ongoing mining activities to an environmental audit. If significant impacts on glaciers and peri-glacial environment are verified by said audit, the authority is empowered to take action, including the suspension or relocation of the activity. The Province of San Juan, where Barrick’s operations are located in Argentina, had previously adopted glacier protection legislation, with which Barrick’s activities comply.
 
Barrick believes it is legally entitled to continue its current activities on the basis of existing approvals.  In this regard, the Federal Court in San Juan has granted injunctions, based on the unconstitutionality of the federal law, suspending its application in the Province and in particular to Veladero and Pascua-Lama pending consideration of the constitutionality of the law, to be decided by the Supreme Court of Justice of Argentina.
 
Following the earthquake in Chile in the first quarter of 2010, the Chilean government presented a package of certain tax increases to the Chilean Congress for approval.  With respect to corporate income taxes, a temporary first tier income tax increase from 17% to 20% in 2011, and 18.5% in 2012 was presented to and approved by the Chilean Congress.  The income tax changes were enacted in the third quarter 2010.
 
In addition, in October 2010, the Chilean government enacted legislation for a new specific mining tax. Under the new specific mining tax, for new projects, the applicable rates would change from 5% of operating margin after depreciation to a range of 5% - 14% based on the level of operating margin.  For those companies currently operating under a stabilized regime, the law contemplates an option to voluntarily apply a rate of 4% - 9% for 2010-2012, and then return to the stabilized rate of 4% until the current stability period ends, and obtain an extension of the stability period at rates in the range of 5% -
 
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14% for an additional 6 years.  In January 2011, Barrick voluntarily adopted the new specific mining tax with respect to its Zaldívar mine in Chile.
 
In 2010, the Australian government proposed a new tax on the minerals industry. The original proposed tax extended to all minerals including gold and copper. After negative community feedback, the government abandoned the original proposed new tax and has now announced a new minerals resource rent tax (“MRRT”) which will apply to iron ore and coal.  Other commodities such as gold and copper will not be subject to the proposed new MRRT which is planned to be introduced in mid-2012. Barrick will continue to monitor the progress of this new proposed tax.
 
On February 24, 2011, the Australian government announced that it intends to introduce a carbon tax on emissions to start as early as July 1, 2012.  Determination of the quantum of the tax is not expected until after a report is delivered in May 2011. The government has proposed a transition from the carbon tax regime to an emissions trading scheme (ETS) within three to five years.  If introduced, the proposed carbon tax and ETS is expected to have an impact on the costs of gold mining operations in Australia. The extent of this impact will not be known until the Australian government releases more details about the proposed new scheme. Barrick will continue to monitor government announcements on this matter in order to properly assess the impacts on its Australian operations.
 
The Supreme Court in the Republic of the Philippines adopted new Rules of Procedure for Environmental Cases effective April 29, 2010 (the “Environmental Rules”).  Rule 7 of the Environmental Rules purports to create a new special civil action or remedy called a “Writ of Kalikasan”.  The Environmental Rules provide that such a writ is available to a natural or juridical person, on behalf of persons “whose constitutional right to a balanced and healthful ecology is violated, or threatened with violation by an unlawful act or omission of a public official or employee, or private individual or entity, involving environmental damage of such magnitude as to prejudice the life, health or property of inhabitants in two or more cities or provinces.”  The remedies available under this procedure are in the nature of injunctive orders preventing continued harm to the environment and orders for rehabilitation or remediation of the environment. The Rules provide for a significantly compressed procedural timeframe for such proceedings and, amongst other things, require:  (i) the petitioners to file all of their evidence at the time they commence the proceeding and file their Petition for a Writ; and (ii) the respondents to file a responding pleading and their evidence within ten (10) days of being served with the Writ.  The Rules also contemplate a speedy hearing and determination on the merits.
 
Barrick is unable to predict what additional legislation or revisions may be proposed that might affect its business or when any such proposals, if enacted, might become effective. Such changes, however, could require increased capital and operating expenditures and could prevent or delay certain operations by the Company.
 
The various levels of government controls and regulations address, among other things, the environmental impact of mining and mineral processing operations. With respect to the regulation of mining and processing, legislation and regulations in various jurisdictions establish performance standards, air and water quality emission standards and other design or operational requirements for various components of operations, including health and safety standards. Legislation and regulations also establish requirements for decommissioning, reclamation and rehabilitation of mining properties following the cessation of operations, and may require that some former mining properties be managed for long periods of time (see “Environment and Closure”). In addition, in certain jurisdictions, the Company is subject to foreign investment controls and regulations governing its ability to remit earnings abroad.
 
The Company believes that it is in substantial compliance with all current government controls and regulations at each of its material properties.
 
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Legal Proceedings
 
Set out below is a summary of potentially material legal proceedings to which Barrick is a party.
 
Cortez Hills Complaint
 
On November 12, 2008, the United States Bureau of Land Management issued a Record of Decision approving the Cortez Hills Expansion Project.  On November 20, 2008, the TeMoak Shoshone Tribe, the East Fork Band Council of the TeMoak Shoshone Tribe and the Timbisha Shoshone Tribe, the Western Shoshone Defense Project, and Great Basin Resource Watch filed a lawsuit against the United States seeking to enjoin the majority of the activities comprising the Project on grounds that it violated the Western Shoshone rights under the Religious Freedom Restoration Act (“RFRA”), that it violated the Federal Land Policy and Management Act’s (“FLPMA”) prohibition on “unnecessary and undue degradation,” and that the Project’s Environment Impact Statement (“EIS”) did not meet the requirements of the National Environmental Policy Act (“NEPA”).  The Plaintiffs subsequently dismissed their RFRA claim, with prejudice, conceding that it was without merit, in light of a decision in another case.
 
On November 24, 2008, the Plaintiffs filed a Motion for a Temporary Restraining Order and a Preliminary Injunction barring work on the Project until after a trial on the merits.  In January 2009, the Court denied the Plaintiffs’ Motion for a Preliminary Injunction, concluding that the Plaintiffs had failed to demonstrate a likelihood of success on the merits and that the Plaintiffs had otherwise failed to satisfy the necessary elements for a preliminary injunction.  The Plaintiffs appealed that decision to the United States Court of Appeals for the Ninth Circuit.  In December 2009, the Ninth Circuit issued an opinion in which it held that the Plaintiffs had failed to show that they were likely to succeed on the merits of their FLPMA claims, and thus were not entitled to an injunction based on those claims.  The Ninth Circuit, however, held that Plaintiffs were likely to succeed on two of their NEPA claims and ordered that a supplemental EIS be prepared by Barrick that specifically provided more information on (i) the effectiveness of proposed mitigation measures for seeps and springs that might be affected by groundwater pumping,  and (ii) the air quality impact of the shipment of refractory ore to Goldstrike for processing and that additional air quality modeling for fine particulate matter using updated EPA procedures should be performed and included in the supplemental EIS.  The Ninth Circuit decision directed the District Court to enter an injunction consistent with the decision.  In April 2010, the District Court granted Barrick’s motion seeking a tailored preliminary injunction, which allows mining operations to continue while the supplemental EIS is being completed.
 
In August 2010, the District Court issued an order granting summary judgment for Cortez except, generally for those issues covered by the supplemental EIS, on which it reserved ruling until the completion of that document.  The final supplemental EIS was published on January 14, 2011.  On March 15, 2011 BLM issued its record of decision which approved the supplemental EIS which had the effect of terminating the tailored injunction, thereby enabling the Cortez mine to revert to its original operating scope.  The parties to the litigation have submitted a scheduling stipulation that provides for final briefing of any remaining summary judgement issues by August 2011.
 
Marinduque Complaint
 
Placer Dome was named the sole defendant in a Complaint filed in October 2005, by the Provincial Government of Marinduque, an island province of the Philippines (“Province”), with the District Court in Clark County, Nevada.  The Complaint asserted that Placer Dome was responsible for alleged environmental degradation with consequent economic damages and impacts to the environment in the
 
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vicinity of the Marcopper mine that was owned and operated by Marcopper Mining Corporation (“Marcopper”).  Placer Dome indirectly owned a minority shareholding of 39.9% in Marcopper until the divestiture of its shareholding in 1997.  The Province sought “to recover damages for injuries to the natural, ecological and wildlife resources within its territory”.  In addition, the Province sought compensation for the costs of restoring the environment, an order directing Placer Dome to undertake and complete “the remediation, environmental cleanup, and balancing of the ecology of the affected areas,” and payment of the costs of environmental monitoring.  The Complaint addressed the discharge of mine tailings into Calancan Bay, the 1993 Maguila-guila dam breach, the 1996 Boac river tailings spill, and alleged past and continuing damage from acid rock drainage.
 
The action was removed to the U.S. District Court for the District of Nevada on motion of Placer Dome.  After the amalgamation of Placer Dome and the Company, the Court granted the Province’s motion to join the Company as an additional named Defendant.  In June 2007, the Court issued an order granting the Company’s motion to dismiss on grounds of forum non conveniens (improper choice of forum).  In September 2009, the U.S. Court of Appeals for the Ninth Circuit reversed the decision of the District Court on the ground that the U.S. District Court lacked subject matter jurisdiction over the case and removal from the Nevada state court was improper.
 
In April 2010, the Company filed a motion to dismiss the claims in the Nevada state court on the grounds of forum non conveniens and on October 12, 2010, the court issued an order granting the Company’s motion to dismiss the action.  On February 11, 2011, the Court issued its written reasons for the dismissal order.  On March 11, 2011, the Province filed a motion to reconsider the Court’s order, which the Company opposed on March 28, 2011.  The Province has also served notice of its intention to appeal the Court’s order.  The Company intends to continue to defend the action vigorously.
 
Calancan Bay (Philippines) Complaint
 
In July 2004, a complaint was filed against Marcopper and Placer Dome in the Regional Trial Court of Boac, on the Philippine island of Marinduque, on behalf of a putative class of fishermen who reside in the communities around Calancan Bay, in northern Marinduque.  The complaint alleges injuries to health and economic damages to the local fisheries resulting from the disposal of mine tailings from the Marcopper mine.  The total amount of damages claimed is approximately US$1 billion.
 
In October 2006, the court granted the plaintiffs’ application for indigent status, allowing the case to proceed without payment of filing fees.  In March 2008, an attempt was made to serve Placer Dome by serving the summons and complaint on Placer Dome Technical Services (Philippines) Inc. (“PDTS”).  PDTS has returned the summons and complaint stating that PDTS is not an agent of Placer Dome for any purpose and is not authorized to accept service or to take any other action on behalf of Placer Dome.  In April 2008, Placer Dome made a special appearance by counsel to move to dismiss the complaint for lack of personal jurisdiction and on other grounds.  The plaintiffs have opposed the motion to dismiss.  The motion has been briefed and is currently pending.
 
In October 2008, the plaintiffs filed a motion challenging Placer Dome’s legal capacity to participate in the proceedings in light of its alleged “acquisition” by the Company.  Placer Dome opposed this motion.  The motion has been briefed and is currently pending.  The Company intends to defend the action vigorously.
 
Perilla Complaint
 
In August 2009, BGI was purportedly served in Ontario with a complaint filed in November 2008 in the Regional Trial Court of Boac, on the Philippine island of Marinduque, on behalf of two named
 
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individuals and purportedly on behalf of the approximately 200,000 residents of Marinduque.  In December 2009, the complaint was also purportedly served in Ontario in the name of Placer Dome Inc.  The complaint alleges injury to the economy and the ecology of Marinduque as a result of the discharge of mine tailings from the Marcopper mine into the Calancan Bay, the Boac River, and the Mogpog River. The plaintiffs are claiming for abatement of a public nuisance allegedly caused by the tailings discharge and for nominal damages for an alleged violation of their constitutional right to a balanced and healthful ecology. BGI has moved to dismiss the complaint on a variety of grounds, which motion is now pending a decision of the Court following the failure of plaintiffs’ counsel to appear at the hearing in February 2010 or to timely file any comment or opposition to the motion.  At the hearding in February 2010, the Court ordered that the motion be submitted for resolution without providing the plaintiffs any further opportunity to file an opposition to the motion.  A motion to dismiss the complaint on a variety of grounds has also been filed in the name of Placer Dome.  In May 2010, the plaintiffs filed a motion for an order to admit an amended complaint in which they are seeking additional remedies including temporary and permanent environmental protection orders and also seeking to name the Company as a defendant instead of BGI.  In June 2010, BGI and Placer Dome filed a motion to have the Court resolve their unresolved motions to dismiss before considering the plaintiffs’ motion to admit the amended complaint.  An opposition to the plaintiffs’ motion to admit was also filed by BGI and Placer Dome on the same basis.  This motion is now fully briefed and awaiting determination by the Court.  It is not known when these motions or the outstanding motions to dismiss will be decided by the Court.   The Company intends to defend the action vigorously.
 
Writ of Kalikasan
 
On February 25, 2011 a Petition for the Issuance of a Writ of Kalikasan with Prayer for Temporary Environmental Protection Order (TEPO) was filed in the Supreme Court of the Republic of the Philippines in Eliza M. Hernandez, Mamerto M. Lanete and Godofredo L. Manoy versus Placer Dome Inc. and Barrick Gold Corporation, SC G.R. No. 195482 (the “Petition”).  On March 8, 2011, the Supreme Court issued an En Banc Resolution and Writ of Kalikasan and directed service of summons on Placer Dome and the Company, ordered Placer Dome and the Company to make a verified return of the Writ with ten (10) days of service and referred the case to the Court of Appeal for hearing.  The Petition alleges that Placer Dome violated the Petitioners’ constitutional right to a balanced and healthful ecology as a result of, amongst other things, the discharge of tailings into Calancan Bay, the 1993 Maguila-guila dam break, the 1996 Boac river tailings spill and Marcopper’s failure to properly decommission the Marcopper mine.  The Petitioners have pleaded that the Company is liable for the alleged actions and omissions of Placer Dome which was a minority indirect shareholder of Marcopper at all relevant times and is seeking orders requiring the Company to environmentally remediate the areas in and around the mine site that are alleged to have sustained environmental impacts.  The Petitioners purported to serve the Company on March 25, 2011.  The Company intends to, amongst other things, challenge the validity of service and jurisdiction and challenge the constitutionality of the Writ of Kalikasan.
 
Pakistani Constitutional Litigation
 
In November 2006, a Constitutional Petition was filed in the High Court of Balochistan by three Pakistani citizens against: Barrick, the governments of Balochistan and Pakistan, the Balochistan Development Authority (“BDA”), Tethyan Copper Company (“TCC”), Antofagasta Plc (“Antofagasta”), Muslim Lakhani and BHP (Pakistan) Pvt Limited (“BHP”).
 
The Petition alleged, among other things, that the entry by the BDA into the 1993 Joint Venture Agreement (“JVA”) with BHP to facilitate the exploration of the Reko Diq area and the grant of related exploration licenses were illegal and that the subsequent transfer of the interests of BHP in the JVA and
 
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the licenses to TCC was also illegal and should therefore be set aside.  Barrick currently indirectly holds 50% of the shares of TCC, with Antofagasta indirectly holding the other 50%.
 
In June 2007, the High Court of Balochistan dismissed the Petition against Barrick and the other respondents in its entirety.  In August 2007, the petitioners filed a Civil Petition for Leave to Appeal in the Supreme Court of Pakistan.  In late 2010, the Supreme Court of Pakistan began hearing this matter, together with several other related petitions filed against TCC or its related parties.  The related petitions primarily relate to whether it is in the public interest for TCC to receive a mining lease.  On February 3, 2011, the Supreme Court issued an interim order providing, among other things, that the GOB may not take any decision in respect of the grant or otherwise of a mining lease to TCC until matters before the Supreme Court are decided.  As of March 31, 2011, no decision has been reached by the Supreme Court. Barrick and TCC continue to defend these actions vigorously.
 
El Morro Claim
 
On October 11, 2009, Barrick entered into an agreement to acquire a 70% interest in the El Morro project from Xstrata plc (“Xstrata”) for $465 million in cash.  El Morro is an advanced stage gold-copper project located near Barrick’s Pascua-Lama and Cerro Casale projects in Chile. On January 7, 2010, New Gold Inc. (“New Gold”) announced that it had given Xstrata notice of its intention to exercise a right of first refusal and on February 1, 2010, Xstrata notified Barrick that it was terminating its agreement with Barrick. On February 16, 2010, New Gold purported to close its purchase of the 70% interest in El Morro with funds loaned to it by Goldcorp and immediately thereafter New Gold sold this same 70% interest to Goldcorp. The Company has filed an action in the Ontario Superior Court of Justice against New Gold, Goldcorp and Xstrata, challenging the purported exercise of New Gold’s right of first refusal on the basis that, among other things, it was not lawfully exercised.
 
Pueblo Viejo
 
In April, 2010, PVDC received a copy of an action filed in the Dominican Republic by Fundacion Amigo de Maimon Inc., Fundacion Miguel L. de Pena Garcia Inc., and a number of individuals.  The action alleges a variety of matters couched as violations of fundamental rights, including taking of private property, violations of mining and environmental and other laws, slavery, human trafficking, and bribery of government officials.  The complaint does not describe the relief sought, but the action is styled as an “Amparo” remedy, which typically includes some form of injunctive relief.  PVDC submitted a motion for a change in venue.  The Supreme Court granted the motion and assigned the case to the Ninth Criminal Trial Court of Santo Domingo.  No further proceedings have occurred.  PVDC intends to vigorously defend the action.
 
Argentine Glacier Legislation
 
On September 30, 2010, the National Law on Minimum Requirements for the Protection of Glaciers was enacted in Argentina, and came into force in early November 2010. The federal law bans new mining exploration and exploitation activities on glaciers and in the “peri-glacial” environment, and subjects ongoing mining activities to an environmental audit. If such audit identifies significant impacts on glaciers and peri-glacial environment, the relevant authority is empowered to take action that, according to the legislation, could include the suspension or relocation of the activity.  In the case of the Veladero mine and the Pascua-Lama project, the competent authority is the Province of San Juan.  The Province of San Juan had previously adopted glacier protection legislation, with which Veladero and Pascua-Lama comply.
 
In November 2010, in response to legal actions brought against the National State by local unions and  San Juan based mining and construction chambers, as well as by Barrick’s subsidiaries, Barrick Exploraciones Argentina S.A. and Minera Argentina Gold S.A., which own the Veladero mine and the
 
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Argentine portion of the Pascua-Lama project, respectively, the Federal Court in the Province of San Juan, granted injunctions, based on the unconstitutionality of the federal law, suspending its application in the Province and, in particular to Veladero and Pascua-Lama.  In December 2010, the Province of San Juan became a party to the actions, joining the challenge to the constitutionality of the new federal legislation.  As a result of the intervention of the Province, the actions have been removed to the National Supreme Court of Justice of Argentina to determine the constitutionality of the legislation.
 
General
 
Barrick and its subsidiaries are, from time to time, involved in various claims, legal proceedings and complaints arising in the ordinary course of business. Barrick is also subject to reassessment for income and mining taxes for certain years. Barrick does not believe that adverse decisions in any pending or threatened proceedings related to any potential tax assessments or other matters, or any amount which it may be required to pay by reason thereof, will have a material adverse effect on the financial condition or future results of operations of Barrick.
 
RISK FACTORS
 
The risks described below are not the only ones facing Barrick.  Additional risks not currently known to Barrick, or that Barrick currently deems immaterial, may also impair Barrick’s operations.
 
Metal price volatility
 
Barrick’s business is strongly affected by the world market price of gold and copper. If the world market price of gold or copper were to drop and the prices realized by Barrick on gold or copper sales were to decrease significantly and remain at such a level for any substantial period, Barrick’s profitability and cash flow would be negatively affected.
 
Gold and copper prices can be subject to volatile price movements, which can be material and can occur over short periods of time and are affected by numerous factors, all of which are beyond Barrick’s control. Based on current estimates of Barrick’s 2011 gold production and sales, the approximate sensitivity of the Company’s EBITDA to a $50 per ounce increase or decrease in the market gold price will result in a $380-$400 million increase or decrease.  Industry factors that may affect the price of gold include: industrial and jewelry demand; the level of demand for gold as an investment; central bank lending, sales and purchases of gold; speculative trading; and costs of and levels of global gold production by producers of gold. Gold prices may also be affected by macroeconomic factors, including: expectations of the future rate of inflation; the strength of, and confidence in, the U.S. dollar, the currency in which the price of gold is generally quoted, and other currencies; interest rates; and global or regional, political or economic uncertainties.  Factors tending to affect the price of copper include: the worldwide balance of copper demand and supply; rates of global economic growth, trends in industrial production and conditions in the housing and automotive industries, all of which correlate with demand for copper; economic growth and political conditions in China, which has become the largest consumer of refined copper in the world, and other major developing economies; speculative investment positions in copper and copper futures; the availability and cost of substitute materials; currency exchange fluctuations, including the relative strength of the U.S. dollar. In addition, certain of Barrick’s mineral projects include other minerals (principally nickel and silver), each of which is subject to price volatility based on factors beyond Barrick’s control.
 
Depending on the market price of the relevant metal, Barrick may determine that it is not economically feasible to continue commercial production at some or all of its operations or the development of some or all of its current projects, as applicable, which could have an adverse impact on
 
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Barrick’s financial performance and results of operations.  In such a circumstance, Barrick may also curtail or suspend some or all of its exploration activities, with the result that depleted reserves are not replaced.  In addition, the market value of Barrick’s gold or copper inventory may be reduced and existing reserves may be reduced to the extent that ore cannot be mined and processed economically at the prevailing prices.
 
Replacement of depleted reserves
 
Barrick must continually replace reserves depleted by production to maintain production levels over the long term.  Reserves can be replaced by expanding known orebodies, locating new deposits or making acquisitions.  Exploration is highly speculative in nature. Barrick’s exploration projects involve many risks and are frequently unsuccessful.  Once a site with mineralization is discovered, it may take several years from the initial phases of drilling until production is possible, during which time the economic feasibility of production may change. Substantial expenditures are required to establish proven and probable reserves and to construct mining and processing facilities. As a result, there is no assurance that current or future exploration programs will be successful.  There is a risk that depletion of reserves will not be offset by discoveries or acquisitions.  The mineral base of Barrick may decline if reserves are mined without adequate replacement and Barrick may not be able to sustain production beyond the current mine lives, based on current production rates.
 
Projects
 
Barrick’s ability to sustain or increase its present levels of gold and copper production is dependent in part on the success of its projects. There are many risks and unknowns inherent in all projects.  For example, the economic feasibility of projects is based upon many factors, including: the accuracy of reserve estimates; metallurgical recoveries with respect to gold, copper and by-products; capital and operating costs of such projects; the future prices of the relevant minerals; and the ability to secure appropriate financing to develop such projects. Projects also require the successful completion of feasibility studies, the resolution of various fiscal, tax and royalty matters, the issuance of necessary governmental permits and the acquisition of satisfactory surface or other land rights.  It may also be necessary for Barrick to, among other things, find or generate suitable sources of power and water for a project, ensure that appropriate community infrastructure is developed by third parties to support the project and to secure appropriate financing to fund these expenditures (see “— Current Global Financial Condition” and “—  Liquidity and Level of Indebtedness”).
 
Projects have no operating history upon which to base estimates of future cash flow.  The capital expenditures and time required to develop new mines or other projects are considerable and changes in costs or construction schedules can affect project economics.  Thus, it is possible that actual costs may increase significantly and economic returns may differ materially from Barrick’s estimates or that metal prices may decrease significantly or that Barrick could fail to obtain the satisfactory resolution of fiscal and tax matters or the governmental approvals necessary for the operation of a project or obtain project financing on acceptable terms and conditions or at all, in which case, the project may not proceed either on its original timing or at all. It is not unusual in the mining industry for new mining operations to experience unexpected problems during the start-up phase, resulting in delays and requiring more capital than anticipated.
 
Current global financial conditions
 
Following the onset of the credit crisis in 2008, global financial conditions were characterized by extreme volatility and several major financial institutions either went into bankruptcy or were rescued by governmental authorities. While global financial conditions subsequently stabilized, there remains
 
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considerable risk in the system given the extraordinary measures adopted by government authorities to achieve that stability.  The deteriorating financial condition of certain government authorities has significantly increased the potential for sovereign defaults in a number of jurisdictions, including within the member states of the European Union.  Global financial conditions could suddenly and rapidly destabilize in response to future economic shocks, as government authorities may have limited resources to respond to future crises. Future economic shocks may be precipitated by a number of causes, including a continued rise in the price of oil, geopolitical instability and natural disasters. Any sudden or rapid destabilization of global economic conditions could impact Barrick’s ability to obtain equity or debt financing in the future on terms favorable to Barrick. Additionally, any such occurrence could cause decreases in asset values that are deemed to be other than temporary, which may result in impairment losses.  Further, in such an event, Barrick’s operations and financial condition could be adversely impacted.
 
Mineral reserves and resources
 
Barrick’s mineral reserves and mineral resources are estimates, and no assurance can be given that the estimated reserves and resources are accurate or that the indicated level of gold, copper or any other mineral will be produced.  Such estimates are, in large part, based on interpretations of geological data obtained from drill holes and other sampling techniques.  Actual mineralization or formations may be different from those predicted.  Further, it may take many years from the initial phase of drilling before production is possible, and during that time the economic feasibility of exploiting a discovery may change.
 
The SEC does not permit mining companies in their filings with the SEC to disclose estimates other than mineral reserves.  However, because Barrick prepares this Annual Information Form in accordance with Canadian disclosure requirements, it contains resource estimates, which are required by National Instrument 43-101, as well.  Mineral resource estimates for properties that have not commenced production are based, in many instances, on limited and widely spaced drill hole information, which is not necessarily indicative of the conditions between and around drill holes.  Accordingly, such mineral resource estimates may require revision as more drilling information becomes available or as actual production experience is gained.  No assurance can be given that any part or all of Barrick’s mineral resources constitute or will be converted into reserves.
 
Market price fluctuations of gold, copper, silver and certain other metals, as well as increased production and capital costs or reduced recovery rates, may render Barrick’s proven and probable reserves unprofitable to develop at a particular site or sites for periods of time or may render mineral reserves containing relatively lower grade mineralization uneconomic. Moreover, short-term operating factors relating to the mineral reserves, such as the need for the orderly development of orebodies or the processing of new or different ore grades, may cause mineral reserves to be reduced or Barrick to be unprofitable in any particular accounting period.  Estimated reserves may have to be recalculated based on actual production experience. Any of these factors may require Barrick to reduce its mineral reserves and resources, which could have a negative impact on Barrick’s financial results. Failure to obtain or maintain necessary permits or government approvals or changes to applicable legislation could also cause Barrick to reduce its reserves.  There is also no assurance that Barrick will achieve indicated levels of gold or copper recovery or obtain the prices assumed in determining such reserves.
 
Liquidity and level of indebtedness
 
As of December 31, 2010, Barrick had cash and cash equivalents of approximately $4.0 billion and capital leases and long-term debt of approximately $6.7 billion.  Although Barrick has been successful in repaying debt in the past, there can be no assurance that it can continue to do so.  In addition, Barrick may
 
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assume additional debt in future periods or reduce its holdings of cash and cash equivalents in connection with funding future acquisitions, existing operations, capital expenditures or in pursuing other business opportunities.  Barrick’s level of indebtedness could have important consequences for its operations, including:
 
·                   Barrick may need to use a large portion of its cash flow to repay principal and pay interest on its debt, which will reduce the amount of funds available to finance its operations and other business activities; and
 
·                   Barrick’s debt level may limit its ability to pursue other business opportunities, borrow money for operations or capital expenditures in the future or implement its business strategy.
 
Barrick expects to obtain the funds to pay its expenses and to pay principal and interest on its debt in 2011 through a combination one or more of: its existing capital resources; its future cash flow from operations; issuing new, unsecured debt; and putting in place project financing for a portion of the expected construction cost of a number of its projects. Barrick’s ability to meet its payment obligations will depend on its future financial performance, which will be affected by financial, business, economic and other factors. Barrick will not be able to control many of these factors, such as economic conditions in the markets in which it operates. Barrick cannot be certain that its existing capital resources and future cash flow from operations will be sufficient to allow it to pay principal and interest on Barrick’s debt and meet its other obligations. If these amounts are insufficient or if there is a contravention of its debt covenants, Barrick may be required to refinance all or part of its existing debt, sell assets, borrow more money or issue additional equity.  The ability of Barrick to access the bank, public debt or equity capital markets on an efficient basis may be constrained by the dislocation in the credit markets, capital and/or liquidity constraints in the banking, debt and/or equity markets at the time of issuance.  See “ — Current global financial conditions”.
 
Price volatility and availability of other commodities
 
The profitability of Barrick’s business is affected by the market prices of commodities produced as by-products at Barrick’s mines, such as silver, as well as the cost and availability of commodities which are consumed or otherwise used in connection with Barrick’s operations and projects, including, but not limited to, diesel fuel, natural gas, electricity, acid, steel, concrete and cyanide. Prices of such commodities can be subject to volatile price movements, which can be material and can occur over short periods of time, and are affected by factors that are beyond Barrick’s control. An increase in the cost, or decrease in the availability, of construction materials such as steel and concrete may affect the timing and cost of Barrick’s projects.  If Barrick’s proceeds from the sale of by-products were to decrease significantly, or the costs of certain commodities consumed or otherwise used in connection with Barrick’s operations and projects were to increase, or their availability to decrease, significantly, and remain at such levels for a substantial period of time, Barrick may determine that it is not economically feasible to continue commercial production at some or all of Barrick’s operations or the development of some or all of Barrick’s current projects, which could have an adverse impact on Barrick as described under “ — Metal price volatility” above.
 
Mining risks and insurance risks
 
The mining industry is subject to significant risks and hazards, including environmental hazards, industrial accidents, unusual or unexpected geological conditions, labor force disruptions, civil strife,  unavailability of materials and equipment, weather conditions, pit wall failures, rock bursts, cave-ins, flooding, seismic activity, water conditions and gold bullion losses, most of which are beyond Barrick’s control. These risks and hazards could result in: damage to, or destruction of, mineral properties or
 
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producing facilities; personal injury or death; environmental damage; delays in mining; and monetary losses and possible legal liability.   As a result, production may fall below historic or estimated levels and Barrick may incur significant costs or experience significant delays that could have a material adverse effect on Barrick’s financial performance, liquidity and results of operation.
 
Barrick maintains insurance to cover some of these risks and hazards.  The insurance is maintained in amounts that are believed to be reasonable depending on the circumstances surrounding each identified risk.  No assurance can be given that such insurance will continue to be available, or that it will be available at economically feasible premiums, or that Barrick will maintain such insurance. Barrick’s property, liability and other insurance may not provide sufficient coverage for losses related to these or other risks or hazards. In addition, Barrick does not have coverage for certain environmental losses and other risks, as such coverage cannot be purchased at a commercially reasonable cost.  The lack of, or insufficiency of, insurance coverage could adversely affect Barrick’s cash flow and overall profitability.
 
Production and cost estimates
 
Barrick prepares estimates of future production, cash costs and capital costs of production for particular operations. No assurance can be given that such estimates will be achieved. Failure to achieve production or cost estimates or material increases in costs could have an adverse impact on Barrick’s future cash flows, profitability, results of operations and financial condition.
 
Barrick’s actual production and costs may vary from estimates for a variety of reasons, including: actual ore mined varying from estimates of grade, tonnage, dilution and metallurgical and other characteristics; short-term operating factors relating to the ore reserves, such as the need for sequential development of orebodies and the processing of new or different ore grades; revisions to mine plans; risks and hazards associated with mining; natural phenomena, such as inclement weather conditions, water availability, floods, and earthquakes; and unexpected labor shortages or strikes.  Costs of production may also be affected by a variety of factors, including: changing waste-to-ore ratios, ore grade metallurgy, labor costs, the cost of commodities, general inflationary pressures and currency exchange rates.
 
Environmental, health and safety regulations; permits
 
Barrick’s mining and processing operations and exploration activities are subject to extensive laws and regulations governing the protection of the environment, waste disposal, worker safety, mine development and protection of endangered and other special status species.  In addition, Barrick’s ability to successfully obtain key permits and approvals to explore for, develop and operate mines and to successfully operate in communities around the world will likely depend on its ability to develop, operate and close mines in a manner that is consistent with the creation of social and economic benefits in the surrounding communities.  Barrick’s ability to obtain permits and approvals and to successfully operate in particular communities or to obtain financing may be adversely impacted by real or perceived detrimental events associated with Barrick’s activities or those of other mining companies affecting the environment, human health and safety or the surrounding communities.  Delays in obtaining or failure to obtain government permits and approvals may adversely affect Barrick’s operations, including its ability to explore or develop properties, commence production or continue operations.  Barrick has made, and expects to make in the future, significant expenditures to comply with such laws and regulations and, to the extent reasonably practicable, create social and economic benefit in the surrounding communities. Future changes in applicable laws, regulations and permits or changes in their enforcement or regulatory interpretation could have an adverse impact on Barrick’s financial condition or results of operations.
 
Failure to comply with applicable environmental and health and safety laws and regulations may result in injunctions, fines, suspension or revocation of permits and other penalties.  There can be no
 
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assurance that Barrick has been or will at all times be in full compliance with all such laws and regulations and with its environmental and health and safety permits or that Barrick has all required permits.  The costs and delays associated with compliance with these laws, regulations and permits could stop Barrick from proceeding with the development of a project or the operation or further development of a mine or increase the costs of development or production and may materially adversely affect Barrick’s business, results of operations or financial condition.  Barrick may also be held responsible for the costs of addressing contamination at the site of current or former activities or at third party sites.  Barrick could also be held liable for exposure to hazardous substances.  The costs associated with such responsibilities and liabilities may be significant.  While Barrick has implemented extensive health and safety initiatives at its sites to ensure the health and safety of its employees, contractors and members of the community affected by its operations, there is no guarantee that such measures will eliminate the occurrence of accidents or other incidents which may result in personal injuries or damage to property, and in certain instances such occurrences could give rise to regulatory fines and/or civil liability.
 
In certain of the countries in which Barrick has operations, it is required to submit, for government approval, a reclamation plan for each of its mining sites that establishes Barrick’s obligation to reclaim property after minerals have been mined from the site. In some jurisdictions, bonds or other forms of financial assurances are required for security for these reclamation activities. Barrick may incur significant costs in connection with these reclamation activities, which may materially exceed the provisions Barrick has made for such reclamation.  In addition, the unknown nature of possible future additional regulatory requirements and the potential for additional reclamation activities create further uncertainties related to future reclamation costs, which may have a material adverse effect on Barrick’s financial condition, liquidity or results of operations.  Barrick is involved in various investigative and remedial actions.  There can be no assurance that the costs of such actions would not be material.  When a previously unrecognized reclamation liability becomes known or a previously estimated cost is increased, the amount of that liability or additional cost is expensed, which may materially reduce net income in that period.
 
Foreign investments and operations
 
Barrick conducts mining, development and exploration activities in many countries, including the United States, Canada, Australia, Argentina, Chile, Peru, Dominican Republic, Papua New Guinea, Pakistan and Tanzania. Mining investments are subject to the risks normally associated with any conduct of business in foreign countries including: uncertain political and economic environments; war, terrorism and civil disturbances; changes in laws or policies of particular countries, including those relating to imports, exports, duties and currency; cancellation or renegotiation of contracts; royalty and tax increases or other claims by government entities, including retroactive claims; risk of loss due to disease and other potential endemic health issues; risk of expropriation and nationalization; delays in obtaining or the inability to obtain or maintain necessary governmental permits; currency fluctuations; restrictions on the ability of local operating companies to sell gold, copper or other minerals offshore for U.S. dollars, and on the ability of such companies to hold U.S. dollars or other foreign currencies in offshore bank accounts; import and export regulations, including restrictions on the export of gold, copper or other minerals; limitations on the repatriation of earnings; and increased financing costs.
 
These risks may limit or disrupt operating mines or projects, restrict the movement of funds, cause Barrick to have to expend more funds than previously expected or required, or result in the deprivation of contract rights or the taking of property by nationalization or expropriation without fair compensation, and may materially adversely affect Barrick’s financial position or results of operations.  Furthermore, in the event of a dispute arising from Barrick’s activities in Argentina, Chile, Peru, Dominican Republic, Papua New Guinea, Pakistan or Tanzania, Barrick may be subject to the exclusive jurisdiction of courts outside North America and Australia, which could adversely affect the outcome of the dispute.
 
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In Papua New Guinea, the location of the Porgera gold mine and where Barrick has access to over 5,300 square kilometers of exploration property, there is a greater level of political and economic risk compared to some other countries in which Barrick operates.  The Porgera mine’s infrastructure, including power, water and fuel, may be at risk of sabotage.
 
The Porgera mine has, on a number of occasions, experienced delays in the granting of operating permits and licenses necessary for these businesses to conduct their lawful operations.  Although there has never been an interruption to operations due to an issue of this nature, if at any time in the future permits essential to lawful operations are not obtained or exemptions are not granted, there is a risk that the Porgera mine may not be able to operate for a period of time. Future government actions cannot be predicted, but may impact the operation and regulation of mines including Porgera.
 
A number of economic and social issues exist that increase Barrick’s political and economic risk.  Infectious diseases (including malaria, HIV/AIDS and tuberculosis) are major health care issues in certain of the countries in which Barrick operates.  In Tanzania, Barrick implemented infectious disease programs, including malaria control programs and tuberculosis and HIV/AIDS awareness and prevention programs for its employees, families and local communities at its Bulyanhulu mine, Tulawaka mine and North Mara mine and expects that similar programs will be implemented at the Buzwagi mine by ABG.
 
Security and human rights
 
C ivil disturbances and criminal activities such as trespass, illegal mining, theft and vandalism have caused disruptions at certain of Barrick’s operations in Tanzania and Papua New Guinea, occasionally resulting in the suspension of operations. Affected sites have taken measures to protect their employees, property and production facilities from these risks.  Certain sites have engaged armed and unarmed security personnel and installed perimeter fencing, walls and cameras in sensitive areas, such as main entrances and processing plants.  Some sites have entered into arrangements with law enforcement agencies to provide policing and law and order in the areas surrounding the applicable site.  Incidents of criminal activity, trespass, illegal mining, theft and vandalism have occasionally led to conflict with security personnel and/or police, which in some cases resulted in injuries and/or fatalities.  The measures that have been implemented by the Company will not guarantee that such incidents will not continue to occur and such incidents may halt or delay production, increase operating costs, result in harm to employees or trespassers, decrease operational efficiency, increase community tensions or result in criminal and/or civil liability for the Company or its employees and/or financial damages or penalties.
 
The manner in which the Company’s personnel respond to civil disturbances and criminal activities can give rise to additional risks where those responses are not conducted in a manner that is consistent with international standards relating to the use of force and respect for human rights.  Barrick has implemented a number of significant measures and safeguards which are intended to ensure that its personnel understand and uphold these standards.  The implementation of these measures will not guarantee that the Company’s personnel will uphold these standards in every instance.  The failure to conduct security operations in accordance with these standards can result in harm to employees or community members, increase community tensions, reputational harm to Barrick and its partners or result in criminal and/or civil liability for the Company or its employees and/or financial damages or penalties.
 
Civil disturbances and criminal activities such as trespass, illegal mining, theft and vandalism have occasionally caused disruptions to operations at Porgera and at certain of ABG’s operations in Tanzania.   Illegal mining, which involves trespass into the operating area of the mine, is both a security and safety issue at the Porgera mine and at certain of ABG’s operations in Tanzania .  The illegal miners from time to time have clashed with mine security staff and law enforcement personnel who have attempted to move them away from the facilities.  The presence of the illegal miners, given the nature of the mines’
 
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operations, creates a safety issue for both the illegal miners as well as Barrick’s and ABG’s employees and can cause disruptions to mine operations.
 
It is not possible to determine with certainty the future costs that Barrick may incur in dealing with the issues described above at its operations, however, if the number of incidents increases, costs associated with security, in the case of civil disturbances and illegal mining, may also increase, affecting profitability.
 
Community relations and license to operate
 
The Company’s relationship with the communities in which it operates are critical to ensure the future success of its existing operations and the construction and development of its projects.  There is an increasing level of public concern relating to the perceived effect of mining activities on the environment and on communities impacted by such activities.  Certain non-governmental organizations (“NGOs”), some of which oppose globalization and resource development, are often vocal critics of the mining industry and its practices, including the use of cyanide and other hazardous substances in processing activities.  Adverse publicity generated by such NGOs or others related to extractive industries generally, or Barrick’s operations specifically, could have an adverse effect on the Company’s reputation or financial condition and may impact its relationship with the communities in which it operates.  While Barrick is committed to operating in a socially responsible manner, there is no guarantee that the Company’s efforts in this respect will mitigate this potential risk.  Barrick has implemented extensive community relations and security and safety initiatives to anticipate and manage social issues that may arise at its operations.
 
Government regulation and changes in legislation
 
The Company’s business is subject to various levels of government controls and regulations, which are supplemented and revised from time to time.  Barrick is unable to predict what legislation or revisions may be proposed that might affect its business or when any such proposals, if enacted, might become effective. Such changes, however, could require increased capital and operating expenditures and could prevent or delay certain operations by the Company.  See “Legal Matters — Government Controls and Regulations”.
 
Currency fluctuations
 
Currency fluctuations may affect the costs Barrick incurs at its operations and may affect Barrick’s operating results and cash flows. Gold and copper are each sold throughout the world based principally on the U.S. dollar price, but a portion of Barrick’s operating expenses are incurred in local currencies, such as the Canadian dollar, Australian dollar, Chilean peso, Argentine peso and the Papua New Guinean kina. The appreciation of non-U.S. dollar currencies against the U.S. dollar has increased the costs of production at Barrick’s mines, making such mines less profitable. This may continue into the future.  Barrick enters into currency hedging contracts to mitigate the impact on operating costs of the appreciation of certain non-U.S. dollar currencies against the U.S. dollar. Barrick may incur an opportunity loss if the U.S. dollar appreciates in value relative to non-U.S. dollar currencies.  For 2011, Barrick’s average Australian and Canadian dollar hedge rates are favourable when compared to the year-end market rates for these currencies.  Assuming market exchange rates remain at the December 31, 2010 levels of $1.02 (AUD) and $1.00 (CAD), Barrick expects to record gains on our operating expenditures of approximately $360 million in 2011 (about $45-47 per ounce on total forecast 2011 production), or approximately $340 million for the Australian dollar, approximately $10 million for the Canadian dollar and approximately $10 million for the Chilean peso, which will primarily impact Barrick’s administration costs.  Barrick also expects to record gains on its capital expenditures of approximately $30 million in
 
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2011. These hedging activities do not cover all of Barrick’s future expected operating costs.  There can be no assurance that Barrick will continue the hedging activities that it currently undertakes.  See “ — Use of derivatives” and “Enterprise Risk Management - Financial Risk-Management”.
 
Use of derivatives
 
In September 2009, Barrick announced its plan to eliminate its Gold Hedges and a significant portion of its Floating Contracts.  Barrick eliminated its Gold Hedges in 2009 as well as a portion of the liability associated with the Floating Contracts.  The remaining liability associated with the Floating Contracts was eliminated in 2010.  Nonetheless, Barrick continues to use certain derivative products to manage the risks associated with copper and silver price volatility, changes in other commodity input prices, interest rates, foreign currency exchange rates and energy prices.  The use of derivative instruments involves certain inherent risks including: (a) credit risk - the risk of that the creditworthiness of a counterparty may adversely affect its ability to perform its payment and other obligations under its agreement with Barrick or adversely affect the financial and other terms the counterparty is able to offer Barrick; (b) market liquidity risk — the risk that Barrick has entered into a derivative position that cannot be closed out quickly, by either liquidating such derivative instrument or by establishing an offsetting position; (c) unrealized mark-to-market risk — the risk that, in respect of certain derivative products, an adverse change in market prices for commodities, currencies or interest rates will result in Barrick incurring an unrealized mark-to-market loss in respect of such derivative products.  See “ — Current global financial conditions”.
 
Interest rates
 
A significant, prolonged decrease in interest rates could have a material adverse impact on the interest earned on Barrick’s cash balances ($4.0 billion at December 31, 2010).  The Company’s interest rate exposure mainly relates to the mark-to-market value of derivative instruments, including the fair value and ongoing payments under US dollar interest-rate swaps; and to the interest payments on our variable-rate debt ($1.0 billion at December 31, 2010, which includes 100% of the non-recourse project financing facility for Pueblo Viejo drawn as of such date).
 
Title to properties
 
The validity of mining claims, which constitute most of Barrick’s property holdings, can be uncertain and may be contested. Although Barrick has attempted to acquire satisfactory title to its properties, some risk exists that some titles, particularly title to undeveloped properties, may be defective.
 
Competition
 
Barrick competes with other mining companies and individuals for mining claims and leases on exploration properties and the acquisition of mining assets.  This competition may increase Barrick’s cost of acquiring suitable claims, properties and assets, should they become available to Barrick.  Barrick also competes with other mining companies to attract and retain key executives and employees.  There can be no assurance that Barrick will continue to be able to compete successfully with its competitors in acquiring such properties and assets or in attracting and retaining skilled and experienced employees.
 
Acquisitions and integration
 
From time to time, Barrick examines opportunities to acquire additional mining assets and businesses.  Any acquisition that Barrick may choose to complete may be of a significant size, may change the scale of Barrick’s business and operations, and may expose Barrick to new geographic, political, operating, financial and geological risks.  Barrick’s success in its acquisition activities depends on its ability to
 
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identify suitable acquisition candidates, negotiate acceptable terms for any such acquisition, and integrate the acquired operations successfully with those of Barrick.  Any acquisitions would be accompanied by risks.  For example, there may be a significant change in commodity prices after Barrick has committed to complete the transaction and established the purchase price or exchange ratio; a material orebody may prove to be below expectations; Barrick may have difficulty integrating and assimilating the operations and personnel of any acquired companies, realizing anticipated synergies and maximizing the financial and strategic position of the combined enterprise, and maintaining uniform standards, policies and controls across the organization; the integration of the acquired business or assets may disrupt Barrick’s ongoing business and its relationships with employees, customers, suppliers and contractors; and the acquired business or assets may have unknown liabilities which may be significant.  In the event that Barrick chooses to raise debt capital to finance any such acquisition, Barrick’s leverage will be increased.  If Barrick chooses to use equity as consideration for such acquisition, existing shareholders may suffer dilution.  Alternatively, Barrick may choose to finance any such acquisition with its existing resources.  There can be no assurance that Barrick would be successful in overcoming these risks or any other problems encountered in connection with such acquisitions.
 
Employee relations
 
Barrick’s ability to achieve its future goals and objectives is dependent, in part, on maintaining good relations with its employees and minimizing employee turnover.  A prolonged labor disruption at any of its material properties could have a material adverse impact on its operations as a whole.
 
Shortages of critical parts, equipment and skilled labor
 
An increase in worldwide demand for critical resources such as input commodities, drilling equipment, tires and skilled labor may cause unanticipated cost increases and delays in delivery times, thereby impacting operating costs, capital expenditures and production schedules.
 
Joint ventures
 
Certain of the properties in which Barrick has an interest are operated though joint ventures with other mining companies.  Any failure of such other companies to meet their obligations to Barrick or to third parties, or any disputes with respect to the parties’ respective rights and obligations, could have a material adverse effect on the joint ventures or their properties.  In addition, Barrick may be unable to exert control over strategic decisions made in respect of such properties.
 
Litigation
 
Barrick is currently subject to litigation and may be involved in disputes with other parties in the future which may result in litigation.  The results of litigation cannot be predicted with certainty.  If Barrick is unable to resolve these disputes favourably, it may have a material adverse impact on Barrick’s financial performance, cash flow and results of operations.  See “Legal Matters — Legal Proceedings”.
 
Disclosure and internal controls
 
Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.  Disclosure controls and procedures are designed to ensure that information required to be disclosed by a company in reports filed with securities regulatory agencies is recorded, processed, summarized and reported on a timely basis and is accumulated and communicated to a company’s management, including its chief executive officer and
 
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chief financial officer, as appropriate, to allow timely decisions regarding required disclosure.  Barrick has invested resources to document and analyze its system of disclosure controls and its internal control over financial reporting.  A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance with respect to the reliability of financial reporting and financial statement preparation (see “Internal Control Over Financial Reporting and Disclosure Controls and Procedures”).
 
Ability to support the carrying value of goodwill
 
As of December 31, 2010, the carrying value of Barrick’s goodwill was approximately $5.29 billion on an IFRS basis or 16% of Barrick’s total assets. Under IFRS, goodwill is allocated to reporting units representing the Company’s operating segments, which include Barrick’s individual mineral properties. Barrick evaluates, on at least an annual basis, the carrying amount of goodwill to determine whether current events and circumstances indicate that such carrying amount may no longer be recoverable.  This evaluation involves a comparison of the estimated fair value of Barrick’s reporting units to their carrying values.  Gold mining companies typically trade at a market capitalization that is based on a multiple of net asset value (“NAV”), whereby NAV represents a discounted cash flow valuation based on projected future cash flows. For goodwill impairment testing purposes, Barrick estimates the fair value of a reporting unit by applying a multiple to the reporting unit’s NAV, which is calculated based on projected cash flows from its most recent life of mine plan. For copper reporting units, the estimated fair value is calculated by applying a multiple to NAV. The process for determining these fair values is subjective and requires management to make estimates and assumptions including, but not limited to, projected future revenues (based on estimates of production and long-term metals prices), operating expenses, capital expenditures, remaining economic life of individual mineral properties, discount rates and NAV multiples. These estimates and assumptions are subject to change in the future due to uncertain competitive and market conditions or changes in business strategies.  The timing and amount of future goodwill impairment charges is difficult to determine and will be dependent on a multitude of factors that impact valuations of reporting units, including changes in observed market multiples for valuation purposes, changes in geo-political risk and country specific discount rates, changes in market gold prices and total cash costs, success in finding new reserves, future exploration potential and future capital requirements.
 
IPO of African Barrick Gold
 
On March 24, 2010, ABG began operating as a separate, publicly traded company that holds all of Barrick’s former African gold mines, gold projects and gold exploration properties.  Barrick has retained an equity interest of approximately 73.9% in ABG.  The board of directors and/or executive management team of ABG may determine to undertake actions that are different than those that the board of directors and/or executive management team of Barrick would have taken.  In addition, the minority shareholders of ABG represent an important new stakeholder group that is required to be considered in ABG’s corporate governance and decision-making.  Given the potential divergence in stakeholder interests, there is a risk that actions undertaken by ABG could differ from actions that would have been taken by Barrick and in certain circumstances could adversely effect Barrick’s reputation and/or result in potential civil or criminal liability for the Company.
 
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MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 
Reference is made to the Management’s Discussion and Analysis of Financial and Operating Results of the Company (U.S. GAAP) for the year ended December 31, 2010, which is incorporated by reference into this Annual Information Form and is available on SEDAR at www.sedar.com and on EDGAR at www.sec.gov as an exhibit to Barrick’s Form 40-F.
 
CONSOLIDATED FINANCIAL STATEMENTS
 
Reference is made to the Company’s Consolidated Financial Statements for the year ended December 31, 2010 (U.S. GAAP), which is incorporated by reference into this Annual Information Form and is available on SEDAR at www.sedar.com and on EDGAR at www.sec.gov as an exhibit to Barrick’s Form 40-F.
 
CAPITAL STRUCTURE
 
Set forth below is a description of Barrick’s share capital. The following statements are brief summaries of, and are subject to the provisions of, the articles of amalgamation and by-laws of Barrick and the relevant provisions of the Business Corporations Act (Ontario).
 
General
 
Barrick’s authorized share capital consists of an unlimited number of Barrick common shares, an unlimited number of first preferred shares issuable in series and an unlimited number of second preferred shares issuable in series.
 
Common Shares
 
The holders of Barrick common shares are entitled to one vote for each share on all matters submitted to a vote of shareholders and do not have cumulative voting rights. The holders of Barrick common shares are entitled to receive dividends if, as and when declared by the Board of Directors of Barrick in respect of the Barrick common shares. Subject to the prior rights of the holders, if any, of the first preferred shares and second preferred shares then outstanding and of the shares then outstanding of any other class ranking senior to the Barrick common shares, the holders of Barrick common shares are entitled to share ratably in any distribution of the assets of Barrick upon liquidation, dissolution or winding-up, after satisfaction of all debts and other liabilities.  As of March 28, 2011, there were 999,157,105 Barrick common shares issued and outstanding.
 
The rights, preferences and privileges of holders of Barrick common shares are subject to the rights of the holders of shares of any series of first preferred shares (the “First Preferred Shares”) or second preferred shares (the “Second Preferred Shares”) or any other class ranking senior to the Barrick common shares that Barrick may issue in the future.
 
There are no limitations contained in the articles or by-laws of Barrick or the Business Corporations Act (Ontario) on the ability of a person who is not a Canadian resident to hold Barrick common shares or exercise the voting rights associated with Barrick common shares.  The Barrick common shares are not subject to any exchange, conversion, exercise, redemption, retraction, surrender or similar rights or restrictions.
 
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Preferred Shares
 
First Preferred Shares and Second Preferred Shares may be issued from time to time in series. The Board of Directors of the Company determines by resolution the designation, rights, privileges, restrictions and conditions to be attached to each such series.
 
The Company is entitled to redeem all or any part of the First Preferred Shares or Second Preferred Shares of any series on payment for each share of the amount equal to the result obtained when the stated capital account for the series is divided by the number of issued and outstanding shares of such series together with such premium, if any, as may be determined by the Board of Directors in connection with its determination of the designation, rights, privileges, restrictions and conditions to be attached to the applicable series, and all declared and unpaid dividends thereon. The Company is also entitled to purchase for cancellation all or any part of the First Preferred Shares of any series.
 
The First Preferred Shares and the Second Preferred Shares of each series are entitled to a preference over the common shares of the Company and any other shares ranking junior to the First Preferred Shares or Second Preferred Shares, as the case may be, with respect to the payment of dividends and the distribution of assets in the event of a liquidation, dissolution or winding-up of the Company. Any series of First Preferred Shares or Second Preferred Shares may also be given such other preferences over the common shares and any other shares ranking junior to the First Preferred Shares or Second Preferred Shares, as the case may be, as may be determined. In the event of a liquidation, dissolution or winding-up of the Company, the holders of the First Preferred Shares are entitled to receive, in the aggregate, the amount of the stated capital account of the First Preferred Shares plus all declared and unpaid dividends plus, if the liquidation, dissolution or winding-up is voluntary, any premium to which the shares would be entitled on a redemption, before any amount is paid or property or assets are distributed to the holders of common shares or any other shares ranking junior to the First Preferred Shares. After payment of such amount, the holders of the First Preferred Shares are not entitled to share in any further distribution of the property or assets of the Company. In the event of a liquidation, dissolution or winding-up of the Company, the holders of the Second Preferred Shares are entitled to receive, in the aggregate, the amount of the stated capital account of the Second Preferred Shares plus all declared and unpaid dividends plus, if the liquidation, dissolution or winding-up is voluntary, any premium to which the shares would be entitled on a redemption, before any amount is paid or property or assets are distributed to the holders of common shares or any other shares ranking junior to the Second Preferred Shares. After payment of such amount, the holders of the Second Preferred Shares are not entitled to share in any further distribution of the property or assets of the Company.
 
The holders of First Preferred Shares and Second Preferred Shares are entitled to receive fixed, non-cumulative preferential quarterly cash dividends at such rate and on such dates as may be determined by the Board of Directors in connection with its determination of the designation, rights, privileges, restrictions and conditions to be attached to the applicable series.
 
The approval of the holders of the First Preferred Shares or the Second Preferred Shares is required to delete or vary any right, privilege, restriction or condition attaching to the First Preferred Shares or Second Preferred Shares, as the case may be, as a class and any other matter requiring the approval or consent of the holders of the First Preferred Shares or the Second Preferred Shares, as the case may be, as a class.
 
The first series of First Preferred Shares is designated as “$0.114 Non-cumulative Redeemable Convertible First Preferred Shares, Series A” (the “First Preferred Shares, Series A”), consisting of 10,000,000 First Preferred Shares. In addition to the rights, privileges, restrictions and conditions attached to the First Preferred Shares as a class, the First Preferred Shares, Series A are entitled to fixed non-
 
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cumulative preferential cash dividends of C$0.114 per year, payable quarterly and can be converted into common shares on a one for one basis (subject to adjustment) if called for redemption. The redemption price for the First Preferred Shares, Series A is initially C$1.90 per share, but it may change if the Company gives notice that it has determined that the market price of the First Preferred Shares, Series A is a stipulated price. On or after the day that is 30 days after such notice is given, a holder of First Preferred Shares, Series A can require the Company to redeem his or her First Preferred Shares, Series A. The approval of the holders of the First Preferred Shares, Series A is required in respect of certain changes to the provisions relating to the First Preferred Shares or the First Preferred Shares, Series A. As of March 28 , 2011, there were no First Preferred Shares, Series A issued and outstanding.
 
The second series of First Preferred Shares is designated as “$0.126 Non-cumulative Redeemable Convertible First Preferred Shares, Series B” (the “First Preferred Shares, Series B”), consisting of 10,000,000 First Preferred Shares. In addition to the rights, privileges, restrictions and conditions attached to the First Preferred Shares as a class, the First Preferred Shares, Series B are entitled to fixed non-cumulative preferential cash dividends of C$0.126 per year, payable quarterly and can be converted into common shares on a one for one basis (subject to adjustment) if called for redemption. The redemption price for each First Preferred Share, Series B is its stated capital (being C$2.10 per share) plus a premium of C$0.2625 per share, together with all declared and unpaid dividends. The approval of the holders of the First Preferred Shares, Series B is required in respect of certain changes to the provisions relating to the First Preferred Shares or the First Preferred Shares, Series B. No class of shares may be created or issued ranking as to capital or dividends prior to or on parity with the First Preferred Shares except with the prior approval of the holders of the First Preferred Shares, Series B. As of March 28 , 2011, there were no First Preferred Shares, Series B issued and outstanding.
 
The third series of First Preferred Shares is designated as “First Preferred Shares, Series C Special Voting Share” (the “Special Voting Share”), consisting of one Special Voting Share. The Special Voting Share was issued to effect the assumption by Barrick of the BGI exchangeable share structure in connection with the acquisition of Homestake. In connection with a prior merger transaction, BGI, a subsidiary of Homestake, issued a class of exchangeable shares to investors resident in Canada and, to a lesser extent, the United States that allowed the holders of those shares to exchange their shares for shares of Homestake on a share-for-share basis. On the completion of the acquisition of Homestake by Barrick, those holders became entitled to exchange their BGI exchangeable shares for Barrick common shares on the basis of 0.53 of a Barrick common share for each BGI exchangeable share.
 
In addition to the rights, privileges, restrictions and conditions attached to the First Preferred Shares as a class, e xcept as otherwise required by applicable law, the holder of record of the Special Voting Share has a number of votes equal to the number of BGI exchangeable shares outstanding from time to time, which are not owned by Barrick or its subsidiaries or affiliates, multiplied by 0.53. The holder of the Special Voting Share will vote together with the holders of Barrick common shares as a single class on all matters submitted to a vote of the holders of the Barrick common shares, except as may be required by applicable law. The holder of the Special Voting Share is entitled to receive, in any distribution of property or assets of Barrick upon any liquidation, dissolution or winding-up of Barrick, an amount equal to the stated capital of the share plus all declared and unpaid dividends on the share, before any amount is paid or distributed in respect of the Barrick common shares or any other Barrick shares ranking junior to the Special Voting Share. The holder of the Special Voting Share is entitled to receive a dividend of C$0.04 per year.  As a result of the redemption on February 27, 2009 by Barrick of all outstanding BGI exchangeable shares (other than BGI exchangeable shares owned by Barrick or any subsidiary or affiliate of Barrick), there were no shares, securities, debt obligations, options or other agreements that could give rise to the issuance of any BGI exchangeable shares to any person (other than to Barrick or any subsidiary or affiliate of Barrick) and, in March 2009, the Special Voting Share was redeemed and cancelled by Barrick.
 
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The first series of Second Preferred Shares is designated as “$0.222 Non-cumulative Redeemable Convertible Second Preferred Shares, Series A” (the “Second Preferred Shares, Series A”), consisting of 15,000,000 Second Preferred Shares. In addition to the rights, privileges, restrictions and conditions attached to the Second Preferred Shares as a class, the Second Preferred Shares, Series A are entitled to fixed non-cumulative preferential cash dividends of C$0.222 per year, payable quarterly and can be converted into common shares on a one for one basis (subject to adjustment) if called for redemption. The redemption price for each Second Preferred Share, Series A is C$2.43 per share, together with all declared and unpaid dividends. A holder of Second Preferred Shares, Series A can require the Company to redeem his or her Second Preferred Shares, Series A at the redemption price. The approval of the holders of the Second Preferred Shares, Series A is required in respect of certain changes to the provisions relating to the Second Preferred Shares or the Second Preferred Shares, Series A. No class of shares may be created or issued ranking as to capital or dividends prior to or on parity with the Second Preferred Shares (with the exception of the First Preferred Shares) except with the prior approval of the holders of the Second Preferred Shares, Series A. As of March 28 , 2011, there were no Second Preferred Shares, Series A issued and outstanding.
 
RATINGS
 
The following table sets out the ratings of Barrick’s corporate debt by the rating agencies indicated as at March 28, 2011:

 	 	Rating Agency	
 	 	Moody’s Investors
Service	 	Standard & Poor’s 
 Ratings Services	 	DBRS	
 	 	 	 	 	 	 	
Senior Unsecured Debt	 	Baa1	 	A-	 	A	
 
Moody’s Investors Service (“Moody’s”) credit ratings for long-term debt are on a rating scale that ranges from Aaa to C, which represents the range from highest to lowest quality of such securities rated. According to Moody’s, a rating of Baa is the fourth highest of nine major categories. Moody’s applies numerical modifiers 1, 2 and 3 in each generic rating classification from Aa to Caa in its corporate bond rating system. The modifier 1 indicates that the issue ranks in the higher end of its generic rating category, the modifier 2 indicates a mid-range ranking and the modifier 3 indicates that the issue ranks in the lower end of its generic rating category.  According to the Moody’s rating system, long-term obligations rated Baa are subject to moderate credit risk. They are considered medium-grade and as such may possess certain speculative characteristics.
 
Standard & Poor’s Ratings Services (“S&P”) credit ratings for long-term debt are on a rating scale that ranges from AAA to D, which represents the range from highest to lowest quality of such securities rated. The A rating is the third highest of ten major categories. The ratings from AA to CCC may be modified by the addition of a plus (+) or minus (-) sign to show relative standing within the major rating categories.  According to the S&P rating system, debt securities rated A are somewhat more susceptible to the adverse effects of changes in circumstances and economic conditions than obligations in higher-rated categories.  However, the obligor’s capacity to meet its financial commitment on the obligation is still strong.
 
DBRS Limited (“DBRS”) uses a long-term debt rating scale that ranges from AAA to D, which represents the range from highest to lowest quality of such securities rated. According to DBRS, a rating of A by DBRS is in the third highest of 10 major categories and is of satisfactory credit quality. Protection of interest and principal is still substantial, but the degree of strength is less than that of AA rated entities. While “A” is a respectable rating, entities in this category are considered to be more
 
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susceptible to adverse economic conditions and have greater cyclical tendencies than higher-rated securities.
 
Barrick understands that the ratings are based on, among other things, information furnished to the above ratings agencies by Barrick and information obtained by the ratings agencies from publicly available sources. The credit ratings given to Barrick’s debt instruments by the rating agencies are not recommendations to buy, hold or sell such debt instruments since such ratings do not comment as to market price or suitability for a particular investor. There is no assurance that any rating will remain in effect for any given period of time or that any rating will not be revised or withdrawn entirely by a rating agency in the future if, in its judgment, circumstances so warrant.  Credit ratings are intended to provide investors with (i) an independent measure of the credit quality of an issue of securities; (ii) an indication of the likelihood of repayment for an issue of securities; and (iii) an indication of the capacity and willingness of the issuer to meet its financial obligations in accordance with the terms of those securities. Credit ratings accorded to Barrick’s debt instruments may not reflect the potential impact of all risks on the value of such instruments, including risks related to market or other factors discussed in this Annual Information Form (see also “Risk Factors”).
 
MARKET FOR SECURITIES
 
Barrick’s common shares are listed and posted for trading on the Toronto Stock Exchange and the New York Stock Exchange under the symbol ABX.  The following table outlines the closing share price trading range and volume of shares traded by month in 2010, based on trading information published by each Exchange.

 	 	Toronto Stock Exchange	 	New York Stock Exchange	 	
 	 	Share Price Trading
Range	 	 	 	Share Price Trading
Range	 	 	 	
2010	 	High	 	Low	 	Share Volume	 	High	 	Low	 	Share Volume	 	
 	 	(C$ per share)	 	(millions)	 	($ per share)	 	(millions)	 	
January	 	44.00	 	37.03	 	69.2	 	42.63	 	34.63	 	77.8	 	
February	 	41.67	 	36.01	 	77.4	 	40.00	 	33.65	 	80.8	 	
March	 	41.85	 	37.65	 	86.5	 	40.80	 	36.69	 	69.0	 	
April	 	44.90	 	38.86	 	72.7	 	44.36	 	38.15	 	67.2	 	
May	 	47.99	 	42.80	 	98.9	 	47.20	 	39.95	 	86.8	 	
June	 	48.89	 	42.93	 	83.7	 	47.25	 	41.14	 	73.6	 	
July	 	46.88	 	41.07	 	61.0	 	45.33	 	39.68	 	64.7	 	
August	 	50.65	 	42.05	 	61.2	 	47.50	 	40.66	 	53.5	 	
September	 	50.22	 	45.30	 	75.5	 	47.55	 	43.85	 	61.6	 	
October	 	49.77	 	46.06	 	67.0	 	49.65	 	44.87	 	64.3	 	
November	 	53.66	 	48.16	 	66.6	 	53.44	 	47.63	 	64.2	 	
December	 	55.99	 	51.02	 	50.1	 	55.65	 	50.65	 	46.1	 	
 
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ABG’s common shares are listed and posted for trading on the London Stock Exchange (“LSE”) under the symbol ABG.  The following table outlines the closing share price trading range and volume of shares traded by month in 2010, based on trading information provided by the LSE.

 	 	London Stock Exchange	 	
 	 	Share Price Trading Range	 	 	 	
2010	 	High	 	Low	 	Share Volume	 	
 	 	(UK£ per share)	 	 	 	(millions)	 	
January	 	—	 	—	 	—	 	
February	 	—	 	—	 	—	 	
March	 	5.96	 	5.70	 	5.5	 	
April	 	6.24	 	5.56	 	6.1	 	
May	 	6.21	 	5.35	 	12.7	 	
June	 	6.63	 	6.17	 	17.6	 	
July	 	6.29	 	5.36	 	6.6	 	
August	 	5.97	 	5.38	 	3.4	 	
September	 	6.13	 	5.75	 	7.5	 	
October	 	6.36	 	5.36	 	12.5	 	
November	 	5.69	 	5.12	 	14.7	 	
December	 	6.14	 	5.32	 	8.5	 	
 
MATERIAL CONTRACTS
 
Set out below is a description of Barrick’s material contracts as at December 31, 2009.
 
On March 6, 2003, Placer Dome entered into an Indenture (the “2003 Indenture”) with Deutsche Bank Trust Company Americas in connection with the issuance of senior debt securities.
 
On March 6, 2003, Placer Dome entered into a First Supplemental Indenture with Deutsche Bank Trust Company Americas in connection with the issuance and sale by Placer Dome of $200 million principal amount of 6.375% debentures on March 6, 2003. This First Supplemental Indenture, together with the original 2003 Indenture, sets out the terms and conditions pertaining to the $200 million principal amount 6.375% debentures.
 
On October 10, 2003, Placer Dome entered into a Second Supplemental Indenture with Deutsche Bank Trust Company Americas in connection with the issuance and sale by Placer Dome of $300 million principal amount of 6.45% debentures on October 10, 2003. This Second Supplemental Indenture, together with the original 2003 Indenture, sets out the terms and conditions pertaining to the $300 million principal amount 6.45% debentures.
 
On October 10, 2003, Placer Dome entered into a Third Supplemental Indenture with Deutsche Bank Trust Company Americas in connection with the issuance and sale by Placer Dome of $230 million principal amount of 2.75% convertible debentures on October 10, 2003. This Third Supplemental Indenture, together with the original 2003 Indenture, sets out the terms and conditions pertaining to the $230 million principal amount 2.75% convertible debentures.
 
On November 12, 2004, Barrick entered into an Indenture with Barrick Gold Inc., Barrick Gold Finance Company and JPMorgan Chase Bank (the “2004 Indenture”). Pursuant to the 2004 Indenture, (a) Barrick issued $200 million principal amount of 5.80% notes due 2034 (the “Barrick 2034 Notes”), (b)
 
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Barrick Gold Finance Company issued $200 million principal amount of 5.80% notes due 2034 (the “BGFC 2034 Notes”), and (c) Barrick Gold Finance Company issued $350 million principal amount of 4.875% notes due 2014 (the “2014 Notes”), all on November 12, 2004. The 2004 Indenture sets out the terms and conditions pertaining to the Barrick 2034 Notes, the BGFC 2034 Notes and the 2014 Notes. Each of the BGFC 2034 Notes and the 2014 Notes are unconditionally guaranteed by Barrick.
 
On October 12, 2006, Barrick International (Barbados) Corp., formerly Barrick International Bank Corp. (“BIBC”) issued an aggregate of $1 billion of copper-linked notes (the “Copper-Linked Notes”) comprised of $400 million of 5.75% notes due 2016 and $600 million of 6.35% notes due 2036 pursuant to an Indenture dated as of the same date among BIBC, as issuer, Barrick (HMC) Mining Company (“Barrick (HMC)”), as initial joint obligor, Barrick, as parent guarantor and The Bank of New York, as trustee (the “2006 Indenture”).  The 2006 Indenture sets out the terms and conditions pertaining to the Copper-Linked Notes, which include an unconditional guarantee by Barrick.
 
On the same date, and as part of the same transaction, ABX Financing Company (“ABXFC”), a company incorporated for the purpose of acquiring the Copper-Linked Notes, issued an aggregate of $1 billion of notes (the “ABXFC Notes”) comprised of $400 million of 5.75% notes due 2016 and $600 million of 6.35% notes due 2036 pursuant to an Indenture dated as of the same date among ABXFC, as issuer, BIBC, Barrick (HMC) and Barrick, as guarantors, and The Bank of New York, as trustee (the “ABXFC Indenture”).   The ABXFC Indenture sets out the terms and conditions pertaining to the ABXFC Notes, which include an unconditional guarantee by Barrick, BIBC and Barrick (HMC).
 
On September 11, 2008, Barrick entered into an Indenture with Barrick Gold Financeco LLC, Barrick North America Finance LLC and The Bank of New York Mellon (“2008 Indenture”).  Pursuant to the 2008 Indenture, (a) Barrick Gold Financeco LLC issued $500 million principal amount 6.125% notes due 2013 (the “BGFC 2013 Notes”), and (b) Barrick North America Finance LLC issued $500 million principal amount 6.80% notes due 2018 (the “BNAF 2018 Notes”) and $250 million principal amount 7.50% notes due 2038 (the “BNAF 2038 Notes”), all on September 11, 2008.  On March 19, 2009, Barrick issued an aggregate of $750 million principal amount 6.95% notes due 2019 (the “BGC 2019 Notes”) pursuant to the 2008 Indenture.  The 2008 Indenture sets out the terms and conditions pertaining to the BGFC 2013 Notes, the BNAF 2018 Notes, the BNAF 2038 Notes and the BGC 2019 Notes.  Each of the BGFC 2013 Notes, the BNAF 2018 Notes and the BNAF 2038 Notes are unconditionally guaranteed by Barrick.
 
On October 16, 2009, Barrick entered into an Indenture with Barrick (PD) Australia Finance Pty Ltd. and the Bank of New York Mellon (the “2009 Indenture”).  Pursuant to the 2009 Indenture, Barrick (PD) Australia Finance Pty Ltd. issued $400 million principal amount 4.950% notes due 2020 (the “BPDAF 2020 Notes”) and $850 million principal amount 5.950% notes due 2039 (the “BPDAF 2039 Notes”), all on October 16, 2009.  The 2009 Indenture sets out the terms and conditions pertaining to the BPDAF 2020 Notes and the BPDAF 2039 Notes.  Each of the BPDAF 2020 Notes and the BPDAF 2039 Notes are unconditionally guaranteed by Barrick.
 
TRANSFER AGENTS AND REGISTRARS
 
Barrick’s transfer agent and registrar for its common shares is CIBC Mellon Trust Company, Toronto, Ontario. Barrick’s transfer agent and registrar for the BGI exchangeable shares is Computershare Trust Company of Canada, Toronto, Ontario.
 
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DIVIDEND POLICY
 
In 2008, Barrick paid a total cash dividend of $0.40 per common share — $0.20 in mid-June and $0.20 in mid-December. In 2009, Barrick paid a total cash dividend of $0.40 per common share — $0.20 in mid-June and $0.20 in mid-December. In 2010, as a result of Barrick’s positive outlook on the gold price, its strong financial position and robust operating cash flows, Barrick’s Board of Directors authorized an annual dividend increase from $0.40 per common share to $0.48 per common share. The Board also approved moving from a semi-annual dividend to a quarterly dividend. In 2010, Barrick paid a total cash dividend of $0.44 per common share - $0.20 in mid-June, $0.12 in mid-September and $0.12 in mid-December. The amount and timing of any dividends is within the discretion of Barrick’s Board of Directors. The Board of Directors reviews the dividend policy quarterly based on the cash requirements of Barrick’s operating assets, exploration and development activities, as well as potential acquisitions, combined with the current and projected financial position of Barrick.
 
DIRECTORS AND OFFICERS OF THE COMPANY
 
As of March 28, 2011, directors and executive officers of Barrick as a group beneficially own, directly or indirectly, or exercise control or direction over 1,781,289 common shares representing approximately 0.18% of the outstanding common shares of Barrick.
 
Directors of the Company
 
The present term of each director will expire at the next annual meeting of shareholders or upon such director’s successor being elected or appointed. The following are the directors of the Company as at March 28, 2011:

Name (age) and municipality of residence	 	Principal occupations during past 5 years	
Howard L. Beck ( 77 ) 
 Toronto, Ontario 
 Canada	 	Mr. Beck is a corporate director. Mr. Beck was a senior partner of the law firm, Davies, Ward & Beck from 1962 to 1989. Mr. Beck holds an undergraduate degree and law degree from the University of British Columbia and a master’s degree in law from Columbia University. He was called to the bar of British Columbia and Ontario. He was appointed Queen’s Counsel in 1971. Mr. Beck is also a director of Citibank Canada. At different times during the period from 2006 to 2010, Mr. Beck also served as a director or trustee of the following publicly-traded entities: Trizec Canada Inc., Trizec Properties Inc. and Cineplex Galaxy Income Fund.
 
Barrick Board Details:
· Director since 1984	
 
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Name (age) and municipality of residence	 	Principal occupations during past 5 years	
C. William D. Birchall ( 68 ) 
 Toronto, Ontario 
 Canada	 	Mr. Birchall was appointed as the Vice Chairman of Barrick in July 2005. From 2004 to March 2007, Mr. Birchall was the Chief Executive Officer of ABX Financeco Inc., a Barrick subsidiary. Mr. Birchall was the Vice Chairman of TrizecHahn Corporation, a real estate company, from 1996 to 2006. He graduated from Merchant Taylor’s School and is a Fellow of the United Kingdom Institute of Chartered Accountants. Mr. Birchall is also a director of Rogers Communications Inc. Mr. Birchall did not serve as a director of any other publicly-traded companies during the period from 2006 to 2010.
 
Barrick Board Details:
· Vice Chairman since 2005 and Director since 1984	
 	 	 	
Donald J. Carty ( 64 ) 
 Dallas, Texas 
 USA	 	Mr. Carty is the Chairman of Porter Airlines Inc. and Virgin America Airlines, commercial airline companies. He served as Vice Chairman and Chief Financial Officer of Dell Inc., a computer manufacturer, from early 2007 until mid-2008. From 1998 to 2003, he was the Chairman and Chief Executive Officer of AMR Corp. and American Airlines, a commercial airline company. Mr. Carty is also a member of the board of trustees of Southern Methodist University. He holds an undergraduate degree and an honorary doctor of law from Queen’s University and a master’s degree in business administration from Harvard University. Mr. Carty is an Officer of the Order of Canada. Mr. Carty is also a director of Canadian National Railway Company, Dell Inc., Gluskin Sheff & Associates, Inc., Hawaiian Holdings, Inc. and Talisman Energy Inc. At different times during the period from 2006 to 2010, Mr. Carty also served as a director of the following publicly-traded companies: CHC Helicopter Corporation, Placer Dome Inc., Sears Holding Corp., and SolutionInc Technologies Limited.
 
Barrick Board Details:
· Director since 2006	
 	 	 	
Gustavo Cisneros ( 65 )
Caracas, Venezuela	 	Mr. Cisneros is the Chairman of the Cisneros Group of Companies, a privately held media, entertainment, technology and consumer products organization. Mr. Cisneros is a member of Barrick’s International Advisory Board. He is a member of the advisory boards of a number of organizations and universities, including the United Nations Information and Communication Technologies (ICT) Task Force, The Americas Society, Georgetown University and Harvard University. Mr. Cisneros holds an undergraduate degree from Babson College. During the period from 2006 to 2010, Mr. Cisneros served as a director of Univision Communications Inc.
 
Barrick Board Details:
· Director since 2003	
 
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Name (age) and municipality of residence	 	Principal occupations during past 5 years	
Marshall A. Cohen ( 75 ) 
 Toronto, Ontario 
 Canada	 	Mr. Cohen is Counsel to law firm Cassels, Brock & Blackwell LLP. Mr. Cohen was the President and Chief Executive Officer of the Molson Companies Limited, a brewery company, from 1988 to 1996. Prior to that, he served with the Government of Canada for 15 years, including appointments as Deputy Minister of Industry, Trade & Commerce; Energy, Mines & Resources; and Finance. Mr. Cohen holds an undergraduate degree from the University of Toronto, a law degree from Osgoode Hall Law School and a master’s degree in law from York University. Mr. Cohen recently retired as Chairman of the Board of Governors of York University and is an honourary director or governor of a number of non-profit organizations, including the C.D. Howe Institute and Mount Sinai Hospital. Mr. Cohen is an Officer of the Order of Canada. Mr. Cohen is also a director of Gleacher and Co. Inc., TriMas Corporation, and TD Ameritrade. At different times during the period from 2006 to 2011, Mr. Cohen also served as a director of the following publicly-traded entities: American International Group, Inc., Collins & Aikman Inc., The Goldfarb Corporation, IBI Income Fund, Metaldyne Corporation, The Toronto-Dominion Bank, and Golf Town Income Fund.
 
Barrick Board Details:
· Director since 1988	
 	 	 	
Peter A. Crossgrove ( 74 ) 
 Toronto, Ontario 
 Canada	 	Mr. Crossgrove is the Chairman of the Board and Acting Chief Executive Officer of Excellon Resources Inc. and Vice Chairman of Detour Gold Corporation. Mr. Crossgrove is also the former Chairman and a founder of Masonite International Corporation, a door manufacturing company. Mr. Crossgrove is also the former Chief Executive Officer and Vice Chairman of Placer Dome. Mr. Crossgrove is also a director of the Canadian Partnership Against Cancer. He holds an undergraduate degree from Concordia University and a master’s degree in business administration from the University of Western Ontario. Mr. Crossgrove is a recipient of the Queen’s Jubilee Medal, a Member of the Order of Canada, and a Member of the Order of Ontario. Mr. Crossgrove is also a director of Dundee REIT, Lake Shore Gold Corp., Pelangio Exploration Inc., and QLT Inc.
 
Barrick Board Details:
  · Director since 1993	
 
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Name (age) and municipality of residence	 	Principal occupations during past 5 years	
Robert M. Franklin ( 64 ) 
 Toronto, Ontario 
 Canada	 	Mr. Franklin is President of Signalta Capital Corporation, an investment company. From August 2006 to March 2007, he was Chairman of the Board of Photowatt Technologies, a developer of solar power technologies, and from 1993 to January 2006, he was the Chairman of the Board of Placer Dome, a gold mining company. He holds an undergraduate degree from Hillsdale College. Mr. Franklin is also a director of Canadian Tire Corporation and Toromont Industries Ltd. At different times during the period from 2006 to 2010, Mr. Franklin served as a director or trustee of the following publicly-traded entities: First Uranium Corp., Great Lakes Carbon Corporation, Resolve Business Outsourcing Income Fund and Royster-Clark, Ltd. and Stratos Global Corporation.
 
Barrick Board Details:
· Director since 2006	
 	 	 	
J. Brett Harvey ( 60 ) 
 Venetia, Pennsylvania 
 USA	 	Mr. Harvey is Chairman, President and Chief Executive Officer of CONSOL Energy Inc., a coal, gas and energy services company. Mr. Harvey serves on the board of a number of energy industry associations, including the industry advisory board of the International Energy Agency, the Leadership Council of the American Coalition for Clean Coal Electricity, the National Coal Council, the Virginia Coalfield Economic Development Authority and the Bituminous Coal Operators’ Association. Mr. Harvey is a member of the National Executive Board of the Boy Scouts of America. He holds an undergraduate degree from the University of Utah. Mr. Harvey is also a director of Allegheny Technologies Inc. Mr. Harvey did not serve as a director of any other publicly-traded companies during the period from 2006 to 2010.
 
Barrick Board Details:
· Director since 2005	
 	 	 	
The Right Honourable Brian Mulroney  ( 71 ) 
 Montreal, Quebec 
 Canada	 	Mr. Mulroney is the Chairman of Barrick’s International Advisory Board and a Senior Partner of the law firm Ogilvy Renault. Mr. Mulroney was the Prime Minister of Canada from 1984 to 1993. Mr. Mulroney is a member of the advisory group of Lion Capital LLP. He holds an undergraduate degree from St. Francis Xavier University and a law degree from Université Laval. Mr. Mulroney is a Companion of the Order of Canada. Mr. Mulroney is also a director of The Blackstone Group L.P., Independent News & Media PLC, Quebecor Inc., and Wyndham Worldwide Corporation. At different times during the period from 2006 to 2010, Mr. Mulroney served as a director of the following publicly-traded companies: Archer Daniels Midland Company, Cendant Corporation, Trizec Properties, Inc., and Quebecor World Inc.
 
Barrick Board Details:
· Director since 1993	
 
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Name (age) and municipality of residence	 	Principal occupations during past 5 years	
Anthony Munk (50 ) 
Toronto, Ontario 
 Canada	 	Mr. Anthony Munk is a Managing Director of Onex Corporation, a leading North American private equity firm. He is Chairman of the Board of Husky Injection Molding Systems Ltd. and a director of RSI Home Products Inc., Cineplex Inc. and Tomkin Building Products, Inc. He is also Vice Chairman of the Aurea Foundation and a director of The Peter Munk Charitable Foundation. Mr. Munk holds an undergraduate degree from Queen’s University. During the period from 2006 to 2010, Mr. Munk did not serve as a director of any other publicly-traded companies.
 
Barrick Board Details:
· Director since 1996	
 	 	 	
Peter Munk ( 83 ) 
 Toronto, Ontario 
 Canada	 	Mr. Peter Munk is the Founder and Chairman of Barrick. From March 27, 2008 to January 15, 2009, Mr. Munk was also the interim Chief Executive Officer of Barrick. Prior to September 2006, he was also Chairman of Trizec Properties, Inc., a real estate investment trust, and Chairman and Chief Executive Officer of Trizec Canada Inc., a real estate company. Mr. Munk is the former Chair of the University of Toronto Crown Foundation and served as a Trustee of the University Health Network in Toronto. He holds an undergraduate degree and an honorary doctor of laws from the University of Toronto. Mr. Munk is a member of the Canadian Business Hall of Fame and the Canadian Mining Hall of Fame, a recipient of the Woodrow Wilson Award for Corporate Citizenship, and a Companion of the Order of Canada. Mr. Munk did not serve as a director of any other publicly-traded companies during the period from 2006 to 2010.
 
Barrick Board Details:
· Chairman and Director since 1984	
 	 	 	
Aaron W. Regent ( 45 ) 
 Toronto, Ontario 
 Canada	 	Mr. Regent was appointed President and Chief Executive Officer of Barrick on January 16, 2009. Prior to his appointment at Barrick, Mr. Regent was Senior Managing Partner and Co-CEO of Brookfield Infrastructure Group of Brookfield Asset Management, an asset management company. Prior to August 2006, he was the President of Falconbridge Limited, a diversified metals and mining company, after its merger with Noranda Inc. Prior to July 2005, he was President and Chief Executive Officer of Falconbridge Limited. He is a council member of the International Council on Mining and Metals, and a director of the World Gold Council, the Hospital for Sick Kids Foundation and the C. D. Howe Institute. Mr. Regent is a Chartered Accountant in Ontario and holds an undergraduate degree from the University of Western Ontario. Mr. Regent did not serve as a director of any other publicly-traded companies during the period from 2006 to 2010.
 
Barrick Board Details:
· Director since February 19, 2009	
 
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Name (age) and municipality of residence	 	Principal occupations during past 5 years	
The Right Honourable 
 Nathaniel P. Rothschild (39) 
 Klosters, Switzerland	 	Mr. Rothschild is Founder and Co-Chairman of Vallar PLC, as well as Co-Chairman of EN+ Group Limited, the parent company of UC Rusal PLC. Mr. Rothschild is a member of Barrick’s International Advisory Board. Mr. Rothschild is an advisory trustee of the Yad Hanadiv Foundation and member of the Belfer Center’s International Council at John F. Kennedy School of Government at Harvard University and International Advisory Council of Brookings Institution. He holds a master’s degree in history from Oxford. During the period from 2006 to 2010, Mr. Rothschild also served as a director of RIT Capital Partners plc.
 
Barrick Board Details:
· Director since April 28, 2010	
 	 	 	
Steven J. Shapiro ( 58 ) 
 Houston, Texas 
 USA	 	Mr. Shapiro is a corporate director. From April 2005 to May 2006, he was Executive Vice President, Finance and Corporate Development, and a director of Burlington Resources, Inc., an oil and gas exploration and production company. From January 2003 to April 2005, he was Executive Vice President and Chief Financial Officer of Burlington Resources, Inc. He serves as a trustee of the Houston Museum of Natural Science. Mr. Shapiro holds an undergraduate degree from Union College and a master’s degree in business administration from Harvard University. Mr. Shapiro is also a director of El Paso Corporation and Vallar PLC. Mr. Shapiro did not serve as a director of any other publicly-traded companies during the period from 2006 to 2010.
 
Barrick Board Details:
· Director since 2004	
 
Committees of the Board
 
Corporate Governance and Nominating Committee
 
The Corporate Governance and Nominating Committee is comprised of M.A. Cohen, R.M. Franklin and J.B. Harvey.
 
Audit Committee
 
The Audit Committee is comprised of D.J. Carty, P.A. Crossgrove, R.M. Franklin and S.J. Shapiro.
 
Compensation Committee
 
The Compensation Committee is comprised of D.J. Carty, M.A. Cohen, J.B. Harvey and S.J. Shapiro.
 
Environmental, Health and Safety Committee
 
The Environmental, Health and Safety Committee is comprised of P.A. Crossgrove, Aaron W. Regent, J.B. Harvey and C.W.D. Birchall.
 
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Finance Committee
 
The Finance Committee is comprised of H.L. Beck, C.W.D. Birchall, A. Munk, N.P. Rothschild.
 
International Advisory Board
 
The members of the Board that also sit on the International Advisory Board are B. Mulroney, G. Cisneros and N.P. Rothschild.
 
Executive Officers of the Company
 
In addition to Peter Munk, Aaron W. Regent and C. William D. Birchall , as set out above, the following are the executive officers of the Company as at March 28, 2011:

Name (age) and municipality of residence	 	Office	 	Principal occupations during past 5 years	
Kelvin Dushnisky (47) 
 Oakville, Ontario 
 Canada	 	Executive Vice President, Corporate and Legal Affairs	 	Executive Vice President, Corporate and Legal Affairs of the Company; prior to June 2010, Executive Vice President, Corporate Affairs of the Company; prior to December 2007, Senior Vice President, Corporate Affairs of the Company.	
 	 	 	 	 	
Peter J. Kinver (55) 
 Toronto, Ontario 
 Canada	 	Executive Vice President and Chief Operating Officer	 	Executive Vice President and Chief Operating Officer of the Company.	
 	 	 	 	 	
Jamie C. Sokalsky (53)
 Toronto, Ontario 
 Canada	 	Executive Vice President and Chief Financial Officer	 	Executive Vice President and Chief Financial Officer of the Company.	
 	 	 	 	 	
Robert Krcmarov (46) 
 Toronto, Ontario 
 Canada	 	Senior Vice President, Global Exploration	 	Senior Vice President, Global Exploration of the Company; prior to December 2008, Vice President, Global Exploration of the Company; prior to May 2007, Vice President, Exploration of the Company.	
 	 	 	 	 	
Don Ritz (64) 
 Toronto, Ontario 
 Canada	 	Senior Vice President, Safety and Leadership Development	 	Senior Vice President, Safety and Leadership Development of the Company; prior to July 2009, Vice President, Safety and Health of the Company; prior to May 2006, Vice President, Safety and Occupational Health of the Company.	
 	 	 	 	 	
Sybil Veenman (47) 
 Toronto, Ontario 
 Canada	 	Senior Vice President and General Counsel	 	Senior Vice President and General Counsel; prior to July 2010, Senior Vice President, Assistant General Counsel and Secretary of the Company; prior to July 2008, Vice President, Assistant General Counsel and Secretary of the Company.	
 
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Name (age) and municipality of residence	 	Office	 	Principal occupations during past 5 years	
Gregory A. Lang (56) 
Sandy, Utah
U.S.A.	 	President, North America	 	President, North America of the Company.	
 	 	 	 	 	
Igor Gonzales (56) 
 La Molina, Lima, Peru	 	President, South America	 	President, South America of the Company.	
 	 	 	 	 	
Gary Halverson (52) 
 Perth, Australia	 	President, Australia-Pacific	 	President, Australia-Pacific of the Company; prior to December 2008, Director of Operations Eastern Region Australia Pacific; prior to August 2006, General Manager Cortez, Placer Dome Nevada USA.	
 	 	 	 	 	
Greg Hawkins (42) 
 London, England	 	President and Chief Executive Officer, African Barrick Gold	 	President and Chief Executive Officer, African Barrick Gold; prior to March 2010, Chief Financial Officer, Australia-Pacific RBU of the Company; prior to June 2006, Manager, Reporting & Analysis, Australia/Africa RBU of the Company.	
 
Mr. Cohen, a director of the Company, was a director of Haynes International, Inc. and Collins & Aikman Inc., each a company which during the past ten years has made a proposal under legislation relating to bankruptcy or insolvency or instituted an arrangement with creditors while Mr. Cohen was acting as a director for such company or within one year of Mr. Cohen resigning from the board of directors. On March 29, 2004, Haynes International, Inc. and certain of its U.S. subsidiaries filed a voluntary petition for reorganization under Chapter 11 of the U.S. Bankruptcy Code . On May 17, 2005, Collins & Aikman Inc. and substantially all of its U.S. operating subsidiaries filed a voluntary petition for reorganization under Chapter 11 of the U.S. Bankruptcy Code. Mr. Mulroney, a director of the Company, is a director of Quebecor World Inc., a company which during the past ten years has made a proposal under legislation relating to bankruptcy or insolvency or instituted an arrangement with creditors while Mr. Mulroney was acting as a director for such company. On January 21, 2008, Quebecor World Inc. and substantially all of its U.S. operating subsidiaries filed a voluntary petition for creditor protection under the Canadian Companies’ Creditors Arrangement Act and Chapter 11 of the U.S. Bankruptcy Code .
 
AUDIT COMMITTEE
 
Audit Committee Mandate
 
Purpose
 
1.             The purpose of the Audit Committee (the “Committee”) of the Board of Directors (the “Board”) is to assist the Board in its oversight of: (i) the financial reporting process and the quality, transparency and integrity of the Company’s financial statements and other related public disclosures; (ii) the Company’s internal controls over financial reporting; (iii) the Company’s compliance with legal and regulatory requirements relevant to the financial statements and financial reporting; (iv) the external auditors’ qualifications and independence; and (v) the performance of the internal audit function and the external auditors.
 
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2.             The function of the Committee is oversight.  The members of the Committee are not full-time employees of the Company.  The Company’s management is responsible for the preparation of the Company’s financial statements in accordance with applicable accounting standards and applicable laws and regulations.  The Company’s external auditors are responsible for the audit or review, as applicable, of the Company’s financial statements in accordance with applicable auditing standards and laws and regulations.
 
Committee Responsibilities
 
3.             The Committee’s responsibilities shall include:
 
External Auditors
 
(a)                               retaining and terminating, and/or making recommendations to the Board of Directors and the shareholders with respect to the retention or termination of, an external auditing firm to conduct review engagements on a quarterly basis and an annual audit of the Company’s financial statements;
 
(b)                              communicating to the external auditors that they are ultimately accountable to the Board and the Committee as representatives of the shareholders;
 
(c)                               obtaining and reviewing an annual report prepared by the external auditors describing:  the firm’s internal quality-control procedures; any material issues raised by the most recent internal quality-control review, or peer review, of the firm, or by any inquiry or investigation by governmental or professional authorities, within the preceding five years, respecting one or more independent audits carried out by the firm, and any steps taken to deal with any such issues;
 
(d)                              evaluating the independence of the external auditor and any potential conflicts of interest and (to assess the auditors’ independence) all relationships between the external auditors and the Company, including obtaining and reviewing an annual report prepared by the external auditors describing all relationships between the external auditors and the Company;
 
(e)                               approving, or recommending to the Board of Directors for approval, all audit engagement fees and terms, as well as all non-audit engagements of the external auditors prior to the commencement of the engagement;
 
(f)                                 reviewing with the external auditors the plan and scope of the quarterly review and annual audit engagements;
 
(g)                              setting hiring policies with respect to the employment of current or former employees of the external auditors;
 
Financial Reporting
 
(h)                              reviewing, discussing and recommending to the Board for approval the annual audited financial statements and related “management’s discussion and analysis of financial and operating results” prior to filing with securities regulatory authorities and delivery to shareholders;
 
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(i)                                  reviewing and discussing with the external auditors the results of their reviews and audit, any issues arising and management’s response, including any restrictions on the scope of the external auditors’ activities or requested information and any significant disagreements with management, and resolving any disputes;
 
(j)                                  reviewing, discussing and approving, or recommending to the Board for approval, the quarterly financial statements and quarterly “management’s discussion and analysis of financial and operating results” prior to filing with securities regulatory authorities and delivery to shareholders;
 
(k)                               reviewing and discussing with management and the external auditors the Company’s critical accounting policies and practices, material alternative accounting treatments, significant accounting and reporting judgments, material written communications between the external auditor and management (including management representation letters and any schedule of unadjusted differences) and significant adjustments resulting from the audit or review;
 
(l)                                  reviewing and discussing with management the Company’s earnings press releases, as well as type of financial information and earnings guidance (if any) provided to analysts and ratings agencies;
 
(m)                            reviewing and discussing such other relevant public disclosures containing financial information as the Committee may consider necessary or appropriate;
 
(n)                              reviewing and discussing with management the disclosure controls relating to the Company’s public disclosure of financial information, including information extracted or derived from the financial statements, and periodically assess the adequacy of such procedures;
 
Internal Controls Over Financial Reporting
 
(o)                              reviewing and discussing with management, the external auditors and the head of internal audit the effectiveness of the Company’s internal controls over financial reporting, including reviewing and discussing any significant deficiencies in the design or operation of internal controls, and any fraud, whether or not material, that involves management or other employees who have a significant role in the Company’s internal controls over financial reporting;
 
(p)                              discussing the Company’s process with respect to risk assessment (including fraud risk), risk management and the Company’s major financial risks and financial reporting exposures, all as they relate to internal controls over financial reporting, and the steps management has taken to monitor and control such risks;
 
(q)                              reviewing and discussing with management the Company’s Code of Business Conduct and Ethics and anti-fraud program and the actions taken to monitor and enforce compliance;
 
(r)                                 establishing procedures for:
 
(i)                             the receipt, retention and treatment of complaints regarding accounting, internal controls or auditing matters; and
 
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(ii)                          the confidential, anonymous submission by employees of the Company of concerns regarding questionable accounting, internal controls or auditing matters;
 
Internal Audit
 
(s)                               reviewing and discussing with management, the external auditors and the head of internal audit the responsibilities and effectiveness of the Company’s internal audit function, including reviewing the internal audit mandate, independence, organizational structure, internal audit plans and adequacy of resources, receiving periodic internal audit reports and meeting privately with the head of internal audit on a periodic basis;
 
(t)                                 approving in advance the retention and dismissal of the head of internal audit;
 
Other
 
(u)                              meeting separately, periodically, with each of management, the head of internal audit and the external auditors;
 
(v)                              reporting regularly to the Board;
 
(w)                            reviewing and assessing its mandate and recommending any proposed changes to the Corporate Governance and Nominating Committee of the Board on an annual basis; and
 
(x)                                evaluating the functioning of the Committee on an annual basis, including with reference to the discharge of its mandate, with the results to be reported to the Corporate Governance and Nominating Committee, which shall report to the Board.
 
Responsibilities of the Committee Chair
 
4.             The fundamental responsibility of the Committee Chair is to be responsible for the management and effective performance of the Committee and provide leadership to the Committee in fulfilling its mandate and any other matters delegated to it by the Board.  To that end, the Committee Chair’s responsibilities shall include:
 
(a)                                      working with the Chairman of the Board, the Chief Executive Officer and the Secretary to establish the frequency of Committee meetings and the agendas for meetings;
 
(b)                                     providing leadership to the Committee and presiding over Committee meetings;
 
(c)                                      facilitating the flow of information to and from the Committee and fostering an environment in which Committee members may ask questions and express their viewpoints;
 
(d)                                     reporting to the Board with respect to the significant activities of the Committee and any recommendations of the Committee;
 
(e)                                      leading the Committee in annually reviewing and assessing the adequacy of its mandate and evaluating its effectiveness in fulfilling its mandate; and
 
(f)                                        taking such other steps as are reasonably required to ensure that the Committee carries out its mandate.
 
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Powers
 
5.             The Committee shall have the authority, including approval of fees and other retention terms, to obtain advice and assistance from outside legal, accounting or other advisors in its sole discretion, at the expense of the Company, which shall provide adequate funding for such purposes.  The Company shall also provide the Committee with adequate funding for the ordinary administrative expenses of the Committee.  The Committee shall have unrestricted access to information, management, the external auditors and the head of internal audit, including private meetings, as it considers necessary or appropriate to discharge its duties and responsibilities.  The Committee may, in its discretion, delegate all or a portion of its duties and responsibilities to a subcommittee of the Committee.
 
Composition
 
6.             The Committee shall be appointed by the Board annually and shall be comprised of a minimum of three directors.  If an appointment of members of the Committee is not made as prescribed, the members shall continue as such until their successors are appointed.
 
7.             All of the members of the Committee shall be directors whom the Board has determined are independent, taking into account the applicable rules and regulations of securities regulatory authorities and/or stock exchanges.
 
8.             Each member of the Committee shall be “financially literate” and at least one member of the Committee shall have “accounting or related financial management expertise”(1). At least one member of the Committee shall be an “audit committee financial expert”, as defined in the applicable rules and regulations of securities regulatory authorities and/or stock exchanges.

9.             If a Committee member simultaneously serves on the audit committee of more than three public companies, the Board shall make a determination as to whether such service impairs the ability of such member to serve effectively on the Committee and disclose such determination in the Company’s annual proxy statement.
 
Meetings
 
10.           The Committee shall have a minimum of four meetings per year, to coincide with the Company’s financial reporting cycle.  Additional meetings will be scheduled as considered necessary or appropriate, including to consider specific matters at             the request of the external auditors or the head of internal audit.
 
11.           The time and place of the meetings of the Committee, the calling of meetings and the procedure in all things at such meetings shall be determined by the Chairman of the Committee.

(1) For purposes of this mandate, “financially literate” means the ability to read and understand a balance sheet, an income statement, a cash flow statement and the related notes that present a breadth and level of complexity of accounting issues that are generally comparable to the breadth and complexity of issues that can reasonably be expected to be raised by the Company’s financial statements, and “accounting or related financial management expertise” means the ability to analyze and interpret a full set of financial statements, including the related notes that present a breadth and level of complexity of accounting issues that are generally comparable to the breadth and complexity of issues that can reasonably be expected to be raised by the Company’s financial statements.
 
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Composition of the Audit Committee
 
The Audit Committee is comprised entirely of independent directors (D.J. Carty, P.A. Crossgrove, R.M. Franklin and S.J. Shapiro). There were six meetings of the Audit Committee in 2010. All of the members of the Committee attended all of the meetings held in 2010, except Mr. Carty attended five out of six meetings.
 
All of the members of the Audit Committee are financially literate and at least one member has accounting or related financial management expertise. Barrick’s Board of Directors has determined that S.J. Shapiro, a member of the Audit Committee, is an “audit committee financial expert” as defined by SEC rules and is independent, as that term is defined by the New York Stock Exchange’s corporate governance standards applicable to Barrick.
 
The rules adopted by the SEC indicate that the designation of Mr. Shapiro as an audit committee financial expert will not deem him to be an “expert” for any purpose or impose any duties, obligations or liability on Mr. Shapiro that are greater than those imposed on members of the Audit Committee and Barrick’s Board of Directors who do not carry this designation. Other members of the Audit Committee are also experienced audit committee members and may qualify as “audit committee financial experts”; however, the Board of Directors has only made the specific determination in respect of Mr. Shapiro.
 
Participation on Other Audit Committees
 
The Company does not restrict the number of other audit committees on which members of its Audit Committee may serve. No member of the Audit Committee currently serves on the audit committee of more than three publicly-traded companies.
 
Audit Committee Pre-Approval Policies and Procedures
 
Barrick’s Audit Committee has adopted a pre-approval policy with respect to permitted non-audit services. Under this policy, subject to certain conditions, specified audit-related services, tax-related non-audit services, audit services and certain permitted non-audit services may be presented to the Audit Committee for pre-approval as a category of services on an annual or project basis. On a quarterly basis, management of Barrick is required to update the Audit Committee in respect of the actual amount of fees in comparison to the pre-approved estimate. Following the annual pre-approval, on an interim basis, management of Barrick is permitted to approve statutory, compliance and subsidiary audits and additional audit-related services and specified non-audit services, provided that the estimated fees for such services fall within specified dollar limits.  Additional audit-related services and specified non-audit services that exceed the dollar thresholds and all additional non-audit services, including tax-related non-audit services, require the pre-approval of the Audit Committee (or if within a specified dollar threshold, the Committee Chairman).
 
External Auditor Service Fees
 
PricewaterhouseCoopers LLP are the auditors of Barrick’s Consolidated Financial Statements. The following PricewaterhouseCoopers LLP fees were incurred by Barrick in each of the years ended December 31, 2010 and 2009 for professional services rendered to Barrick:
 
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Fees 
 (amount in millions)	 	2010	 	2009	 	
 	 	 	 	 	 	
Audit Fees (1)	 	$	8.5	 	$	7.4	 	
Audit-Related Fees (2)	 	4.8	 	4.3	 	
Tax compliance and advisory fees	 	1.2	 	0.9	 	
All Other Fees(3)	 	0.2	 	0.1	 	
 	 	 	 	 	 	
Total	 	$	14.7	 	$	12.7	 	

(1)   The classification of fees is based on applicable Canadian securities laws and SEC definitions.  Audit fees have increased $1.1 million from 2009, $1.0 million of which is related to movements in foreign exchange rates against the U.S. dollar in the jurisdictions in which audit services are provided.
 
(2)   In 2010, audit-related fees primarily relate to fees paid for services in connection with the IFRS conversion project ($1.7 million) and in connection with the offering of equity securities of ABG ($3.0 million) paid in early 2010.  In 2009, audit-related fees primarily related to fees paid for services in connection with the Company’s offerings of debt and equity securities ($0.4 million in 2009), and $3.6 million of audit-related fees related to services in connection with the offering of equity securities of ABG.
 
(3)   In 2009, All Other Fees comprise amounts paid for accounting and internal audit software applications and accounting research services.
 
INTERNAL CONTROL OVER FINANCIAL REPORTING AND DISCLOSURE CONTROLS AND PROCEDURES
 
Disclosure controls and procedures are designed to ensure that material information relating to Barrick, and its consolidated subsidiaries, is accumulated and communicated on a timely basis to appropriate members of Barrick’s management, including Barrick’s Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure. Disclosure controls and procedures apply to various disclosures, including reports filed with securities regulatory agencies.
 
Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial information, including information contained in Barrick’s 2010 Annual Report and this Annual Information Form. Internal control over financial reporting includes those policies and procedures that pertain to the preparation of financial statements prepared for external purposes in accordance with generally accepted accounting principles.
 
An evaluation was carried out under the supervision of and with the participation of Barrick’s management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures and internal controls over financial reporting (as defined in rules adopted by the SEC) as at December 31, 2010. Based on that evaluation, Barrick’s Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures and internal control over financial reporting were effective as at December 31, 2010. For additional information as regards the effectiveness of internal control over financial reporting, see “Management’s Report on Internal Control Over Financial Reporting” in our 2010 Annual Report.
 
A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance with respect to the reliability of financial reporting and financial statement preparation. Accordingly, Barrick’s management, including Barrick’s Chief Executive Officer and our Chief Financial Officer, does not expect that Barrick’s internal control over financial reporting will
 
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prevent or detect all error and all fraud. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with policies or procedures may change.
 
Barrick will continue to periodically review its disclosure controls and procedures and internal control over financial reporting and may make modifications from time to time as considered necessary or desirable.  It is not expected that the Company’s conversion to IFRS described on pages 85 to 98 of the MD&A in Barrick’s 2010 Annual Report will impact the effectiveness of the disclosure controls and procedures or the internal control over financial reporting in 2011.
 
NON-GAAP FINANCIAL MEASURES
 
Total Cash Costs and Net Cash Costs per Ounce
 
Total cash costs per ounce/pound and net cash costs per ounce are non-GAAP financial measures.  Both measures include all costs absorbed into inventory, as well as royalties, by-product credits, and production taxes, and exclude inventory purchase accounting adjustments, unrealized gains/losses from non-hedge currency and commodity contracts, and amortization and accretion.  These measures also include the gross margin generated by the Company’s Barrick Energy business unit, which was acquired to mitigate Barrick’s exposure to oil prices as a credit against gold production costs.  The presentation of these statistics in this manner allows Barrick to monitor and manage those factors that impact production costs on a monthly basis.  These measures are calculated by dividing the aggregate of the applicable costs by gold ounces or copper pounds sold.  These measures are calculated on a consistent basis for the periods presented.
 
Under purchase accounting rules, Barrick records the fair value of acquired work in progress and finished goods inventories as at the date of acquisition.  As the acquired inventory is sold, any purchase accounting adjustments, reflected in the carrying amount of inventory at acquisition, impacts cost of sales.  The method of valuing these inventories is based on estimated selling prices less costs to complete and a reasonable profit margin.  Consequently, the fair values do not necessarily reflect costs to produce consistent with ore mined and processed into gold and copper after the acquisition.  Hence, Barrick has removed such costs from the Company’s cash costs measurements.  Many mining companies record the unrealized gains/losses from non-hedge currency and commodity contracts in other income, and therefore these amounts are not reflected in the cost of sales measures presented by these companies.  Consequently, Barrick believes that removing these unrealized gains/losses provides investors and analysts with a measure of the Company’s costs of production that is more comparable to the measures presented by other mining companies.  The Company has provided below reconciliations to illustrate the impact of excluding inventory purchase accounting adjustments and unrealized gains/losses from non-hedge currency and commodity contracts from Barrick’s total cash costs and net cash costs measures.
 
Barrick calculates total cash costs and net cash costs based on its equity interest in production from the Company’s mines.  The Company believes that using an equity interest presentation is a fairer, more accurate way to measure economic performance than using a consolidated basis.  For mines where Barrick holds less than a 100% share in the production, the Company excludes the economic share of gold production that flows to any partners who hold a non-controlling interest.  Consequently, for the Tulawaka mine, although Barrick fully consolidated the results of operations from this mine in the Company’s consolidated financial statements, Barrick’s production and total cash costs and net cash costs statistics only reflect its equity share of the production.
 
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Starting in 2008, Barrick provided a net cash costs measure which treats the gross margin from all non-gold sales, whether or not these non-gold metals are produced in conjunction with gold, as a credit against the cost of producing gold.  In 2009, Barrick began using this measure to evaluate the overall performance of the Company’s business on a consolidated basis.  A number of other gold producers present their costs net of the contribution from non-gold sales.  Barrick believes that including a measure of net cash costs per ounce on this basis provides investors and analysts with information with which to compare the Company’s performance to other gold producers, and to better assess the overall performance of Barrick’s business.  In addition, this measure provides information to enable investors and analysts to understand the importance of non-gold revenues to the Company’s cost structure.
 
Cash costs per ounce/pound statistics are intended to provide additional information, do not have any standardized meaning prescribed by US GAAP and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with US GAAP.  The measures are not necessarily indicative of operating profit or cash flow from operations as determined under US GAAP.  Other companies may calculate these measures differently.
 
Reconciliation of Cost of Sales to Total Cash Costs per ounce/pound

 	 	For the years ended December 31	 	
 	 	Gold	 	Copper	 	
($ millions, except per ounce/pound information in dollars)	 	2010	 	2009	 	2008	 	2010	 	2009	 	2008	 	
Cost of sales	 	$	3,789	 	$	3,407	 	$	3,377	 	$	345	 	$	361	 	$	315	 	
Cost of sales applicable to discontinued operations	 	10	 	24	 	49	 	88	 	83	 	121	 	
Cost of sales applicable to non-controlling interests(1)	 	(107	)	(12	)	(14	)	—	 	—	 	—	 	
Cost of sales applicable to ore purchase arrangement	 	(104	)	(29	)	—	 	—	 	—	 	—	 	
Inventory purchase accounting adjustments	 	—	 	—	 	(16	)	—	 	—	 	—	 	
Unrealized non-hedge gains/(losses) on currency and commodity contracts	 	5	 	7	 	(14	)	—	 	—	 	—	 	
Impact of Barrick Energy	 	(56	)	(20	)	(14	)	—	 	—	 	—	 	
Total cash costs	 	$	3,537	 	$	3,377	 	$	3,368	 	$	433	 	$	444	 	$	436	 	
Ounces/pounds sold - consolidated basis (000s ounces/millions pounds)	 	7,963	 	7,307	 	7,658	 	391	 	380	 	367	 	
Ounces/pounds sold- non-controlling interest (000s ounces)(1)	 	(229	)	(28	)	(63	)	—	 	—	 	—	 	
Ounces/pounds sold - equity basis (000s ounces/millions pounds)	 	7,734	 	7,279	 	7,595	 	391	 	380	 	367	 	
Total cash costs per ounce/per pound	 	$	457	 	$	464	 	$	443	 	$	1.11	 	$	1.17	 	$	1.19	 	

(1)  Relates to ABG’s partner’s 30% interest in Tulawaka.
 
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Net Cash Costs per ounce

($ millions, except per ounce/pound data in dollars)	 	For the years ended December 31	 	For the three months
 ended December 31	 	
 	 	2010	 	2009	 	2008	 	2010	 	2009	 	
Ounces gold sold — equity basis (000s)	 	7,734	 	7,279	 	7,595	 	1,825	 	1,797	 	
Total cash costs per ounce — equity basis	 	$	457	 	$	464	 	$	443	 	$	486	 	$	465	 	
Revenues from copper sales	 	$	1,102	 	$	943	 	$	1,007	 	$	333	 	$	398	 	
Revenues from copper sales of discontinued operations	 	244	 	212	 	221	 	74	 	—	 	
Unrealized non-hedge gold/copper derivative (gains) losses	 	(14	)	49	 	(23	)	2	 	13	 	
Unrealized mark-to-market provisional price adjustments	 	—	 	(4	)	38	 	—	 	(4	)	
Net revenues from copper excluding unrealized non-hedge gains/losses from copper contracts	 	$	1,332	 	$	1,200	 	$	1,243	 	$	409	 	$	407	 	
Copper cost of sales per consolidated statement of income	 	345	 	361	 	315	 	93	 	128	 	
Copper cost of sales from discontinued operations	 	88	 	83	 	121	 	23	 	—	 	
Copper credits	 	899	 	756	 	807	 	293	 	279	 	
Copper credits per ounce	 	116	 	104	 	106	 	160	 	155	 	
Net cash costs per ounce	 	$	341	 	$	360	 	$	337	 	$	326	 	$	310	 	
 
Realized Price
 
Realized price is a non-GAAP financial measure which excludes from sales:
 
·         Unrealized gains and losses on non-hedge derivative contracts;
 
·         Unrealized mark-to-market gains and losses on provisional pricing from copper and gold sales contracts; and
 
·         Export duties
 
This measure is intended to enable management to better understand the price realized in each reporting period for gold and copper sales because unrealized mark-to-market value of non-hedge gold and copper derivatives and unrealized mark-to-market gains and losses on outstanding receivables from copper and gold sales contracts are subject to change each period due to changes in market factors such as spot and forward gold and copper prices such that prices ultimately realized may differ from those recorded.  The exclusion of such unrealized mark-to-market gains and losses from the presentation of this performance measure enables investors to understand performance based on the realized proceeds of selling gold and copper production.  The gains and losses on non-hedge derivatives and receivable balances relate to instruments/balances that mature in future periods, at which time the gains and losses will become realized.  The amounts of these gains and losses reflect fair values based on market valuation assumptions at the end of each period and do not necessarily represent the amounts that will become realized on maturity.  For those reasons, Barrick believes that this measure provides a more accurate reflection of the Company’s past performance and is a better indicator of its expected performance in future periods.
 
Starting with second quarter 2009, Barrick began to adjust its realized price calculation for export duties that are paid upon sale and are currently netted against revenues.  Barrick believes this provides investors and analysts with a more accurate measure with which to compare to market gold prices and to assess the Company’s gold sales performance.
 
The realized price measure is intended to provide additional information, and does not have any standardized meaning prescribed by US GAAP and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with US GAAP.  The measure is not necessarily
 
133 

 
indicative of sales as determined under US GAAP.  Other companies may calculate this measure differently. The following table reconciles realized prices to the most directly comparable US GAAP measure.
 
Reconciliation of Sales to Realized Price per ounce/per pound

($ millions, except per ounce/pound information in dollars)	 	Gold	 	Copper	 	
For the years ended December 31	 	2010	 	2009	 	2008	 	2010	 	2009	 	2008	 	
Sales	 	$	9,699	 	$	7,135	 	$	6,577	 	$	1,102	 	$	943	 	$	1,007	 	
Sales attributable to discontinued operations	 	43	 	56	 	79	 	244	 	212	 	221	 	
Sales applicable to non-controlling interests	 	(204	)	(27	)	(56	)	—	 	—	 	—	 	
Sales attributable to ore purchase agreement	 	(111	)	(26	)	—	 	—	 	—	 	—	 	
Unrealized non-hedge gold/copper derivative (gains) losses	 	—	 	—	 	2	 	(14	)	49	 	(23	)	
Unrealized mark-to-market provisional price adjustments	 	(1	)	—	 	(1	)	—	 	(4	)	38	 	
Export duties	 	68	 	30	 	23	 	—	 	—	 	—	 	
Sales — as adjusted	 	$	9,494	 	$	7,168	 	$	6,624	 	$	1,332	 	$	1,200	 	$	1,243	 	
Ounces/pounds sold (000s ounces/millions pounds)	 	7,734	 	7,279	 	7,595	 	391	 	380	 	367	 	
Realized gold/copper price per ounce/pound	 	$	1,228	 	$	985	 	$	872	 	$	3.41	 	$	3.16	 	$	3.39	 	
 
Adjusted Net Income (Adjusted Net Income per Share) and Return on Equity
 
Adjusted net income is a non-GAAP financial measure which excludes the following from net income:
 
·         Elimination of Gold Sales Contracts;
 
·         Non-recurring tax adjustments;
 
·         Impairment charges related to goodwill, property, plant and equipment, and investments;
 
·         Gains/losses on acquisitions/dispositions;
 
·         Foreign currency translation gains/losses;
 
·         Non-recurring restructuring costs; and
 
·         Unrealized gains/losses on non-hedge derivative instruments
 
Management uses this measure internally to evaluate the underlying operating performance of the Company as a whole for the reporting periods presented, and to assist with the planning and forecasting of future operating results.   Barrick believes that adjusted net income allows investors and analysts to better evaluate the results of the underlying business of the Company.   While the adjustments to net income in this measure include items that are recurring, management believes that adjusted net income is a useful measure of the Company’s performance because impairment charges and gains/losses on asset acquisitions/dispositions do not reflect the underlying operating performance of our core mining business and are not necessarily indicative of future operating results.   Further, foreign currency translation gains/losses and unrealized gains/losses from non-hedge derivative contracts are not necessarily reflective of the underlying operating results for the reporting periods presented.
 
As noted, the Company uses this measure for its own internal purposes.  Management’s internal budgets and forecasts and public guidance do not reflect potential impairment charges, potential gains/losses on the acquisition/disposition of assets, foreign currency translation gains/losses, or unrealized gains/losses on non-hedge derivative contracts.  Consequently, the presentation of adjusted net income enables investors and analysts to better understand the underlying operating performance of our core mining business through the eyes of management.  Management periodically evaluates the
 
134 

 
components of adjusted net income based on an internal assessment of performance measures that are useful for evaluating the operating performance of our business segments and a review of the non-GAAP measures used by mining industry analysts and other mining companies.
 
Barrick also presents return on equity as a measure which is calculated by dividing adjusted net income by average shareholders’ equity.  Management believes this to be a useful indicator of the Company’s performance.
 
In 2009, Barrick updated the items included in its reconciliation of net income to adjusted net income for items that are not reflective of the ongoing operational results.  These adjustments will result in a more meaningful adjusted net income for investors and analysts to assess the Company’s current operating performance and to predict future operating results:
 
·         Added “Effect of tax rate changes” (renamed “non-recurring tax adjustments” for the 2010 reporting period) to exclude the effect of corporate income tax rate changes beyond the control of management.
 
·         Added “Elimination of gold sales contracts” to exclude any gains/losses related to the elimination of the contracts.  Included in this line is the loss incurred upon initial recognition of the liability and any gains/losses due to mark-to-market adjustments through the date contracts were settled.
 
·         Added “Non-recurring restructuring costs” to exclude the non-recurring charges related to our Organization Review.  Restructuring costs related to our mine closures are not included in this adjustment.
 
·         Adjusted “Gains/losses on the disposition of long-lived assets” to “Gains/losses on acquisitions/dispositions” to include bargain purchase gains and gains on step acquisitions.
 
Adjusted net income is intended to provide additional information only and does not have any standardized meaning prescribed by US GAAP and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with US GAAP.  The measure is not necessarily indicative of operating profit or cash flow from operations as determined under US GAAP.  Other companies may calculate this measure differently.  The following table reconciles this non-GAAP measure to the most directly comparable US GAAP measure.

 	 	For the years ended December 31	 	For the three months
ended December 31	 	
($ millions, except per share amounts in dollars)(1)	 	2010	 	2009	 	2008	 	2010	 	2009	 	
Net income (loss)	 	$	3,274	 	$	(4,274	)	$	785	 	$	896	 	$	215	 	
Elimination of gold sales contracts	 	—	 	5,901	 	—	 	—	 	241	 	
Non-recurring tax adjustments	 	(4	)	59	 	—	 	74	 	59	 	
Impairment charges related to intangibles, property, plant and equipment, and investments	 	5	 	259	 	899	 	—	 	102	 	
Gains on acquisitions/dispositions(2)	 	(41	)	(85	)	(178	)	(10	)	(1	)	
Foreign currency translation (gains)/losses(3)	 	34	 	(95	)	135	 	(11	)	(22	)	
Restructuring costs	 	43	 	15	 	—	 	3	 	6	 	
Unrealized (gains)/losses on non-hedge derivative instruments	 	(32	)	30	 	20	 	(5	)	4	 	
Adjusted net income	 	$	3,279	 	$	1,810	 	$	1,661	 	$	947	 	$	604	 	
Net income per share(4)	 	3.32	 	(4.73	)	0.90	 	0.90	 	0.22	 	
Adjusted net income per share(4)	 	3.32	 	2.00	 	1.90	 	$	0.95	 	$	0.61	 	
Average Shareholders’ Equity	 	$	17,064	 	$	15,170	 	$	15,267	 	 	 	 	 	
Return on equity(5)	 	19	%	12	%	11	%	 	 	 	 	

(1)                                   Amounts presented in this table are post-tax.
 
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(2)                                   Includes gains recorded on the Cerro Casale acquisition of $29 million.
(3)                                  Includes a currency translation gain of $70 million recorded in first quarter 2009 relating to Canadian deferred tax assets due to an election to adopt a US dollar functional currency for Canadian tax purposes.
(4)                                   Calculated using weighted average number of shares outstanding under the basic method of earnings per share.
(5)                                   Calculated as adjusted net income divided by average shareholders’ equity
 
INTERESTS OF EXPERTS
 
PricewaterhouseCoopers LLP, the auditors of the Company, has advised the Company that it is independent of Barrick Gold Corporation in accordance with the Rules of Professional Conduct of the Institute of Chartered Accountants of Ontario and has complied with the SEC’s rules on auditor independence.
 
ADDITIONAL INFORMATION
 
Additional information, including directors’ and officers’ remuneration and indebtedness, principal holders of the Company’s securities and options to purchase securities is contained in the Company’s Management Information Circular and Proxy Statement dated March 22, 2011. As well, additional financial information is provided in the Company’s 2010 Annual Report, in the Company’s Consolidated Financial Statements (as prepared under U.S. GAAP) and Management’s Discussion and Analysis of Financial and Operating Results for the year ended December 31, 2010 (as prepared under U.S. GAAP), each of which is available electronically from the Canadian System for Electronic Document Analysis and Retrieval (SEDAR) (www.sedar.com) and from the SEC’s Electronic Document Gathering and Retrieval System (EDGAR) (www.sec.gov).  Additional Information relating to Barrick is available on SEDAR at www.sedar.com and on EDGAR at www.sec.gov.
 
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Exhibit 99.2
 
Barrick Financial Report 2010 | Management’s Report on Internal Controls Over Financial Reporting
 
Management’s Report on Internal Controls Over Financial Reporting
 
Barrick’s Management is responsible for establishing and maintaining adequate internal control over financial reporting.
 
Barrick’s Management assessed the effectiveness of the Company’s internal control over financial reporting as at December 31, 2010. Barrick’s Management used the Committee of Sponsoring Organizations of the Treadway Commission (COSO) framework to evaluate the effectiveness of Barrick’s internal control over financial reporting. Based on Barrick Management’s assessment, Barrick’s internal control over financial reporting is effective as at December 31, 2010.
 
The effectiveness of the Company’s internal control over financial reporting as at December 31, 2010 has been audited by PricewaterhouseCoopers LLP, Chartered Accountants, as stated in their report which is located on pages 102—103 of Barrick’s 2010 Annual Financial Statements.
 
1 

Exhibit 99.3

 
Management’s Responsibility
 
Management’s Responsibility
 
Management’s Responsibility for Financial Statements
 
The accompanying consolidated financial statements have been prepared by and are the responsibility of the Board of Directors and Management of the Company.
 
The consolidated financial statements have been prepared in accordance with United States generally accepted accounting principles and reflect Management’s best estimates and judgments based on currently available information. The Company has developed and maintains a system of internal accounting controls in order to ensure, on a reasonable and cost effective basis, the reliability of its financial information.
 
The consolidated financial statements have been audited by PricewaterhouseCoopers LLP, Chartered Accountants. Their report outlines the scope of their examination and opinion on the consolidated financial statements.

/s/ Jamie C. Sokalsky	 	
 	 	
Jamie C. Sokalsky	 	
Executive Vice President	 	
and Chief Financial Officer	 	
Toronto, Canada	 	
February 16, 2011	 	
 
100 

 
Barrick Financial Report 2010 | Management’s Report on Internal Controls Over Financial Reporting
 
Management’s Report on Internal Controls Over Financial Reporting
 
Barrick’s Management is responsible for establishing and maintaining adequate internal control over financial reporting.
 
Barrick’s Management assessed the effectiveness of the Company’s internal control over financial reporting as at December 31, 2010. Barrick’s Management used the Committee of Sponsoring Organizations of the Treadway Commission (COSO) framework to evaluate the effectiveness of Barrick’s internal control over financial reporting. Based on Barrick Management’s assessment, Barrick’s internal control over financial reporting is effective as at December 31, 2010.
 
The effectiveness of the Company’s internal control over financial reporting as at December 31, 2010 has been audited by PricewaterhouseCoopers LLP, Chartered Accountants, as stated in their report which is located on pages 102—103 of Barrick’s 2010 Annual Financial Statements.
 
101 

 
Independent Auditor’s Report
 
February 16, 2011
 
To the Shareholders of
Barrick Gold Corporation
 
We have completed integrated audits of Barrick Gold Corporation’s (the Company) 2010, 2009 and 2008 consolidated financial statements and of its internal control over financial reporting as at December 31, 2010. Our opinions, based on our audits, are presented below.
 
Report on the consolidated financial statements
 
We have audited the accompanying consolidated financial statements of Barrick Gold Corporation, which comprise the consolidated balance sheets as at December 31, 2010 and December 31, 2009 and the consolidated statements of income, cash flow, equity and comprehensive income for each of the years in the three-year period ended December 31, 2010 and the related notes.
 
Management’s responsibility for the consolidated financial statements
 
Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with accounting principles generally accepted in the United States of America and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.
 
Auditor’s responsibility
 
Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with Canadian generally accepted auditing standards and the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform an audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement. Canadian generally accepted auditing standards also require that we comply with ethical requirements.
 
An audit involves performing procedures to obtain audit evidence, on a test basis, about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Company’s preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of accounting principles and policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.
 
We believe that the audit evidence we have obtained in our audits is sufficient and appropriate to provide a basis for our audit opinion on the consolidated financial statements.
 
102 

 
Barrick Financial Report 2010 | Independent Auditor’s Report
 
Opinion
 
In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of Barrick Gold Corporation as at December 31, 2010 and December 31, 2009 and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2010 in accordance with accounting principles generally accepted in the United States of America.
 
Report on internal control over financial reporting
 
We have also audited Barrick Gold Corporation’s internal control over financial reporting as at December 31, 2010, based on criteria established in Internal Control — Integrated Framework, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
 
Management’s responsibility for internal control over financial reporting
 
Management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in Management’s Report on Internal Control Over Financial Reporting.
 
Auditor’s responsibility
 
Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We conducted our audit of internal control over financial reporting in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.
 
An audit of internal control over financial reporting includes obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we consider necessary in the circumstances. We believe that our audit provides a reasonable basis for our audit opinion on the Company’s internal control over financial reporting.
 
Definition of internal control over financial reporting
 
A Company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company’s assets that could have a material effect on the financial statements.
 
Inherent limitations
 
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
 
Opinion
 
In our opinion, Barrick Gold Corporation maintained, in all material respects, effective internal control over financial reporting as at December 31, 2010 based on criteria established in Internal Control — Integrated Framework issued by COSO.

	 	
 	 	
Chartered Accountants, Licensed Public Accountants	 	
Toronto, Canada	 	
 
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Financial Statements
 
Consolidated Statements of Income

Barrick Gold Corporation
For the years ended December 31 (in millions of United States dollars, except per share data)	 	2010	 	2009	 	2008	 	
Sales (notes 4 and 5)	 	$	10,924	 	$	8,136	 	$	7,613	 	
Costs and expenses	 	 	 	 	 	 	 	
Cost of sales (notes 4 and 6)(1)	 	4,201	 	3,807	 	3,706	 	
Amortization and accretion (notes 4 and 15b)	 	1,196	 	1,073	 	957	 	
Corporate administration	 	154	 	171	 	155	 	
Exploration (notes 4 and 7)	 	180	 	141	 	198	 	
Project development expense (notes 4 and 7)	 	153	 	85	 	242	 	
Elimination of gold sales contracts	 	—	 	5,933	 	—	 	
Other expense (note 8a)	 	463	 	343	 	302	 	
Impairment charges (note 8b)	 	7	 	277	 	598	 	
 	 	6,354	 	11,830	 	6,158	 	
Interest income	 	14	 	10	 	39	 	
Interest expense (note 20b)	 	(121	)	(57	)	(21	)	
Other income (note 8c)	 	124	 	112	 	291	 	
Write-down of investments (note 8b)	 	—	 	(1	)	(205	)	
 	 	17	 	64	 	104	 	
Income (loss) from continuing operations before income taxes and other items	 	4,587	 	(3,630	)	1,559	 	
Income tax expense (note 9)	 	(1,370	)	(648	)	(594	)	
Loss from equity investees (note 12)	 	(41	)	(87	)	(64	)	
Income (loss) from continuing operations before non-controlling interests	 	3,176	 	(4,365	)	901	 	
Income (loss) from discontinued operations (note 3i)	 	121	 	97	 	(104	)	
Income (loss) before non-controlling interests	 	3,297	 	(4,268	)	797	 	
Non-controlling interests (note 27)	 	(23	)	(6	)	(12	)	
Net income (loss)	 	$	3,274	 	$	(4,274	)	$	785	 	
Earnings (loss) per share data (note 10)	 	 	 	 	 	 	 	
Income (loss) from continuing operations	 	 	 	 	 	 	 	
Basic	 	$	3.19	 	$	(4.84	)	$	1.02	 	
Diluted	 	$	3.16	 	$	(4.84	)	$	1.01	 	
Income (loss) from discontinued operations	 	 	 	 	 	 	 	
Basic	 	$	0.13	 	$	0.11	 	$	(0.12	)	
Diluted	 	$	0.12	 	$	0.11	 	$	(0.12	)	
Net income (loss)	 	 	 	 	 	 	 	
Basic	 	$	3.32	 	$	(4.73	)	$	0.90	 	
Diluted	 	$	3.28	 	$	(4.73	)	$	0.89	 	

(1) Exclusive of amortization.
 
The accompanying notes are an integral part of these consolidated financial statements.
 
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Barrick Financial Report 2010 | Financial Statements
 
Consolidated Statements of Cash Flow

Barrick Gold Corporation 
For the years ended December 31 (in millions of United States dollars)	 	2010	 	2009	 	2008	 	
Operating Activities	 	 	 	 	 	 	 	
Net income (loss)	 	$	3,274	 	$	(4,274	)	$	785	 	
Amortization and accretion (notes 4 and 15b)	 	1,196	 	1,073	 	957	 	
Impairment charges and write-down of investments (note 8b)	 	7	 	278	 	803	 	
Income tax expense (note 9)	 	1,370	 	648	 	594	 	
Income taxes paid	 	(647	)	(376	)	(575	)	
Net proceeds taxes paid	 	(85	)	(66	)	—	 	
Increase in inventory	 	(403	)	(372	)	(370	)	
Elimination of gold sales contracts	 	—	 	5,933	 	—	 	
Payment on settlement for gold sales contracts	 	(656	)	(5,221	)	—	 	
Gain on sale/acquisition of long-lived assets (note 8c)	 	(50	)	(85	)	(187	)	
(Income) loss from discontinued operations (note 3i)	 	(121	)	(97	)	104	 	
Operating cash flows of discontinued operations (note 3i)	 	(8	)	7	 	26	 	
Other operating activities (note 11a)	 	250	 	230	 	117	 	
Net cash provided by (used in) operating activities	 	4,127	 	(2,322	)	2,254	 	
Investing Activities	 	 	 	 	 	 	 	
Property, plant and equipment	 	 	 	 	 	 	 	
Capital expenditures (note 4)	 	(3,323	)	(2,351	)	(1,749	)	
Sales proceeds	 	61	 	10	 	185	 	
Acquisitions (note 3)	 	(813	)	(101	)	(2,174	)	
Investments (note 12)	 	 	 	 	 	 	 	
Purchases	 	(61	)	(3	)	(18	)	
Sales	 	15	 	7	 	76	 	
Decrease in restricted cash	 	—	 	113	 	18	 	
Investing cash flows of discontinued operations (note 3i)	 	—	 	(3	)	(27	)	
Other investing activities (note 11b)	 	(51	)	(87	)	(231	)	
Net cash used in investing activities	 	(4,172	)	(2,415	)	(3,920	)	
Financing Activities	 	 	 	 	 	 	 	
Capital stock	 	 	 	 	 	 	 	
Proceeds on exercise of stock options	 	127	 	65	 	74	 	
Proceeds on common share offering (note 25)	 	—	 	3,885	 	—	 	
Proceeds from public issuance of common shares by a subsidiary (note 3e)	 	884	 	—	 	—	 	
Long-term debt (note 20b)	 	 	 	 	 	 	 	
Proceeds	 	782	 	2,154	 	2,717	 	
Repayments	 	(149	)	(397	)	(1,603	)	
Dividends (note 25)	 	(436	)	(369	)	(349	)	
Funding from non-controlling interests	 	114	 	304	 	88	 	
Deposit on silver sale agreement	 	137	 	213	 	—	 	
Financing cash flows of discontinued operations (note 3i)	 	—	 	—	 	—	 	
Other financing activities (note 11c)	 	(25	)	(26	)	(34	)	
Net cash provided by financing activities	 	1,434	 	5,829	 	893	 	
Effect of exchange rate changes on cash and equivalents	 	15	 	35	 	3	 	
Net increase (decrease) in cash and equivalents	 	1,404	 	1,127	 	(770	)	
Cash and equivalents at beginning of period (note 20a)	 	2,564	 	1,437	 	2,207	 	
Cash and equivalents at end of period (note 20a)	 	$	3,968	 	$	2,564	 	$	1,437	 	
 
The accompanying notes are an integral part of these consolidated financial statements.
 
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Financial Statements
 
Consolidated Balance Sheets

Barrick Gold Corporation
At December 31 (in millions of United States dollars)	 	2010	 	2009	 	
Assets	 	 	 	 	 	
Current assets	 	 	 	 	 	
Cash and equivalents (note 20a)	 	$	3,968	 	$	2,564	 	
Accounts receivable (note 14)	 	346	 	251	 	
Inventories (note 13)	 	1,852	 	1,540	 	
Other current assets (note 14)	 	947	 	524	 	
Assets of discontinued operations (note 3i)	 	—	 	59	 	
 	 	7,113	 	4,938	 	
Non-current assets	 	 	 	 	 	
Equity in investees (note 12a)	 	291	 	1,136	 	
Other investments (note 12b)	 	203	 	92	 	
Property, plant and equipment (note 15)	 	17,751	 	13,125	 	
Goodwill (note 17)	 	5,287	 	5,197	 	
Intangible assets (note 16)	 	140	 	66	 	
Deferred income tax assets (note 24)	 	467	 	949	 	
Other assets (note 18)	 	2,070	 	1,531	 	
Assets of discontinued operations (note 3i)	 	—	 	41	 	
Total assets	 	$	33,322	 	$	27,075	 	
Liabilities and Equity	 	 	 	 	 	
Current liabilities	 	 	 	 	 	
Accounts payable	 	$	1,511	 	$	1,221	 	
Current portion of long-term debt (note 20b)	 	14	 	54	 	
Other current liabilities (note 19)	 	964	 	475	 	
Liabilities of discontinued operations (note 3i)	 	—	 	23	 	
 	 	2,489	 	1,773	 	
Non-current liabilities	 	 	 	 	 	
Long-term debt (note 20b)	 	6,678	 	6,281	 	
Asset retirement obligations (note 22)	 	1,439	 	1,122	 	
Deferred income tax liabilities (note 24)	 	1,114	 	1,184	 	
Other liabilities (note 23)	 	868	 	1,145	 	
Liabilities of discontinued operations (note 3i)	 	—	 	23	 	
Total liabilities	 	12,588	 	11,528	 	
Equity	 	 	 	 	 	
Capital stock (note 25)	 	17,790	 	17,390	 	
Additional paid-in capital	 	288	 	—	 	
Retained earnings (deficit)	 	456	 	(2,382	)	
Accumulated other comprehensive income (note 26)	 	531	 	55	 	
Total shareholders’ equity	 	19,065	 	15,063	 	
Non-controlling interests (note 27)	 	1,669	 	484	 	
Total equity	 	20,734	 	15,547	 	
Contingencies and commitments (notes 15 and 30)	 	 	 	 	 	
Total liabilities and equity	 	$	33,322	 	$	27,075	 	
 
The accompanying notes are an integral part of these consolidated financial statements.
 
Signed on behalf of the Board,

/s/ Aaron Regent	 	/s/ Steven J. Shapiro	 	
 	 	 	 	
Aaron Regent, Director	 	Steven J. Shapiro, Director	 	
 
106 

 
Barrick Financial Report 2010 | Financial Statements
 
Consolidated Statements of Equity

Barrick Gold Corporation
For the years ended December 31 (in millions of United States dollars)	 	2010	 	2009	 	2008	 	
Common shares (number in thousands)	 	 	 	 	 	 	 	
At January 1	 	984,328	 	872,739	 	869,887	 	
Issued on public equity offering (note 25)	 	—	 	108,973	 	—	 	
Issued on exercise of stock options	 	4,760	 	2,349	 	2,383	 	
Issued on conversion of debentures (note 20b)	 	9,412	 	—	 	—	 	
Issued on redemption of exchangeable shares (note 25b)	 	—	 	267	 	469	 	
At December 31	 	998,500	 	984,328	 	872,739	 	
Common shares	 	 	 	 	 	 	 	
At January 1	 	$	17,390	 	$	13,372	 	$	13,273	 	
Issued on public equity offering (note 25)	 	—	 	3,926	 	—	 	
Issued on conversion of debentures (note 20b)	 	268	 	—	 	—	 	
Issued on exercise of stock options	 	127	 	65	 	74	 	
Recognition of stock option expense	 	14	 	20	 	25	 	
Other adjustments	 	(9	)	7	 	—	 	
At December 31	 	17,790	 	17,390	 	13,372	 	
Additional paid-in capital	 	 	 	 	 	 	 	
At January 1	 	—	 	—	 	—	 	
Recognized on initial public offering of African Barrick Gold (note 3e)	 	288	 	—	 	—	 	
At December 31	 	288	 	—	 	—	 	
Retained earnings (deficit)	 	 	 	 	 	 	 	
At January 1	 	(2,382	)	2,261	 	1,832	 	
Net income (loss)	 	3,274	 	(4,274	)	785	 	
Dividends (note 25)	 	(436	)	(369	)	(349	)	
Repurchase of preferred shares of a subsidiary	 	—	 	—	 	(7	)	
At December 31	 	456	 	(2,382	)	2,261	 	
Accumulated other comprehensive income (loss) (note 26)	 	531	 	55	 	(356	)	
Total shareholders’ equity	 	19,065	 	15,063	 	15,277	 	
Non-controlling interests (note 27)	 	 	 	 	 	 	 	
At January 1	 	484	 	182	 	82	 	
Net income attributable to non-controlling interests	 	23	 	6	 	12	 	
Funding from non-controlling interests	 	114	 	299	 	90	 	
Other increase (decrease) in non-controlling interests	 	1,048	 	(3	)	(2	)	
At December 31	 	1,669	 	484	 	182	 	
Total equity at December 31	 	$	20,734	 	$	15,547	 	$	15,459	 	
 
Consolidated Statements of Comprehensive Income

Barrick Gold Corporation	 	 	 	 	 	 	 	
For the years ended December 31 (in millions of United States dollars)	 	2010	 	2009	 	2008	 	
Net income (loss)	 	$	3,274	 	$	(4,274	)	$	785	 	
Other comprehensive income (loss), net of tax (note 26)	 	476	 	411	 	(507	)	
Comprehensive income (loss)	 	$	3,750	 	$	(3,863	)	$	278	 	
 
The accompanying notes are an integral part of these consolidated financial statements.
 
107 

 
Notes to Consolidated Financial Statements
 
Notes to Consolidated Financial Statements
 
Barrick Gold Corporation. Tabular dollar amounts in millions of United States dollars, unless otherwise shown. References to C$, A$, ZAR, CLP, PGK, TZS, JPY, ARS, GBP and EUR are to Canadian dollars, Australian dollars, South African rand, Chilean pesos, Papua New Guinea kina, Tanzanian schillings, Japanese yen, Argentinean pesos, British Pound Sterling and Euros, respectively.
 
1 · Nature of Operations
 
Barrick Gold Corporation (“Barrick” or the “Company”) principally engages in the production and sale of gold, as well as related activities such as exploration and mine development. We also produce significant amounts of copper and hold interests in oil and gas properties located in Canada through our oil and gas subsidiary, Barrick Energy. Our producing mines are concentrated in three regional business units: North America, South America, and Australia Pacific. We also hold a 73.9% equity interest in a listed company, African Barrick Gold plc (“ABG”), which includes our African gold mines and exploration properties. We sell our gold production into the world market and we sell our copper production into the world market and to private customers.
 
2 · Significant Accounting Policies
 
a) Basis of Preparation
 
These consolidated financial statements have been prepared under United States generally accepted accounting principles (“US GAAP”). To ensure comparability of financial information, certain prior year amounts have been reclassified to reflect current financial statement presentation.
 
b) Principles of Consolidation
 
These consolidated financial statements include the accounts of Barrick Gold Corporation and those entities that we have the ability to control either through voting rights or means other than voting rights. For these entities, we record 100% of the revenues, expenses, cash flows, assets and liabilities in our consolidated financial statements. For entities that we control but hold less than a 100% ownership interest, a non-controlling interest is recorded in the consolidated income statement to reflect the non-controlling interest’s share of the net income (loss), and a non-controlling interest is recorded in the consolidated balance sheet to reflect the non-controlling interest’s share of the net assets of the entity. For entities that are subject to joint control (“joint ventures” or “JVs”) we account for our interest using the equity method of accounting where our interest is held through a corporate structure.
 
For unincorporated JVs in which we hold an undivided interest in the assets and liabilities and receive our share of production from the joint venture, we include our pro rata share of the assets, liabilities, revenues, expenses and cash flows in our financial statements.
 
We have assessed all entities including those entities that hold economic interests in projects that are in the exploration or development stage, in which we hold an economic interest, to determine if they are variable interest entities (“VIEs”).  If they are determined to be VIEs, we assess on an ongoing basis who the primary beneficiary is based on who has the power to direct matters that most significantly impact the activities of the VIE and who has the obligation to absorb losses or the right to receive benefits of the VIE that could potentially be significant to the VIE. Matters that may have a significant impact on the activities of VIEs include, but are not limited to, approval of budgets and programs, construction decisions and delegation of certain responsibilities to the operator of the project. For VIEs where we are the primary beneficiary, we consolidate the entity and record a non-controlling interest, measured initially at its estimated fair value, for the interest held by other equity owners. For VIEs where we have shared power with unrelated parties over the aforementioned matters that most significantly impact the activities of the VIE, we use the equity method of accounting to report their results (note 12). For all VIEs, our risk is limited to our investment in the entity.
 
The following table illustrates our policy used to account for significant operating mines/projects where we hold less than a 100% economic interest. We consolidate all operating mines/projects where we hold a 100% economic interest.
 
108 

 
Barrick Financial Report 2010 | Notes to Consolidated Financial Statements
 
Consolidation Method at December 31, 2010

 	 	Entity type at December 31, 2010	 	Economic interest at
December 31, 2010(1)	 	Method	 	
African Barrick Gold (2)	 	Non-Wholly Owned Subsidiary	 	73.9	%	Consolidation	 	
Australia	 	 	 	 	 	 	 	
Kalgoorlie Mine	 	Unincorporated JV	 	50	%	Pro Rata	 	
Porgera Mine(3)	 	Unincorporated JV	 	95	%	Pro Rata	 	
North America	 	 	 	 	 	 	 	
Round Mountain Mine	 	Unincorporated JV	 	50	%	Pro Rata	 	
Marigold Mine	 	Unincorporated JV	 	33	%	Pro Rata	 	
Turquoise Ridge Mine	 	Unincorporated JV	 	75	%	Pro Rata	 	
Capital Projects	 	 	 	 	 	 	 	
Pueblo Viejo Project(4)	 	VIE	 	60	%	Consolidation	 	
Cerro Casale Project(5)	 	VIE	 	75	%	Consolidation	 	
Donlin Creek Project(6)	 	VIE	 	50	%	Equity Method	 	
Reko Diq Project(6),(7)	 	VIE	 	37.5	%	Equity Method	 	
Kabanga Project(6),(8)	 	VIE	 	50	%	Equity Method	 	

(1)           Unless otherwise noted, all of our joint ventures are funded by contributions made by their partners in proportion to their economic interest.
(2)           In 2010, we completed an initial public offering (“IPO”) for a non-controlling interest in our African gold mining operations. As a result of this transaction, our economic interest in the North Mara, Bulyanhulu and Buzwagi gold mines was reduced from 100% to 73.9% and our economic interest in the Tulawaka gold mine (an unincorporated JV held through ABG) was reduced from 70% to 51.7% (note 3e).
(3)           We hold an undivided interest in our share of assets and liabilities at the Porgera mine.
(4)           In accordance with the terms of the agreement with our partner, Barrick is responsible for 60% of the funding requirements for the Pueblo Viejo project. We consolidate Pueblo Viejo and record a non-controlling interest for the 40% interest held by our partner. In 2009, we determined that the mineralization at Pueblo Viejo met the definition of proven and probable reserves for United States reporting purposes and began capitalizing development costs attributable to the project. At December 31, 2010, the consolidated carrying amounts (100%) of the Pueblo Viejo project were: assets of $2,889 million (2009: $1,385 million) and liabilities of $1,392 million (2009: $182 million). The maximum exposure to loss related to this VIE is $898 million (2009: $722 million), calculated as 60% of the shareholder’s equity of the entity.
(5)           On March 31, 2010, we obtained control over the Cerro Casale project by acquiring an additional 25% interest, which increased our ownership interest to 75%. As a result, we began to consolidate Cerro Casale and record a non-controlling interest for the 25% interest held by our partner, prospectively from March 31, 2010. Previously, we had joint control over Cerro Casale and accounted for our ownership interest using the equity method of accounting. At December 31, 2010, the consolidated carrying amounts (100%) of the Cerro Casale project were: assets of $1,883 million (2009: $861 million) and of liabilities $22 million (2009: $nil). The maximum exposure to loss related to this VIE is $1,396 million (2009: $861 million), calculated as 75% of the shareholder’s equity of the entity.
(6)           Our Donlin Creek, Reko Diq and Kabanga projects are VIEs that we account for ownership interests using the equity method of accounting. Our maximum exposure to loss is limited to the carrying amount of the investment (note 12).
(7)           We hold a 50% interest in Atacama Copper, which has a 75% interest in the Reko Diq project. We use the equity method to account for our interest in Atacama Copper (note 12).
(8)           In accordance with an agreement with our partner, from 2006 until the third quarter of 2008, our partner was responsible for funding 100% of exploration and project expenditures and we did not incur any costs attributable to our economic interest in this period. During the third quarter of 2008, our partner reached the $145 million funding cap for these expenditures, and thereafter we began funding 50% of the exploration and project expenditures (note 12).
 
c) Foreign Currency Translation
 
The functional currency of our gold and copper operations is the US dollar. We translate non-US dollar balances for these operations into US dollars as follows:
 
·                  Property, plant and equipment, intangible assets and equity method investments using historical rates;
·                   Available-for-sale securities using closing rates with translation gains and losses recorded in other comprehensive income;
·                   Asset retirement obligations using historical rates;
·                   Deferred tax assets and liabilities using closing rates with translation gains and losses recorded in income tax expense;
·                   Other assets and liabilities using closing rates with translation gains and losses recorded in other income/expense; and
·                   Income and expenses using average exchange rates, except for expenses that relate to non-monetary assets and liabilities measured at historical rates, which are translated using the same historical rate as the associated non-monetary assets and liabilities.
 
The functional currency of our oil and gas operations, (“Barrick Energy”) is the Canadian dollar. We translate balances related to Barrick Energy into US dollars as follows:
 
·                   Assets and liabilities using closing exchange rates with translation gains and losses recorded in other comprehensive income; and
·                   Income and expense using average exchange rates with translation gains and losses recorded in other comprehensive income.
 
d) Use of Estimates
 
The preparation of these financial statements requires us to make estimates and assumptions. The most significant ones are: classification of mineralization as either reserves or non-reserves; quantities of proven and probable mineral reserves; fair values of acquired assets and liabilities under business combinations, including the value of mineralized material beyond proven and probable mineral reserves; future costs and
 
109 

 
Notes to Consolidated Financial Statements
 
expenses to produce proven and probable mineral reserves; future commodity prices for gold, copper, silver and other products; future costs of oil and other consumables; future currency exchange rates; the future cost of asset retirement obligations; amounts and likelihood of contingencies; the fair values of reporting units that include goodwill; uncertain tax positions; and credit risk adjustments to discount rates. Using these and other estimates and assumptions, we make various decisions in preparing the financial statements including:
 
·                   The treatment of expenditures at mineral properties prior to when production begins as either an asset or an expense (note 15);
·                   Whether tangible, intangible long-lived assets and equity investments are impaired, and if so, estimates of the fair value of those assets and any corresponding impairment charge (note 15);
·                   Our ability to realize deferred income tax assets and amounts recorded for any corresponding valuation allowances and amounts recorded for uncertain tax positions (note 24);
·                   The useful lives of tangible and intangible long-lived assets and the measurement of amortization (note 15);
·                  The fair value of asset retirement obligations (note 22);
·                   Whether to record a liability for loss contingencies and the amount of any such liability (notes 15 and 30);
·                  The amount of income tax expense (note 9);
·                   Allocations of the purchase price in business combinations to assets and liabilities acquired (notes 3 and 17);
·                   Whether any impairments of goodwill have occurred and if so the amounts of impairment charges (note 17);
·                  Transfers of value beyond proven and probable reserves to assets subject to amortization (note 15); and
·                   Fair value of derivative instruments including credit risk adjustments to the discount rates in determining fair value (notes 20 and 21).
 
As the estimation process is inherently uncertain, actual future outcomes could differ from our present estimates and assumptions, potentially having material future effects on our financial statements.
 
e) Accounting Changes
 
Future Accounting Policy Changes
 
Barrick has made the decision to convert our basis of accounting from US GAAP to International Financial Reporting Standards (“IFRS”) for periods beginning January 1, 2011, preparing its first interim financial statements in accordance with IFRS for the three-month period ending March 31, 2011. As a result of our transition to reporting under IFRS, new US GAAP pronouncements effective from 2011 onwards will not have an impact on our consolidated financial statements.
 
Accounting Pronouncements Implemented in 2010
 
Variable Interest Entities (“VIEs”)
 
As a result of recently issued ASU 2009-17 guidance, we reassessed our VIEs in first quarter 2010, and determined that these changes did not have an impact on our classification of VIEs. We have also increased our disclosures in respect of VIEs (note 2b).
 
Accounting Pronouncements Implemented in 2009
 
Measuring Fair Value of Liabilities
 
In August 2009, the FASB issued Accounting Standards Update (“ASU 2009-05”), Measuring Fair Value of Liabilities which is effective prospectively for interim periods beginning after August 1, 2009, with early adoption permitted. Previous guidance required that the fair value of liabilities be measured under the assumption that the liability is transferred to a market participant. ASU 2009-05 provides further clarification that the fair value measurement of a liability should assume transfer to a market participant as of the measurement date without settlement with the counterparty. Therefore, the fair value of the liability shall reflect non-performance risk, including but not limited to a reporting entity’s own credit risk. The application of ASU 2009-05 in fourth quarter 2009 did not have a material impact on the measurement of our liabilities.
 
Business Combinations
 
In first quarter 2009, we began applying the new FASB guidance for business combinations consummated after December 31, 2008. Under the new guidance, business combinations are accounted for under the “acquisition method”, as opposed to the “purchase method”.
 
The more significant changes to our accounting for business combinations resulting from the application of the acquisition method include: (i) the definition of a business is broadened to include some development stage entities, and therefore more acquisitions may be accounted for as business combinations rather than asset acquisitions; (ii) the measurement date for equity interests issued by the acquirer is the acquisition date instead of a few days before and after terms are agreed to and announced, which may significantly change the amount recorded for the acquired business if share prices differ from the agreement and announcement date to the acquisition date; (iii) all future adjustments to income tax estimates will be recorded as a component of income tax expense, whereas under the previous guidance, certain changes in income tax estimates were recorded to goodwill; (iv) acquisition-related costs of the acquirer, including investment banking fees, legal fees, accounting fees, valuation fees, and other professional or consulting fees will be expensed as incurred, whereas under the previous guidance these costs were capitalized as part of the cost of the
 
110 

 
Barrick Financial Report 2010 | Notes to Consolidated Financial Statements
 
business combination; (v) the assets acquired and liabilities assumed as part of a business combination, whether full, partial or step acquisition, result in the recording of assets and liabilities at 100% of their fair value, whereas under the previous guidance only the controlling interest’s portion was recorded at fair value; (vi) recognition of a bargain purchase gain when the fair value of the identifiable assets exceeds the purchase price, whereas under the previous guidance, the net book value of the identifiable assets would have been adjusted downward; and (vii) the non-controlling interest will be recorded at its share of fair value of net assets acquired, including its share of goodwill, whereas under previous guidance the non-controlling interest is recorded at its share of the carrying value of net assets acquired with no goodwill being allocated. See note 3 for our disclosure of the accounting impact of business combinations and asset acquisitions.
 
Non-controlling Interests in Consolidated Financial Statements
 
In first quarter 2009, we adopted the new FASB guidance for non-controlling interests. Under the new guidance, non-controlling interests are measured at 100% of the fair value of assets acquired and liabilities assumed. Prior to the effective date of the new guidance, non-controlling interests were measured at book value. For presentation and disclosure purposes, non-controlling interests are now classified as a separate component of equity. In addition, the new guidance changes the manner in which increases/decreases in ownership percentages are accounted for. Changes in ownership percentages are recorded as equity transactions and no gain or loss is recognized as long as the parent retains control of the subsidiary. When a parent company deconsolidates a subsidiary but retains a non-controlling interest, the non-controlling interest is remeasured at fair value on the date control is lost and a gain or loss is recognized at that time. Further, accumulated losses attributable to the non-controlling interests are no longer limited to the original carrying amount, and therefore non-controlling interests could have a negative carrying balance.
 
The new provisions have been applied prospectively with the exception of the presentation and disclosure provisions, which have been applied for all prior periods presented in the financial statements. The presentation and disclosure provisions resulted in the reclassification of non-controlling interests to the Equity section of the Balance Sheet totaling $484 million as at December 31, 2009 (December 31, 2008: $182 million).
 
f) Other Notes to the Financial Statements

 	 	Note	 	Page	 	
Acquisitions and divestitures	 	3	 	112	 	
Segment information	 	4	 	115	 	
Sales	 	5	 	118	 	
Cost of sales	 	6	 	119	 	
Exploration and project development expense	 	7	 	120	 	
Other expense and income	 	8	 	121	 	
Income tax expense	 	9	 	122	 	
Earnings (loss) per share	 	10	 	124	 	
Cash flow — other items	 	11	 	125	 	
Equity in investees and other investments	 	12	 	126	 	
Inventories	 	13	 	127	 	
Accounts receivable and other current assets	 	14	 	129	 	
Property, plant and equipment	 	15	 	130	 	
Intangible assets	 	16	 	134	 	
Goodwill	 	17	 	135	 	
Other assets	 	18	 	137	 	
Other current liabilities	 	19	 	137	 	
Financial instruments	 	20	 	137	 	
Fair value measurements	 	21	 	147	 	
Asset retirement obligations	 	22	 	148	 	
Other non-current liabilities	 	23	 	149	 	
Deferred income taxes	 	24	 	150	 	
Capital stock	 	25	 	152	 	
Other comprehensive income (loss) (“OCI”)	 	26	 	153	 	
Non-controlling interests	 	27	 	153	 	
Stock-based compensation	 	28	 	154	 	
Post-retirement benefits	 	29	 	157	 	
Litigation and claims	 	30	 	160	 	
 
111 

 
Notes to Consolidated Financial Statements
 
3 · Acquisitions and Divestitures

For the years ended December 31	 	2010	 	2009	 	
Cash paid on acquisition (1)	 	 	 	 	 	
Cerro Casale	 	$	454	 	$	—	 	
Barrick Energy acquisitions	 	264	 	53	 	
Tusker Gold Limited	 	74	 	—	 	
REN joint venture	 	36	 	—	 	
Hemlo	 	—	 	50	 	
 	 	$	828	 	$	103	 	
Less: cash acquired	 	(15	)	(2	)	
 	 	$	813	 	$	101	 	
Cash proceeds on divestiture (1)	 	 	 	 	 	
ABG	 	$	884	 	$	—	 	
Osborne	 	17	 	—	 	
 	 	$	901	 	$	—	 	

(1) All amounts represent gross cash paid or received on acquisition or divestiture.
 
a) Barrick Energy Acquisitions
 
In 2010, Barrick Energy completed three acquisitions. On May 17, 2010, Barrick Energy acquired all of the outstanding shares of Bountiful Resources (“Bountiful”), a privately held corporation, for approximately $109 million. On June 25, 2010, Barrick Energy acquired the Puskwa property from Galleon Energy Inc. (“Puskwa”) for approximately $130 million. On September 17, 2010, Barrick Energy acquired the assets of Dolomite Resources (“Dolomite”) for approximately $25 million. We have determined that all of these transactions represent business combinations, with Barrick Energy identified as the acquirer. We have recognized goodwill on these acquisitions due to expected synergies and the deferred tax impact. The tables below present the combined purchase cost and purchase price allocation for these transactions. Barrick Energy began consolidating the operating results, cash flows, and net assets of Bountiful, Puskwa, and Dolomite, from the respective acquisition dates.
 
Total Costs to Allocate

Purchase cost	 	$	264	 	
 
Allocation of Fair Values to Bountiful, Puskwa, and Dolomite’s Net Assets

Current assets	 	$	8	 	
Property, plant and equipment	 	252	 	
Goodwill	 	64	 	
Total assets	 	324	 	
Current liabilities	 	2	 	
Asset retirement obligations	 	8	 	
Bank debt	 	13	 	
Deferred income tax liabilities	 	37	 	
Total liabilities	 	60	 	
Net assets acquired	 	$	264	 	
 
b) Acquisition of Tusker Gold Limited
 
On April 27, 2010, ABG acquired 100% of the issued and outstanding shares of Tusker Gold Limited (“Tusker”) for aggregate net consideration of approximately $74 million. As a result of this acquisition, ABG has increased its interest in the Nyanzaga joint venture from 51% to 100%. We have determined that this transaction represents a business combination, with ABG identified as the acquirer. The tables below present the purchase cost and our preliminary purchase price allocation. The purchase price allocation will be finalized upon the determination of the deferred tax impact. Any adjustments to deferred tax impact will have a corresponding impact on goodwill.
 
ABG began consolidating the operating results, cash flows and net assets of Tusker from the date of acquisition.
 
Total Costs to Allocate

Purchase cost	 	$	74	 	
Less: cash acquired	 	(8	)	
Cash consideration paid	 	$	66	 	
 
Preliminary Allocation of Fair Values to Tusker’s Net Assets

Property, plant and equipment	 	$	80	 	
Goodwill	 	22	 	
Total assets	 	102	 	
Current liabilities	 	10	 	
Other non-current liabilities	 	4	 	
Deferred income tax liabilities	 	22	 	
Total liabilities	 	36	 	
Net assets acquired	 	$	66	 	
 
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Barrick Financial Report 2010 | Notes to Consolidated Financial Statements
 
c) Disposition of Sedibelo
 
On February 4, 2011, we entered into agreements to dispose of our 10% interest in the Sedibelo platinum project (“Sedibelo”) and certain assets to the Bakgatla-Ba-Kgafela Tribe (“BBK”), owner of the remaining 90% interest in Sedibelo, as well as the transfer of certain long lead items required for the development of Sedibelo to Newshelf 1101 (Proprietary) Limited, for total consideration of approximately $44 million; and to settle various outstanding matters between Barrick and the BBK regarding Sedibelo and their respective interests. The agreements are subject to certain customary conditions and the transactions are expected to close by the end of first quarter 2011.
 
d) Acquisition of 64% Interest in REN Joint Venture
 
On April 8, 2010, we entered into an agreement to acquire the remaining 64% interest in the REN joint venture from Centerra Gold Inc. for $36 million. The REN property is located next to the Goldstrike operations in Nevada. The transaction closed on July 2, 2010. The acquisition was accounted for as an asset purchase.
 
e) IPO of African Gold Mining Operations
 
On March 24, 2010, the initial public offering (“IPO”) for ABG closed and its approximately 404 million ordinary shares were admitted to the Official List of the UK Listing Authority and to trading on the London Stock Exchange’s main market for listed securities. ABG sold approximately 101 million ordinary shares in the offering, or about 25% of its equity and Barrick retained an interest in approximately 303 million ordinary shares, or about 75% of the equity of ABG. In April 2010, the over-allotment option was partially exercised resulting in a 1.1% dilution of our interest in ABG to 73.9% .
 
The net proceeds from the IPO and the exercise of the over-allotment option were approximately $884 million. As Barrick has retained a controlling financial interest in ABG, we will continue to consolidate ABG and we accounted for the disposition of ABG shares as an equity transaction. Accordingly, the difference between the proceeds received and the carrying value of $596 million has been recorded as $288 million of additional paid-in capital in shareholders’ equity, and we set up a non-controlling interest to reflect our ownership interest in ABG.
 
f) Acquisition of Additional 25% Interest in Cerro Casale
 
On March 31, 2010, we completed the acquisition of the additional 25% interest in Cerro Casale from Kinross Gold Corporation (“Kinross”) for cash consideration of $454 million and the elimination of a $20 million contingent obligation, which was payable by Kinross to Barrick on a construction decision. Our interest in the project is now 75% and we have obtained control over the project. As a result, we began consolidating 100% of the operating results, cash flows and net assets of Cerro Casale, and we recorded a non-controlling interest for the 25% ownership interest held by Kinross, prospectively from March 31, 2010. We have remeasured our previously held 50% ownership interest to fair value and recorded a corresponding gain of $29 million.
 
The tables below present the purchase cost and preliminary purchase price allocation.
 
Total Costs to Allocate

Purchase cost (25% interest)	 	$	455	 	
Purchase price adjustment	 	(1	)	
Less: cash acquired	 	(7	)	
Cash consideration paid	 	447	 	
Equity method investment	 	879	 	
Non-controlling interest	 	454	 	
Subtotal	 	1,780	 	
Fair value of net assets	 	1,809	 	
Gain on acquisition	 	$	29	 	
 
Preliminary Allocation of Purchase Price to Cerro Casale’s Net Assets (100% basis)

Current assets	 	$	1	 	
Water rights	 	75	 	
VAT receivables	 	11	 	
Property, plant and equipment	 	1,732	 	
Total assets	 	1,819	 	
Current liabilities	 	10	 	
Net assets acquired	 	$	1,809	 	
 
g) Acquisition of 50% Interest in Valhalla
 
On September 17, 2009, Barrick Energy completed the acquisition of 50% interest in the Valhalla oil and gas field, which is close to our existing Sturgeon Lake field, for total cash consideration of $53 million. This transaction was considered an asset purchase.
 
113 

 
Notes to Consolidated Financial Statements
 
h) Acquisition of 50% Interest in Hemlo
 
On April 22, 2009, we completed the acquisition of the remaining 50% interest in the Williams and David Bell gold mines (“Hemlo”) in Canada from Teck Resources Ltd. for cash consideration of $50 million, thereby increasing our interest to 100%. We recognized a bargain purchase gain of $43 million, resulting from the excess fair value of the net assets acquired over the cash consideration paid. Following this transaction, we remeasured our existing 50% interest in the assets and liabilities of Hemlo held prior to this transaction to their fair values, recognizing a gain of approximately $29 million. The total gain of $72 million was recorded in other income (note 8c). 
 
The tables below represent the purchase cost, purchase price allocation and the bargain purchase gain recorded in other income in 2009 (note 8c).
 
Total Costs to Allocate

Purchase cost	 	$	65	 	
Purchase price adjustment	 	(15	)	
Less: cash acquired	 	(2	)	
 	 	$	48	 	
 
Preliminary Allocation of Fair Values to Hemlo’s Net Assets

Current assets	 	$	10	 	
Property, plant and equipment	 	 	 	
Buildings, plant and equipment	 	25	 	
Capitalized development costs	 	21	 	
Capitalized reserve acquisition costs	 	81	 	
Total assets	 	137	 	
Current liabilities	 	8	 	
Asset retirement obligations	 	32	 	
Deferred income tax liabilities	 	21	 	
Total liabilities	 	61	 	
Net assets acquired	 	$	76	 	
 
i) Discontinued Operations
 
Results of Discontinued Operations

For the years ended December 31	 	2010	 	2009	 	2008	 	
Gold sales	 	 	 	 	 	 	 	
Osborne	 	$	43	 	$	31	 	$	27	 	
Henty	 	—	 	25	 	52	 	
Copper sales	 	 	 	 	 	 	 	
Osborne	 	244	 	212	 	221	 	
 	 	$	287	 	$	268	 	$	300	 	
Income before tax	 	 	 	 	 	 	 	
Osborne	 	$	173	 	$	129	 	$	(85	)	
Henty	 	—	 	9	 	(23	)	
 	 	$	173	 	$	138	 	$	(108	)	
Net income	 	 	 	 	 	 	 	
Osborne	 	$	121	 	$	91	 	$	(81	)	
Henty	 	—	 	6	 	(23	)	
 	 	$	121	 	$	97	 	$	(104	)	
 
Osborne
 
On September 30, 2010, we divested our Osborne copper mine to Ivanhoe Australia Limited (“Ivanhoe”), for consideration of approximately $17 million cash and a royalty payable from any future production, capped at approximately $14 million. Ivanhoe has agreed to assume all site environmental obligations. A loss of approximately $7 million, primarily due to severance obligations, was recognized in the third quarter of 2010. The results of operations, including the loss on disposition, and the assets and liabilities of Osborne have been presented as discontinued operations in these consolidated financial statements.
 
Henty
 
On July 6, 2009, we finalized an agreement with Bendigo Mining Limited (“Bendigo”) to divest our Henty mine in our Australia Pacific segment for cash consideration of $4 million and Bendigo shares with a fair value of $2 million as at the closing date. We are also entitled to receive a royalty payable on production from future exploration discoveries, capped at approximately $17 million. A gain of $4 million was recognized in the third quarter. The results of operations and the assets and liabilities of Henty have been presented as discontinued operations in these consolidated financial statements.
 
114 

 
Barrick Financial Report 2010 | Notes to Consolidated Financial Statements
 
4 · Segment Information
 
In first quarter 2010 we revised the format of information provided to the Chief Operating Decision Maker to better reflect management’s view of the operations. The primary change involves the presentation of Exploration and Project Development, RBU Costs and Other Expenses (Income) as a component of Segment Income. Previously, these expenditures were monitored separately. Accordingly, we have revised our operating segment disclosure to be consistent with the reporting changes, with adjustments to comparative information to conform to the current period presentation.
 
Income Statement Information

For the year ended December 31, 2010	 	Sales	 	Cost of Sales	 	Exploration &
Project
Development	 	RBU Costs	 	Other
Expenses
(Income)(1)	 	Amortization	 	Segment
Income
(Loss)(2)	 	
Gold	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
North America	 	$	3,823	 	$	1,511	 	$	106	 	$	39	 	$	53	 	$	444	 	$	1,670	 	
South America	 	2,523	 	515	 	17	 	41	 	36	 	165	 	1,749	 	
Australia Pacific	 	2,434	 	1,276	 	61	 	51	 	36	 	251	 	759	 	
African Barrick Gold	 	919	 	487	 	23	 	38	 	26	 	119	 	226	 	
Copper	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
South America	 	1,102	 	345	 	—	 	5	 	20	 	84	 	648	 	
Capital Projects(3)	 	—	 	—	 	134	 	3	 	(49	)	4	 	(92	)	
Barrick Energy	 	123	 	67	 	—	 	7	 	4	 	60	 	(15	)	
 	 	$	10,924	 	$	4,201	 	$	341	 	$	184	 	$	126	 	$	1,127	 	$	4,945	 	
 
Income Statement Information

For the year ended December 31, 2009	 	Sales	 	Cost of Sales	 	Exploration &
Project
Development	 	RBU Costs	 	Other
Expenses
(Income)(1)	 	Amortization	 	Segment
Income
(Loss)(2)	 	
Gold	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
North America	 	$	2,780	 	$	1,421	 	$	66	 	$	43	 	$	(9	)	$	362	 	$	897	 	
South America	 	1,831	 	499	 	30	 	24	 	33	 	134	 	1,111	 	
Australia Pacific	 	1,836	 	1,110	 	38	 	50	 	56	 	282	 	300	 	
African Barrick Gold	 	688	 	377	 	8	 	32	 	35	 	93	 	143	 	
Copper	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
South America	 	943	 	361	 	1	 	3	 	14	 	76	 	488	 	
Capital Projects(3)	 	—	 	—	 	107	 	5	 	(6	)	3	 	(109	)	
Barrick Energy	 	58	 	39	 	—	 	6	 	4	 	30	 	(21	)	
 	 	$	8,136	 	$	3,807	 	$	250	 	$	163	 	$	127	 	$	980	 	$	2,809	 	
 
115 

 
Notes to Consolidated Financial Statements
 
Income Statement Information

For the year ended December 31, 2008	 	Sales	 	Cost of Sales	 	Exploration &
Project
Development	 	RBU Costs	 	Other
Expenses
(Income)(1)	 	Amortization	 	Segment
Income
(Loss)(2)	 	
Gold	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
North America	 	$	2,627	 	$	1,517	 	$	108	 	$	46	 	$	(16	)	$	354	 	$	618	 	
South America	 	1,833	 	531	 	55	 	20	 	33	 	163	 	1,031	 	
Australia Pacific	 	1,579	 	1,002	 	47	 	48	 	—	 	240	 	242	 	
African Barrick Gold	 	538	 	327	 	16	 	24	 	14	 	63	 	94	 	
Copper	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
South America	 	1,007	 	315	 	11	 	4	 	4	 	66	 	607	 	
Capital Projects(3)	 	—	 	—	 	162	 	5	 	9	 	—	 	(176	)	
Barrick Energy	 	29	 	14	 	1	 	2	 	—	 	13	 	(1	)	
 	 	$	7,613	 	$	3,706	 	$	400	 	$	149	 	$	44	 	$	899	 	$	2,415	 	

(1)           Other expenses include accretion expense. For the year ended December 31, 2010, accretion expense was $47 million (2009: $57 million; 2008: $45 million). See note 15 for further details.
(2)           We manage the performance of our regional business units using a measure of income before interest and taxes, consequently interest income, interest expense and income taxes are not allocated to our regional business units.
(3)           Segment loss for the Capital Projects segment includes project development expense and losses from equity investees that hold capital projects. See notes 7 and 12 for further details. For the year ended December 31, 2010, Capital Projects other expenses (income) includes a $29 million pre-tax gain on the acquisition of the 25% interest in Cerro Casale (note 3f).
 
Reconciliation of Segment Income to Income (Loss) from Continuing Operations Before Income Taxes and Other Items

For the years ended December 31	 	2010	 	2009	 	2008	 	
Segment income	 	$	4,945	 	$	2,809	 	$	2,415	 	
Amortization of corporate assets	 	(22	)	(36	)	(13	)	
Exploration not attributable to segments	 	(9	)	(11	)	(12	)	
Project development not attributable to segments	 	(36	)	(58	)	(97	)	
Corporate administration	 	(154	)	(171	)	(155	)	
Other expense not attributable to segments	 	(76	)	2	 	137	 	
Elimination of gold sales contracts	 	—	 	(5,933	)	—	 	
Impairment charges	 	(7	)	(277	)	(598	)	
Interest income	 	14	 	10	 	39	 	
Interest expense	 	(121	)	(57	)	(21	)	
Write-down of investments	 	—	 	(1	)	(205	)	
Loss from capital projects held through equity investees	 	53	 	93	 	69	 	
Income (loss) from continuing operations before income taxes and other items	 	$	4,587	 	$	(3,630	)	$	1,559	 	
 
116 

 
Barrick Financial Report 2010 | Notes to Consolidated Financial Statements
 
Geographic Information

 	 	Long-lived assets(1)	 	Sales(2)	 	
For the years ended December 31	 	2010	 	2009	 	2008	 	2010	 	2009	 	2008	 	
North America	 	 	 	 	 	 	 	 	 	 	 	 	 	
United States	 	$	4,746	 	$	4,618	 	$	4,322	 	$	3,520	 	$	2,552	 	$	2,501	 	
Canada	 	1,528	 	1,040	 	643	 	426	 	286	 	155	 	
Dominican Republic	 	2,550	 	1,352	 	446	 	—	 	—	 	—	 	
South America	 	 	 	 	 	 	 	 	 	 	 	 	 	
Peru	 	415	 	283	 	318	 	1,200	 	1,291	 	1,367	 	
Chile	 	4,395	 	2,181	 	1,930	 	1,102	 	943	 	1,007	 	
Argentina	 	1,758	 	1,214	 	1,104	 	1,323	 	540	 	466	 	
Australia Pacific	 	 	 	 	 	 	 	 	 	 	 	 	 	
Australia	 	1,680	 	1,646	 	1,536	 	1,823	 	1,306	 	1,040	 	
Papua New Guinea	 	868	 	682	 	677	 	611	 	530	 	539	 	
Africa	 	 	 	 	 	 	 	 	 	 	 	 	 	
Tanzania	 	1,864	 	1,628	 	1,645	 	919	 	688	 	538	 	
Other	 	17	 	12	 	17	 	—	 	—	 	—	 	
Segment total	 	$	19,821	 	$	14,656	 	$	12,638	 	$	10,924	 	$	8,136	 	$	7,613	 	

(1) Long-lived assets include property, plant and equipment and other assets.
(2) Presented based on the location in which the sale originated.
 
Asset Information

 	 	Segment
assets	 	Segment
capital expenditures(1)	 	
For the years ended December 31	 	2010	 	2009	 	2008	 	2010	 	2009	 	2008	 	
Gold	 	 	 	 	 	 	 	 	 	 	 	 	 	
North America	 	$	4,877	 	$	4,779	 	$	4,304	 	$	523	 	$	553	 	$	434	 	
South America	 	1,311	 	1,166	 	1,183	 	202	 	161	 	84	 	
Australia Pacific	 	2,548	 	2,328	 	2,212	 	295	 	221	 	207	 	
African Barrick Gold	 	1,855	 	1,621	 	1,024	 	137	 	126	 	138	 	
Copper	 	 	 	 	 	 	 	 	 	 	 	 	 	
South America	 	1,231	 	1,242	 	1,267	 	63	 	37	 	57	 	
Capital projects	 	6,643	 	2,686	 	1,904	 	2,187	 	1,317	 	919	 	
Barrick Energy	 	808	 	501	 	382	 	86	 	31	 	15	 	
Segment total	 	19,273	 	14,323	 	12,276	 	3,493	 	2,446	 	1,854	 	
Cash and equivalents	 	3,968	 	2,564	 	1,437	 	 	 	 	 	 	 	
Other current assets	 	3,145	 	2,315	 	2,642	 	 	 	 	 	 	 	
Equity in investees	 	291	 	1,136	 	1,085	 	 	 	 	 	 	 	
Other investments	 	203	 	92	 	60	 	 	 	 	 	 	 	
Intangible assets	 	140	 	66	 	74	 	 	 	 	 	 	 	
Deferred income tax assets	 	467	 	949	 	869	 	 	 	 	 	 	 	
Assets of discontinued operations	 	—	 	100	 	76	 	 	 	 	 	 	 	
Goodwill	 	5,287	 	5,197	 	5,280	 	 	 	 	 	 	 	
Other items not allocated to segments	 	548	 	333	 	362	 	67	 	21	 	62	 	
Enterprise total	 	$	33,322	 	$	27,075	 	$	24,161	 	$	3,560	 	$	2,467	 	$	1,916	 	

(1)           Segment capital expenditures are presented for internal management reporting purposes on an accrual basis. Capital expenditures in the Consolidated Statements of Cash Flow are presented on a cash basis. In 2010, cash expenditures were $3,323 million (2009: $2,351 million; 2008: $1,749 million) and the increase in accrued expenditures was $237 million in 2010 (2009: $116 million increase; 2008: $167 million increase).
 
117 

 
Notes to Consolidated Financial Statements
 
5 · Sales

For the years ended December 31	 	2010	 	2009	 	2008	 	
Gold bullion sales (1),(2)	 	 	 	 	 	 	 	
Spot market sales	 	$	9,374	 	$	6,991	 	$	6,455	 	
Concentrate sales(3)	 	325	 	144	 	122	 	
 	 	9,699	 	7,135	 	6,577	 	
Copper sales (1),(4)	 	 	 	 	 	 	 	
Copper cathode sales	 	1,098	 	943	 	1,007	 	
Concentrate sales	 	4	 	—	 	—	 	
 	 	1,102	 	943	 	1,007	 	
Oil and gas sales	 	123	 	58	 	29	 	
 	 	$	10,924	 	$	8,136	 	$	7,613	 	

(1)           Revenues include amounts transferred from OCI to earnings for commodity cash flow hedges (see notes 20e and 26).
(2)           Gold sales include gains and losses on non-hedge derivative contracts: For the year ended December 31, 2010: $26 million gain (2009: $56 million gain; 2008: $19 million gain).
(3)           Concentrate sales include gains and losses on the mark-to-market receivable balances arising from smelting contracts, which are accounted for as embedded derivatives: For the year ended December 31, 2010: $3 million gain (2009: $1 million gain; 2008: $3 million loss).
(4)           Copper sales include gains and losses on economic copper hedges that do not qualify for hedge accounting treatment: For the year ended December 31, 2010: $40 million gain (2009: $55 million loss; 2008: $67 million gain). Sales also include gains and losses on the mark-to-market receivable balances arising from copper smelting contracts, which are accounted for as embedded derivatives: For the year ended December 31, 2010: $10 million gain (2009: $4 million gain; 2008: $nil).
 
Principal Products
 
All of our gold mining operations produce gold in doré form, except Bulyanhulu and Buzwagi which produce both gold doré and gold concentrate. Gold doré is unrefined gold bullion bars usually consisting of 90% gold that is refined to pure gold bullion prior to sale to our customers. Gold concentrate is a processing product containing the valuable ore mineral (gold) from which most of the waste mineral has been eliminated. This concentrate undergoes a smelting process to convert it into gold bullion. Gold bullion is sold primarily in the London spot market. Gold concentrate is sold to third-party smelters. At our Zaldívar mine we produce copper cathode, which consists of 99.9% copper. Copper cathodes are sold directly under copper cathode sales contracts with various third-party buyers.
 
Revenue Recognition
 
We record revenue when the following conditions are met: persuasive evidence of an arrangement exists; delivery and transfer of title (gold revenue only) have occurred under the terms of the arrangement; the price is fixed or determinable; and collectability is reasonably assured. Revenue is presented net of direct sales taxes of $68 million (2009: $30 million; 2008: $23 million). Incidental revenues from the sale of by-products, primarily copper and silver, are classified within cost of sales.
 
Bullion Sales
 
We record revenue from gold and silver bullion sales at the time of physical delivery, which is also the date that title to the gold or silver passes. The sales price is fixed at the delivery date based on either the terms of gold sales contracts or the gold spot price.
 
Concentrate Sales
 
Under the terms of concentrate sales contracts with independent smelting companies, gold and copper sales prices are provisionally set on a specified future date after shipment based on market prices. We record revenues under these contracts at the time of shipment, which is also when title passes to the smelting companies, using forward market gold and copper prices on the expected date that final sales prices will be determined. Variations between the price recorded at the shipment date and the actual final price set under the smelting contracts are caused by changes in market gold and copper prices and result in an embedded derivative in the accounts receivable. The embedded derivative is recorded at fair value each period until final settlement occurs, with changes in fair value included as a component of revenue.
 
Copper Cathode Sales
 
Under the terms of copper cathode sales contracts, copper sales prices are provisionally set on a specified future date based upon market commodity prices plus certain price adjustments. Revenue is recognized at the time of shipment when risk of loss passes to the customer, and collectability is reasonably assured. Revenue is provisionally measured using forward market prices on the expected date that final selling prices will be determined. Variations occur between the price recorded on the date of revenue recognition and the actual final price under the terms of the contracts due to changes in market copper prices and result in an embedded derivative in the accounts receivable. The embedded derivative is recorded at fair value each period until final settlement occurs, with changes in fair value included as a component of revenue.
 
118 

 
Barrick Financial Report 2010 | Notes to Consolidated Financial Statements
 
Provisional Copper and Gold Sales
 
Revenues before treatment and refining charges subject to final price adjustments as at December 31 and final provisional price adjustments recorded within the year were as follows:

At December 31	 	2010	 	2009	 	2008	 	
Copper	 	$	143	 	$	88	 	$	45	 	
Gold	 	66	 	8	 	15	 	

Final price adjustments recorded during the year:

For the years ended December 31	 	2010	 	2009	 	2008	 	
Gain (loss)	 	 	 	 	 	 	 	
Copper	 	$	21	 	$	45	 	$	(36	)	
Gold	 	—	 	—	 	—	 	

Oil and Gas Sales
 
Revenue from the sale of crude oil, natural gas and natural gas liquids is recorded at the time it enters the pipeline system, which is also when title transfers and there is reasonable assurance of collectability. At the time of delivery of oil and gas, prices are fixed and determinable based upon contracts referenced to monthly market commodity prices plus certain price adjustments. Price adjustments include product quality and transportation adjustments and market differentials.
 
6  · Cost of Sales

 	 	Gold	 	Copper	 	Oil & Gas	 	
For the years ended December 31	 	2010	 	2009	 	2008	 	2010	 	2009	 	2008	 	2010	 	2009	 	2008	 	
Cost of goods sold(1)	 	$	3,542	 	$	3,230	 	$	3,211	 	$	349	 	$	362	 	$	315	 	$	39	 	$	29	 	$	8	 	
Unrealized (gains) losses on non-hedge contracts	 	(6	)	(7	)	14	 	—	 	—	 	—	 	—	 	—	 	—	 	
By-product revenues	 	(124	)	(73	)	(92	)	(4	)	(1	)	—	 	—	 	—	 	—	 	
Royalty expense	 	287	 	218	 	202	 	—	 	—	 	—	 	28	 	10	 	6	 	
Mining production taxes	 	90	 	39	 	42	 	—	 	—	 	—	 	—	 	—	 	—	 	
 	 	$	3,789	 	$	3,407	 	$	3,377	 	$	345	 	$	361	 	$	315	 	$	67	 	$	39	 	$	14	 	

(1)           Cost of goods sold includes charges to reduce the cost of inventory to net realizable value as follows: $3 million for the year ended December 31, 2010 (2009: $6 million; 2008: $62 million). The cost of inventory sold in the period reflects all components capitalized to inventory, except that, for presentation purposes, the component of inventory cost relating to amortization of property, plant and equipment is classified in the income statement under “amortization”. Some companies present this amount under “cost of sales”. The amount presented in amortization rather than cost of sales was $1,097 million in the year ended December 31, 2010 (2009: $964 million; 2008: $893 million).
 
Royalties
 
Certain of our properties are subject to royalty arrangements based on mineral production at the properties. The primary type of royalty is a net smelter return (NSR) royalty. Under this type of royalty we pay the holder an amount calculated as the royalty percentage multiplied by the value of gold production at market gold prices less third-party smelting, refining and transportation costs. Other types of royalties include:
 
·  Net profits interest (NPI) royalty,
·   Modified net smelter return (NSR) royalty,
·   Net smelter return sliding scale (NSRSS) royalty,
·  Gross proceeds sliding scale (GPSS) royalty,
·  Gross smelter return (GSR) royalty,
·  Net value (NV) royalty, and a
·  Land tenement (LT) royalty.
 
Royalty expense is recorded on completion of the production process.
 
Royalties applicable to our oil and gas properties include:
 
·  Crown royalties,
 ·  Net profits interest (NPI) royalty, and
·  Overriding royalty (ORR).
 
119 

 
Notes to Consolidated Financial Statements

Producing mines &	 	 	 	
development projects	 	Type of royalty	 	
 	 	 	 	
North America	 	 	 	
Goldstrike	 	0%–5% NSR, 0%–6% NPI	 	
Williams	 	1.5% NSR, 0.75% NV,	 	
 	 	1% NV	 	
David Bell	 	3%–3.5% NSR	 	
Round Mountain	 	3.53%–6.35% NSRSS	 	
Bald Mountain	 	3.5%–7% NSRSS,	 	
 	 	2.9%–4% NSR,	 	
 	 	10% NPI	 	
Ruby Hill	 	3% modified NSR	 	
Cortez	 	1.5% GSR	 	
Cortez – Pipeline/South Pipeline deposit	 	0.4%–9% GSR	 	
Cortez – portion of Pipeline/South Pipeline deposit	 	5% NV	 	
 	 	 	 	
South America	 	 	 	
Veladero	 	3.75% modified NSR	 	
Lagunas Norte	 	2.51% NSR	 	
 	 	 	 	
Australia Pacific	 	 	 	
Porgera	 	2% NSR, 0.25% other	 	
Queensland & Western Australia production(1)	 	2.5%–2.7% of gold revenue	 	
Cowal	 	4% of net gold revenue	 	
Africa	 	 	 	
Bulyanhulu	 	3% NSR	 	
Tulawaka	 	3% NSR	 	
North Mara – Nyabirama and Nyabigena pit	 	3% NSR, 1% LT	 	
North Mara – Gokona pit	 	3% NSR, 1.1% LT	 	
Buzwagi	 	3% NSR, 30% NPI(2)	 	
Capital Projects	 	 	 	
Donlin Creek Project	 	1.5% NSR (first 5 years),	 	
 	 	4.5% NSR (thereafter),	 	
 	 	8.0% NPI(3)	 	
Pascua-Lama Project – Chile gold production	 	1.5%–9.8% GPSS	 	
Pascua-Lama Project – Chile copper production	 	2% NSR	 	
Pascua-Lama Project – Argentina production	 	3% modified NSR	 	
Pueblo Viejo	 	3.2% NSR (for gold & silver),	 	
 	 	28.75% NPI(3)	 	
Cerro Casale	 	3% NSR (capped at	 	
 	 	$3 million cumulative)	 	
Reko Diq	 	2% NSR	 	
Kabanga	 	3% NSR	 	
Other	 	 	 	
Barrick Energy	 	0.40% NPI, 0.54% ORR,	 	
 	 	22.1% Crown royalty, net	 	

(1)           Includes the Kalgoorlie, Kanowna, Granny Smith, Plutonic, Darlot and Lawlers mines.
(2)           The NPI is calculated as a percentage of profits realized from the Buzwagi mine after all capital, exploration, and development costs and interest incurred in relation to the Buzwagi mine have been recouped and all operating costs relating to the Buzwagi mine have been paid. No amount is currently payable.
(3)           The NPI is calculated as a percentage of profits realized from the mine until all funds invested to date with interest at an agreed upon rate are recovered. No amount is currently payable.
 
7 · Exploration and Project Development Expense

For the years ended December 31	 	2010	 	2009	 	2008	 	
 	 	 	 	 	 	 	 	
Exploration:	 	 	 	 	 	 	 	
Minesite exploration	 	$	66	 	$	42	 	$	62	 	
Projects	 	114	 	99	 	136	 	
 	 	$	180	 	$	141	 	$	198	 	
Project development expense:	 	 	 	 	 	 	 	
Pueblo Viejo(1)	 	$	3	 	$	(3	)	$	62	 	
Sedibelo	 	2	 	8	 	17	 	
Fedorova	 	1	 	2	 	24	 	
Pascua-Lama	 	12	 	17	 	21	 	
Kainantu	 	3	 	10	 	28	 	
Cerro Casale	 	63	 	—	 	—	 	
Other	 	19	 	27	 	33	 	
 	 	103	 	61	 	185	 	
Other project expenses(2)	 	50	 	24	 	57	 	
 	 	$	153	 	$	85	 	$	242	 	

(1)	We record a non-controlling interest balance for our partner’s share of expenditures within “non-controlling interests” in the income statement. In 2009, the costs include a reimbursement of historical remediation expenditures.	
(2)	Includes costs related to corporate development activities, research and development costs, and other corporate project expenditures.	
 
Accounting Policy for Exploration and Project Expenditures
 
Exploration Expenditures
 
Exploration activities relate to the initial search for deposits with economic potential and the evaluation and assessment of deposits that have been identified as having economic potential. Exploration activity is undertaken at both greenfield sites (sites where we do not have any mineral deposits that are already being mined or developed) and brownfield sites (sites that are adjacent or in close proximity to a mineral deposit that is classified within proven and probable reserves as defined by United States reporting standards and is already being mined or developed). Exploration expenditures reflect the costs of such activities, including exploratory drilling costs.
 
Expenditures on exploration activity conducted at greenfield sites are expensed as incurred. Exploration expenditures are capitalized when incurred at brownfield sites where the activities are directed at obtaining additional information on an ore body that is classified within proven and probable reserves or for the purpose of converting a mineral resource into a proven and probable reserve and, prior to the commencement of the exploration program, we can conclude that it is probable that such a conversion will take place. Our assessment
 
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Barrick Financial Report 2010 | Notes to Consolidated Financial Statements
 
of probability is based on the following factors: results from previous exploration programs; results from geological models; results from a mine scoping study confirming economic viability of the resource; and preliminary estimates of mine inventory, ore grade, cash flow and mine life. Costs incurred at brownfield sites that meet the above criteria are capitalized as mine development costs. All other exploration expenditures incurred at these sites are expensed as mine site exploration.
 
Project Expenditures
 
Project expenditures reflect costs incurred at development projects related to establishing the technical and commercial viability of developing mineral deposits identified through exploration or acquired through a business combination or asset acquisition. Project expenditures include the cost of: i) establishing the volume and grade of deposits through drilling of core samples, trenching and sampling activities in an ore body that is classified as either a mineral resource or a proven and probable reserve; ii) determining the optimal methods of extraction and metallurgical and treatment processes; iii) studies related to surveying, transportation and infrastructure requirements; iv) permitting activities; and v) economic evaluations to determine whether development of the mineralized material is commercially justified, including scoping, prefeasibility and final feasibility studies.
 
We capitalize the costs of activities at projects after mineralization is classified as proven and probable reserves. Before classifying mineralization as proven and probable reserves, the costs of project activities are expensed as incurred, except for costs incurred to construct tangible assets that are capitalized within property, plant and equipment. The costs of start-up activities at mines and projects, such as recruiting and training costs, are also expensed as incurred within project development expense.
 
The Cerro Casale, Donlin Creek, Reko Diq and Kabanga projects are in various stages of development; however, none of these projects had met the criteria for cost capitalization at December 31, 2010. We account for our interests in the Reko Diq and Kabanga projects using the equity method of accounting and project expenses are included in “equity investees” in the Consolidated Income Statement (see note 12). Effective January 1, 2009, we determined that mineralization of Pueblo Viejo met the definition of proven and probable reserves for United States reporting purposes. Following this determination, we began capitalizing the cost of project activities at Pueblo Viejo.
 
8 · Other Expense and Income
 
a) Other Expense

For the years ended December 31	 	2010	 	2009	 	2008	 	
Regional business unit costs(1)	 	$	184	 	$	163	 	$	149	 	
Severance costs(2)	 	16	 	41	 	1	 	
Currency translation losses(3)	 	26	 	8	 	37	 	
Changes in estimate of AROs at closed mines	 	14	 	8	 	9	 	
Finance charges(4)	 	22	 	—	 	—	 	
Community relations(5)	 	35	 	14	 	21	 	
Environmental costs	 	8	 	13	 	7	 	
World Gold Council fees	 	16	 	14	 	11	 	
Non-hedge derivative losses	 	—	 	1	 	17	 	
Provision for supply contract restructuring costs(6)	 	46	 	—	 	—	 	
Pension and other post-retirement benefit expense	 	6	 	9	 	5	 	
Other items	 	90	 	72	 	45	 	
 	 	$	463	 	$	343	 	$	302	 	

(1)           Relates to costs incurred at regional business unit offices.
(2)           In 2009, includes $21 million in restructuring costs related to an organizational review, and other termination and restructuring costs.
(3)           Amounts attributable to currency translation losses on working capital balances.
(4)           Represents financing charges on the settlement obligation to close out gold sales contracts. Those contracts were settled in fourth quarter 2010 (note 23).
(5)           Amounts mainly related to community programs and other related expenses.
(6)           Amount relates to the present value of required payments to restructure a tire supply contract.
 
Environmental Costs
 
During the production phases of a mine, we incur and expense the cost of various activities connected with environmental aspects of normal operations, including compliance with and monitoring of environmental regulations; disposal of hazardous waste produced from normal operations; and operation of equipment designed to reduce or eliminate environmental effects. In limited circumstances, costs to acquire and install plant and equipment are capitalized during the production phase of a mine if the costs are expected to mitigate risk or prevent future environmental contamination from normal operations.
 
When a contingent loss arises from the improper use of an asset, a loss accrual is recorded if the loss is probable and reasonably estimable. Amounts recorded are adjusted as further information develops or if circumstances change. Recoveries of environmental remediation costs from other parties are recorded as assets when receipt is deemed probable.
 
121 

 
Notes to Consolidated Financial Statements
 
b) Impairment Charges

For the years ended December 31	 	2010	 	2009	 	2008	 	
Impairment of goodwill (note 17)(1)	 	$	—	 	$	63	 	$	584	 	
Impairment of long-lived assets(2)	 	7	 	214	 	14	 	
 	 	7	 	277	 	598	 	
Write-down of investments (note 12)(3)	 	—	 	1	 	205	 	
 	 	$	7	 	$	278	 	$	803	 	

(1)           In 2009, we recorded an impairment charge of $63 million for Plutonic. Impairment charges for Osborne ($64 million) and Henty ($30 million) in 2008 are reflected in the results of discontinued operations. Impairment charges recorded in 2008 related to Kanowna ($272 million), North Mara ($216 million), Barrick Energy ($88 million) and Marigold ($8 million).
(2)           In 2010, an impairment charge of $7 million was recorded to write off the remaining carrying amount of an intangible asset relating to a tire supply contract. In 2009, impairment charges of $43 million and $158 million were recorded to reduce the carrying amount of long-lived assets for Plutonic and Sedibelo to their estimated fair values, respectively. In 2008, impairment charges primarily relate to a $12 million charge recorded to reduce the carrying amount of long-lived assets at Marigold to their estimated fair value.
(3)           In 2008, we recorded impairment charges on our investments in Highland Gold ($140 million), on Asset-Backed Commercial Paper ($39 million) and various other investments in junior gold mining companies ($26 million).
 
c) Other Income

For the years ended December 31	 	2010	 	2009	 	2008	 	
Gains on sale of assets(1)	 	$	21	 	$	13	 	$	187	 	
Gain on sale of investments(2)	 	12	 	6	 	59	 	
Gain on acquisition of assets(3)	 	29	 	72	 	—	 	
Royalty income	 	7	 	5	 	25	 	
Sale of water rights	 	3	 	4	 	4	 	
Non-hedge derivative gains	 	24	 	—	 	—	 	
Other	 	28	 	12	 	16	 	
 	 	$	124	 	$	112	 	$	291	 	

(1)           In 2008, we recorded a gain of $167 million on the disposition of royalties to Royal Gold and a gain of $9 million on the sale of the Doyon royalty.
(2)           In 2008, we recorded a gain of $12 million on the sale of available-for-sale investments. We also sold Asset-Backed Commercial Paper for cash proceeds of $49 million and recorded a gain on sale of $42 million.
(3)           Relates to a $29 million gain recorded on gaining control of Cerro Casale following the acquisition of an additional 25% interest (note 3f). In 2009, we recorded a gain of $72 million on the acquisition of the remaining 50% interest in Hemlo (note 3h).
 
9 · Income Tax Expense

For the years ended December 31	 	2010	 	2009	 	2008	 	
Current	 	 	 	 	 	 	 	
Canada	 	$	15	 	$	(21	)	$	22	 	
International	 	1,180	 	562	 	613	 	
 	 	$	1,195	 	$	541	 	$	635	 	
Deferred	 	 	 	 	 	 	 	
Canada	 	$	54	 	$	(11	)	$	3	 	
International	 	179	 	210	 	(146	)	
 	 	$	233	 	$	199	 	$	(143	)	
Income tax expense before elements below	 	$	1,428	 	$	740	 	$	492	 	
Net currency translation (gains) losses on deferred tax balances	 	(2	)	(40	)	98	 	
Impact of legislative amendments in Australia	 	(78	)	—	 	—	 	
Dividend withholding tax	 	74	 	—	 	—	 	
Canadian functional currency election	 	—	 	(70	)	—	 	
Canadian tax rate changes	 	—	 	59	 	—	 	
Total expense	 	1,422	 	689	 	590	 	
Current (2010) and deferred income tax (expense) recovery (2009 and 2008) – discontinued operations	 	(52	)	(41	)	4	 	
Income tax expense – continuing operations	 	$	1,370	 	$	648	 	$	594	 	
 
Currency Translation
 
Deferred tax balances are subject to remeasurement for changes in currency exchange rates each period. The most significant balances are Canadian deferred tax liabilities with a carrying amount of approximately $25 million, Argentinean deferred tax liabilities with a carrying amount of approximately $106 million, and Australian and Papua New Guinea deferred tax liabilities with a carrying amount of approximately $144 million. In 2010 and 2009, the appreciation of the Canadian and Australian dollar against the US dollar, and the weakening of the Argentine peso against the US dollar resulted in net translation gains totaling $2 million and $40 million, respectively. These gains are included within deferred tax expense/recovery.
 
122 

 
Barrick Financial Report 2010 | Notes to Consolidated Financial Statements
 
Impact of Legislative Amendments in Australia
 
In Australia, we elected to enter into the consolidated tax regime in 2004 (in 2002 for the former Placer Dome Inc. subsidiaries). At the time the elections were made, there were certain accrued gains that were required to be included in taxable income upon subsequent realization. In second quarter 2010, clarifying legislative amendments to the Australian consolidation tax rules were enacted. These amendments enable us to reduce the inclusion of certain of these accrued gains, resulting in a permanent decrease in taxable income. The impact of the amendment is a current tax recovery of $78 million recorded in second quarter 2010.
 
Dividend Withholding Tax
 
In fourth quarter 2010, we recorded a $74 million dollar dividend withholding current tax expense in respect of funds available to be repatriated from a foreign subsidiary.
 
Canadian Functional Currency Election
 
In fourth quarter 2008, we filed an election under Canadian draft legislation to prepare some of our Canadian tax returns using US dollar functional currency effective January 1, 2008. The legislation was enacted in first quarter 2009 which resulted in a one-time benefit of $70 million.
 
Canadian Tax Rate Changes
 
In fourth quarter 2009, a provincial rate change was enacted in Canada that lowered the applicable tax rate. The impact of this tax rate change was to reduce net deferred tax assets in Canada by $59 million, recorded as a component of deferred tax expense.
 
Reconciliation to Canadian Statutory Rate

For the years ended December 31	 	2010	 	2009	 	2008	 	
At 31% (2009: 33%; 2008: 33.50%) statutory rate	 	$	1,422	 	$	(1,198	)	$	522	 	
Increase (decrease) due to:	 	 	 	 	 	 	 	
Allowances and special tax deductions(1)	 	(168	)	(110	)	(100	)	
Impact of foreign tax rates(2)	 	73	 	1,786	 	(86	)	
Expenses not tax deductible	 	25	 	16	 	13	 	
Impairment charges not tax deductible	 	—	 	21	 	199	 	
Gain on acquisition of assets not taxable	 	—	 	(18	)	—	 	
Net currency translation (gains)/losses on deferred tax balances	 	(2	)	(40	)	98	 	
Canadian functional currency election	 	—	 	(70	)	—	 	
Impact of legislative amendments in Australia	 	(78	)	—	 	—	 	
Release of valuation allowances	 	(129	)	—	 	(175	)	
Valuation allowances set up against current year tax losses	 	73	 	163	 	74	 	
Canadian tax rate changes	 	—	 	59	 	—	 	
Dividend withholding tax	 	74	 	—	 	—	 	
Other withholding taxes	 	21	 	16	 	21	 	
Mining taxes(3)	 	48	 	21	 	19	 	
Other items	 	11	 	2	 	9	 	
Income tax expense	 	$	1,370	 	$	648	 	$	594	 	

(1)          We are able to claim certain allowances and tax deductions unique to extractive industries that result in a lower effective tax rate.
(2)          We operate in multiple foreign tax jurisdictions that have tax rates different than the Canadian statutory rate. Additionally, we have reinvested earnings and cash flow generated by the Zaldívar mine in Chile to fund a portion of the construction cost of Pascua-Lama. The reinvestment of these earnings and cash flow resulted in a lower tax rate applied for the period. Amounts in 2009 include the impact of the elimination of gold sales contracts in a low tax jurisdiction.
(3)          For 2010, this includes the impact of adopting the new Chilean specific mining tax (royalty).
 
123 

 
Notes to Consolidated Financial Statements
 
10 · Earnings (loss) per share

For the years ended December 31
 ($ millions, except shares in millions	 	2010	 	2009	 	2008	 	
and per share amounts in dollars)	 	Basic	 	Diluted	 	Basic	 	Diluted	 	Basic	 	Diluted	 	
Income (loss) from continuing operations	 	$	3,153	 	$	3,153	 	$	(4,371	)	$	(4,371	)	$	889	 	$	889	 	
Plus: interest on convertible debentures	 	—	 	—	 	—	 	—	 	—	 	3	 	
Income (loss) available to common shareholders and after assumed conversions	 	3,153	 	3,153	 	(4,371	)	(4,371	)	889	 	892	 	
Income (loss) from discontinued operations	 	121	 	121	 	97	 	97	 	(104	)	(104	)	
Net income (loss)	 	$	3,274	 	$	3,274	 	$	(4,274	)	$	(4,274	)	$	785	 	$	788	 	
Weighted average shares outstanding	 	987	 	987	 	903	 	903	 	872	 	872	 	
Effect of dilutive securities	 	 	 	 	 	 	 	 	 	 	 	 	 	
Stock options	 	—	 	2	 	—	 	—	 	—	 	4	 	
Convertible debentures	 	—	 	8	 	—	 	—	 	—	 	9	 	
 	 	987	 	997	 	903	 	903	 	872	 	885	 	
Earnings (loss) per share	 	 	 	 	 	 	 	 	 	 	 	 	 	
Income (loss) from continuing operations	 	$	3.19	 	$	3.16	 	$	(4.84	)	$	(4.84	)	$	1.02	 	$	1.01	 	
Net income (loss)	 	$	3.32	 	$	3.28	 	$	(4.73	)	$	(4.73	)	$	0.90	 	$	0.89	 	
 
Earnings per share is computed by dividing net income available to common shareholders by the weighted average number of common shares outstanding for the period. Diluted earnings per share reflect the potential dilution that could occur if additional common shares are assumed to be issued under securities that entitle their holders to obtain common shares in the future. For stock options, the number of additional shares for inclusion in diluted earnings per share calculations is determined using the treasury stock method. Under this method, stock options, whose exercise price is less than the average market price of our common shares, are assumed to be exercised and the proceeds are used to repurchase common shares at the average market price for the period. The incremental number of common shares issued under stock options and repurchased from proceeds is included in the calculation of diluted earnings per share. For convertible debentures, the number of additional shares for inclusion in diluted earnings per share calculations is determined using the as if converted method. The incremental number of common shares issued is included in the number of weighted average shares outstanding and interest on the convertible debentures is excluded from the calculation of income.
 
124 

 
Barrick Financial Report 2010 | Notes to Consolidated Financial Statements
 
11 · Cash Flow – Other Items
 
a) Operating Cash Flows – Other Items

For the years ended December 31	 	2010	 	2009	 	2008	 	
Adjustments for non-cash income statement items:	 	 	 	 	 	 	 	
Currency translation losses (note 8a)	 	$	26	 	$	8	 	$	37	 	
Amortization of premium on debt securities (note 20b)	 	(6	)	(6	)	(7	)	
Amortization of debt issue costs (note 20b)	 	4	 	6	 	7	 	
Stock option expense (note 28a)	 	14	 	20	 	25	 	
Loss from equity in investees (note 12)	 	41	 	87	 	64	 	
Gain on sale of investments (note 8c)	 	(12	)	(6	)	(59	)	
Losses on write-down of inventory (note 13)	 	3	 	6	 	62	 	
Non-controlling interests (notes 2b and 27)	 	23	 	6	 	12	 	
Net change in current operating assets and liabilities, excluding inventory	 	195	 	148	 	7	 	
Revisions to AROs (note 22)	 	8	 	10	 	9	 	
Settlement of AROs (note 22)	 	(44	)	(39	)	(38	)	
Amortization of hedge gains/losses on acquired gold hedge position	 	(2	)	(10	)	(2	)	
Other net operating activities	 	$	250	 	$	230	 	$	117	 	
Operating cash flow includes payments for:	 	 	 	 	 	 	 	
Pension plan contributions (note 29a)	 	$	56	 	$	50	 	$	47	 	
Cash interest paid	 	400	 	311	 	213	 	
 
b) Investing Cash Flows – Other Items

For the years ended December 31	 	2010	 	2009	 	2008	 	
Funding for equity investees (note 12)	 	$	(51	)	$	(80	)	$	(107	)	
Loans to joint venture partners	 	—	 	—	 	(4	)	
Purchase of land and water rights	 	—	 	—	 	(16	)	
Purchases of royalties	 	—	 	—	 	(42	)	
Long-term supply contract	 	—	 	—	 	(35	)	
Other	 	—	 	(7	)	(27	)	
Other net investing activities	 	$	(51	)	$	(87	)	$	(231	)	
 
c) Financing Cash Flows – Other Items

For the years ended December 31	 	2010	 	2009	 	2008	 	
Financing fees on long-term debt	 	$	(37	)	$	(16	)	$	(11	)	
Derivative settlements	 	12	 	(10	)	(23	)	
Other net financing activities	 	$	(25	)	$	(26	)	$	(34	)	
 
125 

 
Notes to Consolidated Financial Statements
 
12 · Equity in Investees and Other Investments
 
a) Equity Method Investment Continuity

 	 	Highland	 	Atacama(1)	 	Cerro Casale	 	Donlin Creek	 	Kabanga	 	Total	 	
At January 1, 2008	 	$	169	 	$	118	 	$	734	 	$	64	 	$	—	 	$	1,085	 	
Purchases	 	1	 	—	 	41	 	—	 	—	 	42	 	
Equity pick-up (loss) from equity investees	 	5	 	(32	)	(11	)	(17	)	(9	)	(64	)	
Capitalized interest	 	—	 	9	 	42	 	4	 	—	 	55	 	
Funding	 	—	 	62	 	9	 	27	 	9	 	107	 	
Impairment charges	 	(140	)	—	 	—	 	—	 	—	 	(140	)	
At January 1, 2009	 	35	 	157	 	815	 	78	 	—	 	1,085	 	
Equity pick-up (loss) from equity investees	 	6	 	(39	)	(21	)	(18	)	(15	)	(87	)	
Capitalized interest	 	—	 	8	 	46	 	4	 	—	 	58	 	
Funding	 	—	 	31	 	21	 	11	 	17	 	80	 	
At January 1, 2010	 	41	 	157	 	861	 	75	 	2	 	1,136	 	
Equity pick-up (loss) from equity investees	 	12	 	(19	)	(6	)	(22	)	(6	)	(41	)	
Capitalized interest	 	—	 	8	 	12	 	4	 	—	 	24	 	
Funding	 	—	 	12	 	12	 	22	 	5	 	51	 	
Transfer to property, plant and equipment(2)	 	—	 	—	 	(879	)	—	 	—	 	(879	)	
At December 31, 2010	 	$	53	 	$	158	 	$	—	 	$	79	 	$	1	 	$	291	 	
Publicly traded	 	Yes	 	No	 	No	 	No	 	No	 	 	 	

(1)          Represents our investment in Reko Diq.
 
(2)          The carrying amount of the Cerro Casale investment has been transferred to property, plant and equipment as a result of our obtaining control over the entity due to the acquisition of an additional 25% interest. See note 3f for further details.
 
Accounting Policy for Equity Method Investments
 
Under the equity method, we record our equity share of the income or loss of equity investees each period. On acquisition of an equity investment, the underlying identifiable assets and liabilities of an equity investee are recorded at fair value and the income or loss of equity investees is based on these fair values. For an investment in a company that represents a business, if the cost of any equity investment exceeds the total amount of the fair value of identifiable assets and liabilities, any excess is accounted for in a manner similar to goodwill, with the exception that an annual goodwill impairment test is not required. Additional funding into an investee is recorded as an increase in the carrying value of the investment. The carrying amount of each investment in a publicly traded equity investee is evaluated for impairment using the same method as an available-for-sale security.
 
Our investments in non-publicly traded equity investees are exploration and development projects; therefore, we assess if there has been a potential impairment triggering event for an other-than-temporary impairment by: testing the underlying assets of the equity investee for recoverability; and assessing if there has been a change in the mining plan or strategy for the project. If we determine underlying assets are recoverable and no other potential impairment conditions were identified, then our investment in the non-publicly traded equity investee is carried at cost. If the other underlying assets are not recoverable, we record an impairment charge equal to the difference between the carrying amount of the investee and its fair value. Where reliable information is available, we determine fair value based on the present value of cash flows expected to be generated by the investee. Where reliable cash flow information is not available, we determine fair value using a market comparable approach.
 
126 

 
Barrick Financial Report 2010 | Notes to Consolidated Financial Statements
 
b) Other Investments

At December 31	 	2010	 	2009	 	
Available-for-sale securities	 	$	171	 	$	61	 	
Other investments	 	32	 	31	 	
 	 	$	203	 	$	92	 	
 
Available-for-sale Securities

 	 	 	 	2010	 	 	 	2009	 	
 	 	Fair	 	Gains	 	Fair	 	Gains	 	
At December 31	 	value(1) 	 	in OCI	 	value	 	in OCI	 	
Securities in an unrealized gain position	 	 	 	 	 	 	 	 	 	
Equity securities	 	$	169	 	$	85	 	$	54	 	$	27	 	
Benefit plans(2)	 	 	 	 	 	 	 	 	 	
Fixed-income	 	—	 	—	 	1	 	—	 	
Equity	 	—	 	—	 	5	 	—	 	
 	 	169	 	85	 	60	 	27	 	
Securities in an unrealized loss position	 	 	 	 	 	 	 	 	 	
Other equity securities(3)	 	2	 	—	 	1	 	—	 	
 	 	171	 	85	 	61	 	27	 	
Other investments	 	 	 	 	 	 	 	 	 	
Long-term loan receivable(4)	 	32	 	—	 	31	 	—	 	
 	 	$	203	 	$	85	 	$	92	 	$	27	 	

(1) Refer to note 21 for further information on the measurement of fair value.
(2) Under various benefit plans for certain former Homestake executives, a portfolio of marketable fixed-income and equity securities are held in a rabbi trust that is used to fund obligations under the plans.
(3) Other equity securities in a loss position consist of investments in various junior mining companies.
(4) The long-term loan receivable is measured at amortized cost. The principal amount is $35 million.
 
Gains on Investments Recorded in Earnings

 	 	2010	 	2009	 	2008	 	
Gains realized on sales	 	$	12	 	$	6	 	$	59	 	
Cash proceeds from sales	 	$	15	 	$	7	 	$	76	 	
 
Accounting Policy for Available-for-Sale Securities
 
Available-for-sale securities are recorded at fair value with unrealized gains and losses recorded in other comprehensive income (“OCI”). Realized gains and losses are recorded in earnings when investments mature or on sale, calculated using the average cost of securities sold. If the fair value of an investment declines below its carrying amount, we undertake an assessment of whether the impairment is other than temporary. We consider all relevant facts and circumstances in this assessment, particularly: the length of time and extent to which fair value has been less than the carrying amount; the financial condition and near-term prospects of the investee, including any specific events that have impacted its fair value; both positive and negative evidence that the carrying amount is recoverable within a reasonable period of time; and our ability and intent to hold the investment for a reasonable period of time sufficient for an expected recovery of the fair value up to or beyond the carrying amount. We record in earnings any unrealized declines in fair value judged to be other than temporary.
 
13 · Inventories

 	 	Gold	 	Copper	 	
At December 31	 	2010	 	2009	 	2010	 	2009	 	
Raw materials	 	 	 	 	 	 	 	 	 	
Ore in stockpiles	 	$	1,440	 	$	1,052	 	$	110	 	$	77	 	
Ore on leach pads	 	242	 	215	 	156	 	172	 	
Mine operating supplies	 	563	 	488	 	25	 	19	 	
Work in process	 	265	 	215	 	48	 	5	 	
Finished products	 	 	 	 	 	 	 	 	 	
Gold doré	 	75	 	69	 	—	 	—	 	
Copper cathode	 	—	 	—	 	15	 	4	 	
Gold concentrate	 	19	 	20	 	—	 	—	 	
 	 	2,604	 	2,059	 	354	 	277	 	
Non-current ore in stockpiles(1)	 	(958	)	(679	)	(148	)	(117	)	
 	 	$	1,646	 	$	1,380	 	$	206	 	$	160	 	

(1) Ore that we do not expect to process in the next 12 months is classified within other assets.
 
Accounting Policy for Inventory
 
Material extracted from our mines is classified as either ore or waste. Ore represents material that, at the time of extraction, we expect to process into a saleable form, and sell at a profit. Ore is recorded as an asset that is classified within inventory as material is extracted from the open pit or underground mine. Ore is accumulated in stockpiles that are subsequently processed into gold/copper in a saleable form under a mine plan that takes into consideration optimal scheduling of production of our reserves, present plant capacity, and the market price of gold/copper. Gold/copper work in process represents gold/copper in the processing circuit that we count as production but is not yet in a saleable form.
 
Gold and copper ore contained in stockpiles is measured by estimating the number of tons added and removed from the stockpile, and the associated estimate of gold and copper contained therein (based on assay data) and applying estimated metallurgical recovery rates (based on the expected processing method). Stockpile ore tonnages are verified by periodic surveys. Costs are allocated to ore stockpiles based on quantities
 
127 

 
Notes to Consolidated Financial Statements
 
of material stockpiled using current mining costs incurred up to the point of stockpiling the ore and including allocations of waste mining costs, overheads, depreciation, depletion and amortization relating to mining operations. As ore is processed, costs are removed based on recoverable quantities of gold and/or copper and each stockpile’s average cost per unit. Ore stockpiles are reduced by provisions required to reduce inventory to net realizable value.
 
We record gold in process, gold doré and gold in concentrate form at average cost, less provisions required to reduce inventory to market value. Average cost is calculated based on the cost of inventory at the beginning of a period, plus the cost of inventory produced in a period. Costs capitalized to in process and finished goods inventory include the cost of stockpiles processed; direct and indirect materials and consumables; direct labor; repairs and maintenance; utilities; amortization of property, plant and equipment; and local mine administrative expenses. Costs are removed from inventory and recorded in cost of sales and amortization expense based on the average cost per ounce of gold in inventory. Mine operating supplies are recorded at the lower of purchase cost and market value.
 
We record provisions to reduce inventory to net realizable value, to reflect changes in economic factors that impact inventory value or to reflect present intentions for the use of slow moving and obsolete supplies inventory.

For the years ended December 31	 	2010	 	2009	 	2008	 	
Inventory impairment charges	 	$	3	 	$	6	 	$	62	 	

Ore on leach pads
 
The recovery of gold and copper from certain oxide ores is achieved through the heap leaching process. Our Pierina, Lagunas Norte, Veladero, Cortez, Bald Mountain, Round Mountain, Ruby Hill and Marigold mines all use a heap leaching process for gold and our Zaldívar mine uses a heap leaching process for copper. Under this method, ore is placed on leach pads where it is treated with a chemical solution, which dissolves the gold or copper contained in the ore. The resulting “pregnant” solution is further processed in a plant where the gold or copper is recovered. For accounting purposes, costs are added to ore on leach pads based on current mining and leaching costs, including applicable depreciation, depletion and amortization relating to mining operations. Costs are removed from ore on leach pads as ounces or pounds are recovered based on the average cost per recoverable ounce of gold or pound of copper on the leach pad.
 
Estimates of recoverable gold or copper on the leach pads are calculated from the quantities of ore placed on the leach pads (measured tons added to the leach pads), the grade of ore placed on the leach pads (based on assay data) and a recovery percentage (based on ore type).
 
Although the quantities of recoverable gold or copper placed on the leach pads are reconciled by comparing the grades of ore placed on pads to the quantities of gold or copper actually recovered (metallurgical balancing), the nature of the leaching process inherently limits the ability to precisely monitor inventory levels. As a result, the metallurgical balancing process is regularly monitored and estimates are refined based on actual results over time. Historically, our operating results have not been materially impacted by variations between the estimated and actual recoverable quantities of gold or copper on our leach pads. At December 31, 2010, the weighted average cost per recoverable ounce of gold and recoverable pound of copper on leach pads was $547 per ounce and $1.10 per pound, respectively (2009: $383 per ounce of gold and $1.01 per pound of copper). Variations between actual and estimated quantities resulting from changes in assumptions and estimates that do not result in write-downs to net realizable value are accounted for on a prospective basis.
 
The ultimate recovery of gold or copper from a leach pad will not be known until the leaching process is concluded. Based on current mine plans, we expect to place the last ton of ore on our current leach pads at dates for gold ranging from 2011 to 2027 and for copper ranging from 2011 to 2027. Including the estimated time required for residual leaching, rinsing and reclamation activities, we expect that our leaching operations will terminate within a period of up to six years following the date that the last ton of ore is placed on the leach pad.
 
The current portion of ore inventory on leach pads is determined based on estimates of the quantities of gold or copper at each balance sheet date that we expect to recover during the next 12 months.
 
128 

 
Barrick Financial Report 2010 | Notes to Consolidated Financial Statements
 
Ore in Stockpiles

At December 31	 	2010	 	2009	 	Year(1)	 	
Gold	 	 	 	 	 	 	 	
Goldstrike	 	 	 	 	 	 	 	
Ore that requires roasting	 	$	499	 	$	452	 	2025	 	
Ore that requires autoclaving	 	42	 	46	 	2024	 	
Kalgoorlie	 	89	 	80	 	2021	 	
Porgera	 	140	 	117	 	2024	 	
Cowal	 	93	 	88	 	2019	 	
Veladero	 	21	 	26	 	2024	 	
Cortez	 	365	 	98	 	2027	 	
Turquoise Ridge	 	14	 	15	 	2036	 	
Other	 	177	 	130	 	 	 	
Copper	 	 	 	 	 	 	 	
Zaldívar	 	110	 	77	 	2026	 	
 	 	$	1,550	 	$	1,129	 	 	 	

(1) Year in which we expect to complete full processing of the ore in stockpiles.
 
Ore on Leachpads

At December 31	 	2010	 	2009	 	Year(1)	 	
Gold	 	 	 	 	 	 	 	
Veladero	 	$	87	 	$	75	 	2011	 	
Cortez	 	16	 	25	 	2011	 	
Ruby Hill	 	10	 	24	 	2011	 	
Bald Mountain	 	15	 	24	 	2011	 	
Lagunas Norte	 	17	 	22	 	2011	 	
Round Mountain	 	25	 	18	 	2011	 	
Pierina	 	53	 	14	 	2011	 	
Marigold	 	19	 	13	 	2011	 	
Copper	 	 	 	 	 	 	 	
Zaldívar	 	156	 	172	 	2011	 	
 	 	$	398	 	$	387	 	 	 	

(1) Year in which we expect to complete full processing of the ore on leachpads.
 
Purchase Commitments
 
At December 31, 2010, we had purchase obligations for supplies and consumables of approximately $1,449 million.
 
14 · Accounts Receivable and Other Current Assets

At December 31	 	2010	 	2009	 	
Accounts receivable	 	 	 	 	 	
Amounts due from concentrate sales	 	$	22	 	$	9	 	
Amounts due from copper cathode sales	 	159	 	109	 	
Other receivables	 	165	 	133	 	
 	 	$	346	 	$	251	 	
Other current assets	 	 	 	 	 	
Derivative assets (note 20e)	 	$	615	 	$	214	 	
Goods and services taxes recoverable(1)	 	211	 	201	 	
Deferred share-based compensation (note 28b)	 	13	 	7	 	
Prepaid expenses	 	95	 	92	 	
Other	 	13	 	10	 	
 	 	$	947	 	$	524	 	

(1)           2010 includes $59 million and $132 million in VAT and fuel tax receivables in Africa and South America, respectively (2009: $50 million and $111 million, respectively).
 
129 

 
 
Notes to Consolidated Financial Statements
 
15 · Property, Plant and Equipment

 	 	Assets	 	 	 	 	 	Exploration	 	 	 	 	 	
 	 	subject to	 	Accumulated	 	Capital	 	properties	 	Construction	 	 	 	
 	 	amortization(1),(2) 	 	amortization	 	Projects(6)	 	& VBPP	 	in progress(3)	 	Total	 	
At January 1, 2008	 	$	14,073	 	$	(7,598	)	$	1,089	 	$	474	 	$	397	 	$	8,435	 	
Additions	 	584	 	(155	)	756	 	—	 	626	 	1,811	 	
Acquisitions	 	1,609	 	—	 	—	 	409	 	—	 	2,018	 	
Capitalized interest(5)	 	57	 	—	 	102	 	8	 	—	 	167	 	
Amortization	 	—	 	(912	)	—	 	—	 	—	 	(912	)	
Impairments	 	(14	)	—	 	—	 	—	 	—	 	(14	)	
Transfers between categories(4)	 	481	 	—	 	(31	)	(178	)	(272	)	—	 	
At January 1, 2009	 	16,790	 	(8,665	)	1,916	 	713	 	751	 	11,505	 	
Additions	 	445	 	21	 	1,207	 	3	 	608	 	2,284	 	
Acquisitions	 	276	 	—	 	—	 	—	 	—	 	276	 	
Capitalized interest(5)	 	71	 	—	 	132	 	8	 	—	 	211	 	
Amortization	 	—	 	(1,033	)	—	 	—	 	—	 	(1,033	)	
Impairments	 	(56	)	—	 	(122	)	—	 	—	 	(178	)	
Currency translation adjustment	 	60	 	—	 	—	 	—	 	—	 	60	 	
Transfers between categories(4)	 	1,130	 	—	 	(616	)	(92	)	(422	)	—	 	
At January 1, 2010	 	18,716	 	(9,677	)	2,517	 	632	 	937	 	13,125	 	
Additions	 	533	 	43	 	1,957	 	(1	)	1,032	 	3,564	 	
Acquisitions	 	252	 	—	 	1,732	 	116	 	—	 	2,100	 	
Capitalized interest(5)	 	14	 	—	 	241	 	10	 	—	 	265	 	
Amortization	 	—	 	(1,331	)	—	 	—	 	—	 	(1,331	)	
Currency translation adjustment	 	28	 	—	 	—	 	—	 	—	 	28	 	
Transfers between categories(4)	 	1,263	 	—	 	5	 	(64	)	(1,204	)	—	 	
At December 31, 2010	 	$	20,806	 	$	(10,965	)	$	6,452	 	$	693	 	$	765	 	$	17,751	 	

(1)           Represents capitalized reserve acquisition and development costs and buildings, plant and equipment.
(2)           Includes assets under capital leases, leach pads and tailings dams.
(3)           Includes construction in process for tangible assets at operating mines, as well as deposits on long lead capital items. Once an asset is available for use, it is transferred to assets subject to amortization and amortized over its estimated useful life.
(4)           Includes construction in process that is transferred to buildings, plant and equipment as the asset is available for use and value beyond proven and probable reserves (“VBPP”) that is transferred to capitalized reserve acquisition and development costs, once mineralized material is converted into proven and probable reserves. In 2009, Buzwagi transitioned from a development project to an operating mine and its property, plant, and equipment balance was transferred from exploration properties, capital projects & VBPP to assets subject to amortization and construction in progress.
(5)           Capitalized interest for assets subject to amortization primarily reflects capitalized interest at Cortez Hills.
(6)           Includes construction in process for tangible assets at capital projects.
 
a) Accounting Policy for Property, Plant and Equipment
Capitalized Reserve Acquisition Costs
 
We capitalize the cost of acquisition of land and mineral rights. On acquiring a mineral or petroleum and natural gas property, we estimate the fair value of proven and probable reserves, and we record these amounts as assets at the date of acquisition. When production begins, capitalized reserve acquisition costs are amortized using the units-of-production (“UOP”) method, whereby the numerator is the number of ounces of gold/pounds of copper/barrels of oil equivalent (boe) produced and the denominator is the estimated recoverable ounces of gold/pounds of copper/boe contained in proven and probable reserves.
 
Value Beyond Proven and Probable Reserves (“VBPP”)
 
On acquisition of mineral property, we prepare an estimate of the fair value of the resources and exploration potential of that property and record this amount as an asset (VBPP) as at the date of acquisition. As part of our annual business cycle, we prepare estimates of proven and probable gold and copper mineral reserves for each mineral property. The change in reserves, net of production is used to determine the amount to be converted from VBPP to proven and probable reserves subject to amortization. For 2010 the effect on amortization expense of transfers from VBPP to proven and probable reserves is an increase of $3 million (2009: $3 million increase; 2008: $5 million increase).
 
130 

 
Barrick Financial Report 2010 | Notes to Consolidated Financial Statements

 	 	VBPP	 	
At January 1, 2008	 	$	313	 	
VBPP conversion to reserves	 	(178	)	
Acquisitions(1)	 	381	 	
At January 1, 2009	 	516	 	
VBPP conversion to reserves	 	(93	)	
At January 1, 2010	 	$	423	 	
VBPP conversion to reserves	 	(64	)	
At December 31, 2010	 	$	359	 	

(1) Represents VBPP acquired on acquisition of the additional 40% interest in Cortez.
 
Capitalized Development Costs
 
Capitalized development costs include the costs of removing overburden and waste materials at our open pit mining operations prior to the commencement of production; costs incurred to access reserves at our underground mining operations; exploration expenditures incurred that meet the definition of an asset (refer to note 7 for capitalization criteria for drilling and related costs), and qualifying development costs incurred at our petroleum and natural gas properties.
 
The costs of removing overburden and waste materials to access the ore body at an open pit mine prior to the production phase are referred to as “pre-stripping costs”. Pre-stripping costs are capitalized during the development of an open pit mine. Where a mine operates several open pits that utilize common processing facilities, we capitalize the pre-stripping costs associated with each pit. The production phase of an open pit mine commences when saleable materials, beyond a de minimus amount, are produced. Stripping costs incurred during the production phase of a mine are variable production costs that are included as a component of inventory to be recognized as a component of cost of sales in the same period as the revenue from the sale of inventory. Capitalized pre-stripping costs are amortized using the UOP method, whereby the denominator is the estimated recoverable ounces of gold/pounds of copper in proven and probable reserves in the associated open pit.
 
At our underground mines, we incur development costs to build new shafts, drifts and ramps that will enable us to physically access ore underground. The time over which we will continue to incur these costs depends on the mine life, which could in some cases be greater than 25 years. These underground development costs are capitalized as incurred. Costs incurred and capitalized to enable access to specific ore blocks or areas of the mine, and which only provide an economic benefit over the period of mining that ore block or area, are amortized using the UOP method, whereby the denominator is estimated recoverable ounces of gold/pounds of copper contained in proven and probable reserves within that ore block or area. If capitalized underground development costs provide an economic benefit over the entire mine life, the costs are amortized using the UOP method, whereby the denominator is the estimated recoverable ounces of gold/pounds of copper contained in total accessible proven and probable reserves.
 
For our petroleum and natural gas properties, we follow the successful efforts method of accounting, whereby exploration expenditures which are either general in nature or related to an unsuccessful drilling program are expensed. Only costs which relate directly to the discovery and development of specific commercial oil and gas reserves are capitalized as development costs and amortized using the UOP method, whereby the denominator is the estimated recoverable amount of boe in proven developed reserves.
 
Buildings, Plant and Equipment
 
We record buildings, plant and equipment at cost, which includes all expenditures incurred to prepare an asset for its intended use. Cost includes the purchase price; brokers’ commissions; and installation costs including architectural, design and engineering fees, legal fees, survey costs, site preparation costs, freight charges, transportation insurance costs, duties, testing and preparation charges. In addition, if the cost of an asset acquired other than through a business combination is different from its tax basis on acquisition, the cost is adjusted to reflect the related future income tax consequences.
 
We capitalize costs that extend the productive capacity or useful economic life of an asset. Costs incurred that do not extend the productive capacity or useful economic life of an asset are considered repairs and maintenance and expensed as incurred. We amortize the capitalized cost of assets less any estimated residual value, using the straight-line method over the estimated useful economic life of the asset based on their expected use in our business. The longest estimated useful economic life for buildings and equipment at ore processing facilities is 25 years and for mining equipment is 15 years. Depreciation of oil and gas plants and related facilities is calculated using the UOP method.
 
In the normal course of our business, we have entered into certain leasing arrangements whose conditions meet the criteria for the leases to be classified as capital leases. For capital leases, we record an asset and an obligation at an amount equal to the present value at the beginning of the lease term of minimum lease payments over the lease term. In the case of our capital leasing arrangements, there is transfer of ownership of the leased assets to us at the end of the lease term and therefore we amortize these assets on a basis consistent with our other owned assets. As at December 31, 2010, the carrying value of our capital leases is $72 million.
 
131 

 
Notes to Consolidated Financial Statements
 
Exploration Properties and Development Projects
 
The amounts capitalized to exploration and development projects comprise the cost of mineral interests acquired either as individual asset purchases or as part of a business combination. The amount capitalized to development projects with proven and probable reserves also includes the capitalization cost associated with developing and constructing the mine. The value of such assets is primarily driven by the nature and amount of mineralized material contained in such properties. Exploration and development stage mineral interests represent interests in properties that contain proven and probable reserves or are believed to potentially contain mineralized material consisting of (i) other mineralized material such as measured, indicated and inferred material; (ii) other mine exploration potential such as inferred material not immediately adjacent to existing reserves and mineralization but located within the immediate mine area; (iii) other mine-related exploration potential that is not part of measured, indicated or inferred material greenfield exploration potential; and (iv) any acquired right to explore and develop a potential mineral deposit.
 
Amounts capitalized to capital projects include costs associated with the construction of tangible assets, such as processing plants, permanent housing facilities and other tangible infrastructure associated with the project.
 
Exploration Properties, Capital Projects and VBPP

 	 	Carrying amount	 	Carrying amount	 	
 	 	at December 31,	 	at December 31,	 	
 	 	2010	 	2009	 	
Exploration projects and other land positions	 	 	 	 	 	
Papua New Guinea land positions	 	$	194	 	$	187	 	
Tanzanian exploration properties(1)	 	82	 	—	 	
REN joint venture	 	36	 	—	 	
Other	 	22	 	22	 	
Value beyond proven and probable reserves at producing mines	 	359	 	423	 	
Capital projects(2)	 	 	 	 	 	
Pascua-Lama	 	2,164	 	1,196	 	
Pueblo Viejo	 	2,502	 	1,321	 	
Cerro Casale(3)	 	1,786	 	—	 	
 	 	$	7,145	 	$	3,149	 	

(1)           Represents amounts allocated to exploration properties as a result of the Tusker acquisition. See note 3b for further details.
(2)           The carrying amounts for the Donlin Creek, Reko Diq, and Kabanga projects are reflected in the carrying amounts of the equity investments through which they are owned. Refer to note 12.
(3)           The carrying amount for the Cerro Casale investment has been transferred to property, plant and equipment in 2010 as a result of our obtaining control of the entity due to the acquisition of an additional 25% interest. Refer to note 3f.
 
Capitalized Interest
 
Interest cost is considered an element of the historical cost of an asset when a period of time is necessary to prepare it for its intended use. We capitalize interest costs to exploration properties and development projects prior to when production begins while exploration, development or construction activities are in progress. We also capitalize interest costs on the cost of certain equity method investments, wherein the only significant assets are exploration properties or capital projects, and while exploration, development or construction activities are in progress. For 2010, we capitalized $289 million of interest costs (2009: $269 million).
 
Gold and Copper Mineral Reserves
 
At the end of each fiscal year, as part of our annual business cycle, we prepare estimates of proven and probable gold and copper mineral reserves for each mineral property. We prospectively revise calculations of amortization expense for property, plant and equipment amortized using the UOP method, whereby the denominator is estimated recoverable ounces of gold/pounds of copper. The effect of changes in reserve estimates on amortization expense for 2010 was $nil (2009: $70 million decrease; 2008: $57 million decrease).
 
b) Amortization and Accretion

 	 	2010	 	2009	 	2008	 	
Amortization	 	$	1,149	 	$	1,016	 	$	912	 	
Accretion (note 22)	 	47	 	57	 	45	 	
 	 	$	1,196	 	$	1,073	 	$	957	 	
 
c) Impairment Evaluations
 
Producing Mines, Development Projects and Petroleum & Natural Gas Properties
 
We review and test the carrying amounts of assets when events or changes in circumstances suggest that the carrying amount may not be recoverable. We group assets at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities. For operating mines, capital projects and petroleum and natural gas properties, the individual mine/project/property is a single reporting unit for impairment testing purposes. A potential impairment is identified if the sum of the reporting unit’s undiscounted cash flows is less than its carrying amount. When a potential long-lived asset impairment is identified, the amount of impairment is calculated by comparing its fair value to its carrying amount.
 
132 

 
Barrick Financial Report 2010 | Notes to Consolidated Financial Statements
 
Long-lived assets subject to potential impairment at mine sites/capital projects/petroleum and natural gas properties include buildings, plant and equipment, capitalized reserve acquisition and development costs and VBPP. For impairment assessment purposes, the estimated fair value of buildings, plant and equipment is based on a combination of current depreciated replacement cost and current market value. The estimated fair value of capitalized reserve acquisition, development costs and VBPP is determined using an income approach which measures the present value of the related cash flows expected to be derived from the asset.
 
Exploration Properties
 
After acquisition, various factors can affect the recoverability of the capitalized cost of land and mineral rights, particularly the results of exploration drilling. The length of time between the acquisition of land and mineral rights and when we undertake exploration work varies based on the prioritization of our exploration projects and the size of our exploration budget. If we determine that a potential impairment condition may exist, we compare the sum of the undiscounted cash flows expected to be generated from the project to its carrying amount. If the sum of undiscounted cash flows is less than the carrying amount, an impairment charge is recognized if the carrying amount of the individual long-lived assets within the group exceeds their fair value. For projects that do not have reliable cash flow projections, a market approach is applied.
 
In 2010, we did not record any impairment charge related to our exploration properties. In 2008, we completed a bankable feasibility study (“BFS”) for our Sedibelo platinum project in South Africa meeting the conditions for a 10% interest in the property. We also held the right to increase our interest to 65% in return for a decision to develop Sedibelo and payment of approximately $106 million in fourth quarter 2009. In third quarter 2009, after conducting a thorough review of development alternatives to maximize the project’s potential, we decided not to proceed with this payment to increase our ownership interest in Sedibelo. As a consequence of this decision, we recorded an impairment charge of $158 million in third quarter 2009, reducing the carrying amount of our investment in the project and related assets to their estimated fair values.
 
d) Capital Commitments
 
In addition to entering into various operational commitments in the normal course of business, we had commitments of approximately $1,254 million at December 31, 2010 for construction activities at our capital projects.
 
e) Insurance
 
We purchase insurance coverage for certain insurable losses, subject to varying deductibles, at our mineral properties and corporate locations including losses such as property damage and business interruption. We record losses relating to insurable events as they occur. Proceeds receivable from insurance coverage are recorded at such time as receipt is probable and the amount receivable is fixed or determinable.

Insurance Proceeds	 	2010	 	2009	 	2008	 	
Cost of sales	 	$	2	 	$	18	 	$	30	 	
Other income	 	6	 	26	 	2	 	
 	 	$	8	 	$	44	 	$	32	 	
 
133 

 
Notes to Consolidated Financial Statements
 
16 · Intangible Assets

 	 	2010	 	2009	 	
 	 	Gross carrying	 	Accumulated	 	Net carrying	 	Gross carrying	 	Accumulated	 	Net carrying	 	
For the years ended December 31	 	amount	 	amortization	 	amount	 	amount	 	amortization	 	amount	 	
Water rights(1)	 	$	116	 	$	—	 	$	116	 	$	40	 	$	—	 	$	40	 	
Technology(2)	 	17	 	—	 	17	 	17	 	—	 	17	 	
Supply contracts(3)	 	23	 	16	 	7	 	24	 	15	 	9	 	
 	 	$	156	 	$	16	 	$	140	 	$	81	 	$	15	 	$	66	 	
Aggregate period amortization expense	 	 	 	$	1	 	 	 	 	 	$	—	 	 	 	

For the years ended December 31	 	 	 	2011	 	2012	 	2013	 	2014	 	2015	 	
Estimated aggregate amortization expense	 	 	 	$	—	 	$	2	 	$	2	 	$	2	 	$	2	 	

(1)           Water rights in South America ($116 million) are subject to annual impairment testing and will be amortized when used in the future. In 2010, we recorded a $75 million increase as a result of gaining control of Cerro Casale. Refer to note 3f. In 2009, we increased our investment in water rights for our Sedibelo project by $26 million. We subsequently recorded an impairment charge for water rights related to Sedibelo ($34 million) in third quarter 2009 (note 15c).
(2)           The amount will be amortized using the UOP method over the estimated proven and probable reserves of the Pueblo Viejo mine, with no assumed residual value.
(3)           Relates to a supply agreement with Michelin North America Inc. to secure a supply of tires and will be amortized upon the commencement of the supply of tires in the future.
 
Accounting Policy for Intangible Assets
 
Intangible assets acquired as part of an acquisition of a business are recognized separately from goodwill if the asset is separable or arises from contractual or legal rights. Intangible assets are also recognized when acquired individually or with a group of other assets.
 
Intangible assets are initially recorded at their estimated fair value. Intangible assets with a finite life are amortized over their useful economic lives on a straight-line or UOP basis, as appropriate. Intangible assets having indefinite lives and intangible assets that are not yet ready for use are not amortized and are reviewed annually for impairment. We also review and test the carrying amounts of all intangible assets when events or changes in circumstances suggest that their carrying amount may not be recoverable.
 
In second quarter 2010, after restructuring a tire supply agreement, we recorded an impairment charge of $7 million. In third quarter 2009, after making a decision not to continue developing the Sedibleo project, we recorded an impairment charge of $34 million related to water rights at the project.
 
134 

 
Barrick Financial Report 2010 | Notes to Consolidated Financial Statements
 
17 · Goodwill

 	 	Gold	 	Copper	 	Other	 	 	 	
 	 	North	 	 	 	South	 	 	 	South	 	Barrick	 	 	 	
 	 	America	 	Australia	 	America	 	Africa	 	America	 	Energy	 	Total	 	
At January 1, 2008	 	$	2,381	 	$	1,815	 	$	441	 	$	373	 	$	743	 	$	—	 	$	5,753	 	
Additions(1)	 	23	 	—	 	—	 	—	 	—	 	96	 	119	 	
Other(2)	 	—	 	—	 	—	 	—	 	—	 	(8	)	(8	)	
Impairments(3)	 	(8	)	(272	)	—	 	(216	)	—	 	(88	)	(584	)	
At December 31, 2008	 	2,396	 	1,543	 	441	 	157	 	743	 	—	 	5,280	 	
Other(4)	 	(20	)	—	 	—	 	—	 	—	 	—	 	(20	)	
Impairments(5)	 	—	 	(63	)	—	 	—	 	—	 	—	 	(63	)	
At December 31, 2009	 	2,376	 	1,480	 	441	 	157	 	743	 	—	 	5,197	 	
Additions(6)	 	—	 	—	 	—	 	22	 	—	 	64	 	86	 	
Other(2)	 	—	 	—	 	—	 	—	 	—	 	4	 	4	 	
At December 31, 2010	 	$	2,376	 	$	1,480	 	$	441	 	$	179	 	$	743	 	$	68	 	$	5,287	 	

(1)           Represents goodwill acquired as a result of the acquisitions of an additional 40% interest in Cortez ($20 million), an additional 40% interest in Storm ($3 million) and Barrick Energy ($96 million).
(2)           Represents the impact of foreign exchange rate changes on the translation of Barrick Energy from C$ to US$.
(3)           Impairment charges recorded in 2008 related to Kanowna ($272 million), North Mara ($216 million), Barrick Energy ($88 million), and Marigold ($8 million).
(4)           Represents a reduction of goodwill as a result of the acquisition of an additional 50% interest in the Hemlo mine (note 3h).
(5)           Impairment charge recorded in 2009 related to Plutonic ($63 million).
(6)           Represents goodwill acquired as a result of the acquisition of Tusker ($22 million) (note 3b) and Bountiful, Puskwa and Dolomite ($64 million) (note 3a).
 
Accounting Policy for Goodwill and Goodwill Impairment
 
Under the purchase method, the costs of business acquisitions are allocated to the assets acquired and liabilities assumed based on the estimated fair value at the date of acquisition. The excess of purchase cost over the net fair value of identified tangible and intangible assets and liabilities acquired represents goodwill that is allocated to reporting units. We believe that goodwill arises principally because of the following factors: 1) The going concern value implicit in our ability to sustain and/or grow our business by increasing reserves and resources through new discoveries; 2) The ability to capture unique synergies that can be realized from managing a portfolio of both acquired and existing mines and mineral properties in our regional business units; and 3) the requirement to record a deferred tax liability for the difference between the assigned values and the tax bases of assets acquired and liabilities assumed in a business combination at amounts that do not reflect fair value.
 
Each individual mineral property that is an operating mine is a reporting unit for goodwill impairment testing purposes. On an annual basis, as at October 1, and at any other time if events or changes in circumstances indicate that the fair value of a reporting unit has been reduced below its carrying amount, we evaluate the carrying amount of goodwill for potential impairment.
 
There is no active market for our reporting units. Consequently, when assessing a reporting unit for potential goodwill impairment, we use an income approach (being the net present value of expected future cash flows or net asset value (“NAV”) of the relevant reporting unit) to determine the fair value we could receive for the reporting unit in an arm’s length transaction at the measurement date. Expected future cash flows are based on a probability-weighted approach applied to potential outcomes. Estimates of expected future cash flows reflect estimates of projected future revenues, cash costs of production and capital expenditures contained in our long-term life of mine (“LOM”) plans, which are updated for each reporting unit in the fourth quarter of each fiscal year.
 
135 

 
Notes to Consolidated Financial Statements
 
Our LOM plans are based on detailed research, analysis and modeling to optimize the internal rate of return generated from each reporting unit. As such, these plans consider the optimal level of investment, overall production levels and sequence of extraction taking into account all relevant characteristics of the ore body, including waste to ore ratios, ore grades, haul distances, chemical and metallurgical properties impacting process recoveries and capacities of available extraction, haulage and processing equipment. Therefore, the LOM plan is the appropriate basis for forecasting production output in each future year and the related production costs and capital expenditures.
 
Projected future revenues reflect the forecasted future production levels at each of our reporting units as detailed in our LOM plans. Included in these forecasts is the production of mineral resources that do not currently qualify for inclusion in proven and probable ore reserves where there is a high degree of confidence in its economic extraction. This is consistent with the methodology we use to measure value beyond proven and probable reserves when allocating the purchase price of a business combination to acquired mining assets.
 
Projected future revenues also reflect our estimated long-term metals prices, which are determined based on current prices, an analysis of the expected total production costs of the producers, forward pricing curves of the particular metal and forecasts of expected long-term metals prices prepared by analysts. These estimates often differ from current price levels, but our methodology is consistent with how a market participant would assess future long-term metals prices. In 2010, we have used estimated 2011, 2012 and long-term gold prices of $1,250, $1,250 and $1,150 per ounce, respectively (2009: short-term $1,050, long-term $950), and estimated 2011, 2012 and long-term copper prices of $3.25, $3.25 and $2.75 per pound, respectively (2009: short-term $2.50, long-term $2.25).
 
Our estimates of future cash costs of production and capital expenditures are based on the LOM plans for each reporting unit. Costs incurred in currencies other than the US dollar are translated to US dollars using expected long-term exchange rates based on the relevant forward pricing curve. Oil prices are a significant component, both directly and indirectly, of our expected cash costs of production. We have used an estimated average oil price of $75 per barrel (2009: $75), which is based on the spot price, forward pricing curve, and long-term oil price forecasts prepared by analysts.
 
The discount rate applied to present value the net future cash flows is based upon our real weighted average cost of capital with an appropriate adjustment for the remaining life of a mine and risks associated with the relevant cash flows based on the geographic location of the reporting unit. These risk adjustments were based on observed historical country risk premiums and the average credit default swap spreads for the period. In 2010, we used the following real discount rates for our gold mines with goodwill: United States 2.31% — 3.87% (2009: 3.03% — 4.61% ); Australia 3.05% — 3.83% (2009: 3.53% — 4.45%); Argentina 10.25% (2009: 12.52%); Tanzania 7.12% — 8.67% (2009: 8.79% — 10.37%); Papua New Guinea 8.67% (2009: 8.46%); and Peru 3.76% — 4.53% (2009: 4.87% — 5.78%).The decrease in discount rates compared to the prior year primarily reflects lower risk free borrowing rates. Discount rates for Papua New Guinea increased due to higher country risk premiums. For our copper mine, we used the following real discount rate in 2010: Chile 8.94% (2009: 8.82%). The increase in discount rates compared to the prior year primarily reflects a higher country risk premium.
 
For our gold reporting units, we apply a market multiple to the NAV computed using the present value of future cash flows approach in order to assess their estimated fair value. Gold companies typically trade at a market capitalization that is based on a multiple of their underlying NAV. Consequently, a market participant would generally apply a NAV multiple when estimating the fair value of an operating gold mine.
 
136 

 
Barrick Financial Report 2010 | Notes to Consolidated Financial Statements
 
When selecting NAV multiples to arrive at fair value, we considered trading prices of comparable gold mining companies on October 1, 2010. The selected ranges of multiples for all operating gold mines were also based on mine life. The range of selected multiples in respect of operating gold mines with lives of five years or less were based on the lower end of the observed multiples. Mines with lives greater than five years were generally based on median and/or average observation. Mines with lives of twenty years or greater were based on a 20% increase on the median and/or average observations. In 2010, we have used the following multiples in our assessment of the fair value of our gold reporting units: North America 1.0 – 1.9 (2009: 1.2 – 2.2); Australia 1.0 – 1.6 (2009: 1.3 – 1.8); South America 1.0 – 1.5 (2009: 1.1 – 1.6); and Africa 1.0 – 1.7 (2009: 1.2 – 2.0).
 
In 2010 there were no goodwill impairment charges (2009: $63 million Plutonic; 2008: Kanowna $272 million; North Mara $216 million; Osborne, included in discontinued operations, $64 million; Henty, included in discontinued operations, $30 million; Marigold $8 million; and Barrick Energy $88 million). In second quarter 2009, we acquired the remaining 50% interest in our Hemlo mine, which resulted in a $20 million reduction of goodwill.
 
18 · Other Assets

At December 31	 	2010	 	2009	 	
Non-current ore in stockpiles (note 13)	 	$	1,106	 	$	796	 	
Derivative assets (note 20e)	 	511	 	290	 	
Goods and services taxes recoverable(1)	 	138	 	124	 	
Debt issue costs	 	54	 	42	 	
Unamortized share-based compensation (note 28b)	 	70	 	67	 	
Notes receivable	 	90	 	94	 	
Deposits receivable	 	—	 	11	 	
Other	 	101	 	107	 	
 	 	$	2,070	 	$	1,531	 	

(1)           Includes $75 million and $63 in VAT and fuel tax receivables in South America and Africa, respectively (2009: $94 million and $30 million, respectively).
 
Debt Issue Costs
 
In 2010, a total of $9 million of debt issue costs arose from the non-recourse project financing for Pueblo Viejo.
 
Amortization of debt issue costs is calculated using the interest method over the term of each debt obligation, and classified as a component of interest cost (see note 20b).
 
In 2009, a total of $16 million of debt issue costs arose on debenture issuances of $1.25 billion and $750 million.
 
19 · Other Current Liabilities

At December 31	 	2010	 	2009	 	
Asset retirement obligations (note 22)	 	$	88	 	$	85	 	
Derivative liabilities (note 20e)	 	173	 	180	 	
Post-retirement benefits (note 29)	 	10	 	16	 	
Income taxes payable (note 9)	 	535	 	94	 	
Restricted stock units (note 28b)	 	64	 	33	 	
Other	 	94	 	67	 	
 	 	$	964	 	$	475	 	
 
20 · Financial Instruments
 
Financial instruments include cash; evidence of ownership in an entity; or a contract that imposes an obligation on one party and conveys a right to a second entity to deliver/receive cash or another financial instrument. Information on certain types of financial instruments is included elsewhere in these financial statements as follows: accounts receivable — note 14; investments — note 12; restricted share units — note 28b.
 
a) Cash and Equivalents
 
Cash and equivalents include cash, term deposits, treasury bills and money markets with original maturities of less than 90 days.

At December 31	 	2010	 	2009	 	
Cash deposits	 	$	1,345	 	$	509	 	
Term deposits	 	1,236	 	298	 	
Treasury bills	 	—	 	125	 	
Money market investments	 	1,387	 	1,632	 	
 	 	$	3,968	 	$	2,564	 	
 
137 

 
Notes to Consolidated Financial Statements
 
b) Long-Term Debt(1)

 	 	2010	 	2009	 	2008	 	
 	 	 	 	 	 	Repay-	 	Amorti-	 	 	 	 	 	Repay-	 	Amorti-	 	 	 	 	 	Repay-	 	Amorti-	 	 	 	
 	 	 	 	 	 	ments/	 	zation	 	 	 	 	 	ments/	 	zation	 	 	 	 	 	ments/	 	zation	 	 	 	
 	 	At	 	 	 	Redemp-	 	and	 	At	 	 	 	Redemp-	 	and	 	At	 	 	 	Redemp-	 	and	 	At	 	
 	 	Dec. 31	 	Proceeds	 	tions(7)	 	Other(2) 	 	Dec. 31	 	Proceeds	 	tions	 	Other(2) 	 	Dec. 31	 	Proceeds	 	tions	 	Other(2)	 	Jan. 1	 	
Fixed rate notes	 	$	3,217	 	$	—	 	$	—	 	$	3	 	$	3,214	 	$	1,964	 	$	—	 	$	—	 	$	1,250	 	$	1,250	 	$	—	 	$	—	 	$	—	 	
5.80%/4.875% notes(3)	 	752	 	—	 	—	 	4	 	748	 	—	 	—	 	1	 	747	 	—	 	—	 	2	 	745	 	
Copper-linked notes	 	—	 	—	 	—	 	—	 	—	 	—	 	190	 	—	 	190	 	—	 	325	 	—	 	515	 	
US dollar notes(8)	 	996	 	—	 	—	 	—	 	996	 	190	 	—	 	1	 	805	 	325	 	—	 	—	 	480	 	
Convertible senior debentures	 	—	 	—	 	281	 	(4	)	285	 	—	 	—	 	(4	)	289	 	—	 	—	 	(4	)	293	 	
Project financing	 	754	 	754	 	62	 	—	 	62	 	—	 	53	 	—	 	115	 	—	 	99	 	—	 	214	 	
Capital leases	 	72	 	—	 	24	 	34	 	62	 	—	 	25	 	17	 	70	 	—	 	21	 	6	 	85	 	
Other debt obligations(4)	 	901	 	—	 	63	 	(4	)	968	 	—	 	16	 	7	 	977	 	152	 	150	 	52	 	923	 	
First credit facility(5)	 	—	 	—	 	—	 	—	 	—	 	—	 	—	 	—	 	—	 	990	 	990	 	—	 	—	 	
 	 	6,692	 	754	 	430	 	33	 	6,335	 	2,154	 	284	 	22	 	4,443	 	2,717	 	1,585	 	56	 	3,255	 	
Less: current portion(6)	 	(14	)	—	 	—	 	—	 	(54	)	—	 	—	 	—	 	(93	)	—	 	—	 	—	 	(102	)	
 	 	$	6,678	 	$	754	 	$	430	 	$	33	 	$	6,281	 	$	2,154	 	$	284	 	$	22	 	$	4,350	 	$	2,717	 	$	1,585	 	$	56	 	$	3,153	 	
Short-term debt	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Demand financing facility	 	—	 	—	 	—	 	—	 	—	 	—	 	113	 	—	 	113	 	—	 	18	 	—	 	131	 	
 	 	$	—	 	$	—	 	$	—	 	$	—	 	$	—	 	$	—	 	$	113	 	$	—	 	$	113	 	$	—	 	$	18	 	$	—	 	$	131	 	

(1)	The agreements that govern our long-term debt each contain various provisions which are not summarized herein. In certain cases, these provisions allow Barrick to, at its option, redeem indebtedness prior to maturity at specified prices and also may permit redemption of debt by Barrick upon the occurrence of certain specified changes in tax legislation.	
(2)	Amortization of debt premium/discount.	
(3)	During third quarter 2004, we issued $400 million of debentures at a $3 million discount that mature on November 15, 2034 and $350 million of debentures at a $2 million discount that mature on November 15, 2014.	
(4)	The obligations have an aggregate amount of $901 million, of which $100 million is subject to floating interest rates and $801 million is subject to fixed interest rates ranging from 4.75% to 8.05%. The obligations mature at various times between 2012 and 2035.	
(5)	We have a credit and guarantee agreement with a group of banks (the “Lenders”), which requires the Lenders to make available to us a credit facility of up to $1.5 billion or the equivalent amount in Canadian currency. The credit facility, which is unsecured, has an interest rate of LIBOR plus 0.25% to 0.35% on drawn down amounts, and a commitment rate of 0.07% to 0.08% on undrawn amounts. $50 million matures in 2012 and the remaining $1.45 billion matures in 2013.	
(6)	The current portion of long-term debt consists of capital leases ($14 million).	
(7)	On October 20, 2010 we redeemed all of our entire outstanding Placer Dome 2.75% Convertible Senior Debentures due 2023.	
(8)	$400 million of US dollar notes with a coupon of 5.75% mature in 2016 and $600 million of US dollar notes with a coupon of 6.35% mature in 2036.	
 
Redemption of Convertible Senior Debentures
 
On October 20, 2010 (the “Redemption Date”) we redeemed our entire outstanding Placer Dome 2.75% Convertible Senior Debentures due 2023 (the “Debentures”). The registered holders of the Debentures were to receive a redemption price of 100.825% of the principal amount outstanding, plus accrued and unpaid interest to the Redemption Date, for a total of $1,008.63 per $1,000.00 principal amount of Debentures if the conversion option was not exercised.
 
Effective September 1, 2010 to October 19, 2010, the conversion rate per each $1,000 principal amount of Securities was 40.9378 common shares. Substantially all the holders of these debentures exercised their right to convert these Securities into common shares. No gain or loss was recognized in the income statement on conversion.
 
138 

 
Barrick Financial Report 2010 | Notes to Consolidated Financial Statements
 
Pueblo Viejo Project Financing Agreement
 
In April 2010, Barrick and Goldcorp finalized terms for $1.035 billion (100% basis) in non-recourse project financing for Pueblo Viejo. The lending syndicate is comprised of international financial institutions including export development agencies and commercial banks. The amount is divided into three tranches of $400 million, $375 million and $260 million with tenors of 15, 15 and 12 years, respectively. The $400 million tranche bears a coupon of LIBOR+3.25% pre-completion and scales gradually to LIBOR+5.10% (inclusive of political risk insurance premium) for years 13—15. The $375 million tranche bears a fixed coupon of 4.02% for the entire 15 years. The $260 million tranche bears a coupon of LIBOR+3.25% pre-completion and scales gradually to LIBOR+4.85% (inclusive of political risk insurance premium) for years 11—12. Barrick and Goldcorp each provided a guarantee for their proportionate share which will terminate upon Pueblo Viejo meeting certain operating completion tests and are subject to an exclusion for certain political risk events. In June 2010 we received $782 million (100% basis), less financing fees of $28 million on this financing agreement by fully drawing on the $400 million and $260 million tranches and a portion of the $375 million tranche.
 
Fixed Rate Notes
 
On October 16, 2009, we issued two tranches of debentures totaling $1.25 billion through our wholly-owned indirect subsidiary Barrick (PD) Australia Finance Pty Ltd. (“BPDAF”) consisting of $850 million of 30-year notes with a coupon rate of 5.95%, and $400 million of 10-year notes with a coupon rate of 4.95% (collectively the “Notes”). BPDAF used the proceeds to provide loans to us for settling the Gold Hedges and some of the Floating Contracts. In exchange, we provide sufficient funds to BPDAF to meet the principal and interest obligations on the notes. We also provided an unconditional and irrevocable guarantee of these payments, which will rank equally with our other unsecured and unsubordinated obligations.
 
On March 19, 2009, we issued an aggregate of $750 million of 10-year notes with a coupon rate of 6.95% for general corporate purposes. The notes are unsecured, unsubordinated obligations and will rank equally with our other unsecured, unsubordinated obligations.
 
In September, 2008, we issued an aggregate of $1,250 million of notes through our wholly-owned indirect subsidiaries Barrick North America Finance LLC and Barrick Gold Financeco LLC (collectively the “LLCs”) consisting of $500 million of 5-year notes with a coupon rate of 6.125%, $500 million of 10-year notes with a coupon rate of 6.8%, and $250 million of 30-year notes with a coupon rate of 7.5% (collectively the “Notes”). The LLCs used the proceeds to provide loans to us. We provide sufficient funds to the LLCs to meet the principal and interest obligations on the notes. We also provided an unconditional and irrevocable guarantee of these payments, which will rank equally with our other unsecured and unsubordinated obligations.
 
We provide an unconditional and irrevocable guarantee on debentures totaling $1.25 billion through our wholly-owned indirect subsidiary Barrick (PD) Australia Finance Pty Ltd. and $1.25 billion of notes through our wholly-owned indirect subsidiaries Barrick North America Finance LLC and Barrick Gold Financeco LLC. These payments will rank equally with our other unsecured and unsubordinated obligations.
 
Project Financing
 
One of our wholly-owned subsidiaries, Minera Argentina Gold S.A. in Argentina, had a limited recourse amortizing loan of $62 million outstanding at December 31, 2009, the majority of which had a variable interest rate. During the year this loan was fully repaid.
 
139 

 
Notes to Consolidated Financial Statements

 	 	For the years ended December 31	 	
 	 	2010	 	2009	 	2008	 	
 	 	Interest	 	Effective	 	Interest	 	Effective	 	Interest	 	Effective	 	
Interest	 	cost	 	rate(1)	 	cost	 	rate(1)	 	cost	 	rate(1)	 	
Fixed rate notes	 	$	211	 	6.49	%	$	142	 	6.40	%	$	26	 	7.00	%	
5.80%/4.875% notes	 	41	 	5.48	%	44	 	5.80	%	42	 	5.70	%	
US dollar notes	 	62	 	6.22	%	62	 	6.20	%	62	 	6.20	%	
Convertible senior debentures	 	2	 	0.80	%	3	 	0.80	%	4	 	1.50	%	
Project financing	 	16	 	3.65	%	8	 	8.20	%	19	 	11.00	%	
Capital leases	 	3	 	4.30	%	2	 	5.60	%	4	 	5.00	%	
Other debt obligations	 	47	 	4.94	%	49	 	5.10	%	50	 	5.30	%	
Deposit on silver sale agreement (note 23)	 	21	 	8.59	%	6	 	8.59	%	—	 	—	 	
First credit facility	 	—	 	—	 	—	 	—	 	17	 	3.30	%	
Demand financing facility	 	—	 	—	 	5	 	8.70	%	11	 	8.90	%	
Other interest	 	7	 	 	 	5	 	 	 	8	 	 	 	
 	 	410	 	 	 	326	 	 	 	243	 	 	 	
Less: interest capitalized	 	(289	)	 	 	(269	)	 	 	(222	)	 	 	
 	 	$	121	 	 	 	$	57	 	 	 	$	21	 	 	 	
Cash interest paid	 	$	400	 	 	 	$	311	 	 	 	$	213	 	 	 	
Amortization of debt issue costs	 	4	 	 	 	6	 	 	 	7	 	 	 	
Amortization of premium	 	(6	)	 	 	(6	)	 	 	(7	)	 	 	
Losses on interest rate hedges	 	2	 	 	 	3	 	 	 	1	 	 	 	
Increase in interest accruals	 	10	 	 	 	12	 	 	 	29	 	 	 	
Interest cost	 	$	410	 	 	 	$	326	 	 	 	$	243	 	 	 	

(1)    The effective rate includes the stated interest rate under the debt agreement, amortization of debt issue costs and debt discount/premium and the impact of interest rate contracts designated in a hedging relationship with long-term debt.

 	 	 	 	 	 	 	 	 	 	 	 	2016 and	 	
Scheduled Debt Repayments	 	2011	 	2012	 	2013	 	2014	 	2015	 	thereafter	 	
Fixed rate notes	 	$	—	 	$	—	 	$	500	 	$	—	 	$	—	 	$	2,750	 	
5.80%/4.875% notes	 	—	 	—	 	—	 	350	 	—	 	400	 	
Project financing	 	—	 	—	 	38	 	76	 	76	 	592	 	
US dollar notes	 	—	 	—	 	—	 	—	 	1,000	 	—	 	
Other debt obligations	 	—	 	120	 	65	 	—	 	100	 	566	 	
 	 	$	—	 	$	120	 	$	603	 	$	426	 	$	1,176	 	$	4,308	 	
Minimum annual payments under capital leases	 	$	14	 	$	17	 	$	16	 	$	10	 	$	8	 	$	7	 	
 
140 

 
Barrick Financial Report 2010 | Notes to Consolidated Financial Statements
 
c) Use of Derivative Instruments (“Derivatives”) in Risk Management
 
In the normal course of business, our assets, liabilities and forecasted transactions, as reported in US dollars, are impacted by various market risks including, but not limited to:

Item	 	Impacted by	
 	 	 	
·  Sales	 	·  Prices of gold, copper, oil and natural gas	
·  Cost of sales	 	 	
·  Consumption of diesel fuel, propane, natural gas and electricity	 	·  Prices of diesel fuel, propane, natural gas and electricity	
·  Non-US dollar expenditures	 	·  Currency exchange rates — US dollar versus A$, ARS, C$, CLP, JPY, PGK, TZS and ZAR	
·  By-product credits	 	·  Prices of silver and copper	
·  Corporate and regional administration, exploration and business development costs	 	·  Currency exchange rates — US dollar versus A$, ARS, C$, CLP, JPY, PGK, TZS and ZAR	
·  Capital expenditures	 	 	
·  Non-US dollar capital expenditures	 	·  Currency exchange rates — US dollar versus A$, ARS, C$, CLP, EUR and PGK	
·  Consumption of steel	 	·  Price of steel	
·  Interest earned on cash and equivalents	 	·  US dollar interest rates	
·  Interest paid on fixed-rate borrowings	 	·  US dollar interest rates	
 
The timeframe and manner in which we manage risks varies for each item based upon our assessment of the risk and available alternatives for mitigating risk. For these particular risks, we believe that derivatives are an appropriate way of managing the risk.
 
The primary objective of our risk management program is to mitigate variability associated with changing market values related to the hedged item. Many of the derivatives we use meet the hedge effectiveness criteria and are designated in a hedge accounting relationship. Some of the derivative instruments are effective in achieving our risk management objectives, but they do not meet the strict hedge effectiveness criteria, and they are classified as “economic hedges”. The change in fair value of these economic hedges is recorded in current period earnings, classified with the income statement line item that is consistent with the derivative instruments’ intended risk objective.
 
d) Other Use of Derivative Instruments
 
We also enter into derivative instruments with the objective of realizing trading gains to increase our reported net income.
 
During the year, we wrote $100 million net USD pay-fixed swaptions giving the buyer the right, but not the obligation, to enter into an interest rate swap at a specific date in the future, at a particular fixed rate, for a specified term. Changes in the fair value of the swaptions and the premiums earned were recognized in current period earnings through interest expense. For the year, we recognized a gain on premiums of $2 million and a loss on position value of $1 million in current period earnings. There were $200 million USD pay-fixed swaptions outstanding at December 31, 2010.
 
We enter into purchased and written contracts with the primary objective of increasing the realized price on our gold and copper sales. During 2010, we wrote gold put and call options with an average outstanding notional volume of 0.3 million and 0.3 million ounces, respectively, on a net basis. We also held other net purchased gold long positions during the year with an average outstanding notional of 0.1 million ounces. During the year, we wrote copper call options averaging 5 million pounds and purchased other net long copper positions averaging 7 million pounds.
 
As a result of these activities, we recorded realized gains in revenue of $26 million on gold contracts and realized gains of $7 million on copper contracts in 2010. There are no outstanding gold or copper positions at December 31, 2010.
 
141 

 
Notes to Consolidated Financial Statements
 
e) Summary of Derivatives at December 31, 2010

 	 	 	 	 	 	 	 	 	 	Accounting	 	 	 	
 	 	 	 	 	 	 	 	 	 	classification by	 	 	 	
 	 	Notional amount by term to maturity	 	notional amount	 	 	 	
 	 	Within	 	2 to 3	 	4 to 5	 	 	 	Cash flow	 	Fair value	 	Non-	 	Fair value	 	
 	 	1 year	 	years	 	years	 	Total	 	hedge	 	hedge	 	hedge	 	(USD)	 	
US dollar interest rate contracts	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total receive — fixed swap positions	 	$	—	 	$	100	 	$	100	 	$	200	 	$	—	 	$	200	 	$	—	 	$	6	 	
Total pay — fixed swap positions	 	—	 	—	 	(100	)	(100	)	—	 	—	 	(100	)	(3	)	
Total pay — fixed swaption positions	 	—	 	—	 	(200	)	(200	)	—	 	—	 	(200	)	(2	)	
Currency contracts	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
A$:US$ contracts (A$ millions)	 	1,638	 	2,064	 	515	 	4,217	 	4,217	 	—	 	—	 	804	 	
C$:US$ contracts (C$ millions)	 	353	 	19	 	—	 	372	 	372	 	—	 	—	 	12	 	
CLP:US$ contracts (CLP millions)(1)	 	172,595	 	71,800	 	—	 	244,395	 	98,295	 	—	 	146,100	 	37	 	
EUR:US$ contracts (EUR millions)	 	10	 	10	 	—	 	20	 	20	 	—	 	—	 	(1	)	
PGK:US$ contracts (PGK millions)	 	54	 	—	 	—	 	54	 	—	 	—	 	54	 	1	 	
Commodity contracts	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Copper collar sell contracts (millions of pounds)	 	278	 	8	 	—	 	286	 	185	 	—	 	101	 	(128	)	
Copper net call spread contracts (millions of pounds)	 	132	 	—	 	—	 	132	 	—	 	—	 	132	 	23	 	
Copper net collar buy contracts (millions of pounds)	 	79	 	—	 	—	 	79	 	—	 	—	 	79	 	56	 	
Silver collar sell contracts (millions of ozs)	 	—	 	—	 	15	 	15	 	15	 	—	 	—	 	(15	)	
Diesel contracts (thousands of barrels)(2)	 	2,316	 	2,341	 	50	 	4,707	 	4,707	 	—	 	—	 	55	 	
Propane contracts (millions of gallons)	 	13	 	6	 	—	 	19	 	19	 	—	 	—	 	3	 	
Electricity contracts (thousands of megawatt hours)	 	53	 	35	 	—	 	88	 	—	 	—	 	88	 	—	 	

(1)    Non-hedge contracts economically hedge pre-production capital expenditures at our Pascua-Lama project.
(2)    Diesel commodity contracts represent a combination of WTI, ULSD and ULSD/WTI Crack spread swaps, WTB, MOPS and JET hedge contracts. These derivatives hedge physical supply contracts based on the price of ULSD, WTB, MOPS and JET respectively, plus a spread. WTI represents West Texas Intermediate, WTB represents Waterborne, MOPS represents Mean of Platts Singapore, JET represents Jet Fuel, ULSD represents Ultra Low Sulfur Diesel US Gulf Coast.
 
Fair Values of Derivative Instruments

 	 	Asset Derivatives	 	Liability Derivatives	 	
 	 	At Dec. 31, 2010	 	At Dec. 31, 2009	 	At Dec. 31, 2010	 	At Dec. 31, 2009	 	
 	 	Balance sheet	 	Fair	 	Balance sheet	 	Fair	 	Balance sheet	 	Fair	 	Balance sheet	 	Fair	 	
 	 	classification	 	value	 	classification	 	value	 	classification	 	value	 	classification	 	value	 	
Derivatives designated as hedging instruments	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
US dollar interest rate contracts	 	Other assets	 	$	6	 	Other assets	 	$	—	 	Other liabilities	 	$	—	 	Other liabilities	 	$	—	 	
Currency contracts	 	Other assets	 	831	 	Other assets	 	374	 	Other liabilities	 	1	 	Other liabilities	 	9	 	
Commodity contracts	 	Other assets	 	112	 	Other assets	 	53	 	Other liabilities	 	192	 	Other liabilities	 	131	 	
Total derivatives classified as hedging instruments	 	 	 	$	949	 	 	 	$	427	 	 	 	$	193	 	 	 	$	140	 	
Derivatives not designated as hedging instruments	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
US dollar interest rate contracts	 	Other assets	 	$	—	 	Other assets	 	$	1	 	Other liabilities	 	$	5	 	Other liabilities	 	$	7	 	
Currency contracts	 	Other assets	 	30	 	Other assets	 	15	 	Other liabilities	 	7	 	Other liabilities	 	9	 	
Commodity contracts	 	Other assets	 	147	 	Other assets	 	61	 	Other liabilities	 	73	 	Other liabilities	 	43	 	
Total derivatives not designated as hedging instruments	 	 	 	$	177	 	 	 	$	77	 	 	 	$	85	 	 	 	$	59	 	
Total derivatives	 	 	 	$	1,126	 	 	 	$	504	 	 	 	$	278	 	 	 	$	199	 	
 
142 

 
Barrick Financial Report 2010 | Notes to Consolidated Financial Statements
 
US Dollar Interest Rate Contracts
 
Non-hedge Contracts
 
We have a $300 million US dollar receive-fixed interest rate swap outstanding that is used to economically hedge US dollar interest rate risk on our outstanding cash balance.
 
Currency Contracts
 
Cash Flow Hedges
 
During the year, currency contracts totaling A$1,449 million, C$370 million, EUR 13 million, PGK 42 million, and CLP 145,885 million have been designated against forecasted non-US dollar denominated expenditures, some of which are hedges that matured within the year. The outstanding contracts hedge the variability of the US dollar amount of those expenditures caused by changes in currency exchange rates over the next four years.
 
Hedged items that relate to operating and/or sustaining capital expense are identified as the first stated quantity of dollars of forecasted expenditures in a future month. For A$110 million, C$295 million, and CLP 30,780 million of collar contracts, we have concluded that the hedges are 100% effective because the critical terms (including notional amount and maturity date) of the hedged items and the currency contracts are the same. For all remaining currency hedges, prospective and retrospective hedge effectiveness is assessed using the hypothetical derivative method. The prospective test is based on regression analysis of the month-on-month change in fair value of both the actual derivative and a hypothetical derivative caused by actual historic changes in forward exchange rates over the last three years. The retrospective test involves comparing the effect of historic changes in exchange rates each period on the fair value of both the actual and hypothetical derivative, and ineffectiveness is measured using a dollar offset approach. The effective portion of changes in fair value of the currency contracts is recorded in OCI until the forecasted expenditure impacts earnings.
 
Hedged items that relate to pre-production expenditures at our development projects are identified as the stated quantity of dollars of the forecasted expenditures associated with a specific transaction in a pre-defined time period. For AUD 55 million, EUR 20 million and CLP 54,900 million, hedge effectiveness is assessed using the dual spot method, where changes in fair value attributable to changes in spot prices are calculated on a discounted basis for the actual derivative and an undiscounted basis for the hypothetical derivative. The effectiveness testing excludes time value of the hedging instrument. Prospective and retrospective hedge effectiveness uses a dollar offset method.
 
Non-hedge Contracts
 
We concluded that CLP 146,100 million of collar contracts do not meet the effectiveness criteria of the dual spot method. These contracts represent an economic hedge of pre-production capital expenditures at our Pascua-Lama and Cerro Casale projects. Although not qualifying as an accounting hedge, the contracts protect us against variability of the CLP to the US dollar on pre-production expenditures at our Pascua-Lama and Cerro Casale projects. Changes in the fair value of the non-hedge CLP contracts are recorded in current period project expense. In 2010, we recorded an unrealized gain of $24 million on the outstanding collar contracts. Non-hedge currency contracts are used to mitigate the variability of the US dollar amount of non-US dollar denominated exposures that do not meet the strict hedge effectiveness criteria. Changes in the fair value of non-hedge currency contracts are recorded in current period cost of sales, corporate administration, other income, other expense or income tax expense according to the intention of the hedging instrument.
 
Commodity Contracts
 
Diesel/Propane/Electricity/Natural Gas
 
Cash Flow Hedges
 
During the year, we entered into 480 thousand barrels of WTI/ ULSD crack spread swaps, 1,222 thousand barrels of MOPS forwards, 228 thousand barrels of WTB forwards, 228 thousand barrels of JET forwards, and 19 million gallons of propane designated against forecasted fuel purchases for expected consumption at our mines. The designated contracts act as a hedge against variability in market prices on the cost of future fuel purchases over the next four years. Hedged items are identified as the first stated quantity of forecasted consumption purchased in a future month. Prospective and retrospective hedge effectiveness is assessed using the hypothetical derivative method. The prospective test is based on regression analysis of the month-on-month change in fair value of both the actual derivative and a hypothetical derivative caused by actual historic changes in commodity prices over the last three years. The retrospective test involves comparing the effect of historic changes in commodity prices each period on the fair value of both the actual and hypothetical derivative, and ineffectiveness is measured using a dollar offset approach. The effective portion of changes in fair value of the commodity contracts is recorded in OCI until the forecasted transaction impacts earnings.
 
143 

 
Notes to Consolidated Financial Statements
 
In 2009, we entered into a diesel fuel supply contract. Under the terms of the contract, fuel purchased for consumption at our Nevada based mines is priced based on the ULSD index. We have continued to hedge our exposure to diesel using our existing WTI forward contracts. Retrospective hedge effectiveness testing shows a strong correlation between ULSD and WTI and thus we expect that these hedges will continue to be effective. The prospective and retrospective testing is assessed using the hypothetical derivative method.
 
Non-hedge Contracts
 
Non-hedge electricity contracts of 88 thousand megawatt hours are used to mitigate the risk of price changes on electricity consumption at Barrick Energy. Although not qualifying as an accounting hedge, the contracts protect the Company to a significant extent from the effects of changes in electricity prices. Changes in the fair value of non-hedge electricity contracts are recorded in current period cost of sales.
 
Copper
 
Cash Flow Hedges
 
Copper collar contracts totaling 185 million pounds have been designated as hedges against copper cathode sales at our Zaldívar mine. The contracts contain purchased put and sold call options with weighted average strike prices of $3.00/lb and $4.35/lb, respectively.
 
For collars designated against copper cathode production, the hedged items are identified as the first stated quantity of pounds of forecasted sales in a future month. Prospective hedge effectiveness is assessed on these hedges using a dollar offset method. The dollar offset assessment involves comparing the effect of theoretical shifts in forward copper prices on the fair value of both the actual hedging derivative and a hypothetical hedging derivative. The retrospective assessment involves comparing the effect of historic changes in copper prices each period on the fair value of both the actual and hypothetical derivative using a dollar offset approach. The effective portion of changes in fair value of the copper contracts is recorded in OCI until the forecasted copper sale impacts earnings.
 
Non-hedge Contracts
 
Copper sell collar contracts totaling 22 million pounds were entered into during the year containing purchased puts and sold calls with an average strike price of $3.25/lb and $4.77/lb, respectively. The options mature over a period of two years, with 14 million pounds maturing in 2011 and the remaining 8 million pounds maturing in 2012. During 2010, we also de-designated collar sell contracts for 79 million pounds and crystallized $12 million of losses in OCI. These hedges were originally designated against future copper production at our Zaldívar mine. The exposure is still expected to occur and therefore amounts crystallized in OCI will be recorded in copper revenue when the sales occur. We continue to hold these collars as non-hedge contracts. The contracts contain purchased put and sold call options with an average strike of $3.00/lb and $4.02/lb, respectively.
 
During 2010, we purchased 79 million pounds of collar buy contracts containing sold put and purchased call options with an average strike of $3.00/lb and $3.99/lb, respectively, for a net premium of $11 million. Premiums paid have been recorded as a reduction of current period revenue. The options mature evenly throughout 2011.
 
During 2010, we purchased 132 million pounds of call options at an average strike of $4.26/lb and sold 132 million pounds of call options at $4.72/lb for a net premium of $13 million. Premiums paid have been recorded as a reduction of current period revenue. The options mature evenly throughout 2011. These contracts are not designated as cash flow hedges. Changes in the fair value of these copper options are recorded in current period revenue.
 
Silver
 
Cash Flow Hedges
 
During the year we designated silver collar contracts totaling 15 million ounces as hedges against silver bullion sales from our silver producing mines. The contracts contain purchased put and sold call options with weighted average strike prices of $20/oz and $55/oz respectively. For collars designated against silver bullion sales, the hedged items are identified as the first stated quantity of ounces of forecasted sales in a future month. Prospective hedge effectiveness is assessed using a regression method. The regression method involves comparing week-by-week changes in the fair value of both the actual hedging derivative and a hypothetical derivative caused by actual historical changes in commodity prices over the last fifty-two weeks. The retrospective assessment involves comparing the effect of historic changes in silver prices each period on the fair value of both the actual and hypothetical derivative using a regression approach. The effective portion of changes in fair value of the silver contracts is recorded in OCI until the forecasted silver sale impacts earnings.
 
144 

 
Barrick Financial Report 2010 | Notes to Consolidated Financial Statements
 
Non-hedge Gains (Losses)

For the years ended December 31	 	2010	 	2009	 	2008	 	Income statement classification	 	
Risk management activities	 	 	 	 	 	 	 	 	 	
Commodity contracts	 	 	 	 	 	 	 	 	 	
Copper	 	$	33	 	$	(53	)	$	73	 	Revenue/cost of sales	 	
Fuel	 	—	 	1	 	(30	)	Cost of sales	 	
Steel	 	—	 	—	 	(3	)	Project development expense	 	
Currency contracts	 	30	 	(4	)	(8	)	Cost of sales/corporate administration/ other income/expense/	 	
Interest rate contracts	 	(2	)	(7	)	(4	)	Interest income/expense	 	
 	 	61	 	(63	)	28	 	 	 	
Other use of derivative instruments	 	 	 	 	 	 	 	 	 	
Commodity contracts	 	 	 	 	 	 	 	 	 	
Gold	 	26	 	56	 	19	 	Revenue	 	
Copper	 	7	 	(2	)	—	 	Revenue	 	
Interest rate swaptions	 	—	 	3	 	—	 	Interest income/expense	 	
 	 	33	 	57	 	19	 	 	 	
Other gains (losses)	 	 	 	 	 	 	 	 	 	
Embedded derivatives(1)	 	13	 	5	 	(3	)	Revenue	 	
Hedge ineffectiveness	 	11	 	(3	)	(6	)	Cost of sales/revenue/other income	 	
Ineffective portion of fair value hedge	 	3	 	—	 	—	 	Other income/expense	 	
 	 	$	27	 	$	2	 	$	(9	)	 	 	
 	 	$	121	 	$	(4	)	$	38	 	 	 	

(1) Includes embedded derivatives on gold concentrate sales and copper cathode sales.
 
Derivative Assets and Liabilities

 	 	2010	 	2009	 	
At January 1	 	$	305	 	$	(43	)	
Derivatives cash (inflow) outflow	 	 	 	 	 	
Operating activities	 	(168	)	(328	)	
Financing activities	 	(12	)	10	 	
Change in fair value of:	 	 	 	 	 	
Non-hedge derivatives	 	103	 	(39	)	
Cash flow hedges	 	 	 	 	 	
Effective portion	 	601	 	708	 	
Ineffective portion	 	11	 	(3	)	
Fair value hedges	 	5	 	—	 	
Ineffective portion of fair value hedge	 	3	 	—	 	
At December 31	 	$	848	 	$	305	 	
Classification:	 	 	 	 	 	
Other current assets	 	$	615	 	$	214	 	
Other long-term assets	 	511	 	290	 	
Other current liabilities	 	(173	)	(180	)	
Other long-term obligations	 	(105	)	(19	)	
 	 	$	848	 	$	305	 	
 
145 

 
Notes to Consolidated Financial Statements
 
Cash Flow Hedge Gains (Losses) in OCI

 	 	Commodity	 	 	 	 	 	 	 	Interest rate	 	 	 	
 	 	price hedges	 	Currency hedges	 	hedges	 	 	 	
 	 	 	 	 	 	 	 	Operating	 	Administration/	 	Capital	 	Long-term	 	 	 	
 	 	Silver(1)	 	Copper	 	Fuel	 	costs	 	other costs	 	expenditures	 	debt	 	Total	 	
At January 1, 2008	 	$	15	 	$	14	 	$	79	 	$	238	 	$	27	 	$	(1	)	$	(17	)	$	355	 	
Effective portion of change in fair value of hedging instruments	 	—	 	582	 	(215	)	(610	)	(46	)	5	 	(17	)	(301	)	
Transfers to earnings:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
On recording hedged items in earnings	 	(2	)	(112	)	(33	)	(106	)	(11	)	(4	)	1	 	(267	)	
At December 31, 2008	 	13	 	484	 	(169	)	(478	)	(30	)	—	 	(33	)	(213	)	
Effective portion of change in fair value of hedging instruments	 	—	 	(273	)	68	 	820	 	42	 	48	 	—	 	705	 	
Transfers to earnings:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
On recording hedged items in earnings	 	(10	)	(283	)	95	 	(22	)	7	 	(3	)	3	 	(213	)	
Hedge ineffectiveness due to changes in original forecasted transaction	 	—	 	—	 	2	 	(5	)	—	 	—	 	—	 	(3	)	
At December 31, 2009	 	3	 	(72	)	(4	)	315	 	19	 	45	 	(30	)	276	 	
Effective portion of change in fair value of hedging instruments	 	(15	)	(60	)	29	 	549	 	56	 	53	 	—	 	612	 	
Transfers to earnings:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
On recording hedged items in earnings	 	(2	)	54	 	26	 	(146	)	(33	)	(6	)	3	 	(104	)	
At December 31, 2010	 	$	(14	)	$	(78	)	$	51	 	$	718	 	$	42	 	$	92	 	$	(27	)	$	784	 	

 	 	Cost of	 	Copper	 	Cost of	 	Cost of	 	Administration/	 	 	 	Interest	 	 	 	
Hedge gains/losses classified within	 	sales	 	sales	 	sales	 	sales	 	Other expense	 	Amortization	 	expense	 	 	 	
Portion of hedge gain (loss) expected to affect 2011 earnings(2)	 	$	2	 	$	(78	)	$	22	 	$	273	 	$	39	 	$	—	 	$	(3	)	$	255	 	

(1) Amounts prior to 2010 reflect amortization of crystallized gold positions.
(2) Based on the fair value of hedge contracts at December 31, 2010.
 
Cash Flow Hedge Gains (Losses) at December 31

 	 	 	 	 	 	 	 	 	 	Amount of gain (loss)	 	
 	 	 	 	 	 	Amount of gain (loss)	 	Location of gain (loss)	 	recognized in income	 	
 	 	Amount of gain	 	 	 	transferred from	 	recognized in income	 	(ineffective portion and	 	
 	 	(loss) recognized	 	Location of gain (loss)	 	OCI into income	 	(ineffective portion and	 	amount excluded from	 	
Derivatives in cash flow	 	in OCI	 	transferred from OCI into	 	(effective portion)	 	amount excluded from	 	effectiveness testing)	 	
hedging relationships	 	2010	 	2009	 	income (effective portion)	 	2010  	 	2009	 	effectiveness testing)	 	2010	 	2009	 	
Interest rate contracts	 	$	—	 	$	—	 	Interest income/expense	 	$	(3	)	$	(3	)	Interest income/expense	 	$	—	 	$	—	 	
Foreign exchange	 	 	 	 	 	Cost of sales/corporate	 	 	 	 	 	Cost of sales/corporate	 	14	 	2	 	
contracts	 	658	 	910	 	administration/amortization	 	185	 	21	 	administration/amortization	 	 	 	 	 	
Commodity contracts	 	(46	)	(205	)	Revenue/cost of sales	 	(78	)	198	 	Revenue/cost of sales	 	—	 	(2	)	
Total	 	$	612	 	$	705	 	 	 	$	104	 	$	216	 	 	 	$	14	 	$	—	 	
 
Fair Value Hedge Gains at December 31

 	 	 	 	Amount of gain	 	
 	 	Location of gain	 	recognized in income	 	
 	 	recognized in income	 	on derivative	 	
Derivatives in fair value hedging relationships	 	on derivative	 	2010	 	2009	 	
Interest rate contracts	 	Interest income/expense	 	$	8	 	$	—	 	

146 

 
Barrick Financial Report 2010 | Notes to Consolidated Financial Statements
 
f) Credit Risk
 
Credit risk is the risk that the counterparty to a financial instrument will cause a financial loss to us by failing to discharge its obligations. Credit risk arises and is associated with our overall position in cash and cash equivalents, derivative assets and accounts receivables. To mitigate our exposure to credit risk we maintain policies to limit the concentration of credit risk, review counterparty creditworthiness on a monthly basis, and ensure liquidity of available funds.
 
Specifically, we invest our cash and cash equivalents in highly rated financial institutions primarily within the United States and other investment grade countries.(1)
 
We sell our gold and copper production into the world market and to private customers with strong credit ratings. Historically the level of customer defaults has not had a significant impact on our operating results or financial position. 
 
The fair value of our derivative contracts is adjusted for credit risk based on observed credit default swap spreads. In cases where we have a legally enforceable master netting agreement with a counterparty, credit risk exposure represents the net amount of the positive and negative fair values by counterparty. For derivatives in a net asset position, credit risk is measured using credit default swap spreads for each particular counterparty, as appropriate. For derivatives in a net liability position, credit risk is measured using Barrick’s credit default swap spreads. We specifically mitigate credit risk on derivatives in a net asset position by:
 
·         entering into derivatives with high credit-quality counterparties (investment grade);
·         limiting the amount of exposure to each counterparty; and 
·         monitoring the financial condition of counterparties on a regular basis.
 
The company’s maximum exposure to credit risk is as follows:

At December 31	 	2010	 	2009	 	
Cash and equivalents	 	$	3,968	 	$	2,564	 	
Accounts receivable	 	346	 	251	 	
Net derivative assets by counterparty	 	901	 	235	 	
 	 	$	5,215	 	$	3,050	 	

(1)           Investment grade countries include Canada, Chile, Australia, and Peru. Investment grade countries are defined as being rated BBB- or higher by S&P.
 
g) Risks Relating to the Use of Derivatives
 
By using derivatives, in addition to credit risk, we are affected by market risk. Market risk is the risk that the fair value of a derivative might be adversely affected by a change in commodity prices, interest rates, or currency exchange rates, and that this in turn affects our financial condition. We manage market risk by establishing and monitoring parameters that limit the types and degree of market risk that may be undertaken.
 
21 · Fair Value Measurements
 
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value hierarchy establishes three levels to classify the inputs to valuation techniques used to measure fair value. Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2 inputs are quoted prices in markets that are not active, quoted prices for similar assets or liabilities in active markets, inputs other than quoted prices that are observable for the asset or liability (for example, interest rate and yield curves observable at commonly quoted intervals, forward pricing curves used to value currency and commodity contracts and volatility measurements used to value option contracts), or inputs that are derived principally from or corroborated by observable market data or other means. Level 3 inputs are unobservable (supported by little or no market activity). The fair value hierarchy gives the highest priority to Level 1 inputs and the lowest priority to Level 3 inputs.
 
a) Assets and Liabilities Measured at Fair Value on a Recurring Basis

 	 	Quoted prices	 	Significant	 	 	 	 	 	
 	 	in active	 	other	 	Significant	 	 	 	
 	 	markets for	 	observable	 	unobservable	 	Aggregate	 	
 	 	identical assets	 	inputs	 	inputs	 	fair	 	
 	 	(Level 1)	 	(Level 2)	 	(Level 3)	 	value	 	
Cash equivalents	 	$	2,781	 	$	—	 	$	—	 	$	2,781	 	
Available-for-sale securities	 	171	 	—	 	—	 	171	 	
Derivatives	 	—	 	848	 	—	 	848	 	
Receivables from provisional copper and gold sales	 	—	 	159	 	—	 	159	 	
 	 	$	2,952	 	$	1,007	 	$	—	 	$	3,959	 	
 
147 

 
Notes to Consolidated Financial Statements
 
b) Fair Values of Financial Instruments

 	 	2010	 	2009	 	
 	 	 	 	Estimated	 	 	 	Estimated	 	
 	 	Carrying	 	fair	 	Carrying	 	fair	 	
At December 31	 	amount	 	value	 	amount	 	value	 	
Financial assets	 	 	 	 	 	 	 	 	 	
Cash and equivalents(1)	 	$	3,968	 	$	3,968	 	$	2,564	 	$	2,564	 	
Accounts receivable(1)	 	346	 	346	 	251	 	251	 	
Available-for-sale securities(2)	 	171	 	171	 	61	 	61	 	
Derivative assets	 	1,126	 	1,126	 	504	 	504	 	
 	 	$	5,611	 	$	5,611	 	$	3,380	 	$	3,380	 	
Financial liabilities	 	 	 	 	 	 	 	 	 	
Accounts payable(1)	 	$	1,511	 	$	1,511	 	$	1,221	 	$	1,221	 	
Long-term debt(3)	 	6,692	 	7,070	 	6,335	 	6,723	 	
Settlement obligation to close out gold sales contracts	 	—	 	—	 	647	 	647	 	
Derivative liabilities	 	278	 	278	 	199	 	199	 	
Restricted share units(4)	 	153	 	153	 	124	 	124	 	
Deferred share units(4)	 	9	 	9	 	6	 	6	 	
 	 	$	8,643	 	$	9,021	 	$	8,532	 	$	8,920	 	

(1)           Fair value approximates the carrying amounts due to the short-term nature and historically negligible credit losses.
(2)           Recorded at fair value. Quoted market prices are used to determine fair value.
(3)           Long-term debt is generally recorded at cost except for obligations that are designated in a fair-value hedge relationship, which are recorded at fair value in periods when a hedge relationship exists. The fair value of long-term debt is primarily determined using quoted market prices. Balance includes current portion of long-term debt.
(4)           Recorded at fair value based on our period-end closing market share price.
 
c) Valuation Techniques
 
Cash Equivalents
 
The fair value of our cash equivalents is classified within Level 1 of the fair value hierarchy because they are valued using quoted market prices in active markets. Our cash equivalents are comprised of U.S. Treasury bills and money market securities that are invested primarily in U.S. Treasury bills.
 
Available-for-Sale Securities
 
The fair value of available-for-sale securities is determined based on a market approach reflecting the closing price of each particular security at the balance sheet date. The closing price is a quoted market price obtained from the exchange that is the principal active market for the particular security, and therefore available-for-sale securities are classified within Level 1 of the fair value hierarchy.
 
Derivative Instruments
 
The fair value of derivative instruments is determined using either present value techniques or option pricing models that utilize a variety of inputs that are a combination of quoted prices and market-corroborated inputs. The fair values of all our derivative contracts include an adjustment for credit risk. For counterparties in a net asset position credit risk is based upon the observed credit default swap spread for each particular counterparty, as appropriate. For counterparties in a net liability position credit risk is based upon Barrick’s observed credit default swap spread. The fair value of US dollar interest rate and currency swap contracts is determined by discounting contracted cash flows using a discount rate derived from observed LIBOR and swap rate curves and CDS rates. In the case of currency contracts, we convert non-US dollar cash flows into US dollars using an exchange rate derived from currency swap curves and CDS rates. The fair value of commodity forward contracts is determined by discounting contractual cash flows using a discount rate derived from observed LIBOR and swap rate curves and CDS rates. Contractual cash flows are calculated using a forward pricing curve derived from observed forward prices for each commodity. Derivative instruments are classified within Level 2 of the fair value hierarchy.
 
Receivables from Provisional Copper and Gold Sales
 
The fair value of receivables rising from copper and gold sales contracts that contain provisional pricing mechanisms is determined using the appropriate quoted forward price from the exchange that is the principal active market for the particular metal. As such, these receivables are classified within Level 2 of the fair value hierarchy.
 
22 · Asset Retirement Obligations
 
Asset Retirement Obligations (AROs)

 	 	2010	 	2009	 	
At January 1	 	$	1,207	 	$	1,036	 	
AROs acquired during the year	 	9	 	30	 	
AROs arising in the year	 	305	 	119	 	
Impact of revisions to expected cash flows recorded in earnings	 	8	 	10	 	
Settlements	 	 	 	 	 	
Cash payments	 	(44	)	(39	)	
Settlement gains	 	(5	)	(6	)	
Accretion	 	47	 	57	 	
At December 31	 	1,527	 	1,207	 	
Current portion (note 19)	 	(88	)	(85	)	
 	 	$	1,439	 	$	1,122	 	
 
148 

 
Barrick Financial Report 2010 | Notes to Consolidated Financial Statements
 
Each period we assess cost estimates and other assumptions used in the valuation of AROs at each of our mineral properties to reflect events, changes in circumstances and new information available. Changes in these cost estimates and assumptions have a corresponding impact on the fair value of the ARO. For closed mines, any change in the fair value of AROs results in a corresponding charge or credit within other expense, whereas at operating mines the charge is recorded as an adjustment to the carrying amount of the corresponding asset. In 2010, adjustments of $27 million were recorded to reflect changes in cost estimates for AROs at closed mines and Barrick Energy (2009: $10 million; 2008: $9 million).

At December 31	 	2010	 	2009	 	
Operating mines and development properties	 	 	 	 	 	
ARO increase(1)	 	$	301	 	$	119	 	
ARO decrease(2)	 	(8	)	(1	)	
Closed mines	 	 	 	 	 	
ARO increase(3)	 	14	 	8	 	
Barrick Energy	 	 	 	 	 	
ARO increase(1)	 	13	 	2	 	

(1)           These adjustments were recorded with a corresponding adjustment to property, plant and equipment. 2010 balance includes revisions to mine closure plans at Porgera ($118 million) and Pierina ($90 million).
(2)           Represents a decrease in AROs at a mine where the corresponding ARO asset had been fully amortized and was therefore recorded as a recovery in other income.
(3)           For closed mines, any change in the fair value of AROs results in a corresponding charge or credit to other expense or other income, respectively.
 
AROs arise from the acquisition, development, construction and normal operation of mining property, plant and equipment, due to government controls and regulations that protect the environment on the closure and reclamation of mining properties. The major parts of the carrying amount of AROs relate to tailings and heap leach pad closure/rehabilitation; demolition of buildings/mine facilities; ongoing water treatment; and ongoing care and maintenance of closed mines. The fair values of AROs are measured by discounting the expected cash flows using a discount factor that reflects the credit-adjusted risk-free rate of interest. We prepare estimates of the timing and amount of expected cash flows when an ARO is incurred. We update expected cash flows to reflect changes in facts and circumstances. The principal factors that can cause expected cash flows to change are: the construction of new processing facilities; changes in the quantities of material in reserves and a corresponding change in the life-of-mine plan; changing ore characteristics that impact required environmental protection measures and related costs; changes in water quality that impact the extent of water treatment required; and changes in laws and regulations governing the protection of the environment. When expected cash flows increase, the revised cash flows are discounted using a current discount factor whereas when expected cash flows decrease the reduced cash flows are discounted using a historic discount factor, and then in both cases any change in the fair value of the ARO is recorded. We record the fair value of an ARO when it is incurred. At producing mines AROs incurred and changes in the fair value of AROs are recorded as an adjustment to the corresponding asset carrying amounts. At closed mines, any adjustment to the fair value of an ARO is charged directly to earnings. AROs are adjusted to reflect the passage of time (accretion) calculated by applying the discount factor implicit in the initial fair-value measurement to the beginning-of-period carrying amount of the AROs. For producing mines, development projects and closed mines, accretion is recorded in amortization and accretion. Upon settlement of an ARO, we record a gain or loss if the actual cost differs from the carrying amount of the ARO. Settlement gains/losses are recorded in other (income) expense. Other environmental remediation costs that are not AROs are expensed as incurred (see note 8a).
 
23 · Other Non-current Liabilities

At December 31	 	2010	 	2009	 	
Deposit on silver sale agreement	 	$	312	 	$	196	 	
Settlement obligation to close out gold sales contracts	 	—	 	647	 	
Pension benefits (note 29c)	 	103	 	96	 	
Other post-retirement benefits (note 29e)	 	25	 	26	 	
Derivative liabilities (note 20e)	 	105	 	19	 	
Restricted share units (note 28b)	 	89	 	91	 	
Provision for supply contract restructuring costs	 	31	 	—	 	
Provision for offsite remediation	 	61	 	—	 	
Other	 	142	 	70	 	
 	 	$	868	 	$	1,145	 	
 
Silver Sale Agreement
 
On September 22, 2009, we entered into an agreement with Silver Wheaton Corp. to sell the equivalent of 25% of the life-of-mine silver production from the Pascua-Lama project and 100% of silver production from the Lagunas Norte, Pierina and Veladero mines until project completion at Pascua-Lama. In return, we were entitled to an upfront cash payment of $625 million payable over three years from the date of the agreement, as well as ongoing payments in cash of the lesser of $3.90 (subject to an annual inflation adjustment of 1% starting three years after project completion at Pascua-Lama) and the prevailing market price for each ounce of silver delivered under the agreement.
 
149 

 
Notes to Consolidated Financial Statements
 
During 2010 we received cash payments of $137.5 million (2009: $213 million). Providing that construction continues to progress at Pascua-Lama, we are entitled to receive additional cash payments totaling $275 million in aggregate over the next two anniversary dates of the agreement. An imputed interest expense is being recorded on the liability at the rate implicit in the agreement. The liability plus imputed interest will be amortized based on the difference between the effective contract price for silver and the amount of the ongoing cash payment per ounce of silver delivered under the agreement.
 
Settlement Obligation to Close Out Gold Sales Contracts
 
In September 2009, we announced a plan to eliminate our “Gold Hedges” and a significant portion of our “Floating Contracts”. Our “Gold Hedges” were fixed price contracts which did not participate in gold price movements. Our “Floating Contracts” were essentially Gold Hedges that had been offset against future movements in the gold price but not yet settled. As at December 31, 2009, the obligation relating to the Floating Contracts had been reduced to $0.6 billion. During 2010 the $0.6 billion obligation relating to the Floating Contracts was repaid.
 
24 · Deferred Income Taxes
 
Recognition and Measurement
 
We record deferred income tax assets and liabilities where temporary differences exist between the carrying amounts of assets and liabilities in our balance sheet and their tax bases. The measurement and recognition of deferred income tax assets and liabilities takes into account: enacted rates that will apply when temporary differences reverse; interpretations of relevant tax legislation; tax planning strategies; estimates of the tax bases of assets and liabilities; and the deductibility of expenditures for income tax purposes. We recognize the effect of changes in our assessment of these estimates and factors when they occur. Changes in deferred income tax assets, liabilities and valuation allowances are allocated between net income and other comprehensive income based on the source of the change. 
 
Current income taxes of $74 million and deferred income taxes of $48 million have been provided on the undistributed earnings of certain foreign subsidiaries. Deferred income taxes have not been provided on the undistributed earnings of all other foreign subsidiaries which are considered to be reinvested indefinitely outside Canada. The determination of the unrecorded deferred income tax liability is not considered practicable.
 
Sources of Deferred Income Tax Assets and Liabilities

At December 31	 	2010	 	2009	 	
Deferred tax assets	 	 	 	 	 	
Tax loss carry forwards	 	$	553	 	$	659	 	
Capital tax loss carry forwards	 	101	 	—	 	
Alternative minimum tax (“AMT”) credits	 	318	 	287	 	
Asset retirement obligations	 	494	 	413	 	
Property, plant and equipment	 	177	 	268	 	
Post-retirement benefit obligations	 	14	 	16	 	
Accrued interest payable	 	63	 	108	 	
Other	 	53	 	—	 	
 	 	1,773	 	1,751	 	
Valuation allowances	 	(425	)	(481	)	
 	 	1,348	 	1,270	 	
Deferred tax liabilities	 	 	 	 	 	
Property, plant and equipment	 	(1,725	)	(1,328	)	
Derivative instruments	 	(168	)	(81	)	
Inventory	 	(102	)	(70	)	
Other	 	—	 	(26	)	
 	 	$	(647	)	$	(235	)	
Classification:	 	 	 	 	 	
Non-current assets	 	$	467	 	$	949	 	
Non-current liabilities	 	(1,114	)	(1,184	)	
 	 	$	(647	)	$	(235	)	
 
Expiry Dates of Tax Losses and AMT Credits

 	 	 	 	 	 	 	 	 	 	 	 	No	 	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	expiry	 	 	 	
 	 	2011	 	2012	 	2013	 	2014	 	2015+	 	date	 	Total	 	
Tax losses(1)	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Canada	 	$	7	 	$	—	 	$	2	 	$	—	 	$	1,290	 	$	—	 	$	1,299	 	
Barbados	 	—	 	—	 	—	 	—	 	7,280	 	—	 	$	7,280	 	
Chile	 	—	 	—	 	—	 	—	 	—	 	202	 	$	202	 	
Tanzania	 	—	 	—	 	—	 	—	 	—	 	97	 	$	97	 	
Dominican Republic	 	—	 	—	 	—	 	—	 	—	 	247	 	$	247	 	
Other	 	—	 	—	 	—	 	—	 	6	 	100	 	$	106	 	
 	 	$	7	 	$	—	 	$	2	 	$	—	 	$	8,576	 	$	646	 	$	9,231	 	
AMT credits(2)	 	 	 	 	 	 	 	 	 	 	 	$	318	 	$	318	 	

(1)           Represents the gross amount of tax loss carry forwards translated at closing exchange rates at December 31, 2010.
(2)           Represents the amounts deductible against future taxes payable in years when taxes payable exceed “minimum tax” as defined by United States tax legislation.
 
150 

 
Barrick Financial Report 2010 | Notes to Consolidated Financial Statements
 
Net Deferred Tax Assets

 	 	2010	 	2009	 	
Gross deferred tax assets	 	 	 	 	 	
Canada	 	$	350	 	$	366	 	
Chile	 	20	 	44	 	
Argentina	 	97	 	119	 	
Australia	 	104	 	109	 	
Tanzania	 	56	 	122	 	
United States	 	136	 	542	 	
Barbados	 	73	 	69	 	
Other	 	56	 	59	 	
 	 	892	 	1,430	 	
Valuation allowances	 	 	 	 	 	
Canada	 	(52	)	(45	)	
Chile	 	(20	)	(22	)	
Argentina	 	(97	)	(119	)	
Australia	 	(104	)	(11	)	
Tanzania	 	(30	)	(30	)	
United States	 	(7	)	(136	)	
Barbados	 	(73	)	(69	)	
Other	 	(42	)	(49	)	
 	 	(425	)	(481	)	
Net	 	$	467	 	$	949	 	
 
Valuation Allowances
 
We consider the need to record a valuation allowance against deferred tax assets, taking into account the effects of local tax law. A valuation allowance is not recorded when we conclude that sufficient positive evidence exists to demonstrate that it is more likely than not that a deferred tax asset will be realized.
 
The main factors considered are:
 
·         Historic and expected future levels of taxable income;
·         Tax plans that affect whether tax assets can be realized; and
·         The nature, amount and expected timing of reversal of taxable temporary differences.
 
Levels of future taxable income are mainly affected by: market gold and silver prices; forecasted future costs and expenses to produce gold reserves; quantities of proven and probable gold reserves; market interest rates; and foreign currency exchange rates. If these factors or other circumstances change, we record an adjustment to valuation allowances to reflect our latest assessment of the amount of deferred tax assets that will more likely than not be realized.
 
A deferred income tax asset totaling $298 million has been recorded in Canada. This deferred tax asset primarily arose due to mark-to-market losses realized for acquired Placer Dome derivative instruments. Projections of various sources of income support the conclusion that the realizability of this deferred tax asset is more likely than not, and consequently no valuation allowance has been set up for this deferred tax asset.
 
Due to the impact of higher market gold prices in third quarter 2010 the remaining valuation allowance relating to AMT credits in the United States was released.
 
Source of Changes in Deferred Tax Balances

For the years ended December 31	 	2010	 	2009	 	2008	 	
Temporary differences	 	 	 	 	 	 	 	
Property, plant and equipment	 	$	(402	)	$	(279	)	$	(3	)	
Asset retirement obligations	 	81	 	47	 	24	 	
Tax loss carry forwards	 	(106	)	2	 	(72	)	
Capital tax loss carry forwards	 	101	 	—	 	—	 	
Derivatives	 	(86	)	(171	)	212	 	
Other	 	(1	)	8	 	(2	)	
 	 	(413	)	(393	)	159	 	
Net currency translation gains/ (losses) on deferred tax balances	 	2	 	40	 	(98	)	
Canadian tax rate changes	 	—	 	(59	)	—	 	
Canadian functional currency election	 	—	 	70	 	—	 	
Release of other valuation allowances	 	—	 	—	 	175	 	
 	 	$	(411	)	$	(342	)	$	236	 	
Intraperiod allocation to:	 	 	 	 	 	 	 	
Income (loss) from continuing operations before income taxes	 	$	(231	)	$	(107	)	$	41	 	
Income (loss) from discontinued operations	 	—	 	(41	)	4	 	
Tusker acquisition	 	(22	)	—	 	—	 	
Acquisition of Hemlo	 	—	 	(56	)	—	 	
Share issue costs	 	—	 	40	 	—	 	
Redemption of convertible senior debentures	 	(12	)	—	 	—	 	
Cortez acquisition	 	—	 	—	 	11	 	
Barrick Energy Inc. acquisitions	 	(37	)	—	 	(22	)	
Kainantu acquisition	 	—	 	—	 	(19	)	
Other acquisition	 	—	 	—	 	2	 	
OCI (note 26)	 	(109	)	(178	)	219	 	
Other	 	(1	)	(8	)	(2	)	
 	 	$	(412	)	$	(350	)	$	234	 	
 
Unrecognized Tax Benefits

 	 	2010	 	2009	 	
At January 1	 	$	67	 	$	46	 	
Additions based on tax positions related to the current year	 	—	 	—	 	
Additions for tax positions of prior years	 	—	 	38	 	
Reductions for tax positions of prior years	 	—	 	—	 	
Settlements	 	(3	)	(17	)	
At December 31(1)	 	$	64	 	$	67	 	

(1)           If recognized, the total amount of $64 million would be recognized as a benefit to income taxes on the income statement, and therefore would impact the reported effective tax rate.
 
151 

 
Notes to Consolidated Financial Statements
 
We anticipate the amount of unrecognized tax benefits to decrease within 12 months of the reporting date by approximately $2 million to $3 million, related primarily to the expected settlement of income tax and mining tax assessments. 
 
We further anticipate that it is reasonably possible for the amount of unrecognized tax benefits to decrease within 12 months of the reporting date by approximately $37 million through a potential settlement with tax authorities that may result in a reduction of available tax pools.
 
Tax Years Still Under Examination

Canada	 	2006–2010	 	
United States	 	2010	 	
Peru	 	2007–2010	 	
Chile(1)	 	2007–2010	 	
Argentina	 	2004–2010	 	
Australia	 	All years open	 	
Papua New Guinea	 	2004–2010	 	
Tanzania	 	All years open	 	

(1)           In addition, operating loss carry forwards from earlier periods are still open for examination.
 
Peruvian Tax Assessment
 
On September 30, 2004, the Tax Court of Peru issued a decision in our favor in the matter of our appeal of a 2002 income tax assessment for an amount of $32 million, excluding interest and penalties. The assessment mainly related to the validity of a revaluation of the Pierina mining concession, which affected its tax basis for the years 1999 and 2000. The full life-of-mine effect on current and deferred income tax liabilities totaling $141 million was fully recorded at December 31, 2002, as well as other related costs of about $21 million.
 
In January 2005, we received written confirmation that there would be no appeal of the September 30, 2004 Tax Court of Peru decision. In December 2004, we recorded a $141 million reduction in current and deferred income tax liabilities and a $21 million reduction in other accrued costs. The confirmation concluded the administrative and judicial appeals process with resolution in Barrick’s favor.
 
Notwithstanding the favorable Tax Court decision we received in 2004 on the 1999 to 2000 revaluation matter, in an audit concluded in 2005, SUNAT has reassessed us on the same issue for tax years 2001 to 2003. On October 19, 2007, SUNAT confirmed their reassessment. The tax assessment is for $53 million of tax, plus interest and penalties of $209 million updated as of December 31, 2010. We filed an appeal to the Tax Court of Peru within the statutory period. We believe that the audit reassessment has no merit, that we will prevail in court again, and accordingly no liability has been recorded for this reassessment.
 
25 · Capital Stock
 
a) Common Shares
 
Our authorized capital stock includes an unlimited number of common shares (issued 998,499,673 common shares); 9,764,929 First preferred shares Series A (issued nil); 9,047,619 Series B (issued nil); and 14,726,854 Second preferred shares Series A (issued nil).
 
Common Share Offering
 
On September 23, 2009, we issued 109 million common shares of Barrick at a price of $36.95 per share, for net proceeds of $3,885 million.
 
In 2010, we declared and paid dividends in US dollars totaling $0.44 per share ($436 million) (2009: $0.40 per share, $369 million; 2008: $0.40 per share, $349 million).
 
b) Exchangeable Shares
 
In connection with a 1998 acquisition, Barrick Gold Inc. (“BGI”) issued 11.1 million BGI exchangeable shares, which were each exchangeable for 0.53 of a Barrick common share at any time at the option of the holder, and had essentially the same voting, dividend (payable in Canadian dollars), and other rights as 0.53 of a Barrick common share. BGI is a subsidiary that holds our interest in the Hemlo and Eskay Creek Mines. We had the right to require the exchange of each outstanding BGI exchangeable share for 0.53 of a Barrick common share. In first quarter 2009, the remaining 0.5 million BGI exchangeable shares were redeemed for 0.3 million Barrick common shares.
 
152 

 
Barrick Financial Report 2010 | Notes to Consolidated Financial Statements
 
26 · Other Comprehensive Income (Loss)  (“OCI”)

 	 	2010	 	2009	 	2008	 	
Accumulated OCI at beginning of period	 	 	 	 	 	 	 	
Cash flow hedge gains, net of tax of $81, $89, $105	 	$	195	 	$	(124	)	$	250	 	
Investments, net of tax of $3, $nil, $4	 	24	 	(2	)	37	 	
Currency translation adjustments, net of tax of $nil, $nil, $nil	 	(141	)	(197	)	(143	)	
Pension plans and other post-retirement benefits, net of tax of $14, $19, $2	 	(23	)	(33	)	7	 	
 	 	55	 	(356	)	151	 	
Other comprehensive income (loss) for the period:	 	 	 	 	 	 	 	
Changes in fair value of cash flow hedges	 	612	 	705	 	(301	)	
Changes in fair value of investments	 	69	 	34	 	(52	)	
Currency translation adjustments(1)	 	22	 	56	 	(54	)	
Pension plan and other post-retirement benefit adjustments (note 29):	 	 	 	 	 	 	 	
Net actuarial gain (loss)	 	(2	)	15	 	(62	)	
Transition obligation (asset)	 	—	 	—	 	1	 	
Less: reclassification adjustments for (gains) losses recorded in earnings:	 	 	 	 	 	 	 	
Transfers of cash flow hedge gains to earnings on recording hedged items in earnings	 	(104	)	(216	)	(267	)	
Investments:	 	 	 	 	 	 	 	
Other than temporary impairment charges	 	—	 	1	 	26	 	
Gains realized on sale	 	(12	)	(6	)	(17	)	
Other comprehensive income (loss), before tax	 	585	 	589	 	(726	)	
Income tax recovery (expense) related to OCI	 	(109	)	(178	)	219	 	
Other comprehensive income (loss), net of tax	 	$	476	 	$	411	 	$	(507	)	
Accumulated OCI at December 31	 	 	 	 	 	 	 	
Cash flow hedge gains, net of tax of $186, $81, $89	 	$	598	 	$	195	 	$	(124	)	
Investment, net of tax of $7, $3, $nil	 	77	 	24	 	(2	)	
Currency translation adjustments, net of tax of $nil, $nil, $nil	 	(119	)	(141	)	(197	)	
Pension plans and other post-retirement benefits, net of tax of $14, $14, $19	 	(25	)	(23	)	(33	)	
 	 	$	531	 	$	55	 	$	(356	)	

(1) Represents currency translation adjustments for Barrick Energy.
 
27 · Non-controlling Interests

 	 	Pueblo Viejo project	 	African Barrick Gold(1)	 	Cerro Casale(2)	 	Other	 	Total	 	
At January 1, 2008	 	$	60	 	$	17	 	$	—	 	$	5	 	$	82	 	
Share of net earnings (loss)	 	(26	)	38	 	—	 	—	 	12	 	
Cash contributed	 	120	 	(30	)	—	 	—	 	90	 	
Other increase in non-controlling interest	 	—	 	—	 	—	 	(2	)	(2	)	
At December 31, 2008	 	154	 	25	 	—	 	3	 	182	 	
Share of net earnings (loss)	 	1	 	5	 	—	 	—	 	6	 	
Cash contributed	 	307	 	(8	)	—	 	—	 	299	 	
Other increase in non-controlling interest	 	—	 	—	 	—	 	(3	)	(3	)	
At December 31, 2009	 	462	 	22	 	—	 	—	 	484	 	
Share of net earnings (loss)	 	(3	)	41	 	(15	)	—	 	23	 	
Cash contributed	 	101	 	—	 	13	 	—	 	114	 	
Other increase in non-controlling interest	 	—	 	594	 	454	 	—	 	1,048	 	
At December 31, 2010	 	$	560	 	$	657	 	$	452	 	$	—	 	$	1,669	 	

(1)           Represents non-controlling interest in ABG. The balance at January 1, 2010 includes the non-controlling interest of 30% in our Tulawaka mine.
(2)           Represents non-controlling interest in Cerro Casale. Refer to note 3f.
 
153 

 
Notes to Consolidated Financial Statements
 
28 · Stock-based Compensation
 
a) Stock Options
 
Under Barrick’s stock option plan, certain officers and key employees of the Corporation may purchase common shares at an exercise price that is equal to the closing share price on the day before the grant of the option. The grant date is the date when the details of the award, including the number of options granted by individual and the exercise price, are approved. Stock options vest evenly over four years, beginning in the year after granting. Options granted in July 2004 and prior are exercisable over 10 years, whereas options granted since December 2004 are exercisable over seven years. At December 31, 2010, 6.7 million (2009: 6.9 million; 2008: 7.4 million) common shares, in addition to those currently outstanding, were available for granting options. Stock options when exercised result in an increase to the number of common shares issued by Barrick.
 
Compensation expense for stock options was $14 million in 2010 (2009: $20 million; 2008: $25 million), and is presented as a component of corporate administration and other expense, consistent with the classification of other elements of compensation expense for those employees who had stock options. In 2009, we recognized an additional $7 million of stock option expense as a result of accelerating the vesting conditions of certain plan participants on their departure from the Company. The recognition of compensation expense for stock options reduced earnings per share for 2010 by $0.01 per share (2009: $0.03 per share; 2008: $0.03 per share).
 
Total intrinsic value relating to options exercised in 2010 was $96 million (2009: $38 million; 2008: $61 million).
 
Employee Stock Option Activity (Number of Shares in Millions)

 	 	2010	 	2009	 	2008	 	
 	 	 	 	Average	 	 	 	Average	 	 	 	Average	 	
 	 	Shares	 	price	 	Shares	 	price	 	Shares	 	price	 	
C$ options	 	 	 	 	 	 	 	 	 	 	 	 	 	
At January 1	 	3.3	 	$	27	 	4.8	 	$	27	 	7.1	 	$	27	 	
Exercised	 	(1.9	)	27	 	(1.4	)	26	 	(2.1	)	28	 	
Forfeited	 	—	 	—	 	—	 	—	 	—	 	—	 	
Cancelled/expired	 	—	 	—	 	(0.1	)	23	 	(0.2	)	28	 	
At December 31	 	1.4	 	$	26	 	3.3	 	$	27	 	4.8	 	$	27	 	
US$ options	 	 	 	 	 	 	 	 	 	 	 	 	 	
At January 1	 	9.1	 	$	33	 	8.9	 	$	28	 	7	 	$	28	 	
Granted	 	0.9	 	55	 	1.6	 	41	 	2.8	 	34	 	
Exercised	 	(2.9	)	28	 	(1.3	)	24	 	(0.8	)	24	 	
Forfeited	 	(0.1	)	38	 	(0.1	)	35	 	(0.1	)	31	 	
Cancelled/expired	 	—	 	—	 	—	 	—	 	—	 	—	 	
At December 31	 	7.0	 	$	38	 	9.1	 	$	33	 	8.9	 	$	28	 	
 
154 

 
Barrick Financial Report 2010 | Notes to Consolidated Financial Statements
 
Stock Options Outstanding (Number of Shares in Millions)

 	 	Outstanding	 	Exercisable	 	
 	 	 	 	 	 	 	 	Intrinsic	 	 	 	 	 	Intrinsic	 	
 	 	 	 	Average	 	Average	 	value(1)	 	 	 	Average	 	value(1)	 	
Range of exercise prices	 	Shares	 	price	 	life (years)	 	($ millions)	 	Shares	 	price	 	($ millions)	 	
C$ options	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
$ 22 – $ 27	 	0.8	 	$	24	 	2	 	$	24	 	0.8	 	$	24	 	$	24	 	
$ 28 – $ 31	 	0.6	 	29	 	3	 	15	 	0.6	 	29	 	15	 	
 	 	1.4	 	$	26	 	2	 	$	39	 	1.4	 	$	26	 	$	39	 	
US$ options	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
$ 9 – $ 19	 	0.1	 	$	13	 	2	 	$	3	 	0.1	 	$	13	 	$	3	 	
$ 20 – $ 27	 	1.9	 	26	 	3	 	53	 	1.4	 	25	 	40	 	
$ 28 – $ 41	 	1.4	 	37	 	5	 	32	 	1.3	 	37	 	22	 	
$ 42 – $ 55	 	3.6	 	46	 	6	 	21	 	0.8	 	43	 	9	 	
 	 	7.0	 	$	38	 	5	 	$	109	 	3.6	 	$	33	 	$	74	 	

(1)           Based on the closing market share price on December 31, 2010 of C$53.12 and US$53.18.
 
Option Information

For the years ended December 31	 	 	 	 	 	 	 	
(per share and per option amounts in dollars)	 	2010	 	2009	 	2008	 	
Valuation assumptions	 	Lattice	(1),(2)	Lattice	(1),(2)	Lattice	(1),(2)	
Expected term (years)	 	5.0–5.1	 	5.0–5.1	 	4.5–5.2	 	
Expected volatility(2)	 	33%–60%	 	35%–60%	 	30%–70%	 	
Weighted average expected volatility(2)	 	36%	 	51%	 	43%	 	
Expected dividend yield	 	1%–1.13%	 	1%–1.1%	 	0.7%–1.5%	 	
Risk-free interest rate(2)	 	0.19%–2.88%	 	0.16%–3.44%	 	0.25%–5.1%	 	
 	 	 	 	 	 	 	 	
Options granted (in millions)	 	0.9	 	1.6	 	2.8	 	
Weighted average fair value per option	 	$	16	 	$	13	 	$	12	 	

(1)           Different assumptions were used for the multiple stock option grants during the year.
(2)           The volatility and risk-free interest rate assumption varied over the expected term of these stock option grants.
 
The expected volatility assumptions have been developed taking into consideration both historical and implied volatility of our US dollar share price. The risk-free rate for periods within the contractual life of the option is based on the US Treasury yield curve in effect at the time of the grant.
 
We use the straight-line method for attributing stock option expense over the vesting period. Stock option expense incorporates an expected forfeiture rate. The expected forfeiture rate is estimated based on historical forfeiture rates and expectations of future forfeiture rates. We make adjustments if the actual forfeiture rate differs from the expected rate.
 
The expected term assumption is derived from the option valuation model and is in part based on historical data regarding the exercise behavior of option holders based on multiple share-price paths. The Lattice model also takes into consideration employee turnover and voluntary exercise patterns of option holders.
 
As at December 31, 2010, there was $37 million (2009: $58 million; 2008: $42 million) of total unrecognized compensation cost relating to unvested stock options. We expect to recognize this cost over a weighted average period of 2 years (2009: 2 years; 2008: 2 years).
 
b) Restricted Share Units (RSUs) and Deferred Share Units (DSUs)
 
Under our RSU plan, selected employees are granted RSUs where each RSU has a value equal to one Barrick common share. RSUs vest at the end of a two-and-a-half or three-year period and are settled in cash on the third anniversary of the grant date. Additional RSUs are credited to reflect dividends paid on Barrick common shares over the vesting period.
 
A liability for RSUs is recorded at fair value on the grant date, with a corresponding amount recorded as a deferred compensation asset that is amortized on a straight-line basis over the vesting period. Changes in the fair value of the RSU liability
 
155 

 
Notes to Consolidated Financial Statements
 
are recorded each period, with a corresponding adjustment to the deferred compensation asset.
 
Compensation expense for RSUs incorporates an expected forfeiture rate. The expected forfeiture rate is estimated based on historical forfeiture rates and expectations of future forfeiture rates. We make adjustments if the actual forfeiture rate differs from the expected rate. At December 31, 2010, the weighted average remaining contractual life of RSUs was 1.22 years.
 
Compensation expense for RSUs was $48 million in 2010 (2009: $40 million; 2008: $33 million) and is presented as a component of corporate administration and other expense, consistent with the classification of other elements of compensation expense for those employees who had RSUs. As at December 31, 2010 there was $83 million of total unamortized compensation cost relating to unvested RSUs (2009: $74 million; 2008: $84 million).
 
Under our DSU plan, Directors must receive a specified portion of their basic annual retainer in the form of DSUs, with the option to elect to receive 100% of such retainer in DSUs. Each DSU has the same value as one Barrick common share. DSUs must be retained until the Director leaves the Board, at which time the cash value of the DSUs will be paid out. Additional DSUs are credited to reflect dividends paid on Barrick common shares. DSUs are recorded at fair value on the grant date and are adjusted for changes in fair value. The fair value of amounts granted each period together with changes in fair value are expensed.
 
DSU and RSU Activity

 	 	 	 	Fair	 	 	 	Fair	 	
 	 	DSUs	 	value	 	RSUs	 	value	 	
 	 	(thousands)	 	($ millions)	 	(thousands)	 	($ millions)	 	
At January 1, 2008	 	100	 	$	4	 	2,383	 	$	100	 	
Settled for cash	 	(4	)	(0.1	)	(348	)	(10.3	)	
Forfeited	 	—	 	—	 	(262	)	(10.6	)	
Granted	 	34	 	1.2	 	1,493	 	42	 	
Credits for dividends	 	—	 	—	 	20	 	0.7	 	
Change in value	 	—	 	(0.5	)	—	 	(1.7	)	
At December 31, 2008	 	130	 	$	5	 	3,286	 	$	120	 	
Settled for cash	 	—	 	—	 	(897	)	(35.7	)	
Forfeited	 	—	 	—	 	(279	)	(11.1	)	
Granted	 	37	 	1.2	 	1,013	 	42.1	 	
Credits for dividends	 	—	 	—	 	27	 	1	 	
Change in value	 	—	 	0.7	 	—	 	7.4	 	
At December 31, 2009	 	167	 	$	7	 	3,150	 	$	124	 	
Settled for cash	 	(20	)	(0.6	)	(824	)	(42.8	)	
Forfeited	 	—	 	—	 	(326	)	(17.0	)	
Granted	 	33	 	1.5	 	918	 	49.3	 	
Credits for dividends	 	—	 	—	 	30	 	1.3	 	
Change in value	 	—	 	1.9	 	—	 	37.9	 	
At December 31, 2010	 	180	 	$	9	 	2,948	 	$	153	 	
 
c) Performance Restricted Share Units (PRSUs)
 
In 2008, Barrick launched a PRSU plan. Under this plan, selected employees are granted PRSUs, where each PRSU has a value equal to one Barrick common share. PRSUs vest at the end of a three-year period and are settled in cash on the third anniversary of the grant date. Additional PRSUs are credited to reflect dividends paid on Barrick common shares over the vesting period. Vesting, and therefore, the liability is based on the achievement of performance goals and the target settlement will range from 0% to 200% of the value. At December 31, 2010, 335 thousand units were outstanding (2009: 250 thousand units).
 
d) Employee Share Purchase Plan (ESPP)
 
In 2008, Barrick launched an Employee Share Purchase Plan. This plan enables Barrick employees to purchase Company shares through payroll deduction. Each year, employees may contribute 1%—6% of their combined base salary and annual bonus, and Barrick will match 50% of the contribution, up to a maximum of $5,000 per year. During 2010, Barrick contributed $0.6 million to this plan (2009: $0.8 million).
 
e) ABG Stock Options
 
African Barrick Gold has a stock option plan for its directors and selected employees. The exercise price of the granted options is determined by the ABG Remuneration Committee before the grant of an option provided that this price cannot be less than the average of the middle-market quotation of ABG’s shares (as derived from the London Stock Exchange Daily Official List) for the three dealing days immediately preceding the date of grant. All options outstanding at the end of the year expire in 2017. None of the ABG options granted were exercisable at December 31, 2010. Stock option expense of $1 million (2009: $nil; 2008: $nil) is included as a component of other expense.
 
156 

 
29 · Post-retirement Benefits
 
a) Defined Contribution Pension Plans
 
Certain employees take part in defined contribution employee benefit plans. We also have a retirement plan for certain officers of the Company, under which we contribute 15% of the officer’s annual salary and bonus. Our share of contributions to these plans, which is expensed in the year it is earned by the employee, was $56 million in 2010, $50 million in 2009 and $47 million in 2008.
 
b) Defined Benefit Pension Plans
 
We have qualified defined benefit pension plans that cover certain of our United States and Canadian employees and provide benefits based on employees’ years of service. Our policy is to fund the amounts necessary on an actuarial basis to provide enough assets to meet the benefits payable to plan members. Independent trustees administer assets of the plans, which are invested mainly in fixed income and equity securities. In 2009, two of our qualified defined benefit plans in Canada were wound up. No curtailment gain or loss resulted and the obligations of the plans were settled in 2009. In 2007, one of our qualified defined benefit plans in Canada was wound up. No curtailment gain or loss resulted and the obligations of the plans were settled in 2009.
 
As well as the qualified plans, we have non-qualified defined benefit pension plans covering certain employees and former directors of the Company. An irrevocable trust (“rabbi trust”) was set up to fund these plans. The fair value of assets held in this trust was $nil in 2010 (2009: $6 million).
 
Actuarial gains and losses arise when the actual return on plan assets differs from the expected return on plan assets for a period, or when the expected and actuarial accrued benefit obligations differ at the end of the year. We amortize actuarial gains and losses over the average remaining life expectancy of plan participants, in excess of a 10% corridor.
 
Pension Expense (Credit)

For the years ended December 31	 	2010	 	2009	 	2008	 	
Expected return on plan assets	 	$	(14	)	$	(14	)	$	(19	)	
Service cost	 	—	 	—	 	—	 	
Interest cost	 	17	 	19	 	21	 	
Actuarial losses	 	2	 	2	 	1	 	
 	 	$	5	 	$	7	 	$	3	 	
 
c) Pension Plan Information
 
Fair Value of Plan Assets

For the years ended December 31	 	2010	 	2009	 	2008	 	
Balance at January 1	 	$	215	 	$	237	 	$	293	 	
Increase for plans assumed on acquisitions(1)	 	—	 	8	 	9	 	
Actual return on plan assets	 	25	 	36	 	(41	)	
Company contributions	 	12	 	9	 	12	 	
Settlements	 	—	 	(24	)	—	 	
Benefits paid	 	(25	)	(52	)	(33	)	
Foreign currency adjustments	 	—	 	1	 	(3	)	
Balance at December 31	 	$	227	 	$	215	 	$	237	 	

(1)           In 2009, represents plan acquired on acquisition of additional 50% in Hemlo.
In 2008, represents plan acquired on acquisition of additiona l 40% in Cortez.

 	 	2010	 	2010	 	
At December 31	 	Target(1)	 	Actual	 	Actual	 	
Composition of plan assets(2)	 	 	 	 	 	 	 	
Equity securities	 	54	%	54	%	$	122	 	
Fixed income securities	 	46	%	46	%	105	 	
 	 	100	%	100	%	$	227	 	

(1)           Based on the weighted average target for all defined benefit plans
(2)           Holdings in Equity and Fixed income securities consist of Level 1 and Level 2 assets within the fair value hierarchy.
 
Projected Benefit Obligation (PBO)

For the years ended December 31	 	2010	 	2009	 	
Balance at January 1	 	$	321	 	$	357	 	
Increase for plans assumed on acquisitions	 	—	 	6	 	
Amendments	 	1	 	—	 	
Service cost	 	—	 	—	 	
Interest cost	 	17	 	19	 	
Actuarial losses	 	20	 	6	 	
Benefits paid	 	(25	)	(52	)	
Foreign currency adjustments	 	2	 	8	 	
Settlements	 	—	 	(23	)	
Balance at December 31	 	$	336	 	$	321	 	
Funded status(1)	 	$	(109	)	$	(106	)	
ABO(2)	 	$	335	 	$	321	 	

(1)           Represents the fair value of plan assets less projected benefit obligations.
(2)           Represents the accumulated benefit obligation (“ABO”) for all plans. The ABO for plans where the PBO exceeds the fair value of plan assets was $326 million (2009: $314 million). Based on actuarial reports at December 31, 2010, our funding requirements for 2011 are $nil.
 
157 

 
Notes to Consolidated Financial Statements
 
Pension Plan Assets/Liabilities

For the years ended December 31	 	2010	 	2009	 	
Non-current assets	 	$	2	 	$	3	 	
Current liabilities	 	(8	)	(13	)	
Non-current liabilities	 	(103	)	(96	)	
Other comprehensive loss	 	43	 	34	 	
 	 	$	(66	)	$	(72	)	
 
The projected benefit obligation and fair value of plan assets for pension plans with a projected benefit obligation in excess of plan assets at December 31, 2010 and 2009 were as follows:

For the years ended December 31	 	2010	 	2009	 	
Projected benefit obligation, end of year	 	$	328	 	$	314	 	
Fair value of plan assets, end of year	 	$	217	 	$	206	 	
 
The projected benefit obligation and fair value of plan assets for pension plans with an accumulated benefit obligation in excess of plan assets at December 31, 2010 and 2009 were as follows:

For the years ended December 31	 	2010	 	2009	 	
Projected benefit obligation, end of year	 	$	328	 	$	314	 	
Accumulated benefit obligation, end of year	 	$	326	 	$	314	 	
Fair value of plan assets, end of year	 	$	217	 	$	206	 	
 
Expected Future Benefit Payments

For the years ending December 31	 	 	 	
2011	 	$	24	 	
2012	 	23	 	
2013	 	31	 	
2014	 	23	 	
2015	 	23	 	
2016 – 2020	 	$	114	 	
 
d) Actuarial Assumptions

For the years ended December 31	 	2010	 	2009	 	2008	 	
Discount rate(1)	 	 	 	 	 	 	 	
Benefit obligation	 	4.95%–5.77%	 	5.55–6.87%	 	4.50–6.25%	 	
Pension cost	 	4.82%–6.87%	 	6.00–6.25%	 	4.50–6.25%	 	
Return on plan assets(1)	 	4.50%–7.00%	 	4.50–7.00%	 	3.75–7.00%	 	
Wage increases	 	5.00%	 	5.00%	 	3.50–5.00%	 	

(1)           Effect of a one-percent change: Discount rate: $32 million increase in ABO and $1.5 million decrease in pension cost; Return on plan assets: $2 million decrease in pension cost.
 
Pension plan assets, which consist primarily of fixed-income and equity securities, are valued using current market quotations. Plan obligations and the annual pension expense are determined on an actuarial basis and are affected by numerous assumptions and estimates including the market value of plan assets, estimates of the expected return on plan assets, discount rates, future wage increases and other assumptions. The discount rate, assumed rate of return on plan assets and wage increases are the assumptions that generally have the most significant impact on our pension cost and obligation.
 
The discount rate used to calculate the benefit obligation and pension cost is the rate at which the pension obligation could be effectively settled. This rate was developed by matching the cash flows underlying the pension obligation with a spot rate curve based on the actual returns available on high-grade (Moody’s Aa) US corporate bonds. Bonds included in this analysis were restricted to those with a minimum outstanding balance of $50 million. Only non-callable bonds, or bonds with a make-whole provision, were included. Finally, outlying bonds (highest and lowest 10%) were discarded as being non-representative and likely to be subject to a change in investment grade. The procedure was applied separately for pension and post-retirement plan purposes, and produced the same rate in each case.
 
The assumed rate of return on assets for pension cost purposes is the weighted average of expected long-term asset return assumptions. In estimating the long-term rate of return for plan assets, historical markets are studied and long-term historical returns on equities and fixed-income investments reflect the widely accepted capital market principle that assets with higher volatility generate a greater return over the long run. Current market factors such as inflation and interest rates are evaluated before long-term capital market assumptions are finalized.
 
Wage increases reflect the best estimate of merit increases to be provided, consistent with assumed inflation rates.
 
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Barrick Financial Report 2010 | Notes to Consolidated Financial Statements
 
e) Other Post-retirement Benefits
 
We provide post-retirement medical, dental, and life insurance benefits to certain employees. We use the corridor approach in the accounting for post-retirement benefits. Actuarial gains and losses resulting from variances between actual results and economic estimates or actuarial assumptions are deferred and amortized over the average remaining life expectancy of participants when the net gains or losses exceed 10% of the accumulated post-retirement benefit obligation.
 
Other Post-retirement Benefits Expense

For the years ended December 31	 	2010	 	2009	 	2008	 	
Interest cost	 	$	1	 	$	2	 	$	2	 	

Fair Value of Plan Assets

For the years ended December 31	 	2010	 	2009	 	2008	 	
Balance at January 1	 	$	—	 	$	—	 	$	—	 	
Contributions	 	2	 	1	 	2	 	
Benefits paid	 	(2	)	(1	)	(2	)	
Balance at December 31	 	$	—	 	$	—	 	$	—	 	
 
Accumulated Post-retirement Benefit Obligation (APBO)

For the years ended December 31	 	2010	 	2009	 	2008	 	
Balance at January 1	 	$	29	 	$	32	 	$	30	 	
Interest cost	 	1	 	2	 	2	 	
Actuarial (gains) losses	 	(1	)	(3	)	2	 	
Benefits paid	 	(2	)	(2	)	(2	)	
Balance at December 31	 	$	27	 	$	29	 	$	32	 	
Funded status	 	(27	)	(29	)	(32	)	
Unrecognized net transition obligation	 	n/a	 	n/a	 	n/a	 	
Unrecognized actuarial losses	 	n/a	 	n/a	 	n/a	 	
Net benefit liability recorded	 	n/a	 	n/a	 	n/a	 	
 
Other Post-retirement Liabilities

For the years ended December 31	 	2010	 	2009	 	
Current liability	 	$	2	 	$	3	 	
Non-current liability	 	25	 	26	 	
 	 	$	27	 	$	29	 	
 
Amounts recognized in accumulated other comprehensive income consist of:(1)

For the years ended December 31	 	2010	 	2009	 	
Net actuarial loss (gain)	 	$	(4	)	$	(4	)	
Transition obligation (asset)	 	—	 	1	 	
 	 	$	(4	)	$	(3	)	

(1)           The estimated amounts that will be amortized into net periodic benefit cost in 2011.
 
We have assumed a health care cost trend of 8% in 2011, decreasing ratably to 4.75% in 2019 and thereafter. The assumed health care cost trend had a minimal effect on the amounts reported. A one percentage point change in the assumed health care cost trend rate at December 31, 2010 would have had no significant effect on the post-retirement obligation and would have had no significant effect on the benefit expense for 2010.
 
Expected Future Benefit Payments

For the years ending December 31	 	 	 	
2011	 	$	2	 	
2012	 	2	 	
2013	 	3	 	
2014	 	3	 	
2015	 	2	 	
2016 – 2020	 	$	5	 	
 
159 

 
Notes to Consolidated Financial Statements
 
30 · Litigation and Claims
 
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. 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 a loss is probable, and the amount can be reliably estimated, then a loss is recorded. When a contingent loss is not probable but is reasonably possible, or is probable but the amount of loss cannot be reliably estimated, then details of the contingent loss are disclosed. Loss contingencies considered remote are generally not disclosed unless they involve guarantees, in which case we disclose the nature of the guarantee. Legal fees incurred in connection with pending legal proceedings are expensed as incurred.
 
Cortez Hills Complaint
 
On November 12, 2008, the United States Bureau of Land Management issued a Record of Decision approving the Cortez Hills Expansion Project. On November 20, 2008, the TeMoak Shoshone Tribe, the East Fork Band Council of the TeMoak Shoshone Tribe and the Timbisha Shoshone Tribe, the Western Shoshone Defense Project, and Great Basin Resource Watch filed a lawsuit against the United States seeking to enjoin the majority of the activities comprising the Project on grounds that it violated the Western Shoshone rights under the Religious Freedom Restoration Act (“RFRA”), that it violated the Federal Land Policy and Management Act’s (“FLPMA”) prohibition on “unnecessary and undue degradation,” and that the Project’s Environment Impact Statement (“EIS”) did not meet the requirements of the National Environmental Policy Act (“NEPA”). The Plaintiffs subsequently dismissed their RFRA claim, with prejudice, conceding that it was without merit, in light of a decision in another case.
 
On November 24, 2008, the Plaintiffs filed a Motion for a Temporary Restraining Order and a Preliminary Injunction barring work on the Project until after a trial on the merits. In January 2009, the Court denied the Plaintiffs’ Motion for a Preliminary Injunction, concluding that the Plaintiffs had failed to demonstrate a likelihood of success on the merits and that the Plaintiffs had otherwise failed to satisfy the necessary elements for a preliminary injunction. The Plaintiffs appealed that decision to the United States Court of Appeals for the Ninth Circuit. In December 2009, the Ninth Circuit issued an opinion in which it held that the Plaintiffs had failed to show that they were likely to succeed on the merits of their FLPMA claims, and thus were not entitled to an injunction based on those claims. The Ninth Circuit, however, held that Plaintiffs were likely to succeed on two of their NEPA claims and ordered that a supplemental EIS be prepared by Barrick that specifically provided more information on (i) the effectiveness of proposed mitigation measures for seeps and springs that might be affected by groundwater pumping, and (ii) the air quality impact of the shipment of refractory ore to Goldstrike for processing and that additional air quality modeling for fine particulate matter using updated EPA procedures should be performed and included in the supplemental EIS. The Ninth Circuit decision directed the District Court to enter an injunction consistent with the decision. In April 2010, the District Court granted Barrick’s motion seeking a tailored preliminary injunction, which allows mining operations to continue while the supplemental EIS is being completed.
 
In August 2010, the District Court issued an order granting summary judgment for Cortez except, generally for those issues covered by the supplemental EIS, on which it reserved ruling until the completion of that document. The final supplemental EIS was published on January 14, 2011. BLM’s record of decision on the final supplemental EIS is expected sometime after February 14, 2011.
 
Marinduque Complaint
 
Placer Dome Inc. was named the sole defendant in a Complaint filed in October 2005, by the Provincial Government of Marinduque, an island province of the Philippines (“Province”), with the District Court in Clark County, Nevada. The Complaint asserted that Placer Dome Inc. was responsible for alleged environmental degradation with consequent economic damages and impacts to the environment in the vicinity of the Marcopper mine that was owned and operated by Marcopper Mining Corporation (“Marcopper”). Placer Dome Inc. indirectly owned a minority shareholding of 39.9% in Marcopper until the divestiture of its shareholding in 1997. The Province sought “to recover damages for injuries to the natural, ecological and wildlife resources within its territory”. In addition, the Province sought compensation for the costs of restoring the environment, an order directing Placer Dome Inc. to undertake and complete “the remediation, environmental cleanup, and balancing of the ecology of the affected areas,” and payment of the costs of environmental monitoring. The Complaint addressed the discharge of mine tailings into Calancan Bay, the
 
160 

 
Barrick Financial Report 2010 | Notes to Consolidated Financial Statements
 
1993 Maguila-guila dam breach, the 1996 Boac river tailings spill, and alleged past and continuing damage from acid rock drainage.
 
The action was removed to the U.S. District Court for the District of Nevada on motion of Placer Dome Inc. After the amalgamation of Placer Dome Inc. and the Company, the Court granted the Province’s motion to join the Company as an additional named Defendant. In June 2007, the Court issued an order granting the Company’s motion to dismiss on grounds of forum non conveniens (improper choice of forum). In September 2009, the U.S. Court of Appeals for the Ninth Circuit reversed the decision of the District Court on the ground that the U.S. District Court lacked subject matter jurisdiction over the case and removal from the Nevada state court was improper.
 
In April 2010, the Company filed a motion to dismiss the claims in the Nevada state court on the grounds of forum non conveniens and on October 12, 2010, the court issued an order granting the Company’s motion to dismiss the action. On February 11, 2011, the Court issued its written reasons for the dismissal order and the Province now has 30 days in which to determine whether or not to appeal the order.
 
No amounts have been accrued for any potential loss under this complaint.
 
Calancan Bay (Philippines) Complaint
 
In July 2004, a complaint was filed against Marcopper and Placer Dome Inc. in the Regional Trial Court of Boac, on the Philippine island of Marinduque, on behalf of a putative class of fishermen who reside in the communities around Calancan Bay, in northern Marinduque. The complaint alleges injuries to health and economic damages to the local fisheries resulting from the disposal of mine tailings from the Marcopper mine. The total amount of damages claimed is approximately US$1 billion.
 
In October 2006, the court granted the plaintiffs’ application for indigent status, allowing the case to proceed without payment of filing fees. In March 2008, an attempt was made to serve Placer Dome Inc. by serving the summons and complaint on Placer Dome Technical Services (Philippines) Inc. (“PDTS”). PDTS has returned the summons and complaint stating that PDTS is not an agent of Placer Dome Inc. for any purpose and is not authorized to accept service or to take any other action on behalf of Placer Dome Inc. In April 2008, Placer Dome Inc. made a special appearance by counsel to move to dismiss the complaint for lack of personal jurisdiction and on other grounds. The plaintiffs have opposed the motion to dismiss. The motion has been briefed and is currently pending.
 
In October 2008, the plaintiffs filed a motion challenging Placer Dome Inc.’s legal capacity to participate in the proceedings in light of its alleged “acquisition” by the Company. Placer Dome Inc. opposed this motion. The motion has been briefed and is currently pending.
 
The Company intends to defend the action vigorously. No amounts have been accrued for any potential loss under this complaint.
 
Perilla Complaint
 
In August 2009, Barrick Gold Inc. was purportedly served in Ontario with a complaint filed in November 2008 in the Regional Trial Court of Boac, on the Philippine island of Marinduque, on behalf of two named individuals and purportedly on behalf of the approximately 200,000 residents of Marinduque. In December 2009, the complaint was also purportedly served in Ontario in the name of Placer Dome Inc. The complaint alleges injury to the economy and the ecology of Marinduque as a result of the discharge of mine tailings from the Marcopper mine into the Calancan Bay, the Boac River, and the Mogpog River. The plaintiffs are claiming for abatement of a public nuisance allegedly caused by the tailings discharge and for nominal damages for an alleged violation of their constitutional right to a balanced and healthful ecology. Barrick Gold Inc. has moved to dismiss the complaint on a variety of grounds, which motion is now pending a decision of the Court following the failure of plaintiffs’ counsel to appear at the hearing in February 2010 or to timely file any comment or opposition to the motion. Motions to dismiss the complaint on a variety of grounds have also been filed in the name of Placer Dome Inc. In May 2010, the plaintiffs filed a motion for an order to admit an amended complaint in which they are seeking additional remedies including temporary and permanent environmental protection orders. In June 2010, Barrick Gold Inc. and Placer Dome Inc. filed a motion to have the Court resolve their unresolved motions to dismiss before considering the plaintiffs’ motion to admit the amended complaint. An opposition to the plaintiffs’ motion to admit was also filed by Barrick Gold Inc. and Placer Dome Inc. on the same basis. This motion is now fully briefed and awaiting determination by the Court. It is not known when these motions or the outstanding motions to dismiss will be decided by the Court. The Company intends to defend the action vigorously. No amounts have been accrued for any potential loss under this complaint.
 
Pakistani Constitutional Litigation
 
In November 2006, a Constitutional Petition was filed in the High Court of Balochistan by three Pakistani citizens against: Barrick, the governments of Balochistan and Pakistan, the Balochistan Development Authority (“BDA”), Tethyan Copper Company (“TCC”), Antofagasta Plc (“Antofagasta”), Muslim Lakhani and BHP (Pakistan) Pvt Limited (“BHP”).
 
161 

 
Notes to Consolidated Financial Statements
 
The Petition alleged, among other things, that the entry by the BDA into the 1993 Joint Venture Agreement (“JVA”) with BHP to facilitate the exploration of the Reko Diq area and the grant of related exploration licenses were illegal and that the subsequent transfer of the interests of BHP in the JVA and the licenses to TCC was also illegal and should therefore be set aside. Barrick currently indirectly holds 50% of the shares of TCC, with Antofagasta indirectly holding the other 50%.
 
In June 2007, the High Court of Balochistan dismissed the Petition against Barrick and the other respondents in its entirety. In August 2007, the petitioners filed a Civil Petition for Leave to Appeal in the Supreme Court of Pakistan. In late 2010, the Supreme Court of Pakistan began hearing this matter, together with several other related petitions filed against TCC or its related parties. The related petitions primarily relate to whether it is in the public interest for TCC to receive a mining lease. On February 3, 2011, the Supreme Court issued an interim order providing, among other things, that the Government of Balochistan may not take any decision in respect of the grant or otherwise of a mining lease to TCC until matters before the Supreme Court are decided. As of February 16, 2011, no decision has been reached by the Supreme Court. Barrick and TCC continue to defend these actions vigorously. No amounts have been accrued for any potential loss under these complaints.
 
Pueblo Viejo
 
In April, 2010, Pueblo Viejo Dominicana Corporation (“PVDC”) received a copy of an action filed in the Dominican Republic by Fundacion Amigo de Maimon Inc., Fundacion Miguel L. de Pena Garcia Inc., and a number of individuals. The action alleges a variety of matters couched as violations of fundamental rights, including taking of private property, violations of mining and environmental and other laws, slavery, human trafficking, and bribery of government officials. The complaint does not describe the relief sought, but the action is styled as an “Amparo” remedy, which typically includes some form of injunctive relief. PVDC intends to vigorously defend the action.
 
Argentine Glacier Legislation
 
On September 30, 2010, the National Law on Minimum Requirements for the Protection of Glaciers was enacted in Argentina, and came into force in early November 2010. The federal law bans new mining exploration and exploitation activities on glaciers and in the “peri-glacial” environment, and subjects ongoing mining activities to an environmental audit. If such audit identifies significant impacts on glaciers and peri-glacial environment, the relevant authority is empowered to take action, which according to the legislation could include the suspension or relocation of the activity. In the case of the Veladero mine and the Pascua-Lama project, the competent authority is the Province of San Juan. The Province of San Juan had previously adopted glacier protection legislation, with which Veladero and Pascua-Lama comply.
 
In November 2010, in response to legal actions brought against the National State by local unions and San Juan based mining and construction chambers, as well as by Barrick’s subsidiaries, Barrick Exploraciones Argentina S.A. and Minera Argentina Gold S.A., which own the Veladero mine and the Argentine portion of the Pascua-Lama project, respectively, the Federal Court in the Province of San Juan, granted injunctions, based on the unconstitutionality of the federal law, suspending its application in the Province and, in particular to Veladero and Pascua-Lama. In December 2010, the Province of San Juan became a party to the actions, joining the challenge to the constitutionality of the new federal legislation. As a result of the intervention of the Province, the actions have been removed to the National Supreme Court of Justice of Argentina to determine the constitutionality of the legislation.
 
162 

Exhibit 99.4

 
Management’s Discussion and Analysis
 
Management’s Discussion and Analysis (“MD&A”)
 
Management’s Discussion and Analysis (“MD&A”) is intended to help the reader understand Barrick Gold Corporation (“Barrick”, “we”, “our” or the “Company”), our operations, financial performance and present and future business environment. This MD&A, which has been prepared as of February 16, 2011, should be read in conjunction with our audited consolidated financial statements for the year ended December 31, 2010. Unless otherwise indicated, all amounts are presented in US dollars.
 
For the purposes of preparing our MD&A, we consider the materiality of information. Information is considered material if: (i) such information results in, or would reasonably be expected to result in, a significant change in the market price or value of our shares; or (ii) there is a substantial likelihood that a reasonable investor would consider it important in making an investment decision; or (iii) if it would significantly alter the total mix of information available to investors. We evaluate materiality with reference to all relevant circumstances, including potential market sensitivity.
 
Continuous disclosure materials, including our most recent Form 40-F/Annual Information Form, annual MD&A, audited consolidated financial statements, and Notice of Annual Meeting of Shareholders and Proxy Circular will be available on our website at www.barrick.com, on SEDAR at www.sedar.com and on EDGAR at www.sec.gov. For an explanation of terminology unique to the mining industry, readers should refer to the glossary on page 99.
 
Cautionary Statement On Forward-Looking Information
 
Certain information contained or incorporated by reference in this MD&A, including any information as to our strategy, plans or future financial or operating performance, constitutes “forward-looking statements”. All statements, other than statements of historical fact, are forward-looking statements. The words “believe”, “expect”, “anticipate”, “contemplate”, “target”, “plan”, “intend”, “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 us, are inherently subject to significant business, economic and competitive uncertainties and contingencies. Known and unknown factors could cause actual results to differ materially from those projected in the forward-looking statements. Such factors include, but are not limited to: fluctuations in the market and forward price of gold and copper or certain other commodities (such as silver, diesel fuel and electricity); the impact of global liquidity and credit availability on the timing of cash flows and the values of assets and liabilities based on projected future cash flows; fluctuations in the currency markets (such as Canadian and Australian dollars, South African rand, Chilean peso, Argentinean peso, British pound, Peruvian sol and Papua New Guinean kina versus US dollar); changes in US dollar interest rates that could impact the mark-to-market value of outstanding derivative instruments and ongoing payments/receipts under interest rate swaps and variable rate debt obligations; risks arising from holding derivative instruments (such as credit risk, market liquidity risk and mark-to-market risk); changes in national and local government legislation, taxation, controls, regulations and political or economic developments
 
30 

 
Barrick Financial Report 2010 | Management’s Discussion and Analysis
 
in Canada, the United States, Dominican Republic, Australia, Papua New Guinea, Chile, Peru, Argentina, South Africa, Tanzania, United Kingdom, Pakistan or Barbados or other countries in which we do or may carry on business in the future; business opportunities that may be presented to, or pursued by, us; our ability to successfully integrate acquisitions; operating or technical difficulties in connection with mining or development activities; employee relations; availability and increased costs associated with mining inputs and labor; litigation; the speculative nature of exploration and development, including the risks of obtaining necessary licenses and permits; diminishing quantities or reserve grades; adverse changes in our credit rating; and contests over title to properties, particularly title to undeveloped properties. In addition, there are risks and hazards associated with the business of exploration, development and mining, including environmental hazards, industrial accidents, unusual or unexpected formations, pressures, cave-ins, flooding and gold bullion or copper cathode losses (and the risk of inadequate insurance, or inability to obtain insurance, to cover these risks). Many of these uncertainties and contingencies can affect our actual results and could cause actual results to differ materially from those expressed or implied in any forward-looking statements made by, or on behalf of, us. Readers are cautioned that forward-looking statements are not guarantees of future performance. All of the forward-looking statements made in this MD&A are qualified by these cautionary statements. Specific reference is made to Barrick’s most recent Form 40-F/Annual Information Form on file with the SEC and Canadian provincial securities regulatory authorities for a discussion of some of the factors underlying forward-looking statements. We disclaim any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise, except to the extent required by applicable law.
 
Changes in Presentation of Non-GAAP Financial Performance Measures
 
We use certain non-GAAP financial performance measures in our MD&A. For a detailed description of each of the non-GAAP measures used in this MD&A, please see the discussion under “Non-GAAP Financial Performance Measures” beginning on page 78 of our MD&A.
 
Adjusted Debt and Net Debt
 
Starting in 2010, we introduced adjusted debt and net debt as new non-GAAP measures. We have adjusted our long-term debt to exclude fair value adjustments and our partner’s share of project financing and to include the settlement obligation to close out the gold sales contracts and issue costs. We have excluded the impact of fair value adjustments in order to reflect the actual settlement obligation in relation to the debt instrument. We have excluded our partner’s share of project financing, in situations where we report 100% of the debt on a consolidated basis but have only provided a guarantee for our proportionate share of the debt. We have included the settlement obligation related to gold sales contracts because they have terms similar to long-term debt instruments and have been settled in cash. Our cash and equivalents (net of our partner’s share of cash where we have excluded their proportionate share of the project financing from our adjusted debt calculation) is deducted from the adjusted total to arrive at net debt.
 
These adjusted debt and net debt figures are more indicative of how we manage our debt levels internally than the equivalent US GAAP measures and provide a meaningful measure for investors and analysts to evaluate our overall debt capacity, liquidity and capital structure. They are intended to provide additional information only and do not have any standardized meaning prescribed by US GAAP and should not be considered in isolation or as substitutes for measures of performance prepared in accordance with US GAAP. Other companies may calculate these measures differently.
 
Adjustment to Cash Costs
 
Also starting in 2010, we adjusted our gold total cash costs to remove the impact of ore purchase agreements that have economic characteristics similar to toll milling arrangements. The cost of producing these ounces is not indicative of our normal production costs. Hence, we have removed such costs from total cash costs.
 
31 

 
Management’s Discussion and Analysis
 
Free Cash Flow
 
Starting in 2010, we introduced free cash flow as a new non-GAAP measure. We have deducted capital expenditures from adjusted operating cash flow to arrive at free cash flow.
 
Free cash flow is a measure that management believes to be a useful indicator of the Company’s ability to operate without reliance on additional borrowing or usage of existing cash. It is intended to provide additional information only and does not have any standardized meaning prescribed by US GAAP and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with US GAAP. The measure is not necessarily indicative of operating profit or cash flow from operations as determined under US GAAP. Other companies may calculate this measure differently.
 
Return on Equity
 
Starting in 2010, we introduced return on equity as a new non-GAAP measure. Return on equity has been defined as adjusted net income divided by average shareholders’ equity.
 
Return on equity is a measure that management believes to be a useful indicator of the Company’s performance. It is intended to provide additional information only and does not have any standardized meaning prescribed by US GAAP and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with US GAAP. Other companies may calculate this measure differently.

Index	
 	 	
33	Financial and Operating Highlights	
 	 	 	
 	33	2010 Fourth Quarter and Year-End Results	
 	35	2010 Business Developments	
 	38	Outlook for 2011	
 	 	 	
42	Business Overview	
 	 	 	
 	42	Our Business	
 	43	Our Strategy	
 	43	Capability to Execute our Strategy	
 	46	Enterprise Risk Management	
 	47	Market Review	
 	 	 	
54	Financial and Operating Results	
 	 	 	
 	54	Summary of Financial Performance	
 	55	Summary of Operating Performance	
 	59	Mineral Reserves and Mineral Resources Update	
 	59	Review of Operating Segment Performance	
 	 	 	
65	Financial Condition Review	
 	 	 	
 	65	Balance Sheet Review	
 	67	Liquidity and Cash Flow	
 	69	Financial Instruments	
 	70	Commitments and Contingencies	
 	 	 	
72	Review of Quarterly Results	
 	 	
73	US GAAP Critical Accounting Policies and Estimates	
 	 	
78	Non-GAAP Financial Performance Measures	
 	 	
85	International Financial Reporting Standards (IFRS)	
 	 	
99	Glossary of Technical Terms	
 
32 

 
Barrick Financial Report 2010 | Management’s Discussion and Analysis
 
Financial and Operating Highlights ( 1)
 
2010 Fourth Quarter and Year-End Results
 
Summary of Financial and Operating Data

 	 	For the three months ended	 	For the years ended	 	
 	 	December 31	 	December 31	 	
($ millions, except where indicated)	 	2010	 	2009	 	2010	 	2009	 	
Financial Data	 	 	 	 	 	 	 	 	 	
Sales	 	$	3,033	 	$	2,452	 	$	11,211	 	$	8,404	 	
Net income/(loss)	 	896	 	215	 	3,274	 	(4,274	)	
Per share (“EPS”)( 2)	 	0.90	 	0.22	 	3.32	 	(4.73	)	
Adjusted net income(3)	 	947	 	604	 	3,279	 	1,810	 	
Per share (“adjusted EPS”)(2),(3)	 	0.95	 	0.61	 	3.32	 	2.00	 	
EBITDA(3)	 	1,635	 	794	 	5,900	 	(2,563	)	
Adjusted EBITDA(3)	 	1,635	 	1,035	 	5,900	 	3,370	 	
Capital expenditures	 	1,145	 	748	 	3,323	 	2,358	 	
Operating cash flow	 	781	 	(4,300	)	4,127	 	(2,322	)	
Adjusted operating cash flow(3)	 	1,437	 	921	 	4,783	 	2,899	 	
Free Cash Flow(3)	 	$	292	 	$	173	 	1,460	 	541	 	
Cash and equivalents	 	 	 	 	 	3,968	 	2,564	 	
Adjusted debt(3)	 	 	 	 	 	6,392	 	6,919	 	
Net debt(3)	 	 	 	 	 	$	2,542	 	$	4,355	 	
Return on equity(3)	 	 	 	 	 	19	%	12	%	
 	 	 	 	 	 	 	 	 	 	
Operating Data	 	 	 	 	 	 	 	 	 	
Gold	 	 	 	 	 	 	 	 	 	
Gold produced (000s ounces)(4)	 	1,700	 	1,871	 	7,765	 	7,397	 	
Gold sold (000s ounces)	 	1,825	 	1,797	 	7,734	 	7,279	 	
Realized price ($ per ounce)(3)	 	$	1,368	 	$	1,119	 	$	1,228	 	$	985	 	
Net cash costs ($ per ounce)(3)	 	$	326	 	$	310	 	$	341	 	$	360	 	
Total cash costs ($ per ounce)(3)	 	$	486	 	$	465	 	$	457	 	$	464	 	
 	 	 	 	 	 	 	 	 	 	
Copper	 	 	 	 	 	 	 	 	 	
Copper produced (millions of pounds)	 	82	 	98	 	368	 	393	 	
Copper sold (millions of pounds)	 	103	 	118	 	391	 	380	 	
Realized price ($ per pound)(3)	 	$	3.99	 	$	3.44	 	$	3.41	 	$	3.16	 	
Total cash costs ($ per pound)(3)	 	$	1.12	 	$	1.08	 	$	1.11	 	$	1.17	 	

(1)    The amounts presented in this table include the results of discontinued operations.
(2)    Calculated using weighted average number of shares outstanding under the basic method.
(3)    Adjusted net income, adjusted EPS, EBITDA, adjusted EBITDA, adjusted operating cash flow, free cash flow, adjusted debt, net debt, return on equity, realized price, net cash costs and total cash costs are non-GAAP financial performance measures with no standardized meaning under US GAAP. For further information and a detailed reconciliation, please see pages 78 – 85 of this MD&A.
(4)    Production includes our equity share of gold production at Highland Gold.
 
33 

 
Management’s Discussion and Analysis
 
Fourth Quarter and Full Year Financial and Operating Highlights
 
·       Net income and adjusted net income for the fourth quarter 2010 were $896 million and $947 million, respectively, compared to net income of $215 million and adjusted net income of $604 million for fourth quarter 2009. Net income for the year 2010 was $3,274 million, compared to a net loss of $4,274 million in 2009, which included a $5,901 million charge related to the elimination of our gold sales contracts. Adjusted net income for the year 2010 was $3,279 million, compared to $1,810 million for full year 2009.
·       EPS and adjusted EPS for the fourth quarter 2010 were $0.90 and $0.95, respectively, compared to EPS of $0.22 and adjusted EPS of $0.61 for the fourth quarter 2009. EPS for the year 2010 was $3.32, compared to the loss of $4.73 for full year 2009. Adjusted EPS for the year 2010 was $3.32, compared to $2.00 for full year 2009. The significant increase in adjusted EPS in 2010 largely reflects the increase of gold production and realized gold prices. EPS and adjusted EPS reflect the impact of the issuance of 109 million common shares in third quarter 2009, which represented a 12% increase in common shares then outstanding with a corresponding dilutive impact on both EPS and adjusted EPS.
·       EBITDA and adjusted EBITDA for the fourth quarter 2010 were both $1,635 million, compared to EBITDA of $794 million and adjusted EBITDA of $1,035 million for the fourth quarter 2009. EBITDA and adjusted EBITDA for the year 2010 was $5,900 million, compared to EBITDA of $(2,563) million and adjusted EBITDA of $3,370 million for full year 2009.
·       Operating cash flow and adjusted operating cash flow for the fourth quarter 2010 were $781 million and $1,437 million, respectively, compared to operating cash outflow of $4,300 million and adjusted operating cash flow of $921 million for the fourth quarter 2009. Operating cash flow for the year 2010 was $4,127 million, compared to operating cash outflow of $2,322 million in 2009. Operating cash flow reflects payments related to the settlement of gold sales contracts of $5,221 million in 2009 and $656 million in 2010. Adjusted operating cash flow, which excludes the impact of these payments, totaled $4,783 million in 2010 compared to $2,899 million in 2009.
·       Free cash flow for the fourth quarter 2010 was $292 million, compared to $173 million for the fourth quarter 2009. Free cash flow for the year 2010 was $1,460 million, compared to $541 million for full year 2009. The increases reflect higher adjusted operating cash flow, partially offset by higher capital expenditures.
·       Primary factors driving the increase in net income, adjusted net income, EPS, adjusted EPS, EBITDA, adjusted EBITDA, operating cash flow, adjusted operating cash flow and free cash flow were higher realized gold and copper prices and higher gold sales volume. Net income and adjusted net income were impacted by higher amortization, higher income tax expense, and higher interest expense as a result of debt issuance in fourth quarter 2009.Net income, EPS, EBITDA and operating cash flow were also impacted by the elimination of the gold sales contracts.
·       Gold production and total cash costs for the fourth quarter 2010 were 1.7 million ounces and $486 per ounce, respectively, compared to production of 1.9 million ounces and total cash costs of $465 per ounce for fourth quarter 2009. Gold production and total cash costs for the year 2010 were 7.8 million ounces and $457 per ounce, respectively, compared to production of 7.4 million and total cash costs of $464 per ounce for full year 2009. Gold sales totaled 1.8 million ounces for the fourth quarter 2010 and 7.7 million ounces for the year 2010, compared to 1.8 million ounces and 7.3 million ounces, respectively, for the comparable prior year periods. Gold production increased for the year primarily due to increased production at Cortez, Veladero, Kalgoorlie and Cowal, partially offset by decreases in production at Goldstrike, Pierina and Lagunas Norte.
·       Copper production and total cash costs for the fourth quarter 2010 were 82 million pounds and $1.12 per pound, respectively, compared to production of 98 million pounds and total cash costs of $1.08 per pound for fourth quarter 2009. Copper production and total cash costs for the year 2010 were 368 million pounds and $1.11 per pound, respectively, compared to production of 393 million pounds and $1.17 per pound for full year 2009. Copper sales totaled 103 million pounds for the fourth quarter 2010 and 391 million pounds for the year 2010, compared to 118 million pounds and 380 million pounds, respectively, for the comparable prior year periods. Copper sales were higher than copper produced in 2010 primarily due to higher sales volume in Osborne, where shipping delays moved part of 2009 production into 2010 sales. Copper production decreased for the year 2010 primarily due to a decrease in copper production as a result of the divestiture of Osborne in third quarter 2010.
 
34 

 
Barrick Financial Report 2010 | Management’s Discussion and Analysis
 
·       Realized gold price for the fourth quarter 2010 was $1,368 per ounce, compared to $1,119 per ounce for fourth quarter 2009. Realized gold price for the year 2010 was $1,228 per ounce, compared to $985 per ounce for full year 2009. The increases principally reflect higher market gold prices.
·       Realized copper price for the fourth quarter 2010 was $3.99 per pound, compared to $3.44 per pound for fourth quarter 2009. Realized copper price for the year 2010 was $3.41 per pound, compared to $3.16 per pound for full year 2009. The increases reflect higher market copper prices.
·       Net cash costs for the fourth quarter 2010 were $326 per ounce, compared to $310 per ounce for the fourth quarter 2009. Net cash costs for the year were $341 per ounce, compared to $360 per ounce for the full year 2009. Net cash costs decreased in 2010, primarily due to higher copper credits as a result of higher market copper prices.
·       Capital expenditures totaled $1,145 million for fourth quarter 2010 and $3,323 million for the year 2010, compared to $748 million and $2,358 million, respectively, for the comparable prior year periods. The increases largely reflect higher project capital expenditures and higher minesite sustaining capital expenditures.
·       At December 31, 2010, cash and equivalents totaled $3,968 million, adjusted debt totaled $6,392 million and net debt totaled $2,542 million, compared to the equivalent December 31, 2009 totals of $2,564 million, $6,919 million and $4,355 million, respectively. During 2010, we received $469 million in project financing for Pueblo Viejo ($782 million on a 100% basis) and repaid $805 million in debt, including $656 million to settle the remaining obligation for the gold sales contracts.
 
2010 Business Developments
 
Economic, Fiscal and Legislative Developments
 
The current global economic situation has impacted Barrick in a number of ways. The response from many governments to the ongoing economic crisis has led to continuing low interest rates and a reflationary environment that has supported higher commodity prices. The increase in gold, copper and silver market prices in particular (refer to Market Review section of this MD&A for more details) have been key drivers of higher income and operating cash flows for Barrick. The fiscal pressures currently experienced by many governments have resulted in a search for new sources of revenues, and the mining industry, which is generating significant profits and cash flow in this high metal price environment, is facing the possibility of higher income taxes and royalties. The proposed Australian Mineral Resources Rent Tax (“MRRT”) is one example. While the MRRT has been greatly revised to its current form, and is no longer expected to apply to our gold operations, we continue to monitor developments related to this proposal. In addition, in order to finance reconstruction stemming from the devastating 2010 earthquake, the Chilean government recently enacted a temporary first tier income tax increase from 17% to 20% in 2011 and 18.5% in 2012 as well as a new elective mining royalty. In January 2011 we adopted the new royalty. The impact of adoption was a $26 million increase in 2010 income tax expense and an expected increase of about $15 million in 2011 income tax expense. The impact of the temporary income tax rate increase on 2011 income tax expense is expected to be about $20 million.
 
On the legislative front, Argentina recently passed a federal glacier protection law that restricts mining in areas on or near the nation’s glaciers. Our activities do not take place on glaciers, and are undertaken pursuant to existing environmental approvals issued on the basis of comprehensive environmental impact studies that fully considered potential impacts on water resources, glaciers and other sensitive environmental areas around Veladero and Pascua-Lama. We have a comprehensive range of measures in place to protect such areas and resources. Further, we believe that
 
35 

 
Management’s Discussion and Analysis
 
the new federal law is unconstitutional, as it seeks to legislate matters that are within the constitutional domain of the provinces. The Province of San Juan, where our operations are located, previously enacted glacier protection legislation with which we comply. We believe we are legally entitled to continue our current activities on the basis of existing approvals. In this regard, the Federal Court in San Juan has granted injunctions, based on the unconstitutionality of the federal law, suspending its application in the Province and in particular to Veladero and Pascua-Lama pending consideration of the constitutionality of the law by the Supreme Court of Argentina. It is possible that others may attempt to bring legal challenges seeking to restrict our activities based on the new federal law. We will vigorously oppose any such challenges.
 
Financing Developments
 
IPO of African Gold Mining Operations
 
In March 2010, the initial public offering (“IPO”) for African Barrick Gold plc (“ABG”) closed and its approximately 404 million ordinary shares were admitted to the Official List of the UK Listing Authority and to trading on the London Stock Exchange’s main market for listed securities. ABG sold approximately 101 million ordinary shares in the offering, or about 25% of its equity and Barrick retained an interest in approximately 303 million ordinary shares, or about 75% of the equity of ABG. In April 2010, the over-allotment option was partially exercised, resulting in a 1.1% dilution of our interest in ABG to 73.9%.
 
The net proceeds from the IPO and the exercise of the over-allotment option were approximately $884 million. As Barrick retained a controlling financial interest in ABG, we have consolidated ABG and accounted for the disposition of ABG shares as an equity transaction. Accordingly, the difference between the proceeds received and the carrying value has been recorded as additional paid-in capital in equity, and we have set up a non-controlling interest to reflect the change in our ownership interest in ABG.
 
Pueblo Viejo Project Financing Agreement
 
In April 2010, Barrick and Goldcorp finalized terms for $1.035 billion (100% basis) in non-recourse project financing for our Pueblo Viejo project. The lending syndicate is comprised of international financial institutions, including two export credit agencies, and a syndicate of commercial banks. The financing is divided into three tranches of $400 million, $375 million and $260 million with terms of 15, 15 and 12 years, respectively. Barrick and Goldcorp have each provided a guarantee for their proportionate share, which will terminate upon Pueblo Viejo meeting certain operating completion tests, and which is subject to a carve out for certain political risk events. In June 2010, we received $782 million (100% basis) in the first draw on this financing arrangement and these funds are being used to fund ongoing construction at the project.
 
Increased Dividend
 
As a result of our positive outlook on the gold price, our strong financial position and robust operating cash flows, Barrick’s Board of Directors authorized an annual dividend increase from $0.40 per common share to $0.48 per common share. The Board also approved moving from a semi-annual dividend to a quarterly dividend ( 1) .
 
Acquisitions and Divestitures
 
Acquisition of Additional 25% Interest in Cerro Casale
 
In March 2010, we completed the acquisition of an additional 25% interest in Cerro Casale from Kinross Gold Corporation (“Kinross”) for cash consideration of $454 million and the elimination of a $20 million contingent obligation that was payable by Kinross to Barrick on a construction decision. Our interest in the project is now 75% and we have obtained control over the project. As a result, we began consolidating 100% of the operating results, cash flows and net assets of Cerro Casale, with an offsetting non-controlling interest of 25%, prospectively as at March 31, 2010. As a result of becoming the primary beneficiary of the Variable Interest Entity (“VIE”), we have remeasured our previously held 50% ownership interest to fair value and recorded a corresponding gain of $29 million.

(1)    The declaration and payment of dividends remains at the discretion of the Board of Directors and will depend on our financial results, cash requirements, future prospects and other factors deemed relevant by the Board.
 
36 

 
Barrick Financial Report 2010 | Management’s Discussion and Analysis
 
Barrick Energy Acquisitions
 
In 2010, Barrick Energy completed three acquisitions. In May 2010, Barrick Energy acquired all of the outstanding shares of Bountiful Resources (“Bountiful”), a privately held corporation, for approximately $109 million. In June 2010, Barrick Energy acquired the Puskwa property from Galleon Energy Inc. (“Puskwa”) for approximately $130 million. In September 2010, Barrick Energy acquired the assets of Dolomite Resources (“Dolomite”) for approximately $25 million. We have determined that all of these transactions represent business combinations, with Barrick Energy identified as the acquirer. Barrick Energy began consolidating the operating results, cash flows, and net assets of Bountiful, Puskwa, and Dolomite from their respective acquisition dates. The properties acquired in these transactions are in close proximity to our existing operations and we expect to realize operational synergies once they have been integrated. Barrick Energy provides a natural economic hedge against our fuel price exposure and with the benefit of these acquisitions, total production for 2010 increased to approximately 2.1 million barrels of oil equivalent (“boe”).
 
Sedibelo
 
In February 2011, we entered into agreements to dispose of our 10% interest in the Sedibelo platinum project (“Sedibelo”) and certain assets to the Bakgatla-Ba-Kgafela Tribe (“BBK”), owner of the remaining 90% interest in Sedibelo, as well as the transfer of certain long lead items required for the development of Sedibelo to Newshelf 1101 (Proprietary) Limited, for total consideration of approximately $44 million; and to settle various outstanding matters between Barrick and the BBK regarding Sedibelo and their respective interests. The agreements are subject to certain customary conditions. We expect to realize a gain of approximately $65 million upon closing of these transactions, which is expected by the end of first quarter 2011.
 
Project Development Progress
 
Pueblo Viejo Construction
 
At our Pueblo Viejo project, construction is progressing with first production expected in first quarter 2012. Preproduction capital is expected to increase by 10 – 15% from the previous estimate to $3.3 – $3.5 billion (100% basis). The increased capital cost estimate is largely due to higher labor, power supply, freight and steel product related costs as well as general inflation. Once in production, this project will begin to contribute to Barrick’s annual gold production at lower cash costs than the Company average. The project is a long life asset with an expected mine life of over 25 years.
 
Pascua-Lama Construction
 
In 2009, we began construction of the Pascua-Lama project on the border between Chile and Argentina, which is on track to commence production in the first half of 2013. Pre-production capital is expected to increase by 10 – 20% to $3.3 – $3.6 billion as a result of a stronger Chilean peso and labor, commodity and other input cost increases in both countries and higher inflation, particularly in Argentina. When complete, it is expected to be one of the lowest operating cost gold producing mines in the world. The project is a long life asset with an expected mine life of over 20 years.
 
Cerro Casale Advancement
 
At the Cerro Casale project in Chile, the review of additional permitting requirements before considering a construction decision is progressing. A review is currently underway to determine the impact of a stronger Chilean peso and higher labor costs in Chile on costs. Early indications suggest that the capital cost may be higher by about 20 – 25% from the previous estimate of $4.2 billion, which is based on the feasibility study completed in 2009 and reflects the impact of a stronger Chilean peso, higher labor, commodity and other input costs. An update will be provided by the end of the second quarter. Cerro Casale is one of the world’s largest undeveloped gold-copper deposits.
 
37 

 
Management’s Discussion and Analysis
 
Outlook for 2011
 
2011 Guidance Summary

 	 	2010	 	2011	 	
 	 	Actual IFRS basis (unaudited)(1)	 	Guidance IFRS basis(1)	 	
Gold production and costs	 	 	 	 	 	
Production (millions of ounces)(2)	 	7.8	 	7.6 – 8.0	 	
Cost of sales(3)	 	4,566	 	5,100 – 5,300	 	
Gold unit production costs	 	 	 	 	 	
Total cash costs ($ per ounce)(4)	 	409	 	450 – 480	 	
Net cash costs ($ per ounce)(5)	 	292	 	340 – 380	 	
Depreciation ($ per ounce)(6)	 	136	 	150 – 160	 	
Copper production and costs	 	 	 	 	 	
Production (millions of pounds)	 	368	 	~300	 	
Cost of sales(7)	 	430	 	500 – 520	 	
Copper unit production costs	 	 	 	 	 	
Total cash costs ($ per pound)	 	1.10	 	1.35 – 1.45	 	
Depreciation ($ per pound)	 	0.23	 	0.25 – 0.30	 	
Other depreciation(8)	 	50	 	35 – 45	 	
Exploration and evaluation expense(9)	 	234	 	330 – 350	 	
Exploration(10)	 	152	 	210 – 220	 	
Evaluation	 	82	 	120 – 130	 	
Corporate administration	 	157	 	160 – 170	 	
Other expense(11)	 	473	 	325 – 350	 	
Other income(11)	 	142	 	25 – 30	 	
Finance income	 	14	 	20 – 25	 	
Finance costs(12)	 	158	 	60 – 80	 	
Capital expenditures:	 	 	 	 	 	
Minesite sustaining	 	863	 	900 – 1,000	 	
Open pit and underground mine development(13)	 	571	 	750 – 850	 	
Minesite expansion(13)	 	251	 	450 – 500	 	
Capital projects(14)	 	1,691	 	2,100 – 2,300	 	
Effective income tax rate(15)	 	TBD	 	33	%	

(1)            The preliminary 2010 IFRS results are unaudited. Final 2010 IFRS results are subject to management’s final review as well as audit by the Company’s independent registered accounting firm and may vary significantly from these preliminary results because of a number of factors, including, without limitation, additional or revised information and changes in accounting standards or policies or in how these standards are applied.
(2)            Guidance for gold production reflects Barrick’s equity share of ABG (73.9%) and Highland Gold (20%).
(3)            Cost of sales applicable to gold includes depreciation expense and cost of sales applicable to the outside equity interests in ABG. Guidance for cost of sales reflects the full 100% consolidation of ABG gold sales. Under IFRS, the outside equity interest in ABG’s share of cost of sales is reflected as a reduction in income attributable to non-controlling interests, which we do not provide guidance for. Cost of sales guidance does not include proceeds from by-product metal sales or the net contribution from Barrick Energy, whereas guidance for gold total cash costs and gold net cash costs do reflect these items. See page 91 of this MD&A for a reconciliation of 2010 cost of sales reported in accordance with US GAAP to cost of sales reported in accordance with IFRS.
(4)            Gold total cash costs includes expected proceeds of approximately $150 million (2010: $120 million) from the sale of by-product metals and the net contribution of approximately $95 million from Barrick Energy (2010: $56 million). See page 92 of this MD&A for a reconciliation of 2010 total cash costs reported in accordance with US GAAP to total cash costs reported in accordance with IFRS.
(5)            Assuming a realized copper price of $3.75 per pound.
(6)            Includes depreciation expense related to Barrick Energy.
(7)            Cost of sales applicable to copper includes depreciation expense. See page 91 of this MD&A for a reconciliation of cost of sales reported in accordance with US GAAP to cost of sales reported in accordance with IFRS.
(8)            Represents depreciation for the Corporate office and Regional Business Unit offices. Excludes accretion expense since it is now classified as part of finance costs under IFRS.
(9)            Represents Barrick’s share of expenditures for 2011 after deducting $8 million for non-controlling interests (2010: $18 million) and includes expected costs of $13 million for Reko Diq and Donlin Creek that will be classified under “income (loss) from equity investees” (2010: $23 million).
(10)          Total exploration expenditures in 2011 are expected to be about $320 – $340 million including $210 – $220 million (2010: $152 million) in exploration expense and $110 – $120 million (2010: $60 million) in capitalized exploration costs. The capitalized exploration costs are included in the guidance for open pit and underground mine development and minesite expansion. See page 91 of this MD&A for a reconciliation of 2010 exploration and project development expenses reported in accordance with US GAAP to exploration and project development expenses reported in accordance with IFRS.
(11)          Other expense and other income are expected to be lower in 2011 as 2010 costs include special items of approximately $100 million in other expense, primarily due to severance and restructuring costs, and approximately $120 million in other income, primarily due to the gain recorded on the acquisition of the additional 25% interest in Cerro Casale. Other income guidance for 2011 excludes gain of $65 million expected from sale of Sedibelo.
(12)          See page 92 of this MD&A for a reconciliation of 2010 interest expense reported in accordance with US GAAP to finance costs reported in accordance with IFRS.
(13)          Includes capitalized exploration costs.
(14)          Represents Barrick’s share of project capital expenditures including capitalized interest of about $350 million in 2011 (2010: $309 million).
(15)          Effective income tax rate has not been presented since final IFRS assessment has not been completed.
 
38 

 
Barrick Financial Report 2010 | Management’s Discussion and Analysis
 
In 2011, Barrick will move to reporting its results on an International Financial Reporting Standards (“IFRS”) basis from US GAAP. This change will bring our basis of reporting in line with the other large international mining companies that already report their results in accordance with IFRS, and therefore the conversion to IFRS will improve the comparability of our financial performance to these companies. There are significant accounting policy differences between IFRS and US GAAP, particularly the accounting for production phase waste stripping costs and exploration and evaluation costs. IFRS allows greater flexibility in determining whether these costs are eligible for capitalization.  As a result, the conversion to IFRS will result in a decrease in operating costs, an increase in net assets and an increase in operating cash flow and capital expenditures compared to our equivalent results presented in accordance with US GAAP. Guidance for 2011 has been prepared on an IFRS basis with comparative information based on our preliminary calculation of the results under IFRS for 2010. For a reconciliation of results for 2010 prepared under US GAAP compared to the preliminary results prepared under IFRS, please refer to page 87 of this MD&A.
 
2011 Guidance Analysis
 
Production
 
We prepare estimates of future production based on mine plans that reflect the expected method by which we will mine reserves at each site. Actual gold and copper production may vary from these estimates due to a number of operational factors, including whether the volume and/or grade of ore mined differs from estimates, which could occur because of changing mining rates, ore dilution, varying metallurgical and other ore characteristics, and/or short-term mining conditions that require different sequential development of ore bodies or mining in different areas of the mine. Certain non-operating factors may also cause actual production to vary from guidance, including litigation risk, the regulatory environment and the impact of global economic conditions. Mining rates are also impacted by various risks and hazards inherent at each operation, including natural phenomena, such as inclement weather conditions, floods and earthquakes, and unexpected civil disturbances, labor shortages or strikes.
 
We expect 2011 gold production to be about 7.6 to 8.0 million ounces, which is consistent with the 2010 level of 7.8 million ounces. Gold production in North America is expected to increase due to an increase in tons processed and higher average head grades at Cortez Hills and the recommencement of production at Golden Sunlight after a two-year mine development period. The increase in North America is offset by lower production in South America, primarily due to lower ore grades at Veladero. Production in Australia Pacific and our share of ABG production are expected to be similar to 2010 production levels.
 
Copper production is expected to decrease from 368 million pounds in 2010 to about 300 million pounds, largely due to the divestiture of the Osborne mine in third quarter 2010.
 
Beyond 2010, we are targeting to increase our gold production to 9 million ounces within the next five years. The significant drivers of this production growth include our Pueblo Viejo and Pascua-Lama projects, as well as various expansionary opportunities at our existing operating mines.
 
Revenues
 
Revenues include consolidated sales of gold, copper, oil and metal by-products. Revenues from oil and metal by-products are reflected in our guidance for gold total cash costs. Revenues from gold and copper reported in 2011 will reflect the sale of production at market gold and copper prices and the impact of copper hedge contracts. Barrick does not provide guidance on 2011 gold and copper prices.
 
Cost of Sales, Net Cash Costs and Total Cash Costs
 
We prepare estimates of cost of sales, net cash costs and total cash costs based on expected costs associated with mine plans that reflect the expected method by which we will mine reserves at each site. Cost of sales, net cash costs and total cash costs per ounce/pound are also affected by ore metallurgy that impacts gold and copper recovery rates, labor costs, the cost of mining supplies and services, foreign currency exchange rates and stripping costs incurred during the production phase of the mine. In the normal course of our operations, we attempt to manage each of these risks to mitigate, where possible, the effect they have on our operating results.
 
Cost of sales applicable to gold is expected to be in the range of $5.1 to $5.3 billion, compared to $4.6 billion in 2010. The increase is primarily due to an increase in tons mined and tons processed compared to 2010 levels, and higher labor costs and inflationary cost pressures, particularly in South America and Australia Pacific.
 
39 

 
Management’s Discussion and Analysis
 
Total cash costs are expected to be in the range of $450 to $480 per ounce compared to $409 per ounce in 2010. The increase in 2011 principally reflects the impact of lower ore grades, particularly in South America, which is expected to be partially offset by an increase in production levels due to higher tons processed and the impact of higher labor costs in South America and Australia. These increases are expected to be partially offset by higher by-product credits due to expected higher copper and silver prices.

 

(1) Chart depicts approximate impacts of each category on total cash costs  per ounce.
 
Cost of sales applicable to copper is expected to be in the range of $500 to $520 million compared to $430 million in 2010. Total cash costs are expected to be in the range of $1.35 to $1.45 per pound for copper. The increase in total cash costs of approximately $0.30 per pound is primarily as a result of the increase in the price of sulfuric acid and the processing of lower ore grades at Zaldívar.
 
Net gold cash costs are expected to be in the range of $340 to $380 per ounce, assuming an average market copper price of $3.75 for 2011.
 
Exploration and Evaluation
 
Exploration and Evaluation (“E&E”) costs will be classified under both the “exploration and evaluation” line and the “loss from equity investees” line on our consolidated statements of income. The timing of the funding provided to equity investees for E&E expenditures and the recognition of the related income or expense as loss from equity investees in our consolidated statement of income may vary. The funding is initially recorded as an increase in the carrying amount of our investment. Our share of expenses is recognized when the expenditures are incurred by the equity investee.
 
We expect to expense approximately $330 to $350 million for our share of E&E expenditures in 2011, up from $234 million in 2010. Higher costs primarily reflect ongoing minesite reserve and resource development programs, principally at Cortez, Porgera, Lagunas Norte, Granny Smith and Goldstrike. E&E expenses also includes non-capitalizable project costs at Pueblo Viejo, Pascua-Lama and Cerro Casale and costs classified under income (loss) from equity investees.
 
Finance Costs
 
Finance costs primarily represent interest expense on long-term debt. We expect lower finance costs in 2011 primarily due to higher capitalized interest as a result of the continuation of construction at Pueblo Viejo and Pascua-Lama.
 
Capital Expenditures
 
Total capital expenditures for 2011 are expected to be in the range of $4.20 billion to $4.65 billion. The level of spend is particularly high in 2011 primarily due to the intensity of construction activity at both our Pueblo Viejo and Pascua-Lama projects, and significant open pit mine development activity, particularly at Goldstrike and Cortez. Based on our current portfolio of development projects, we expect total capital expenditures to decrease in 2012.
 
40 

 
Barrick Financial Report 2010 | Management’s Discussion and Analysis
 
Minesite Sustaining
 
Sustaining capital expenditures are expected to slightly increase from 2010 expenditure levels of $863 million to about $900 to $1,000 million.
 
Open Pit and Underground Mine Development
 
Open pit and underground mine development capital includes capitalized waste stripping, underground mine development and exploration drilling expenditures that meet our criteria for capitalization. In 2011, expenditures primarily relate to mine development activities at Goldstrike, Cortez, North Mara, Veladero, Porgera and Granny Smith. Expenditures are expected to increase from 2010 levels primarily due to North America, where both Goldstrike and Cortez are scheduled to commence a period of high waste stripping as anticipated in their life of mine plans. The high levels of waste stripping activity at both mines are expected to be substantially complete by the end of 2011.
 
Minesite Expansion
 
The expected increase in expansion capital relates to various projects at Goldstrike, Bald Mountain, Golden Sunlight, Cortez and Turquoise Ridge in North America, Lagunas Norte in South America; and ABG’s North Mara mine. The increase also reflects capitalized exploration costs to advance the expansion projects at Turquoise Ridge and North Mara; as well various expansion projects at our Cortez property.
 
Capital Projects
 
The expected increase in our share of capital project capital expenditures from $1,691 million in 2010 to about $2,100 to $2,300 million in 2011 is mainly due to the continuing construction activity at Pueblo Viejo and increased levels of construction activity at Pascua-Lama. Guidance for 2011 also includes early stage capital expenditures at Cerro Casale.

 	 	2010	 	2011	 	
 	 	Actual IFRS	 	Guidance IFRS	 	
($ millions)	 	basis (unaudited)	 	basis	 	
Pueblo Viejo (60% basis)	 	$	592	 	$475 to $525	 	
Pascua-Lama	 	724	 	$1,110 to $1,200	 	
Cerro Casale (75% basis) and other	 	66	 	$175 to $225	 	
Capitalized interest	 	309	 	~$350	 	
 	 	$	1,691	 	$2,100 to $2,300	 	
 
Income Taxes
 
Our underlying expected effective tax rate excludes the impact of currency translation gains/losses and changes in tax valuation allowances.
 
At the end of 2010, income taxes payable amounted to $535 million due to the significant increase in income generated in the year. Operating cash flow in 2011 will be reduced by the settlement of this liability in the second quarter as well as higher income tax installments based on the income levels for 2010.
 
Outlook Assumptions and Economic Sensitivity Analysis

 	 	2011 Guidance	 	Hypothetical	 	Impact on	 	Impact on EBITDA	 	
 	 	Assumption	 	Change	 	Total Cash Costs	 	(millions)	 	
Gold revenue	 	$	1,300/oz	 	$	50/oz	 	n/a	 	$380–$400	 	
Copper revenue	 	$	3.75/lb	 	$	0.25/lb	 	n/a	 	$	75	 	
Gold total cash costs	 	 	 	 	 	 	 	 	 	
Gold price effect on royalties and production taxes	 	$	1,300/oz	 	$	50/oz	 	$	1.25/oz	 	$	9	 	
WTI crude oil price(1)	 	$	85/bbl	 	$	10/bbl	 	$	0.20/oz	 	$	2	 	
Australian dollar exchange rate(1)	 	0.95 : 1	 	10	%	—	 	—	 	
Copper total cash costs	 	 	 	 	 	 	 	 	 	
WTI crude oil price(1)	 	$	85/bbl	 	$	10/bbl	 	$	0.01/lb	 	$	3	 	
Chilean peso exchange rate(1)	 	500 : 1	 	10	%	$	0.01/lb	 	$	5	 	

( 1)   Due to hedging activities we are largely protected against changes in these factors.
 
41 

 
Management’s Discussion and Analysis
 
Business Overview
 
Our Business
 
Barrick’s vision is to be the world’s best gold mining company by finding, acquiring, developing and producing gold in a safe, profitable and socially responsible manner. Guided by our five core values – behave like an owner, act with a sense of urgency, be a team player, continually improve, and deliver results – we have become the world’s preeminent gold mining company.
 
Barrick’s market capitalization, annual gold production and gold reserves are also the largest in the industry. We also produce significant amounts of copper and have significant silver reserves contained within our gold reserves at our Pascua-Lama project. We sell our production in the world market through the following distribution channels: gold bullion is sold in the gold spot market; gold and copper concentrate is sold to independent smelting companies; and copper cathode is sold to various manufacturers and traders.

 

(1)   Based on the most recent public information as at date noted.
 
Our large mineral inventory is well situated primarily in geopolitically secure countries. Approximately 65% of our reserves are located in investment grade(2) countries, including the United States, Chile, Australia, Peru and Canada, which provides a lower overall risk profile.

 

(2)   Defined as being rated BBB- or higher by S&P.
 
42 

 
Barrick Financial Report 2010 | Management’s Discussion and Analysis

 

(1)           Based on actual results for Barrick, Gold Fields and Kinross. All others are based on the most recent public guidance issued as at February 16, 2011.

 

(1)           Based on actual results for Barrick, Gold Fields, Goldcorp and Kinross. All others are based on the most recent public guidance issued as at February 16, 2011.
 
We, along with our subsidiaries, have operating mines or projects in Canada, the United States, Dominican Republic, Australia, Papua New Guinea, Peru, Chile, Argentina, Pakistan and Tanzania. The geographic split of gold production for the year ended December 31, 2010 was as follows:

 
Our Strategy
 
Our core objective is to maximize long-term value for our shareholders by following a strategy that emphasizes return on capital, as well as earnings and cash flow growth, while providing full leverage of production and reserves/resources to market gold prices. To deliver on this objective, we focus on the following strategic priorities:
 
Financial Strength
 
·       Optimize realized gold and copper prices;
·       Contain and/or reduce production costs;
·       Optimize return on capital expenditures;
·       Maintain a strong financial position and good liquidity;
 
Gold Leverage
 
·       Meet annual production targets;
·       Grow reserve/resource base;
·       Unhedged on all future gold production;
 
Growth
 
·       Develop advanced projects on time and on budget;
·       Identify and develop growth opportunities at operating mines;
·       Selectively acquire future accretive growth opportunities;
 
Responsible Mining
 
·       Improve safety and environmental performance; and
·       Maintain our social license to operate.
 
Capability to Execute our Strategy
 
Our capability to execute our strategy comes from the strength of our experienced management team, skilled workforce and organizational structure, a strong pipeline of projects that facilitates the long-term sustainability of our business, our strong financial position, and our commitment to corporate social responsibility.
 
43 

 
Management’s Discussion and Analysis
 
Experienced Management Team, Skilled Workforce and Organizational Structure
 
We have an experienced board of directors and senior management team with a proven track record at Barrick and within the mining industry. Strong leadership and governance are critical to the successful implementation of our core business strategies.
 
Our senior management is complemented by a skilled workforce that enhances the efficiency and effectiveness of our operations, particularly our ability to meet our annual production targets and contain costs. The remote nature of many of our mine sites presents some challenges in maintaining a well-trained and skilled workforce. We continue to focus on training and development for key members of our senior mine management, technical professionals and frontline workers through our talent management processes, enhanced distance learning programs and e-learning technologies in order to meet this challenge. We have also expanded our technical training and development programs beyond our technical mining disciplines (mining, metallurgy, maintenance and geology) to include our critical support functions. This program is now improving the technical and leadership skills of over 1,000 professionals. Leadership development for key leadership positions and high potential employees will be an area of focus in the coming year in order to support our continued growth plans by maintaining a robust leadership pipeline.
 
We manage our business using a Regional Business Unit (“RBU”) structure to ensure that each region is able to customize corporate strategies to meet the unique conditions in which they operate. We have three RBUs, each of which is led by its own Regional President: North America, South America and Australia Pacific. We also hold a 73.9% equity interest in ABG, which is listed on the London Stock Exchange (“LSE”) and comprises our African gold mining business. In addition, Barrick Energy manages our oil & gas business and provides support for energy savings initiatives undertaken by our RBUs. Since their inception, the RBUs have added value to our business by realizing operational efficiencies in the region, allocating resources more effectively and understanding and better managing the local business environment, including labor, consumable costs and supply and government and community relations.
 
Exploration and Development of New Mines
 
Barrick’s exploration strategy is aligned with our business objectives. It is a three-pronged, balanced approach that ensures we can meet both our short and long-term growth needs. The annual exploration program is focused on replacing and adding reserves and resources at our mines and projects. Our exploration group works closely with our corporate development group to identify acquisition opportunities with exploration upside. Finally, the exploration group looks for the next flagship deposit that will sustain Barrick for decades.
 
The exploration budget supports a strong pipeline of projects and is weighted towards near-term resource additions and conversion at our existing mines where we believe there is excellent potential to make new discoveries and to expand reserves and resources. The budget also provides support for earlier stage exploration in our operating districts and a smaller percentage of the budget is directed at emerging areas in order to generate quality projects for future years.
 
Total exploration expenditure in 2011 is budgeted to be about $320 – $340 million and includes expenditures that will meet the criteria for capitalization. These expenditures will support exploration activity across all regions, with the largest share in North America where 43% of the total budget is allocated. This split is largely consistent in comparison to previous years.

 
Barrick has been successful at consistently finding reserves and resources. We have extensive land positions on many of the world’s most prospective trends and, due in large part to our consistent funding and disciplined approach to exploration, we were successful at replacing reserves in 2010 and growing resources. Since 1990, we have spent approximately $2.2 billion on exploration, which has resulted in the
 
44 

 
Barrick Financial Report 2010 | Management’s Discussion and Analysis
 
discovery of approximately 139 million ounces of reserves, substantially more than the 109 million ounces that we have produced in the same time period. The per ounce cost of reserve additions of approximately $16 has added substantial value to the Company.

 
Building new mines is key to our long-term goal of increasing profitability and creating long-term shareholder value. It can take a number of years for a project to move from the exploration stage through to mine construction and into production and this time frame has increased in recent years as considerable opposition to new mining projects can develop from influential NGOs or unstable political climates. The development of a new mine requires successful permitting and government relations, community dialogue and engagement, and significant financial and human capital. This significant increase in the timeline and cost of developing projects is reflected in our business strategy by ensuring that we have an inventory of projects combined with effective management of current operating mines.
 
The projects in our portfolio are at various stages of development, ranging from scoping to feasibility to construction. We have a dedicated Capital Projects group to focus on managing our large projects through this process, up to and including the commissioning of new mines, at which point responsibility for mine operations is handed over to the relevant RBUs. Over the past seven years, we have built seven new projects on time and near budget, namely Tulawaka, Lagunas Norte, Veladero, Cowal, Ruby Hill, Buzwagi and Cortez Hills. We expect that this experience will allow us to successfully commission the two projects currently in construction (Pueblo Viejo and Pascua-Lama), over the next three years. These projects are expected to contribute substantial low cost production and support a growing production profile for the Company over the next five years.
 
Financial Strength
 
The recent global economic crisis has underlined the importance of maintaining adequate levels of liquidity and a strong balance sheet. We actively manage our liquidity by focusing on maintaining and growing operating cash flows. Our cash flows are dependent on prices realized from gold and copper sales, our production levels, production costs, exploration spend, cash payments for income taxes, interest and other factors. Although weak global economic conditions have persisted, our strong operating performance, along with rising gold and copper prices, has enabled us to enhance our financial position. In 2010, we reduced net debt and increased dividends, while funding capital expenditure requirements for projects in construction and maintaining our financial flexibility to pursue future growth opportunities.
 
Corporate Responsibility
 
Operating in a socially responsible manner is critical in maintaining a license to operate in our industry. We are committed to making a positive difference in the communities in which we live and work. We recognize that responsible behavior is our calling card, creating opportunities to generate greater value for our shareholders, while at the same time fostering sustainable development in the communities and countries where we operate. In 2010, we were named to the Dow Jones Sustainability World Index (“DJSI”), ranking the Company as a top performer in corporate social responsibility worldwide for the third consecutive year. The renewed listing on the index reinforces Barrick’s position among the most sustainability-driven companies in the world.
 
Responsible environmental management is central to our success as the gold mining leader. To accomplish this goal across our 25 mines and four regions (including ABG) we have implemented an Environmental Management System which guides all of our sites. We have also developed, and are continuing to develop, specific performance standards. Our global Water Conservation Standard, completed in 2008, has been implemented as a company-wide priority.
 
45 

 
Management’s Discussion and Analysis
 
In 2009, we drafted four additional Standards, including a Biodiversity Standard, a Climate Change Standard, a Mine Closure Standard and an Incident Reporting Standard, which were all implemented in 2010. In certain respects, these Standards exceed regulatory requirements and represent industry best practices.
 
Barrick was a leading participant in the development of the International Cyanide Management Code and, by the end of 2010, we had achieved Cyanide Code certification at 20 of the 23 operations where cyanide is used. Of the balance, two are pursuing certification, which they expect to achieve before 2012, and one will certify once an additional ore body is developed and processing resumes.
 
Barrick recognizes the risks that climate change represents to society and to our long-term success. Our Climate Change Standard focuses on energy efficiency and the use of renewable energy to reduce the Company’s carbon footprint. The program builds on energy efficiency programs and renewable energy projects already underway at our operations and embeds climate change considerations into business management processes and investment decision-making. All 25 Barrick mines have conducted energy self-assessments and are working toward greater energy efficiency and conservation. One such example is a small hydroelectric project in Chile’s Atacama Desert that was brought on line in 2009. This end-of-pipe power generator produces power from water pumped 90 km to the minesite from the Negrillar aquifer at the base of the Andes. Also, the underground mines in Nevada have successfully implemented bio-diesel use, which has the combined benefit of reducing GHG emissions and diesel particulate matter in engine exhaust.
 
We believe that the health and safety of our workers is fundamental to our business. Our vision is: “Every person going home safe and healthy every day”. We are committed to the identification and elimination or control of workplace hazards for the protection of ourselves and others. Our long-term goal is to be a zero incident company.
 
For us to succeed in fulfilling this goal, we:
 
·   Provide the expertise and resources needed to maintain safe and healthy working environments;
·   Established clearly defined safety and occupational health programs and measure safety and health performance, making improvements as warranted;
·   Operate in accordance with recognized industry standards, while complying with applicable regulations;
·   Investigate the causes of accidents and incidents and develop effective preventative and remedial action;
·   Train employees to carry out their jobs safely and productively;
·   Maintain a high degree of emergency preparedness; and
·   Require that vendors and contractors comply with our applicable safety and health standards.
 
Enterprise Risk Management
 
As our Board recognizes that creating shareholder value is the reward for taking and accepting risk, our primary objective is to maximize long-term value for our shareholders. Our enterprise risk management vision is to implement a company-wide culture of risk management where risks are promptly identified, assessed, reported, and monitored at all levels of the organization through the use of simple and effective risk management processes. Actively managing risks improves our ability to effectively execute on our business strategy and thereby create shareholder value by finding, acquiring, developing and producing quality reserves in a safe, profitable and socially responsible manner. Consequently, we have established a process for identifying, evaluating and managing company-wide risks. All risks are reported through our RBU and corporate leaders. These risks are ranked and prioritized and effective and efficient action plans are developed as necessary. Analysis is also performed to ensure there is proper assessment of risks that may interfere with achieving the strategic objectives of the Company as a whole.
 
The following is a summary of what management has determined to be the most significant risk factors affecting Barrick. There may be additional risks, currently believed to be less significant, that either individually or collectively, may significantly affect our business and financial results in the future. For a more detailed description of risks facing the Company, please refer to the most recently filed Annual Information Form. A description of some of the risks currently viewed as significant follows:
 
Exposure to gold price
 
Barrick’s revenues are primarily derived from the sale of gold and the market price of gold can fluctuate widely due to macroeconomic factors that are beyond our control. Consequently, the market price of gold is one of the most significant factors in determining the profitability of our operations. All of our future gold production is unhedged, providing full leverage to changes in the market gold price.
 
46 

 
Barrick Financial Report 2010 | Management’s Discussion and Analysis
 
To maximize our realized gold price, we have a corporate treasury function which monitors the gold market and is responsible for our gold sales.
 
License to operate
 
Maintaining our social license to operate is critical for Barrick to operate our existing mines and develop our projects around the world. Some of the risks to our social license include: compliance with environmental laws and regulations; community relations and human rights issues; and the health and safety of our employees. To manage these risks and maintain our social license, we have developed global environmental standards which, in many cases, exceed regulatory requirements and represent industry best practice. We have a globally coordinated community relations strategy that utilizes our corporate and local expertise to improve relations in the communities in which we operate. We have recently joined the Voluntary Principles on Security and Human Rights and are undertaking two new corporate social responsibility (“CSR”) initiatives to further strengthen our CSR performance. We will appoint an independent Director to its Board of Directors to support its commitment to CSR. The search is underway to fill this position in 2011. We will also establish an external CSR Advisory Board that will provide advice and guidance on challenging social and environmental issues and encourage further innovation and leadership in CSR. Additionally, we have an extensive Safety and Health program, committed to the protection of our employees and the residents of communities in proximity to our operations.
 
Project development
 
The development of our significant capital projects represents a key driver to our plans for future growth. The process to bring these projects into operation may be subject to unexpected delays that could increase the cost of development and the ultimate operating cost of the relevant project. Our Capital Projects group is responsible for completing relevant studies, obtaining the necessary approvals and managing construction. We utilize a formal system to govern advancement of projects as they progress from scoping through the execution and commissioning stages. This disciplined system of standards and procedures, which includes the involvement of multiple functional groups, enhances the study quality and consistency; and enables the development of mitigation plans where necessary, thereby improving the overall certainty of project delivery on schedule and on budget.
 
Global economic conditions
 
Barrick’s operating results and financial condition depend significantly on commodity prices and foreign exchange rates, which are largely dependent on worldwide economic conditions. Changes in general economic conditions could result in: adverse changes in key input commodity prices; adverse changes in foreign exchange rates, disruption in financial and credit markets; and negative impacts on our supply chain. To manage these risks, we actively hedge foreign exchange economic risks and key input commodities, including the fuel hedge provided by Barrick Energy. We continuously monitor the credit markets as part of our capital allocation function and will seek to minimize disruption to our liquidity or our supply chain to ensure the optimal operation of the Company.
 
Market Review
 
Gold
 
The market price of gold is the most significant factor in determining the earnings and cash flow-generating capacity of Barrick’s operations. The price of gold is subject to volatile price movements over short periods of time and is affected by numerous industry and macroeconomic factors that are beyond our control. Gold price volatility remained high in 2010, with the price ranging from $1,045 to $1,431 per ounce during the year. The average market price for the year of $1,225 per ounce was an all-time high. The financial crisis of 2008, the subsequent slow pace of the economic recovery and government stimulus measures adopted in response by the largest developed economies, including the United States, the Eurozone and Japan, has resulted in large fiscal deficits in these jurisdictions. These deficits have triggered concerns of sovereign debt defaults, particularly in the Eurozone. Further, the monetary policies put in place by the world’s most prominent central banks remain very accommodative in an attempt to increase the rate of economic growth and reduce unemployment levels, with short-term US interest rates at historic lows. Gold has historically played an important role as a constant measure of value. The continuing uncertain macroeconomic environment and loose monetary policies have resulted in gold performing its traditional role as a store of value and an alternative to fiat currency. Consequently, gold continues to be viewed as a safe haven investment, which has resulted in a strong increase in investment demand. Throughout 2010, we have continued to see increased interest in holding gold as an investment. This was evidenced by the increased volumes
 
47 

 
Management’s Discussion and Analysis
 
held by Exchange Traded Funds (ETFs) and global exchanges, as well as the worldwide demand for physical gold in forms such as bars and coins as investors seek a safe haven against the uncertain global economic outlook. A continuation of these trends is supportive of high long-term gold prices.

 

(1)   Includes the holdings of GBS (ASX), GBS (LSE), NewGold (JSE), GLD (NYSE), IAU (Amex), ZKB (Swiss), ETFS (London), XETRA (DAX), Julius Baer (SWX), ETFS (NYSE), CS-XMTCH (SIX), UBS-IS (USD).
 
We believe that the outlook for global gold mine production will be one of declining supply in the years to come. While modest increases in production have occurred in recent years primarily as a result of the increase in gold prices, we continue to expect a decline over the long term. The primary drivers for the global decline are a trend of lower grade production by many producers; increasing time requirements and impediments in bringing projects – especially large-scale projects – to the production stage; a lack of global exploration success in recent years; and a scarcity of new, promising regions for gold exploration and production. A decrease in global industry production raises the potential for a higher sustainable long-term gold price.

 
Gold sales from the official sector under the Central Bank Gold Agreement (CBGA) also have a significant impact on gold prices. Sales for the year ended in September 2010 were less than 2% of the full-year quota of 400 tonnes, excluding sales from the International Monetary Fund (“IMF”). We are now in the second year of the current CBGA which runs to September 2014 and allows for the sale of up to 400 tonnes per year. In 2010, the IMF completed its previously announced sale of 403 tonnes of gold, with no future sales anticipated at this time. Net official sector sales have been declining in recent years and, in fact, central banks were net buyers of gold in 2010 for the first time since 1988.
 
48 

 
Barrick Financial Report 2010 | Management’s Discussion and Analysis

 
The reserve gold holdings of emerging market countries, such as the BRIC countries (Brazil, Russia, India, and China) are significantly lower than the reserve holdings of more developed countries. The central banks of these developing economies hold a significant portion of their reserves in US dollars and as they identify a need to diversify their portfolio and reduce their exposure to the US dollar, we believe that gold will be one of the main beneficiaries. In conjunction with the below quota selling of gold under the CBGA, which is expected to continue in the current year of the agreement, the net purchases of gold by global central banks provide a strong indication that gold is viewed as a reserve asset and a de-facto currency.

 
Copper
 
Copper prices generally rose throughout 2010, particularly in the second half, as London Metals Exchange (LME) copper prices traded in a wide range of $2.74 to $4.42 per pound, averaging $3.42 per pound, and closing the year at an all-time high of $4.42 per pound. Copper’s rise to all-time highs occurred mainly as a result of strong demand from emerging markets, especially China, decreasing exchange stockpiles and increasing investor interest in base metals with strong forward-looking supply/demand fundamentals. Copper prices should continue to be positively influenced by demand from Asia, global economic growth, the limited availability of scrap metal and production levels of mines and smelters in the future.
 
Utilizing option collar strategies, we have put in place floor protection on approximately 60% of our expected copper production for 2011 at an average floor price of $3.00 per pound. In addition, we have sold net call options on approximately 70% of our 2011 production at an average price of approximately $4.85 per pound. Our realized price on all 2011 production is expected to be reduced by approximately $0.12 per pound in 2011 as a result of the net premium paid on option hedging strategies. Our remaining copper production is subject to market prices.

 
49 

 
Management’s Discussion and Analysis
 
Silver
 
Silver traded in a wide range of $14.64 to $30.94 per ounce in 2010, averaged $20.19 per ounce and closed the year at $30.63 per ounce. Despite weak industrial demand, silver managed to rise during the year to a 30-year high due to very strong investment demand, which is driven by the similar factors influencing investment demand for gold. The ounces held by major global silver ETFs increased by 91 million ounces during the year, with holdings totaling 487 million ounces at the end of 2010. The physical silver market is currently in surplus and, while continuing global economic growth is expected to improve industrial demand, the primary influence of prices should continue to be investment demand in the near term.
 
Silver prices have a significant impact on the overall economics and expected gold total cash costs for our Pascua-Lama project, which is currently in the construction phase. Silver prices do not significantly impact our current operating earnings, cash flows or gold total cash costs.
 
In the fourth quarter, utilizing zero-cost option collar strategies, we took advantage of high spot silver prices and attractive option pricing by adding hedge protection on three million ounces per year of expected silver production from 2013 to 2017, inclusive, with a floor price of $20 per ounce and an average ceiling price of $55 per ounce.
 
In 2009, we entered into a transaction with Silver Wheaton Corp. (“Silver Wheaton”) whereby we sold 25% of the life-of-mine Pascua-Lama silver production from the later of January 1, 2014 or completion of project construction, and 100% of silver production from the Lagunas Norte, Pierina and Veladero mines until that time. Silver Wheaton will make up front payments totaling $625 million ($350 million received as at December 31, 2010). Silver Wheaton will also make ongoing payments of $3.90 per ounce in cash (subject to a 1% annual inflation adjustment starting three years after completing construction at Pascua-Lama) for each ounce of silver delivered under the agreement.
 
Currency Exchange Rates
 
The results of our mining operations outside of the United States are affected by US dollar exchange rates. The largest single exposure we have is to the Australian dollar/US dollar exchange rate. We also have exposure to the Canadian dollar through a combination of Canadian mine operating costs and corporate administration costs and increasing exposure to the Chilean peso as a result of the construction of our Pascua-Lama project. In addition, we have exposure to the Papua New Guinea kina, Peruvian sol, and Argentinean peso through mine operating and capital costs.
 
In 2010, the US dollar generally declined against our currency exposures, primarily as a result of the low interest rates offered on US dollars, concerns about the level of US government borrowing and deficits, and increasing investor appetite for riskier assets.
 
Fluctuations in the US dollar increase the volatility of our costs reported in US dollars, subject to protection that we have put in place through our currency hedging program. Canada and Australia have emerged from the global economic crisis better than most OECD countries. The Bank of Canada and the Reserve Bank of Australia raised benchmark interest rates by 75 basis points and 100 basis points, respectively, during the year, while the US Federal Reserve held rates constant. In 2010, the Canadian dollar traded in a range of $0.92 to $1.01 and closed at $1.00. The Australian dollar experienced higher volatility, trading in a range of $0.81 to $1.03 and closed at $1.02, with the strengthening occurring towards the end of the year due in part to higher commodity prices and economic growth in Asia-Pacific.
 
About 60% of our consolidated production costs are denominated in US dollars and are not exposed to fluctuations in US dollar exchange rates. For the remaining portion, our currency hedge position allows for more accurate forecasting of our anticipated expenditures in US dollar terms and mitigates our exposure to volatility in the US dollar. Our currency hedge position has provided benefits to us in the form of hedge gains recorded within our operating costs when contract exchange rates are compared to prevailing market exchange rates as follows: 2010 – $146 million; 2009 – $27 million; and 2008 – $106 million. For 2010, we also recorded currency hedge gains in our corporate administration costs of $33 million (2009 – $7 million loss and 2008 – $11 million gain).
 
For 2011, our average Australian and Canadian dollar hedge rates are favorable when compared to the year-end market rates for these currencies. The average hedge rates vary depending on when the contracts were put in place. We have hedged approximately AUD $1,638 million and CAD $353 million in 2011 for expected Australian and Canadian operating costs and sustainable and eligible
 
50 

 
Barrick Financial Report 2010 | Management’s Discussion and Analysis
 
project capital expenditures at average rates of $0.79 and $1.02, respectively. Total expected Australian and Canadian operating and capital expenditures in 2011 are expected to be AUD $1,776 million and CAD $477 million, and as a result we are approximately 92% and 74% hedged, respectively. In addition, we have hedged approximately 84%, 72%, and 46% of our total expected 2012, 2013, and 2014 Australian dollar expenditures at average rates of $0.75, $0.72, and $0.75, respectively. Assuming market exchange rates at the December 31, 2010 levels of $1.02 for AUD and $1.00 for CAD, we expect to record gains on our operating expenditures of approximately $360 million in 2011 ($340 million for the Australian dollar; $10 million for the Canadian dollar; and $10 million for the Chilean peso), or about $45 – $47 per ounce based on total forecast 2011 production. We also expect to record gains on our capital expenditures of approximately $30 million in 2011. In addition, we have Chilean peso contracts in place to hedge a portion of our operating expenditures, primarily at Zaldívar, and our capital expenditures, primarily at the Pascua-Lama project. Further information on our currency hedge positions is included in note 20 to the consolidated financial statements.

 
AUD Currency Contracts

 	 	 	 	Effective Average	 	 	 	
 	 	Contracts	 	Hedge	 	% of Expected	 	
 	 	(AUD millions)	 	Rate (AUDUSD)	 	AUD Exposure (1)	 	
2011	 	1,638	 	0.79	 	92	%	
2012	 	1,182	 	0.75	 	84	%	
2013	 	882	 	0.72	 	72	%	
2014	 	515	 	0.75	 	46	%	
 
CAD Currency Contracts

 	 	 	 	Effective	 	 	 	
 	 	Contracts(2)	 	Average Hedge	 	% of Expected	 	
 	 	(CAD millions)	 	Rate (USDCAD)	 	CAD Exposure (1)	 	
2011	 	353	 	1.02	 	74	%	
2012	 	19	 	1.02	 	5	%	
 
CLP Currency Contracts

 	 	 	 	Effective	 	 	 	
 	 	Contracts	 	Average Hedge	 	% of Expected	 	
 	 	(CLP millions)(3)	 	Rate (USDCLP)	 	CLP Exposure(4)	 	
2011	 	172,595	 	507	 	57	%	
2012	 	71,800	 	513	 	27	%	

(1)   Includes all forecasted operating, sustainable and eligible project capital expenditures.
(2)   Includes $301 million CAD contracts with a cap and floor of $1.01 and $1.11, respectively.
(3)   Includes CLP 146,100 million collar contracts that are an economic hedge of capital expenditures, primarily at our Pascua-Lama project with a cap and floor of 509 and 575, respectively.
(4)   Includes all forecasted operating, sustainable and forecasted project capital expenditures.

 
51 

 
Management’s Discussion and Analysis

 
Fuel
 
For 2010, oil prices traded between $63 and $92 per barrel, averaged $80 per barrel and closed the year at $91 per barrel as the global economy returned to growth.
 
On average we consume approximately 3.8 million barrels of diesel fuel annually across all our mines. Diesel fuel is refined from crude oil and is therefore subject to the same price volatility affecting crude oil prices. Volatility in crude prices has a significant direct and indirect impact on our production costs. To mitigate this volatility, we employ a strategy of combining the use of financial contracts and our production from Barrick Energy to effectively hedge our exposure to high oil prices. We currently have financial contracts in place totaling 4.7 million barrels, which represents 56% of our total estimated direct consumption in 2011 and 34% of our total estimated direct consumption over the following two years. Those contracts are primarily designated for our Nevada-based mines, and have average prices below current forward prices. In 2010, we recorded hedge losses in earnings of approximately $28 million on our fuel hedge positions (2009: $97 million loss; 2008: $33 million gain). Assuming market rates at the December 31, 2010 level of $91 per barrel, we expect to realize hedge gains of approximately $20 million in 2011 from our financial fuel contracts.

Financial Fuel Hedge Summary	 	 	 	 	

 	 	Barrels(1)	 	 	 	% of Expected	 	
 	 	(thousands)	 	Average Price	 	Exposure	 	
2011	 	2,394	 	$	94	 	56	%	
2012	 	1,273	 	83	 	38	%	
2013	 	1,068	 	78	 	30	%	
 	 	4,735	 	$	88	 	42	%	

(1)   Refers to contracts for a combination of WTI, ULSD, WTB, MOPS and JET. Products other than WTI have market prices in excess of WTI due to refining and location premiums. As a result, our average price on hedged barrels for 2011 – 2013 is $81 per barrel on a WTI-equivalent basis.
 
In 2011, we expect Barrick Energy to produce about 2.9 million boe. The net contribution from the Barrick Energy production is expected to provide a natural offset equivalent to about 1.0 million boe. The Barrick Energy contribution, along with our financial fuel hedges, provides hedge protection for approximately 92% of our estimated fuel consumption for 2011.

 
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Barrick Financial Report 2010 | Management’s Discussion and Analysis
 
US Dollar Interest Rates
 
Beginning in 2008, in response to the contraction of global credit markets and in an effort to spur economic activity and avoid potential deflation, the US Federal Reserve reduced its benchmark rate to between 0% and 0.25% . The benchmark was kept at this level through 2010. We expect that short-term rates will remain at low levels through 2011 and into 2012, with the US Federal Reserve continuing to use monetary policy initiatives in an effort to keep long-term interest rates low and increase employment. We expect such initiatives to be followed by incremental increases to short-term rates once economic conditions and credit markets normalize.
 
At present, our interest rate exposure mainly relates to interest receipts on our cash balances ($4.0 billion at the end of the year); the mark-to-market value of derivative instruments; the fair value and ongoing payments under US dollar interest-rate swaps; and to the interest payments on our variable-rate debt ($1.0 billion at December 31, 2010). Currently, the amount of interest expense recorded in our consolidated statement of income is not materially impacted by changes in interest rates, because the majority of debt was issued at fixed interest rates. The relative amounts of variable-rate financial assets and liabilities may change in the future, depending on the amount of operating cash flow we generate, as well as the level of capital expenditures and our ability to borrow on favorable terms using fixed rate debt instruments.

 
The steep US yield curve has a significant impact on the net amount of interest expense since our debt issuances were set at predominantly 10-year and 30-year interest rates, while our cash and equivalents balances are generating interest income at much lower rates in the 1 to 90 day range.
 
If shorter term interest rates rise, this should result in us generating higher amounts of interest income on our cash balances, while our interest expense is largely at fixed rates and is therefore insensitive to increasing interest rates.
 
53 

 
Management’s Discussion and Analysis
 
Financial and Operational Results
 
Summary of Financial Performance (1)

($ millions, except per share data in dollars)	 	 	 	 	 	 	 	 	 	 	 	
For the years ended December 31	 	2010	 	2009	 	$ Change	 	% Change	 	2008	 	
Sales	 	$	11,211	 	$	8,404	 	$	2,807	 	33	%	$	7,913	 	
Net income/(loss)	 	3,274	 	(4,274	)	7,548	 	—	 	785	 	
Per share(2)	 	3.32	 	(4.73	)	8.05	 	—	 	0.90	 	
Adjusted net income(3)	 	3,279	 	1,810	 	1,469	 	81	%	1,661	 	
Per share(2)	 	3.32	 	2.00	 	1.32	 	66	%	1.90	 	
EBITDA(3)	 	5,900	 	(2,563	)	8,463	 	—	 	2,273	 	
Adjusted EBITDA(3)	 	5,900	 	3,370	 	2,530	 	75	%	2,273	 	
Operating cash flow	 	4,127	 	(2,322	)	6,449	 	—	 	2,254	 	
Adjusted operating cash flow(3)	 	4,783	 	2,899	 	1,884	 	65	%	2,254	 	
Free cash flow(3)	 	$	1,460	 	$	541	 	$	919	 	170	%	$	478	 	

(1)	The amounts presented in this table include the results of discontinued operations.	
(2)	Calculated using weighted average number of shares outstanding under the basic method.	
(3)	Adjusted net income, EBITDA, adjusted EBITDA, adjusted operating cash flow and free cash flow are non-GAAP financial performance measure with no standardized meaning under US GAAP. For further information and a detailed reconciliation, please see pages 78–85 of this MD&A.	
 
In 2010, we recorded net income of $3,274 million compared to a net loss of $4,274 million in 2009, which included a $5,901 million charge related to the elimination of the gold sales contracts.
 
Adjusted net income was $3,279 million in 2010, compared to $1,810 million in 2009. The increases in net income and adjusted net income compared to 2009 were primarily driven by higher gold sales volumes and higher realized gold and copper prices. The increase in net income also reflects the $5,901 million charge related to the gold sales contracts recorded in 2009. The significant adjusting items in 2010 include: a $29 million gain related to the re-measurement of our 50% interest in Cerro Casale on closing the acquisition of an additional 25% interest in 2010; $32 million of unrealized non-hedge gains primarily relating to Chilean peso contracts; partially offset by $43 million in restructuring charges relating to costs for a long-term tire supply contract and severance arrangements and $34 million in unrealized foreign currency translation losses related to deferred income tax and working capital balances in our regional business units.

 
EBITDA was $5,900 million in 2010, compared to a loss of $2,563 million in 2009. The significant increase is primarily attributable to the $5,933 million pre-tax charge relating to the gold sales contracts recorded in 2009. Adjusted EBITDA was impacted by the same factors affecting net income and adjusted net income with the exception of income tax expense. Adjusted EBITDA, which excludes the impact of the gold sales contracts, was $5,900 million in 2010, a 75% increase compared to the total of $3,370 million in 2009.
 
54 

 
Barrick Financial Report 2010 | Management’s Discussion and Analysis
 
Operating cash flow was an inflow of $4,127 million in 2010 compared to a cash outflow of $2,322 million in 2009. Operating cash flow reflects payments related to the settlement of gold sales contracts of $5,221 million in 2009 and $656 million in 2010. Adjusted operating cash flow, which excludes the impact of these payments, totaled $4,783 million in 2010 compared to $2,899 million in 2009. Adjusted operating cash flow in 2010 was positively affected by higher realized gold and copper prices and higher gold sales, partially offset by lower copper sales volumes.

 
Summary of Operating Performance(1)

($ millions, except per ounce/pound data in dollars)	 	Gold	 	Copper	 	
For the years ended December 31	 	2010	 	2009	 	2008	 	2010	 	2009	 	2008	 	
Production (000s oz/millions of lbs)(2)	 	7,765	 	7,397	 	7,657	 	368	 	393	 	370	 	
Sales	 	 	 	 	 	 	 	 	 	 	 	 	 	
000s oz/millions lbs	 	7,734	 	7,279	 	7,595	 	391	 	380	 	367	 	
$ millions(3)	 	$	9,742	 	$	7,191	 	$	6,656	 	$	1,346	 	$	1,155	 	$	1,228	 	
Market price(4)	 	1,225	 	972	 	872	 	3.42	 	2.34	 	3.15	 	
Realized price(4),(5)	 	1,228	 	985	 	872	 	3.41	 	3.16	 	3.39	 	
Cost of sales ($ millions)	 	3,799	 	3,431	 	3,426	 	433	 	444	 	436	 	
Total cash costs(2),(4),(5)	 	457	 	464	 	443	 	$	1.11	 	$	1.17	 	$	1.19	 	
Net cash costs(2),(4),(5)	 	$	341	 	$	360	 	$	337	 	 	 	 	 	 	 	

(1)	The amounts presented in this table include the results of discontinued operations.	
(2)	Reflects our equity share of production.	
(3)	Represents sales on a 100% consolidated basis.	
(4)	Per ounce/pound weighted average.	
(5)	Realized price, total cash costs and net cash costs are non-GAAP financial performance measures with no standard meaning under US GAAP. For further information and a detailed reconciliation, please see pages 78–85 of this MD&A.	
 
Sales
 
In 2010, sales totaled $11.2 billion, up 33% compared to the 2009 total of $8.4 billion, primarily due to higher realized gold and copper prices and higher gold and copper sales volumes. Realized gold prices of $1,228 per ounce in 2010 were up $243 per ounce compared to 2009, reflecting an increase in market gold prices, which averaged $1,225 per ounce in 2010, compared to $972 per ounce in 2009. Realized copper prices in 2010 were 8% higher than in 2009 as copper traded at record levels in 2010.
 
Cost of sales
 
Cost of sales applicable to gold was $3.8 billion in 2010, up 11%, compared to $3.4 billion in 2009. The increase reflects the impact of higher production and sales, partly offset by lower total cash costs. In 2010, cost of sales applicable to gold was outside our most recent guidance range of $3.5 billion to $3.6 billion due to higher gold sales volumes at our North American region in the fourth quarter.
 
55 

 
Management’s Discussion and Analysis
 
Cost of sales applicable to copper was $433 million in 2010, down 2% compared to $444 million in 2009. The decrease reflects lower costs at Osborne in 2010, due to the divestiture at the end of third quarter 2010.
 
Total cash costs and net cash costs(3)
 
Gold total cash costs were $457 per ounce in 2010, down 2% compared to $464 per ounce in 2009. Higher royalties and production taxes, energy, consumables and maintenance costs were more than offset by higher mill grades, gold production and sales volumes which resulted in lower unit production costs. For the year, total cash costs per ounce were in line with the 2010 guidance range of $425 to $455 per ounce, and also in line with the most recent guidance of about $455 per ounce.
 
Copper total cash costs were $1.11 per pound in 2010, down 5% compared to $1.17 per pound in 2009. The decrease principally reflects lower direct operating costs at Zaldívar primarily due to lower sulfuric acid prices. In 2010, total cash costs per pound were within our most recent 2010 guidance range of $1.10 to $1.15 per pound.
 
Gold net cash costs were $341 per ounce in 2010, down 5% compared to $360 per ounce in 2009. The decrease reflects lower gold total cash costs per ounce and higher copper credits from Zaldívar and Osborne, mainly due to higher realized copper prices. In 2010, net cash costs per ounce were lower than our most recent guidance range of $350 to $360 per ounce, primarily due to higher realized copper prices.
 
Net cash margins
 
Net cash margins per ounce illustrate the trends in profitability and the impact of fluctuations in realized prices and net cash costs on our ability to generate earnings and operating cash flow.
 
Net cash margins per ounce increased 42% in 2010, largely due to the rise in gold prices in conjunction with the decrease in net cash costs.

 
Other operating expenses
 
Amortization expense was $1,149 million in 2010, up 13% compared to $1,016 million in 2009. The increase is primarily due to increased amortization charges in North America as Cortez Hills entered production in 2010 and in South America, where production and sales almost doubled at Veladero. Amortization expense per ounce was $127, up 4% compared to $122 in 2009.
 
Exploration expense was $180 million in 2010, up 28% compared to $141 million in 2009. The increase is primarily due to increased minesite and projects exploration. Project development expense was $153 million in 2010, up 80% compared to $85 million in 2009. The increase is primarily due to $63 million spent to update the feasibility study for Cerro Casale.
 
Other expense was $463 million in 2010, up 35% compared to $343 million in 2009. The increase is primarily due to $46 million in charges related to restructuring a long-term tire supply contract, $22 million in finance charges related to the remaining floating gold sales contracts, and $21 million in incremental community relations costs, partially offset by $25 million in reduced severance costs.

(3)           Total cash costs and net cash costs are non-GAAP financial performance measures with no standardized meaning under US GAAP. For further information and a detailed reconciliation, please see page 81 of this MD&A.
 
56 

 
Barrick Financial Report 2010 | Management’s Discussion and Analysis
 
Interest expense

(in $ millions)
For the years ended December 31	 	2010	 	2009	 	
Interest costs	 	 	 	 	 	
Incurred	 	410	 	326	 	
Capitalized	 	(289	)	(269	)	
Interest expensed	 	121	 	57	 	
 
Interest expense was $121 million in 2010, up 112% compared to $57 million in 2009. The increase is primarily due to additional debt issued in Q4 2009 and imputed interest on deposits received for the silver sale agreement with Silver Wheaton.
 
Impairment Charges
 
Impairment charges were $7 million, compared to $277 million in 2009. The amount for 2009 included write-downs for Plutonic ($106 million) and Sedibelo ($158 million).
 
Income Tax

(Percentages)
For the years ended December 31	 	2010	 	2009	 	2008	 	
Effective tax rate on ordinary income	 	30	%	29	%	30	%	
Elimination of gold sales contracts	 	—	 	(48	)%	—	 	
Non-taxable goodwill impairment charges	 	—	 	2	%	10	%	
Net currency translation (gains)/losses on deferred tax balances	 	—	 	(1	)%	5	%	
Canadian functional currency election	 	—	 	(2	)%	—	 	
Impact of legislative amendment in Australia	 	(2	)%	—	 	—	 	
Dividend withholding tax	 	2	%	—	 	—	 	
Canadian tax rate changes	 	—	 	2	%	—	 	
Release of deferred tax valuation allowances	 	—	 	—	 	(7	)%	
Actual effective tax rate	 	30	%	(18	)%	38	%	
 
Our effective tax rate on ordinary income increased from 29% to 30% in 2010 primarily due to the impact of changes in the mix of production and on the mix of taxable income in the various tax jurisdictions where we operate. The more significant items impacting income tax expense in 2010 and 2009 include the following:
 
Currency Translation
 
Deferred tax balances are subject to remeasurement for changes in currency exchange rates each period. The most significant balances are Canadian deferred tax liabilities with a carrying amount of approximately $25 million, Argentinean deferred tax liabilities with a carrying amount of approximately $106 million, and Australian and Papua New Guinea deferred tax liabilities with a carrying amount of approximately $144 million. In 2010 and 2009, the appreciation of the Canadian and Australian dollar against the US dollar, and the weakening of the Argentine peso against the US dollar resulted in net translation gains totaling $2 million and $40 million, respectively. These gains are included within deferred tax expense/recovery.
 
Impact of Legislative Amendments in Australia
 
In Australia, we elected to enter into the consolidated tax regime in 2004 (in 2002 for the former Placer Dome Inc. subsidiaries). At the time the elections were made, there were certain accrued gains that were required to be included in taxable income upon subsequent realization. In second quarter 2010, clarifying legislative amendments to the Australian consolidation tax rules were enacted. These amendments enabled us to reduce the inclusion of certain of these accrued gains, resulting in a permanent decrease in taxable income. The impact of the amendment is a current tax recovery of $78 million recorded in second quarter 2010.
 
Dividend Withholding Tax
 
In fourth quarter 2010, we recorded a $74 million dollar dividend withholding current tax expense in respect of funds available to be repatriated from a foreign subsidiary.
 
Canadian Functional Currency Election
 
In fourth quarter 2008, we filed an election under Canadian draft legislation to prepare some of our Canadian tax returns using US dollar functional currency effective January 1, 2008. The legislation was enacted in first quarter 2009 which resulted in a one-time benefit of $70 million.
 
Canadian Tax Rate Changes
 
In fourth quarter 2009, a provincial rate change was enacted in Canada that lowered the applicable tax rate. The impact of this tax rate change was to reduce net deferred tax assets in Canada by $59 million, recorded as a component of deferred tax expense.
 
Chilean Income Tax
 
Following the earthquake in Chile in first quarter 2010, the government presented a package of certain tax increases to Congress for approval. With respect to corporate income taxes, a temporary first tier income tax increase from 17% to 20% in 2011, and 18.5% in 2012 was presented to and approved by Congress. The income tax changes were enacted in third quarter 2010, but do not result in any changes to income tax expense for the current year. We anticipate that the corporate income tax changes will result in an increase to income tax expense in 2011 of about $20 million.
 
57 

 
Management’s Discussion and Analysis
 
Chilean Royalty
 
In October 2010, the Chilean government enacted legislation for a specific mining tax (“royalty”). Under this royalty, for new projects, the royalty rates would change from 5% of operating margin after depreciation to a range of 5%—14% based on the level of operating margin. For those companies currently operating under a stabilized regime (at 4% until 2017), the law contemplates an option to voluntarily, (i) apply a rate of 4%—9% for 2010—2012, then (ii) return the current stabilized rate of 0% or 4% until the current stability period ends, and (iii) obtain an extension of the stability period at rates in the range of 5%—14% for an additional 6 years. In January 2011, Barrick adopted the new royalty. The impact of adoption was a $26 million increase in 2010 income tax expense and an expected increase of about $15 million in 2011 income tax expense.
 
Mining Overview(1)

For the years ended December 31	 	2010	 	2009	 	% Change	 	2008	 	
Gold	 	 	 	 	 	 	 	 	 	
Ore tons mined (millions)	 	155	 	174	 	(11	)%	182	 	
Waste tons mined (millions)	 	539	 	555	 	(3	)%	498	 	
Total tons mined (millions)	 	694	 	729	 	(5	)%	680	 	
Ore tons processed (millions)	 	145	 	171	 	(15	)%	191	 	
Average grade (ozs/ton)	 	0.063	 	0.052	 	23	%	0.047	 	
Recovery rate	 	85.0	%	83.2	%	2	%	84.4	%	
Gold produced (000s/oz)	 	7,765	 	7,397	 	5	%	7,657	 	
Copper	 	 	 	 	 	 	 	 	 	
Ore tons mined (millions)	 	48	 	50	 	(4	)%	45	 	
Waste tons mined (millions)	 	24	 	30	 	(20	)%	38	 	
Total tons mined (millions)	 	72	 	80	 	(10	)%	83	 	
Ore tons processed (millions)	 	46	 	49	 	(6	)%	44	 	
Average grade (percent)	 	0.6	 	0.6	 	—	 	0.6	 	
Copper produced (millions of lbs)	 	368	 	393	 	(6	)%	370	 	

(1)   The amounts presented in this table include the results of discontinued operations.
 
Production
 
Gold production in 2010 was 0.4 million ounces or 5% higher than in 2009, reflecting higher production in South America and North America, partially offset by lower production in Africa. Production of 7.8 million ounces was within our most recent guidance range of 7.6 to 7.8 million ounces. Copper production in 2010 was 6% lower than in 2009 due to lower production from Osborne as mining ceased in the third quarter, partially offset by higher production at Zaldívar. Production of 368 million pounds was slightly higher than our most recent guidance of approximately 360 million pounds.
 
Tons Mined and Tons Processed — Gold
 
Total tons mined decreased in 2010 by 5% and tons processed decreased by 15% when compared to 2009. The decreases were primarily due to decreased mining activity at Goldstrike, Ruby Hill, Veladero, Kalgoorlie and Buzwagi, partially offset by increased mining activity at Bald Mountain and Pierina. The decrease in ore tons processed was primarily due to fewer ore tons processed at Cortez and Bald Mountain. At Cortez, higher grade ore from both the underground and the open pit was processed in 2010, whereas in 2009, the ore was of lower grade and contained significant amounts of heap leach material. At Bald Mountain, mine sequencing resulted in less leach material being mined and more mine development waste stripping activities being undertaken. The decreased tons processed did not have any impact on overall production due to the increase in average head grades.

 

(1)   All amounts presented are based on equity production.
 
Average Mill Head Grades — Gold
 
Average mill head grades increased by approximately 23% in 2010 compared to 2009, primarily due to mine sequencing that resulted in higher ore grades from Cortez, Cowal and Veladero, partially offset by lower grades processed at Tulawaka and at Buzwagi, where suspension of a number of employees led to a period of processing lower grade stockpiles while replacement personnel were being hired. In general, reserve grades have been trending downwards in recent years, partly as a result of rising gold prices which make it economic to process lower grade material.
 
58 

 
Barrick Financial Report 2010 | Management’s Discussion and Analysis

 

(1)           All amounts presented based on equity production. Average mill head grades are expressed as the number of ounces of gold contained in a ton of ore processed. Reserve grade represents expected grade over the life of the mine and is calculated based on reserves reported at the end of the immediately preceding year.
 
Mineral Reserves and Mineral Resources Update(4)
 
At year-end 2010, we added 9 million ounces of proven and probable reserves. After depletion of 9 million ounces, proven and probable gold reserves remained unchanged at 139.8 million ounces, still the largest in the industry, based on an assumed $1,000 (5) per ounce gold price. The increase primarily reflects incremental reserves due to the acquisition of an additional 25% interest in Cerro Casale and reserve additions at Goldstrike, Cortez, Veladero and Ruby Hill, partially offset by a decrease as a result of disposition of our 26.1% interest in ABG.
 
Measured and indicated gold mineral resources increased by 24% to 76.3 million ounces and inferred gold mineral resources increased 18% to 37.2 million ounces based on a $1,200 per ounce gold price.
 
Copper reserves increased 7% to 6.5 billion pounds and measured and indicated resources increased 1% to 13.0 billion pounds, based on an assumed $2.00 per pound copper price. Contained silver within reported gold reserves is over one billion ounces.
 
Replacing gold and copper reserves depleted by production year over year is necessary in order to maintain production levels over the long term. If depletion of reserves exceeds discoveries over the long term, then we may not be able to sustain gold and copper production levels. Reserves can be replaced by expanding known ore bodies, acquiring mines or properties or discovering new deposits. Once a site with gold or copper mineralization is discovered, it takes many years from the initial phases of drilling until production is possible, during which time the economic feasibility of production may change. Substantial expenditures are required to establish proven and probable reserves and to permit and construct mining and processing facilities.
 
Review of Operating Segments Performance
 
We report our results of operations using a geographical business unit approach, with producing mines concentrated in three regional business units: North America, South America and Australia Pacific. We also hold a 73.9% equity interest in ABG, which includes our previously held African gold mines and exploration properties. In addition, we have a Capital Projects segment, distinct from our regional business units, to focus on managing projects. This structure reflects how we manage our business and how we classify our operations for business planning and measuring performance.
 
In 2010, we revised the format of information provided to the Chief Operating Decision Maker to better reflect management’s view of the operations. The primary change involves the presentation of minesite exploration and project development, RBU costs and other expenses (income) as a component of Segment Income. Previously, these expenditures were monitored separately. Accordingly, we have revised our operating segment review to be consistent with those reporting changes, with restatement of comparative information to conform to the current period presentation.
 
North America
 
Summary of Financial and Operating Data

For the years ended December 31	 	2010	 	2009	 	% Change	 	2008	 	
Total tons mined (millions)	 	396	 	397	 	—	 	360	 	
Ore tons processed (millions)	 	44	 	64	 	(31	)%	92	 	
Average grade (ozs/ton)	 	0.084	 	0.053	 	58	%	0.041	 	
Gold produced (000s/oz)	 	3,110	 	2,810	 	11	%	3,028	 	
Cost of sales ($ millions)	 	$	1,511	 	$	1,421	 	6	%	$	1,517	 	
Total cash costs (per oz)	 	$	489	 	$	504	 	(3	)%	$	493	 	
Segment income ($ millions)(1)	 	$	1,670	 	$	897	 	86	%	$	618	 	
Amortization ($ millions)	 	$	444	 	$	362	 	23	%	$	354	 	
Segment EBITDA ($ millions)(2)	 	$	2,114	 	$	1,259	 	68	%	$	972	 	
Capital expenditures ($ millions)	 	$	489	 	$	207	 	136	%	$	161	 	

(1)           Segment income excludes income taxes.
(2)           EBITDA is a non-GAAP financial performance measure with no standardized meaning under US GAAP. For further information and a detailed reconciliation, please see page 82 of this MD&A.
(4)           For a breakdown of reserves and resources by category and additional information relating to reserves and resources, see pages 163 170 of this Financial Report.
(5)           Reserves at Round Mountain have been calculated using an assumed price of $900 per ounce.
 
59 

 
Management’s Discussion and Analysis
 
Segment EBITDA and segment income for 2010 were $2,114 million and $1,670 million, an increase of 68% and 86%, respectively, over 2009. The increases were primarily the result of higher realized gold prices and higher sales volume at lower total cash costs. Segment income was also impacted by higher amortization expense as a result of the Cortez Hills open pit entering production in early 2010.
 
Gold production for 2010 was 11% higher than 2009, and in line with the top end of our original regional guidance range of 2.95 to 3.10 million ounces. Higher production at Cortez was partially offset by lower production at Goldstrike, Hemlo, Ruby Hill and Golden Sunlight.
 
Production at Cortez increased by 120% over 2009, mainly as a result of the commencement of production at the Cortez Hills open pit operations in the first quarter of 2010. At Goldstrike, production for the year was down by 13% compared to 2009, primarily as a result of the planned partial shutdown of the autoclave facility which occurred during the second half of 2009 due to a decrease in ore suitable for acidic autoclaving, as well as mine sequencing that resulted in lower grade areas being mined in the first half of 2010. Hemlo’s production for the year decreased by 12% over the prior year due to the processing of lower grade ore. Ruby Hill’s production for the year decreased by 21% over the prior year due to increased waste stripping, which resulted in a decrease in ore tons available to process. Golden Sunlight was not in production in 2010 as it entered an extended redevelopment phase during 2009, but is expected to start production of gold again during the first quarter of 2011.
 
Cost of sales for 2010 increased by 6% over 2009, primarily as a result of higher royalties and production taxes, labor, consumables and energy costs. Over the same period, total cash costs per ounce were down 3% to $489, and were within our most recent regional guidance range of $480 to $500 per ounce. The increase in cost of sales was more than offset by higher production and sales volumes, particularly from the lower cost Cortez Hills operations, resulting in decreased total cash costs per ounce.
 
In 2011, we expect gold production to be in the range of 3.30 to 3.46 million ounces. Production is expected to be higher than 2010 primarily due to an increase in tons processed and higher average head grades from the Cortez Hills open pit mine and the recommencement of production at Golden Sunlight after a two-year period of mine development. This is expected to be partly offset by lower production at Goldstrike due to a significant waste stripping campaign and the processing of lower grade stockpile ore. Total gold cash costs are expected to be $425 to $450 per ounce and similar to the 2010 level of $429 per ounce on an IFRS basis.
 
Beyond 2010, we have identified various opportunities to add production within North America, including the potential of expanding our current Turquoise Ridge underground operation into a large scale open pit to mine low-grade mineralization; the Bald Mountain North Area expansion; and the use of thiosulphate technology at Goldstrike to extend the life of the autoclaves. We continue to progress evaluation of these opportunities to create value at our existing operations.
 
South America
 
Summary of Financial and Operating Data

For the years ended December 31	 	2010	 	2009	 	% Change	 	2008	 	
Gold	 	 	 	 	 	 	 	 	 	
Total tons mined (millions)	 	145	 	158	 	(8	)%	151	 	
Ore tons processed (millions)	 	67	 	70	 	(4	)%	65	 	
Average grade (ozs/ton)	 	0.039	 	0.036	 	8	%	0.037	 	
Gold produced (000s/oz)	 	2,120	 	1,889	 	12	%	2,111	 	
Cost of sales ($ millions)	 	$	515	 	$	499	 	3	%	$	531	 	
Total cash costs (per oz)	 	$	243	 	$	265	 	(8	)%	$	251	 	
Segment income ($ millions)(1)	 	$	1,749	 	$	1,111	 	57	%	$	1,031	 	
Amortization ($ millions)	 	$	165	 	$	134	 	23	%	$	163	 	
Segment EBITDA ($ millions)(2)	 	$	1,914	 	$	1,245	 	54	%	$	1,194	 	
Capital expenditures ($ millions)	 	$	199	 	$	171	 	16	%	$	92	 	
Copper	 	 	 	 	 	 	 	 	 	
Copper produced (millions of lbs)	 	318	 	302	 	5	%	295	 	
Cost of sales ($ millions)	 	$	345	 	$	361	 	(4	)%	$	315	 	
Total cash costs (per lb)	 	$	1.09	 	$	1.17	 	(7	)%	$	1.08	 	
Segment income ($ millions)(1)	 	$	648	 	$	488	 	33	%	$	607	 	
Amortization ($ millions)	 	$	84	 	$	76	 	11	%	$	66	 	
Segment EBITDA ($ millions)(2)	 	$	732	 	$	564	 	30	%	$	673	 	
Capital expenditures ($ millions)	 	$	55	 	$	33	 	67	%	$	62	 	

(1)           Segment income excludes income taxes.
(2)           EBITDA is a non-GAAP financial performance measure with no standardized meaning under US GAAP. For further information and a detailed reconciliation, please see page 82 of this MD&A.
 
Segment EBITDA and segment income for the gold segment for 2010 were $1,914 million and $1,749 million, an increase of 54% and 57%, respectively, over 2009. These increases were primarily as a result of higher realized gold prices and sales volumes at lower total cash costs.
 
Gold production for 2010 was 12% higher than 2009, and was within our regional guidance range of 2.11 to 2.25 million ounces. Production increased at Veladero, due to higher grade ore mined at both the Amable and Federico pits, as well as an increase in tons processed as a result of the
 
60 

 
Barrick Financial Report 2010 | Management’s Discussion and Analysis
 
start-up of the crusher circuit expansion in the second half of 2009 and the overland conveyor in the first half of 2010. The increase at Veladero was partly offset by lower production at Pierina and Lagunas Norte. Production at Lagunas Norte decreased in the second half of 2010, as expected, due to a change in the mine plan, which resulted in the mining of lower grade ore in the second half of 2010.
 
As a result of rising gold prices, Pierina’s mine life has been extended to the end of 2014. Previously, Pierina was expected to stop producing in mid-2013.
 
In 2010, cost of sales attributable to the gold segment increased by 3% over 2009, primarily due to higher production and sales taxes and higher energy and maintenance costs. Total cash costs of $243 per ounce were within our most recent regional guidance range of $240 to $260 per ounce. The increase in cost of sales was more than offset by significantly higher production and sales volumes at Veladero due to the increase in average head grade and in tons processed and resulted in an 8% decrease from the prior year cash cost per ounce.
 
In 2011, we expect gold production to be in the range of 1.8 to 1.935 million ounces. Production is expected to be lower than 2010 primarily due to Veladero and, to a lesser extent, Lagunas Norte and Pierina. Mining activity at Veladero is expected to shift away from the higher grade areas of the Filo Federico pit to lower grade areas as anticipated in the life-of-mine plan. At Lagunas Norte, higher ore grades are expected to be more than offset by lower recoveries due to leaching of more carbonaceous materials as well as longer leach cycles compared to 2010. Total gold cash costs are expected to be $350 to $380 per ounce compared to $208 per ounce in 2010 on an IFRS basis. Total cash costs per ounce are expected to be higher in 2011 due to lower grades and inflation in Argentina.
 
Segment EBITDA and segment income for the copper segment for 2010 were $732 million and $648 million, an increase of 30% and 33%, respectively, over 2009. The increases were primarily as a result of higher realized copper prices, and sales volumes at lower total cash costs.
 
Copper production in 2010 was 5% higher than 2009, and was within our original guidance range of 305 to 325 million pounds, mainly due to increased tons processed and higher grades as a result of mining higher grade areas of the open pit and improved recoveries from the leach pad.
 
Total cash costs per pound decreased by 7%, compared to 2009 due to lower cost of sales and higher production and sales volumes. Total cash costs were within our original guidance range of $1.05 to $1.20 per pound.
 
We expect 2011 copper production to be around 300 million pounds and cash costs per pound to be in the range of $1.35 to $1.45 per pound. We expect cash costs to increase in 2011 due to the increase in the price of sulfuric acid and lower grades at Zaldívar.
 
Beyond 2010, we have identified various opportunities to add production within South America, including extending mining at Lagunas Norte as a result of incremental mineralization, which would improve output in future years and also extend the mine life by approximately 6 years. We have also identified the potential of mining primary sulfide mineralization at Zaldívar, which is situated below the current reserves and could extend the mine life by as much as 16 years. We continue to progress our evaluation of these opportunities to create value at our existing operations.
 
Australia Pacific
 
Summary of Financial and Operating Data( 1)

For the years ended December 31	 	2010	 	2009	 	% Change	 	2008	 	
Gold	 	 	 	 	 	 	 	 	 	
Total tons mined (millions)	 	118	 	133	 	(11	)%	147	 	
Ore tons processed (millions)	 	27	 	30	 	(10	)%	29	 	
Average grade (ozs/ton)	 	0.082	 	0.075	 	9	%	0.077	 	
Gold produced (000s/oz)	 	1,939	 	1,950	 	(1	)%	1,942	 	
Cost of sales ($ millions)	 	$	1,286	 	$	1,134	 	13	%	$	1,051	 	
Total cash costs (per oz)	 	$	613	 	$	581	 	6	%	$	550	 	
Segment income ($ millions)(2)	 	$	776	 	$	315	 	146	%	$	267	 	
Amortization ($ millions)	 	$	251	 	$	282	 	(11	)%	$	240	 	
Segment EBITDA ($ millions)(3)	 	$	1,027	 	$	597	 	72	%	$	507	 	
Capital expenditures ($ millions)	 	$	289	 	$	239	 	21	%	$	191	 	
Copper	 	 	 	 	 	 	 	 	 	
Copper produced (millions of lbs)	 	50	 	91	 	(45	)%	75	 	
Cost of sales ($ millions)	 	$	88	 	$	83	 	6	%	$	121	 	
Total cash costs (per lb)	 	$	1.18	 	$	1.15	 	3	%	$	1.64	 	
Segment income (loss) ($ millions)(2)	 	$	104	 	$	82	 	27	%	$	(35	)	
Amortization ($ millions)	 	$	—	 	$	—	 	$	—	 	$	—	 	
Segment EBITDA ($ millions)(3)	 	$	104	 	$	82	 	27	%	$	(35	)	
Capital expenditures ($ millions)	 	$	—	 	$	6	 	—	 	$	24	 	

(1)           The amounts presented in this table include the results of discontinued operations.
(2)           Segment income includes income taxes related to Osborne only.
(3)           EBITDA is a non-GAAP financial performance measure with no standardized meaning under US GAAP. For further information and a detailed reconciliation, please see page 82 of this MD&A.
 
Segment EBITDA and segment income for the gold segment for 2010 were $1,027 million and $776 million, an increase of 72% and 146%, respectively, over 2009. The increases were primarily as a result of higher realized gold prices.
 
61 

 
Management’s Discussion and Analysis
 
Gold production for 2010 was slightly lower than 2009, and was within our regional guidance range of 1.85 to 2.0 million ounces. Higher production at Cowal and Kalgoorlie was offset by lower production at Kanowna, Porgera and Yilgarn. The divestiture of Henty in the second quarter of 2009 and cessation of mining at Osborne in July 2010 also contributed to the slightly lower year over year production.
 
Production at Cowal increased by 28% over 2009 due to the mining of higher grade ore. At Kalgoorlie, production increased 14% over 2009, due to mining in higher grade areas of the pit and higher mill throughput. Production at Kanowna decreased by 12% from 2009 as a result of lower underground tons mined as mining at Bullant was completed at the end of 2009, and as fewer open pit tons were mined in 2010. Production at Porgera decreased 6% from 2009 due to a water shortage from lack of adequate rainfall which impacted mill throughput and wall stability issues which restricted mining in higher grade zones. At Yilgarn, production decreased 11% due to lower ore grades processed and lower throughput due to a decrease in ore tons mined.
 
In 2010, cost of sales attributable to gold has increased by 13% over 2009, reflecting higher royalties and production taxes as gold prices traded at higher levels than in 2009, an increase in our effective Australian dollar currency hedge rates and higher labor and maintenance costs. Cost of sales also includes $104 million related to ore purchases processed at Granny Smith, compared to $29 million in 2009. These increases were partially offset by lower costs as a result of the disposal of the Henty mine in the first half of 2009. Total cash costs per ounce were up 6% to $613 over 2009, due to the same factors that affected cost of sales with the exception of the costs related to the ore purchases at Granny Smith, which are excluded from our calculation of total cash cost per ounce as the cost of producing these ounces is not indicative of our normal production costs. Total cash costs were within our most recent 2010 regional guidance range of $610 to $625 per ounce.
 
In 2011, we expect gold production to be in the range of 1.85 to 2.0 million ounces, which is consistent with 2010. Higher production is expected at Porgera due to the aforementioned pit wall stability issues and lack of adequate rainfalls that negatively impacted the process plant in 2010. Kalgoorlie and Cowal production is expected to decrease due to mining lower grade areas. Total gold cash costs are expected to be $610 to $635 per ounce compared to $576 per ounce in 2010 on an IFRS basis. Total cash costs per ounce are expected to be higher primarily due to labor inflation.
 
Both segment EBITDA and segment income for the copper segment for the year were $104 million, an increase of 27% over the prior year as a result of higher copper sales volume, due to the continued clearing of copper concentrate stockpiles, as well as shipping delays that moved the timing of 2009 production into 2010 sales.
 
Copper production for 2010 was down 45% compared to 2009 largely due to the cessation of operations in July 2010.
 
In 2010, cost of sales attributable to copper increased by 6% compared to 2009 as a result of higher sales volume, while total cash costs per pound were up 3%.
 
Beyond 2010, we have identified various opportunities to add gold production within Australia Pacific, including a potential expansion at Cowal that could extend the mine life by about 4 years and an expansion at Granny Smith.  We continue to progress our evaluation of these opportunities to create value at our existing operations.
 
African Barrick Gold(1)
 
Summary Financial and Operating Data

For the years ended December 31	 	2010	 	2009	 	% Change	 	2008	 	
100% basis	 	 	 	 	 	 	 	 	 	
Total tons mined (millions)	 	44	 	41	 	7	%	22	 	
Ore tons processed (millions)	 	8	 	7	 	14	%	4	 	
Average grade (ozs/ton)	 	0.094	 	0.114	 	(18	)%	0.154	 	
Gold produced (000s/oz)	 	701	 	716	 	(2	)%	545	 	
Cost of sales ($ millions)	 	$	487	 	$	377	 	29	%	$	327	 	
Total cash costs (per oz)	 	$	646	 	$	545	 	19	%	$	560	 	
Segment income ($ millions)(3)	 	$	226	 	$	143	 	58	%	$	94	 	
Amortization ($ millions)	 	$	119	 	$	93	 	28	%	$	63	 	
Segment EBITDA ($ millions)(4)	 	$	345	 	$	236	 	46	%	$	157	 	
Capital expenditures ($ millions)	 	$	131	 	$	134	 	(2	)%	$	172	 	
73.9% equity basis ( 2)	 	 	 	 	 	 	 	 	 	
Total tons mined (millions)	 	35	 	41	 	(15	)%	22	 	
Ore tons processed (millions)	 	7	 	7	 	—	 	4	 	
Average grade (ozs/ton)	 	0.094	 	0.114	 	(18	)%	0.154	 	
Gold produced (000s/oz)	 	564	 	716	 	(21	)%	545	 	
Cost of sales ($ millions)	 	$	390	 	$	377	 	3	%	$	327	 	
Total cash costs (per oz)	 	$	646	 	$	545	 	19	%	$	560	 	
Segment income ($ millions)(3)	 	$	180	 	$	143	 	26	%	$	94	 	
Amortization ($ millions)	 	$	95	 	$	93	 	2	%	$	63	 	
Segment EBITDA ($ millions)(4)	 	$	275	 	$	236	 	17	%	$	157	 	
Capital expenditures ($ millions)	 	$	104	 	$	134	 	(22	)%	$	172	 	

(1)           ABG reports its results under IFRS while we report our results under US GAAP. All figures represented in this table are prepared in accordance with US GAAP.
(2)           These amounts represent our equity share of results. The dilution of our ownership interest in ABG to approximately 73.9% impacts our operating statistics from second quarter 2010 onwards.
(3)           Segment income excludes income taxes.
(4)           EBITDA is a non-GAAP financial performance measure with no standardized meaning under US GAAP. For further information and a detailed reconciliation, please see page 82 of this MD&A.
 
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Barrick Financial Report 2010 | Management’s Discussion and Analysis
 
Segment EBITDA and segment income for 2010, on a 100% basis, were $345 million and $226 million, an increase of 46% and 58%, respectively, over 2009. The increases were primarily as a result of higher realized gold prices, partially offset by higher total cash costs. Segment income was also affected by higher amortization expense as a result of Buzwagi entering production in second quarter 2009.
 
Barrick’s equity interest in 2010 production came in slightly lower than the most recent regional guidance of 0.575 million ounces. The original guidance range was 0.65 to 0.69 million ounces (based on Barrick’s equity interest). Lower than originally expected production in 2010 was mainly due to mining equipment availability issues at Tulawaka and issues at Buzwagi, including the mining of lower grade transitional oxide ore and the impact of the actions taken in response to the discovery of widespread fuel theft at the mine site.
 
In 2010, cost of sales, on a 100% basis, increased by 29% over 2009, reflecting higher royalties and production taxes as gold prices traded at higher levels than 2009 along with higher labor, energy and maintenance costs. Compared to 2009, 2010 total cash costs per ounce were up 19% and was outside our regional guidance range of $620 to $640 per ounce. The increase in total cash costs was primarily due to higher costs at Buzwagi due to plant and equipment repair costs and higher total cash costs at North Mara due to higher drilling costs and higher waste tons mined.
 
In 2011, we expect equity gold production, reflecting our 73.9% ownership of ABG, to be in the range of 0.515 to 0.560 million ounces. Production is expected to be lower than 2010 as our effective full year share of production in 2010 was about 80%, due to the recognition of 100% ownership in the first quarter 2010 and 73.9% ownership for the remainder of the year. Buzwagi production is expected to be higher in 2011 due to successfully addressing production difficulties that arose in 2010 due to fuel theft. North Mara is expected to have lower production as the mine plan focuses on waste stripping at the Gokona pit, with production coming from lower grade stockpiles. Total gold cash costs are expected to be $590 to $650 per ounce compared to $570 per ounce in 2010 on an IFRS basis. Total cash costs per ounce are expected to be higher due to lower North Mara grades and an increase in energy, labor and contractor costs across most sites.
 
Beyond 2010, ABG has identified various opportunities to add production, including a potential underground zone at North Mara, the Bulyanhulu Upper East Zone; and at the Golden Ridge exploration property. ABG continues to progress its evaluation of these opportunities to create value at its existing operations and to develop acquired exploration properties.
 
Capital Projects
 
Summary Financial Data

($ millions)	 	 	 	 	 	 	 	
For the years ended December 31	 	2010	 	2009	 	2008	 	
Project expenses(1)	 	$	100	 	$	49	 	$	140	 	
Project expenses incurred by equity investees(2)	 	53	 	93	 	69	 	
Total project expenses	 	153	 	142	 	209	 	
Capital expenditures(3)	 	 	 	 	 	 	 	
Buzwagi	 	—	 	52	 	273	 	
Pascua-Lama	 	724	 	202	 	112	 	
Pueblo Viejo	 	592	 	433	 	157	 	
Subtotal	 	1,316	 	687	 	542	 	
Capital commitments(4)	 	$	1,253	 	$	1,018	 	$	552	 	

(1)    Amounts presented represent our share of project development expense.
(2)    Amounts presented represent our share of project development expense from projects for which we use the equity accounting method, including Reko Diq, Kabanga, Donlin Creek and Cerro Casale (until March 31, 2010).
(3)    Amounts presented represent our share of capital expenditures on a cash basis.
(4)    Capital commitments represent purchase obligations as at December 31 where binding commitments have been entered into for long lead capital items related to construction activities at our projects.
 
We spent $153 million in project expenses and $1,316 million (our share) in capital expenditures in 2010. The increase in project expenses compared to 2009 primarily relates to increased spending at Cerro Casale, partially offset by decreased expenses at Reko Diq and Kabanga. Increases in capital expenditures compared to 2009 are primarily due to increased expenditures at our Pueblo Viejo and Pascua-Lama projects, partially offset by decreased expenditures at Buzwagi, as it entered production in 2009. Our 2011 expenditures are expected to increase due to continued construction activities at both the Pascua-Lama and Pueblo Viejo projects.
 
Project Updates
 
Pueblo Viejo
 
At the Pueblo Viejo project in the Dominican Republic, preproduction capital is expected to increase by 10–15% from the previous estimate to $3.3–$3.5 billion (100% basis). The increased capital cost estimate is largely due to higher labor, power supply, freight and steel product related costs as well as general inflation. In December, the Environmental Impact Assessment for the 240 kV power transmission line was approved allowing associated construction activities to commence. Alternative temporary power sources are being
 
63 

 
Management’s Discussion and Analysis
 
secured which will allow project commissioning in the fourth quarter of 2011. First production is expected in the first quarter of 2012. Overall construction is about 50% complete, approximately 75% of the capital has been committed and all four of the autoclaves are on site and have been placed on their footings. About 80% of the planned concrete has been poured, 55% of the steel has been erected and more than 600,000 tons of ore have been stockpiled. Work continues toward achieving key milestones including the connection of power to the site. Barrick’s 60% share of annual gold production in the first full five years of operation is expected to average 625,000–675,000 ounces at total cash costs of $275–$300 per ounce.(6)
 
Pascua-Lama
 
At the Pascua-Lama project on the border of Chile and Argentina, pre-production capital is expected to increase by 10–20% to $3.3–$3.6 billion. Pressure on capital costs are primarily as a result of a stronger Chilean peso, labor, commodity and other input cost increases in both countries and higher inflation particularly in Argentina. First production is expected in the first half of 2013. Approximately 40% of the capital has been committed, detailed engineering and procurement are more than 90% complete and about 60% of the earthworks necessary for the process plant and mining support facilities have been moved. Construction of the power transmission line has commenced and the new access road is almost 75% complete. Development of the tunnel, which connects the mine in Chile and the process plant in Argentina, is progressing on both sides. Occupancy of the construction camps in Chile and Argentina continues to ramp up with more than 2,000 housed on site. Average annual gold production from Pascua-Lama is expected to be 750,000–800,000 ounces in the first full five years of operation at total cash costs of $20–$50 per ounce (7)  based on a silver price of $16 per ounce. For every $1 per ounce increase in the silver price, total cash costs are expected to decrease by about $35 per ounce over this period.
 
Cerro Casale
 
At the Cerro Casale project in Chile, the review of additional permitting requirements before considering a construction decision is progressing alongside discussions with the government and meetings with local communities and indigenous groups. Given the changed operating environment in Chile and the Company’s experience at Pascua-Lama, a review of the capital cost of the project has been initiated. Early indications suggest that the capital cost may be higher by about 20–25% from the previous estimate of $4.2 billion, which is based on the feasibility study completed in 2009 and reflects the impact of a stronger Chilean peso, higher labor, commodity and other input costs. An update will be provided by the end of the second quarter. Barrick’s 75% share of average annual production is anticipated to be about 750,000–825,000 ounces of gold and 170–190 million pounds of copper in the first full five years of operation at total cash costs of about $240–$260 per ounce (8)  also based on the feasibility study completed in 2009. A $0.25 per pound change in the copper price would result in an approximate $50 per ounce impact on the expected total cash costs per ounce over the first full five years of operation.
 
Donlin Creek
 
At Donlin Creek, a large, undeveloped, refractory gold deposit in Alaska, a feasibility study on this 50% owned project was approved by the Board of Donlin Creek LLC in second quarter 2009. Further optimization studies are underway, primarily focused on the potential to utilize natural gas to reduce operating costs. The feasibility study revisions, inclusive of updated costs are expected to be completed in the third quarter of 2011 for consideration by the Board of Donlin Creek LLC.
 
Reko Diq
 
Reko Diq is a large copper-gold porphyry mineral deposit on the Tethyan belt, located in southwest Pakistan in the province of Balochistan, in which we hold a 37.5% interest. The initial mine development feasibility study and the environmental and social impact assessment are both complete. The feasibility study indicates pre-production capital of approximately $3.3 billion (100% basis) based on a 120,000 ton-per-day processing plant, which is capable of future expansions. Barrick’s share of average annual production for the first five full years is expected to be about 100,000 ounces of gold at total cash costs of $420–$450 per ounce and 150–160 million pounds of copper at total cash costs of about $1.00–$1.10 per pound. A copy of the feasibility study has been delivered to the Government of Balochistan (“GOB”) in accordance with the terms of the joint venture agreement to which the GOB is a party. Currently, the Supreme Court

(6)    Based on gold price and oil price assumptions of $1,100 per ounce and $85 per barrel, respectively.
(7)    In addition to silver price assumption, based on a gold price and oil price assumption of $1,100 per ounce and $85 per barrel, respectively, and assuming a Chilean peso foreign exchange rate of 500:1
(8)    Based on a gold price, copper price and oil price assumptions of $1,100 per ounce, $2.75 per pound and $85 per barrel, respectively, and a Chilean peso foreign exchange rate of 500:1.
 
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Barrick Financial Report 2010 | Management’s Discussion and Analysis
 
of Pakistan is hearing several constitutional petitions which, among other things, challenge the GOB’s right to grant a mining lease to the project company. On February 3, 2011, the Supreme Court issued an interim order providing, among other things, that the GOB may not take any decision in respect of the grant or otherwise of a mining lease to the project company until the matters before the Supreme Court are decided. The project company filed its application for the mining lease on February 15, 2011.
 
Kabanga
 
Barrick holds a 50% interest in the Kabanga project located in Tanzania, which is one of the world’s largest undeveloped nickel sulfide deposits. Xstrata Nickel is currently the operator of this project. Expenditures are funded equally by Xstrata Nickel and Barrick. A peer review of the draft Social, Environmental Impact Assessment report was completed and the report is being revised concurrently with the draft feasibility study report. Both reports are now expected to be submitted in the first half of 2011.
 
Financial Condition Review
 
Summary Balance Sheet and Key Financial Ratios

($ millions, except ratios and share amounts)	 	 	 	 	 	
As at December 31	 	2010	 	2009	 	
Total cash and equivalents	 	$	3,968	 	$	2,564	 	
Non-cash working capital	 	1,806	 	1,473	 	
Non-current assets	 	26,209	 	22,137	 	
Other assets	 	1,339	 	901	 	
Total Assets	 	33,322	 	27,075	 	
Non-current liabilities excluding adjusted debt	 	3,421	 	2,827	 	
Adjusted debt(1)	 	6,392	 	6,919	 	
Other liabilities	 	2,775	 	1,782	 	
Total Liabilities	 	12,588	 	11,528	 	
Total shareholders’ equity	 	19,065	 	15,063	 	
Non-controlling interests	 	1,669	 	484	 	
Total Equity	 	$	20,734	 	$	15,547	 	
Dividends	 	436	 	369	 	
Net debt(1)	 	$	2,542	 	$	4,355	 	
Total common shares outstanding (millions of shares)(2)	 	999	 	984	 	
Key Financial Ratios:	 	 	 	 	 	
Current ratio(3)	 	2.86:1	 	2.79:1	 	
Adjusted debt-to-equity(4)	 	0.34:1	 	0.46:1	 	
Net debt-to-equity(5)	 	0.13:1	 	0.29:1	 	
Return on equity(6)	 	19	%	12	%	

(1)    Adjusted debt and net debt are non-GAAP financial performance measures with no standardized meaning under US GAAP. For further information and a detailed reconciliation, please see page 84 of this MD&A.
(2)    Total common shares outstanding do not include 8,432,418 stock options. The increase from December 31, 2009 is due to exercise of stock options and the conversion of debentures.
(3)    Represents current assets divided by current liabilities as at December 31, 2010 and December 31, 2009.
(4)    Represents adjusted debt divided by total shareholders’ equity as at December 31, 2010 and December 31, 2009.
(5)    Represents net debt divided by total shareholders’ equity as at December 31, 2010 and December 31, 2009.
(6)    Represents adjusted net income divided by average shareholders’ equity as at December 31, 2010 and December 31, 2009.
 
Balance Sheet Review
 
Total assets were $33.3 billion in 2010, an increase of $6.2 billion or 23% compared to 2009. The increase primarily reflects an increase in property, plant and equipment, largely due to the impact of acquisitions and capital expenditures, and cash and equivalents. Our asset base is primarily comprised of non-current assets such as property, plant and equipment and goodwill, reflecting the capital intensive nature of the mining business and our history of growing through acquisitions, production inventories and cash and equivalents. We typically do not carry a material accounts receivable balance, since only sales of concentrate and copper cathode have a settlement period.
 
65 

 
Management’s Discussion and Analysis
 
Total liabilities increased by $1.1 billion or 9% compared to 2009, as an increase in asset retirement obligations and derivative liabilities was partially offset by a reduction in adjusted debt, due to the repayment of the remaining settlement obligation in gold sales contracts and the conversion of convertible debentures into common shares in fourth quarter 2010.
 
Sources and Uses of Net Debt

($ millions)	 	 	 	 	 	
For the years ended December 31	 	2010	 	2009	 	
Operating activities	 	 	 	 	 	
Adjusted operating cash flow	 	$	4,783	 	$	2,899	 	
Settlement of gold sales contracts	 	(656	)	(5,221	)	
Total operating inflows (outflows)	 	4,127	 	(2,322	)	
Investing activities	 	 	 	 	 	
Capital expenditures–minesite sustaining	 	(1,077	)	(784	)	
Capital expenditures–minesite expansionary(1)	 	(242	)	(60	)	
Capital expenditures–projects(1)	 	(2,004	)	(1,514	)	
Acquisitions	 	(813	)	(101	)	
Other investing activities	 	(36	)	44	 	
Total investing outflows	 	(4,172	)	(2,415	)	
Financing activities (excluding debt)	 	 	 	 	 	
Proceeds from public issuance of common shares by a subsidiary	 	884	 	—	 	
Common share offering	 	—	 	3,885	 	
Dividends	 	(436	)	(369	)	
Funding from non-controlling interests	 	114	 	304	 	
Deposit on silver sale agreement	 	137	 	213	 	
Other financing activities	 	102	 	39	 	
Total financing inflows	 	801	 	4,072	 	
Repayment with restricted cash	 	—	 	(113	)	
Other non-cash movements	 	(75	)	(33	)	
Conversion of convertible debt	 	281	 	—	 	
Settlement (recognition) of obligation to close out gold sales contracts	 	656	 	(655	)	
Adjustment for Pueblo Viejo financing (partner’s share), net of cash	 	195	 	—	 	
Net decrease (increase) in net debt	 	1,813	 	(1,466	)	
Net debt at beginning of period	 	(4,355	)	(2,889	)	
Net debt at end of period	 	$	(2,542	)	$	(4,355	)	

(1)   The amounts include capitalized interest of $281 million (2009: $257 million).
 
Net debt decreased to $2.5 billion, and our net debt-to-equity ratio decreased to 0.13:1 during the year. The majority of our outstanding long-term debt matures at various dates beyond 2013, with approximately $774 million repayable in the period 2011 to 2013. In addition, counterparties to debt and derivative instruments do not have unilateral discretionary rights to accelerate repayment at earlier dates; therefore we are largely protected from short-term liquidity fluctuations.
 
Shareholders’ Equity
 
Outstanding Share Data

As at January 28, 2011	 	Number of shares	 	
Common shares	 	998,546,376	 	
Stock options	 	8,432,418	 	
 
Dividend Policy
 
In 2010, we increased our annual dividend from $0.40 per common share to $0.48 per common share and we also moved from a semi-annual dividend to a quarterly dividend. This 20% increase in dividends reflects our ability to generate substantial cash flows from our operations in a high gold price environment. With strong cash flow and the industry’s only A-rated balance sheet, we determined that we have the financial resources to return additional value to shareholders while still investing in advanced projects. The amount and timing of any dividends is within the discretion of our Board of Directors. The Board of Directors reviews the dividend policy quarterly based on our current and projected liquidity profile, and capital requirements for capital projects and potential acquisitions.
 
Comprehensive Income
 
Comprehensive income consists of net income or loss, together with certain other economic gains and losses, which, collectively, are described as “other comprehensive income” or “OCI”, and excluded from the income statement.
 
In 2010, other comprehensive income was $476 million on an after-tax basis consisting primarily of gains of $612 million on hedge contracts designated for future periods, caused primarily by changes in currency exchange rates, copper prices, and fuel prices; reclassification adjustments totaling $104 million for gains on hedge contracts designated for 2010 that were transferred to earnings in 2010; $12 million transferred to earnings related to gains recorded on the sale of shares in various investments in junior mining companies; $69 million of gains recorded as a result of changes in the fair value of investments held during the year; and $22 million in gains for currency translation adjustments on Barrick Energy.
 
Included in accumulated other comprehensive income at December 31, 2010 were unrealized pre-tax gains on currency, commodity and interest rate hedge contracts totaling
 
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Barrick Financial Report 2010 | Management’s Discussion and Analysis
 
$784 million. The balance primarily relates to currency hedge contracts which are designated against operating costs and capital expenditures mostly over the next three years and are expected to help protect against the impact of the strengthening of the Australian and Canadian dollar against the US dollar. These hedge gains/losses are expected to be recorded in earnings at the same time as the corresponding hedged operating costs and amortization of capital expenditures are also recorded in earnings.
 
Financial Position
 
We maintained a sound financial position in 2010 despite the market turbulence that has been experienced over the past three years. This is illustrated by our significant cash and working capital balances and our relatively low debt-to-equity and debt to total capitalization ratios as at December 31, 2010.
 
Our sound financial position is reflected in the fact that we have the only A-rated balance sheet in the gold mining industry as measured by S&P. Our credit ratings, as established by S&P and Moody’s, have remained stable. Our ability to access unsecured debt markets and the related cost of debt financing is, in part, dependent upon maintaining an acceptable credit rating. Deterioration in our credit rating would not adversely affect existing debt securities, but could impact funding costs for any new debt financing.
 
Credit Rating from Major Rating Agencies

At January 28, 2011:	 	 	 	
Standard and Poor’s (“S&P”)	 	A–	 	
Moody’s	 	Baa1	 	
 
The key factors impacting our financial position, and therefore our credit rating, include the following:
 
·    Our market capitalization and the strength of our balance sheet, including the amount of net debt and our net debt-to-equity ratio (refer to balance sheet review section of this MD&A for discussion of key factors impacting these measures in 2010);
·   Our net cash flow, including cash generated by operating activities (refer to liquidity and cash flow section of this MD&A for discussion of key factors impacting these measures in 2010);
·   Expected capital expenditure requirements (refer to the outlook section of this MD&A for a discussion of key factors impacting these measures in future periods);
·   The quantity of our gold reserves (refer to page 166 for more information); and
·   Our geo-political risk profile.
 
Liquidity and Cash Flow
 
Total cash and cash equivalents at the end of 2010 were $4.0 billion (9) . At year end, our cash position consisted of a mix of term deposits, treasury bills and money market investments. We also have a $1.5 billion credit facility available as a source of financing and we may raise new financing for projects, acquisitions, or for other purposes on an as needed basis.
 
Cash Summary

As at December 31	 	2010	 	2009	 	
US dollars	 	$	3,692	 	$	2,392	 	
Canadian dollars	 	36	 	71	 	
Australian dollars	 	29	 	57	 	
Other	 	211	 	44	 	
 	 	$	3,968	 	$	2,564	 	
 
One of our primary ongoing sources of liquidity is operating cash flow. In 2010, we generated $4.1 billion in operating cash flow, compared to a $2.3 billion operating cash outflow in 2009. Operating cash flow reflects payments related to the settlement of gold sales contracts of $5.2 billion in 2009 and $656 million in 2010. Adjusted operating cash flow, which excludes the impact of these payments, totaled $4.8 billion in 2010, an increase of 65% compared to 2009. The increase in adjusted operating cash flow was primarily due to growing cash margins with the rise in realized gold and copper prices and higher gold sales, partially offset by higher income taxes paid.
 
Non-cash Working Capital

($ millions)	 	 	 	 	 	
For the years ended December 31	 	2010	 	2009	 	
Inventories(1)	 	$	2,958	 	$	2,336	 	
Other current assets	 	648	 	320	 	
Accounts receivable	 	346	 	251	 	
VAT and fuel tax receivables(2)	 	329	 	285	 	
Accounts payable and other current liabilities	 	(2,475	)	(1,719	)	
Non-cash working capital	 	$	1,806	 	$	1,473	 	

(1)    Includes long-term stockpiles of $1,106 million (2009: $796 million).
(2)    Includes long-term VAT and fuel tax receivables of $138 million (2009: $124 million).
(9)    Includes $401 million cash held at ABG, which may not be readily deployed outside ABG. It also includes $296 million held at Pueblo Viejo as a result of the first draw on the project financing. These funds are to be used to fund the further construction of the project and are not readily deployable by Barrick for other purposes.
 
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Management’s Discussion and Analysis
 
Adjusted operating cash flow was also impacted by a $333 million increase in non-cash working capital. The increase in non-cash working capital primarily relates to an increase in inventories, partially offset by an increase in accounts payable and other current liabilities. The increase in inventory related to approximately $400 million increase in ore in stockpiles, primarily at Cortez, Goldstrike and Porgera.
 
The principal uses of 2010 adjusted operating cash flow were settlement of gold sales contracts, sustaining capital expenditures, construction activities at capital projects, acquisitions, and dividend payments.
 
In 2010, our adjusted operating cash flow was $4.8 billion. Assuming we are able to sustain this level of cash generation, dividends at current rates totaling about $0.5 billion per year and minesite sustaining capital expenditures of about $1.0 billion, $3.3 billion per year would be available for investment in capital projects, minesite expansion opportunities and acquisitions. The most significant factor impacting whether this level of cash generation is sustainable is market gold and copper prices. Over the next three years, we expect to spend an average of $0.5 billion per year on minesite expansion projects and a total of $2.8 billion to fund the remaining construction activities at Pueblo Viejo and Pascua-Lama. For Pueblo Viejo, we expect to fund about $250 million of the remaining spend from the future proceeds of the project financing. At Pascua-Lama, we expect to fund remaining construction activities with up to $1.25 billion from new project financing and $275 million from future proceeds of the Silver Wheaton Agreement.
 
Investments in capital projects and acquisitions are subject to an internal capital allocation review prior to proceeding with new expenditures. This review entails an assessment of our overall liquidity, the overall level of investment required, and the prioritization of investments. The assessment also takes into account expected levels of future operating cash flow and the cost and availability of new financing. A decline in market gold prices and/or copper prices could impact the timing and amount of future investment in capital projects and/or other uses of capital.
 
Alternatives for sourcing our future capital or other liquidity needs include other credit facilities, future operating cash flow, sale of non-core assets, project financings and debt or equity financings. These alternatives are continually evaluated to determine the optimal mix of capital resources for our capital needs.
 
Cash used in investing activities amounted to $4,172 million in 2010, an increase of $1,757 million compared to 2009, primarily due to total capital expenditures of $3,323 million, which includes capitalized interest, the $447 million related to the acquisition of an additional 25% interest in Cerro Casale in the first quarter and $264 million related to the acquisitions by Barrick Energy in the second and third quarter.
 
Capital Expenditures(1),(2)

($ millions)	 	 	 	 	 	 	 	
For the years ended December 31	 	2010	 	2009	 	2008	 	
Capital expenditures – projects	 	 	 	 	 	 	 	
Buzwagi(3)	 	$	—	 	$	52	 	$	273	 	
Pascua-Lama	 	724	 	202	 	112	 	
Pueblo Viejo	 	592	 	433	 	157	 	
Cortez Hills	 	19	 	278	 	155	 	
Kainantu	 	—	 	—	 	4	 	
Sedibelo	 	—	 	—	 	38	 	
Subtotal(4)	 	$	1,335	 	$	965	 	$	739	 	
Capital expenditures attributable to non-controlling interests (5)	 	394	 	292	 	104	 	
Total project capital expenditures	 	$	1,729	 	$	1,257	 	$	843	 	
Minesite expansionary capital expenditures	 	 	 	 	 	 	 	
Golden Sunlight	 	$	49	 	$	37	 	$	—	 	
Goldstrike	 	3	 	—	 	—	 	
Veladero(6)	 	23	 	23	 	—	 	
Cortez	 	20	 	—	 	—	 	
Bald Mountain	 	139	 	—	 	—	 	
South Arturo	 	2	 	—	 	—	 	
Total capital expenditures – minesite expansionary	 	$	236	 	$	60	 	$	—	 	
Sustaining capital expenditures	 	 	 	 	 	 	 	
North America	 	$	270	 	$	170	 	$	161	 	
South America	 	231	 	181	 	154	 	
Australia Pacific	 	289	 	245	 	215	 	
African Barrick Gold	 	131	 	134	 	172	 	
Other(7)	 	156	 	54	 	40	 	
Subtotal	 	 	 	 	 	 	 	
Total capital expenditures – minesite sustaining	 	$	1,077	 	$	784	 	$	742	 	
Capitalized interest	 	281	 	257	 	191	 	
Total	 	$	3,323	 	$	2,358	 	$	1,776	 	

(1)    The amounts presented in this table include the results of discontinued operations.
(2)    These amounts are presented on a cash basis consistent with the amounts presented on the consolidated statement of cash flows.
(3)    Buzwagi entered into production as of May 1, 2009. Capital expenditures from May onwards have been reflected in minesite sustaining, although construction continued until third quarter 2009.
(4)    On an accrual basis, our share of project capital expenditures is $1,791 million including capitalized interest.
(5)    Amount reflects our partner’s share of expenditures at the Pueblo Viejo project on a cash basis.
(6)    These amounts include capital expenditures related to the development of a new pit at our Veladero mine.
(7)    These amounts include $86 million of capital expenditures at Barrick Energy (2009: $32 million and 2008: $15 million).
 
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Barrick Financial Report 2010 | Management’s Discussion and Analysis
 
Cash provided by financing activities for 2010 was $1,434 million. The significant financing activities in 2010 included $884 million in proceeds from public issuance of common shares by ABG in the first quarter 2010 and the drawdown of $782 million of Pueblo Viejo project financing in second quarter 2010. These amounts were partially offset by dividend payments of $436 million and debt repayments of $149 million. This compares to financing inflows in 2009 of $5,829 million largely from the proceeds from the Common Share offering of $3,885 million and debt proceeds of $2,154 million, partially offset by debt repayments of $397 million and dividend payments of $369 million.
 
Financial Instruments
 
We use a mixture of cash, long-term debt and shareholders’ equity to maintain an efficient capital structure and ensure adequate liquidity exists to meet the cash needs of our business. We use interest rate contracts to mitigate interest rate risk that is implicit in our cash balances and outstanding long-term debt. In the normal course of business, we are inherently exposed to currency and commodity price risk. We use currency and commodity hedging instruments to mitigate these inherent business risks. We also hold certain derivative instruments that do not qualify for hedge accounting treatment. These non-hedge derivatives are described in note 20 to our consolidated financial statements. For a discussion of certain risks and assumptions that relate to the use of derivatives, including market risk, market liquidity risk and credit risk, refer to notes 2 and 20 to our consolidated financial statements. For a discussion of the methods used to value financial instruments, as well as any significant assumptions, refer to note 21 to our consolidated financial statements.
 
Counterparty Risk
 
Our financial position is also dependent, in part, on our exposure to the risk of counterparty defaults related to the net fair value of our derivative contracts. Counterparty risk is the risk that a third party might fail to fulfill its performance obligations under the terms of a financial instrument. Counterparty risk can be assessed both in terms of credit risk and liquidity risk. For cash and equivalents and accounts receivable, credit risk represents the carrying amount on the balance sheet, net of any overdraft positions.
 
For derivatives, when the fair value is positive, this creates credit risk. When the fair value of a derivative is negative, we assume no credit risk. However, liquidity risk exists to the extent a counterparty is no longer able to perform in accordance with the terms of the contract due to insolvency. In cases where we have a legally enforceable master netting agreement with a counterparty, credit risk exposure represents the net amount of the positive and negative fair values for similar types of derivatives. For a net negative amount, we regard credit risk as being zero. For a net positive amount, this is a reasonable basis to measure credit risk when there is a legally enforceable master netting agreement. We mitigate credit and liquidity risk by:
 
·                   Entering into derivatives with high credit-quality counterparties;
·                   Limiting the amount of exposure to each counterparty; and
·                   Monitoring the financial condition of counterparties.
 
As of December 31, 2010, we had 23 counterparties to our derivative positions. We proactively manage our exposure to individual counterparties in order to mitigate both credit and liquidity risks. For those counterparties in a net asset position (total balance attributable to the counterparties is $899 million), two hold greater than 10% of our mark-to-market asset position, with the largest counterparty holding 17% (or $154 million). For those counterparties in a net liability position (total balance attributable to the counterparties is $52 million), one holds greater than 10% of our mark-to-market liability position, with the largest counterparty holding 93% (or $49 million). On an ongoing basis, we monitor our exposures and ensure that none of the counterparties with which we hold outstanding contracts has declared insolvency.
 
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Management’s Discussion and Analysis
 
Summary of Financial Instruments
 
As at and for the year ended December 31, 2010

Financial	 	Principal/	 	Associated	
Instrument	 	Notional Amount	 	Risks	
Cash and equivalents	 	$ 3,968 million	 	· Interest rate
 · Credit	
Accounts receivable	 	$ 346 million	 	· Credit	
Available-for-sale securities	 	$ 171 million	 	· Market	
Accounts payable	 	$ 1,511 million	 	· Interest rate	
Long-term debt	 	$ 6,705 million	 	· Interest rate	
Restricted share units	 	$ 153 million	 	· Market	
Deferred share units	 	$ 9 million	 	· Market	
Performance restricted share units	 	$ 11 million	 	· Market	
Derivative instruments – currency contracts	 	CAD
CLP
AUD	372 million
244,395 million
4,217 million	 	· Credit
 · Market/liquidity	
Derivative instruments – copper contracts	 	207 million lbs	 	· Market/liquidity
 · Credit	
Derivative instruments – energy contracts	 	Fuel
Propane	4.7 million bbls
19 million gallons	 	· Market/liquidity
 · Credit	
Derivative instruments – interest rate contracts	 	Pay float interest rate swaps
Receive float interest rate swaps
Receive float interest rate swaptions	($200) million
$ 100 million
$ 200 million	 	· Credit
 · Market/liquidity	
Non-hedge derivatives	 	various	 	· Market/liquidity
 · Credit	

Commitments and Contingencies
 
Capital Expenditures Not Yet Committed
 
We expect to incur capital expenditures during the next five years for both projects and producing mines. The projects are at various stages of development, from preliminary exploration or scoping study stage through to the construction execution stage. The ultimate decision to incur capital expenditures at each potential site is subject to positive results which allow the project to advance past decision hurdles. Two projects were at an advanced stage at December 31, 2010, namely Pueblo Viejo and Pascua-Lama (refer to pages 63–64 for further details).
 
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Barrick Financial Report 2010 | Management’s Discussion and Analysis
 
Contractual Obligations and Commitments

 	 	Payments due	 	 	 	
($ millions)	 	 	 	 	 	 	 	 	 	 	 	2016 and	 	 	 	
As at December 31	 	2011	 	2012	 	2013	 	2014	 	2015	 	thereafter	 	Total	 	
Long-term debt(1)	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Repayment of principal	 	$	—	 	$	120	 	$	603	 	$	426	 	$	176	 	$	5,308	 	$	6,633	 	
Capital leases	 	18	 	17	 	16	 	10	 	8	 	3	 	72	 	
Interest	 	373	 	372	 	363	 	337	 	309	 	3,838	 	5,592	 	
Asset retirement obligations(2)	 	89	 	100	 	70	 	48	 	83	 	1,456	 	1,846	 	
Operating leases	 	12	 	10	 	8	 	7	 	7	 	35	 	79	 	
Restricted share units	 	60	 	93	 	—	 	—	 	—	 	—	 	153	 	
Pension benefits and other post-retirement benefits	 	26	 	26	 	34	 	26	 	25	 	119	 	256	 	
Derivative liabilities(3)	 	215	 	2	 	7	 	10	 	12	 	32	 	278	 	
Purchase obligations for supplies and consumables(4)	 	595	 	185	 	134	 	105	 	93	 	337	 	1,449	 	
Capital commitments(5)	 	1,333	 	69	 	1	 	—	 	—	 	—	 	1,403	 	
Social development costs	 	11	 	3	 	16	 	3	 	6	 	72	 	111	 	
Total	 	$	2,732	 	$	997	 	$	1,252	 	$	972	 	$	719	 	$	11,200	 	$	17,872	 	

(1)           Long-term Debt and Interest–Our debt obligations do not include any subjective acceleration clauses or other clauses that enable the holder of the debt to call for early repayment, except in the event that we breach any of the terms and conditions of the debt or for other customary events of default. The debt and interest amounts include 100% of the Pueblo Viejo financing, even though we have only guaranteed our 60% share. We are not required to post any collateral under any debt obligations. The terms of our debt obligations would not be affected by deterioration in our credit rating. Projected interest payments on variable rate debt were based on interest rates in effect at December 31, 2010. Interest is calculated on our long-term debt obligations using both fixed and variable rates.
(2)           Asset Retirement Obligations–Amounts presented in the table represent the undiscounted future payments for the expected cost of asset retirement obligations.
(3)           Derivative Liabilities–Amounts presented in the table relate to derivative contracts disclosed under notes 2 and 20 to the consolidated financial statements. Payments related to derivative contracts cannot be reasonably estimated given variable market conditions.
(4)           Purchase Obligations for Supplies and Consumables–Includes commitments related to new purchase obligations to secure a supply of acid, tires and cyanide for our production process.
(5)           Capital Commitments–Purchase obligations for capital expenditures include only those items where binding commitments have been entered into. Commitments at the end of 2010 mainly relate to construction capital at Pueblo Viejo and Pascua-Lama.
 
Litigation and Claims
 
We are currently subject to various litigation as disclosed in note 30 to the consolidated financial statements, and we may be involved in disputes with other parties in the future that may result in litigation. If we are unable to resolve these disputes favorably, it may have a material adverse impact on our financial condition, cash flow and results of operations.
 
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Management’s Discussion and Analysis
 
Review of Quarterly Results
 
Quarterly Information(1)

 	 	2010	 	2009	 	
($ millions, except where indicated)	 	Q4	 	Q3	 	Q2	 	Q1	 	Q4	 	Q3	 	Q2	 	Q1	 	
Sales	 	$	3,033	 	$	2,811	 	$	2,731	 	$	2,636	 	$	2,452	 	$	2,096	 	$	2,029	 	$	1,827	 	
Realized price – gold(2)	 	1,368	 	1,237	 	1,205	 	1,114	 	1,119	 	971	 	931	 	915	 	
Realized price – copper(2)	 	3.99	 	3.39	 	2.93	 	3.29	 	3.44	 	2.90	 	3.18	 	2.93	 	
Cost of sales	 	1,110	 	1,076	 	1,072	 	1,041	 	1,013	 	971	 	975	 	955	 	
Net income/(loss)(4)	 	896	 	837	 	783	 	758	 	215	 	(5,350	)	492	 	371	 	
Per share (dollars)(3),(4)	 	0.90	 	0.85	 	0.79	 	0.77	 	0.22	 	(6.07	)	0.56	 	0.42	 	
Adjusted net income(5)	 	947	 	829	 	759	 	741	 	604	 	473	 	431	 	298	 	
Per share (dollars)(3),(4)	 	0.95	 	0.84	 	0.77	 	0.75	 	0.61	 	0.54	 	0.49	 	0.34	 	
EBITDA(5)	 	1,635	 	1,542	 	1,328	 	1,395	 	794	 	(4,946	)	943	 	648	 	
Operating cash flow	 	781	 	1,276	 	1,019	 	1,051	 	(4,300	)	911	 	718	 	349	 	
Adjusted operating cash flow(5)	 	$	1,437	 	$	1,276	 	$	1,019	 	$	1,051	 	$	921	 	$	911	 	$	718	 	$	349	 	

(1)           The amounts presented in this table include the results of discontinued operations.
(2)           Per ounce/pound weighted average. Realized price is a non-GAAP financial performance measure with no standard meaning under US GAAP. For further information and a detailed reconciliation, please see page 83 of this MD&A.
(3)           Calculated using weighted average number of shares outstanding under the basic method of earnings per share.
(4)           Sum of all the quarters may not add up to the yearly total due to rounding.
(5)           Adjusted net income, EBITDA and adjusted operating cash flow are non-GAAP financial performance measures with no standard meaning under US GAAP. For further information and a detailed reconciliation, please see pages 78 – 82 of this MD&A.
 
Our financial results for the last eight quarters reflect: volatile spot gold and copper prices that impact realized sales price and generally higher gold and copper production costs mainly caused by inflationary pressures. The net loss realized in third quarter 2009 includes a $5.9 billion charge relating to a decision to eliminate our gold sales contracts.
 
Fourth Quarter Results
 
In fourth quarter 2010, we reported net income and adjusted net income of $896 million and $947 million, respectively, compared to $215 million and $604 million, respectively, in fourth quarter 2009.
 
The increases in both net income and adjusted net income were as a result of record high gold and copper prices and higher gold sales volume, partially offset by lower copper sales volume and higher total cash costs for gold and copper.
 
In fourth quarter 2010, we sold 1.83 million ounces of gold and 103 million pounds of copper, compared to 1.8 million ounces of gold and 118 million pounds of copper in fourth quarter 2009. Sales in fourth quarter 2010 were higher than the same prior year period reflecting higher market prices for both copper and gold and higher gold sales volumes. In fourth quarter 2010, cost of sales was $1,110 million or $486 per ounce on a total cash cost basis, an increase of $97 million and $21 per ounce, respectively, from fourth quarter 2009. Cost of sales was impacted by higher sales volume in fourth quarter 2010, compared to fourth quarter 2009. Total gold cash costs were slightly higher, as the regional production mix shifted to our higher cost regions in fourth quarter 2010. In fourth quarter 2010, net cash costs increased by $16 per ounce to $326 per ounce, compared to $310 per ounce in fourth quarter 2009, reflecting higher cash costs, partially offset by higher copper credits.
 
Operating cash flow in fourth quarter 2010 was $781 million, a significant increase from fourth quarter 2009. Fourth quarter operating cash flow reflected the cost of settling the gold sales contracts of $656 million and $5,221 million in 2010 and 2009, respectively.
 
Adjusted operating cash flow in fourth quarter 2010, which excludes the cost of settling the gold sales contracts, was $1,437 million, a 56% increase over fourth quarter 2009, reflecting higher market prices for gold and copper and an increase in gold sales volumes.
 
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Barrick Financial Report 2010 | Management’s Discussion and Analysis
 
US GAAP Critical Accounting Policies and Estimates
 
Management has discussed the development and selection of our critical accounting estimates with the Audit Committee of the Board of Directors, and the Audit Committee has reviewed the disclosure relating to such estimates in conjunction with its review of this MD&A. The accounting policies and methods we utilize determine how we report our financial condition and results of operations, and they may require management to make estimates or rely on assumptions about matters that are inherently uncertain.
 
Our financial condition and results of operations are reported using accounting policies and methods prescribed by US GAAP. In certain cases, US GAAP allows accounting policies and methods to be selected from two or more alternatives, any of which might be reasonable yet result in our reporting materially different amounts. We exercise judgment in selecting and applying our accounting policies and methods to ensure that, while US GAAP compliant, they reflect our judgment of an appropriate manner in which to record and report our financial condition and results of operations.
 
Accounting Changes Implemented in 2010
 
Amendments to Accounting for Variable Interest Entities (“VIEs”)
 
In second quarter 2009, the FASB issued an amendment to its guidance on VIEs which makes significant changes to the model for determining which entity should consolidate a VIE and how often this assessment should be performed. Based on our assessment, these changes do not have an impact on the accounting for our existing VIEs. We have updated our financial statement notes to reflect the increased disclosure requirements (note 2b).
 
Future Accounting Policy Changes
 
We have not identified any changes in US GAAP that may have a significant impact on our future financial statements. With the transition to reporting under IFRS in 2011, new US GAAP pronouncements effective from 2011 onwards do not impact our 2010 financial statements prepared in accordance with US GAAP.
 
Internal Control over Financial Reporting and Disclosure Controls and Procedures
 
Management is responsible for establishing and maintaining adequate internal control over financial reporting and disclosure controls and procedures. Internal control over financial reporting is a framework designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements in accordance with US GAAP. The Company’s internal control over financial reporting framework includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with US GAAP, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the Company’s consolidated financial statements.
 
Disclosure controls and procedures form a broader framework designed to ensure that other financial information disclosed publicly fairly presents in all material respects the financial condition, results of operations and cash flows of the company for the periods presented in this MD&A and Barrick’s Annual Report. The Company’s disclosure controls and procedures framework includes processes designed to ensure that material information relating to the Company, including its consolidated subsidiaries, is made known to management by others within those entities to allow timely decisions regarding required disclosure.
 
Together, the internal control over financial reporting and disclosure controls and procedures frameworks provide internal control over financial reporting and disclosure. Due to its inherent limitations, internal control over financial reporting and disclosure may not prevent or detect all misstatements. Further, the effectiveness of internal control is subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with policies or procedures may change. Management will continue to monitor the effectiveness of its internal control over financial reporting and disclosure and may make modifications from time to time as considered necessary or desirable. It is not expected that the 2011 conversion to IFRS described on page 85 will impact the effectiveness of the internal control over financial reporting and disclosure in the upcoming year.
 
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Management’s Discussion and Analysis
 
The management of Barrick, at the direction of our chief executive and financial officers, have evaluated the effectiveness of the design and operation of the internal controls over financial reporting and disclosure controls and procedures as of the end of the period covered by this report and have concluded that they were effective at a reasonable assurance level.
 
Barrick’s annual management report on internal control over financial reporting and the integrated audit report of Barrick’s auditors for the year ended December 31, 2010 will be included in Barrick’s 2010 Annual Report and its 2010 Form 40-F/Annual Information Form on file with the US Securities and Exchange Commission (“SEC”) and Canadian provincial securities regulatory authorities.
 
Critical Accounting Estimates and Judgments
 
Certain accounting estimates have been identified as being “critical” to the presentation of our financial condition and results of operations because they require us to make subjective and/or complex judgments about matters that are inherently uncertain; or there is a reasonable likelihood that materially different amounts could be reported under different conditions or using different assumptions and estimates.
 
Reserve Estimates Used to Measure Amortization of Property, Plant and Equipment
 
We record amortization expense based on the estimated useful economic lives of long-lived assets. Changes in reserve estimates are generally calculated at the end of each year and cause amortization expense to increase or decrease prospectively. The estimate that most significantly affects the measurement of amortization is quantities of proven and probable gold and copper reserves, because we amortize a large portion of property, plant and equipment using the units-of-production method. The estimation of quantities of gold and copper reserves, in accordance with the principles in Industry Guide No. 7, issued by the SEC is complex, requiring significant subjective assumptions that arise from the evaluation of geological, geophysical, engineering and economic data for a given ore body. This data could change over time as a result of numerous factors, including new information gained from development activities, evolving production history and a reassessment of the viability of production under different economic conditions. Changes in data and/or assumptions could cause reserve estimates to substantially change from period to period. Actual gold and copper production could differ from expected gold and copper production based on reserves, and an adverse change in gold or copper prices could make a reserve uneconomic to mine. Variations could also occur in actual ore grades and gold, silver and copper recovery rates from estimates.
 
A key trend that could reasonably impact reserve estimates is rising market mineral prices, because the mineral price assumption used in preparing reserve estimates is calculated based on the trailing three-year average market price. As this assumption rises, it could result in an upward revision to reserve estimates as material not previously classified as a reserve becomes economic at higher gold prices. Following the recent trend in market gold prices over the last three years, the mineral price assumption used to measure reserves has also been rising.
 
The gold price assumption was $1,000 ( 10)  per ounce in 2010 (2009: $825 per ounce; 2008: $725 per ounce). The copper price assumption was $2.00 per pound in 2010 (2009: $2.00 per pound; 2008: $2.00 per pound).
 
The impact of a change in reserve estimates is generally more significant for mines near the end of the mine life because the overall impact on amortization is spread over a shorter time period. Also, amortization expense is more significantly impacted by changes in reserve estimates at underground mines than open-pit mines due to the following factors:
 
(i)              Underground development costs incurred to access ore at underground mines are significant and amortized using the units-of-production method; and
 
(ii)           Reserves at underground mines are often more sensitive to mineral price assumptions and changes in production costs. Production costs at underground mines are impacted by factors such as dilution, which can significantly impact mining and processing costs per ounce.

(10)     Reserves at Round Mountain have been calculated using an assumed price of $900 per ounce.
 
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Barrick Financial Report 2010 | Management’s Discussion and Analysis
 
Impact of Historic Changes in Reserve Estimates on Amortization for the years ended December 31

 	 	2010	 	2009	 	
 	 	Reserves	 	Amortization	 	Reserves	 	Amortization	 	
 	 	increase	 	increase	 	increase	 	increase	 	
($ millions, except reserves in millions of contained oz/pounds)	 	(decrease)(1)	 	(decrease)	 	(decrease)(1)	 	(decrease)	 	
Gold	 	 	 	 	 	 	 	 	 	
North America	 	5.7	 	$	(13	)	9.6	 	$	(32	)	
Australia Pacific	 	1.6	 	3	 	0.3	 	(11	)	
African Barrick Gold	 	(0.8	)	—	 	(0.5	)	(2	)	
South America	 	0.8	 	4	 	13.5	 	(9	)	
Total Gold	 	7.3	 	$	(6	)	22.9	 	$	(54	)	
Copper	 	 	 	 	 	 	 	 	 	
Australia Pacific	 	30	 	$	—	 	(153	)	$	(3	)	
South America	 	308	 	6	 	1,023	 	(13	)	
Total Copper	 	338	 	$	6	 	870	 	$	(16	)	

(1)           Each year we update our reserve estimates as at the end of the year as part of our normal business cycle. We then use those updated reserve estimates to calculate amortization expense in the following fiscal year on assets which use the units-of-production method of amortization. Reserve changes presented were calculated as at the end of 2009 and 2008 and are in millions of contained ounces/pounds.
 
Long- Lived Asset and Goodwill Impairment Evaluations
 
Producing Mines and Development Projects
 
On an annual basis, as at October 1, and at any other time if events or changes in circumstances indicate that the fair value of a reporting unit has been reduced below its carrying amount, we evaluate the carrying amount of goodwill for potential impairment by comparing its fair value to its carrying amount. We also evaluate the long-lived assets of a reporting unit for potential impairment when events or changes in circumstances indicate that its fair value has been reduced below its carrying amount by comparing that reporting unit’s undiscounted cash flows to its carrying amount (referred to as a “screen test”). When a potential long-lived asset impairment is identified as a result of the screen test, the amount of impairment is calculated by comparing its fair value to its carrying amount.
 
There is no active market for our reporting units. Consequently, when assessing a reporting unit for impairment, we use an income approach (being the net present value of expected future cash flows from our LOM plans, or net asset value (“NAV”) of the relevant reporting unit) to determine the fair value we could receive for the reporting unit in an arm’s length transaction at the measurement date. For our gold reporting units, we apply a market multiple to the NAV in order to assess their estimated fair value. Gold companies typically trade at a market capitalization that is based on a multiple of their underlying NAV. Consequently, a market participant would generally apply a NAV multiple when estimating the fair value of an operating gold mine.
 
Included in these forecasts is the production of mineral resources that do not currently qualify for inclusion in proven and probable ore reserves where there is a high degree of confidence in its economic extraction. This is consistent with the methodology we use to measure value beyond proven and probable reserves when allocating the purchase price of a business combination to acquired mining assets. Other significant estimates employed in our assessment of fair value include short-term and long-term metal prices, foreign exchange rates, the price of oil, weighted average cost of capital used in discounting and the NAV multiple. For further information on these estimates refer to note 17 of our consolidated financial statements.
 
In fourth quarter 2010, we conducted our annual goodwill impairment test on all of our reporting units to which goodwill has been assigned, by comparing their estimated fair value to their carrying amounts. We did not record any goodwill impairments at any of our mine sites.
 
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Management’s Discussion and Analysis
 
Exploration Property
 
After acquisition, various factors can affect the recoverability of the capitalized cost of land and mineral rights, particularly the results of exploration drilling. The length of time between the acquisition of land and mineral rights and when we undertake exploration work varies based on the prioritization of our exploration projects and the size of our exploration budget. If we determine that a potential impairment condition may exist, we compare the sum of the undiscounted cash flows expected to be generated from the project to its carrying amount. If the sum of undiscounted cash flows is less than the carrying amount, an impairment charge is recognized if the carrying amount of the individual long-lived assets within the group exceeds their fair value. For projects that do not have reliable cash flow projections, a market approach is applied.
 
Intangible Asset
 
Intangible assets having indefinite lives and intangible assets that are not yet ready for use are not amortized and are reviewed annually for impairment. We also review and test the carrying amounts of all intangible assets when events or changes in circumstances suggest that their carrying amount may not be recoverable. Based on the review, we noted that there were no indications of impairment in 2010.
 
Production Stage
 
We assess each mine construction project to determine when a mine moves into production stage. The criteria used to assess the start date are determined based on the unique nature of each mine construction project, such as the complexity of a plant or its location. We consider various relevant criteria to assess when the mine is substantially complete and ready for its intended use and moved into the production stage. Some of the criteria considered would include, but are not limited to, the following: (1) the level of capital expenditures compared to construction cost estimates; (2) the completion of a reasonable period of testing of mine plant and equipment; (3) the ability to produce minerals in saleable form (within specifications); and (4) the ability to sustain ongoing production of minerals.
 
When a mine construction project moves into the production stage, the capitalization of certain mine construction costs ceases and costs are either capitalized to inventory or expensed, except for capitalizable costs related to property, plant and equipment additions or improvements, underground mine development or reserve development.
 
Pre-production stripping costs are capitalized until an “other than de minimis” level of mineral is produced, after which time such costs are either capitalized to inventory or expensed. We consider various relevant criteria to assess when an “other than de minimis” level of mineral is produced. Some of the criteria considered would include, but are not limited to, the following: (1) the amount of ounces mined versus total ounces in reserves; (2) the amount of ore tons mined vs. total LOM expected ore tons mined; (3) the current stripping ratio versus the LOM strip ratio; and (4) the ore grade versus the LOM grade.
 
Fair Value of Asset Retirement Obligations (“AROs”)
 
AROs arise from the acquisition, development, construction and normal operation of mining property, plant and equipment, due to government controls and regulations that protect the environment and public safety on the closure and reclamation of mining properties. We record the fair value of an ARO in our consolidated financial statements when it is incurred and capitalize this amount as an increase in the carrying amount of the related asset. At operating mines, the increase in an ARO is recorded as an adjustment to the corresponding asset carrying amount and results in a prospective increase in amortization expense. At closed mines, any adjustment to an ARO is charged directly to earnings.
 
The fair values of AROs are measured by discounting the expected cash flows using a discount factor that reflects the credit-adjusted risk-free rate of interest. We prepare estimates of the timing and amounts of expected cash flows when an ARO is incurred, which are updated to reflect changes in facts and circumstances, or if we are required to submit updated mine closure plans to regulatory authorities. In the future, changes in regulations or laws or enforcement could adversely affect our operations; and any instances of non-compliance with laws or regulations that result in fines or injunctions or delays in projects, or any unforeseen environmental contamination at, or related to, our mining properties, could result in us suffering significant costs. We mitigate these risks through environmental and health and safety programs under which we monitor compliance with laws and regulations and take steps to reduce the risk of environmental contamination occurring. We maintain insurance for some environmental risks; however, for some risks, coverage cannot be purchased at a reasonable cost. Our coverage may not provide full recovery for all possible causes of loss. The principal factors that can cause expected cash flows to change are: the construction of new processing facilities; changes in the quantities of material in reserves and a corresponding change in the life-of-mine plan; changing ore characteristics that ultimately impact
 
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Barrick Financial Report 2010 | Management’s Discussion and Analysis
 
the environment; changes in water quality that impact the extent of water treatment required; and changes in laws and regulations governing the protection of the environment. In general, as the end of the mine life nears, the reliability of expected cash flows increases, but earlier in the mine life, the estimation of an ARO is inherently more subjective. Significant judgments and estimates are made when estimating the fair value of AROs. Expected cash flows relating to AROs could occur over periods up to 40 years and the assessment of the extent of environmental remediation work is highly subjective. Considering all of these factors that go into the determination of an ARO, the fair value of AROs can materially change over time.
 
At our operating mines, we continue to record AROs based on disturbance of the environment over time. It is reasonably possible that circumstances could arise during or by the end of the mine life that will require material revisions to AROs. In particular, the extent of water treatment can have a material effect on the fair value of AROs, and the expected water quality at the end of the mine life, which is the primary driver of the extent of water treatment, can change significantly. We periodically prepare updated studies for our mines, following which it may be necessary to adjust the fair value of AROs. The period of time over which we have assumed that water quality monitoring and treatment will be required has a significant impact on AROs at closed mines. The amount of AROs recorded reflects the expected cost, taking into account the probability of particular scenarios. The difference between the upper end of the range of these assumptions and the lower end of the range can be significant, and consequently changes in these assumptions could have a material effect on the fair value of AROs and future earnings in a period of change.
 
AROs

($ millions)	 	 	 	 	 	
As at December 31	 	2010	 	2009	 	
Operating mines	 	$	1,186	 	$	958	 	
Closed mines	 	210	 	208	 	
Development projects	 	95	 	40	 	
Other	 	36	 	24	 	
Total	 	$	1,527	 	$	1,230	 	
 
Deferred Tax Assets and Liabilities
 
Measurement of Temporary Differences
 
We are periodically required to estimate the tax basis of assets and liabilities. Where applicable tax laws and regulations are either unclear or subject to varying interpretations, it is possible that changes in these estimates could occur that materially affect the amounts of deferred income tax assets and liabilities recorded in our consolidated financial statements. Changes in deferred tax assets and liabilities generally have a direct impact on earnings in the period of changes.
 
Valuation Allowances
 
Each period, we evaluate the likelihood of whether some portion or all of each deferred tax asset will not be realized. This evaluation is based on historic and future expected levels of taxable income, the pattern and timing of reversals of taxable temporary timing differences that give rise to deferred tax liabilities, and tax planning activities. Levels of future taxable income are affected by, among other things, market gold prices, and production costs, quantities of proven and probable gold and copper reserves, interest rates and foreign currency exchange rates. If we determine that it is more likely than not (a likelihood of more than 50%) that all or some portion of a deferred tax asset will not be realized, we record a valuation allowance against the amount we do not expect to realize. Changes in valuation allowances are recorded as a component of income tax expense or recovery for each period. The most significant recent trend impacting expected levels of future taxable income and the amount of valuation allowances, has been rising market gold prices. A continuation of a trend of higher gold prices could lead to the release of some of the valuation allowances recorded, with a corresponding effect on earnings in the period of release. Conversely, a decline in market gold prices could lead to an increase in valuation allowances and a corresponding increase in income tax expense.
 
In 2010, we released $129 million of valuation allowances primarily because sources of income became available that enabled tax losses and US Alternative Minimum Tax (“AMT”) credits to be realized.
 
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Management’s Discussion and Analysis
 
Valuation Allowances

($ millions)	 	 	 	 	 	
As at December 31	 	2010	 	2009	 	
Australia	 	$	104	 	$	11	 	
Argentina	 	97	 	119	 	
Barbados	 	73	 	69	 	
Canada	 	52	 	45	 	
Tanzania	 	30	 	30	 	
Chile	 	20	 	22	 	
United States	 	7	 	136	 	
Other	 	42	 	49	 	
Total	 	$	425	 	$	481	 	
 
Chile, Argentina, Tanzania and Other: the valuation allowances relate to the full amount of tax assets in subsidiaries that do not have any present sources of gold production or taxable income. In the event that these subsidiaries have sources of taxable income in the future, we may release some or all of the valuation allowances.
 
Canada: most of the valuation allowances relate to tax pools which can only be utilized by income from specific sources.
 
Australia: most of the valuation allowances relate to capital losses that can only be utilized if any capital gains are realized.
 
Non-GAAP Financial Performance Measures(11)
 
Adjusted Net Income (Adjusted Net Income per Share) and Return on Equity
 
Adjusted net income is a non-GAAP financial measure which excludes the following from net income:
 
·                   Elimination of gold sales contracts;
·                   Non-recurring tax adjustments;
·                   Impairment charges related to goodwill, property, plant and equipment, and investments;
·                   Gains/losses on acquisitions/dispositions;
·                   Foreign currency translation gains/losses;
·                   Non-recurring restructuring costs; and
·                   Unrealized gains/losses on non-hedge derivative instruments
 
Management uses this measure internally to evaluate the underlying operating performance of the Company as a whole for the reporting periods presented, and to assist with the planning and forecasting of future operating results. We believe that adjusted net income allows investors and analysts to better evaluate the results of the underlying business of the Company. While the adjustments to net income in this measure include items that are recurring, management believes that adjusted net income is a useful measure of the Company’s performance because the elimination of gold sales contracts, non-recurring tax adjustments, impairment charges, gains/losses on asset acquisitions/dispositions and non-recurring restructuring charges do not reflect the underlying operating performance of our core mining business and are not necessarily indicative of future operating results. Furthermore, foreign currency translation gains/losses and unrealized gains/losses from non-hedge derivative contracts are not necessarily reflective of the underlying operating results for the reporting periods presented.
 
As noted, the Company uses this measure for its own internal purposes. Management’s internal budgets and forecasts and public guidance do not reflect potential impairment charges, potential gains/losses on the acquisition/disposition of assets, foreign currency translation gains/losses, or unrealized gains/losses on non-hedge derivative contracts. Consequently, the presentation of adjusted net income enables investors and analysts to better understand the underlying operating performance of our core mining business through the eyes of Management. Management periodically evaluates the components of adjusted net income based on an internal assessment of performance measures that are useful for evaluating the operating performance of our business segments and a review of the non-GAAP measures used by mining industry analysts and other mining companies.
 
We also present return on equity as a measure which is calculated by dividing adjusted net income by average shareholders’ equity. Management believes this to be a useful indicator of the Company’s performance.
 
Adjusted net income and return on equity are intended to provide additional information only and do not have any standardized meaning prescribed by US GAAP and should not be considered in isolation or as substitutes for measures of performance prepared in accordance with US GAAP. The measures are not necessarily indicative of operating profit or cash flow from operations as determined under US GAAP. Other companies may calculate these measures differently. The following table reconciles these non-GAAP measures to the most directly comparable US GAAP measure.

(11)  The amounts presented in the non-GAAP financial performance measure tables include the results of discontinued operations.
 
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Barrick Financial Report 2010 | Management’s Discussion and Analysis
 
Reconciliation of Net Income to Adjusted Net Income and Return on Equity ( 1)

 	 	 	 	 	 	 	 	For the three months	 	
 	 	For the years ended December 31	 	ended December 31	 	
($ millions, except per share amounts in dollars)	 	2010	 	2009	 	2008	 	2010	 	2009	 	
Net income (loss)	 	$	3,274	 	$	(4,274	)	$	785	 	$	896	 	$	215	 	
Elimination of gold sales contracts	 	—	 	5,901	 	—	 	—	 	241	 	
Non-recurring tax adjustments	 	(4	)	59	 	—	 	74	 	59	 	
Impairment charges related to intangibles, property, plant and equipment, and investments	 	5	 	259	 	899	 	—	 	102	 	
Gains on acquisitions/dispositions(2)	 	(41	)	(85	)	(178	)	(10	)	(1	)	
Foreign currency translation (gains)/losses(3)	 	34	 	(95	)	135	 	(11	)	(22	)	
Restructuring costs	 	43	 	15	 	—	 	3	 	6	 	
Unrealized (gains)/losses on non-hedge derivative instruments	 	(32	)	30	 	20	 	(5	)	4	 	
Adjusted net income	 	$	3,279	 	$	1,810	 	$	1,661	 	$	947	 	$	604	 	
Net income per share(4)	 	3.32	 	(4.73	)	0.90	 	0.90	 	0.22	 	
Adjusted net income per share(4)	 	3.32	 	2.00	 	1.90	 	$	0.95	 	$	0.61	 	
Average Shareholders’ Equity	 	$	17,064	 	$	15,170	 	$	15,267	 	 	 	 	 	
Return on equity(5)	 	19	%	12	%	11	%	 	 	 	 	

(1)           Amounts presented in this table are post-tax.
(2)           Includes gains recorded on the Cerro Casale acquisition of $29 million. Refer to page 36 of this MD&A for further information.
(3)           Includes a currency translation gain of $70 million recorded in first quarter 2009 relating to Canadian deferred tax assets due to an election to adopt a US dollar functional currency for Canadian tax purposes.
(4)           Calculated using weighted average number of shares outstanding under the basic method of earnings per share.
(5)           Calculated as adjusted net income divided by average shareholders’ equity.
 
Adjusted Operating Cash Flow and Free Cash Flow
 
Adjusted operating cash flow is a non-GAAP financial measure which excludes the effect of elimination of gold sales contracts.
 
Management uses adjusted operating cash flow as a measure internally to evaluate the underlying operating cash flow performance of the Company as a whole for the reporting periods presented, and to assist with the planning and forecasting of future operating cash flow. The elimination of gold sales contracts is an activity that is not reflective of the underlying capacity of our operations to generate operating cash flow and therefore this adjustment will result in a more meaningful operating cash flow measure for investors and analysts to evaluate our performance in the period and assess our future operating cash flow generating capability.
 
We also present free cash flow as a measure which excludes capital expenditures from adjusted operating cash flow. Management believes this to be a useful indicator of the Company’s ability to operate without reliance on additional borrowing or usage of existing cash.
 
Adjusted operating cash flow and free cash flow are intended to provide additional information only and do not have any standardized meaning prescribed by US GAAP and should not be considered in isolation or as substitutes for measures of performance prepared in accordance with US GAAP. The measures are not necessarily indicative of operating profit or cash flow from operations as determined under US GAAP. Other companies may calculate these measures differently. The following table reconciles these non-GAAP measures to the most directly comparable US GAAP measures.
 
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Management’s Discussion and Analysis
 
Reconciliation of Adjusted Operating Cash Flow and Free Cash Flow

 	 	 	 	 	 	 	 	For the three months	 	
 	 	For the years ended December 31	 	ended December 31	 	
($ millions)	 	2010	 	2009	 	2008	 	2010	 	2009	 	
Operating cash flow	 	$	4,127	 	$	(2,322	)	$	2,254	 	$	781	 	$	(4,300	)	
Elimination of gold sales contracts	 	656	 	5,221	 	—	 	656	 	5,221	 	
Adjusted operating cash flow	 	$	4,783	 	$	2,899	 	$	2,254	 	$	1,437	 	$	921	 	
Capital expenditures	 	(3,323	)	(2,358	)	(1,776	)	(1,145	)	(748	)	
Free Cash Flow	 	$	1,460	 	$	541	 	$	478	 	$	292	 	$	173	 	
 
Total Cash Costs per ounce and Net Cash Costs per ounce
 
Total cash costs per ounce/pound and net cash costs per ounce are non-GAAP financial measures. Both measures include all costs absorbed into inventory, as well as royalties, by-product credits, and production taxes, and exclude inventory purchase accounting adjustments, unrealized gains/losses from non-hedge currency and commodity contracts, and amortization and accretion. These measures also include the gross margin generated by our Barrick Energy business unit, which was acquired to mitigate our exposure to oil prices as a credit against gold production costs. The presentation of these statistics in this manner allows us to monitor and manage those factors that impact production costs on a monthly basis. These measures are calculated by dividing the aggregate of the applicable costs by gold ounces or copper pounds sold. These measures are calculated on a consistent basis for the periods presented.
 
We have also adjusted our gold total cash costs to remove the impact of ore purchase agreements that have economic characteristics similar to a toll milling arrangement. The cost of producing these ounces is not indicative of our normal production costs. Hence, we have removed such costs from total cash costs.
 
We calculate total cash costs and net cash costs based on our equity interest in production from our mines. We believe that using an equity interest presentation is a fairer, more accurate way to measure economic performance than using a consolidated basis. For mines where we hold less than a 100% share in the production, we exclude the economic share of gold production attributable to the non-controlling interest. Consequently, our production and total cash costs and net cash costs statistics only reflect our equity share of production.
 
Net cash costs measures the gross margin from all non-gold sales, whether or not these non-gold metals are produced in conjunction with gold, as a credit against the cost of producing gold. A number of other gold producers present their costs net of the contribution from non-gold sales. We believe that including a measure of net cash costs per ounce on this basis provides investors and analysts with information with which to compare our performance to other gold producers, and to better assess the overall performance of our business. In addition, this measure provides information to enable investors and analysts to understand the importance of non-gold revenues to our cost structure.
 
Total cash cost and net cash cost statistics are intended to provide additional information only and do not have any standardized meaning prescribed by US GAAP and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with US GAAP. The measures are not necessarily indicative of operating profit or cash flow from operations as determined under US GAAP. Other companies may calculate these measures differently. The following tables reconcile these non-GAAP measures to the most directly comparable US GAAP measure.
 
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Barrick Financial Report 2010 | Management’s Discussion and Analysis
 
Reconciliation of Cost of Sales to Total Cash Costs per Ounce/Pound

($ millions, except per ounce/pound information in dollars)	 	Gold	 	Copper	 	
For the years ended December 31	 	2010	 	2009	 	2008	 	2010	 	2009	 	2008	 	
Cost of sales	 	$	3,789	 	$	3,407	 	$	3,377	 	$	345	 	$	361	 	$	315	 	
Cost of sales applicable to discontinued operations	 	10	 	24	 	49	 	88	 	83	 	121	 	
Cost of sales applicable to non-controlling interests(1)	 	(107	)	(12	)	(14	)	—	 	—	 	—	 	
Cost of sales applicable to ore purchase arrangement	 	(104	)	(29	)	—	 	—	 	—	 	—	 	
Inventory purchase accounting adjustments	 	—	 	—	 	(16	)	—	 	—	 	—	 	
Unrealized non-hedge gains/(losses) on currency and commodity contracts	 	5	 	7	 	(14	)	—	 	—	 	—	 	
Impact of Barrick Energy	 	(56	)	(20	)	(14	)	—	 	—	 	—	 	
Total cash costs	 	$	3,537	 	$	3,377	 	$	3,368	 	$	433	 	$	444	 	$	436	 	
Ounces/pounds sold – consolidated basis (000s ounces/millions pounds)	 	7,963	 	7,307	 	7,658	 	391	 	380	 	367	 	
Ounces/pounds sold – non-controlling interest (000s ounces)(1)	 	(229	)	(28	)	(63	)	—	 	—	 	—	 	
Ounces/pounds sold – equity basis (000s ounces/millions pounds)	 	7,734	 	7,279	 	7,595	 	391	 	380	 	367	 	
Total cash costs per ounce/per pound	 	$	457	 	$	464	 	$	443	 	$	1.11	 	$	1.17	 	$	1.19	 	

(1) Relates to ABG’s partner’s 30% interest in Tulawaka.
 
Net Cash Costs per Ounce

 	 	 	 	 	 	 	 	For the three months	 	
 	 	For the years ended December 31	 	ended December 31	 	
($ millions, except per ounce/pound data in dollars)	 	2010	 	2009	 	2008	 	2010	 	2009	 	
Ounces gold sold – equity basis (000s)	 	7,734	 	7,279	 	7,595	 	1,825	 	1,797	 	
Total cash costs per ounce – equity basis	 	$	457	 	$	464	 	$	443	 	$	486	 	$	465	 	
Revenues from copper sales	 	$	1,102	 	$	943	 	$	1,007	 	$	333	 	$	398	 	
Revenues from copper sales of discontinued operations	 	244	 	212	 	221	 	74	 	—	 	
Unrealized non-hedge gold/copper derivative (gains) losses	 	(14	)	49	 	(23	)	2	 	13	 	
Unrealized mark-to-market provisional price adjustments	 	—	 	(4	)	38	 	—	 	(4	)	
Net revenues from copper excluding unrealized non-hedge gains/losses from copper contracts	 	$	1,332	 	$	1,200	 	$	1,243	 	$	409	 	$	407	 	
Copper cost of sales per consolidated statement of income	 	345	 	361	 	315	 	93	 	128	 	
Copper cost of sales from discontinued operations	 	88	 	83	 	121	 	23	 	—	 	
Copper credits	 	899	 	756	 	807	 	293	 	279	 	
Copper credits per ounce	 	116	 	104	 	106	 	160	 	155	 	
Net cash costs per ounce	 	$	341	 	$	360	 	$	337	 	$	326	 	$	310	 	
 
EBITDA and Adjusted EBITDA
 
EBITDA is a non-GAAP financial measure, which excludes the following from net income:
 
·       Income tax expense;
·       Interest expense;
·       Interest income; and
·       Depreciation and amortization.
 
Management believes that EBITDA is a valuable indicator of the Company’s ability to generate liquidity by producing operating cash flow to: fund working capital needs, service debt obligations, and fund capital expenditures. Management uses EBITDA for this purpose. EBITDA is also frequently used by investors and analysts for valuation purposes whereby EBITDA is multiplied by a factor or “EBITDA multiple” that is based on observed or inferred relationship between EBITDA and market values to determine the approximate total enterprise value of a company.
 
81 

 
Management’s Discussion and Analysis
 
EBITDA is intended to provide additional information to investors and analysts, does not have any standardized meaning prescribed by US GAAP and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with US GAAP. EBITDA excludes the impact of cash costs of financing activities and taxes, and the effects of changes in operating working capital balances, and therefore is not necessarily indicative of operating profit or cash flow from operations as determined under US GAAP. Other companies may calculate EBITDA differently.
 
We also present adjusted EBITDA as a non-GAAP measure, which removes the effect of the elimination of gold sales contracts. The elimination of gold sales contracts is an activity that is not reflective of the underlying capacity of our operations to generate earnings and therefore this adjustment will result in a more meaningful earnings measure for investors and analysts to evaluate our performance in the period and assess our future earnings generating capability.
 
The following table provides a reconciliation of EBITDA and adjusted EBITDA to net income.
 
Reconciliation of Net Income to EBITDA and Adjusted EBITDA

 	 	 	 	 	 	 	 	For the three months	 	
 	 	For the years ended December 31	 	ended December 31	 	
($ millions, except per share amounts in dollars)	 	2010	 	2009	 	2008	 	2010	 	2009	 	
Net income	 	$	3,274	 	$	(4,274	)	$	785	 	$	896	 	$	215	 	
Income tax expense	 	1,370	 	648	 	594	 	472	 	295	 	
Interest expense	 	121	 	57	 	21	 	6	 	29	 	
Interest income	 	(14	)	(10	)	(39	)	(3	)	(3	)	
Depreciation and amortization	 	1,149	 	1,016	 	912	 	264	 	258	 	
EBITDA	 	$	5,900	 	$	(2,563	)	$	2,273	 	$	1,635	 	$	794	 	
Elimination of gold sales contracts	 	—	 	5,933	 	—	 	—	 	241	 	
Adjusted EBITDA	 	$	5,900	 	$	3,370	 	$	2,273	 	$	1,635	 	$	1,035	 	
Reported as:	 	 	 	 	 	 	 	 	 	 	 	
Gold	 	 	 	 	 	 	 	 	 	 	 	
North America	 	$	2,114	 	$	1,259	 	$	972	 	$	588	 	$	317	 	
South America	 	1,914	 	1,245	 	1,194	 	441	 	428	 	
Australia Pacific	 	1,027	 	597	 	507	 	312	 	174	 	
African Barrick Gold	 	345	 	236	 	157	 	110	 	59	 	
Copper	 	 	 	 	 	 	 	 	 	 	 	
South America	 	732	 	564	 	673	 	231	 	210	 	
Australia Pacific	 	104	 	82	 	(35	)	35	 	33	 	
Capital Projects	 	(88	)	(106	)	(176	)	(32	)	(16	)	
Barrick Energy	 	45	 	9	 	12	 	15	 	5	 	
Other	 	(293	)	(6,449	)	(1,031	)	(65	)	(416	)	
EBITDA	 	$	5,900	 	$	(2,563	)	$	2,273	 	$	1,635	 	$	794	 	
Elimination of gold sales contracts	 	—	 	5,933	 	—	 	—	 	241	 	
Adjusted EBITDA	 	$	5,900	 	$	3,370	 	$	2,273	 	$	1,635	 	$	1,035	 	
 
82 

 
Barrick Financial Report 2010 | Management’s Discussion and Analysis
 
Realized Prices
 
Realized price is a non-GAAP financial measure which excludes from sales:
 
·       Unrealized gains and losses on non-hedge derivative contracts;
·       Unrealized mark-to-market gains and losses on provisional pricing from copper and gold sales contracts;
·       Sales attributable to ore purchase arrangement; and
·       Export duties.
 
This measure is intended to enable management to better understand the price realized in each reporting period for gold and copper sales because unrealized mark-to-market value of non-hedge gold and copper derivatives and unrealized mark-to-market gains and losses on outstanding receivables from copper and gold sales contracts are subject to change each period due to changes in market factors such as market and forward gold and copper prices so that prices ultimately realized may differ from those recorded. The exclusion of such unrealized mark-to-market gains and losses from the presentation of this performance measure enables investors to understand performance based on the realized proceeds of selling gold and copper production.
 
The gains and losses on non-hedge derivatives and receivable balances relate to instruments/balances that mature in future periods, at which time the gains and losses will become realized. The amounts of these gains and losses reflect fair values based on market valuation assumptions at the end of each period and do not necessarily represent the amounts that will become realized on maturity. We also exclude export duties that are paid upon sale and netted against revenues. We believe this provides investors and analysts with a more accurate measure with which to compare to market gold prices and to assess our gold sales performance. For those reasons, management believes that this measure provides a more accurate reflection of the Company’s past performance and is a better indicator of its expected performance in future periods.
 
The realized price measure is intended to provide additional information, and does not have any standardized meaning prescribed by US GAAP and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with US GAAP. The measure is not necessarily indicative of sales as determined under US GAAP. Other companies may calculate this measure differently. The following table reconciles realized prices to the most directly comparable US GAAP measure.
 
Reconciliation of Sales to Realized Price per Ounce/per Pound

($ millions, except per ounce/pound information in dollars)	 	Gold	 	Copper	 	
For the years ended December 31	 	2010	 	2009	 	2008	 	2010	 	2009	 	2008	 	
Sales	 	$	9,699	 	$	7,135	 	$	6,577	 	$	1,102	 	$	943	 	$	1,007	 	
Sales applicable to discontinued operations	 	43	 	56	 	79	 	244	 	212	 	221	 	
Sales applicable to non-controlling interests	 	(204	)	(27	)	(56	)	—	 	—	 	—	 	
Sales attributable to ore purchase agreement	 	(111	)	(26	)	—	 	—	 	—	 	—	 	
Unrealized non-hedge gold/copper derivative (gains) losses	 	—	 	—	 	2	 	(14	)	49	 	(23	)	
Unrealized mark-to-market provisional price adjustments	 	(1	)	—	 	(1	)	—	 	(4	)	38	 	
Export duties	 	68	 	30	 	23	 	—	 	—	 	—	 	
Sales – as adjusted	 	$	9,494	 	$	7,168	 	$	6,624	 	$	1,332	 	$	1,200	 	$	1,243	 	
Ounces/pounds sold (000s ounces/millions pounds)	 	7,734	 	7,279	 	7,595	 	391	 	380	 	367	 	
Realized gold/copper price per ounce/pound	 	$	1,228	 	$	985	 	$	872	 	$	3.41	 	$	3.16	 	$	3.39	 	
 
83 

 
Management’s Discussion and Analysis
 
Net Cash Margin
 
Management uses a non-GAAP financial measure, net cash margin, which represents realized price per ounce less net cash costs per ounce. This measure is used by management to analyze profitability trends and to assess the cash-generating capability from the sale of gold on a consolidated basis in each reporting period, expressed on a unit basis. We believe that it illustrates the performance of our business on a consolidated basis and enables investors to better understand our performance in comparison to other gold producers who present results on a similar basis and is an important indicator of expected performance in future periods.
 
Our net cash margin is intended to provide additional information, does not have any standardized meaning prescribed by US GAAP and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with US GAAP. This measure is not necessarily indicative of operating profit or cash flow from operations as determined under US GAAP. Other companies may calculate cash margin differently. The following table derives this non-GAAP measure from previously defined non-GAAP measures of realized gold price per ounce, total cash costs per ounce, and copper credit per ounce, as determined in the net cash cost reconciliation. Net cash margin could also be derived from realized price per ounce and net cash costs per ounce.
 
Reconciliation of Net Cash Margin per Ounce

 	 	 	 	 	 	 	 	For the three months	 	
 	 	For the years ended December 31	 	ended December 31	 	
(per ounce data in dollars)	 	2010	 	2009	 	2008	 	2010	 	2009	 	
Realized gold price per ounce	 	$	1,228	 	$	985	 	$	872	 	$	1,368	 	$	1,119	 	
Total cash costs per ounce	 	457	 	464	 	443	 	486	 	465	 	
Total cash margin per ounce	 	$	771	 	$	521	 	$	429	 	$	882	 	$	654	 	
Copper credit per ounce(1)	 	116	 	104	 	106	 	160	 	155	 	
Net cash margin per ounce	 	$	887	 	$	625	 	$	535	 	$	1,042	 	$	809	 	

(1) Copper credit per ounce is calculated as the margin from copper sales divided by gold ounces sold. Refer to the calculation in the net cash costs reconciliation on page 81.
 
Adjusted Debt and Net Debt
 
Management uses non-GAAP financial measures “adjusted debt” and “net debt” since they are more indicative of how we manage our debt levels internally than the US GAAP measure. We believe these measures provide a meaningful measure for investors and analysts to evaluate our overall debt capacity, liquidity and capital structure. Adjusted debt and net debt are intended to provide additional information, do not have any standardized meaning prescribed by US GAAP and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with US GAAP.
 
We have adjusted our long-term debt to exclude fair value on other adjustments and our partner’s share of project financing and to include the remaining settlement obligation to close out the gold sales contracts to arrive at adjusted debt. We have excluded the impact of fair value and other adjustments in order to reflect the actual settlement obligation in relation to the debt instrument. We have excluded our partner’s share of project financing, where Barrick has provided a guarantee only for its proportionate share of the debt. We have included the settlement obligation related to gold sales contracts because they have terms similar to long-term debt instruments and have been settled in cash. We then deduct our cash and equivalents (net of our partner’s share of cash held at Pueblo Viejo) to arrive at net debt.
 
84 

 
Barrick Financial Report 2010 | Management’s Discussion and Analysis
 
Adjusted Debt and Net Debt Summary

As at December 31	 	 	 	 	 	
(in $ millions)	 	2010	 	2009	 	
Debt per financial statements	 	$	6,692	 	$	6,335	 	
Fair value and other adjustments(1)	 	13	 	(71	)	
Pueblo Viejo financing partner’s share(2)	 	(313	)	—	 	
Settlement obligation to close out gold sales contracts(3)	 	—	 	655	 	
Adjusted debt	 	$	6,392	 	$	6,919	 	
Cash and equivalents	 	(3,968	)	(2,564	)	
Cash and equivalents – partner’s share at Pueblo Viejo(2)	 	118	 	—	 	
Net debt	 	$	2,542	 	$	4,355	 	

(1)           Other adjustments primarily relate to issue costs which have been netted against the debts.
(2)           We consolidate 100% of Pueblo Viejo in our financial statements; however we have guaranteed only our 60% share of the $782 million financing received to this point. Therefore, we have removed our partner’s share of both the financing and cash and equivalents to ensure comparability.
(3)           Based on the final settlement value of these contracts.
 
International Financial Reporting Standards (IFRS)
 
We are in the process of converting our basis of accounting from US GAAP to IFRS effective for our first quarter report in 2011. The transition date of January 1, 2010 requires the conversion, for comparative purposes, of our previously reported balance sheets as at December 31, 2009 and December 31, 2010 and our interim and annual consolidated statements of income and cash flows for 2010 from US GAAP to IFRS.
 
In this MD&A, we are providing an update on our conversion project; a preliminary consolidated balance sheet as at January 1, 2010 prepared under IFRS with reconciliations to our December 31, 2009 unaudited balance sheet prepared in accordance with US GAAP; a summary of the IFRS 1, First-time Adoption of International Financial Reporting Standards, (IFRS 1) elections we expect to apply on our transition to IFRS; a preliminary impact assessment of the IFRS conversion on our operating results for the year ended December 31, 2010; and a summary of our IFRS policies where there are significant changes from our US GAAP policies. IFRS accounting standards, and the interpretation thereof, are constantly evolving; accordingly, there may be additional new or revised IFRS accounting standards prior to the issuance of our first IFRS financial statements that could affect the opening IFRS balance sheet, 2010 operating results and related policies presented herein.
 
IFRS Project Update
 
The following chart provides an update of the key activities contained in our conversion plan, the estimated completion date for each of these activities as well as a current status update. The following information will allow investors and others to obtain a better understanding of our IFRS conversion plan and its impacts on the Company.
 
85 

 
Management’s Discussion and Analysis

Key Activities	 	Timing	 	Current Status	
Financial Statement Preparation:
·   Analyze and select ongoing policies where alternatives are permitted including IFRS 1 exemptions
·   Quantify key differences between IFRS and the Company’s application of US GAAP
·   Revise Accounting Policy Manual
·   Prepare IFRS consolidated financial statements including first-time adoption reconciliations	 	·   Revised Accounting Policy Manual in place by January 1, 2011
·   Quantification of impact of key differences on opening balance sheet to be completed in draft in Q2 2010
·   Quantification of impact of key differences on Q1 and Q2 to be completed in draft in Q3 2010; Q3 to be completed in draft in Q4 2010; Q4 to be completed in draft in Q1 2011
·   Skeleton IFRS consolidated financial statements to be prepared for senior management review in Q3 2010
·   Audit Committee review of the skeleton consolidated financial statements in Q4 2010	 	·   Finalization of key accounting policy differences completed in Q4 2009
·   Senior management approval and Audit Committee review of accounting/policy changes and IFRS 1 elections completed in Q4 2009
·   Development of IFRS Accounting Policy Manual completed
·   Quantification of preliminary opening balance sheet completed in Q3 2010
·   Quantification of impact of key differences on Q1, Q2, Q3 and Q4 completed in draft
·   Development and review of preliminary Q1 skeleton consolidated financial statements completed in Q4 2010	
Training :
·   Provide technical training to key finance and accounting personnel in each of our RBUs	 	·   Ongoing training to key personnel as needed	 	·   Technical training provided to key personnel in each of our RBUs and Corporate in Q4 2009	
·   Provide specialized training to selected employees involved with the conversion to IFRS	 	 	 	·   Specific and refresher training provided to selected groups throughout 2010	
Business Activities:
·   Identify conversion impacts on financial covenants, executive compensation and contracts
·   Assess impact on budgeting and long-range plans
·   Identify impact on taxation	 	·   Financial covenant, executive compensation and contract analysis to be completed by Q4 2010
·   Budgeting and long-range planning impact to be completed by Q4 2010
·   Taxation analysis to be completed in Q2 2010	 	·   Financial covenant and contract analysis completed
·   Budgeting and long-range planning completed in Q4 2010 and Q1 2011
·   Identification of potential significant taxation differences completed in Q2 2010 with final assessments completed in Q3 2010	
Financial Information Systems:	 	·   Solution for capturing financial information under US GAAP and IFRS in Q1 2010
·   Necessary changes to financial information systems implemented by transition date	 	·   IFRS reporting application has been implemented to enable the capturing of consolidated financial information under both US GAAP and IFRS
·   Necessary changes to general ledger and financial information systems are complete and regularly updated	
·   Identify required changes to financial information systems and implement solutions
·   Determine and implement solution for capturing financial information under US GAAP and IFRS in 2010 (for comparative information)	 				
Control Environment:
·   Maintain effective Disclosure Controls & Procedures (DC&P) and Internal Control over Financial Reporting (ICFR) throughout the IFRS project
·   Design and implement new IFRS processes and controls	 	·   Incremental controls to be developed in Q2 2010 for the review of IFRS comparative financial information
·   Redesigned processes and controls to be in place by Q1 2011	 	·   Completed an impact assessment of IFRS technical accounting differences on financial reporting risks, procedures, systems and controls
·   Incremental controls implemented for development of Opening Balance Sheet and 2010 comparative financial information
·   Completed an impact assessment of 2011 steady state processes and controls
·   Amendments to specific business processes and controls are being finalized during Q1 2011	
 
Preliminary IFRS Consolidated Opening Balance Sheet
 
In third quarter of 2010, we completed our preliminary opening consolidated IFRS balance sheet as at January 1, 2010. Our preliminary opening consolidated IFRS balance sheet reflects the impact of the applicable IFRS 1 elections that we expect to apply on transition to IFRS. The opening consolidated IFRS balance sheet also reflects the impact of accounting policy differences arising from the transition
 
86 

 
Barrick Financial Report 2010  | Management’s Discussion and Analysis
 
from US GAAP to IFRS. The opening consolidated IFRS balance sheet presented in this MD&A is preliminary and the final opening consolidated IFRS balance sheet may reflect adjustments relating to any new IFRS pronouncements or other adjustments identified through fiscal year 2011.
 
Reconciliation of Consolidated Balance Sheets as Reported Under US GAAP and IFRS

 	 	 	 	As at December 31,	 	 	 	As at January 1,	 	
(Unaudited)	 	 	 	2009	 	Effect of	 	2010	 	
(millions of US $)	 	Ref	 	US GAAP basis	 	conversion to IFRS	 	IFRS basis	 	
Assets	 	 	 	 	 	 	 	 	 	
Current assets	 	 	 	 	 	 	 	 	 	
Cash and equivalents	 	 	 	$	2,564	 	$	—	 	$	2,564	 	
Accounts receivable	 	 	 	251	 	8	 	259	 	
Inventories	 	A	 	1,540	 	(52	)	1,488	 	
Other current assets	 	 	 	524	 	(6	)	518	 	
Assets held for sale	 	 	 	59	 	41	 	100	 	
 	 	 	 	4,938	 	(9	)	4,929	 	
Non-current assets	 	 	 	 	 	 	 	 	 	
Equity in investees	 	B	 	1,136	 	(12	)	1,124	 	
Other investments	 	 	 	92	 	—	 	92	 	
Property, plant and equipment	 	C	 	13,125	 	254	 	13,379	 	
Goodwill	 	 	 	5,197	 	—	 	5,197	 	
Intangible assets	 	C	(2)	66	 	209	 	275	 	
Deferred income tax assets	 	D	 	949	 	(348	)	601	 	
Other assets	 	E	 	1,531	 	(203	)	1,328	 	
Assets of discontinued operations	 	 	 	41	 	(41	)	—	 	
Total assets	 	 	 	$	27,075	 	$	(150	)	$	26,925	 	
Liabilities and Equity	 	 	 	 	 	 	 	 	 	
Current liabilities	 	 	 	 	 	 	 	 	 	
Accounts payable	 	 	 	$	1,221	 	$	—	 	$	1,221	 	
Short-term debt	 	 	 	54	 	—	 	54	 	
Current income tax liabilities	 	 	 	93	 	—	 	93	 	
Other current liabilities	 	 	 	382	 	(16	)	366	 	
Liabilities held for sale	 	 	 	23	 	26	 	49	 	
 	 	 	 	1,773	 	10	 	1,783	 	
Non-current liabilities	 	 	 	 	 	 	 	 	 	
Long-term debt	 	F	 	6,281	 	(157	)	6,124	 	
Provisions	 	G	 	1,122	 	286	 	1,408	 	
Deferred income tax liabilities	 	D	 	1,184	 	(224	)	960	 	
Other liabilities	 	G	 	1,145	 	(261	)	884	 	
Liabilities of discontinued operations	 	 	 	23	 	(23	)	—	 	
Total liabilities	 	 	 	11,528	 	(369	)	11,159	 	
Equity	 	 	 	 	 	 	 	 	 	
Capital stock	 	 	 	17,390	 	2	 	17,392	 	
Convertible borrowings — equity component	 	F	 	—	 	143	 	143	 	
Retained earnings	 	J	 	(2,382	)	(142	)	(2,524	)	
Accumulated other comprehensive income (“AOCI”)	 	H	 	55	 	178	 	233	 	
Total equity attributable to Barrick Gold Corporation shareholders	 	 	 	15,063	 	181	 	15,244	 	
Non-controlling interests	 	I	 	484	 	38	 	522	 	
Total equity	 	 	 	15,547	 	219	 	15,766	 	
Total liabilities and equity	 	 	 	$	27,075	 	$	(150	)	$	26,925	 	
 
87 

 
Management’s Discussion and Analysis
 
References
 
A.  Inventories

(millions of US $)	 	Incr./(Decr.)	 	
Capitalization of production phase stripping(1)	 	$	(142	)	
Other adjustments	 	3	 	
 	 	$	(139	)	
Short-term inventories	 	$	(52	)	
Long-term inventories (included in other assets)	 	(87	)	
 	 	$	(139	)	

(1) Refer to footnote C1.
 
B.  Equity In Investees

(millions of US $)	 	Incr./(Decr.)	 	
Reversal of Highland Gold impairment	 	$	55	 	
Elimination of interest capitalized on equity investees(1)	 	(125	)	
Capitalization of exploration and evaluation costs within equity investees	 	22	 	
Reclassification of hedge losses relating to capital expenditures within equity investees	 	36	 	
 	 	$	(12	)	

(1)           Under IFRS, our investment in equity investees, where the activities are development of mining projects, are not qualifying assets that are eligible for interest capitalization.
 
C.  Property, Plant and Equipment

(millions of US $)	 	Incr./(Decr.)	 	
Capitalization of production phase stripping (net of accumulated depreciation of $275 million)(1)	 	$	560	 	
Reclassification of acquired exploration properties to intangible assets(2)	 	(209	)	
Capitalization of exploration and evaluation costs(3)	 	188	 	
Adjustment due to deemed cost election for oil & gas properties(4)	 	(166	)	
Reclassification of hedge gains relating to capital expenditures from AOCI(5)	 	(56	)	
Adjustments to asset retirement costs	 	(41	)	
Other adjustments	 	(22	)	
 	 	$	254	 	

(1)           Under IFRS, certain waste stripping costs qualify for capitalization, which were previously expensed under US GAAP. Refer to page 94 for an explanation of the policy under IFRS.
(2)           Under IFRS, acquired exploration properties meet the definition of an intangible asset and consequently were reclassified.
(3)           Under IFRS, the criteria to determine costs that qualify for capitalization differ from US GAAP. Refer to page 93 for an explanation of the policy under IFRS.
(4)           Under IFRS 1 exemptions, we elected to take fair value as deemed cost for certain properties. For our oil and gas properties this election resulted in an adjustment to the carrying value of some assets. Refer to page 89 for an explanation of the IFRS 1 exemptions.
(5)           Under IFRS, accumulated hedge gains relating to capital expenditures are presented as a reduction of the cost of the asset.
 
D .             Deferred Income Taxes
 
The adjustments to deferred income tax assets and liabilities principally reflect the tax effects of other IFRS adjustments.
 
E.  Other Assets

(millions of US $)	 	Incr./(Decr.)	 	
Reclassification of debt issue costs(1)	 	$	(45	)	
Long-term inventory adjustments (refer to A)	 	(87	)	
Adjustments relating to restricted stock units(2)	 	(68	)	
Other adjustments	 	(3	)	
 	 	$	(203	)	

(1)           Under IFRS, direct and incremental costs incurred to issue debt securities are recorded as a reduction in the carrying amount of the related debt instrument and are unwound as a finance cost over the term of the debt.
(2)           Under IFRS, for restricted stock units, the long-term asset and corresponding liability are not recognized and were therefore reversed.
 
F.  Long-Term Debt

(millions of US $)	 	Incr./(Decr.)	 	
Bifurcation of equity portion of senior convertible debt(1)	 	$	(143	)	
Reclassification of debt issue costs	 	(45	)	
Reversal to retained earnings of previously amortized debt premium	 	31	 	
 	 	$	(157	)	

(1)           Under IFRS, the convertible debt instruments were bifurcated, and the debt and equity portions were separately recognized.
 
G.  Provisions

(millions of US $)	 	Incr./(Decr.)	 	
Reclassification of employee benefits and stock-based compensation from other liabilities	 	$	261	 	
Adjustments to Provisions for Environmental Rehabilitation (PER) relating to discount rates and foreign exchange rates	 	73	 	
Recognition of constructive obligations under IFRS	 	39	 	
De-recognition of a provision that does not meet IFRS recognition criteria	 	(30	)	
Adjustments to account for restricted stock units	 	(68	)	
Other adjustments	 	11	 	
 	 	$	286	 	
 
H.  AOCI

(millions of US $)	 	Incr./(Decr.)	 	
Reset of cumulative translation losses(1)	 	$	141	 	
Reset of actuarial losses relating to pension plans(1)	 	37	 	
Reclassifications of accumulated hedge gains relating to capital expenditures	 	(20	)	
Adjustments to hedge accounting to exclude the time value of options	 	33	 	
Other adjustments	 	(13	)	
 	 	$	178	 	

(1)           Under IFRS 1 exemptions we chose to reset the balance within AOCI relating to cumulative translation losses and actuarial losses on pension plans. Refer to page 89 for an explanation of the IFRS 1 exemptions.
 
I.                  Non-Controlling Interests
 
The impact on non-controlling interests of capitalization of exploration and evaluation costs was an increase of $38 million, principally relating to Pueblo Viejo.
 
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Barrick Financial Report 2010 | Management’s Discussion and Analysis
 
J.  Retained Earnings Reconciliation

(millions of US $)	 	 	 	
As at January 1, 2010	 	 	 	
US GAAP, as reported	 	$	(2,382	)	
IFRS 1 Exemptions	 	 	 	
Reset of actuarial gains and losses relating to pension plans	 	(37	)	
Reset of cumulative translation account	 	(141	)	
IFRS Policy choices	 	 	 	
Capitalized production phase stripping	 	408	 	
Capitalized exploration & evaluation costs	 	160	 	
Reversal of Highland Gold impairment	 	55	 	
Adjustment due to deemed cost election for oil & gas properties	 	(166	)	
Elimination of capitalized interest on equity investees	 	(125	)	
Increase in PERs(1)	 	(69	)	
Decrease in asset relating to the rehabilitation provision(2)	 	(32	)	
Bifurcation of senior convertible debt	 	(31	)	
Adjustments to hedge accounting to exclude time value of options	 	(33	)	
Tax effect of adjustments, net	 	(108	)	
Other adjustments	 	(23	)	
IFRS basis	 	$	(2,524	)	

(1)           Under IFRS, increase in PERS resulted from changes due to using current vs. historical discount and foreign exchange rates, and changes in cash flows due to additional constructive obligations.
(2)           Calculated using the IFRS 1 simplified approach (see (iii) on page 89).
 
Elected IFRS 1 Exemptions from Full Retrospective Application
 
Our transition to IFRS follows IFRS 1, which offers the possibility to utilize certain exemptions from full retrospective implementation of IFRS. We evaluated the options available in IFRS 1 and elected to adopt transitional implementation policies in the areas of business combinations, employee benefits, rehabilitation provisions, cumulative translation differences and fair value as a deemed cost election.
 
A summary of these transitional accounting policies is given below.
 
i)                 Business Combinations
 
We elected to utilize the option in IFRS 1 to not apply IFRS 3 retrospectively to business combinations completed prior to January 1, 2010. The impact of this policy decision is that all prior business combinations will continue to be accounted for as they originally were under US GAAP, including recognition of any goodwill identified in these transactions.
 
ii)             Employee Future Benefits
 
IFRS 1 allows for all cumulative actuarial gains and losses at the date of transition to be reset to zero within AOCI as of the date of transition as an alternative to full retrospective application of IAS 19 Employee Benefits.  We chose to adopt this transition policy.
 
iii)         Rehabilitation Provision
 
Under IFRS, when a rehabilitation provision is established, we are required to set up a corresponding asset and depreciate it over the remaining useful life of the asset. Any changes in the rehabilitation provision are added or deducted from the cost of the asset to which the obligation relates. Under IFRS 1, we elected to take a simplified approach to calculate and record the asset related to the rehabilitation provision on our opening IFRS consolidated balance sheet. As permitted under IFRS, the rehabilitation provision calculated on the transition date in accordance with IAS 37 is discounted back to the date when the provision first arose, at which date the corresponding asset is set up. This asset is then depreciated to its carrying amount at the transition date.
 
iv)            Cumulative Translation Differences
 
We elected to utilize the option under IFRS 1 to reset the cumulative translation account within AOCI to zero as of the date of transition to IFRS as an alternative to establishing a retrospective cumulative translation difference under the principles of IAS 21.
 
v)                Fair Value as Deemed Cost
 
IFRS 1 provides the option to record certain assets at fair value on transition or at an earlier date as an alternate to full retrospective application of IFRS in accounting for the asset. The option is available on an individual asset by asset basis. We chose to adopt this transition election on selected assets at the following properties: Pascua-Lama, Goldstrike, Plutonic, Marigold, Pierina, Osborne and Barrick Energy.
 
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Management’s Discussion and Analysis
 
Preliminary Impact of the IFRS Conversion on our Statement of Income for the year ended December 31, 2010
 
During 2010 and in the first quarter of 2011, we continued to perform preliminary calculations of the quantitative differences arising from our conversion from US GAAP to IFRS on the operating results for the year ended December 31, 2010. Presented in the tables below are the preliminary impacts identified to date of our conversion to IFRS on our consolidated statement of income for the year ended December 31, 2010. The actual impact of our conversion to IFRS is subject to management’s final review as well as audit by the Company’s independent registered accounting firm and may vary significantly from the preliminary impacts identified below because of a number of factors including without limitation, additional or revised information and changes in accounting standards or policies or in how these standards are applied.

 	 	 	 	For the year ended December 31, 2010	 	
 	 	 	 	US GAAP	 	Effect of IFRS	 	 	 	
(Unaudited)	 	 	 	measurement	 	measurement	 	 	 	
(millions of US $)	 	Ref	 	basis(1)	 	differences	 	IFRS basis	 	
Sales	 	K	 	$	10,991	 	$	14	 	$	11,005	 	
Costs and expenses	 	 	 	 	 	 	 	 	 	
Cost of sales	 	L	 	5,390	 	(228	)	5,162	 	
Corporate administration	 	 	 	154	 	3	 	157	 	
Exploration and evaluation	 	M	 	333	 	(104	)	229	 	
Other expense	 	N	 	459	 	14	 	473	 	
Impairment charges (reversals)	 	O	 	7	 	(80	)	(73	)	
 	 	 	 	6,343	 	(395	)	5,948	 	
Other income	 	P	 	100	 	42	 	142	 	
Income (loss) from equity investees	 	Q	 	(41	)	18	 	(23	)	
Gain (loss) on non-hedge derivatives	 	R	 	103	 	(38	)	65	 	
Income before finance items and income taxes	 	 	 	4,810	 	431	 	5,241	 	
Finance items	 	 	 	 	 	 	 	 	 	
Finance income	 	 	 	14	 	—	 	14	 	
Finance costs	 	S	 	(168	)	10	 	(158	)	
Income before income taxes	 	 	 	4,656	 	441	 	5,097	 	
Income tax expense	 	TBD	(2)	(1,480	)	TBD	 	TBD	 	
Income from continuing operations	 	 	 	3,176	 	TBD	 	TBD	 	
Income from discontinued operations	 	 	 	121	 	—	 	121	 	
Net income ( 3)	 	 	 	$	3,297	 	$	TBD	 	$	TBD	 	
Attributable to:	 	 	 	 	 	 	 	 	 	
Equity holders of Barrick Gold Corporation	 	 	 	$	3,274	 	$	TBD	 	$	TBD	 	
Non-controlling interests	 	 	 	$	23	 	$	TBD	 	$	TBD	 	

(1)           Certain US GAAP figures have been reclassified to conform to our expected IFRS financial statement presentation.
(2)           TBD = to be determined.
(3)           Net income under IFRS has not been presented since final assessment of differences has not been completed.
 
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Barrick Financial Report 2010 | Management’s Discussion and Analysis
 
References
 
K. Sales

 	 	For the year ended	 	
(millions of US $)	 	Dec. 31, 2010	 	
US GAAP, as reported	 	$	10,924	 	
By-product revenue reclassified from cost of sales(1)	 	131	 	
Gain on non-hedge derivatives(2)	 	(64	)	
US GAAP, as adjusted for IFRS format	 	10,991	 	
Revenue recognition(3)	 	14	 	
IFRS basis	 	$	11,005	 	

(1)           Recognition of incidental by-product sales previously recorded as a credit to costs of sales will be presented as part of sales commencing January 1, 2010.
(2)           Under IFRS, all realized and unrealized non-hedge derivative gains or losses, hedge ineffectiveness and amounts not qualifying for hedge accounting are presented as a separate line on the consolidated income statement. Under US GAAP these amounts were presented in the respective income statement line item to which the gain or loss is related.
(3)           Sales increased on transition due to earlier recognition of revenue for our concentrate sales at Bulyanhulu mine. Under IFRS, revenue is recognized on transfer of risk and rewards as compared to recognition on transfer of title under US GAAP.
 
L. Cost of Sales

 	 	For the year ended	 	
(millions of US $)	 	Dec. 31, 2010	 	
US GAAP cost of sales, as reported	 	$	4,201	 	
US GAAP amortization and accretion, as reported	 	1,196	 	
By-product revenue reclassified from cost of sales(1)	 	131	 	
Reclassification of certain royalty payments to income tax(2)	 	(101	)	
Reclassification of accretion expense to finance costs(3)	 	(47	)	
Gain on non-hedge derivatives(4)	 	10	 	
US GAAP, as adjusted for IFRS format	 	5,390	 	
Capitalization of production phase stripping(5)	 	(292	)	
Depreciation expense(6)	 	63	 	
Other adjustments	 	1	 	
IFRS basis	 	$	5,162	 	
IFRS cost of sales applicable to:	 	 	 	
Gold	 	$	4,566	 	
Copper	 	430	 	
Oil & Gas	 	115	 	
Others	 	51	 	
Total	 	$	5,162	 	

(1)           Refer to footnote K1.
(2)           Under IFRS, certain payments that are made to government bodies and are calculated based on net profit are classified as taxes. We reclassified the following to income tax expense: Nevada Net Proceeds Tax and Cowal royalty.
(3)           For IFRS purposes, accretion expense is presented as part of “Finance Costs”.
(4)           Refer to footnote K2.
(5)           Costs of sales were lower primarily due to capitalized production phase stripping costs.
(6)           Depreciation expense increased under IFRS due to higher book values resulting from capitalization of production phase stripping costs and exploration and evaluation costs, and the impact of the calculation on the asset related to the environmental rehabilitation provisions under IFRS 1 for opening balance sheet as at January 1, 2010.
 
M. Exploration and Evaluation

 	 	For the year ended	 	
(millions of US $)	 	Dec. 31, 2010	 	
US GAAP Exploration, as reported	 	$	180	 	
US GAAP Project Development Costs, as reported	 	153	 	
US GAAP, as adjusted for IFRS format(1)	 	333	 	
Capitalized exploration expenditures(2)	 	(26	)	
Capitalized project development costs(2)	 	(78	)	
IFRS basis	 	$	229	 	

(1)           For IFRS purposes, exploration costs and project development costs are combined and presented as “Exploration and Evaluation Costs”.
(2)           Under IFRS the criteria to determine costs that qualify for capitalization differs from US GAAP. We capitalized additional exploration and evaluation costs at certain properties, mainly Cerro Casale, where management assessed under IFRS that it is probable that these expenditures will result in future economic benefits.
 
N. Other Expense

 	 	For the year ended	 	
(millions of US $)	 	Dec. 31, 2010	 	
US GAAP, as reported	 	$	463	 	
Reclassification of certain payments to income tax(1)	 	(9	)	
Gain on non-hedge derivatives(2)	 	5	 	
US GAAP, as adjusted for IFRS format	 	459	 	
PER adjustments for closed mines(3)	 	19	 	
Others	 	(5	)	
IFRS basis	 	$	473	 	

(1)           Under IFRS certain payments that are made to government bodies and are calculated based on net profit are classified as taxes. We reclassified the Peru voluntary payments to income tax expense.
(2)           Refer to footnote K2.
(3)           Under IFRS, PERs are updated each reporting period based on the current discount and foreign exchange rates.
 
O. Impairment Charges (Reversals)

 	 	For the year ended	 	
(millions of US $)	 	Dec. 31, 2010	 	
US GAAP, as reported	 	$	7	 	
Reversal of Highland Gold impairment(1)	 	(84	)	
Others	 	4	 	
IFRS basis	 	$	(73	)	

(1)           Under IFRS past impairments of equity investments can be reversed in the future if there is a recovery in the realizable value of the investment. In 2008, we recorded an impairment of $140 million on our investment in Highland Gold. The fair value of the investment has increased since the write down; therefore, partial reversals were recorded under IFRS at transition date and in subsequent quarters.
 
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Management’s Discussion and Analysis
 
P. Other Income

 	 	For the year ended	 	
(millions of US $)	 	Dec. 31, 2010	 	
US GAAP, as reported	 	$	124	 	
Gain on non-hedge derivatives(1)	 	(24	)	
US GAAP, as adjusted for IFRS format	 	100	 	
Gain on Cerro Casale acquisition(2)	 	40	 	
Other adjustments	 	2	 	
IFRS basis	 	$	142	 	

(1)           Refer to footnote K2.
(2)           In the first quarter of 2010, Barrick acquired an additional 25% ownership interest in the Cerro Casale project. Due to the elimination of capitalized interest under IFRS, the assets had a lower book value on equity investments which resulted in a higher gain on acquisition recorded as other income.
 
Q. Income (Loss) from Equity Investees

 	 	For the year ended	 	
(millions of US $)	 	Dec. 31, 2010	 	
US GAAP, as reported	 	$	(41	)	
Capitalization of exploration and evaluation costs within equity investees(1)	 	18	 	
IFRS basis	 	$	(23	)	

(1)           Refer to footnote M2.
 
R. Gain (Loss) on Non-Hedge Derivatives (1)

 	 	For the year ended	 	
(millions of US $)	 	Dec. 31, 2010	 	
US GAAP, as reported	 	$	Nil	 	
Net realized and unrealized gains on non-hedge derivative positions	 	93	 	
Unrealized gains due to hedge ineffectiveness	 	10	 	
US GAAP, as adjusted for IFRS format	 	103	 	
Reclassification of loss on time value of options from AOCI	 	(38	)	
IFRS basis	 	$	65	 	

(1)           Under IFRS, all realized and unrealized non-hedge derivative gains or losses, hedge ineffectiveness and amounts not qualifying for hedge accounting are presented as a separate line on the consolidated income statement. Under US GAAP these amounts were presented in the respective income statement line item to which the gain or loss is related.
 
S. Finance Costs

 	 	For the year ended	 	
(millions of US $)	 	Dec. 31, 2010	 	
US GAAP interest expense, as reported	 	$	(121	)	
Reclassification of accretion expense(1)	 	(47	)	
US GAAP, as adjusted for IFRS format	 	(168	)	
Elimination of interest capitalized on equity investees(2)	 	(25	)	
Interest capitalized to Property Plant and Equipment(3)	 	20	 	
Changes in accretion expense(4)	 	26	 	
Other adjustments	 	(11	)	
IFRS basis	 	$	(158	)	

(1)           For IFRS purposes, interest expense and accretion are combined and presented as “Finance Costs”.
(2)           Under IFRS, our investment in equity investees where the activities are development of mining projects are not qualifying assets that are eligible for interest capitalization. On transition and in subsequent quarters, this resulted in the reversal of previously capitalized interest primarily related to Cerro Casale.
(3)           Under IFRS, capitalization of production phase stripping and capitalized exploration and evaluation costs resulted in an increase in capitalized interest relating to those expenditures.
(4)           Under IFRS, accretion expense changed due to changes in discount and foreign exchange rates on PER.
 
Preliminary impact of conversion to IFRS on 2010 Total Cash Costs per ounce, Depreciation per ounce and Capital Expenditures
 
Total Cash Costs — Gold

 	 	For the year ended	 	
($ per ounce)	 	Dec. 31, 2010	 	
US GAAP, as reported	 	$	457	 	
Capitalized stripping costs(1)	 	(36	)	
Reclassification of certain payments to income tax(2)	 	(13	)	
Other adjustments	 	1	 	
IFRS basis	 	$	409	 	

(1)           Refer to footnote L5.
(2)           Refer to footnote L2.
 
Depreciation — Gold

 	 	For the year ended	 	
($ per ounce)	 	Dec. 31, 2010	 	
US GAAP, as reported	 	$	127	 	
Depreciation of capitalized stripping costs(1)	 	8	 	
Depreciation of capitalized exploration and evaluation costs(1)	 	2	 	
Other adjustments	 	(1	)	
IFRS basis	 	$	136	 	

(1)           Refer to footnote L6.
 
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Barrick Financial Report 2010  | Management’s Discussion and Analysis
 
Capital Expenditures

 	 	For the year ended	 	
 	 	Dec. 31, 2010	 	
 	 	US GAAP	 	 	 	IFRS	 	
(millions of US $)	 	100% basis	 	Adj	 	100% basis	 	
Sustaining capital	 	$	863	 	$	—	 	$	863	 	
Open pit and underground mine development(1)	 	214	 	357	 	571	 	
Expansion capital(1)	 	236	 	15	 	251	 	
Capital projects(1),(2)	 	1,729	 	63	 	1,792	 	
Capitalized interest	 	281	 	28	 	309	 	
Total	 	$	3,323	 	$	463	 	$	3,786	 	

(1)           Capital expenditures increased due to the capitalization of production phase stripping costs and exploration and evaluation expenditures.
(2)           Represents total project expenditures on a consolidated basis. Under IFRS, our partner’s share of project capital expenditures is $410 million (US GAAP: $394 million).
 
Key IFRS Accounting Policies
 
The following is a summary of key IFRS accounting policies which differ significantly from the comparable US GAAP policies and which were applied in preparing the preliminary consolidated IFRS balance sheet as at January 1, 2010 and the preliminary IFRS operating results for the year ended December 31, 2010.
 
Exploration and Evaluation Expenditures
 
Exploration expenditures reflect the costs related to the initial search for mineral deposits with economic potential or obtaining more information about existing mineral deposits. Exploration expenditures typically include costs associated with prospecting, sampling, mapping, diamond drilling and other work involved in searching for ore. Generally, expenditures relating to exploration activities are expensed as incurred. Capitalization of exploration expenditure commences when it is probable that future economic benefits will flow to the Company. The assessment of probability is based on factors such as whether the drilling is performed in a resource that is contiguous or adjacent to an existing reserve.
 
Evaluation expenditures reflect costs incurred at development projects related to establishing the technical and commercial viability of developing mineral deposits identified through exploration or acquired through a business combination or asset acquisition. Evaluation expenditures include the cost of (i) establishing the volume and grade of deposits through drilling of core samples, trenching and sampling activities in an ore body that is classified as either a mineral resource or a proven and probable reserve, (ii) determining the optimal methods of extraction and metallurgical and treatment processes, (iii) studies related to surveying, transportation and infrastructure requirements, (iv) permitting activities, and (v) economic evaluations to determine whether development of the mineralized material is commercially justified, including scoping, prefeasibility and final feasibility studies. Evaluation expenditures and the subsequent mine development costs are capitalized if management determines that there is sufficient evidence to support probability of generating positive economic returns in the future.
 
If an exploration and evaluation activity does not prove viable, all irrecoverable costs with the project are written off.
 
Cash flows attributable to capitalized exploration and evaluation costs are classified as investing activities in the consolidated statements of cash flow.
 
For our petroleum and natural gas properties, we follow the successful efforts method of accounting, whereby exploration expenditures that are either general in nature or related to an unsuccessful drilling program are written off. Only costs that relate directly to the discovery and development of specific commercial oil and gas reserves are capitalized as development costs.
 
Property, Plant and Equipment
 
Land, Buildings, Plant and Equipment
 
We record buildings, plant and equipment at cost, less accumulated depreciation and applicable impairment losses. Cost includes all expenditures incurred to prepare an asset for its intended use, including the purchase price; brokers’ commissions; and installation costs including architectural, design and engineering fees, legal fees, survey costs, site preparation costs, freight charges, transportation insurance costs, duties, testing and preparation charges. Depreciation commences when buildings, plant and equipment are considered available for use. Land is not depreciated and is measured at historical cost less impairments.
 
We capitalize costs that extend the productive capacity or useful economic life of an asset. Costs incurred that do not extend the productive capacity or useful economic life of an asset are considered repairs and maintenance that may be part of production cost and capitalized to inventory.
 
We enter into leasing arrangements and arrangements that are in substance leasing arrangements. The determination of whether an arrangement is, or contains, a lease is based on the substance of the arrangement at inception date, including whether the fulfillment of the arrangement is dependent on the use of a specific asset or assets or whether the arrangement conveys a right to use the asset. A reassessment after inception is only made in specific
 
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Management’s Discussion and Analysis
 
circumstances. Leasing arrangements that transfer substantially all the risks and rewards of ownership of the asset to Barrick are classified as finance leases.
 
Finance leases are recorded as an asset with a corresponding liability at an amount equal to the lower of the fair value of the leased property and the present value at the beginning of the lease term of the minimum lease payments over the term of the lease. Each lease payment is allocated between the liability and finance costs using the effective interest method, whereby a constant rate of interest expense is recognized on the balance of the liability outstanding. The interest element of the lease is charged to the consolidated statements of income as a finance cost.
 
All other leases are classified as operating leases. Operating lease payments are recognized as an operating cost in the consolidated statements of income on a straight-line basis over the lease term.
 
Mining Interests
 
Mining interests consist of capitalized costs that include:
 
(i)              Acquired mineral reserves and resources,
(ii)           Underground mine development costs,
(iii)        Open pit mine development costs,
(iv)       Capitalized exploration and evaluation cost, and
(v)          Capitalized interest.
 
Depreciation commences when assets are available for their intended use.
 
(i) Acquired Mineral Reserves and Resources
 
Acquired Mining Properties
 
On acquisition of a mining property in the development or production stage, we prepare an estimate of the fair value attributable to the proven and probable mineral reserves, mineral resources and exploration potential that management has determined to be probable for future economic extraction over the life of mine. The estimated fair value of these reserves, resources and exploration potential is recorded as an asset as at the date of acquisition at cost, less accumulated depreciation and applicable accumulated impairment losses.
 
Acquired Petroleum and Natural Gas Properties
 
On acquiring petroleum and natural gas property, we estimate the fair value of reserves and resources and we record this amount as an asset at the date of acquisition. Capitalized reserve acquisition costs are depreciated when the asset is available for its intended use.
 
(ii) Underground Mine Development Costs
 
At our underground mines, we incur development costs to build new shafts, drifts and ramps that will enable us to physically access ore underground. The time over which we will continue to incur these costs depends on the mine life. These underground development costs are capitalized as incurred.
 
(iii) Open Pit Development Costs
 
In open pit mining operations, it is necessary to remove overburden and other waste materials to access ore from which minerals can be extracted economically. The process of mining overburden and waste materials is referred to as stripping.
 
Stripping costs incurred during the development stage of a mine in order to provide initial access to the ore body (referred to as pre-production stripping) are capitalized as mine development costs. Stripping costs incurred during the production stage (referred to as production phase stripping) are accounted for as current period production costs unless these costs result in a future economic benefit. Production phase stripping costs generate a future economic benefit when the related stripping activity: (i) provides access to ore to be mined in the future; (ii) increases the fair value of the mine (or pit) as access to future mineral reserves becomes less costly; (iii) increases the productive capacity or extends the productive life of the pit. Such production phase stripping costs are capitalized as mine development costs.
 
For periods where production phase stripping activity generates a future economic benefit, the life-of-pit waste tons to ore tons ratio (the “strip ratio”) is considered, along with other factors such as the length and intensity of the stripping campaign, to determine the amount of production stripping costs incurred that is related to current production versus the amount that relates to the future economic benefit.
 
Where a mine operates several open pits that are regarded as separate operations for the purpose of mine planning, stripping costs are accounted for separately by reference to the ore reserves from each separate pit (i.e. the initial stripping of the second and subsequent pits is considered to be pre-production stripping). If, however, the pits are highly integrated for the purpose of mine planning, the second and subsequent pits are regarded as extensions of the first pit in accounting for stripping costs. In such cases, the initial stripping of the second and subsequent pits is considered to be production phase stripping relating to the combined operation.
 
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Barrick Financial Report 2010 | Management’s Discussion and Analysis
 
(iv) Capitalized Exploration and Evaluation Costs
 
Exploration and evaluation expenditures that result in a probable future economic benefit are capitalized (refer to page 93).
 
(v) Capitalized Interest
 
Interest cost is considered an element of the historical cost of an asset when a period of time is necessary to prepare it for its intended use. We capitalize interest costs for qualifying assets including our exploration properties and capital projects prior to when production begins while exploration, development or construction activities are in progress and borrowings have been incurred. Capitalization ceases when construction is interrupted for an extended period or when the asset is substantially complete. Where funds are borrowed specifically to finance a project, the amount capitalized represents the actual borrowing costs incurred. Where surplus funds available out of money borrowed specifically to finance a project are temporarily invested, the total capitalized interest is reduced by income generated from short-term investments of such funds. Where the funds used to finance a project form part of general borrowings, the amount capitalized is calculated using a weighted average of rates applicable to the relevant borrowings during the period.
 
Other Assets Not Subject to Depreciation
 
Non-Depreciable Mining Interest
 
On acquisition of a mining property in the development or production stage, we prepare an estimate of the fair value attributable to the mineral resources that management has determined not to be probable of future economic extraction, as well as the fair value attributable to the exploration potential of the property. The estimated fair value of these acquired resources and exploration potential is recorded as an asset (non-depreciable mining interest) as at the acquisition date. As part of our annual business cycle, we prepare estimates of gold and copper mineral reserves and resources for each mineral property. The changes in reserves and resources are, among other things, used to determine the amount to be converted from non-depreciable mining interests to depreciable mining interests.
 
Construction-in-Progress
 
Assets under construction at both our development projects and operating mines are capitalized as construction-in-progress. Construction-in-progress amounts related to development projects are included in the carrying amount of the development project. Construction-in-progress amounts incurred at operating mines are presented as a separate asset within Property Plant & Equipment (“PP&E”). The cost of PP&E comprises its purchase price and any costs directly attributable to bringing it into working condition for its intended use, at which point, it is transferred to PP&E and depreciation commences. Construction-in-progress also contains deposits on long lead items. Construction-in-progress is not depreciated.
 
Depreciation
 
Property, plant and equipment are depreciated over their useful life, or over the remaining life of the mine if shorter. The property, plant and equipment assets acquired under finance leases are depreciated over the shorter of the useful life of the asset and the lease term. The residual value of the asset is considered when determining the amount to be depreciated. Land is not depreciated and is measured at historical cost less impairments.
 
For mining interests, the economic benefits of the assets are consumed in a pattern which is linked to the production level. Such assets are depreciated on a units-of-production basis (“UOP”).
 
Capitalized costs associated with acquired mining properties and capitalized exploration and evaluation costs are depreciated on a UOP basis, whereby the denominator is the estimated ounces of gold/pounds of copper in proven and probable reserves and a portion of resources at the mine where it is considered probable that those resources will be extracted economically. The depreciation is included as a component of inventory cost as the applicable ore is extracted.
 
Acquired petroleum and natural gas reserves and resources and capitalized exploration costs are depreciated on a UOP basis, whereby the denominator is the estimated barrels of oil equivalent in proven reserves.
 
Capitalized underground development costs incurred and capitalized to enable access to specific ore blocks or areas of the underground mine, and which only provide an economic benefit over the period of mining that ore block or area, are depreciated on a UOP basis, whereby the denominator is estimated ounces of gold/pounds of copper
 
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Management’s Discussion and Analysis
 
in proven and probable reserves and a portion of resources within that ore block or area where it is considered probable that those resources will be extracted economically.
 
If capitalized underground development costs provide an economic benefit over the entire mine life, the costs are depreciated on a UOP basis, whereby the denominator is the estimated ounces of gold/pounds of copper in total accessible proven and probable reserves and a portion of resources where it is considered probable that those resources will be extracted economically.
 
Production phase stripping costs that generate a future economic benefit to Barrick are capitalized as mine development costs and depreciated on a UOP basis whereby the denominator is the estimated ounces of gold/pounds of copper in the associated open pit in proven and probable reserves and a portion of resources where it is considered probable that those resources will be extracted economically. The depreciation is included as a component of inventory cost as the applicable ore is extracted.
 
Depreciation on equipment utilized in the development of assets, including open pit and underground mine development, is depreciated and recapitalized as development costs attributable to the related asset.
 
Annual Depreciation Rates of Major Assets Categories

Land	 	Not depreciated	 	
Mining Interests	 	UOP	 	
Plant and equipment	 	5 — 25 years	 	
Underground mobile equipment	 	5 — 7 years	 	
Light vehicles and other mobile equipment	 	2 — 3 years	 	
Furniture, computer and office equipment	 	2 — 3 years	 	
Oil and gas plants and related facilities	 	3 — 15 years	 	
 
Each asset’s estimated residual value and useful life is reviewed, and adjusted if appropriate, on an annual basis. The estimate of residual value and useful life is based on the physical condition and life limitations of buildings, plant and equipment and the present assessment of economically recoverable ounces of the mine for the mining property and development cost asset. Changes to the estimated residual values or useful lives are accounted for prospectively.
 
Update of Gold and Copper Mineral Reserves and Resources
 
At the end of each fiscal year, as part of our annual business cycle, we update our life-of mine plans and prepare estimates of Proven and Probable gold and copper mineral reserves as well as measured, indicated and inferred mineral resources for each mineral property. We prospectively revise calculations of depreciation of property, plant and equipment based on these updated life-of-mine plans.
 
Impairment Evaluations
 
We review and test the carrying amounts of long-lived assets when events or changes in circumstances suggest that the carrying amount may not be recoverable. Impairment assessments are conducted at the level of cash-generating units (“CGUs”), which is the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets. For operating mines, capital projects and petroleum and natural gas properties, the individual mine/project/property represents a CGU for impairment testing of long-lived assets.
 
The recoverable amount of a CGU is the higher of Value In Use (“VIU”) and Fair Value Less Cost to Sell (“FVLCS”). An impairment loss is recognized for any excess of carrying amount of a CGU over its recoverable amount. Impairment losses are allocated pro-rata based on relative carrying values. Any impairment is recognized as an expense in the consolidated statements of income in the reporting period in which the write-down occurs.
 
Long-lived assets subject to potential impairment at mine sites/capital projects/petroleum and natural gas properties include land, buildings, plant and equipment, mineral properties and capitalized development costs, construction-in-progress and development projects.
 
Impairment Reversals
 
An impairment loss recognized in prior years for long-lived assets shall be reversed if, and only if, there has been a change in the estimates used to determine the asset’s recoverable amount since the last impairment loss was recognized. This reversal is recognized in the consolidated statements of income and is limited to the carrying amount that would have been determined, net of any depreciation, had no impairment been recognized in prior years. After such a reversal, any depreciation charge is adjusted prospectively.
 
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Barrick Financial Report 2010 | Management’s Discussion and Analysis
 
Goodwill and Intangible Assets
 
Goodwill
 
Under the acquisition method, the costs of business acquisitions are allocated to the assets acquired and liabilities assumed based on the estimated fair values at the date of acquisition. The excess of acquisition cost over the net fair value of identified tangible and intangible assets acquired and liabilities and contingent liabilities assumed represents goodwill that is allocated to CGUs.
 
Impairment Evaluations
 
Goodwill is not amortized; rather it is evaluated for impairment annually as of October 1 or at any time during the year if an indicator of impairment is considered to exist. We test goodwill at the operating segment level, since each CGU in a segment derives synergy benefits from the business combinations within that segment that give rise to goodwill, and management does not internally monitor goodwill at a lower level. An impairment loss is recognized for the amount by which the operating segment’s carrying amount exceeds its recoverable amount.
 
The recoverable amount of an operating segment is the higher of Value In Use (“VIU”) and Fair Value Less Cost to Sell (“FVLCS”). An impairment loss is recognized for any excess of carrying amount of an operating segment over its recoverable amount. Any impairment is recognized as an expense in the consolidated statements of income in the reporting period in which the write-down occurs. The impairment loss is allocated to reduce the carrying amount of the assets of the operating segment in the following order: (a) first, to reduce the carrying amount of goodwill allocated to the operating segment, (b) then, to the other assets of the operating segment pro rata on the basis of the carrying amount of each asset.
 
Impairment Reversals
 
An impairment loss recognized for goodwill shall not be reversed in a subsequent period.
 
Intangible Assets
 
Intangible assets acquired by way of an asset acquisition or business combination are recognized if the asset is separable or arises from contractual or legal rights and the fair value can be measured reliably on initial recognition. On acquisition of a mineral property in the exploration stage, we prepare an estimate of the fair value attributable to the exploration potential, including mineral resources, if any, of that property. The fair value of the exploration potential is recorded as an intangible asset (acquired exploration potential) as at the date of acquisition. When an exploration stage property moves into development, any acquired exploration intangible asset balance attributable to that property is transferred to non-depreciable mining interests within property, plant and equipment.
 
Impairment Evaluations
 
We review and test the carrying amounts of intangible assets when events or changes in circumstances suggest that the carrying amount may not be recoverable. Intangible assets that are currently in use and subject to amortization are included in the carrying amount of the appropriate CGU and tested for impairment together with the other long lived assets of that CGU. Intangible assets that are not subject to amortization are tested at an individual asset level.
 
Impairment Reversals
 
An impairment loss recognized in prior years for intangible assets is reversed if there has been a change in the circumstances that led to the impairment loss and it has been determined that the asset is no longer impaired as a result. This reversal is recognized in the consolidated statements of income and is limited to the carrying amount that would have been determined, net of any depreciation where applicable, had no impairment been recognized in prior years. After such a reversal, any depreciation charge where applicable is adjusted prospectively.
 
Provision for Environmental Rehabilitation
 
Mining, extraction and processing activities normally give rise to obligations for environmental rehabilitation. Rehabilitation work can include facility decommissioning and dismantling; removal or treatment of waste materials; site and land rehabilitation, including compliance with and monitoring of environmental regulations; security and other site-related costs required to perform the rehabilitation work; and operation of equipment designed to reduce or eliminate environmental effects. The extent of work required and the associated costs are dependent on the requirements of relevant authorities and our environmental policies. Routine operating costs that may impact the ultimate closure and rehabilitation activities, such as waste material handling conducted as an integral part of a mining or production process, are not included in the provision. Costs arising from unforeseen circumstances, such as the contamination caused
 
97 

 
Management’s Discussion and Analysis
 
by unplanned discharges, are recognized as an expense and liability when the event occurs that gives rise to an obligation and reliable estimates of the required rehabilitation costs can be made.
 
Provisions for the cost of each rehabilitation program are normally recognized at the time that an environmental disturbance occurs or a constructive obligation is determined. When the extent of disturbance increases over the life of an operation, the provision is increased accordingly. The major parts of the carrying amount of provisions relate to tailings pond closure/rehabilitation; demolition of buildings/mine facilities; ongoing water treatment; and ongoing care and maintenance of closed mines. Costs included in the provision encompass all closure and rehabilitation activity expected to occur progressively over the life of the operation and at the time of closure in connection with disturbances as at the reporting date. Estimated costs included in the determination of the provision reflect the risks and probabilities of alternative estimates of cash flows required to settle the obligation at each particular operation. The costs are estimated using either the work of external consultants or internal experts depending on management’s intention.
 
The timing of the actual rehabilitation expenditure is dependent upon a number of factors such as the life and nature of the asset, the operating license conditions and the environment in which the mine operates. Expenditure may occur before and after closure and can continue for an extended period of time depending on rehabilitation requirements. Rehabilitation provisions are measured at the expected value of future cash flows, discounted to their present value using a current, US dollar real risk-free pre-tax discount rate. The unwinding of the discount is included in finance expense and results in an increase in the amount of the provision. Provisions are updated each reporting period for the effect of a change in the discount rate and foreign exchange rate, and the change in estimate is added or deducted from the related asset and depreciated prospectively over the asset’s useful life.
 
Significant judgments and estimates are involved in forming expectations of future activities and the amount and timing of the associated cash flows. Those expectations are formed based on existing environmental and regulatory requirements or, if more stringent, our environmental policies which give rise to a constructive obligation. When expected cash flows change, the revised cash flows are discounted using the current US dollar real risk-free pre-tax discount rate and an adjustment is made to the provision.
 
When provisions for closure and rehabilitation are initially recognized, the corresponding cost is capitalized as an asset, representing part of the cost of acquiring the future economic benefits of the operation. The capitalized cost of closure and rehabilitation activities is recognized in property, plant and equipment and depreciated over the future production from the operations to which it relates.
 
Adjustments to the estimated amount and timing of future closure and rehabilitation cash flows are a normal occurrence in light of the significant judgments and estimates involved. The principal factors that can cause expected cash flows to change are: the construction of new processing facilities; changes in the quantities of material in reserves and resources with a corresponding change in the life-of-mine plan; changing ore characteristics that impact required environmental protection measures and related costs; changes in water quality that impact the extent of water treatment required; foreign exchange rates and changes in laws and regulations governing the protection of the environment.
 
Rehabilitation provisions are adjusted as a result of changes in estimates. Those adjustments are accounted for as a change in the corresponding value of the related assets including the related mineral property, except where a reduction in the provision is greater than the remaining net book value of the related assets, in which case the value is reduced to nil and the remaining adjustment is recognized in the consolidated statements of income. In the case of closed sites, changes to estimated costs are recognized immediately in the consolidated statements of income. The adjusted cost of the asset is depreciated prospectively. Changes also result in an adjustment to future finance costs.
 
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Barrick Financial Report 2010 | Management’s Discussion and Analysis
 
Glossary of Technical Terms
 
AUTOCLAVE: Oxidation process in which high temperatures and pressures are applied to convert refractory sulfide mineralization into amenable oxide ore.
 
BACKFILL: Primarily waste sand or rock used to support the roof or walls after removal of ore from a stope.
 
BY-PRODUCT: A secondary metal or mineral product recovered in the milling process such as copper and silver.
 
CONCENTRATE: A very fine, powder-like product containing the valuable ore mineral from which most of the waste mineral has been eliminated.
 
CONTAINED OUNCES: Represents ounces in the ground before reduction of ounces not able to be recovered by the applicable metallurgical process.
 
DEVELOPMENT: Work carried out for the purpose of opening up a mineral deposit. In an underground mine this includes shaft sinking, crosscutting, drifting and raising. In an open pit mine, development includes the removal of overburden.
 
DILUTION: The effect of waste or low-grade ore which is unavoidably included in the mined ore, lowering the recovered grade.
 
DORÉ: Unrefined gold and silver bullion bars usually consisting of approximately 90 percent precious metals that will be further refined to almost pure metal.
 
DRILLING:
 
Core: drilling with a hollow bit with a diamond cutting rim to produce a cylindrical core that is used for geological study and assays. Used in mineral exploration.
 
In-fill: any method of drilling intervals between existing holes, used to provide greater geological detail and to help establish reserve estimates.
 
EXPLORATION: Prospecting, sampling, mapping, diamond-drilling and other work involved in searching for ore.
 
GRADE: The amount of metal in each ton of ore, expressed as troy ounces per ton or grams per tonne for precious metals and as a percentage for most other metals.
 
Cut-off grade: the minimum metal grade at which an ore body can be economically mined (used in the calculation of ore reserves).
 
Mill-head grade: metal content of mined ore going into a mill for processing.
 
Recovered grade: actual metal content of ore determined after processing.
 
Reserve grade: estimated metal content of an ore body, based on reserve calculations.
 
HEAP LEACHING: A process whereby gold is extracted by “heaping” broken ore on sloping impermeable pads and continually applying to the heaps a weak cyanide solution which dissolves the contained gold. The gold-laden solution is then collected for gold recovery.
 
HEAP LEACH PAD: A large impermeable foundation or pad used as a base for ore during heap leaching.
 
MILL: A processing facility where ore is finely ground and thereafter undergoes physical or chemical treatment to extract the valuable metals.
 
MINERAL RESERVE: See pages 164—165 — “Summary Gold Mineral Reserves and Mineral Resources.”
 
MINERAL RESOURCE: See pages 164—165 — “Summary Gold Mineral Reserves and Mineral Resources.”
 
MINING CLAIM: That portion of applicable mineral lands that a party has staked or marked out in accordance with applicable mining laws to acquire the right to explore for and exploit the minerals under the surface.
 
MINING RATE: Tons of ore mined per day or even specified time period.
 
OPEN PIT: A mine where the minerals are mined entirely from the surface.
 
ORE: Rock, generally containing metallic or non-metallic minerals, which can be mined and processed at a profit.
 
ORE BODY: A sufficiently large amount of ore that can be mined economically.
 
OUNCES: Troy ounces of a fineness of 999.9 parts per 1,000 parts.
 
RECLAMATION: The process by which lands disturbed as a result of mining activity are modified to support beneficial land use. Reclamation activity may include the removal of buildings, equipment, machinery and other physical remnants of mining, closure of tailings storage facilities, leach pads and other mine features, and contouring, covering and re-vegetation of waste rock and other disturbed areas.
 
RECOVERY RATE: A term used in process metallurgy to indicate the proportion of valuable material physically recovered in the processing of ore. It is generally stated as a percentage of the material recovered compared to the total material originally present.
 
REFINING: The final stage of metal production in which impurities are removed from the molten metal.
 
STRIPPING: Removal of overburden or waste rock overlying an ore body in preparation for mining by open pit methods. Expressed as the total number of tons mined or to be mined for each ounce of gold.
 
TAILINGS: The material that remains after all economically and technically recoverable precious metals have been removed from the ore during processing.
 
99 

Exhibit 99.5
 
CONSENT OF INDEPENDENT ACCOUNTANTS
 
We hereby consent to the inclusion in the Annual Report on Form 40-F of Barrick Gold Corporation (the Company), and to the incorporation by reference in the Forms S-8 (File Nos. 333-121500, 333-131715, 333-135769) of the Company, of our report dated February 16, 2011 relating to the Company’s consolidated financial statements and the effectiveness of internal control over financial reporting.
 
/s/ PricewaterhouseCoopers LLP
 
Chartered Accountants, Licensed Public Accountants
Toronto, Ontario
March 31, 2010
 
1 

 
Exhibit 99.6
 
CERTIFICATION REQUIRED BY RULE 13a-14(a) OR RULE 15d-14(a), PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
 
I, Aaron W. Regent certify that:
 
1.                                        I have reviewed this annual report on Form 40-F of Barrick Gold Corporation;
 
2.                                        Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
 
3.                                        Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the issuer as of, and for, the periods presented in this report;
 
4.                                        The issuer’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the issuer and have:
 
(a)                                   Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
 
(b)                                  Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
 
(c)                                   Evaluated the effectiveness of the issuer’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
 
(d)                                  Disclosed in this report any change in the issuer’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the issuer’s internal control over financial reporting; and
 
5.                                        The issuer’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the issuer’s auditors and the audit committee of the issuer’s board of directors (or persons performing the equivalent functions):
 
(a)                                   All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the issuer’s ability to record, process, summarize and report financial information; and
 
(b)                                  Any fraud, whether or not material, that involves management or other employees who have a significant role in the issuer’s internal control over financial reporting.

Date:	March 31, 2011	 	 	
 	 	 	 	
 	 	/s/ Aaron W. Regent	
 	 	Name:	Aaron W. Regent	
 	 	Title:	President and Chief Executive Officer	

 

Exhibit 99.7
 
CERTIFICATION REQUIRED BY RULE 13a-14(a) OR RULE 15d-14(a), PURSUANT TO SECTION 302
OF THE SARBANES-OXLEY ACT OF 2002
 
I, Jamie C. Sokalsky certify that:
 
1.                                       I have reviewed this annual report on Form 40-F of Barrick Gold Corporation;
 
2.                                       Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
 
3.                                       Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the issuer as of, and for, the periods presented in this report;
 
4.                                       The issuer’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the issuer and have:
 
(a)                                  Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
 
(b)                                  Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
 
(c)                                   Evaluated the effectiveness of the issuer’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
 
(d)                                  Disclosed in this report any change in the issuer’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the issuer’s internal control over financial reporting; and
 
5.                                       The issuer’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the issuer’s auditors and the audit committee of the issuer’s board of directors (or persons performing the equivalent functions):
 
(a)                                  All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the issuer’s ability to record, process, summarize and report financial information; and
 
(b)                                  Any fraud, whether or not material, that involves management or other employees who have a significant role in the issuer’s internal control over financial reporting.
 
Date:      March 31, 2011

 	/s/ Jamie C. Sokalsky	
 	Name:	Jamie C. Sokalsky	
 	Title:	Executive Vice President and
Chief Financial Officer	

 
Exhibit 99.8
 
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,
AS ENACTED PURSUANT TO
SECTION 906 OF THE U.S. SARBANES-OXLEY ACT OF 2002
 
Barrick Gold Corporation (the “Company”) is filing with the U.S. Securities and Exchange Commission on the date hereof, its annual report on Form 40-F for the fiscal year ended December 31, 2010 (the “Report”).
 
I, Aaron W. Regent, President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. section 1350, as enacted pursuant to section 906 of the U.S. Sarbanes-Oxley Act of 2002, that, to the best of my knowledge:
 
a)              the Report fully complies with the requirements of section 13(a) or 15(d) of the U.S. Securities Exchange Act of 1934; and
 
b)              the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
 
Date: March 31, 2011

/s/ Aaron W. Regent	 	
Name: Aaron W. Regent	 	
Title: President and Chief Executive Officer	 	

 
Exhibit 99.9
 
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,
AS ENACTED PURSUANT TO
SECTION 906 OF THE U.S. SARBANES-OXLEY ACT OF 200 2
 
Barrick Gold Corporation (the “Company”) is filing with the U.S. Securities and Exchange Commission on the date hereof, its annual report on Form 40-F for the fiscal year ended December 31, 2010 (the “Report”).
 
I, Jamie C. Sokalsky, Executive Vice President and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. section 1350, as enacted pursuant to section 906 of the U.S. Sarbanes-Oxley Act of 2002, that, to the best of my knowledge:
 
a)              the Report fully complies with the requirements of section 13(a) or 15(d) of the U.S. Securities Exchange Act of 1934; and
 
b)              the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
 
Date: March 31, 2011

/s/ Jamie C. Sokalsky	 	
Name: Jamie C. Sokalsky	 	
Title: Executive Vice President and Chief Financial Officer	 	

 
Exhibit 99.10
 
Dodd-Frank Act Disclosure of Mine Safety and Health Administration Safety Data
 
Barrick Gold Corporation (“ Barrick ”) is committed to the health and safety of its employees and in providing an incident free workplace.  Barrick maintains a comprehensive health and safety program that includes extensive training for all employees and contractors, site inspections, emergency response preparedness, crisis communications training, incident investigation, regulatory compliance training and process auditing.
 
Barrick’s U.S. mining operations are subject to Federal Mine Safety and Health Administration (“ MSHA ”) regulation under the U.S. Federal Mine Safety and Health Act of 1977 (“ FMSH Act ”).  MSHA inspects Barrick’s mines on a regular basis and issues various citations and orders when it believes a violation has occurred under the FMSH Act.  Whenever MSHA issues a citation or order, it also generally proposes a civil penalty, or fine, related to the alleged violation.
 
The following disclosures are provided pursuant to Section 1503(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act (“ Dodd-Frank Act ”), which requires certain disclosures by companies required to file periodic reports under the Securities Exchange Act of 1934 that operate mines regulated under the FMSH Act. Under the Dodd-Frank Act, the U.S. Securities and Exchange Commission (“ SEC ”) is authorized to issue rules and regulations to carry out the purposes of these provisions, but has not yet issued final rules under these provisions as of the date of this Annual Report on Form 40-F; therefore, it is possible that any final rules or guidelines adopted by the SEC will require future disclosures to be presented in a different form or contain additional or alternative content. The disclosures reflect Barrick’s U.S. mining operations only as the requirements of the Dodd-Frank Act do not apply to Barrick’s mines operated outside the U.S.
 
In addition, as required by the reporting requirements regarding mine safety included in section 1503(a)(2) of the Dodd-Frank Act, for the year ended  December 31, 2010, none of the mines operated by Barrick received written notice from MSHA of (a) a pattern of violations of mandatory health or safety standards that are of such nature as could have significantly and substantially contributed to the cause and effect of mine health or safety hazards under section 104(e) of the FMSH Act or (b) the potential to have such a pattern.
 
The information in the table below reflects citations and orders MSHA issued to Barrick during the year ended December 31, 2010, as reflected in Barrick’s records.  The data in Barrick’s system may not match or reconcile with the data MSHA maintains on its public website.  In evaluating this information, consideration should also be given to factors such as: (i) the number of citations and orders may vary depending on the size and operation of the mine, (ii) the number of citations issued may vary from inspector to inspector and mine to mine, and (iii) citations and orders may be contested and appealed, and in that process, may be reduced in severity and amount, and may be dismissed.

Mine ID Number(1)	 	Mine or Operating Name	 	Section
104(a) Significant and Substantial Citations(2)	 	Section
104(b) Orders(3)	 	Section
104(d) Citations and
Orders(4)	 	Section
110(b)(2) Violations(5)	 	Section
107(a) Orders(6)	 	Proposed MSHA Assessments(7)	 	Fatalities	 	Pending Legal Action(8)	 	
2601842	 	Bald Mountain Mine	 	21	 	—	 	—	 	—	 	—	 	$	10,003.00	 	0	 	15	 	
2602300
	 	Storm Exploration Decline	 	9	 	—	 	—	 	—	 	—	 	$	2,696.00	 	0	 	5	 	
2602246	 	Meikle Mine	 	123	 	—	 	—	 	—	 	—	 	$	230,480.00	 	2	 	29	 	
2602673	 	Roaster Operations	 	22	 	—	 	—	 	—	 	—	 	$	1,891.00	 	0	 	4	 	
2602674
	 	Mill/Autoclave Operations	 	42	 	—	 	—	 	—	 	—	 	$	4,145.00	 	0	 	8	 	
2602286	 	Torquoise Ridge Mine	 	130	 	1	 	10	 	—	 	1	 	$	187,384.00	 	0	 	17	 	
2600827	 	Barrick Cortez	 	84	 	—	 	6	 	—	 	—	 	$	32,941.00	 	0	 	10	 	
2602573
	 	Barrick Cortez Underground	 	38	 	—	 	—	 	—	 	1	 	$	23,052.00	 	0	 	4	 	
2401417
	 	Golden Sunlight Mine Inc.	 	38	 	—	 	—	 	—	 	1	 	$	10,805.00	 	0	 	2	 	
2602307	 	Ruby Hill Mine	 	15	 	—	 	—	 	—	 	—	 	$	5,973.00	 	0	 	1	 	
2601089	 	Goldstrike Mine	 	25	 	—	 	—	 	—	 	—	 	$	40,933.00	 	0	 	13	 	
4503110	 	Getchell Pit	 	1	 	—	 	—	 	—	 	—	 	$	3,405.00	 	0	 	4	 	
 
1 

 

(1)           MSHA assigns an identification number to each mine or operation and may or may not assign separate identification numbers to related facilities.  The information provided in this table is presented by mine identification number.
 
(2)           Represents the total number of citations issued by MSHA for violation of health or safety standards that could significantly and substantially contribute to a serious injury if left unabated.
 
(3)           Represents the total number of orders issued, which represents a failure to abate a citation under section 104(a) within the period prescribed by MSHA.  This results in an order of immediate withdrawal from the area of the mine affected by the condition until MSHA determines that the violation has been abated.
 
(4)           Represents the total number of citations and orders issued by MSHA for unwarrantable failure to comply with mandatory health or safety standards.  These types of violations could significantly and substantially contribute to a serious injury; however, the conditions do not cause imminent danger (see note 6 below).
 
(5)           Represents the total number of flagrant violations identified.
 
(6)           Represents the total number of imminent danger orders issued under section 107(a) of the FMSH Act.  Orders issued under section 107(a) of the FMSH Act require the operator of the mine to cause all persons (except authorized persons) to be withdrawn from the mine until the imminent danger and the conditions that caused such imminent danger cease to exist.
 
(7)           Amounts represent the total dollar value of proposed assessments received from MSHA and do not necessarily relate to the citations or orders issued by MSHA during the period, or to the pending legal actions reported below.
 
(8)           Pending legal actions before the Federal Mine Safety and Health Review Commission (“ Commission ”) as required to be reported by Section 1503(a)(3)of the Dodd-Frank Act.  The Commission is an independent adjudicative agency established by the FMSH Act that provides administrative trial and appellate review of legal disputes arising under the FMSH Act.  These cases may involve, among other questions, challenges by operators to citations, orders and penalties they have received from MSHA or complaints of discrimination by miners under Section 105 of the FMSH Act.  The following provides additional information of the types of proceedings that may be brought before the Commission:
 
·                   Contest Proceedings — a contest proceeding may be filed with the Commission by an operator to challenge the issuance of a citation or order issued by MSHA;
 
·                   Civil Penalty Proceedings — a civil penalty proceeding may be filed with the Commission by an operator to challenge a civil penalty MSHA has proposed for a violation contained in a citation or order;
 
·                   Discrimination Proceedings — a discrimination proceeding involves a miner’s allegation that he or she has suffered adverse employment action because he or she engaged in activity protected under the FMSH Act, such as making a safety complaint;
 
·                   Temporary Reinstatement Proceedings — a temporary reinstatement proceeding involves cases in which a miner has filed a complaint with MSHA stating that he or she has suffered discrimination and the miner has lost his or her position; and
 
·                   Compensation Proceedings — a compensation proceeding may be filed with the Commission by miners entitled to compensation when a mine is closed by certain closure orders issued by MSHA.  The purpose of the proceeding is to determine the amount of compensation, if any, due to miners idled by the orders.
 
2