**Exhibit 99.3**

** **

Management’s Responsibility

 

**Management’sResponsibility for Financial Statements**

 

The accompanyingconsolidated financial statements have been prepared by and are theresponsibility of the Board of Directors and Management of the company.

 

Theconsolidated financial statements have been prepared in accordance with UnitedStates generally accepted accounting principles and reflect Management’s bestestimates and judgments based on currently available information. The companyhas developed and maintains a system of internal accounting controls in orderto ensure, on a reasonable and cost effective basis, the reliability of itsfinancial information.

 

Theconsolidated financial statements have been audited by PricewaterhouseCoopersLLP, Chartered Accountants. Their report outlines the scope of theirexamination and opinion on the consolidated financial statements.

 

 

**Jamie C.Sokalsky**

Executive Vice President

and Chief Financial Officer

Toronto, Canada

February 19, 2009

 

78

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**Management’s Report on InternalControl Over Financial Reporting**

 

Barrick’s management isresponsible for establishing and maintaining adequate internal control overfinancial reporting.

 

Barrick’smanagement assessed the effectiveness of the company’s internal control overfinancial reporting as at December 31, 2008. Barrick’s Management used theCommittee of Sponsoring Organizations of the Treadway Commission (COSO)framework to evaluate the effectiveness of Barrick’s internal control overfinancial reporting. Based on Barrick management’s assessment, Barrick’sinternal control over financial reporting is effective as at December 31,2008.

 

Theeffectiveness of the Company’s internal control over financial reporting as at December 31,2008 has been audited by PricewaterhouseCoopers LLP, Chartered Accountants, asstated in their report which is located on pages 80—81 of Barrick’s 2008Annual Financial Statements.

 

79

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**IndependentAuditors’ Report**

 

**IndependentAuditors’ Report**

 

**To theShareholders of**

**BarrickGold Corporation**

 

We have completed integratedaudits of Barrick Gold Corporation’s (the Company) 2008, 2007 and 2006consolidated financial statements and of its internal control over financialreporting as at December 31, 2008. Our opinions, based on our audits, arepresented below.

 

**Consolidatedfinancial statements**

 

We have audited theaccompanying consolidated balance sheets of Barrick Gold Corporation as at December 31,2008 and December 31, 2007, and the related consolidated statements ofincome, cash flow, shareholders’ equity and comprehensive income for each ofthe years in the three year period ended December 31, 2008. Theseconsolidated financial statements are the responsibility of the Company’smanagement. Our responsibility is to express an opinion on these consolidatedfinancial statements based on our audits.

 

Weconducted our audits of the Company’s consolidated financial statements inaccordance with Canadian generally accepted auditing standards and thestandards of the Public Company Accounting Oversight Board (United States).Those standards require that we plan and perform an audit to obtain reasonableassurance about whether the financial statements are free of materialmisstatement. An audit of financial statements includes examining, on a testbasis, evidence supporting the amounts and disclosures in the financialstatements. A financial statement audit also includes assessing the accountingprinciples used and significant estimates made by management, and evaluatingthe overall financial statement presentation. We believe that our auditsprovide a reasonable basis for our opinion.

 

Inour opinion, the consolidated financial statements referred to above presentfairly, in all material respects, the financial position of the Company as at December 31,2008 and December 31, 2007 and the results of its operations and its cashflows for each of the years in the three year period ended December 31,2008 in accordance with accounting principles generally accepted in the UnitedStates of America.

 

80

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**Internalcontrol over financial reporting**

 

We have also audited theCompany’s internal control over financial reporting as at December 31,2008, based on criteria established in *InternalControl – Integrated Framework*issued by the Committee of SponsoringOrganizations of the Treadway Commission (COSO). The Company’s management isresponsible for maintaining effective internal control over financial reportingand for its assessment of the effectiveness of internal control over financialreporting, included in the accompanying Report. Our responsibility is toexpress an opinion on the Company’s internal control over financial reportingbased on our audit.

 

Weconducted our audit of internal control over financial reporting in accordancewith the standards of the Public Company Accounting Oversight Board (UnitedStates). Those standards require that we plan and perform the audit to obtainreasonable assurance about whether effective internal control over financialreporting was maintained in all material respects. An audit of internal controlover financial reporting includes obtaining an understanding of internalcontrol over financial reporting, assessing the risk that a material weaknessexists, testing and evaluating the design and operating effectiveness ofinternal control based on the assessed risk, and performing such otherprocedures as we consider necessary in the circumstances. We believe that ouraudit provides a reasonable basis for our opinion.

 

Acompany’s internal control over financial reporting is a process designed toprovide reasonable assurance regarding the reliability of financial reporting andthe preparation of financial statements for external purposes in accordancewith generally accepted accounting principles. A company’s internal controlover financial reporting includes those policies and procedures that (i) pertainto the maintenance of records that, in reasonable detail, accurately and fairlyreflect the transactions and dispositions of the assets of the company; (ii) providereasonable assurance that transactions are recorded as necessary to permitpreparation of financial statements in accordance with generally acceptedaccounting principles, and that receipts and expenditures of the company arebeing made only in accordance with authorizations of management and directorsof the company; and (iii) provide reasonable assurance regardingprevention or timely detection of unauthorized acquisition, use, or dispositionof the company’s assets that could have a material effect on the financialstatements.

 

Becauseof its inherent limitations, internal control over financial reporting may notprevent or detect misstatements. Also, projections of any evaluation ofeffectiveness to future periods are subject to the risk that controls maybecome inadequate because of changes in conditions, or that the degree ofcompliance with the policies or procedures may deteriorate.

 

Inour opinion, the Company maintained, in all material respects, effectiveinternal control over financial reporting as at December 31, 2008 based oncriteria established in *Internal Control –Integrated Framework*issued by the COSO.

 

 

**CharteredAccountants, Licensed Public Accountants**

Toronto, Canada

February 19, 2009

 

81

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ConsolidatedStatements of Income

 
| **Barrick Gold Corporation****For the years ended December 31 (in millions of United States dollars, except per share data)** | ** ** | **2008**  | ** ** | **2007** | ** ** | **2006** | ** ** |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|-----------|------------|----------|------------|----------|------------|
| **Sales**(notes 4 and 5)                                                                                                                                                                                 | ** ** | **$**     | **7,913**  |     | $          | 6,332    |       | $ | 5,630 |   |
| **Costs and expenses**                                                                                                                                                                                   |       |      |       |     |       |     |       |
| Cost of sales (notes 4 and 6)(1)                                                                                                                                                                         | ** ** | **3,876** |       | 3,144    |       | 2,710    |       |
| Amortization and accretion (notes 4 and 15)                                                                                                                                                              | ** ** | **1,033** |       | 1,054    |       | 774      |       |
| Corporate administration                                                                                                                                                                                 | ** ** | **155**   |       | 155      |       | 142      |       |
| Exploration (notes 4 and 7)                                                                                                                                                                              | ** ** | **216**   |       | 179      |       | 171      |       |
| Project development expense (note 7)                                                                                                                                                                     | ** ** | **242**   |       | 188      |       | 119      |       |
| Other expense (note 8a)                                                                                                                                                                                  | ** ** | **295**   |       | 205      |       | 212      |       |
| Impairment charges (note 8b)                                                                                                                                                                             | ** ** | **749**   |       | 42       |       | 17       |       |
|                                                                                                                                                                                                     | ** ** | **6,566** |       | 4,967    |       | 4,145    |       |
| Interest income                                                                                                                                                                                          | ** ** | **39**    |       | 141      |       | 110      |       |
| Interest expense (note 20b)                                                                                                                                                                              | ** ** | **(21**   | **)**      | (113     | )          | (126     | )          |
| Other income (note 8c)                                                                                                                                                                                   | ** ** | **291**   |       | 110      |       | 97       |       |
| Write-down of investments (note 8b)                                                                                                                                                                      | ** ** | **(205**  | **)**      | (23      | )          | (6       | )          |
|                                                                                                                                                                                                     | ** ** | **104**   |       | 115      |       | 75       |       |
| **Income from continuing operations before  income taxes and other items**                                                                                                                               | ** ** | **1,451** |       | 1,480    |       | 1,560    |       |
| Income tax expense (note 9)                                                                                                                                                                              | ** ** | **(590**  | **)**      | (341     | )          | (348     | )          |
| Non-controlling interests (note 2b)                                                                                                                                                                      | ** ** | **(12**   | **)**      | 14       |       | 1        |       |
| Loss from equity investees (note 12)                                                                                                                                                                     | ** ** | **(64**   | **)**      | (43      | )          | (4       | )          |
| **Income from continuing operations**                                                                                                                                                                    | ** ** | **785**   |       | 1,110    |       | 1,209    |       |
| Income from discontinued operations (note 3)                                                                                                                                                             |       | —    |       | 9        |       | 297      |       |
| **Net income for the year**                                                                                                                                                                              | ** ** | **$**     | **785**    |     | $          | 1,119    |       | $ | 1,506 |   |
| **Earnings per share data**(note 10)                                                                                                                                                                     |       |      |       |     |       |     |       |
| Income from continuing operations                                                                                                                                                                        |       |      |       |     |       |     |       |
| Basic                                                                                                                                                                                                    | ** ** | **$**     | **0.90**   |     | $          | 1.28     |       | $ | 1.44 |   |
| Diluted                                                                                                                                                                                                  | ** ** | **$**     | **0.89**   |     | $          | 1.27     |       | $ | 1.42 |   |
| Net income                                                                                                                                                                                               |       |      |       |     |       |     |       |
| Basic                                                                                                                                                                                                    | ** ** | **$**     | **0.90**   |     | $          | 1.29     |       | $ | 1.79 |   |
| Diluted                                                                                                                                                                                                  | ** ** | **$**     | **0.89**   |     | $          | 1.28     |       | $ | 1.77 |   |

 

----

(1) Exclusive of amortization.

 

The accompanying notes are an integral partof these consolidated financial statements.

 

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ConsolidatedStatements of Cash Flow

 
| **Barrick Gold Corporation****For the years ended December 31 (in millions of United States dollars)** | ** ** | **2008**   | ** ** | **2007** | ** ** | **2006** | ** ** |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|------------|------------|----------|------------|----------|------------|
| **Operating Activities**                                                                                                                                      |       |       |       |     |       |     |       |
| Net income                                                                                                                                                    | ** ** | **$**      | **785**    |     | $          | 1,119    |       | $ | 1,506 |   |
| Amortization and accretion (notes 4 and 15)                                                                                                                   | ** ** | **1,033**  |       | 1,054    |       | 774      |       |
| Impairment charges and write-down of  investments (notes  8b and 12)                                                                                          | ** ** | **954**    |       | 65       |       | 23       |       |
| Increase in inventory                                                                                                                                         | ** ** | **(373**   | **)**      | (252     | )          | (193     | )          |
| Gain on sale of assets (note 8c)                                                                                                                              | ** ** | **(187**   | **)**      | (2       | )          | (9       | )          |
| Income tax expense (notes 9 and 24)                                                                                                                           | ** ** | **590**    |       | 341      |       | 348      |       |
| Income taxes paid                                                                                                                                             | ** ** | **(575**   | **)**      | (585     | )          | (280     | )          |
| Other items (note 11a)                                                                                                                                        | ** ** | **(21**    | **)**      | (8       | )          | (47      | )          |
| **Net cash provided by continuing operating  activities**                                                                                                     | ** ** | **2,206**  |       | 1,732    |       | 2,122    |       |
| **Investing Activities**                                                                                                                                      |       |       |       |     |       |     |       |
| Property, plant and equipment                                                                                                                                 |       |       |       |     |       |     |       |
| Capital expenditures (note 4)                                                                                                                                 | ** ** | **(1,776** | **)**      | (1,046   | )          | (1,087   | )          |
| Sales proceeds                                                                                                                                                | ** ** | **185**    |       | 100      |       | 8        |       |
| Acquisitions (note 3)                                                                                                                                         | ** ** | **(2,174** | **)**      | (1,122   | )          | (208     | )          |
| Investments (note 12)                                                                                                                                         |       |       |       |     |       |     |       |
| Purchases                                                                                                                                                     | ** ** | **(18**    | **)**      | (11      | )          | (369     | )          |
| Sales                                                                                                                                                         | ** ** | **76**     |       | 625      |       | 46       |       |
| Reclassification of asset-backed commercial  paper                                                                                                            |       | —     |       | (66      | )          | —   |       |
| Long-term supply contract (note 12)                                                                                                                           | ** ** | **(35**    | **)**      | —   |       | —   |       |
| Other investing activities (note 11b)                                                                                                                         | ** ** | **(170**   | **)**      | (42      | )          | 17       |       |
| **Net cash used in continuing investing  activities**                                                                                                         | ** ** | **(3,912** | **)**      | (1,562   | )          | (1,593   | )          |
| **Financing Activities**                                                                                                                                      |       |       |       |     |       |     |       |
| Capital stock                                                                                                                                                 |       |       |       |     |       |     |       |
| Proceeds on exercise of stock options                                                                                                                         | ** ** | **74**     |       | 142      |       | 74       |       |
| Long-term debt (note 20b)                                                                                                                                     |       |       |       |     |       |     |       |
| Proceeds                                                                                                                                                      | ** ** | **2,723**  |       | 408      |       | 2,189    |       |
| Repayments                                                                                                                                                    | ** ** | **(1,603** | **)**      | (1,128   | )          | (1,581   | )          |
| Dividends (note 25)                                                                                                                                           | ** ** | **(349**   | **)**      | (261     | )          | (191     | )          |
| Settlement of derivative instruments  acquired with Placer Dome                                                                                               |       | —     |       | (197     | )          | (1,840   | )          |
| Funding from non-controlling interests                                                                                                                        | ** ** | **88**     |       | —   |       | 2        |       |
| **Net cash provided by (used in) continuing  financing activities**                                                                                           | ** ** | **933**    |       | (1,036   | )          | (1,347   | )          |
| **Cash Flows of Discontinued Operations**(note 3)                                                                                                             |       |       |       |     |       |     |       |
| Operating activities                                                                                                                                          |       | —     |       | 21       |       | 29       |       |
| Investing activities                                                                                                                                          |       | —     |       | —   |       | 2,788    |       |
| Financing activities                                                                                                                                          |       | —     |       | —   |       | 11       |       |
|                                                                                                                                                          |       | —     |       | 21       |       | 2,828    |       |
| **Effect of exchange rate changes on cash and  equivalents**                                                                                                  | ** ** | **3**      |       | 9        |       | (4       | )          |
| Net increase (decrease) in cash and  equivalents                                                                                                              | ** ** | **(770**   | **)**      | (836     | )          | 2,006    |       |
| **Cash and equivalents at beginning of year**(note 20a)                                                                                                       | ** ** | **2,207**  |       | 3,043    |       | 1,037    |       |
| **Cash and equivalents at end of year**(note 20a)                                                                                                             | ** ** | **$**      | **1,437**  |     | $          | 2,207    |       | $ | 3,043 |   |

 

The accompanying notes are an integral partof these consolidated financial statements.

 

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Consolidated Balance Sheets

 
| **Barrick Gold Corporation****At December 31 (in millions of United States dollars)** | ** ** | **2008**   | ** ** | **2007** | ** ** |
|-------------------------------------------------------------------------------------------------------------------------------|------------|------------|------------|----------|------------|
| **Assets**                                                                                                                    |       |       |       |     |       |
| Current assets                                                                                                                |       |       |       |     |       |
| Cash and equivalents (note 20a)                                                                                               | ** ** | **$**      | **1,437**  |     | $          | 2,207 |   |
| Accounts receivable (note 14)                                                                                                 | ** ** | **197**    |       | 256      |       |
| Inventories (note 13)                                                                                                         | ** ** | **1,309**  |       | 1,129    |       |
| Other current assets (note 14)                                                                                                | ** ** | **1,169**  |       | 707      |       |
|                                                                                                                          | ** ** | **4,112**  |       | 4,299    |       |
| Non-current assets                                                                                                            |       |       |       |     |       |
| Investments (note 12)                                                                                                         | ** ** | **1,145**  |       | 1,227    |       |
| Property, plant and equipment (note 15)                                                                                       | ** ** | **11,547** |       | 8,585    |       |
| Goodwill (note 17)                                                                                                            | ** ** | **5,280**  |       | 5,847    |       |
| Intangible assets (note 16)                                                                                                   | ** ** | **75**     |       | 68       |       |
| Deferred income tax assets (note 24)                                                                                          | ** ** | **869**    |       | 722      |       |
| Other assets (note 18)                                                                                                        | ** ** | **1,133**  |       | 1,203    |       |
| **Total assets**                                                                                                              | ** ** | **$**      | **24,161** |     | $          | 21,951 |   |
| **Liabilities and Shareholders’ Equity**                                                                                 |       |       |       |     |       |
| Current liabilities                                                                                                           |       |       |       |     |       |
| Accounts payable                                                                                                              | ** ** | **$**      | **970**    |     | $          | 808 |   |
| Short-term debt (note 20b)                                                                                                    | ** ** | **206**    |       | 233      |       |
| Other current liabilities (note 19)                                                                                           | ** ** | **668**    |       | 255      |       |
|                                                                                                                          | ** ** | **1,844**  |       | 1,296    |       |
| Non-current liabilities                                                                                                       |       |       |       |     |       |
| Long-term debt (note 20b)                                                                                                     | ** ** | **4,350**  |       | 3,153    |       |
| Asset retirement obligations (note 22)                                                                                        | ** ** | **973**    |       | 892      |       |
| Deferred income tax liabilities (note 24)                                                                                     | ** ** | **754**    |       | 841      |       |
| Other liabilities (note 23)                                                                                                   | ** ** | **781**    |       | 431      |       |
| **Total liabilities**                                                                                                         | ** ** | **8,702**  |       | 6,613    |       |
| **Non-controlling interests**                                                                                                 | ** ** | **182**    |       | 82       |       |
| **Shareholders’ equity**                                                                                                 |       |       |       |     |       |
| Capital stock (note 25)                                                                                                       | ** ** | **13,372** |       | 13,273   |       |
| Retained earnings                                                                                                             | ** ** | **2,261**  |       | 1,832    |       |
| Accumulated other comprehensive income  (loss) (note 26)                                                                      | ** ** | **(356**   | **)**      | 151      |       |
| **Total shareholders’ equity**                                                                                           | ** ** | **15,277** |       | 15,256   |       |
| Contingencies and commitments (notes 15 and 29)                                                                               |       |       |       |     |       |
| **Total liabilities and shareholders’ equity**                                                                           | ** ** | **$**      | **24,161** |     | $          | 21,951 |   |

 

The accompanying notes are an integral partof these consolidated financial statements.

 

Signed on behalf of the Board,

 

 

|                         |   |                                  |
|-------------------------|--------|----------------------------------|
| Aaron  Reqent, Director |   | Steven J. Shapiro, Director |

 

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ConsolidatedStatements of Shareholders’ Equity

 
| **Barrick Gold Corporation****For the years ended December 31 (in millions of United States dollars)** | ** ** | **2008**   | ** ** | **2007** | ** ** | **2006** | ** ** |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|------------|------------|----------|------------|----------|------------|
| **Common shares**(number in millions)                                                                                                                         |       |       |       |     |       |     |       |
| At January 1                                                                                                                                             | ** ** | **870**    |       | 864      |       | 538      |       |
| Issued on exercise of stock options (note 27a)                                                                                                                | ** ** | **3**      |       | 6        |       | 3        |       |
| Issued on acquisition of Placer Dome (note 3f)                                                                                                                |       | —     |       | —   |       | 323      |       |
| At December 31                                                                                                                                           | ** ** | **873**    |       | 870      |       | 864      |       |
| **Common shares**                                                                                                                                             |       |       |       |     |       |     |       |
| At January 1                                                                                                                                             | ** ** | **$**      | **13,273** |     | $          | 13,106   |       | $ | 4,222 |   |
| Issued on exercise of stock options (note 27a)                                                                                                                | ** ** | **74**     |       | 142      |       | 74       |       |
| Issued on acquisition of Placer Dome (note 3f)                                                                                                                |       | —     |       | —   |       | 8,761    |       |
| Options issued on acquisition of Placer  Dome (note 3f)                                                                                                       |       | —     |       | —   |       | 22       |       |
| Recognition of stock option expense (note 27a)                                                                                                                | ** ** | **25**     |       | 25       |       | 27       |       |
| At December 31                                                                                                                                           | ** ** | **13,372** |       | 13,273   |       | 13,106   |       |
| **Retained earnings (deficit)**                                                                                                                               |       |       |       |     |       |     |       |
| At January 1                                                                                                                                             | ** ** | **1,832**  |       | 974      |       | (341     | )          |
| Net income                                                                                                                                                    | ** ** | **785**    |       | 1,119    |       | 1,506    |       |
| Dividends (note 25a)                                                                                                                                          | ** ** | **(349**   | **)**      | (261     | )          | (191     | )          |
| Repurchase of preferred shares of a  subsidiary                                                                                                               | ** ** | **(7**     | **)**      | —   |       | —   |       |
| At December 31                                                                                                                                           | ** ** | **2,261**  |       | 1,832    |       | 974      |       |
| Accumulated other comprehensive income  (loss) (note 26)                                                                                                      | ** ** | **(356**   | **)**      | 151      |       | 119      |       |
| **Total shareholders’ equity at December 31**                                                                                                       | ** ** | **$**      | **15,277** |     | $          | 15,256   |       | $ | 14,199 |   |

 

Consolidated Statements of ComprehensiveIncome

 
| **Barrick Gold Corporation****For the years ended December 31 (in millions of United States dollars)** | ** ** | **2008** | ** ** | **2007** | ** ** | **2006** | ** ** |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|----------|------------|----------|------------|----------|------------|
| Net income                                                                                                                                                    | ** ** | **$**    | **785**    |     | $          | 1,119    |       | $ | 1,506 |   |
| Other comprehensive income (loss), net of  tax (note 26)                                                                                                      | ** ** | **(507** | **)**      | 32       |       | 150      |       |
| **Comprehensive income**                                                                                                                                      | ** ** | **$**    | **278**    |     | $          | 1,151    |       | $ | 1,656 |   |

 

The accompanying notes are an integral partof these consolidated financial statements.

 

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Notes to ConsolidatedFinancial Statements

 

**Barrick GoldCorporation.**Tabulardollar amounts in millions of United States dollars, unless otherwise shown.References to C$, A$, ZAR, CLP, PGK, TZS, JPY, ARS and EUR are to Canadiandollars, Australian dollars, South African rands, Chilean pesos, Papua NewGuinea kina, Tanzanian schillings, Japanese yen, Argentinean pesos and Euros,respectively.

 

**1  ****·****  Nature of Operations**

 

Barrick Gold Corporation (“Barrick”or the “Company”) principally engages in the production and sale of gold, aswell as related activities such as exploration and mine development. We alsoproduce significant amounts of copper and hold interests in a platinum groupmetals development project and a nickel development project, both located inAfrica, a platinum group metals project located in Russia and oil and gasproperties located in Canada. Our producing mines are concentrated in fourregional business units: North America, South America, Africa and AustraliaPacific. We sell our gold production into the world market and we sell ourcopper production into the world market and to private customers.

 

**2  ****·****  Significant Accounting Policies**

 

**a) Basis ofPreparation**

 

These consolidated financialstatements have been prepared under United States generally accepted accountingprinciples (“US GAAP”). In 2008, we amended the income statement classificationof accretion expense (note 2e). Accretion expense is classified withinamortization and accretion. Prior to this date, accretion expense was classifiedas a component of cost of sales and other expense. To ensure comparability offinancial information, prior year amounts have been reclassified to reflectchanges in the financial statement presentation.

 

**b)Principles of Consolidation**

 

These consolidated financialstatements include the accounts of Barrick Gold Corporation and those entitiesthat we have the ability to control either through voting rights or means otherthan voting rights. These entities include development projects and operatingmines in which we hold a less than 100% ownership interest, which generallyoperate as joint ventures. For these joint ventures, our risk is limited to ourinvestment in the entity. FIN 46(R) provides guidance on theidentification and reporting of entities controlled through means other thanvoting rights and defines such entities as variable interest entities (“VIEs”).We apply this guidance to all of our incorporated joint ventures (“JVs”),including those in the development stage. We determine if we are the primarybeneficiary based on whether we expect to participate in the majority of theentities’ future expected gains/ losses, based on the funding requirements setout in their respective agreements. For VIEs where we are the primarybeneficiary, we consolidate the entity and record a non-controlling interest,measured initially at its estimated fair value, for the interest held by otherentity owners. For VIEs where we are not the primary beneficiary, we use theequity method of accounting (note 12).

 

Forunincorporated JVs under which we hold an undivided interest in the assets andliabilities and receive our share of production from the joint venture, weinclude our pro rata share of the assets, liabilities, revenue and expenses inour financial statements.

 

86

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The following tableillustrates our policy used to account for significant entities where we holdless than a 100% economic interest. We consolidate all wholly-owned entities.

 

**Consolidation Method at December 31,2008**

 
| ** **              | ** ** | **Entity type at December 31, 2008** | ** ** | **Economic Interest at  December 31, 2008(1)** | ** ** | **Method**     | ** ** |
|-------------------------|------------|-------------------------------------------|------------|-----------------------------------------------------|------------|----------------|------------|
| **North America**       |       |                                      |       |                                                |       |           |       |
| Round Mountain Mine     |       | Unincorporated  JV                        |       | 50%                                                 |       | Pro Rata       |       |
| Hemlo Property Mine     |       | Unincorporated  JV                        |       | 50%                                                 |       | Pro Rata       |       |
| Marigold Mine           |       | Unincorporated  JV                        |       | 33%                                                 |       | Pro Rata       |       |
| Turquoise Ridge Mine    |       | Unincorporated  JV                        |       | 75%                                                 |       | Pro Rata       |       |
| Pueblo Viejo Project(2) |       | VIE                                       |       | 60%                                                 |       | Consolidation  |       |
| Donlin Creek Project    |       | VIE                                       |       | 50%                                                 |       | Equity  Method |       |
| **South America**       |       |                                      |       |                                                |       |           |       |
| Cerro Casale Project    |       | VIE                                       |       | 51%                                                 |       | Equity  Method |       |
| **Australia**           |       |                                      |       |                                                |       |           |       |
| Kalgoorlie Mine         |       | Unincorporated  JV                        |       | 50%                                                 |       | Pro Rata       |       |
| Porgera Mine(3)         |       | Unincorporated  JV                        |       | 95%                                                 |       | Pro Rata       |       |
| Reko Diq Project(4)     |       | VIE                                       |       | 37.5%                                               |       | Equity  Method |       |
| **Africa**              |       |                                      |       |                                                |       |           |       |
| Tulawaka Mine           |       | Unincorporated  JV                        |       | 70%                                                 |       | Consolidation  |       |
| Kabanga Project(5)      |       | VIE                                       |       | 50%                                                 |       | Equity  Method |       |
| Sedibelo Project(6)     |       | VIE                                       |       | 10%                                                 |       | Consolidation  |       |
| **Russia**              |       |                                      |       |                                                |       |           |       |
| Fedorova Project(7)     |       | VIE                                       |       | 50%                                                 |       | Consolidation  |       |

 

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(1)          Unlessotherwise noted, all of our joint ventures are funded by distributions made bytheir partners in proportion to their economic interest.

(2)          Inaccordance with the terms of the agreement with our partner, Barrick isresponsible for 60% of the funding requirements for the Pueblo Viejo project.We consolidate our interest in Pueblo Viejo and record a non-controllinginterest for the 40% that we don’t own. In 2008, we recorded projectdevelopment expenses of $62 million (2007: $67 million) (note 7) and anon-controlling interest of $26 million (2007: $30 million) (note 2b). At December 31,2008, the carrying value of our Pueblo Viejo project was $447 million (2007:$140 million) (note 15a).

(3)          Wehold an undivided interest in our share of assets and liabilities at thePorgera mine. In August 2007, we increased our ownership interest from 75%to 95% (note 3d).

(4)          Wehold a 50% interest in Atacama Copper, which has a 75% interest in the Reko Diqproject. We use the equity method to account for our interest in Atacama Copper(note 12).

(5)          Inaccordance with an agreement with our partner, from 2006 until the thirdquarter of 2008, our partner was responsible for funding 100% of explorationand project expenditures and we did not record any amounts for our economicinterest in this period. During the third quarter of 2008, our partnercompleted the $145 million spending requirement, and we began funding 50% of theexploration and project expenditures (note 12).

(6)          In2008, we completed a bankable feasibility study (“BFS”), for which we recordedproject development expenses totaling $17 million (2007: $22 million). Based onthe agreement with our partner, we are responsible for funding 100% of theproject expenditures. On completion of the BFS, we earned a 10% interest in theproject and have a right to obtain a further 55% interest upon a decision tomine. The first 40% can be purchased for 50% of the combined platinum,palladium, rhodium and gold production at $12 per ounce. The final 15% can bepurchased for $90 million. If Barrick does not make a decision to mine by May 2009,our partner has the option to acquire our 10% interest at a price based on theBFS costs spent.

(7)          Inaccordance with an agreement with minority shareholders, we have an earn-inoption for an additional 30% interest in the entity that owns the rights to theFedorova project (for a total 80% interest). We are responsible for funding100% of project expenditures until the BFS is finalized, and therefore anon-controlling interest has not been recorded through December 31, 2008.In 2008, we funded $24 million of project expenditures (2007: $18 million).

 

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**EntitiesConsolidated using the Pro Rata Method Income Statement and Cash FlowInformation (100%)**

 
| **For the years ended December 31** | ** ** | **2008**   | ** ** | **2007** | ** ** | **2006** | ** ** |
|------------------------------------------|------------|------------|------------|----------|------------|----------|------------|
| Revenues                                 | ** ** | **$**      | **2,031**  |     | $          | 2,076    |       | $ | 1,776 |   |
| Costs and expenses                       | ** ** | **(1,565** | **)**      | (1,665   | )          | (1,457   | )          |
| Net income                               | ** ** | **$**      | **466**    |     | $          | 411      |       | $ | 319 |   |
| Operating activities(1)                  | ** ** | **$**      | **378**    |     | $          | 147      |       | $ | 473 |   |
| Investing activities(1)                  | ** ** | **$**      | **(159**   | **)**    | $          | (139     | )          | $ | (284 | ) |
| Financing activities(1),(2)              | ** ** | **$**      | **(249**   | **)**    | $          | 81       |       | $ | (185 | ) |

 

**Balance Sheet Information (100%)**

 
| **At December 31**         | ** ** | **2008**  | ** ** | **2007** | ** ** |
|---------------------------------|------------|-----------|------------|----------|------------|
| Assets                          |       |      |       |     |       |
| Inventories                     | ** ** | **$**     | **317**    |     | $          | 430 |   |
| Property, plant and equipment   | ** ** | **1,609** |       | 2,620    |       |
| Other assets(3)                 | ** ** | **316**   |       | 462      |       |
|                            | ** ** | **$**     | **2,242**  |     | $          | 3,512 |   |
| Liabilities                     |       |      |       |     |       |
| Current liabilities             | ** ** | **$**     | **153**    |     | $          | 216 |   |
| Long-term obligations           | ** ** | **244**   |       | 267      |       |
| Deferred income tax liabilities | ** ** | **64**    |       | 47       |       |
|                            | ** ** | **$**     | **461**    |     | $          | 530 |   |

 

**Non-controlling Interests – Income Statement**

 
| **For the years ended December 31** | ** ** | **2008** | ** ** | **2007** | ** ** | **2006** | ** ** |
|------------------------------------------|------------|----------|------------|----------|------------|----------|------------|
| Pueblo Viejo project                     | ** ** | **$**    | **26**     |     | $          | 30       |       | $ | 9 |   |
| Tulawaka mine                            | ** ** | **(38**  | **)**      | (16      | )          | (8       | )          |
|                                     | ** ** | **$**    | **(12**    | **)**    | $          | 14       |       | $ | 1 |   |

 

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(1)          Netcash inflow (outflow).

(2)          Includescash flows between the joint ventures and joint venture partners.

(3)          Thedecrease in assets in 2008 reflects 100% ownership of Cortez.

 

**c) ForeignCurrency Translation**

 

The functional currency ofour gold and copper operations is the US dollar. We translate non-US dollarbalances for these operations into US dollars as follows: 

 

·                  Property, plant and equipment, intangibleassets and equity method investments using historical rates; 

·                  Available-for-sale securities using closingrates with translation gains and losses recorded in other comprehensive income;

·                  Asset retirement obligations using historicalrates; 

·                  Deferred tax assets and liabilities usingclosing rates with translation gains and losses recorded in income tax expense;

·                  Other assets and liabilities using closingrates with translation gains and losses recorded in other income/expense; and

·                  Income and expenses using average exchangerates, except for expenses that relate to non-monetary assets and liabilitiesmeasured at historical rates, which are translated using the same historicalrate as the associated non-monetary assets and liabilities.

 

The functional currency ofour oil and gas operations, (“Barrick Energy”) is the Canadian dollar. Wetranslate balances related to Barrick Energy into US dollars as follows: 

 

·                  Assets and liabilities using closing exchangerates with translation gains and losses recorded in other comprehensive income;and 

·                  Income and expense using average exchangerates with translation gains and losses recorded in other comprehensive income.

 

**d) Use ofEstimates**

 

The preparation of thesefinancial statements requires us to make estimates and assumptions. The mostsignificant ones are: quantities of proven and probable mineral reserves;classification of mineralization as either reserves or nonreserves; fair valuesof acquired assets and liabilities under business combinations, including thevalue of mineralized material beyond proven and probable mineral reserves;future costs and expenses to produce proven and probable mineral reserves;future commodity prices for gold, copper, silver and other products; futurecosts of oil and other consumables; currency exchange rates; the future cost ofasset retirement obligations; amounts and likelihood of contingencies; the fairvalues of reporting units that include goodwill; uncertain tax positions; andcredit risk adjustments to discount rates. Using these and other estimates andassumptions, we make various decisions in preparing the financial statementsincluding:

 

·                  The treatment of expenditures at mineralproperties prior to when production begins as either an asset or an expense(note 15); 

·                  Whether tangible and intangible long-livedassets are impaired, and if so, estimates of the fair value of those assets andany corresponding impairment charge (note 15); 

·                  Our ability to realize deferred income taxassets and amounts recorded for any corresponding valuation allowances andamounts recorded for uncertain tax positions (note 24); 

·                  The useful lives of tangible and intangiblelong-lived assets and the measurement of amortization (note 15); 

·                  The fair value of asset retirementobligations (note 22); 

·                  Whether to record a liability for losscontingencies and the amount of any liability (notes 15 and 29);

 

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·                  The amount of income tax expense (note 9); 

·                  Allocations of the purchase price in businesscombinations to assets and liabilities acquired, (notes 3 and 17); 

·                  Whether any impairments of goodwill haveoccurred and if so the amounts of impairment charges (note 17); 

·                  Transfers of value beyond proven and probablereserves to amortized assets (note 15); and 

·                  Credit risk adjustments to the discount ratesin determining the fair value at derivative instruments (notes 20 and 21).

 

As the estimation process isinherently uncertain, actual future outcomes could differ from presentestimates and assumptions, potentially having material future effects on ourfinancial statements.

 

**e)Accounting Changes**

 

**AccountingChanges Implemented in 2008**

 

**FAS 159,The Fair Value Option for Financial Assets and Financial Liabilities (FAS 159)**

 

In February 2007, theFinancial Accounting Standards Board (“FASB”) issued FAS 159, which allows anirrevocable option, the Fair Value Option (FVO), to carry eligible financialassets and liabilities at fair value, with the election made on aninstrument-by-instrument basis. Changes in fair value for these instrumentswould be recorded in earnings. The objective of FAS 159 is to improve financialreporting by providing entities with the opportunity to mitigate volatility inreported earnings caused by measuring related assets and liabilitiesdifferently without having to apply complex hedge accounting provisions.

 

FAS159 was effective for Barrick beginning in first quarter 2008 and was appliedprospectively. We have not adopted the FVO for any of our eligible financialinstruments, which primarily include available-for-sale securities, equitymethod investments and long-term debt.

 

**FAS 157,Fair Value Measurements (FAS 157)**

 

In 2008, we implemented FAS157 for financial assets and financial liabilities that are measured at fairvalue on a recurring basis. The primary assets and liabilities that arerecognized and disclosed at fair value in accordance with the provisions of FAS157 are: available-for-sale securities; receivables from provisional copper andgold sales; derivate assets and derivative liabilities and held-to-maturityinvestments. The adoption of FAS 157 has resulted in expanded disclosures aboutour fair value measurements for financial assets and financial liabilitiesrecognized in our financial statements. However, the adoption of FAS 157 didnot have an impact on the measurement of fair value as our valuationmethodology for these assets and liabilities is consistent with the fair valueframework established by FAS 157. Refer to note 21 of the ConsolidatedFinancial Statements for details of the adoption of FAS 157 and relateddisclosures.

 

Wehave not applied the provisions of FAS 157 to non-financial assets andnonfinancial liabilities as permitted by the delay specified in FSP FAS 157-2.FSP FAS 157-2 delays the effective date of FAS 157 to fiscal years beginningafter November 15, 2008, for non-financial assets and liabilities, exceptfor items that are recognized or disclosed at fair value in the financialstatements on a recurring basis. Therefore, beginning in 2009 we will apply therequirements of FAS 157 to non-financial assets and non-financial liabilitiesthat we periodically measure at fair value under US GAAP, which willprincipally include: goodwill, tangible and intangible assets measured andrecognized at fair value as a result of an impairment assessment; andnon-financial assets and non-financial liabilities recognized as a result of abusiness combination. The application of the provisions of FAS 157 is notexpected to have a significant impact on our methodology for measuring the fairvalue of these assets and liabilities, but will result in expanded disclosures.

 

**Changes inFinancial Statement Presentation – Accretion Expense**

 

In first quarter 2008, wemade a change to our accounting policy regarding the financial statementclassification of accretion expense. Prior to this change, we recordedaccretion expense at producing mines as a component of cost of sales andaccretion expense at closed mines as a component of other expense. Beginning infirst quarter 2008, we recorded accretion expense at producing mines andaccretion expense at closed mines in amortization and accretion in ourConsolidated Statements of Income.

 

**FSP FAS140-4 and FIN 46(R)-8, Disclosures by Public Entities (Enterprises) aboutTransfers of Financial Assets and Interests in Variable Interest Entities (FSPFAS 140-4 and FIN 46(R)-8)**

 

In December 2008, theFASB issued FSP FAS 140-4 and FIN 46(R)-8 for the purpose of improving thetransparency of transfers of financial assets and an enterprise’s involvementwith variable interest entities (VIEs), including qualifying special-purposeentities (QSPEs). The impact on our financial reporting requirements is limitedto the new VIE disclosures.

 

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TheVIE disclosure requirements focus on an enterprise’s involvement with VIEs andits judgments about the accounting for them. The FSP also requires disclosureof the details of any financial or other support provided to a VIE that theenterprise was not previously contractually required to provide, and theprimary reasons for providing the support. The primary beneficiary of a VIE isalso required to disclose the terms of any arrangements that could require theenterprise to provide future support to the VIE. In addition, FSP FAS 140-4 andFIN 46(R)-8 require disclosure of the carrying amount and classification of thevariable interest entity’s assets and liabilities in the Balance Sheet and areconciliation of those amounts to the enterprise’s maximum exposure to loss.

 

Theadoption of this FSP has resulted in expanded disclosure around our involvementwith our VIEs and the significant judgments and assumptions we make inaccounting for them. We have also included tables that reflect how ourconsolidated VIEs are included in our Consolidated Statement of Income andBalance Sheet.

 

**AccountingChanges Implemented in 2007**

 

**FASBInterpretation No. 48 – Accounting for Uncertainty in Income Taxes, aninterpretation of FASB Statement No. 109 (Accounting for Income Taxes)(FIN 48)**

 

In June 2006, the FASBissued FIN 48 to create a single model to address accounting for uncertainty intax positions. FIN 48 clarifies the accounting for income taxes, by prescribinga minimum recognition threshold a tax position is required to meet before beingrecognized in the financial statements. FIN 48 also provides guidance onderecognition, measurement, classification, interest and penalties, accountingin interim periods, disclosure and transition. FIN 48 is effective for fiscalyears beginning after December 15, 2006.

 

Weadopted the provisions of FIN 48, Accounting for Uncertainty in Income Taxes,on January 1, 2007. As a result of the implementation of FIN 48, noadjustment was required to the liability for unrecognized tax benefits.

 

**AccountingChanges Implemented in 2006**

 

**FAS 158,Employers’ Accounting for Defined Benefit Pension and Other Post-retirementPlans**

 

In September 2006, theFASB issued FAS 158 that requires employers to fully recognize the obligationsassociated with single-employer defined benefit pension, retiree health careand other post-retirement plans in their financial statements.

 

FAS158 requires recognition of the funded status of a benefit plan on the balancesheet. FAS 158 also requires recognition, as a component of other comprehensiveincome, net of tax, of the gains or losses and prior service costs or creditsthat arise during the period but are not recorded as components of net periodicbenefit cost. FAS 158 requires disclosure of information about certain effectsof net periodic benefit cost for the next fiscal year that arise from delayedrecognition of the gains or losses, prior service costs or credits, andtransition asset or obligation.

 

Weadopted the provisions of FAS 158 in 2006. The adoption of FAS 158 did notsignificantly impact our financial statements.

 

**f)Significant Accounting Developments**

 

**FAS 161, Disclosuresabout Derivative Instruments and Hedging Activities (FAS 161)**

 

In March 2008, the FASBissued FAS 161, which will require entities to provide enhanced disclosuresabout (a) how and why an entity uses derivative instruments, (b) howderivative instruments and related hedged items are accounted for under FAS 133and its related interpretations, and (c) how derivative instruments andrelated hedged items affect an entity’s financial position, financialperformance and cash flows. FAS 161 is effective for financial statementsissued for fiscal years and interim periods beginning after November 15, 2008,with early application encouraged. We are currently evaluating the impact ofadopting FAS 161 on our note disclosures related to derivative instruments andhedging activities.

 

**FAS 141(R),Business Combinations (FAS 141(R))**

 

In first quarter 2009, wewill begin applying the provisions of FAS 141(R), which replaced FAS 141, forbusiness combinations consummated after the effective date of December 15,2008. Early adoption of FAS 141(R) was not permitted. Under FAS 141(R),business acquisitions will be accounted for under the “acquisition method”,compared to the “purchase method” mandated by FAS 141.

 

Themore significant changes to Barrick’s accounting for business combinations thatwill result from applying the acquisition method include: (i) thedefinition of a business

 

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is broadened to includedevelopment stage entities, and therefore more acquisitions will be accountedfor as business combinations rather than asset acquisitions; (ii) themeasurement date for equity interests issued by the acquirer is the acquisitiondate 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 ifshare prices differ from the agreement and announcement date to the acquisitiondate; (iii) all future adjustments to income tax estimates will berecorded to income tax expense, whereas under FAS 141 certain changes in incometax estimates were recorded to goodwill; (iv) acquisition-related costs ofthe acquirer, including investment banking fees, legal fees, accounting fees,valuation fees, and other professional or consulting fees will be expensed asincurred, whereas under FAS 141 these costs were capitalized as part of thebusiness combination; (v) the assets acquired and liabilities assumed arerecorded at 100% of fair value even if less than 100% is obtained, whereasunder FAS 141 only the controlling interest’s portion is recorded at fairvalue; and (vi) the non-controlling interest will be recorded at its shareof fair value of net assets acquired, including its share of goodwill, whereasunder FAS 141 the non-controlling interest is recorded at its share of carryingvalue of net assets acquired with no goodwill being allocated.

 

**FAS 160,Non-controlling Interests in Consolidated Financial Statements (FAS 160)**

 

In December 2007 theFASB issued FAS 160, which is effective for fiscal years beginning after December 15,2008. Under FAS 160, non-controlling interests are measured at 100% of the fairvalue of assets acquired and liabilities assumed. Under current standards, thenon-controlling interest is measured at book value. For presentation and disclosurepurposes, non-controlling interests are classified as a separate component ofshareholders’ equity. In addition, FAS 160 changes the manner in whichincreases/decreases in ownership percentages are accounted for. Changes inownership percentages are recorded as equity transactions and no gain or lossis recognized as long as the parent retains control of the subsidiary. When aparent company deconsolidates a subsidiary but retains a non-controllinginterest, the non-controlling interest is re-measured at fair value on the datecontrol is lost and a gain or loss is recognized at that time. Under FAS 160,accumulated losses attributable to the non-controlling interests are no longer limitedto the original carrying amount, and therefore non-controlling interests couldhave a negative carrying balance.

 

The provisions of FAS 160are to be applied prospectively with the exception of the presentation anddisclosure provisions, which are to be applied for all prior periods presentedin the financial statements. Early adoption is not permitted. The presentationand disclosure provisions of FAS 160 will result in the reclassification of$182 million attributable to non-controlling interests to the Share-holders’Equity section of the Balance Sheet for 2008.

 

**g) Other Notes to the Financial Statements**

 
| ** **                                    | ** ** | **Note** | ** ** | **Page** | ** ** |
|-----------------------------------------------|------------|----------|------------|----------|------------|
|                                          |       |     |       |     |       |
| Acquisitions and divestitures                 |       | 3        |       | 92       |       |
| Segment information                           |       | 4        |       | 95       |       |
| Revenue and gold sales contracts              |       | 5        |       | 97       |       |
| Cost of sales                                 |       | 6        |       | 99       |       |
| Exploration and project development expense   |       | 7        |       | 100      |       |
| Other charges                                 |       | 8        |       | 101      |       |
| Income tax expense                            |       | 9        |       | 102      |       |
| Earnings per share                            |       | 10       |       | 103      |       |
| Cash flow – other items                  |       | 11       |       | 104      |       |
| Investments                                   |       | 12       |       | 105      |       |
| Inventories                                   |       | 13       |       | 108      |       |
| Accounts receivable and other current  assets |       | 14       |       | 109      |       |
| Property, plant and equipment                 |       | 15       |       | 110      |       |
| Intangible assets                             |       | 16       |       | 113      |       |
| Goodwill                                      |       | 17       |       | 114      |       |
| Other assets                                  |       | 18       |       | 116      |       |
| Other current liabilities                     |       | 19       |       | 116      |       |
| Financial instruments                         |       | 20       |       | 116      |       |
| Fair value measurements                       |       | 21       |       | 126      |       |
| Asset retirement obligations                  |       | 22       |       | 128      |       |
| Other non-current liabilities                 |       | 23       |       | 129      |       |
| Deferred income taxes                         |       | 24       |       | 129      |       |
| Capital stock                                 |       | 25       |       | 132      |       |
| Other comprehensive income (loss)             |       | 26       |       | 132      |       |
| Stock-based compensation                      |       | 27       |       | 133      |       |
| Post-retirement benefits                      |       | 28       |       | 135      |       |
| Litigation and claims                         |       | 29       |       | 138      |       |

 

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**3  ****·**** Acquisitions and Divestitures**

 
| **For the years ended December 31** | ** ** | **2008** | ** ** | **2007**   | ** ** | **2006** | ** ** |
|--------------------------------------------------------------|------------|----------|------------|------------|------------|----------|------------|
| Cash paid on acquisition(1)                                  |       |     |       |       |       |     |       |
| Cortez (additional 40% interest)                             |       | **$**    | **1,695**  |       | $          | —   |       | $ | — |   |
| Barrick Energy Inc.                                          | ** ** | **460**  |       | —     |       | —   |       |
| Cerro Casale                                                 | ** ** | **40**   |       | 730        |       | —   |       |
| Porgera (additional 20% interest)                            |       | —   |       | 264        |       | —   |       |
| Kainantu                                                     | ** ** | **5**    |       | 135        |       | —   |       |
| Placer Dome                                                  |       | —   |       | —     |       | 1,262    |       |
| Other(2)                                                     | ** ** | **29**   |       | 6          |       | 54       |       |
| ** **                                                   |       | **$**    | **2,229**  |       | $          | 1,135    |       | $ | 1,316 |   |
| Less: cash acquired                                          | ** ** | **(55**  | **)**      | (13        | )          | (1,108   | )          |
| ** **                                                   |       | **$**    | **2,174**  |       | $          | 1,122    |       | $ | 208 |   |
| Cash proceeds on sale(1)                                     |       |     |       |       |       |     |       |
| Royalty disposition                                          | ** ** | **$**    | **150**    |       | $          | —   |       | $ | — |   |
| Celtic(2)                                                    |       | —   |       | 21         |       | —   |       |
| Paddington Mill(3)                                           |       | —   |       | 30         |       | —   |       |
| Other(4),(5)                                                 |       | —   |       | 54         |       | —   |       |
| ** **                                                   |       | **$**    | **150**    |       | $          | 105      |       | $ | — |   |
| Cash proceeds on sale of discontinued  operations            |       |     |       |       |       |     |       |
| South Deep mine                                              | ** ** | **$**    | **—** | ** ** | $          | 21       |       | $ | 1,209 |   |
| Operations sold to Goldcorp                                  |       | —   |       | —     |       | 1,619    |       |
| ** **                                                   | ** ** | **$**    | **—** |       | $          | 21       |       | $ | 2,828 |   |

 

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| (1) | All amounts represent gross  cash paid or received on acquisition or divestiture.                                                                                                                                                                                                                              |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (2) | In 2008, we acquired an  additional 40% interest in the Storm property from Yamana Gold Inc. for $29  million, including $1 million cash acquired, consolidating a 100% ownership  interest in Storm. In 2006, we acquired the Grace Property for cash of $60  million, including cash acquired of $6 million. |
| (3) | Included within investment  sales in the Consolidated Statement of Cash Flow.                                                                                                                                                                                                                                  |
| (4) | Included within Property,  Plant and Equipment sales in the Consolidated Statement of Cash flow.                                                                                                                                                                                                               |
| (5) | In 2007, we sold the Grace  Property, originally acquired in 2006 for cash proceeds of $54 million. There  was no after-tax gain or loss arising on closing.                                                                                                                                                   |

 

**a)Acquisition of Barrick Energy Inc. (“Barrick Energy”)**

 

In 2008, we acquired 59.2million shares of Cadence Energy Inc. (“Cadence”) for cash consideration of$377 million, representing 100% of the issued and outstanding common shares.Subsequent to the acquisition, we rebranded Cadence as Barrick Energy. We havedetermined that this transaction represented a business combination withBarrick identified as the acquirer.

 

Thetables below present the purchase cost and our preliminary allocation of thepurchase price of the assets and liabilities acquired. The purchase priceallocation will be finalized in 2009 upon completion of a full internal taxassessment. The revenues and expenses from Barrick Energy have been included inour Consolidated Statement of Income from September 4, 2008.

 
| **Purchase  Cost**  | ** ** | ** ** | ** ** | ** ** |
|---------------------|------------|------------|------------|------------|
| Purchase cost       |       | $          | 377        |       |
| Less: cash acquired |       | (41        | )          |
|                |       | $          | 336        |       |

 
| **Preliminary  Purchase Price Allocation**             |   |   |   |
|--------------------------------------------------------|--------|--------|--------|
| Current assets                                         |   | $      | 25     |   |
| Property, plant and equipment                          |   |   |   |
| Capitalized reserve acquisition and  development costs |   | 278    |   |
| Building, plant and equipment                          |   | 68     |   |
| Goodwill                                               |   | 96     |   |
| Total assets                                           |   | 467    |   |
| Accounts payable                                       |   | 24     |   |
| Derivative liabilities                                 |   | 10     |   |
| Long-term debt                                         |   | 65     |   |
| Asset retirement obligations                           |   | 10     |   |
| Deferred income tax liabilities                        |   | 22     |   |
| Total liabilities                                      |   | 131    |   |
| Net assets acquired                                    |   | $      | 336    |   |

 

In 2008, we also acquiredall of the oil and gas assets at Sturgeon Lake, Alberta, from DaylightResources Trust for $83 million. The Sturgeon Lake assets are adjacent toCadence’s Sturgeon Lake assets and the transaction enables us to consolidate100% ownership of the Sturgeon Lake South Leduc pool. We have determined thatthis transaction represented an acquisition of assets, which were amalgamatedwith the Cadence operations to form Barrick Energy.

 

**b)Acquisition of 40% Interest in Cortez**

 

In 2008, we completed ouracquisition of an additional 40% interest in the Cortez property from KennecottExplorations (Australia) Ltd. (“Kennecott”), a subsidiary of Rio Tinto plc, fora total cash consideration of $1.695 billion. A further $50 million will bepayable if and when we add an additional 12 million ounces of contained goldresources beyond our December 31, 2007 reserve statement for Cortez. Thiscontingent payment will be recognized as an additional cost of the acquisitiononly if the resource/production targets are met and the amounts become payableas a result. A sliding scale royalty is payable to Kenne-cott on 40% of allproduction in excess of 15 million ounces on and after January 1, 2008.

 

The acquisition consolidates100% ownership for Barrick of the existing Cortez mine and the Cortez Hillsexpansion plus any future potential from the property. We have determined thatthe transaction represents a business combination. The acquisition waseffective March 1, 2008 and the revenues and expenses attributable to the40% interest have been included in our consolidated statements of income fromthat date onwards. The tables below represent the purchase cost and our finalpurchase price allocation for the additional 40% of Cortez.

 

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| **Purchase Cost**           | ** ** | ** ** | ** ** |
|-----------------------------|------------|------------|------------|
| Purchase cost per agreement |       | $          | 1,695      |   |
| Less: cash acquired         |       | (14        | )          |
|                        |       | $          | 1,681      |   |

 
| **Summary  Purchase Price Allocation**                 | ** ** | ** ** | ** ** |
|--------------------------------------------------------|------------|------------|------------|
| Inventories                                            |       | $          | 47         |   |
| Other current assets                                   |       | 1          |       |
| Property, plant and equipment                          |       |       |       |
| Building, plant and equipment                          |       | 184        |       |
| Capitalized reserve acquisition and  development costs |       | 1,057      |       |
| Value beyond proven and probable reserves              |       | 381        |       |
| Goodwill                                               |       | 20         |       |
| Non-current ore in stockpiles                          |       | 17         |       |
| Deferred income tax assets                             |       | 11         |       |
| Total assets                                           |       | 1,718      |       |
| Current liabilities                                    |       | 23         |       |
| Asset retirement obligations                           |       | 14         |       |
| Total liabilities                                      |       | 37         |       |
| Net assets acquired                                    |       | $          | 1,681      |   |

 

**c)Acquisition of Cerro Casale**

 

In 2007, we acquired 94% ofthe common shares of Arizona Star, with the remaining common shares pursuant toa statutory right of compulsory acquisition for $40 million in 2008. ArizonaStar owns a 51% interest in the Cerro Casale deposit in the Maricunga districtof Region III in Chile. The acquisition of Arizona Star has been accounted foras an asset purchase. The tables below represent the purchase cost and finalpurchase price allocation for the acquisition of 100% of the common shares ofArizona Star.

 
| **Purchase Cost**   | ** ** | ** ** | ** ** |
|---------------------|------------|------------|------------|
| Purchase cost       |       | $          | 770        |   |
| Less: cash acquired |       | (7         | )          |
|                |       | $          | 763        |   |

 
| **Summary  Purchase Price Allocation**    |   |   |   |
|-------------------------------------------|--------|--------|--------|
| Other current assets                      |   | $      | 1      |   |
| Equity investment in Cerro Casale project |   | 770    |   |
| Total assets                              |   | 771    |   |
| Current liabilities                       |   | 8      |   |
| Net assets acquired                       |   | $      | 763    |   |

 

**d) PorgeraMine Acquisition**

 

In 2007, we completed theacquisition of an additional 20% interest in the Porgera mine in Papua NewGuinea from Emperor Mines Limited, for cash consideration of $264 million. Theacquisition has been accounted for as a business combination. Following this transactionour interest in the Porgera mine increased from 75% to 95%. The Government ofPapua New Guinea holds the remaining 5% undivided interest in Porgera. TheGovernment of Papua New Guinea and Porgera landowners’ option to purchase up toa 5% interest in the Porgera mine expired in 2008. We are negotiating a sixmonth extension for this option.

 
| **Purchase Cost**   | ** ** | ** ** | ** ** |
|---------------------|------------|------------|------------|
| Purchase cost       |       | $          | 264        |   |
| Less: cash acquired |       | (5         | )          |
|                |       | $          | 259        |   |

 
| **Summary  Purchase Price Allocation** |   |   |   |
|----------------------------------------|--------|--------|--------|
| Inventories                            |   | $      | 17     |   |
| Other current assets                   |   | 2      |   |
| Property, plant and equipment          |   | 145    |   |
| Non-current ore in stockpiles          |   | 60     |   |
| Deferred income tax assets             |   | 20     |   |
| Goodwill                               |   | 34     |   |
| Total assets                           |   | 278    |   |
| Current liabilities                    |   | 11     |   |
| Asset retirement obligations           |   | 8      |   |
| Total liabilities                      |   | 19     |   |
| Net assets acquired                    |   | $      | 259    |   |

 

**e) KainantuAcquisition**

 

In 2007, we completed theacquisition of the Kainantu mineral property and various exploration licensesin Papua New Guinea from Highlands Pacific Limited for cash consideration of$135 million, which reflects the total purchase price, net of $7 millionwithheld pending certain permit renewals. In 2008, $4 million was paid insettlement of the permit renewals and $1 million in transaction costs. Theacquisition has been accounted for as a purchase of assets, allocating $163 millionto the exploration property, $19 million to deferred income tax liabilities and$4 million to an acquired asset retirement obligation liability.

 

93

----

 

**f)Acquisition of Placer Dome Inc. (“Placer Dome”)**

 

In 2006, we acquired 100% ofthe outstanding common shares of Placer Dome. Placer Dome was one of the world’slargest gold mining companies. It had 12 mining operations based in NorthAmerica, South America, Africa and Australia/Papua New Guinea, as well as fourprojects that were in various stages of exploration/development. Its mostsignificant mines were Cortez in the United States, Zaldívar in Chile, Porgerain Papua New Guinea, North Mara in Tanzania and South Deep in South Africa.

 

ThePlacer Dome acquisition was accounted for as a business combination, withBarrick as the accounting acquirer. The purchase cost was $10 billion and wasfunded through a combination of common shares issued, the drawdown of a $1billion credit facility, and cash resources. The table below represents thepurchase cost and final purchase price allocation.

 
| Value of 322.8 million Barrick common  shares issued at $27.14 per share(1) |   | $     | 8,761  |   |
|-----------------------------------------------------------------------------|--------|-------|--------|--------|
| Value of 2.7 million fully vested stock  options                            |   | 22    |   |
| Cash                                                                        |   | 1,239 |   |
| Transaction costs                                                           |   | 32    |   |
|                                                                        |   | $     | 10,054 |   |

 

----

(1)          The measurement of the common share componentof the purchase consideration represents the average closing price on the NewYork Stock Exchange for the two days prior to and two days after the publicannouncement on December 22, 2005 of our final offer for Placer Dome.

 
| **Summary  Purchase Price Allocation**    | ** ** | ** ** | ** ** |
|-------------------------------------------|------------|------------|------------|
| Cash(1)                                   |       | $          | 1,102      |   |
| Inventories                               |       | 428        |       |
| Other current assets                      |       | 198        |       |
| Property, plant and equipment             |       |       |       |
| Buildings, plant and equipment            |       | 2,946      |       |
| Proven and probable reserves              |       | 1,571      |       |
| Value beyond proven and probable reserves |       | 419        |       |
| Intangible assets                         |       | 85         |       |
| Assets of discontinued operations(2)      |       | 1,744      |       |
| Deferred income tax assets                |       | 93         |       |
| Other assets                              |       | 254        |       |
| Goodwill                                  |       | 6,506      |       |
| Total assets                              |       | 15,346     |       |
| Current liabilities                       |       | 669        |       |
| Liabilities of discontinued operations(2) |       | 107        |       |
| Derivative instrument liabilities         |       | 1,729      |       |
| Long-term debt                            |       | 1,252      |       |
| Asset retirement obligations              |       | 387        |       |
| Deferred income tax liabilities           |       | 686        |       |
| Total liabilities                         |       | 4,830      |       |
| Non-controlling interests                 |       | 462        |       |
| Net assets acquired                       |       | $          | 10,054     |   |

 

----

(1)          Cashpaid on acquisition of $160 million, as disclosed in the 2007 Annual Report.

(2)          Includesoperations that were sold to Goldcorp Inc.

 

At acquisition we recordedliabilities totaling $48 million that primarily relate to employee severance atPlacer Dome offices that were closed during 2006. All amounts were settled bythe end of 2007.

 

**g)Disposition of Royalties**

 

In 2008, we divested certainnon-core royalties to Royal Gold Inc. (“Royal Gold”) in exchange for cashconsideration of $150 million and a reduction in various royalties that we arecurrently obligated to pay to Royal Gold with an estimated fair value of $32million. The transaction closed on October 2, 2008 and we recorded apre-tax gain on sale of $167 million in other income.

 

**h) Sale ofPaddington Mill**

 

In 2007, we completed thesale of the Paddington Mill and associated land tenements in Australia toNorton Goldfields Limited and the sale of certain land tenements to ApexMinerals for total proceeds of $32 million, $30 million in cash and $2 millionin Apex Minerals NL shares, respectively. We recorded a gain of $8 million inother income on closing.

 

**i)Discontinued Operations**

 

**Results of DiscontinuedOperations**

 
| **For the years ended December 31** | ** ** | **2008** | ** ** | **2007**   | ** ** | **2006**   | ** ** |
|------------------------------------------|------------|----------|------------|------------|------------|------------|------------|
| Gold sales                               |       |     |       |       |       |       |       |
| South Deep operations                    | ** ** | **$**    | **—** | ** ** | $          | **—** |       | $ | 158 |   |
| Operations sold to Goldcorp              |       | —   |       | —     |       | 83         |       |
|                                     | ** ** | **$**    | **—** | ** ** | $          | **—** |       | $ | 241 |   |
| Income before tax                        |       |     |       |       |       |       |       |
| South Deep                               |       | —   |       | 9          |       | 8          |       |
| Gain on sale of South Deep               |       | —   |       | —     |       | 288        |       |
| Operations sold to Goldcorp              |       | —   |       | —     |       | 1          |       |
|                                     | ** ** | **$**    | **—** | ** ** | $          | 9          |       | $ | 297 |   |
|                                          |            |          |            |            |            |            |            |  |  |  |  |

 

**South Deep**

 

In 2006, we sold our 50%interest in the South Deep mine in South Africa to Gold Fields Limited (“GoldFields”). The consideration on closing was $1,517 million, of which $1,209million was received in cash and $308 million in Gold Fields shares. On closingwe recorded a gain of $288 million.

 

In2007, a final settlement was reached with Gold Fields on the allocation ofinsurance proceeds from an insurance claim that straddled the acquisition date.As a result of that settlement, we recorded further proceeds of $9 millionwithin income from discontinued operations. Also in 2007, $21 million wasreceived in cash and has been classified under Cash Flows of DiscontinuedOperations in our Consolidated Statement of Cash Flow.

 

94

----

 

**OperationsSold to Goldcorp**

 

In 2006, we sold all ofPlacer Dome’s Canadian propertiesand operations (other than Placer Dome’s office in Vancouver), Placer Dome’s interest in the LaCoipa mine in Chile, 40% ofPlacer Dome’s interest in the Pueblo Viejo project, certain related assets and our share in Agua de la Falda S.A. to Goldcorp Inc. (“Goldcorp”)(collectively, the “Operationssold to Goldcorp”).  

 

Thesales proceeds for the operations sold to Goldcorpwere $1,641 million. The aggregate net amountof assets and liabilities of these operations was recorded in the purchase price allocation at $1,641 millionbased on the terms of the saleagreement with Goldcorp that was in place at the time we acquired Placer Dome. The results of theoperations sold to Goldcorp wereincluded under “discontinued operations” in the income statement and cash flowstatement until closing.Interest expense of $21 million was allocated to the results from the operations sold to Goldcorp. No gain or loss arose on closing of the sale.

 

**4****·****Segment Information**

 

In first quarter 2008, we formed a dedicatedCapital Projectsgroup,distinct from our existing regional business units to focus on managing development projects andbuilding new mines. Thisspecialized group manages all project development activities up to andincluding the commissioning of newmines, at which point responsibility for mine operations will be handed over tothe regional business units. We haverevised the format of information provided to the Chief Operating Decision Maker in order tomake resource allocationdecisions and assess the operating performance of this group. Accordingly, we have revised our operating segment disclosure to be consistent with theinternal management structure and reporting changes, with restatement of comparative information to conform to thecurrent period presentation. Inthird quarter 2008, we completed theacquisition of Barrick Energy (note 3a). The results of Barrick Energy are distinct from our existingregional business units and as such are presented as Other in our segmentinformation.  

 

**Income Statement Information**

 
| ** **                                                   | ** ** | **Sales**  | ** ** | **Segment expenses** | ** ** | **Segment income (loss)(1),(2)** | ** ** |
|--------------------------------------------------------------|------------|------------|------------|---------------------------|------------|--------------------------------------------|------------|
| **For the years ended December 31** | ** ** | **2008**   | ** ** | **2007**                  | ** ** | **2006**                                   | ** ** | **2008** | ** ** | **2007** | ** ** | **2006** | ** ** | **2008** | ** ** | **2007** | ** ** | **2006** | ** ** |
| **Gold**                                                     |       |       | ** ** |                      |       |                                       |       |   | ** ** |   |   |   |   |   | ** ** |   |   |   |   |
| North America                                                | ** ** | **$**      | **2,627**  | ** **                | $          | 2,001                                      |       | $ | 1,791 | ** ** | **$** | **1,517** | ** ** | $ | 1,178 |   | $ | 1,039 | ** ** | **$** | **739** | ** ** | $ | 483 |   | $ | 484 |   |
| South America                                                | ** ** | **1,833**  | ** ** | 1,306                     |       | 1,131                                      | ** ** | **531** | ** ** | 400 |   | 305 | ** ** | **1,127** | ** ** | 664 |   | 693 |   |
| Australia Pacific                                            | ** ** | **1,658**  | ** ** | 1,292                     |       | 1,144                                      | ** ** | **1,051** | ** ** | 934 |   | 749 | ** ** | **342** | ** ** | 108 |   | 201 |   |
| Africa                                                       | ** ** | **538**    | ** ** | 428                       |       | 427                                        | ** ** | **327** | ** ** | 293 |   | 226 | ** ** | **145** | ** ** | 55 |   | 111 |   |
| **Copper**                                                   |       |       | ** ** |                      |       |                                       |       |   | ** ** |   |   |   |   |   | ** ** |   |   |   |   |
| South America                                                | ** ** | **1,007**  | ** ** | 1,065                     |       | 955                                        | ** ** | **315** | ** ** | 231 |   | 282 | ** ** | **624** | ** ** | 752 |   | 621 |   |
| Australia Pacific                                            | ** ** | **221**    | ** ** | 240                       |       | 182                                        | ** ** | **121** | ** ** | 108 |   | 109 | ** ** | **44** | ** ** | 92 |   | 55 |   |
| Capital Projects                                             | ** ** | **—** | ** ** | —                    |       | —                                     |       | **—** | ** ** | — |   | — |   | **(254** | **)** | (187 | ) | (111 | ) |
| Other                                                        | ** ** | **29**     | ** ** | —                    | ** ** | —                                     |       | **14** | ** ** | — |   | — |   | **2** | ** ** | — |   | — |   |
| ** **                                                   |       | **$**      | **7,913**  | ** **                | $          | 6,332                                      |       | $ | 5,630 | ** ** | **$** | **3,876** | ** ** | $ | 3,144 |   | $ | 2,710 | ** ** | **$** | **2,769** | ** ** | $ | 1,967 |   | $ | 2,054 |   |

 

----

(1)         Segmentincome (loss) represents segment sales, less cost of sales, less segmentamortization and accretion. For the year ended December 31, 2008,accretion expense was $43 million (2007: $50 million; 2006: $39 million), seenote 15 for further details. Segment loss for the Capital Projects segmentincludes project development expense and losses from capital projects heldthrough equity investees, see notes 7 and 12 for further details.

(2)         Accretionexpense related to capital projects is included within amortization andaccretion. All other amounts related to the capital projects segments areincluded within project development expense.

 

95

----

 

**Income Statement Information(cont’d)**

 
| ** **                                                   | ** ** | **Exploration(1)** | ** ** | **Regional business unit costs(1)** | ** ** |
|--------------------------------------------------------------|------------|--------------------|------------|----------------------------------------------------|------------|
| **For the years ended December 31** | ** ** | **2008**           | ** ** | **2007**                                           | ** ** | **2006** | ** ** | **2008** | ** ** | **2007** | ** ** | **2006** | ** ** |
| North America(2)                                             | ** ** | **$**              | **69**     |                                               | $          | 66 |   | $ | 61 | ** ** | **$** | **48** |   | $ | 27 |   | $ | 32 |   |
| South America                                                | ** ** | **40**             |       | 33                                                 |       | 22 | ** ** | **29** |   | 23 |   | 19 |   |
| Australia Pacific                                            | ** ** | **52**             |       | 46                                                 |       | 44 | ** ** | **48** |   | 38 |   | 38 |   |
| Africa                                                       | ** ** | **18**             |       | 15                                                 |       | 22 | ** ** | **24** |   | 11 |   | 1 |   |
| Other expenses outside reportable segments                   | ** ** | **12**             |       | 8                                                  |       | 19 |   | **—** |   | — |   | — |   |
| Capital projects                                             | ** ** | **25**             |       | 11                                                 |       | 3 |   | **—** | ** ** | — |   | — |   |
| ** **                                                   |       | **$**              | **216**    |                                               | $          | 179 |   | $ | 171 | ** ** | **$** | **149** |   | $ | 99 |   | $ | 90 |   |

 

----

(1)         Explorationand regional business unit costs are excluded from the measure of segment incomebut are reported separately by operating segment to the Chief OperatingDecision Maker.

(2)         In2008, regional business unit costs include costs for Barrick Energy.

 

**Geographic Information**

** **
| ** **                                                   | ** ** | **Long-lived assets(1)** | ** ** | **Sales(2)** | ** ** |
|--------------------------------------------------------------|------------|-------------------------------|------------|--------------|------------|
| **For the years ended December 31** | ** ** | **2008**                      | ** ** | **2007**     | ** ** | **2006** | ** ** | **2008** | ** ** | **2007** | ** ** | **2006** | ** ** |
| North America                                                |       |                          |       |         |       |   |   |   |   |   |   |   |   |
| United States                                                | ** ** | **$**                         | **4,587**  |         | $          | 2,637 |   | $ | 2,518 | ** ** | **$** | **2,501** |   | $ | 1,882 |   | $ | 1,702 |   |
| Canada                                                       | ** ** | **1,017**                     |       | 796          |       | 852 | ** ** | **126** |   | 119 |   | 89 |   |
| Dominican Republic                                           | ** ** | **446**                       |       | 139          |       | 133 |   | **—** |   | — |   | — |   |
| South America                                                |       |                          |       |         |       |   |   |   |   |   |   |   |   |
| Peru                                                         | ** ** | **337**                       |       | 392          |       | 492 | ** ** | **1,367** |   | 1,033 |   | 878 |   |
| Chile                                                        | ** ** | **2,763**                     |       | 2,485        |       | 1,599 | ** ** | **1,007** |   | 1,065 |   | 955 |   |
| Argentina                                                    | ** ** | **1,123**                     |       | 1,048        |       | 1,014 | ** ** | **466** |   | 273 |   | 253 |   |
| Australia Pacific                                            |       |                          |       |         |       |   |   |   |   |   |   |   |   |
| Australia                                                    | ** ** | **1,749**                     |       | 1,724        |       | 2,142 | ** ** | **1,340** |   | 1,250 |   | 1,116 |   |
| Papua New Guinea                                             | ** ** | **677**                       |       | 702          |       | 438 | ** ** | **539** |   | 282 |   | 210 |   |
| Africa                                                       |       |                          |       |         |       |   |   |   |   |   |   |   |   |
| Tanzania                                                     | ** ** | **1,816**                     |       | 1,336        |       | 993 | ** ** | **538** |   | 428 |   | 427 |   |
| Other                                                        | ** ** | **179**                       |       | 478          |       | 603 | ** ** | **29** |   | — |   | — |   |
| ** **                                                   |       | **$**                         | **14,694** |         | $          | 11,737 |   | $ | 10,784 | ** ** | **$** | **7,913** |   | $ | 6,332 |   | $ | 5,630 |   |

 

----

(1)         Long-livedassets include property, plant and equipment, investments, deferred income taxassets and other assets.

(2)         Presentedbased on the location in which the sale originated.

 

**Reconciliationof Segment Income to Income from Continuing Operations Before Income Taxes andOther Items**

 
| **For the years ended December 31**           | ** ** | **2008** | ** ** | **2007**   | ** ** | **2006** | ** ** |
|------------------------------------------------------------------------|------------|----------|------------|------------|------------|----------|------------|
| Segment income                                                         | ** ** | **$**    | **2,769**  | ** ** | $          | 1,967    |       | $ | 2,054 |   |
| Amortization of corporate assets                                       | ** ** | **(19**  | **)**      | (20        | )          | (19      | )          |
| Exploration                                                            | ** ** | **(216** | **)**      | (179       | )          | (171     | )          |
| Other project expenses                                                 | ** ** | **(57**  | **)**      | (15        | )          | (8       | )          |
| Corporate administration                                               | ** ** | **(155** | **)**      | (155       | )          | (142     | )          |
| Other expenses                                                         | ** ** | **(295** | **)**      | (205       | )          | (212     | )          |
| Impairment charges (note 8b)                                           | ** ** | **(749** | **)**      | (42        | )          | (17      | )          |
| Interest income                                                        | ** ** | **39**   | ** ** | 141        |       | 110      |       |
| Interest expense                                                       | ** ** | **(21**  | **)**      | (113       | )          | (126     | )          |
| Other income                                                           | ** ** | **291**  | ** ** | 110        |       | 97       |       |
| Write-down of investments (note 8b)                                    | ** ** | **(205** | **)**      | (23        | )          | (6       | )          |
| Loss from capital projects held through  equity investees              | ** ** | **69**   | ** ** | 14         |       | —   |       |
| Income from continuing operations before  income taxes and other items | ** ** | **$**    | **1,451**  | ** ** | $          | 1,480    |       | $ | 1,560 |   |

 

96

----

 

**Asset Information**

 
| ** **                                                   | ** ** | **Segment  long-lived assets** | ** ** | **Amortization** | ** ** | **Segment  capital expenditures(1)** | ** ** |
|--------------------------------------------------------------|------------|-------------------------------------|------------|------------------|------------|-------------------------------------------|------------|
| **For the years ended December 31** | ** ** | **2008**                            | ** ** | **2007**         | ** ** | **2006**                                  | ** ** | **2008** | ** ** | **2007** | ** ** | **2006** | ** ** | **2008** | ** ** | **2007** | ** ** | **2006** | ** ** |
| **Gold**                                                     |       |                                |       |             |       |                                      |       |   |   |   |   |   |   |   |   |   |   |   |   |
| North America                                                | ** ** | **$**                               | **5,083**  |             | $          | 3,370                                     |       | $ | 3,254 | ** ** | **$** | **350** |   | $ | 314 |   | $ | 247 | ** ** | **$** | **382** |   | $ | 225 |   | $ | 196 |   |
| South America                                                | ** ** | **1,223**                           |       | 1,220            |       | 1,319                                     | ** ** | **165** |   | 234 |   | 127 | ** ** | **80** |   | 158 |   | 224 |   |
| Australia Pacific                                            | ** ** | **2,227**                           |       | 2,173            |       | 2,434                                     | ** ** | **258** |   | 239 |   | 186 | ** ** | **199** |   | 208 |   | 211 |   |
| Africa                                                       | ** ** | **1,195**                           |       | 1,031            |       | 810                                       | ** ** | **62** |   | 78 |   | 88 | ** ** | **133** |   | 118 |   | 85 |   |
| **Copper**                                                   |       |                                |       |             |       |                                      |       |   |   |   |   |   |   |   |   |   |   |   |   |
| South America                                                | ** ** | **1,267**                           |       | 1,271            |       | 1,276                                     | ** ** | **66** |   | 80 |   | 51 | ** ** | **24** |   | 27 |   | 17 |   |
| Australia Pacific                                            | ** ** | **28**                              |       | 116              |       | 146                                       | ** ** | **57** |   | 39 |   | 17 | ** ** | **57** |   | 11 |   | 22 |   |
| Capital projects                                             | ** ** | **3,266**                           |       | 2,195            |       | 1,066                                     | ** ** | **—** |   | — |   | — | ** ** | **919** |   | 326 |   | 259 |   |
| Other                                                        | ** ** | **382**                             | ** ** | —           | ** ** | —                                    | ** ** | **13** | ** ** | — |   | — | ** ** | **15** |   | — |   | — |   |
| Segment total                                                | ** ** | **14,671**                          |       | 11,376           |       | 10,305                                    | ** ** | **971** |   | 984 |   | 716 | ** ** | **1,809** |   | 1,073 |   | 1,014 |   |
| Cash and  equivalents                                        | ** ** | **1,437**                           |       | 2,207            |       | 3,043                                     |       | **—** |   | — |   | — |   | **—** | ** ** | — |   | — |   |
| Other current  assets                                        | ** ** | **2,675**                           |       | 2,092            |       | 1,753                                     |       | **—** |   | — |   | — |   | **—** | ** ** | — |   | — |   |
| Intangible assets                                            | ** ** | **75**                              |       | 68               |       | 75                                        |       | **—** |   | — |   | — |   | **—** | ** ** | — |   | — |   |
| Goodwill                                                     | ** ** | **5,280**                           |       | 5,847            |       | 5,855                                     |       | **—** |   | — |   | — |   | **—** | ** ** | — |   | — |   |
| Other items not  allocated to segments                       | ** ** | **23**                              |       | 361              |       | 479                                       | ** ** | **19** |   | 20 |   | 19 | ** ** | **134** |   | 17 |   | 17 |   |
|                                                         | ** ** | ** **                          |       |             |       |                                      | ** ** | ** ** |   |   |   |   | ** ** | ** ** |   |   |   |   |   |
| Enterprise total                                             | ** ** | **$**                               | **24,161** |             | $          | 21,951                                    |       | $ | 21,510 | ** ** | **$** | **990** |   | $ | 1,004 |   | $ | 735 | ** ** | **$** | **1,943** |   | $ | 1,090 |   | $ | 1,031 |   |

 

----

(1)         Segmentcapital expenditures are presented for internal management reporting purposeson an accrual basis. Capital expenditures in the Consolidated Statements ofCash Flow are presented on a cash basis. In 2008, cash expenditures were $1,776million (2007: $1,046 million; 2006: $1,087 million) and the increase inaccrued expenditures was $167 million in 2008 (2007: $44 million decrease;2006: $56 million increase).

 

**5****·****Revenue and Gold SalesContracts**

 
| **For the years ended December 31** | ** ** | **2008**  | ** ** | **2007** | ** ** | **2006** | ** ** |
|--------------------------------------------------------------|------------|-----------|------------|----------|------------|----------|------------|
| **Gold bullion sales(2)**                                    |       |      |       |     |       |     |       |
| Spot market sales                                            | ** ** | **$**     | **6,507**  |     | $          | 3,823    |       | $ | 3,957 |   |
| Gold sales contracts                                         |       | —    |       | 1,026    |       | 369      |       |
| ** **                                                   |       | **6,507** |       | 4,849    |       | 4,326    |       |
| Concentrate sales(3)                                         | ** ** | **149**   |       | 178      |       | 167      |       |
| ** **                                                   |       | **$**     | **6,656**  |     | $          | 5,027    |       | $ | 4,493 |   |
| **Copper sales(1),(4)**                                      |       |      |       |     |       |     |       |
| Copper cathode sales                                         | ** ** | **$**     | **1,038**  |     | $          | 1,063    |       | $ | 937 |   |
| Concentrate sales                                            | ** ** | **190**   |       | 242      |       | 200      |       |
| ** **                                                   |       | **$**     | **1,228**  |     | $          | 1,305    |       | $ | 1,137 |   |
| **Oil and gas sales(5)**                                     | ** ** | **29**    |       | —   |       | —   |       |
| ** **                                                   |       | **$**     | **7,913**  |     | $          | 6,332    |       | $ | 5,630 |   |

 

----

(1)         Revenuesinclude amounts transferred from OCI to earnings for commodity cash flow hedges(see notes 20c and 26).

(2)         Goldsales include gains and losses on non-hedge derivative contracts: 2008: $19million gain (2007: $8 million loss; 2006: $7 million gain).

(3)         Concentratesales include gains and losses on embedded derivatives in smelting contracts:2008: $3 million loss (2007: $4 million loss; 2006: $4 million gain).

(4)         Coppersales include gains and losses on economic copper hedges that do not qualifyfor hedge accounting treatment: 2008: $67 million gain (2007: $48 million gain;2006: $14 million loss). Sales also include gains and losses on embeddedderivatives in copper smelting contracts: 2008: $38 million loss (2007: $10million loss; 2006: $nil).

(5)         RepresentsBarrick Energy. Refer to note 3a for further details.

 

**PrincipalProducts**

 

All of our gold miningoperations produce gold in doré form, except Eskay Creek, which produces goldconcentrate and gold doré; Bulyanhulu which produces both gold doré and goldconcentrate; and Osborne which produces a concentrate that contains both goldand copper. 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. Goldconcentrate is a processing product containing the valuable ore mineral (gold)from which most of the waste mineral has been eliminated, that undergoes asmelting process to convert it into gold bullion. Gold bullion is soldprimarily in the London spot market or under gold sales contracts. Goldconcentrate is sold to third-party smelters. At our Zaldívar mine we producepure copper cathode, which consists of 99.9% copper, a form that is deliverablefor sale in world metals exchanges.

 

**RevenueRecognition**

 

We record revenue when thefollowing conditions are met: persuasive evidence of an arrangement exists;delivery and transfer of title (gold revenue only) have occurred under theterms of the arrangement; the price is fixed or determinable; andcollectability is reasonably assured. Revenue in 2008 is presented net ofdirect sales taxes of $23 million (2007: $15 million; 2006: $16 million).

 

97

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**Gold BullionSales**

 

We record revenue from goldand silver bullion sales at the time of physical delivery, which is also thedate that title to the gold or silver passes. The sales price is fixed at thedelivery date based on either the terms of gold sales contracts or the goldspot price. Incidental revenues from the sale of by-products such as silver areclassified within cost of sales.

 

**Gold SalesContracts**

 

At December 31, 2008,we had Project Gold Sales Contracts with various customers for a total of 9.5million ounces of future gold production of which 4.2 million ounces are basedon floating spot prices.

 

Ourgold sales contracts are excluded from the scope of FAS 133, because ourobligations under these contracts will be met by physical delivery of goldproduced at our mines and they meet the other requirements set out in paragraph10(b) of FAS 133. In addition, our past sales practices, productivecapacity and delivery intentions are consistent with the definition of normalsales contracts. Accordingly, we have elected to designate our gold salescontracts as “normal sales contracts” with the result that these contracts arenot required to be accounted for as derivatives. Instead, we recognize revenuebased on the contract sales price at the time of physical delivery per theaccounting principles as described above.

 

Theterms of gold sales contracts are governed by master trading agreements (MTAs)that we have in place with each customer. The contracts have final deliverydates primarily over the next 10 years, but we have the right to settle thesecontracts at any time over this period. Contract prices are established atinception through to an interim date. If we do not deliver at this interimdate, a new interim date is set. The price for the new interim date isdetermined in accordance with the MTAs which have a mechanism to establish theapplicable price adjusments. The MTAs have both fixed and floating pricemechanisms. Under the fixed-price mechanism, a price is fixed with reference tothe gold forward market but the price does not increase or decrease due tochanges in the spot gold price, whereas under the floating price mechanism, thefuture selling price does increase or decrease as spot gold prices increase ordecrease. The final realized selling price under a contract primarily dependsupon the price mechanism selected at each interim date, the timing of theactual future delivery date, the market price of gold at the start of thecontract and the forward gold market at each interim date.

 

**Mark-to-MarketValue**

 
| ** **                   | ** ** | **Total**          | ** ** | **At Dec. 31,** | ** ** |
|------------------------------|------------|--------------------|------------|---------------------------|------------|
| ** **                   | ** ** | **ounces in** | ** ** | **2008**                  | ** ** |
| **$ millions**          | ** ** | **millions**       | ** ** | **value(1)**              | ** ** |
| Project Gold Sales Contracts |       | 9.5                |       | $                         | (4,865     | ) |
|                              |            |                    |            |                           |            |  |

 

----

(1)         At aspot gold price of $870 per ounce. The fair value of gold sales contracts arethe present value of expected cash flows that would be required to financiallysettle our obligations arising under the contracts. The present value modelutilizes inputs, such as the current spot gold price, gold lease rates, USdollar interest rate curves and counterparty credit spreads, that are derivedfrom observable market data. The fair value of the gold sales con- tracts doesnot impact the reported accounting results when we settle these contractsthrough physical delivery. Instead, we will recognize revenue at that timebased on the appropriate contract sales price.

 

**ConcentrateSales**

 

Under the terms ofconcentrate sales contracts with independent smelting companies, gold andcopper sales prices are provisionally set on a specified future date aftershipment based on market prices. We record revenues under these contracts atthe time of shipment, which is also when title passes to the smeltingcompanies, using forward market gold and copper prices on the expected datethat final sales prices will be fixed. Variations between the price recorded atthe shipment date and the actual final price set under the smelting contractsare caused by changes in market gold and copper prices, and result in anembedded derivative in the accounts receivable. The embedded derivative isrecorded at fair value each period until final settlement occurs, with changesin fair value classified as provisional price adjustments and included as acomponent of revenue.

 

**CopperCathode Sales**

 

Under the terms of coppercathode sales contracts, copper sales prices are provisionally set on aspecified future date based upon market commodity prices plus certain priceadjustments. Revenue is recognized at the time of shipment when risk of losspasses to the customer, and collectability is reasonably assured. Revenue isprovisionally measured using forward market prices on the expected date thatfinal selling prices will be fixed. Variations occur between the price recordedon the date of revenue recognition and the actual final price under the terms ofthe contracts due to changes in market copper prices, which result in theexistence of an embedded derivative in the accounts receivable. This embeddedderivative is recorded at fair value each period until final settlement occurs,with changes in fair value classified as provisional price adjustments andincluded as a component of revenue.

 

98

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**ProvisionalCopper and Gold Sales**

 

We had the followingrevenues before treatment and refining charges subject to final priceadjustments:

 
| **At December 31** | ** ** | **2008** | ** ** | **2007** | ** ** |
|------------------------------|------------|----------|------------|----------|------------|
| Copper                       | ** ** | **$**    | **80**     |     | $          | 142 |   |
| Gold                         | ** ** | **15**   |       | 9        |       |
|                              |            |          |            |          |            |  |  |

 

The final price adjustments were as follows:

 
| **For the years ended December 31** | ** ** | **2008** | ** ** | **2007** | ** ** | **2006** | ** ** |
|--------------------------------------------------------------|------------|----------|------------|----------|------------|----------|------------|
| Gain (loss)                                                  |       |     |       |     |       |     |       |
| Copper                                                       | ** ** | **$**    | **(31**    | )        | $          | (6       | )          | $ | 9 |   |
| Gold                                                         |       | —   |       | (1       | )          | 3        |       |
|                                                              |            |          |            |          |            |          |            |  |  |  |

 

**Oil and GasSales**

 

Revenue from the sale ofcrude oil, natural gas and natural gas liquids is recorded at the time itenters the pipeline system, which is also when title transfers and there isreasonable assurance of collectability. At the time of delivery of oil and gas,prices are fixed and determinable based upon contracts referenced to monthlymarket commodity prices plus certain price adjustments. Price adjustmentsinclude product quality and transportation adjustments and market differentials.

 

**6****·****Cost of Sales**

 
| ** **                                                   | ** ** | **Gold** |       | **Copper** | ** ** | **Oil & Gas** | ** ** |
|--------------------------------------------------------------|------------|----------|------------|------------|------------|-----------------------------|------------|
| **For the years ended December 31** | ** ** | **2008** | ** ** | **2007**   | ** ** | **2006**                    |       | **2008** | ** ** | **2007** | ** ** | **2006** | ** ** | **2008** | ** ** | **2007** | ** ** | **2006** | ** ** |
| Cost of goods  sold(1)                                       | ** ** | **$**    | **3,258**  | ** ** | $          | 2,715                       |       | $ | 2,265 |   | **$** | **432** | ** ** | $ | 334 |   | $ | 388 | ** ** | **$** | **8** |   | $ | — |   | $ | — |   |
| Unrealized losses  on non-hedge contracts                    | ** ** | **14**   | ** ** | 5          |       | —                      |       | **—** | ** ** | — |   | — |   | **—** |   | — |   | — |   |
| By-product  revenues(2)                                      | ** ** | **(93**  | **)**      | (105       | )          | (123                        | )          | **(2** | **)** | (2 | ) | (1 | ) | **—** |   | — |   | — |   |
| Royalty expense                                              | ** ** | **205**  | ** ** | 161        |       | 150                         |       | **6** | ** ** | 7 |   | 4 | ** ** | **6** |   | — |   | — |   |
| Mining production  taxes                                     | ** ** | **42**   | ** ** | 29         |       | 27                          |       | — | ** ** | — |   | — |   | **—** |   | — |   | — |   |
| ** **                                                   |       | **$**    | **3,426**  | ** ** | $          | 2,805                       |       | $ | 2,319 |   | **$** | **436** | ** ** | $ | 339 |   | $ | 391 | ** ** | **$** | **14** |   | $ | — |   | $ | — |   |

 

----

(1)         Cost ofgoods sold includes charges to reduce the cost of inventory to net realizablevalue as follows: $68 million for the year ended December 31, 2008 (2007:$13 million; 2006: $28 million). The cost of inventory sold in the periodreflects all components capitalized to inventory, except that, for presentationpurposes, 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 presentedin amortization rather than cost of sales was $971 million in the year endedDecember 31, 2008 (2007: $984 million; 2006: $716 million).

(2)         We usesilver sales contracts to sell a portion of silver produced as a by-product.Silver sales contracts have similar delivery terms and pricing mechanisms asgold sales contracts and accordingly, are accounted for in a manner similar toour gold sales contracts. At December 31, 2008, we had fixed-pricecommitments to deliver 7.2 millionounces of silver at an average price of $6.59 per ounce and floating spot pricesilver sales contracts for 8.9 million ounces over periods primarily of up to 10years. The mark-to-market on silversales contracts at December 31, 2008 was negative $67 million (2007:negative $111 million; 2006: $100 million). Refer to note 21 for furtherinformation on fair value measurements.

 

**Royalties**

 

Certain of our propertiesare subject to royalty arrangements based on mineral production at theproperties. The most significant royalties are at the Goldstrike, Bulyanhuluand Veladero mines and the Pascua-Lama project. The primary type of royalty isa net smelter return (NSR) royalty. Under this type of royalty we pay theholder an amount calculated as the royalty percentage multiplied by the valueof gold production at market gold prices less third-party smelting, refiningand transportation costs. Other types of royalties include:

 

· Net profits interest (NPI) 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 recordedat the time of sale of gold production.

 

Royalties applicable to ouroil and gas properties include:

 

· Crown royalties, 

· Net profits interest (NPI) royalty, and 

· Overriding royalty (ORR).

 

99

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| **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% 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         |
| Henty                                                      |       | 2.6%–12% of  gold revenue  |
| Africa                                                     |       |                            |
| Bulyanhulu                                                 |       | 3% NSR                          |
| Tulawaka                                                   |       | 3% NSR                          |
| North Mara                                                 |       | 3% NSR                          |
| North Mara – Gokona pit                               |       | 3% NSR, 1.1%  LT                |
| Capital  Projects                                          |       |                            |
| Donlin Creek Project                                       |       | 1.5% NSR  (first 5 years),      |
|                                                       |       | 4.5% NSR  (thereafter)          |
| 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% NSR                          |
| Pueblo Viejo                                               |       | 3.2% NSR, 0–25%  NPI       |
| Buzwagi                                                    |       | 3%–3.1% NSR                |
| Other                                                      |       |                            |
| Barrick Energy                                             |       | 1.1% NPI                        |
|                                                       |       | 1.3% ORR                        |
|                                                       |       | 21.6% Crown  royalty, net       |

 

----

(1)         Includesthe Kalgoorlie, Kanowna, Granny Smith, Plutonic, Darlot, Lawlers and Osbornemines.

 

**7****·****Exploration and Project Development Expense**

 
| **For the years ended December 31** | ** ** | **2008**   | ** ** | **2007** | ** ** | **2006** | ** ** |
|--------------------------------------------------------------|------------|------------|------------|----------|------------|----------|------------|
| Exploration:                                                 |       |       |       |     |       |     |       |
| Minesite exploration                                         | ** ** | **$**      | **80**     |     | $          | 63       |       | $ | 54 |   |
| Projects                                                     | ** ** | **136**    |       | 116      |       | 117      |       |
| ** **                                                   |       | **$**      | **216**    |     | $          | 179      |       | $ | 171 |   |
| Project development expense:                                 |       |       |       |     |       |     |       |
| Pueblo Viejo(1)                                              | ** ** | **62**     |       | 67       |       | 25       |       |
| Donlin Creek(2)                                              |       | **—** |       | 32       |       | 37       |       |
| Sedibelo                                                     | ** ** | **17**     |       | 22       |       | 10       |       |
| Fedorova                                                     | ** ** | **24**     |       | 18       |       | —   |       |
| Pascua-Lama                                                  | ** ** | **21**     |       | 12       |       | 8        |       |
| Kainantu                                                     | ** ** | **28**     |       | —   |       | —   |       |
| Pinson                                                       | ** ** | **17**     |       | —   |       | —   |       |
| Buzwagi                                                      | ** ** | **1**      |       | 5        |       | 12       |       |
| Other                                                        | ** ** | **15**     |       | 17       |       | 19       |       |
| ** **                                                   |       | **$**      | **185**    |     | $          | 173      |       | $ | 111 |   |
| Other project expenses                                       | ** ** | **57**     |       | 15       |       | 8        |       |
| ** **                                                   |       | **$**      | **242**    |     | $          | 188      |       | $ | 119 |   |

 

----

(1)         Represents100% of project expenditures. We record a non-controlling interest recovery forour partner’s share of expenditures within “non-controlling interests” in theincome statement.

(2)         Amountsfor 2007 include a recovery of $64 million of cumulative project costs from ourpartner. See note 12 for further details.

 

**AccountingPolicy for Exploration and Project Expenditures**

** **

**ExplorationExpenditures**

 

Exploration expendituresrelate to the initial search for deposits with economic potential, includingcosts incurred at both greenfield sites (sites where we do not have any mineraldeposits that are already being mined or developed) and brownfield sites (sitesthat are adjacent to a mineral deposit that is classified within proven andprobable reserves as defined by United States reporting standards and arealready being mined or developed). Exploration expenditures relate to costs incurredto evaluate and assess deposits that have been identified as having economicpotential, including exploratory drilling.

 

        Expenditures on exploration activityconducted at greenfield sites are expensed as incurred. Exploratory drillingand related costs are capitalized when incurred at brownfield sites where theactivities are directed at obtaining additional information on the ore bodythat is classified within proven and probable reserves or for the purpose ofconverting a mineral resource into a proven and probable reserve and, prior tothe commencement of the drilling program, we can conclude that it is probablethat such a conversion will take place. Our assessment of probability is basedon the following factors: results from previous drill

 

100

----

 

programs; results fromgeological models; results from a mine scoping study confirming economicviability of the resource; and preliminary estimates of mine inventory, oregrade, cash flow and mine life. Costs incurred at brownfield sites that meetthe above criteria are capitalized as mine development costs. All otherdrilling and related exploration costs incurred at these sites are expensed asmine site exploration.

 

**ProjectExpenditures**

 

We capitalize the costs ofactivities at projects after mineralization is classified as proven andprobable reserves. Before classifying mineralization as proven and probablereserves, the costs of project activities are expensed as incurred, except forcosts incurred to construct tangible assets that are capitalized withinproperty, plant and equipment. Project activities include: preparation ofengineering scoping, prefeasibility and feasibility studies; metallurgicaltesting; permitting; and sample mining. The costs of start-up activities atmines and projects such as recruiting and training are also expensed asincurred within project expense.

 

ThePueblo Viejo, Donlin Creek, Sedibelo, Kabanga, Cerro Casale and Fedorovaprojects are in various stages; however, none of these projects had met thecriteria for cost capitalization at December 31, 2008. The Reko Diqproject is owned through an equity investee and project expenses are includedin equity investees  in the incomestatement (see note 12). Effective May 1, 2007, we determined thatmineralization at Buzwagi met the definition of proven and probable reservesfor United States reporting purposes. Following this determination, we begancapitalizing the cost of project activities at Buzwagi. EffectiveJanuary 1, 2009, we determined that mineralization of Pueblo Viejo met thedefinition of proven and probable reserves.

 

**8****·****Other Charges**

 

**a) OtherExpense**

 
| **For the years ended December 31**              | ** ** | **2008** | ** ** | **2007** | ** ** | **2006** | ** ** |
|---------------------------------------------------------------------------|------------|----------|------------|----------|------------|----------|------------|
| Regional business unit costs(1)                                           | ** ** | **$**    | **149**    |     | $          | 99       |       | $ | 90 |   |
| Community development costs(2)                                            | ** ** | **21**   |       | 28       |       | 15       |       |
| Environmental costs                                                       | ** ** | **16**   |       | 15       |       | 11       |       |
| World Gold Council fees                                                   | ** ** | **11**   |       | 12       |       | 13       |       |
| Changes in estimate of AROs at closed  mines(3)                           |       | **9**    |       | 6        |       | 53       |       |
| Non-hedge derivative losses                                               | ** ** | **17**   |       | 8        |       | —   |       |
| Currency translation losses(4)                                            | ** ** | **30**   |       | 1        |       | —   |       |
| Pension and other post-retirement benefit  expense (notes 28b and 28e)(5) |       | **5**    |       | 5        |       | 3        |       |
| Other items                                                               | ** ** | **37**   |       | 31       |       | 27       |       |
| ** **                                                                |       | **$**    | **295**    |     | $          | 205      |       | $ | 212 |   |

 

----

(1)         Relatesto costs incurred at regional business unit offices.

(2)         In 2008and 2007, amounts mainly related to community programs in Peru, Argentina andPapua New Guinea. In 2006, amounts mainly related to community programs inPeru.

(3)         In2006, amount relates to change in estimate of the ARO at the Nickel Plateproperty in British Columbia, Canada.

(4)         In2008, amounts primarily relate to translation losses on working capitalbalances in Australia and South America.

(5)         For theyear ended December 31, 2008, $nil million of pension credit that relatesto active employees at producing mines is included in cost of sales (2007:$nil; 2006: $4 million) and $nil million is included in corporateadministration (2007: $nil; 2006: $2 million).

 

**EnvironmentalCosts**

 

During the production phasesof a mine, we incur and expense the cost of various activities connected withenvironmental aspects of normal operations, including compliance with andmonitoring of environmental regulations; disposal of hazardous waste producedfrom normal operations; and operation of equipment designed to reduce oreliminate environmental effects. In limited circumstances, costs to acquire andinstall plant and equipment are capitalized during the production phase of amine if the costs are expected to mitigate risk or prevent future environmentalcontamination from normal operations.

 

Whena contingent loss arises from the improper use of an asset, a loss accrual isrecorded if the loss is probable and reasonably estimable. Amounts recorded aremeasured on an undiscounted basis, and adjusted as further information developsor if circumstances change. Recoveries of environmental remediation costs fromother parties are recorded as assets when receipt is deemed probable.

 

101

----

 

**b)Impairment Charges**

 
| **For the years ended December 31** | ** ** | **2008** | ** ** | **2007** | ** ** | **2006** | ** ** |
|------------------------------------------|------------|----------|------------|----------|------------|----------|------------|
| Impairment of goodwill (note 17)         | ** ** | **$**    | **678**    |     | $          | 42       |       | $ | — |   |
| Impairment of long-lived assets(1)       | ** ** | **71**   |       | —   |       | 17       |       |
|                                     | ** ** | **$**    | **749**    |     | $          | 42       |       | $ | 17 |   |
| Write-down of investments (note 12)(2)   | ** ** | **205**  |       | 23       |       | 6        |       |
|                                     | ** ** | **$**    | **954**    |     | $          | 65       |       | $ | 23 |   |

 

----

(1)          In 2008, an impairment charge of $69 millionwas recorded to reduce the carrying amount to the estimated fair value forOsborne and Marigold. In 2006, the carrying amount of Cuerpo Sur, an extensionof Pierina, was tested for impairment on completion of the annual life of mineplanning process. An impairment charge of $17 million was recorded to reducethe carrying amount to the estimated fair value.

(2)          In 2008, we recorded an impairment charge onour investment in Highland Gold ($140 million), on Asset-Backed CommercialPaper ($39 million) and various other investments in junior gold miningcompanies ($26 million). In 2007, we recorded an impairment charge onAsset-Backed Commercial Paper of $20 million.

 

**c) OtherIncome**

 
| **For the years ended December 31**       | ** ** | **2008**   | ** ** | **2007** | ** ** | **2006** | ** ** |
|------------------------------------------------|------------|------------|------------|----------|------------|----------|------------|
| Gains on sale of assets(1)                     | ** ** | **$**      | **187**    |     | $          | 2        |       | $ | 9 |   |
| Gains on sale of investments(2) (note 12) | ** ** | **59**     |       | 71       |       | 6        |       |
| Royalty income                                 | ** ** | **25**     |       | 17       |       | 10       |       |
| Non-hedge derivative gains                     |       | **—** |       | —   |       | 2        |       |
| Currency translation gains                     |       | **—** |       | —   |       | 2        |       |
| Gain on vend-in to Highland Gold (note 12)     |       | **—** |       | —   |       | 51       |       |
| Interest income(3)                             | ** ** | **4**      |       | 2        |       | 1        |       |
| Sale of water rights                           | ** ** | **4**      |       | 5        |       | 5        |       |
| Other                                          | ** ** | **12**     |       | 13       |       | 11       |       |
|                                           | ** ** | **$**      | **291**    |     | $          | 110      |       | $ | 97 |   |

 

----

(1)          In2008, we recorded a gain of $167 million on the disposition of royalties toRoyal Gold and a gain of $9 on the sale of Doyon royalty. In 2007, we soldcertain properties in South America and Australia, including an $8 million gainon the sale of the Paddington Mill. In 2006, we sold certain properties inCanada and Chile.

(2)          In2008, we recorded a gain of $12 million on the sale of our investment in QGXLtd. We also sold Asset-Backed Commercial Paper for cash proceeds of $49million and recorded a gain on sale of $42 million. Refer to note 12 forfurther details.

(3)          Representsinterest income on our note receivable from NovaGold (note 12).

 

**9****·****Income Tax Expense**

 
| **For the years ended December 31**                          | ** ** | **2008**   | ** ** | **2007** | ** ** | **2006** | ** ** |
|-------------------------------------------------------------------|------------|------------|------------|----------|------------|----------|------------|
| Current                                                           |       |       |       |     |       |     |       |
| Canada                                                            | ** ** | **$**      | **22**     |     | $          | (3       | )          | $ | 13 |   |
| International                                                     | ** ** | **613**    |       | 518      |       | 444      |       |
|                                                              | ** ** | **$**      | **635**    |     | $          | 515      |       | $ | 457 |   |
| Deferred                                                          |       |       |       |     |       |     |       |
| Canada                                                            | ** ** | **$**      | **3**      |     | $          | 19       |       | $ | (131 | ) |
| International                                                     | ** ** | **(146**   | **)**      | (25      | )          | 46       |       |
|                                                              | ** ** | **$**      | **(143**   | **)**    | $          | (6       | )          | $ | (85 | ) |
| Income tax expense before elements below                          |       | **$**      | **492**    |     | $          | 509      |       | $ | 372 |   |
| Net currency translation (gains) losses on  deferred tax balances |       | **98**     |       | (76      | )          | (5       | )          |
| Canadian tax rate changes                                         |       | **—** |       | 64       |       | 12       |       |
| Change in tax status in Australia                                 |       | **—** |       | —   |       | (31      | )          |
| Release of end of year valuation allowances  – Tanzania      |       | **—** |       | (156     | )          | —   |       |
| Total expense                                                     | ** ** | **$**      | **590**    |     | $          | 341      |       | $ | 348 |   |

 

**CurrencyTranslation**

 

Deferred tax balances aresubject to remeasurement for changes in currency exchange rates each period.The most significant balances are Canadian deferred tax assets with a carryingamount of approximately $334 million and Australian and Papua New Guinea netdeferred tax liabilities with a carrying amount of approximately $118 million.In 2007, the appreciation of the Canadian and Australian dollar against the USdollar resulted in net translation gains arising totaling $76 million. Thesegains are included within deferred tax expense/recovery. In 2008, following thestrengthening of the US dollar, we recorded translation losses of $98 million.

 

**Canadian TaxRate Changes**

 

In the second and fourthquarters of 2007 and the second quarter of 2006, federal rate changes wereenacted in Canada that lowered the applicable tax rate. The impact of these taxrate changes was to reduce net deferred tax assets in Canada by $64 million in2007 and $35 million in 2006 that were recorded as a component of deferredincome tax expense. Also in second quarter 2006, on change of tax status of aCanadian subsidiary, we recorded a deferred income tax credit of $23 million toreflect the impact on the measurement of deferred income tax assets andliabilities.

 

102

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**Change inTax Status in Australia**

 

In first quarter 2006, aninterpretative decision (“ID”) wasissued by the Australia Tax Office that clarified the tax treatment of currency gains and losses onforeign denominated liabilities. Under certain conditions, for taxpayers who have made the functional currencyelection, and in respect of debtthat existed at the time the election was made, the ID provided clarification that unrealized foreign exchange gains that currently exist onintercompany debt will notcrystallize upon repayment of the debt. The effect of the ID was recorded as a $31 millionreduction of deferred taxliabilities.

 

**Release ofTanzanian Valuation Allowances**

 

In 2007, we released $156million of end of year deferred taxvaluation allowances in Tanzania due to the impact of higher market gold prices.

 

**Reconciliationto Canadian Statutory Rate**

 
| **For the years ended December 31**      | ** ** | **2008**   | ** ** | **2007**   | ** ** | **2006** | ** ** |
|-------------------------------------------------------------------|------------|------------|------------|------------|------------|----------|------------|
| At 33.50% (2006 and 2005: 36.12%) statutory  rate                 | ** ** | **$**      | **486**    | ** ** | $          | 535      |       | $ | 563 |   |
| Increase (decrease) due to:                                       |       |       | ** ** |       |       |     |       |
| Allowances and special tax deductions(1)                          |       | **(100**   | **)**      | (99        | )          | (55      | )          |
| Impact of foreign tax rates(2)                                    | ** ** | **(82**    | **)**      | 38         |       | (131     | )          |
| Expenses not tax-deductible                                       | ** ** | **13**     | ** ** | 48         |       | 14       |       |
| Impairment charges not tax deductible                             | ** ** | **227**    | ** ** | 15         |       | 6        |       |
| Net currency translation (gains)/losses on  deferred tax balances |       | **98**     | ** ** | (76        | )          | (5       | )          |
| Release of end of year valuation allowances  – Tanzania      |       | **—** | ** ** | (156       | )          | —   |       |
| Release of valuation allowances – Other                      |       | **(175**   | **)**      | (88        | )          | (53      | )          |
| Valuation allowances set up against current  year tax losses      |       | **74**     | ** ** | 5          |       | 7        |       |
| Impact of changes in tax status in Australia                      |       | **—** | ** ** | —     |       | (31      | )          |
| Canadian tax rate changes                                         | ** ** | **—** | ** ** | 64         |       | 12       |       |
| Withholding taxes                                                 | ** ** | **21**     | ** ** | 17         |       | 19       |       |
| Mining taxes                                                      | ** ** | **19**     | ** ** | 19         |       | 9        |       |
| Other items                                                       | ** ** | **9**      | ** ** | 19         |       | (7       | )          |
| Income tax expense                                                | ** ** | **$**      | **590**    | ** ** | $          | 341      |       | $ | 348 |   |

 

----

(1)          We areable to claim certain allowances and tax deductions unique to extractiveindustries that result in a lower effective tax rate.

(2)          Weoperate in multiple foreign tax jurisdictions that have tax rates differentthan the Canadian statutory rate. Additionally, we have reinvested earnings andcash flow generated by the Zaldívar mine in Chile to fund a portion of theconstruction cost of Pascua-Lama. The reinvestment of these earnings and cashflow resulted in a lower tax rate applied for the period. Amounts in 2007included the impact of losses realized on deliveries into corporate gold salescontracts in a low tax jurisdiction.

 

**10****·****Earnings per share**

 
| **For the years ended December 31**           | ** ** | ** ** | ** ** | ** **  | ** ** | ** ** | ** ** | ** **  | ** ** | ** ** | ** ** | ** **  | ** ** |
|------------------------------------------------------------------------|------------|------------|------------|-------------|------------|------------|------------|-------------|------------|------------|------------|-------------|------------|
| **($ millions, except shares in millions**    | ** ** | **2008**   | ** ** | **2007**    | ** ** | **2006**   | ** ** |
| **and per share amounts in dollars)**         | ** ** | **Basic**  | ** ** | **Diluted** | ** ** | **Basic**  | ** ** | **Diluted** | ** ** | **Basic**  | ** ** | **Diluted** | ** ** |
| Income from continuing operations                                      | ** ** | **$**      | **785**    | ** **  | **$**      | **785**    |       | $           | 1,110      |       | $          | 1,110       |       | $ | 1,209 |   | $ | 1,209 |   |
| Plus: interest on convertible debentures                               | ** ** | **—** | ** ** | **3**       |       | —     |       | 2           |       | —     |       | 4           |       |
| Income available to common shareholders and  after assumed conversions | ** ** | **785**    | ** ** | **788**     |       | 1,110      |       | 1,112       |       | 1,209      |       | 1,213       |       |
| Income from discontinued operations                                    | ** ** | **—** | ** ** | **—**  |       | 9          |       | 9           |       | 297        |       | 297         |       |
| Net income                                                             | ** ** | **$**      | **785**    | ** **  | **$**      | **788**    |       | $           | 1,119      |       | $          | 1,121       |       | $ | 1,506 |   | $ | 1,510 |   |
| Weighted average shares outstanding                                    | ** ** | **872**    | ** ** | **872**     |       | 867        |       | 867         |       | 842        |       | 842         |       |
| Effect of dilutive securities                                          |       |       |       |        |       |       |       |        |       |       |       |        |       |
| Stock options                                                          | ** ** | **—** | ** ** | **4**       |       | —     |       | 3           |       | —     |       | 4           |       |
| Convertible debentures                                                 | ** ** | **—** | ** ** | **9**       |       | —     |       | 9           |       | —     |       | 9           |       |
| ** **                                                             | ** ** | **872**    | ** ** | **885**     |       | 867        |       | 879         |       | 842        |       | 855         |       |
| Earnings per share                                                     |       |       |       |        |       |       |       |        |       |       |       |        |       |
| Income from continuing operations                                      | ** ** | **$**      | **0.90**   | ** **  | **$**      | **0.89**   |       | $           | 1.28       |       | $          | 1.27        |       | $ | 1.44 |   | $ | 1.42 |   |
| Net income                                                             | ** ** | **$**      | **0.90**   | ** **  | **$**      | **0.89**   |       | $           | 1.29       |       | $          | 1.28        |       | $ | 1.79 |   | $ | 1.77 |   |

 

103

----

 

Earnings per share iscomputed by dividing net incomeavailable to common shareholders by the weighted average number of common shares outstanding for theperiod. Diluted earnings pershare reflect the potential dilution that could occur if additional common shares are assumed to be issued under securities that entitletheir holders to obtain commonshares in the future. For stock options, the number of additional shares for inclusion in diluted earnings per sharecalculations is determined using the treasury stock method. Under this method,stock options, whose exerciseprice is less than the average market price of our common shares, are assumed to be exercised and the proceeds areused to repurchase common shares at the average market price for the period. The incremental number of commonshares issued under stock options and repurchased from proceeds is included in the calculation of diluted earnings per share. Forconvertible debentures, thenumber of additional shares for inclusion in diluted earnings per share calculations is determinedusing the as if convertedmethod. The incremental number of common shares issued is included in the number of weighted average sharesoutstanding and interest on the convertible debentures is excluded from the calculation of income.  

** **

**11****·****Cash Flow – Other Items**

 

**a) OperatingCash Flows – Other Items**

 
| **For the years ended December 31**         | ** ** | **2008**   | ** ** | **2007**   | ** ** | **2006** | ** ** |
|----------------------------------------------------------------------|------------|------------|------------|------------|------------|----------|------------|
| Adjustments for non-cash income statement  items:                    |       |       |       |       |       |     |       |
| Currency translation (gains) losses (notes  8a and 8c)               | ** ** | **$**      | **30**     | ** ** | $          | 1        |       | $ | (2 | ) |
| Amortization of discount/premium on debt  securities (note 20b)      | ** ** | **(7**     | **)**      | (3         | )          | (12      | )          |
| Amortization of debt issue costs (note 20b)                          | ** ** | **7**      | ** ** | 9          |       | 12       |       |
| Stock option expense (note 27a)                                      | ** ** | **25**     | ** ** | 25         |       | 27       |       |
| Equity in investees (note 12)                                        | ** ** | **64**     | ** ** | 43         |       | 4        |       |
| Gain on sale of investments (note 8c)                                | ** ** | **(59**    | **)**      | (71        | )          | (6       | )          |
| Losses on write-down of inventory (note 13)                          | ** ** | **68**     | ** ** | 13         |       | 28       |       |
| Non-controlling interests (note 2b)                                  | ** ** | **12**     | ** ** | (14        | )          | (1       | )          |
| Net change in operating assets and  liabilities, excluding inventory | ** ** | **(128**   | **)**      | (7         | )          | 51       |       |
| Revisions to AROs at closed mines (note 22)                          | ** ** | **9**      | ** ** | 6          |       | 53       |       |
| Settlement of AROs (note 22)                                         | ** ** | **(40**    | **)**      | (33        | )          | (32      | )          |
| Non-hedge derivative gold options                                    | ** ** | **—** | ** ** | 30         |       | 14       |       |
| Hedge losses on acquired gold hedge  position                        | ** ** | **(2**     | **)**      | 2          |       | 165      |       |
| Gain on Highland vend-in (note 8c)                                   | ** ** | **—** | ** ** | —     |       | (51      | )          |
| Income from discontinued operations                                  | ** ** | **—** | ** ** | (9         | )          | (297     | )          |
| Other net operating activities                                       | ** ** | **$**      | **(21**    | **)**      | $          | (8       | )          | $ | (47 | ) |
| Operating cash flow includes payments for:                           |       |       | ** ** |       |       |     |       |
| Pension plan contributions (note 28a)                                | ** ** | **$**      | **47**     | ** ** | $          | 49       |       | $ | 36 |   |
| Cash interest paid (note 20b)                                        | ** ** | **$**      | **213**    | ** ** | $          | 236      |       | $ | 211 |   |

 

**b) InvestingCash Flows – Other Items**

 
| **For the years ended December 31** | ** ** | **2008**   | ** ** | **2007** | ** ** | **2006** | ** ** |
|--------------------------------------------------------------|------------|------------|------------|----------|------------|----------|------------|
| Loans to joint venture partners                              | ** ** | **$**      | **(4**     | **)**    | $          | (47      | )          | $ | — |   |
| Purchase of land and water rights                            | ** ** | **(16**    | **)**      | —   |       | —   |       |
| Purchases of royalties                                       | ** ** | **(42**    | **)**      | —   |       | —   |       |
| Funding for equity investees                                 | ** ** | **(99**    | **)**      | —   |       | —   |       |
| Decrease in restricted cash (note 14)                        | ** ** | **18**     | ** ** | 19       |       | —   |       |
| Non-hedge derivative copper options                          | ** ** | **—** | ** ** | (23      | )          | —   |       |
| Other                                                        | ** ** | **(27**    | **)**      | 9        |       | 17       |       |
| Other net investing activities                               | ** ** | **$**      | **(170**   | **)**    | $          | (42      | )          | $ | 17 |   |

 

**c) Non-CashInvesting and Financing Activities**

 

**Placer DomeAcquisition**

 

In 2006, we purchased all ofthe common shares of Placer Dome for $10,054 million, of which $8,761 millionwas share consideration (see note 3f). In conjunction with the acquisition,liabilities were assumed as follows:

 
| Fair value of assets acquired(1) |   | $      | 15,346 |   |
|----------------------------------|--------|--------|--------|--------|
| Consideration paid               |   | 10,054 |   |
| Liabilities assumed(2)           |   | $      | 4,830  |   |

 

----

(1)          Includescash of $1,102 million.

(2)          Includesdebt obligations of $1,252 million (note 20b).

 

104

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**Vend-in ofAssets to Highland Gold (“Highland”)**

 

In 2006, we exchangedvarious interests in mineral properties for 34.3 million Highland shares with avalue of $95 million at the time of closing of the transaction (see note 12).

 

**Sale ofSouth Deep**

 

In 2006, we sold the SouthDeep mine to Gold Fields Limited (“Gold Fields”) for $1,517 million. Theproceeds included 18.7 million Gold Fields common shares with a value of $308million (see note 3i).

 

**12****·****Investments**

 
| **At December 31**  | ** ** | **2008**   | ** ** | **2007** | ** ** |
|-------------------------------|------------|------------|------------|----------|------------|
| Available-for-sale securities | ** ** | ** ** |       |     |       | **$** | **31** |   | $ | 96 |   |
| Held-to-maturity securities   | ** ** | ** ** |       |     |       | **—** |   | 46 |   |
| Other investments             | ** ** | ** ** |       |     |       | **29** |   | — |   |
| Equity investments            | ** ** | ** ** |       |     |       | **1,085** |   | 1,085 |   |
| ** **                    |       | ** ** |       |     |       | **$** | **1,145** |   | $ | 1,227 |   |

 
| ** **                                                                   | ** ** | **2008**     | ** ** | **2007**        | ** ** |
|------------------------------------------------------------------------------|------------|--------------|------------|-----------------|------------|
| ** **                                                                   | ** ** | ** **   | ** ** | **Gains**       | ** ** | ** ** | ** ** | **Gains** | ** ** |
| ** **                                                                   | ** ** | **Fair**     | ** ** | **(losses)**    | ** ** | **Fair** | ** ** | **(losses)** | ** ** |
| **At December 31**                                                 | ** ** | **value(1)** | ** ** | **in OCI** | ** ** | **value** | ** ** | **in OCI** | ** ** |
| **Available-for-sale securities Securities in  an unrealized gain position** |       |         |       |            |       |   |   |   |   |
| Allied Gold                                                                  | ** ** | **$**        | **6**      | ** **      | **$**      | **1** |   | $ | — |   | $ | — |   |
| QGX Ltd.                                                                     | ** ** | **—**   | ** ** | **—**      |       | 13 |   | 6 |   |
| Midway Gold Corp.                                                            | ** ** | **3**        | ** ** | **—**      |       | 17 |   | 9 |   |
| Other equity securities                                                      | ** ** | **6**        | ** ** | **2**           |       | 43 |   | 26 |   |
| ** **                                                                   | ** ** | **15**       | ** ** | **3**           |       | 73 |   | 41 |   |
| **Securities in an unrealized loss position**                                |       |         |       |            |       |   |   |   |   |
| Benefit plans(2)                                                             |       |         |       |            |       |   |   |   |   |
| Fixed-income                                                                 | ** ** | **$**        | **2**      | ** **      | **$**      | **—** |   | $ | 4 |   | $ | — |   |
| Equity                                                                       | ** ** | **7**        | ** ** | **(3**          | )          | 14 |   | 1 |   |
| Other equity securities(3)                                                   | ** ** | **7**        | ** ** | **(2**          | )          | 5 |   | (1 | ) |
| ** **                                                                   | ** ** | **16**       | ** ** | **(5**          | )          | 23 |   | — |   |
| ** **                                                                   | ** ** | **31**       | ** ** | **(2**          | )          | 96 |   | 41 |   |
| **Held-to-maturity securities**                                              |       |         |       |            |       |   |   |   |   |
| Asset-Backed                                                                 |       |         |       |            |       |   |   |   |   |
| Commercial Paper                                                             | ** ** | **—**   | ** ** | **—**      |       | 46 |   | — |   |
| **Other investments**                                                        |       |         |       |            |       |   |   |   |   |
| Long-term loan receivable from Yokohama  Rubber Co. Ltd.(4)                  |       | **29**       |       | **—**      |       | — |   | — |   |
| ** **                                                                   | ** ** | **$**        | **60**     | ** **      | **$**      | **(2** | ) | $ | 142 |   | $ | 41 |   |

 

----

(1)          Refer to note 21 for further information onthe measurement of fair value.

(2)          Under various benefit plans for certain formerHomestake executives, a portfolio of marketable fixed-income and equitysecurities are held in a rabbi trust that is used to fund obligations under theplans.

(3)          Other equity securities in a loss positionconsist of investments in various junior mining companies.

(4)          The long-term loan receivable is measured atamortized cost.

 

**AccountingPolicy for Available-for-Sale Securities**

 

Available-for-salesecurities are recorded at fair value with unrealized gains and losses recordedin other comprehensive income (“OCI”). Realized gains and losses are recordedin earnings when investments mature or on sale, calculated using the averagecost of securities sold. If the fair value of an investment declines below itscarrying amount, we undertake an assessment of whether the impairment is otherthan temporary. We consider all relevant facts and circumstances in thisassessment, particularly: the length of time and extent to which fair value hasbeen less than the carrying amount; the financial condition and near-termprospects of the investee, including any specific events that have impacted itsfair value; both positive and negative evidence that the carrying amount isrecoverable within a reasonable period of time; and our ability and intent tohold the investment for a reasonable period of time sufficient for an expectedrecovery of the fair value up to or beyond the carrying amount. We record inearnings any unrealized declines in fair value judged to be other thantemporary.

 

**Available-for-SaleSecurities Continuity**

 
| ** **                                                  | ** ** | **Gold Fields** | ** ** | **NovaGold** | ** ** | **Other** | ** ** | **Total** | ** ** |
|-------------------------------------------------------------|------------|----------------------|------------|--------------|------------|-----------|------------|-----------|------------|
| January 1, 2006                                        |       | $                    | —     |         | $          | —    |       | $         | 62         |   | $ | 62 |   |
| Purchases                                                   |       | —               |       | 218          |       | 27        |       | 245       |       |
| Received in consideration for sale of South  Deep (note 3i) |       | 308                  |       | —       |       | —    |       | 308       |       |
| Sales proceeds                                              |       | —               |       | —       |       | (46       | )          | (46       | )          |
| Mark-to-market adjustments                                  |       | 6                    |       | 13           |       | 58        |       | 77        |       |
| January 1, 2007                                        |       | 314                  |       | 231          |       | 101       |       | 646       |       |
| Purchases                                                   |       | —               |       | —       |       | 11        |       | 11        |       |
| Sales proceeds                                              |       | (356                 | )          | (221         | )          | (48       | )          | (625      | )          |
| Mark-to-market adjustments                                  |       | 42                   |       | (10          | )          | 32        |       | 64        |       |
| January 1, 2008                                        |       | —               |       | —       |       | 96        |       | 96        |       |
| Purchases                                                   |       | —               |       | —       |       | 18        |       | 18        |       |
| Sales proceeds                                              |       | —               |       | —       |       | (26       | )          | (26       | )          |
| Mark-to-market adjustments                                  |       | —               |       | —       |       | (57       | )          | (57       | )          |
| December 31, 2008                                      |       | $                    | —     |         | $          | —    |       | $         | 31         |   | $ | 31 |   |

 

105

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**Gold FieldsLimited (“Gold Fields”)**

 

The investment in GoldFields was acquired on December 1, 2006, as partial consideration for thesale of our interest in South Deep and was recorded net of an initial liquiditydiscount of $48 million to reflect a 120-day restriction on our ability totrade the shares. During 2007, we sold our entire position of 18.7 millionshares for proceeds of $356 million and recorded a gain of $48 million.

 

**NovaGoldResources Inc. (“NovaGold”)**

 

During 2007, we sold ourentire investment in NovaGold for proceeds of $221 million and we recorded again of $3 million on the sale.

 

**Asset-BackedCommercial Paper (“ABCP”)**

 

In 2007, we recordedimpairment charges of $20 million, resulting in a carrying value of $46 millionat the end of 2007. An additional $39 million impairment charge was recorded in2008, resulting in cumulative impairments totaling $59 million and a carryingvalue of $7 million. Subsequently, we reached an agreement with a third partyto sell $66 million of our Asset Backed Commercial Paper (“ABCP”). We received$49 million in proceeds from this sale resulting in a recovery of $42 millionwhich was recorded in Other income.

 

**Agreementwith Yokohama Rubber Co. Ltd. (“Yokohama”)**

 

In 2008, we advanced $35million (“the loan”) to Yokohama to fund expansion of their production facilityand secure a guaranteed supply of OTR tires. Interest on the loan is receivableat a lower than market rate, due to the benefit of the supply agreement, and iscompounded annually. The principal amount and accrued interest is to be repaidin full no later than seven years from the initial date of the loan. In theevent that Barrick does not satisfy certain minimum monthly purchasecommitments, Yokohama has the right to apply the dollar value of the purchaseshortfall against the principal balance of the loan.

 

Theloan was initially recorded at its fair value, based on an estimated marketborrowing rate for a comparable loan without the related tire supply agreement.After initial recognition, the loan is recorded at amortized cost and interestincome is recognized at an effective rate of 6%. We determined that the supplycontract component of the agreement is an intangible asset with an initial fairvalue of $8 million. The intangible asset is amortized on a straight line basisover its useful life.

 

**EquityMethod Investment Continuity**

 
| ** **                                                       | ** ** | **Highland** | ** ** | **Atacama** | ** ** | **Cerro Casale** | ** ** | **Donlin Creek** | ** ** | **Other** | ** ** | **Total** | ** ** |
|------------------------------------------------------------------|------------|--------------|------------|-------------|------------|-----------------------|------------|-----------------------|------------|-----------|------------|-----------|------------|
| At January 1, 2006                                          |       | $            | 131        |        | $          | —                |       | $                     | —     |      | $          | —    |       | $ | 7 |   | $ | 138 |   |
| Purchases                                                        |       | —       |       | 123         |       | —                |       | —                |       | 1         |       | 124       |       |
| Vend-in                                                          |       | 71           |       | —      |       | —                |       | —                |       | —    |       | 71        |       |
| Equity pick-up                                                   |       | (3           | )          | —      |       | —                |       | —                |       | (1        | )          | (4        | )          |
| Capitalized interest                                             |       | —       |       | 1           |       | —                |       | —                |       | —    |       | 1         |       |
| Impairment charges                                               |       | —       |       | —      |       | —                |       | —                |       | (2        | )          | (2        | )          |
| At January 1, 2007                                          |       | 199          |       | 124         |       | —                |       | —                |       | 5         |       | 328       |       |
| Acquired under Arizona Star acquisition                          |       | —       |       | —      |       | 732                   |       | —                |       | —    |       | 732       |       |
| Reclassifications                                                |       | —       |       | —      |       | —                |       | 64                    |       | (4        | )          | 60        |       |
| Equity pick-up                                                   |       | (30          | )          | (14         | )          | —                |       | —                |       | 1         |       | (43       | )          |
| Capitalized interest                                             |       | —       |       | 8           |       | 2                     |       | —                |       | —    |       | 10        |       |
| Impairment charges                                               |       | —       |       | —      |       | —                |       | —                |       | (2        | )          | (2        | )          |
| At January 1, 2008                                          |       | 169          |       | 118         |       | 734                   |       | 64                    |       | —    |       | 1,085     |       |
| Purchases                                                        |       | 1            |       | —      |       | 41                    |       | —                |       | —    |       | 42        |       |
| Funding                                                          |       | —       |       | 62          |       | 1                     |       | 27                    |       | 9         |       | 99        |       |
| Equity pick-up                                                   |       | 5            |       | (32         | )          | (11                   | )          | (17                   | )          | (9        | )          | (64       | )          |
| Elimination of non-controlling interest and  inter-company loans |       | —       |       | —      |       | 8                     |       | —                |       | —    |       | 8         |       |
| Capitalized interest                                             |       | —       |       | 9           |       | 42                    |       | 4                     |       | —    |       | 55        |       |
| Impairment charges                                               |       | (140         | )          | —      |       | —                |       | —                |       | —    |       | (140      | )          |
| At December 31, 2008                                        |       | $            | 35         |        | $          | 157                   |       | $                     | 815        |      | $          | 78        |       | $ | — |   | $ | 1,085 |   |
| Publicly traded                                                  |       | Yes          |       | No          |       | No                    |       | No                    |       |      |       |      |       |

 

106

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**AccountingPolicy for Equity Method Investments**

 

Under the equity method, werecord our equity share of the income or loss of equity investees each period.On acquisition of an equity investment, the underlying identifiable assets andliabilities of an equity investee are recorded at fair value and the income orloss of equity investees is based on these fair values. For an investment in acompany that represents a business, if the cost of any equity investmentexceeds the total amount of the fair value of identifiable assets andliabilities, any excess is accounted for in a manner similar to goodwill, withthe exception that an annual goodwill impairment test is not required.Additional funding into an investee is recorded as an increase in the carryingvalue of the investment. The carrying amount of each investment in a publiclytraded equity investee is evaluated for impairment using the same method as anavailable-for-sale security.

 

Ourinvestments in non-publicly traded equity investees are exploration anddevelopment projects; therefore, we assess if there has been a potentialimpairment triggering event for an other-than-temporary impairment by: testingthe underlying assets of the equity investee for recoverability; and assessingif there has been a change in our mining plan or strategy for the project. Ifwe determine underlying assets are recoverable and no other potentialimpairment conditions were identified, then our investment in the non-publiclytraded equity investee is carried at cost. If the other underlying assets arenot recoverable, we record an impairment charge equal to the difference betweenthe carrying amount of the investee and its fair value. Where reliableinformation is available, we determine fair value based on the present value ifcash flows are expected to be generated by the investee. Where reliable cashflow information is not available, we determine fair value using a marketapproach.

 

**HighlandGold Mining Ltd. (“Highland”)**

 

In 2006, we acquired 34.3million common shares as part of a vend-in transaction. On closing of thistransaction, the fair value of Highland common shares exceeded the carryingamount of assets exchanged by $76 million. We recorded this difference as again of $51 million in Other income and the balance of $25 million as areduction in the carrying amount of our investment in Highland.

 

In2007, Highland announced the issue of 130.1 million new shares for $400million, decreasing our ownership stake in Highland to 20.4% . The equity waspurchased by Millhouse LLC (“Millhouse”) in two tranches. On completion of thetransactions, Millhouse was entitled to appoint 3 of 9 Directors to the Boardand the CEO of Highland who will not serve on the Board. Our ability to appointDirectors has been reduced from 3 to 2. We continue to account for theinvestment using the equity method of accounting.

 

In2008, we recorded an impairment charge of $140 million against the carryingvalue at December 31, 2008 of Highland following an other-than-temporarydecline in the market value of its publicly traded shares.

 

**Donlin Creek**

 

In 2006, as part of theacquisition of Placer Dome, we acquired an interest in the Donlin Creekproject. In 2007, we restructured our agreement with our joint venture partnerand formed a limited liability company, Donlin Creek LLC, to advance the DonlinCreek project. We determined that we share joint control with NovaGold, andthat Donlin Creek LLC is a VIE. Neither party is the primary beneficiary as we jointlyshare in the expected earnings or losses of the project. We use the equitymethod of accounting for our investment in Donlin Creek. The initial cost ofour investment in Donlin Creek was $64 million and represents the cost basis ofassets transferred into the limited liability company.

 

Ourmaximum exposure to loss in this entity is limited to the carrying amount ofour investment in Donlin Creek, which totaled $78 million and accountsreceivable from our partner totaling a further $56 million that arecollateralized against NovaGold’s interest in the value of Donlin Creek as of December 31,2008.

 

107

----

 

**AtacamaCopper Pty Limited (“Atacama Copper”)**

 

In 2006, we acquired a 50%interest in Atacama Copper. The other 50% interest in Atacama Copper is ownedby Antofagasta plc. Atacama Copper is responsible for advancing the Reko Diqproject.

 

Wedetermined that we share joint control with Antofagasta, and that Atacama is aVIE. Neither party is the primary beneficiary as we jointly share in theexpected earnings or losses of the project. We use the equity method ofaccounting for our investment.

 

Ourmaximum exposure to loss in this entity is limited to our investment inAtacama, which totaled $157 million as of December 31, 2008, and amountswe will prospectively fund for Atacama’s interim exploration program.

 

**CompañíaMinera Casale (“Cerro Casale”)**

 

During 2008, we completedour acquisition of Arizona Star for $732 million. Arizona Star has an interestin the entity that holds the Cerro Casale deposit. We determined that we sharejoint control with Kinross and that Cerro Casale is a VIE. Neither party is theprimary beneficiary as we jointly share in the expected earnings or losses ofthe project. We use the equity method of accounting for Arizona Star’sinvestment in Cerro Casale. Our maximum exposure to loss in this entity islimited to our investment in Cerro Casale, which totaled $815 million as of December 31,2008.

 

**13****·****Inventories**

 
| ** **                       | ** ** | **Gold**   | ** ** | **Copper** | ** ** |
|----------------------------------|------------|------------|------------|------------|------------|
| **At December 31**     | ** ** | **2008**   | ** ** | **2007**   | ** ** | **2008** | ** ** | **2007** | ** ** |
| Raw materials                    |       |       |       |       |       |   |   |   |   |
| Ore in stockpiles                | ** ** | **$**      | **825**    |       | $          | 698 | ** ** | **$** | **41** |   | $ | 63 |   |
| Ore on leach pads                | ** ** | **161**    |       | 149        | ** ** | **189** |   | 81 |   |
| Mine operating supplies          | ** ** | **434**    |       | 351        | ** ** | **34** |   | 20 |   |
| Work in process                  | ** ** | **188**    |       | 109        | ** ** | **8** |   | 5 |   |
| Finished products                |       |       |       |       |       |   |   |   |   |
| Gold doré/bullion           | ** ** | **65**     |       | 87         | ** ** | **—** |   | — |   |
| Copper cathode                   | ** ** | **—** |       | —     | ** ** | **13** |   | 9 |   |
| Copper concentrate               | ** ** | **—** |       | —     | ** ** | **18** |   | 16 |   |
| Gold concentrate                 | ** ** | **21**     |       | 40         | ** ** | **—** |   | — |   |
| ** **                       |       | **1,694**  |       | 1,434      | ** ** | **303** |   | 194 |   |
| Non-current ore in stockpiles(1) | ** ** | **(595**   | **)**      | (414       | )          | **(93** | **)** | (85 | ) |
| ** **                       |       | **$**      | **1,099**  |       | $          | 1,020 | ** ** | **$** | **210** |   | $ | 109 |   |

 

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(1)          Orethat we do not expect to process in the next 12 months is classified withinother assets.

** **

**AccountingPolicy for Inventory**

 

Material extracted from ourmines is classified as either ore or waste. Ore represents material that, atthe time of extraction, we expect to process into a saleable form, and sell ata profit. Ore is recorded as an asset that is classified within inventory asmaterial is extracted from the open pit or underground mine. Ore is accumulatedin stockpiles that are subsequently processed into gold/copper in a saleableform under a mine plan that takes into consideration optimal scheduling ofproduction of our reserves, present plant capacity, and the market price ofgold/copper. Gold/copper work in process represents gold/copper in theprocessing circuit that has not completed the production process, and is notyet in a saleable form.

 

Goldand copper ore contained in stockpiles is measured by estimating the number oftons added and removed from the stockpile, and the associated estimate of goldand copper contained therein (based on assay data) and applying estimatedmetallurgical recovery rates (based on the expected processing method).Stockpile ore tonnages are verified by periodic surveys. Costs are allocated toore stockpiles based on quantities of material stockpiled using current miningcosts incurred up to the point of stockpiling the ore and including allocationsof waste mining costs, overheads, depreciation, depletion and amortizationrelating to mining operations. As ore is processed, costs are removed based onrecoverable quantities of gold and/or copper and each stockpile’s average costper unit. Ore stockpiles are reduced by provisions required to reduce inventoryto net realizable value.

 

Werecord gold in process, gold doré and gold in concentrate form at average cost,less provisions required to reduce inventory to market value. Average cost iscalculated based on the cost of inventory at the beginning of a period, plusthe cost of inventory produced in a period. Costs capitalized to in process andfinished goods inventory include the cost of stockpiles processed; direct andindirect materials and consumables; direct labor; repairs and maintenance;utilities; amortization of property, plant and equipment; and local mineadministrative expenses. Costs are removed from inventory and recorded in costof sales and amortization expense based on the average cost per ounce of goldin inventory. Mine operating supplies are recorded at the lower of purchasecost and market value.

 

108

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Werecord provisions to reduce inventory to net realizable value, to reflectchanges in economic factors that impact inventory value or to reflect presentintentions for the use of slow moving and obsolete supplies inventory.

 
| **For the years ended December 31** | ** ** | **2008** | ** ** | **2007** | ** ** | **2006** | ** ** |
|--------------------------------------------------------------|------------|----------|------------|----------|------------|----------|------------|
| Inventory impairment charges                                 | ** ** | **$**    | **68**     |     | $          | 13       |       | $ | 28 |   |
|                                                              |            |          |            |          |            |          |            |  |  |  |

 

**Ore on leachpads**

 

The recovery of gold andcopper 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 ourZaldívar mine uses a heap leaching process for copper. Under this method, oreis placed on leach pads where it is treated with a chemical solution, whichdissolves the gold or copper contained in the ore. The resulting “pregnant” solutionis further processed in a plant where the gold or copper is recovered. For accountingpurposes, costs are added to ore on leach pads based on current mining andleaching costs, including applicable depreciation, depletion and amortizationrelating to mining operations. Costs are removed from ore on leach pads asounces or pounds are recovered based on the average cost per recoverable ounceof gold or pound of copper on the leach pad.

 

Estimatesof recoverable gold or copper on the leach pads are calculated from thequantities of ore placed on the leach pads (measured tons added to the leachpads), the grade of ore placed on the leach pads (based on assay data) and arecovery percentage (based on ore type). In general, leach pads recover between35% and 95% of the ounces or pounds placed on the pads.

 

Althoughthe quantities of recoverable gold or copper placed on the leach pads arereconciled by comparing the grades of ore placed on pads to the quantities ofgold or copper actually recovered (metallurgical balancing), the nature of theleaching process inherently limits the ability to precisely monitor inventorylevels. As a result, the metallurgical balancing process is frequentlymonitored and estimates are refined based on actual results over time.Historically, our operating results have not been materially impacted byvariations between the estimated and actual recoverable quantities of gold orcopper on our leach pads. At December 31, 2008, the weighted average costper recoverable ounce of gold and recoverable pound of copper on leach pads was$439 per ounce and $1.07 per pound, respectively (2007: $287 per ounce of goldand $0.39 per pound of copper). Variations between actual and estimatedquantities resulting from changes in assumptions and estimates that do notresult in write-downs to net realizable value are accounted for on aprospective basis.

 

Theultimate recovery of gold or copper from a leach pad will not be known untilthe leaching process is concluded. Based on current mine plans, we expect toplace the last ton of ore on our current leach pads at dates for gold rangingfrom 2009 to 2024 and for copper ranging from 2014 to 2020. Including theestimated time required for residual leaching, rinsing and reclamationactivities, we expect that our leaching operations will terminate within aperiod of up to six years following the date that the last ton of ore is placedon the leach pad.

 

Thecurrent portion of ore inventory on leach pads is determined based on estimatesof the quantities of gold or copper at each balance sheet date that we expectto recover during the next 12 months.

 

**Ore inStockpiles**

 
| **At December 31**  | ** ** | **2008** | ** ** | **2007** | ** ** | **Year(1)** | ** ** |
|-------------------------------|------------|----------|------------|----------|------------|-------------|------------|
| **Gold**                      |       |     |       |     |       |        |       |
| Goldstrike                    |       |     |       |     |       |        |       |
| Ore that requires roasting    | ** ** | **$**    | **375**    |     | $          | 320         |       | 2034 |   |
| Ore that requires autoclaving | ** ** | **47**   |       | 67       |       | 2010        |       |
| Kalgoorlie                    | ** ** | **74**   |       | 75       |       | 2020        |       |
| Porgera                       | ** ** | **113**  |       | 88       |       | 2022        |       |
| Cowal                         | ** ** | **70**   |       | 36       |       | 2020        |       |
| Veladero                      | ** ** | **24**   |       | 23       |       | 2024        |       |
| Cortez                        | ** ** | **54**   |       | 19       |       | 2012        |       |
| Turquoise Ridge               | ** ** | **12**   |       | 15       |       | 2031        |       |
| Other                         | ** ** | **56**   |       | 55       |       |        |       |
| **Copper**                    |       |     |       |     |       |        |       |
| Zaldívar                 | ** ** | **41**   |       | 63       |       | 2021        |       |
| ** **                    |       | **$**    | **866**    |     | $          | 761         |       |   |   |

 

----

(1)          Year in which we expect to fully process the ore in stockpiles.

 

**PurchaseCommitments**

 

At December 31, 2008,we had purchase obligations for supplies and consumables of approximately$1,164 million.

 

**14****·****Accounts Receivable and Other Current Assets**

 
| **At December 31**          | ** ** | **2008** | ** ** | **2007** | ** ** |
|---------------------------------------|------------|----------|------------|----------|------------|
| Accounts receivable                   |       |     |       |     |       |
| Amounts due from concentrate sales    | ** ** | **$**    | **8**      |     | $          | 19 |   |
| Amounts due from copper cathode sales | ** ** | **42**   |       | 89       |       |
| Other receivables                     | ** ** | **147**  |       | 148      |       |
| ** **                            |       | **$**    | **197**    |     | $          | 256 |   |
| Other current assets                  |       |     |       |     |       |
| Derivative assets (note 20c)          | ** ** | **$**    | **817**    |     | $          | 334 |   |
| Goods and services taxes recoverable  | ** ** | **153**  |       | 161      |       |
| Restricted cash                       | ** ** | **113**  |       | 131      |       |
| Prepaid expenses                      | ** ** | **47**   |       | 40       |       |
| Other                                 | ** ** | **39**   |       | 41       |       |
| ** **                            |       | **$**    | **1,169**  |     | $          | 707 |   |

 

 

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**15****·****Property, Plant andEquipment**

 
| ** **                      | ** ** | ** **              | ** ** | **Exploration**           | ** ** | ** **              | ** ** | ** **       | ** ** | ** ** | ** ** |
|---------------------------------|------------|-------------------------|------------|---------------------------|------------|-------------------------|------------|------------------|------------|------------|------------|
| ** **                      | ** ** | **Assets**              | ** ** | **properties,**           | ** ** | ** **              | ** ** | ** **       | ** ** | ** ** | ** ** |
| ** **                      | ** ** | **subject to**     | ** ** | **capital projects** | ** ** | **Construction**        | ** ** | **Accumulated**  | ** ** | ** ** | ** ** |
| ** **                      | ** ** | **amortization(1),(2)** | ** ** | **and VBPP**         | ** ** | **in progress(3)** | ** ** | **amortization** | ** ** | **Total**  | ** ** |
| At January 1, 2007         |       | $                       | 13,410     |                      | $          | 1,494                   |       | $                | 404        |       | $          | (6,919 | ) | $ | 8,389 |   |
| Additions/disposals             |       | 778                     |       | 84                        |       | —                  |       | 20               |       | 882        |       |
| Acquisitions                    |       | 145                     |       | 135                       |       | —                  |       | —           |       | 280        |       |
| Capitalized interest            |       | 16                      |       | 97                        |       | —                  |       | —           |       | 113        |       |
| Amortization                    |       | —                  |       | —                    |       | —                  |       | (1,004           | )          | (1,004     | )          |
| Reclassification(4)             |       | —                  |       | (66                       | )          | —                  |       | —           |       | (66        | )          |
| Transfers between categories(5) |       | 189                     |       | (198                      | )          | —                  |       | —           |       | (9         | )          |
| At January 1, 2008         |       | $                       | 14,538     |                      | $          | 1,546                   |       | $                | 404        |       | $          | (7,903 | ) | $ | 8,585 |   |
| Additions/disposals             |       | 611                     |       | 756                       |       | 626                     |       | (155             | )          | 1,838      |       |
| Acquisitions                    |       | 1,609                   |       | 409                       |       | —                  |       | —           |       | 2,018      |       |
| Capitalized interest            |       | 57                      |       | 110                       |       | —                  |       | —           |       | 167        |       |
| Amortization                    |       | —                  |       | —                    |       | —                  |       | (990             | )          | (990       | )          |
| Impairments                     |       | (71                     | )          | —                    |       | —                  |       | —           |       | (71        | )          |
| Transfers between categories(5) |       | 481                     |       | (209                      | )          | (272                    | )          | —           |       | —     |       |
| At December 31, 2008       |       | $                       | 17,225     |                      | $          | 2,612                   |       | $                | 758        |       | $          | (9,048 | ) | $ | 11,547 |   |

 

----

| (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 and deposits on long lead  items. Once the asset is available for use, it is transferred to Buildings,  plant and equipment and amortized over its estimated useful life.                                                                                                    |
| (4) | Represents the  reclassification of Donlin Creek to equity investments.                                                                                                                                                                                                                                                                               |
| (5) | 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. |

 

**a)Accounting Policy for Property, Plant and Equipment**

 

**CapitalizedReserve Acquisition Costs**

 

We capitalize the cost ofacquisition of land and mineral rights. On acquiring a mineral or petroleum andnatural gas property, we estimate the fair value of proven and probablereserves, and we record these amounts as assets at the date of acquisition.When production begins, capitalized reserve acquisition costs are amortizedusing the “units-of-production” method, whereby the numerator is the number ofounces of gold/pounds of copper/barrels of oil equivalent (boe) produced andthe denominator is the estimated recoverable ounces of gold/pounds ofcopper/boe contained in proven and probable reserves.

 

**CapitalizedDevelopment Costs**

 

Capitalized developmentcosts include the costs of removing overburden and waste materials at our openpit mining operations prior to the commencement of production; costs incurredto access reserves at our underground mining operations; drilling and relatedcosts incurred that meet the definition of an asset (refer to note 7 forcapitalization criteria for drilling and related costs), and qualifyingdevelopment costs incurred at our petroleum and natural gas properties.

 

Thecost of removing overburden and waste materials to access the ore body at anopen pit mine prior to the production phase are referred to as “pre-strippingcosts”. Pre-stripping costs are capitalized during the development of an openpit mine. Where a mine operates several open pits that utilize commonprocessing facilities, we capitalize the pre-stripping costs associated witheach pit. The production phase of an open pit mine commences when saleablematerials, beyond a de minimus amount, are produced. Stripping costs incurredduring the production phase of a mine are variable production costs that areincluded as a component of inventory to be recognized as a component of cost ofsales in the same period as the revenue from the sale of inventory. Capitalizedpre-stripping costs are amortized using the units-of-production method, wherebythe denominator is the estimated recoverable ounces of gold/pounds of copper inthe associated open pit.

 

Atour underground mines, we incur development costs to build new shafts, driftsand ramps that will enable us to physically access ore underground. The timeover which we will continue to incur these costs depends on the mine life,which could in some cases be up to 25 years. These underground developmentcosts are capitalized as incurred. Costs incurred and capitalized to enableaccess to specific ore blocks or areas of the mine, and which only

 

110

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provide an economic benefitover the period of mining that ore block or area, are amortized using theunits-of-production method, whereby the denominator is estimated recoverableounces of gold/pounds of copper contained in proven and probable reserveswithin that ore block or area. If capitalized underground development costsprovide an economic benefit over the entire mine life, the costs are amortizedusing the units-of-production method, whereby the denominator is the estimatedrecoverable ounces of gold/pounds of copper contained in total accessibleproven and probable reserves.

 

Forour petroleum and natural gas properties, we follow the successful effortsmethod of accounting, whereby exploration expenditures which are either generalin nature or related to an unsuccessful drilling program are written off. Onlycosts which relate directly to the discovery and development of specificcommercial oil and gas reserves are capitalized as development costs andamortized using the units-of-production method, whereby the denominator is theestimated recoverable amount of boe.

 

**Buildings,Plant and Equipment**

 

We record buildings, plantand equipment at cost, which includes all expenditures incurred to prepare anasset for its intended use. Cost includes the purchase price; brokers’commissions; and installation costs including architectural, design andengineering fees, legal fees, survey costs, site preparation costs, freightcharges, transportation insurance costs, duties, testing and preparationcharges. In addition, if the cost of an asset acquired other than through abusiness combination is different from its tax basis on acquisition, the costis adjusted to reflect the related future income tax consequences.

 

Wecapitalize costs that extend the productive capacity or useful economic life ofan asset. Costs incurred that do not extend the productive capacity or usefuleconomic life of an asset are considered repairs and maintenance and expensedas incurred. We amortize the capitalized cost of assets less any estimatedresidual value, using the straight line method over the estimated usefuleconomic life of the asset based on their expected use in our business. Thelongest estimated useful economic life for buildings and equipment at oreprocessing facilities is 25 years and for mining equipment is 15 years.Depreciation of oil and gas plants and related facilities is calculated usingthe units-of-production method.

 

Inthe normal course of our business, we have entered into certain leasingarrangements whose conditions meet the criteria for the leases to be classifiedas capital leases. For capital leases, we record an asset and an obligation atan amount equal to the present value at the beginning of the lease term ofminimum lease payments over the lease term. In the case of our capital leasingarrangements, there is transfer of ownership of the leased assets to us at theend of the lease term and therefore we amortize these assets on a basisconsistent with our other owned assets.

 

**ExplorationProperties and Capital Projects**

 

The amounts capitalized toexploration and development projects comprise the cost of mineral interestsacquired either as individual asset purchases or as part of a businesscombination. The value of such assets is primarily driven by the nature andamount of mineralized material contained in such properties. Exploration anddevelopment stage mineral interests represent interests in properties thatcontain proven and probable reserves or are believed to potentially containmineralized material consisting of (i) other mineralized material such asmeasured, indicated and inferred material within pits; (ii) other mineexploration potential such as inferred material not immediately adjacent toexisting reserves and mineralization but located within the immediate minearea; (iii) other mine-related exploration potential that is not part ofmeasured, indicated or inferred material greenfield exploration potential; (v) anyacquired right to explore or extract a potential mineral deposit. Amountscapitalized to capital projects include costs associated with the constructionof tangible assets, such as processing plants, permanent housing facilities andother tangible infrastructure associated with the project.

 

**ValueBeyond Proven and Probable Reserves (“VBPP”)**

 

On acquisition of mineralproperty, we prepare an estimate of the fair value of the resources andexploration potential of that property and record this amount as an asset (“VBPP”)as at the date of acquisition. At the time mineralized material is convertedinto proven and probable reserves, we classify any associated VBPP, which isnot subject to amortization, as a component of amounts allocated to proven andprobable reserves, which are subject to amortization. As part of our annualbusiness cycle, we prepare estimates of proven and probable gold and copper mineralreserves for each mineral property. The change in reserves,

 

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net of production is, amongother things, used to determine the amount to be converted from VBPP to provenand probable reserves. For the year ended December 31, 2008, wetransferred $178 million of VBPP to proven and probable reserves (2007: $54million). In 2008, we added $381 million to VBPP on acquiring the additional40% of Cortez, based on the preliminary purchase price allocation.

 

**ExplorationProperties, Capital Projects and VBPP**

 
| ** **                                                        | ** ** | **Carrying amount**      | ** ** | **Carrying amount**      | ** ** |
|-------------------------------------------------------------------|------------|-------------------------------|------------|-------------------------------|------------|
| ** **                                                        | ** ** | **at December 31,** | ** ** | **at December 31,** | ** ** |
| ** **                                                        | ** ** | **2008**                      | ** ** | **2007**                      | ** ** |
| Exploration projects and other land  positions PNG land positions |       | **$**                         | **171**    |                          | $          | 135 |   |
| Value beyond proven and probable reserves  at producing mines     |       | **525**                       |       | 322                           |       |
| Capital projects                                                  |       |                          |       |                          |       |
| Pascua-Lama                                                       | ** ** | **777**                       |       | 609                           |       |
| Pueblo Viejo                                                      | ** ** | **439**                       |       | 140                           |       |
| Sedibelo                                                          | ** ** | **123**                       |       | 81                            |       |
| Buzwagi                                                           | ** ** | **495**                       |       | 224                           |       |
| Punta Colorado Wind Farm                                          | ** ** | **82**                        |       | 35                            |       |
|                                                              | ** ** | **$**                         | **2,612**  |                          | $          | 1,546 |   |

 

**CapitalizedInterest**

 

Interest cost is consideredan element of the historical cost of an asset when a period of time isnecessary to prepare it for its intended use. We capitalize interest costs toexploration properties and capital projects prior to when production beginswhile exploration, development or construction activities are in progress. Wealso capitalize interest costs on the cost of certain equity methodinvestments, wherein the only significant assets are exploration properties orcapital projects, and while exploration, development or construction activitiesare in progress.

 

**Gold andCopper Mineral Reserves**

 

At the end of each fiscalyear, as part of our annual business cycle, we prepare estimates of proven andprobable gold and copper mineral reserves for each mineral property, includingthe transfer of amounts allocated to VBPP to proven and probable reservessubject to amortization. We prospectively revise calculations of amortizationof property, plant and equipment. The effect of changes in reserve estimatesand transfers of VBPP amounts to proven and probable reserves subject toamortization on amortization expense for 2008 was a decrease of $52 million(2007: $31 million increase; 2006: $75 million decrease).

 

**b)Amortization and Accretion**

 
| ** **          | ** ** | **2008** | ** ** | **2007** | ** ** | **2006** | ** ** |
|---------------------|------------|----------|------------|----------|------------|----------|------------|
| Amortization        | ** ** | **$**    | **990**    |     | $          | 1,004    |       | $ | 735 |   |
| Accretion (note 22) | ** ** | **43**   |       | 50       |       | 39       |       |
|                | ** ** | **$**    | **1,033**  |     | $          | 1,054    |       | $ | 774 |   |

 

**c)Impairment Evaluations**

 

**ProducingMines, Capital Projects and Petroleum & Natural Gas Properties**

 

We review and test thecarrying amounts of assets when events or changes in circumstances suggest thatthe carrying amount may not be recoverable. We group assets at the lowest levelfor which identifiable cash flows are largely independent of the cash flows ofother assets and liabilities. For operating mines, capital projects andpetroleum and natural gas properties, the individual mine/project/property isincluded in a single group for impairment testing purposes. If there areindications that impairment may have occurred at a particular mine site/capitalproject/petroleum and natural gas property, we compare the sum of theundiscounted cash flows expected to be generated from that mine site/capitalproject/petroleum and natural gas property to its carrying amount, includinggoodwill. If the sum of undiscounted cash flows is less than the carryingamount, an impairment loss is recognized if the carrying amount of theindividual long-lived assets within the group exceeds their fair values.

 

Long-livedassets subject to potential impairment at mine sites/capital projects/petroleumand natural gas properties include buildings, plant and equipment, andcapitalized reserve acquisition and development costs and VBPP. For impairmentassessment purposes, the estimated fair value of buildings, plant and equipmentis based on a combination of current depreciated replacement cost and currentmarket value. The estimated fair value of capitalized reserve acquisition,development costs and VBPP is determined using an income approach whichmeasures the present value of the related cash flows expected to be derivedfrom the asset.

 

Asat December 31, 2008, we decreased our long-term gold and copper priceassumptions, which we determined was, in combination with an overall downturnin the economy, a triggering event to test the long-lived assets at all of ourmines/projects/properties for impairment. As a result we identified ourMarigold gold mine in North America, our Henty and Kanowna gold mines, andOsborne copper mine in Australia as being potentially impaired. Consequently,we compared the estimated fair value of the individual long-lived assets totheir carrying amount and noted impairments of: Marigold $12 million andOsborne $57 million; and no impairments at Kanowna or Henty.

 

112

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**ExplorationProjects**

 

After acquisition, variousfactors can affect the recoverability of the capitalized cost of land andmineral rights, particularly the results of exploration drilling. The length oftime between the acquisition of land and mineral rights and when we undertakeexploration work varies based on the prioritization of our exploration projectsand the size of our exploration budget. If we determine that a potentialimpairment condition may exist, we compare the sum of the undiscounted cashflows expected to be generated from the project to its carrying amount. If thesum of undiscounted cash flows is less than the carrying amount, an impairmentcharge is recognized if the carrying amount of the individual long-lived assetswithin the group exceeds their fair value. For projects that do not havereliable cash flow projections, a market approach is applied. We are continuingwith our current exploration projects as planned and have not noted anyindications of impairment.

 

**d) Capital Commitments**

 

In addition to entering intovarious operational commitments in the normal course of business, we hadcommitments of approximately $552 million at December 31, 2008 forconstruction activities at our capital projects.

 

**e) Insurance**

 

We purchase insurancecoverage for certain insurable losses, subject to varying deductibles, at ourmineral properties including losses such as property damage and businessinterruption. We record losses relating to insurable events as they occur.Proceeds receivable from insurance coverage are recorded at such time asreceipt is probable and the amount receivable is fixed or determinable.

 

**Insurance Proceeds**

 
| ** **              | ** ** | **2008**   | ** ** | **2007** | ** ** | **2006** | ** ** |
|-------------------------|------------|------------|------------|----------|------------|----------|------------|
| Cost of sales           | ** ** | **$**      | **30**     |     | $          | 16       |       | $ | — |   |
| Other income            | ** ** | **2**      |       | —   |       | —   |       |
| Discontinued operations | ** ** | **—** |       | 21       |       | 12       |       |
|                    | ** ** | **$**      | **32**     |     | $          | 37       |       | $ | 12 |   |

 

**16****·****Intangible Assets**

 
| ** **                                                   | ** ** | **2008**                | ** ** | **2007**         | ** ** |
|--------------------------------------------------------------|------------|-------------------------|------------|------------------|------------|
| ** **                                                   | ** ** | **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)                                              | ** ** | **$**                   | **48**     | ** **       | **$**      | **—** | ** ** | **$** | **48** |   | $ | 28 |   | $ | — |   | $ | 28 |   |
| Technology(2)                                                | ** ** | **17**                  | ** ** | **—**       | ** ** | **17** |   | 17 |   | — |   | 17 |   |
| Supply contracts(3)                                          | ** ** | **23**                  | ** ** | **21**           | ** ** | **2** |   | 23 |   | 15 |   | 8 |   |
| Royalties(4)                                                 | ** ** | **—**              | ** ** | **—**       | ** ** | **—** |   | 17 |   | 2 |   | 15 |   |
| Supply agreement(5)                                          | ** ** | **8**                   | ** ** | **—**       | ** ** | **8** |   | — |   | — |   | — |   |
|                                                         | ** ** | **$**                   | **96**     | ** **       | **$**      | **21** | ** ** | **$** | **75** |   | $ | 85 |   | $ | 17 |   | $ | 68 |   |
| Aggregate period amortization expense                        | ** ** | **$**                   | **—** | ** **       | **$**      | **6** | ** ** | **$** | **—** |   | $ | — |   | $ | 7 |   | $ | — |   |

 
| **For the years ended December 31** | ** ** | **2009** | ** ** | **2010** | ** ** | **2011** | ** ** | **2012** | ** ** | **2013** | ** ** |
|--------------------------------------------------------------|------------|----------|------------|----------|------------|----------|------------|----------|------------|----------|------------|
| Estimated aggregate amortization expense                     |       | $        | 3          |     | $          | 1        |       | $        | 1          |     | $          | 1 |   | $ | 1 |   |
|                                                              |            |          |            |          |            |          |            |          |            |          |            |  |  |  |  |  |

 

----

| (1) | Water rights in South  America ($38 million) and Africa ($10 million) are subject to annual  impairment testing and will be amortized when used in the future.                                                     |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (2) | The amount will be  amortized using the units-of-production method over the estimated proven and  probable reserves of the Pueblo Viejo mine, with no assumed residual value.                                      |
| (3) | Supply contracts are being  amortized over the weighted average contract lives of 4–10 years, with no  assumed residual value.                                                                                |
| (4) | In 2008, we sold the  Mulatos royalty as part of the sale of non-core royalties to Royal Gold (note  3G). The Mulatos royalty had a carrying value of $15 million, net of  accumulated amortization of $2 million. |
| (5) | The supply agreement with  Yokohama Rubber Company to secure a supply of tires will be amortized evenly  over the 120-month term of the agreement.                                                                 |

 

**AccountingPolicy for Intangible Assets**

 

Intangible assets acquiredas part of an acquisition of abusiness are recognized separately from goodwill if the asset is separable or arises from contractualor legal rights. Intangibleassets are also recognized when acquired individually or with a group of otherassets.

 

Intangibleassets are initially recorded at their estimated fair value. Intangible assetswith a finite life areamortizedover their useful economic lives on a straight line or units-of-production basis, as appropriate.Intangible assets havingindefinite lives and intangible assets that are not yet ready for use are not amortized and are reviewed annually for impairment.

 

113

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**17****·****Goodwill**

 
| ** **                              | ** ** | ** **  | ** ** | **Gold**      | ** ** | ** **  | ** ** | **Copper** | ** ** | **Other**     | ** ** | ** **  | ** ** |
|-----------------------------------------|------------|-------------|------------|---------------|------------|-------------|------------|------------|------------|---------------|------------|-------------|------------|
| ** **                              | ** ** | **North**   | ** ** | ** **    | ** ** | **South**   | ** ** | ** ** | ** ** | ** **    | ** ** | **South**   | ** ** | **Barrick** | ** ** | ** ** | ** ** |
| ** **                              | ** ** | **America** | ** ** | **Australia** | ** ** | **America** | ** ** | **Africa** | ** ** | **Australia** | ** ** | **America** | ** ** | **Energy** | ** ** | **Total** | ** ** |
| Opening balance, January 1, 2007   |       | $           | 2,423      |          | $          | 1,811       |       | $          | 441        |          | $          | 373         |       | $ | 64 |   | $ | 743 |   | $ | — |   | $ | 5,855 |   |
| Additions(1)                            |       | —      |       | 34            |       | —      |       | —     |       | —        |       | —      |       | — |   | 34 |   |
| Impairments(2)                          |       | (42         | )          | —        |       | —      |       | —     |       | —        |       | —      |       | — |   | (42 | ) |
| Closing balance, December 31, 2007 |       | $           | 2,381      |          | $          | 1,845       |       | $          | 441        |          | $          | 373         |       | $ | 64 |   | $ | 743 |   | $ | — |   | $ | 5,847 |   |
| Additions(3)                            |       | 23          |       | —        |       | —      |       | —     |       | —        |       | —      |       | 96 |   | 119 |   |
| Other(4)                                |       | —      |       | —        |       | —      |       | —     |       | —        |       | —      |       | (8 | ) | (8 | ) |
| Impairments(5)                          |       | (8          | )          | (302          | )          | —      |       | (216       | )          | (64           | )          | —      |       | (88 | ) | (678 | ) |
| Closing balance, December 31, 2008 |       | $           | 2,396      |          | $          | 1,543       |       | $          | 441        |          | $          | 157         |       | $ | — |   | $ | 743 |   | $ | — |   | $ | 5,280 |   |

 

----

| (1) | Represents goodwill  acquired as a result of the acquisition of an additional 20% interest in  Porgera. This goodwill is expected to be deductible for income tax purposes  (note 3d).                                                                                      |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (2) | Impairment charges recorded  in 2007 related to the Golden Sunlight ($35 million) and Eskay Creek ($7  million) mines, as a result of our annual goodwill impairment test. The  goodwill impairment charges are primarily due to the short remaining lives of  these mines. |
| (3) | 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 ($96 million). See note 3.                                                       |
| (4) | Represents the impact of  foreign exchange rate changes on the translation of Barrick Energy from  CAD$to US$.                                                                                                                                                              |
| (5) | Impairment charges recorded  in 2008 related to Kanowna ($272 million), North Mara ($216 million), Barrick  Energy ($88 million), Osborne ($64 million), Henty ($30 million) and Marigold  ($8 million).                                                                    |

 

**AccountingPolicy for Goodwill and Goodwill Impairment**

 

Under the purchase method,the costs of business acquisitions are allocated to the assets acquired andliabilities assumed based on the estimated fair value at the date ofacquisition. The excess of purchase cost over the net fair value of identifiedtangible and intangible assets and liabilities acquired represents goodwillthat is allocated to reporting units. We believe that goodwill arisesprincipally because of the following factors: 1) The going concern valueimplicit in our ability to sustain and/or grow our business by increasingreserves and resources through new discoveries; 2) The ability to captureunique synergies that can be realized from managing a portfolio of bothacquired and existing mines and mineral properties in our regional businessunits; and 3) the requirement to record a deferred tax liability for thedifference between the assigned values and the tax bases of assets acquired andliabilities assumed in a business combination at amounts that do not reflect fairvalue.

 

Eachindividual mineral property that is an operating mine is a reporting unit forgoodwill impairment testing purposes. On an annual basis, as at October 1,and at any other time if events or changes in circumstances indicate that thefair value of a reporting unit has been reduced below its carrying amount, weevaluate the carrying amount of goodwill for potential impairment. In 2008, wedetermined that due to volatile economic conditions it was appropriate toreassess the carrying amount of goodwill for potential impairment as at December 31.

 

Thereis no active market for our reporting units. Consequently, when assessing areporting 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 receivefor the reporting unit in an arm’s length transaction at the measurement date.Expected future cash flows are based on a probability-weighted approach appliedto potential outcomes. Estimates of expected future cash flow reflect estimatesof projected future revenues, cash costs of production and capital expenditurescontained in our long-term life of mine (“LOM”) plans, which are updated foreach reporting unit in the fourth quarter of each fiscal year.

 

OurLOM plans are based on detailed research, analysis and modeling to optimize theinternal rate of return generated from each reporting unit. As such, theseplans consider the optimal level of investment, overall production levels andsequence of extraction taking into account all relevant characteristics of theore body, including waste to ore ratios, ore grades, haul distances, chemicaland metallurgical properties impacting process recoveries and capacities ofavailable extraction, haulage and processing equipment. Therefore, the LOM planis the appropriate basis for forecasting production output in each future yearand the related production costs and capital expenditures.

 

114

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Projectedfuture revenues reflect the forecasted future production levels at each of ourreporting units as detailed in our LOM plans. Included in these forecasts isthe production of mineral resources that do not currently qualify for inclusionin proven and probable ore reserves where there is a high degree of confidencein its economic extraction. This is consistent with the methodology we use tomeasure value beyond proven and probable reserves when allocating the purchaseprice of a business combination to acquired mining assets, and is thereforeconsistent with the provisions of EITF 04-3, Mining Assets: Impairment andBusiness Combinations.

 

Projectedfuture revenues also reflect our estimated long-term metals prices, which aredetermined based on current prices, an analysis of the expected totalproduction costs of the producers and forward pricing curves of the particularmetal and forecasts of expected long-term metals prices prepared by analysts.These estimates often differ from current price levels, but our methodology isconsistent with how a market participant would assess future long-term metalsprices. In 2008, we have used an estimated future gold price of $850 per ounce(2007: $800), and estimated year one and long-term copper prices of $1.50 and$2.00 per pound, respectively (2007: $3.25 year one and $2.00 long-term).

 

Ourestimates of future cash costs of production and capital expenditures are basedon the LOM plans for each reporting unit. Costs incurred in currencies otherthan the US dollar are translated to US dollars using expected long-termexchange rates based on the relevant forward pricing curve. Oil prices are asignificant component, both direct and indirect, of our expected cash costs of production.We have used an estimated average oil price of $75 per barrel, which is basedon the spot price, forward pricing curve, and long-term oil price forecastsprepared by analysts.

 

Thediscount rate applied to present value the net future cash flows is based uponour real weighted average cost of capital with an appropriate adjustment forthe remaining life of a mine and risks associated with the relevant cash flowsbased on the geographic location of the reporting unit. These risk adjustmentswere based on observed historical country risk premiums and the average creditdefault swap spreads for the period. In 2008, we used the following realdiscount rates for our gold mines: United States 2.68%–4.03% (2007: 3.97%);Canada 3.29% (2007: 4.54%); Australia 3.66%–4.29% (2007: 4.98%); Argentina13.74% (2007: 9.18%); Tanzania 8.77%–9.84% (2007: 7.01%); Papua New Guinea9.84% (2007: 7.86%); and Peru 6.33%–6.96% (2007: 5.4%). For our copper mines,we used the following real discount rates in 2008: Australia 6.95% (2007:8.64%); and Chile 8.83% (2007: 8.36%). The increase in discount rates comparedto the prior year primarily reflects higher equity premiums over the risk-freeborrowing rate, and an increase in country risk premiums due to rising creditspreads and increased political risk in certain jurisdictions.

 

Forour gold reporting units, we apply a market multiple to the NAV computed usingthe present value of future cash flows approach in order to assess theirestimated fair value. Gold companies typically trade at a market capitalizationthat is based on a multiple of their underlying NAV. Consequently, a marketparticipant would generally apply a NAV multiple when estimating the fair valueof an operating gold mine. For each reporting unit, the selection of anappropriate NAV multiple to apply considers the change in our total Enterprisevalue from October 1, 2007 and compares this to companies within eachregion.

 

Toassess the NAV multiple on comparable companies, we considered the following:

 

·        Targetprices per Analyst Reports;

·        Tradingprices on the date of Analyst Reports; and

·        Tradingprices on October 1, 2008.

 

The selected multiple for aparticular reporting unit considers its remaining economic life. For reportingunits with operating lives of five years or less, we selected multiples on thelower end of the observed multiples range. Reporting units with operating livesof twenty years or greater were given multiples on the higher end of theobserved multiples. In 2008, we have used the following multiples in ourassessment of the fair value of our gold reporting units: North America 1.0–2.1(2007: 1.0–2.0); Australia 1.0–1.6 (2007: 1.5–2.1); South America 1.0–1.4(2007: 1.2–1.7); and Africa 1.0–1.6 (2007: 1.3–2.0).

 

115

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Wedetermined the fair value of our Barrick Energy reporting unit based onobserved trading multiples relating to boe production per day and proven andprobable reserves of boe.

 

In2008, we recorded a goodwill impairment charge of $30 million at our Henty goldmine in Australia, primarily as a result of its short remaining mine life. Werecorded a $64 million goodwill impairment at our Osborne copper mine inAustralia due to a decline in our price assumption, which resulted in areduction in estimated production levels and remaining mine life. We recorded agoodwill impairment of $272 million at our Kanowna gold mine in Australia and$216 million at our North Mara gold mine in Africa, primarily due to theoverall decline in trading multiples of gold mining companies and higherdiscount factors; and $8 million at our Marigold mine in North America,primarily due to an increase in costs. We also recorded a goodwill impairmentcharge of $88 million for Barrick Energy due to the significant decline in oilprices since its acquisition date.

 

**18****·****Other Assets**

 
| **At December 31**                  | ** ** | **2008** | ** ** | **2007** | ** ** |
|-----------------------------------------------|------------|----------|------------|----------|------------|
| Non-current ore in stockpiles (note 13)       | ** ** | **$**    | **688**    |     | $          | 499 |   |
| Derivative assets (note 20c)                  | ** ** | **15**   |       | 220      |       |
| Goods and services taxes recoverable          | ** ** | **117**  |       | 54       |       |
| Debt issue costs                              | ** ** | **29**   |       | 27       |       |
| Deferred share-based compensation (note  27b) | ** ** | **84**   |       | 75       |       |
| Notes receivable                              | ** ** | **96**   |       | 97       |       |
| Deposits receivable                           | ** ** | **45**   |       | 147      |       |
| Other                                         | ** ** | **59**   |       | 84       |       |
| ** **                                    |       | **$**    | **1,133**  |     | $          | 1,203 |   |

 

**Debt IssueCosts**

 

In 2008, an addition of $11million of debt issue costs arose on the issuance of $1,250 million indebentures. In 2007, no new debt financings were put into place and there wereno additions to debt issue costs.

 

Amortizationof debt issue costs is calculated using the interest method over the term ofeach debt obligation, and classified as a component of interest cost (see note20b).

 

**19****·****Other Current Liabilities**

 
| **At December 31**           | ** ** | **2008** | ** ** | **2007** | ** ** |
|----------------------------------------|------------|----------|------------|----------|------------|
| Asset retirement obligations (note 22) | ** ** | **$**    | **93**     |     | $          | 74 |   |
| Derivative liabilities (note 20c)      | ** ** | **440**  |       | 100      |       |
| Post-retirement benefits (note 28)     | ** ** | **10**   |       | 11       |       |
| Deferred revenue                       | ** ** | **15**   |       | 23       |       |
| Income taxes payable (note 9)          | ** ** | **48**   |       | 38       |       |
| Other                                  | ** ** | **62**   |       | 9        |       |
|                                   | ** ** | **$**    | **668**    |     | $          | 255 |   |

 

**20****·****Financial Instruments**

 

Financial instrumentsinclude cash; evidence of ownership in an entity; or a contract that imposes anobligation on one party and conveys a right to a second entity todeliver/receive cash or another financial instrument. Information on certaintypes of financial instruments is included elsewhere in these financialstatements as follows: accounts receivable – note 14; investments – note 12;restricted share units – note 27b.

 

**a) Cash andEquivalents**

 

Cash and equivalents includecash, term deposits, treasury bills and money markets with original maturitiesof less than 90 days.

 
| **At December 31** | ** ** | **2008** | ** ** | **2007** | ** ** |
|------------------------------|------------|----------|------------|----------|------------|
| Cash deposits                | ** ** | **$**    | **426**    |     | $          | 1,239 |   |
| Term deposits                | ** ** | **107**  |       | 114      |       |
| Treasury bills               | ** ** | **203**  |       | 852      |       |
| Money market investments     | ** ** | **701**  |       | 2        |       |
|                         | ** ** | **$**    | **1,437**  |     | $          | 2,207 |   |

 

116

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**b) Long-TermDebt(1)**

 
|                                |       |                 |       |         |       |           |       |                |       |                                                      |       |                 |       |         |       |           |       |                |       |                 |       |         |       |           |       |                |       |                                                   |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|-------------------------------------|------------|----------------------|------------|--------------|------------|----------------|------------|---------------------|------------|-----------------------------------------------------------|------------|----------------------|------------|--------------|------------|----------------|------------|---------------------|------------|----------------------|------------|--------------|------------|----------------|------------|---------------------|------------|--------------------------------------------------------|------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| ** **                          | ** ** | **2008**             | ** ** | **2007**     | ** ** | **2006**       | ** ** |
| ** **                          | ** ** | **At  Dec. 31** | ** ** | **Proceeds** | ** ** | **Repayments** | ** ** | **Amortization(2)** | ** ** | **Assumed  on acquisition of  Barrick  Energy** | ** ** | **At  Dec. 31** | ** ** | **Proceeds** | ** ** | **Repayments** | ** ** | **Amortization(2)** | ** ** | **At  Dec. 31** | ** ** | **Proceeds** | ** ** | **Repayments** | ** ** | **Amortization(2)** | ** ** | **Assumed  on acquisition of  Placer  Dome** | ** ** |
| Fixed rate notes                    |       | $                    | 1,250      |         | $          | 1,250          |       | $                   | —     |                                                      | $          | —               |       | $            | —     |           | $          | —              |       | $                    | —     |         | $          | —         |       | $                   | —     |                                                   | $          | — |   | $      | — |   | $      | — |   | $      | — |   | $      | — |   |
| 5.80%/4.875%  notes                 |       | 747                  |       | —       |       | —         |       | (2                  | )          | —                                                    |       | 745                  |       | —       |       | —         |       | —              |       | 745                  |       | —       |       | —         |       | —              |       | —                                                 |       |
| Copper-linked  notes                |       | 190                  |       | —       |       | 325            |       | —              |       | —                                                    |       | 515                  |       | —       |       | 393            |       | —              |       | 908                  |       | 995          |       | 87             |       | —              |       | —                                                 |       |
| US dollar notes                     |       | 805                  |       | 325          |       | —         |       | —              |       | —                                                    |       | 480                  |       | 393          |       | —         |       | —              |       | 87                   |       | 87           |       | —         |       | —              |       | —                                                 |       |
| Senior  convertible debentures      |       | 289                  |       | —       |       | —         |       | 4                   |       | —                                                    |       | 293                  |       | —       |       | —         |       | 3                   |       | 296                  |       | —       |       | —         |       | 4                   |       | 300                                                    |       |
| Project financing                   |       | 115                  |       | —       |       | 99             |       | —              |       | —                                                    |       | 214                  |       | —       |       | 91             |       | —              |       | 305                  |       | 13           |       | 64             |       | —              |       | —                                                 |       |
| Capital leases                      |       | 70                   |       | 6            |       | 21             |       | —              |       | —                                                    |       | 85                   |       | 15           |       | 24             |       | —              |       | 94                   |       | 7            |       | 16             |       | —              |       | 6                                                      |       |
| Other debt  obligations(3)          |       | 977                  |       | 152          |       | 150            |       | 5                   |       | 57                                                        |       | 923                  |       |         |       | 101            |       | —              |       | 1,024                |       | 50           |       | —         |       | 6                   |       | 867                                                    |       |
| 7.50%  debentures(4)                |       | —               |       | —       |       | —         |       | —              |       | —                                                    |       | —               |       | —       |       | 500            |       | —              |       | 498                  |       | —       |       | —         |       | —              |       | —                                                 |       |
| Series B  Preferred Securities |       | —               |       | —       |       | —         |       | —              |       | —                                                    |       | —               |       | —       |       | —         |       | —              |       | —               |       | —       |       | 77             |       | 2                   |       | 79                                                     |       |
| First credit  facility(5)           |       | —               |       | 990          |       | 990            |       | —              |       | —                                                    |       | —               |       | —       |       | —         |       | —              |       | —               |       | 1,000        |       | 1,000          |       | —              |       | —                                                 |       |
|                                |       | 4,443                |       | 2,723        |       | 1,585          |       | 7                   |       | 57                                                        |       | 3,255                |       | 408          |       | 1,109          |       | 3                   |       | 3,957                |       | 2,152        |       | 1,244          |       | 12                  |       | 1,252                                                  |       |
| Less: current  portion              |       | (93                  | )          | —       |       | —         |       | —              |       | —                                                    |       | (102                 | )          | —       |       | —         |       | —              |       | (713                 | )          | —       |       | —         |       | —              |       | —                                                 |       |
|                                |       | $                    | 4,350      |         | $          | 2,723          |       | $                   | 1,585      |                                                      | $          | 7                    |       | $            | 57         |           | $          | 3,153               |       | $                    | 408        |         | $          | 1,109          |       | $                   | 3          |                                                   | $          | 3,244  |   | $      | 2,152  |   | $      | 1,244  |   | $      | 12     |   | $      | 1,252  |   |
| **Short-term  debt**                |       |                 |       |         |       |           |       |                |       |                                                      |       |                 |       |         |       |           |       |                |       |                 |       |         |       |           |       |                |       |                                                   |       |
| Demand financing  facility          |       | 113                  |       | —       |       | 18             |       | —              |       | —                                                    |       | 131                  |       | —       |       | 19             |       | —              |       | 150                  |       | —       |       | —         |       | —              |       | 150                                                    |       |
| Second credit  facility(6)          |       | —               |       | —       |       | —         |       | —              |       | —                                                    |       | —               |       | —       |       | —         |       | —              |       | —               |       | 37           |       | 337            |       | —              |       | 300                                                    |       |
|                                |       | $                    | 113        |         | $          | —         |       | $                   | 18         |                                                      | $          | —               |       | $            | —     |           | $          | 131                 |       | $                    | —     |         | $          | 19             |       | $                   | —     |                                                   | $          | 150    |   | $      | 37     |   | $      | 337    |   | $      | — |   | $      | 450    |   |

 

----

| (1) | The agreements which 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  discount/premium.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
| (3) | The obligations have an  aggregate principal amount of $977 million, of which $163 million is subject  to floating interest rates and $814 million is subject to fixed interest  rates ranging from 4.75% to 8.05%. The obligations mature at various times  between 2009 and 2035.                                                                                                                                                                                                                                                                                                |
| (4) | During second quarter 2007,  we repaid the $500 million 7.5% debentures from existing cash balances and  proceeds from the sale of investments.                                                                                                                                                                                                                                                                                                                                                                                                                                    |
| (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. We  increased the limit of this facility from $1 billion in August 2006.  $200 million matures in 2012 and the remaining $1.3 billion matures in 2013. |
| (6) | During third quarter 2006,  we terminated a second credit facility which consisted of unused bank lines  of credit of $850 million with an international consortium of banks.                                                                                                                                                                                                                                                                                                                                                                                                      |

 

117

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**Fixed RateNotes**

 

In September, 2008, weissued an aggregate of $1,250 million of notes through our wholly-ownedindirect subsidiaries Barrick North America Finance LLC and Barrick GoldFinanceco LLC (collectively the “LLCs”) consisting of $500 million of 5-yearnotes with a coupon rate of 6.125%, $500 million of 10-year notes with a couponrate 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 interestobligations on the notes. We also provided an unconditional and irrevocableguarantee of these payments and will provide an unconditional and irrevocableguarantee for any additional securities issued by these entities where theconditions of issuance require a guarantee to be issued, which will rankequally with our other unsecured and unsubordinated obligations.

 

Weused these proceeds to repay the $990 million we drew down in first quarter2008, which was used to partially fund our acquisition of the 40% interest inCortez. The amounts were drawn down using our existing $1.5 billion creditfacility.

 

**Copper-LinkedNotes/US Dollar Notes**

 

In October 2006, weissued $1,000 million of Copper-Linked Notes. During the first three years, thefull $1,000 million obligation of these notes is to be repaid through thedelivery of (the US dollar equivalent of) 324 million pounds of copper. At December 31,2008, 53 million pounds of copper remained to be delivered. Coincident with therepayment of (the US dollar equivalent of) 324 million pounds of copper, wewill reborrow $1,000 million. Over the next year, the total amount outstandingunder these notes will continue to be $1,000 million, with a portion repayablein a copper-linked equivalent and a portion repayable in a fixed amount of USdollars at the maturity of the notes (2016 and 2036). As the copper-linkedequivalent is repaid, the fixed US dollar obligation will increase. After 2009,only the fixed US dollar obligation will remain. The accounting principlesapplicable to these Copper-Linked Notes require separate accounting for thefuture delivery of copper (a fixed-price forward sales contract that meets thedefinition of a derivative that must be separately accounted for) and for theunderlying bond (see note 20c). $400 million of US dollar notes with a couponof 5.75% mature in 2016 and $600 million of US dollar notes with a coupon of6.35% mature in 2036.

 

**SeniorConvertible Debentures**

 

The convertible seniordebentures (the “Securities”) mature in 2023 and had an aggregate principalamount of $289 million outstanding as at the end of 2008. Holders of theSecurities may, upon the occurrence of certain circumstances and withinspecified time periods, convert their Securities into common shares of Barrick.These circumstances are: if the closing price of our common shares exceeds 120%of the conversion price for at least 20 trading days in the 30 consecutivetrading days ending on the last trading day of the immediately preceding fiscalquarter; if certain credit ratings assigned to the Securities fall belowspecified levels or if the Securities cease to be rated by specified ratingagencies or such ratings are suspended or withdrawn; if for each of five consecutivetrading days, the trading price per $1,000 principal amount of the Securitieswas less than 98% of the product of the closing price of our common shares andthe then current conversion rate; if the Securities have been called forredemption provided that only such Securities called for redemption may beconverted and upon the occurrence of specified corporate transactions. On December 31,2008, the conversion rate per each $1,000 principal amount of Securities was40.3766 common shares and the effective conversion price was $24.77 per commonshare. The conversion rate is subject to adjustment in certain circumstances.As such, the effective conversion price may also change.

 

TheSecurities were convertible from October 1, 2007 through December 31,2008. During the period January 1, 2008 to December 31, 2008, $29thousand principal amount of Securities was converted for 1,156 common sharesof Barrick. If all the Securities had been converted and settlement occurred onDecember 31, 2008, we would have issued approximately 9.3 million commonshares with an aggregate fair value of approximately $341.5 million based onour closing share price on December 31, 2008. The Securities are alsoconvertible from January 1, 2009 through March 31, 2009.

 

Wemay redeem the Securities at any time on or after October 20, 2010 andprior to maturity, in whole or in part, at a prescribed redemption price thatvaries depending upon the date of redemption from 100.825% to 100% of theprincipal amount, plus accrued and unpaid interest. The maximum amount we couldbe required to pay to redeem the securities is $232 million plus accruedinterest. Holders of the Securities can require the repurchase of theSecurities for 100% of their principal amount, plus accrued and unpaid interest,on October 15, 2013 and October 15, 2018.

 

118

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In addition, if specifieddesignated events occur prior to maturity of the Securities, we will berequired to offer to purchase all outstanding Securities at a repurchase price equalto 100% of the principal amount, plus accrued and unpaid interest. Foraccounting purposes the Securities are classified as a “conventionalconvertible debenture” and the conversion feature has not been bifurcated fromthe host instrument.

 

**ProjectFinancing**

 

One of our wholly-ownedsubsidiaries, Minera Argentina Gold S.A. in Argentina, had a limited recourseamortizing loan of $115 million outstanding at December 31, 2008, themajority of which has a variable interest rate. We have guaranteed the loanuntil completion occurs, after which it will become non-recourse to the parentcompany. As at December 31, 2008, completion as defined in the loan agreementhas not occurred. The loan is insured for political risks by branches of theCanadian and German governments.

 

**Series BPreferred Securities**

 

On December 18, 2006,we redeemed all of the outstanding 8.5% Series B Preferred Securities due December 31,2045 for total cash of $80 million. The redemption price was comprised of theoutstanding principal amount of $77 million plus accrued and unpaid interest toDecember 17, 2006 of $3 million.

 

**DemandFinancing Facility**

 

We have a demand financingfacility that permits borrowings of up to $150 million. The terms of thefacility require us to maintain cash on deposit with the lender as acompensating balance equal to the amount outstanding under the facility, whichis restricted as to use. The net effective interest rate is 0.4% per annum. At December 31,2008, $113 million had been drawn on the facility and an equal amount had beenplaced on deposit that is included in restricted cash within other currentassets (see note 14).

 
| ** **                                           | ** ** | **For the years ended December 31** | ** ** |
|------------------------------------------------------|------------|--------------------------------------------------------------|------------|
| ** **                                           | ** ** | **2008**                                                     | ** ** | **2007** | ** ** | **2006** | ** ** |
| **Interest**                                         | ** ** | **Interest  cost**                                           | ** ** | **Effective  rate(1)** | ** ** | **Interest  cost** | ** ** | **Effective  rate(1)** | ** ** | **Interest  cost** | ** ** | **Effective  rate(1)** | ** ** |
| Fixed rate debentures                                | ** ** | **$**                                                        | **26**     | ** ** | **7.0** | **%** | $ | — |   | — |   | $ | — |   | — |   |
| 5.80%/4.875% notes                                   | ** ** | **42**                                                       | ** ** | **5.7** | **%** | 41 |   | 5.6 | % | 41 |   | 5.5 | % |
| Copper-linked notes/US dollar notes                  | ** ** | **62**                                                       | ** ** | **6.2** | **%** | 63 |   | 6.2 | % | 13 |   | 5.8 | % |
| Senior convertible debentures                        | ** ** | **4**                                                        | ** ** | **1.5** | **%** | 2 |   | 0.8 | % | 6 |   | 2.0 | % |
| Project financing                                    | ** ** | **19**                                                       | ** ** | **11.0** | **%** | 26 |   | 9.1 | % | 31 |   | 8.8 | % |
| Capital leases                                       | ** ** | **4**                                                        | ** ** | **5.0** | **%** | 6 |   | 7.7 | % | 6 |   | 6.7 | % |
| Other debt obligations                               | ** ** | **50**                                                       | ** ** | **5.3** | **%** | 60 |   | 6.1 | % | 53 |   | 5.4 | % |
| 7.50% debentures                                     |       | —                                                       | ** ** | — | ** ** | 16 |   | 9.9 | % | 49 |   | 9.8 | % |
| Series B Preferred Securities                   |       | —                                                       | ** ** | — | ** ** | — |   | — |   | 3 |   | 4.4 | % |
| First credit facility                                | ** ** | **17**                                                       | ** ** | **3.3** | **%** | 1 |   | — |   | 29 |   | 7.4 | % |
| Demand financing facility                            | ** ** | **11**                                                       | ** ** | **8.9** | **%** | 13 |   | 8.9 | % | 12 |   | 8.8 | % |
| Second credit facility                               |       | —                                                       | ** ** | — |   | — |   | — |   | 6 |   | 5.0 | % |
| Other interest                                       | ** ** | **8**                                                        | ** ** |   |   | 9 |   |   |   | 2 |   |   |   |
|                                                 | ** ** | **243**                                                      | ** ** |   |   | 237 |   |   |   | 251 |   |   |   |
| Less: interest allocated to discontinued  operations |       | —                                                       | ** ** |   |   | — |   |   |   | (23 | ) |   |   |
| Less: interest capitalized                           | ** ** | **(222**                                                     | **)**      |   |   | (124 | ) |   |   | (102 | ) |   |   |
|                                                 | ** ** | **$**                                                        | **21**     | ** ** |   |   | $ | 113 |   |   |   | $ | 126 |   |   |   |
| Cash interest paid                                   | ** ** | **$**                                                        | **213**    | ** ** |   |   | $ | 236 |   |   |   | $ | 211 |   |   |   |
| Amortization of debt issue costs                     | ** ** | **7**                                                        | ** ** |   |   | 9 |   |   |   | 12 |   |   |   |
| Amortization of premium                              | ** ** | **(7**                                                       | **)**      |   |   | (3 | ) |   |   | (12 | ) |   |   |
| Losses on interest rate hedges                       | ** ** | **1**                                                        | ** ** |   |   | 4 |   |   |   | 12 |   |   |   |
| Increase (decrease) in interest accruals             | ** ** | **29**                                                       | ** ** |   |   | (9 | ) |   |   | 28 |   |   |   |
| Interest cost                                        | ** ** | **$**                                                        | **243**    | ** ** |   |   | $ | 237 |   |   |   | $ | 251 |   |   |   |

 

----

| (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. |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

119

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**ScheduledDebt Repayments**

 
| ** **                                    | ** ** | **2009** | ** ** | **2010** | ** ** | **2011** | ** ** | **2012** | ** ** | **2013 and  thereafter** | ** ** |
|-----------------------------------------------|------------|----------|------------|----------|------------|----------|------------|----------|------------|-------------------------------|------------|
| Fixed rate debentures                         |       | $        | —     |     | $          | —   |       | $        | —     |                          | $          | — |   | $ | 1,250 |   |
| 5.80%/4.875% notes                            |       | —   |       | —   |       | —   |       | —   |       | 750                           |       |
| Project financing                             |       | 52       |       | 30       |       | 10       |       | 23       |       | —                        |       |
| US dollar notes                               |       | —   |       | —   |       | —   |       | —   |       | 1,000                         |       |
| Other debt obligations                        |       | 16       |       | —   |       | —   |       | 107      |       | 794                           |       |
| Senior convertible debentures                 |       | —   |       | —   |       | —   |       | —   |       | 230                           |       |
|                                          |       | $        | 68         |     | $          | 30       |       | $        | 10         |                          | $          | 130 |   | $ | 4,024 |   |
| Minimum annual payments under capital  leases |       | $        | 25         |     | $          | 21       |       | $        | 9          |                          | $          | 4 |   | $ | 5 |   |

 

**c) Use ofDerivative Instruments (“Derivatives”) in Risk Management**

 

In the normal course ofbusiness, our assets, liabilities and forecasted transactions are impacted byvarious market risks including, but not limited to:

 
| **Item** | ** **                                                            | **Impacted by**                                 |
|----------|-----------------------------------------------------------------------|------------------------------------------------------|
| ·   | Sales                                                                 |                                                 | · | Prices of gold and copper |
| ·   | Cost of sales                                                         |                                                 |   |   |
|     | ·                                                                | Consumption of diesel fuel,  propane and natural gas |   | · | Prices of diesel fuel,  propane and natural gas |
|     | ·                                                                | 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 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                                               |                                                 | · | US dollar interest rates |
| ·   | Fair value of fixed-rate  debt                                        |                                                 | · | US dollar interest rates |

 

Under our risk managementpolicy, we seek to mitigate the impact of these risks to provide certainty fora portion of our revenues and to control costs and enable us to plan ourbusiness with greater certainty. The timeframe and manner in which we managethese risks varies for each item based upon our assessment of the risk andavailable alternatives for mitigating risk. For these particular risks, webelieve that derivatives are an appropriate way of managing the risk.

 

Theprimary objective of the hedging elements of our derivative instrumentpositions is that changes in the values of hedged items are offset by changesin the values of derivatives. Many of the derivatives we use meet the FAS 133hedge effectiveness criteria and are designated in a hedge accountingrelationship. Some of the derivative instruments are effective in achieving ourrisk management objectives, but they do not meet the strict FAS 133 hedgeeffectiveness criteria, and they are classified as “economic hedges”. Thechange in fair value of these economic hedges is recorded in current periodearnings, classified with the income statement line item that is consistentwith the derivative instruments’ intended risk objective.

 

120

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**Summary ofDerivatives at December 31, 2008(1)**

 
| ** **                                                | ** ** | **Notional amount by term to maturity** | ** ** | **Accounting  classification by  notional amount** | ** ** | ** **                  | ** ** |
|-----------------------------------------------------------|------------|------------------------------------------------------------------|------------|--------------------------------------------------------------|------------|-----------------------------|------------|
| ** **                                                | ** ** | **Within  1 year**                                          | ** ** | **2 to 3  years**                                  | ** ** | **4 to 5  years** | ** ** | **Total** | ** ** | **Cash flow  hedge** | ** ** | **Fair value  hedge** | ** ** | **Non-  hedge** | ** ** | **Fair value  (USD)** | ** ** |
| **US dollar interest rate contracts**                     |       |                                                             |       |                                                         |       |                        |       |   |   |   |   |   |   |   |   |   |   |
| Net pay-fixed swap positions (millions)                   |       | $                                                                | —     |                                                         | $          | (75                         | )          | $ | — |   | $ | (75 | ) | $ | — |   | $ | — |   | $ | (75 | ) | $ | (8 | ) |
| **Currency contracts**                                    |       |                                                             |       |                                                         |       |                        |       |   |   |   |   |   |   |   |   |   |   |
| C$:US$ contracts (C$millions)                        |       | 259                                                              |       | 17                                                           |       | —                      |       | 276 |   | 286 |   | — |   | (10 | ) | $ | (31 | ) |
| A$:US$ contracts (A$millions)                        |       | 1,558                                                            |       | 2,456                                                        |       | 713                         |       | 4,727 |   | 4,709 |   | — |   | 18 |   | $ | (464 | ) |
| CLP:US$ contracts (CLP billions)                     |       | 52,023                                                           |       | —                                                       |       | —                      |       | 52,023 |   | 52,023 |   | — |   | — |   | $ | (7 | ) |
| JPY:US$ contracts (JPY millions)                     |       | 900                                                              |       | —                                                       |       | —                      |       | 900 |   | 900 |   | — |   | — |   | $ | 1 |   |
| ZAR:US$ contracts (ZAR millions)                     |       | —                                                           |       | —                                                       |       | —                      |       | — |   | — |   | — |   | — |   | $ | 1 |   |
| PGK:US$ contracts (PGK millions)                     |       | 45                                                               |       | —                                                       |       | —                      |       | 45 |   | — |   | — |   | 45 |   | $ | (1 | ) |
| **Commodity contracts**                                   |       |                                                             |       |                                                         |       |                        |       |   |   |   |   |   |   |   |   |   |   |
| Copper call option spread contracts (millions  of pounds) |       | 53                                                               |       | —                                                       |       | —                      |       | 53 |   | — |   | — |   | 53 |   |   |   |
| $                                                         | —     |                                                             |
| Copper sold forward contracts (millions of  pounds)       |       | 74                                                               |       | —                                                       |       | —                      |       | 74 |   | 74 |   | — |   | — |   | $ | 123 |   |
| Copper collar sell contracts (millions of  pounds)        |       | 327                                                              |       | —                                                       |       | —                      |       | 327 |   | 129 |   | — |   | 198 |   | $ | 585 |   |
| Copper collar buy contracts (millions of  pounds)         |       | (198                                                             | )          | —                                                       |       | —                      |       | (198 | ) | — |   | — |   | (198 | ) | $ | (54 | ) |
| Diesel contracts (thousands of barrels)(2)                |       | 2,104                                                            |       | 1,940                                                        |       | 1,030                       |       | 5,074 |   | 4,876 |   | — |   | 198 |   | $ | (147 | ) |
| Propane contracts (thousands of gallons)                  |       | 30,000                                                           |       | —                                                       |       | —                      |       | 30,000 |   | 30,000 |   | — |   | — |   | $ | (38 | ) |
| Steel contracts (metric tonnes)                           |       | 3,000                                                            |       | —                                                       |       | —                      |       | 3,000 |   | — |   | — |   | 3,000 |   | $ | (3 | ) |
|                                                           |            |                                                                  |            |                                                              |            |                             |            |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |

 

----

| (1) | Excludes gold and silver  sales contracts (see notes 5 and 6); refer to note 21 for further information  on fair value measurements.                                                                                                                                                                                                           |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (2) | Diesel commodity contracts  represent a combination of WTI, WTB, MOPS and JET hedge contracts and diesel  price contracts based on the price of WTI, 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. |

 

**Fair Valuesof Derivative Instruments at December 31**

 
| ** **                                                                       | ** ** | **Asset Derivatives** | ** ** | **Liability Derivatives** | ** ** |
|----------------------------------------------------------------------------------|------------|----------------------------|------------|--------------------------------|------------|
| **At December 31**                                                     | ** ** | **2008**                   | ** ** | **2007**                       | ** ** | **2008** | ** ** | **2007** | ** ** |
| Derivatives classified as hedging instruments  for accounting purposes           |       |                       |       |                           |       |   |   |   |   |
| Currency contracts                                                               |       | 22                         |       | 302                            |       | (526 | ) | (43 | ) |
| Commodity contracts                                                              |       | 402                        |       | 144                            |       | (205 | ) | (31 | ) |
| Total derivatives classified as hedging  instruments for accounting purposes     |       | 424                        |       | 446                            |       | (731 | ) | (74 | ) |
| Derivatives not classified as hedging  instruments for accounting purposes       |       | —                     |       | —                         |       |   |   |   |   |
| US dollar interest rate contracts                                                |       |                       |       |                           |       | (8 | ) | (10 | ) |
| Currency contracts                                                               |       | 4                          |       | 13                             |       | (1 | ) | (30 | ) |
| Commodity contracts                                                              |       | 404                        |       | 95                             |       | (135 | ) | (51 | ) |
| Total derivatives not classified as hedging  instruments for accounting purposes |       | 408                        |       | 108                            |       | (144 | ) | (91 | ) |
| Total derivatives                                                                |       | 832                        |       | 554                            |       | (875 | ) | (165 | ) |

 

121

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**US DollarInterest Rate Contracts**

 

*Cash FlowHedges*

 

During the third quarter of2008, we added $500 million of pay-fixed interest rate swaps that weredesignated as hedges against the movement of interest rates for an anticipatedfixed-rate debt issuance. We issued the debt in September and subsequentlyclosed out the swaps at a cost of $18 million. This hedge loss remains as acomponent of OCI and will be amortized as a component of interest expense overthe 10-year term of the debt.

 

*Non-hedgeContracts*

 

We have a net US dollarpay-fixed interest rate swap position outstanding that was used to economicallyhedge the US dollar interest rate risk implicit in a prior gold lease rate swapposition. Changes in the fair value of these interest rate swaps are recognizedin current period earnings through interest expense.

 

**CurrencyContracts**

 

*Cash FlowHedges*

 

Currency contracts have beendesignated against forecasted non-US dollar denominated expenditures as a hedgeof the variability of the US dollar amount of those expenditures caused bychanges in currency exchange rates over the next four years. Hedged items areidentified as the first stated quantity of dollars of forecasted expendituresin a future month. For C$286 million, A$4,653 million and CLP52,023 millionportions of the contracts, we have concluded that the hedges are 100% effectiveunder FAS 133 because the critical terms (including notional amount andmaturity date) of the hedged items and currency contracts are the same. For theremaining A$56 million prospective and retrospective hedge effectiveness isassessed using the hypothetical derivative method under FAS 133. Theretrospective test involves comparing the effect of historic changes inexchange rates each period on the fair value of both the actual andhypothetical derivative using a dollar offset approach. The effective portion ofchanges in fair value of the currency contracts is recorded in OCI until theforecasted expenditure impacts earnings; for expenditures capitalized to thecost of inventory, this is upon sale of inventory, and for capitalexpenditures, this is when amortization of the capital assets is recorded inearnings. The prospective test involves comparing the effect of a theoreticalshift in forward exchange rates on the fair value of both the actual andhypothetical derivative. Where applicable, the fair value of derivatives hasbeen evaluated to account for counterparty credit risk.

 

*Non-hedgeContracts*

 

Non-hedge currency contractsare used to mitigate the variability of the US dollar amount of non-US dollardenominated exposures that do not meet the criterion in FAS 133. Changes in thefair value of non-hedge currency contracts are recorded in current period costof sales, corporate administration, other income, other expense or income taxexpense according to the intention of the hedging instrument.

 

**Commodity Contracts**

 

*Cash FlowHedges*

 

*DieselFuel/Propane*

 

Commodity contracts havebeen designated against forecasted purchases of the commodities for expectedconsumption at our mining operations. The contracts act as a hedge of theimpact of variability in market prices on the cost of future commoditypurchases over the next five years. Hedged items are identified as the firststated quantity in thousands of barrels of forecasted purchases in a futuremonth. Prospective and retrospective hedge effectiveness is assessed using thehypothetical derivative method under FAS 133. The prospective test is based onregression analysis of the month-on-month change in fair value of both theactual derivative and a hypothetical derivative caused by actual historicchanges in commodity prices over the last three years. The retrospective testinvolves comparing the effect of historic changes in commodity prices eachperiod on the fair value of both the actual and hypothetical derivative using adollar offset approach. The effective portion of changes in fair value of thecommodity contracts is recorded in OCI until the forecasted transaction impactsearnings. The cost of commodity consumption is capitalized to the cost ofinventory, and therefore this is upon the sale of inventory. Where applicable,the fair value of derivatives has been evaluated to account for counterpartycredit risk.

 

*Non-hedgeContracts*

 

Non-hedge fuel contracts areused to mitigate the risk of price changes on fuel consumption at varioussites. On completion of regression analysis, we concluded that contractstotaling 198 thousand barrels of fuel do not meet the “highly effective”criterion in FAS 133 due to currency and basis differences between derivativecontract prices and the prices charged to the sites by oil suppliers. Althoughnot qualifying as an accounting hedge, the contracts protect the Company to asignificant extent from the effects of changes in fuel prices. Changes in thefair value of non-hedge fuel contracts are recorded in current period cost ofsales.

 

122

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*Cash FlowHedges*

* *

*Copper*

 

The copper-linked notescontain an embedded fixed-price forward copper sales contract that meets thedefinition of a derivative and must be separately accounted for. At December 31,2008, 53 million pounds of embedded fixed-price forward copper sales contractswere outstanding at a price of $3.08/lb. The resulting copper derivative hasbeen designated against future copper cathode at the Zaldívar mine as a cashflow hedge of the variability in market prices of those future sales.

 

Inaddition to the embedded fixed-price forward copper sales contractsoutstanding, there are 21 million pounds of copper forwards outstanding at anaverage price of $3.05/lb hedging future sales at Zaldívar.

 

Coppercollar contracts totaling 129 million pounds have also been designated ashedges against copper cathode sales at our Zaldívar mine. The contracts containpurchased put and sold call options with average strike prices of $3.00/lb and$3.80/lb respectively.

 

Hedgeditems are identified as the first stated quantity of pounds of forecasted salesin a future month. Prospective hedge effectiveness is assessed on these hedgesusing a dollar offset method. The dollar offset assessment involves comparingthe effect of theoretical shifts in forward copper prices on the fair value ofboth the actual hedging derivative and a hypothetical hedging derivative. Theretrospective assessment involves comparing the effect of historic changes incopper prices each period on the fair value of both the actual and hypotheticalderivative using a dollar offset approach. The effective portion of changes infair value of the copper contracts is recorded in OCI until the forecastedcopper sale impacts earnings. Where applicable, the fair value of derivativeshas been evaluated to account for counterparty credit risk.

 

*Non-hedgeContracts*

 

We have purchased and soldcall options on copper that, when combined with the aforementioned embeddedfixed-price forward copper sales contracts, economically lock in copper salesprices between $3.08/lb and $3.58/lb. At December 31, 2008, the notionalamount of these options outstanding was 53 million pounds.

 

During2008 we de-designated collar sell contracts for 153 million pounds andcrystallized $213 million of gains in OCI, of which $192 million remains atyear-end. These hedges were originally designated against future copperproduction at our Zaldívar and Osborne mines. The exposure is still expected tooccur and therefore amounts crystallized in OCI will be recorded in copperrevenue when the originally designated sales occur. We continue to hold thesecollar contracts as non-hedge contracts. When combined with existing non-hedgecollar sell contracts, 198 million pounds of collar sell contracts wereoutstanding at December 31, 2008. The contracts contain purchased put andsold call options with an average strike of $3.09/lb and $3.88/lb,respectively.

 

During2008 we entered into collar buy contracts for 198 million pounds toeconomically lock in the gains on the de-designated and existing non-hedgecontracts. The contracts contain sold put and purchased call options withaverage strike prices of $1.57/lb and $2.01/lb, respectively.

 

Thesecontracts do not meet the “highly effective” criterion for hedge accountingunder FAS 133. Changes in the fair value of these copper options are recordedin current period revenue.

 

123

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**Non-hedgeGains (Losses)**

 

 
| **For the years ended December 31** | ** ** | **2008**   | ** **   | **2007** | ** ** | **2006** | ** ** | **Income statement classification**                                      |
|--------------------------------------------------------------|------------|------------|--------------|----------|------------|----------|------------|------------------------------------------------------------------------------------|
| Commodity  contracts                                         |       |       |         |     |       |     |       |                                                                               |
| Copper                                                       |       | **$**      | **67**       |     | $          | 48       |       | $                                                                                  | (14 | ) | Revenue |
| Gold                                                         |       | **19**     |         | (8       | )          | 7        |       | Revenue                                                                            |
| Silver                                                       |       | **—** |         | —   |       | (5       | )          | Cost of sales                                                                      |
| Fuel                                                         |       | **(30**    | **)**        | 7        |       | 1        |       | Cost of sales                                                                      |
| Steel                                                        |       | **(3**     | **)**        | —   |       | —   |       | Project expense                                                                    |
| Currency contracts                                           |       | **(8**     | **)**        | (7       | )          | —   |       | Cost of sales/corporate  administration/other  income/expense/ income tax  expense |
| Interest rate contracts                                      |       | **(4**     | **)**        | (2       | )          | 8        |       | Interest income/expense                                                            |
| Share purchase warrants                                      |       | **—** |         | (1       | )          | —   |       | Other income/expense                                                               |
|                                                         |       | **41**     |         | 37       |       | (3       | )          |                                                                               |
| Hedge ineffectiveness                                        |       | **—** |         | 4        |       | 3        |       | Various                                                                            |
|                                                         |       | **$**      | ** 41** |     | $          | 41       |       | $                                                                                  | — |   |   |

 

**Derivative Assets and Liabilities**

 
| ** **                        | ** ** | **2008**   | ** ** | **2007**   | ** ** |
|-----------------------------------|------------|------------|------------|------------|------------|
| At January 1                 | ** ** | **$**      | **389**    | ** ** | $          | 178 |   |
| Derivatives cash (inflow) outflow |       | ** ** | ** ** |       |       |
| Operating activities              | ** ** | **(147**   | **)**      | (309       | )          |
| Investing activities              |       | ** ** | ** ** | 23         |       |
| Financing activities              | ** ** | **23**     | ** ** | 197        |       |
| Change in fair value of:          |       | ** ** | ** ** |       |       |
| Non-hedge derivatives             | ** ** | **(1**     | **)**      | 33         |       |
| Cash flow hedges                  |       | ** ** | ** ** |       |       |
| Effective portion                 | ** ** | **(301**   | **)**      | 257        |       |
| Ineffective portion               | ** ** | **(6**     | **)**      | 9          |       |
| Share purchase warrants           |       | **—** | ** ** | (1         | )          |
| Fair value hedges                 |       | **—** | ** ** | 2          |       |
| At December 31               | ** ** | **$**      | **(43**    | **)**      | $          | 389 |   |
| Classification:                   |       | ** ** | ** ** |       |       |
| Other current assets              | ** ** | **$**      | **817**    | ** ** | $          | 334 |   |
| Other assets                      | ** ** | **15**     | ** ** | 220        |       |
| Other current liabilities         | ** ** | **(440**   | **)**      | (100       | )          |
| Other long-term obligations       | ** ** | **(435**   | **)**      | (65        | )          |
| ** **                        |       | **$**      | **(43**    | **)**      | $          | 389 |   |

 

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**Cash Flow Hedge Gains (Losses) in OCI**

 
| ** **                                                        | ** ** | **Commodity  price hedges** | ** ** | **Currency hedges** | ** ** | **Interest rate hedges** | ** ** | ** **           | ** ** |
|-------------------------------------------------------------------|------------|----------------------------------|------------|--------------------------|------------|------------------------------------|------------|----------------------|------------|
| ** **                                                        | ** ** | **Gold/  silver**                | ** ** | **Copper**               | ** ** | **Fuel**                           | ** ** | **Operating  costs** | ** ** | **Administration  costs** | ** ** | **Capital  expenditures** | ** ** | **Cash  balances** | ** ** | **Long-term  debt** | ** ** | **Total** | ** ** |
| At  December 31, 2005                                        |       | $                                | —     |                     | $          | —                             |       | $                    | 38         |   | $ | 102 |   | $ | 30 |   | $ | 39 |   | $ | (2 | ) | $ | (18 | ) | $ | 189 |   |
| Effective portion  of change in fair value of hedging instruments |       | (148                             | )          | 29                       |       | (1                                 | )          | 137                  |       | (2 | ) | 4 |   | (2 | ) | — |   | 17 |   |
| Transfers to  earnings:                                           |       |                             |       |                     |       |                               |       |                 |       |   |   |   |   |   |   |   |   |   |   |
| On recording  hedged items in earnings                            |       | 165                              |       | 28                       |       | (16                                | )          | (84                  | )          | (14 | ) | (4(1 | ) | 1 |   | 1 |   | 77 |   |
| At  December 31, 2006                                        |       | $                                | 17         |                     | $          | 57                                 |       | $                    | 21         |   | $ | 155 |   | $ | 14 |   | $ | 39 |   | $ | (3 | ) | $ | (17 | ) | $ | 283 |   |
| Effective portion  of change in fair value of hedging instruments |       | —                           |       | (75                      | )          | 87                                 |       | 249                  |       | 32 |   | (35 | ) | — |   | (1 | ) | 257 |   |
| Transfers to  earnings:                                           |       |                             |       |                     |       |                               |       |                 |       |   |   |   |   |   |   |   |   |   |   |
| On recording  hedged items in earnings                            |       | (2                               | )          | 32                       |       | (29                                | )          | (166                 | )          | (19 | ) | (5 | (1) | 3 |   | 1 |   | (185 | ) |
| At  December 31, 2007                                        |       | $                                | 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 | ) |

 
| **Hedge gains/losses classified within**           | ** ** | **Gold  sales** | ** ** | **Copper  sales** | ** ** | **Cost of  sales** | ** ** | **Cost of  sales** | ** ** | **Administration** | ** ** | **Amortization** | ** ** | **Interest  income** | ** ** | **Interest  expense** | ** ** | ** ** | ** ** |
|-------------------------------------------------------------------|------------|-----------------|------------|-------------------|------------|-------------------------|------------|-------------------------|------------|--------------------|------------|------------------|------------|----------------------|------------|-----------------------|------------|------------|------------|
| Portion of hedge  gain (loss) expected to affect 2009 earnings(2) |       | $               | 9          |              | $          | 484                     |       | $                       | (109       | )                  | $          | (126             | )          | $                    | (23        | )                     | $          | 3          |       | $ | — |   | $ | (3 | ) | $ | 235 |   |
|                                                                   |            |                 |            |                   |            |                         |            |                         |            |                    |            |                  |            |                      |            |                       |            |            |            |  |  |  |  |  |  |  |  |  |

 

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| (1) | On determining that  certain forecasted capital expenditures were no longer likely to occur within  two months of the originally specified time frame. |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------|
| (2) | Based on the fair value of  hedge contracts at December 31, 2008.                                                                                 |

 

**d) CreditRisk**

 

Credit risk is the risk thata third party might fail to fulfill its performance obligations under the termsof a financial instrument. For cash and equivalents and accounts receivable,credit risk represents the carrying amount on the balance sheet, net of anyoverdraft positions.

 

Forderivatives, when the fair value is positive, this creates credit risk. Whenthe fair value of a derivative is negative, we assume no credit risk. In caseswhere we have a legally enforceable master netting agreement with acounter-party, credit risk exposure represents the net amount of the positiveand negative fair values for similar types of derivatives. For a net negativeamount, we regard credit risk as being zero. A net positive amount for acounterparty is a reasonable measure of credit risk when there is a legallyenforceable master netting agreement. We mitigate credit 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.              |

 

Location of credit risk isdetermined by physical location of the bank branch, customer or counterparty.

 

125

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**CreditQuality of Financial Assets**

 
| ** **                     | ** ** | **S&P  Credit rating** | ** ** |
|--------------------------------|------------|----------------------------|------------|
| **At  December 31, 2008** | ** ** | **AA – or  higher**   | ** ** | **A – or  higher** | ** ** | **BBB or  lower** | ** ** | **Not  rated** | ** ** | **Total** | ** ** |
| Cash and equivalents(1),(2)    |       | $                          | 231        |   | $ | 1,181 |   | $ | 25 |   | $ | — |   | $ | 1,437 |   |
| Derivatives(2)                 |       | 87                         |       | 354 |   | — |   | — |   | 441 |   |
| Accounts receivable            |       | 22                         |       | 6 |   | 38 |   | 131 |   | 197 |   |
|                           |       | $                          | 340        |   | $ | 1,541 |   | $ | 63 |   | $ | 131 |   | $ | 2,075 |   |
| Number of counterparties       |       | 27                         |       | 21 |   | 16 |   |   |   |   |   |
| Largest counterparty (%)       |       | 26                         | %          | 44 | % | 21 | % |   |   |   |   |

 

**Concentrations of Credit Risk**

 
| ** **                    | ** ** | **United** | ** ** | ** ** | ** ** | **Other**         | ** ** | ** ** | ** ** |
|-------------------------------|------------|------------|------------|------------|------------|-------------------|------------|------------|------------|
| **At December 31, 2008** | ** ** | **States** | ** ** | **Canada** | ** ** | **International** | ** ** | **Total**  | ** ** |
| Cash and equivalents(1),(2)   |       | $          | 1,190      |       | $          | 86                |       | $          | 161        |   | $ | 1,437 |   |
| Derivatives(3)                |       | 184        |       | 18         |       | 239               |       | 441        |       |
| Accounts receivable           |       | 29         |       | 36         |       | 132               |       | 197        |       |
|                          |       | $          | 1,403      |       | $          | 140               |       | $          | 532        |   | $ | 2,075 |   |

 

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(1)          Basedon where the parent entity of the counterparties we transact with is domiciled.

(2)          Theamounts presented reflect the outstanding bank balance held with institutionsas at December 31, 2008.

(3)          Theamounts presented reflect the net credit exposure after considering the effectof master netting agreements.

 

**e) RisksRelating to the Use of Derivatives**

 

By using derivatives, inaddition to credit risk, we are affected by market risk and market liquidityrisk. Market risk is the risk that the fair value of a derivative might beadversely affected by a change in commodity prices, interest rates, gold leaserates, or currency exchange rates, and that this in turn affects our financialcondition. We manage market risk by establishing and monitoring parameters thatlimit the types and degree of market risk that may be undertaken. We mitigatethis risk by establishing trading agreements with counterparties under which weare not required to post any collateral or make any margin calls on ourderivatives. Our counterparties cannot require settlement solely because of anadverse change in the fair value of a derivative.

 

Marketliquidity risk is the risk that a derivative cannot be eliminated quickly, byeither liquidating it or by establishing an offsetting position. Under theterms of our trading agreements, counterparties cannot require us toimmediately settle outstanding derivatives, except upon the occurrence ofcustomary events of default such as covenant breaches, including financialcovenants, insolvency or bankruptcy. We generally mitigate market liquidityrisk by spreading out the maturity of our derivatives over time.

 

**21****·****Fair Value Measurements**

 

In 2008, we adopted FAS 157for financial assets and liabilities that are measured at fair value on arecurring basis. FAS 157 defines fair value, establishes a framework formeasuring fair value under US GAAP, and requires expanded disclosures aboutfair value measurements. The primary assets and liabilities affected wereavailable-for-sale securities and derivative instruments. The adoption of FAS157 did not change the valuation techniques that we use to value financialassets and financial liabilities. We have elected to present information forderivative instruments on a net basis. Beginning in 2009, we will also applyFAS 157 to non-financial assets and liabilities that we periodically measure atfair value under US GAAP. The principal assets and liabilities that will beaffected are: goodwill, tangible and intangible assets measured and recognizedat fair value as a result of an impairment assessment; and non-financial assetsand non-financial liabilities recognized as a result of a business combination.The application of FAS 157 is not expected to have a significant impact on ourmethodology for measuring the fair value of these assets and liabilities, butwill result in expanded disclosures.

 

Thefair value hierarchy established by FAS 157 establishes three levels toclassify the inputs to valuation techniques used to measure fair value. Level 1inputs are quoted prices (unadjusted) in active markets for identical assets orliabilities. Level 2 inputs are quoted prices in markets that are not active,quoted prices for similar assets or liabilities in active markets, inputs otherthan quoted prices that are observable for the asset or liability (for example,interest rate and yield curves observable at commonly quoted intervals, forwardpricing curves used to value currency and

 

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commodity contracts andvolatility measurements used to value option contracts), or inputs that arederived principally from or corroborated by observable market data or othermeans. Level 3 inputs are unobservable (supported by little or no marketactivity). The fair value hierarchy gives the highest priority to Level 1 inputsand the lowest priority to Level 3 inputs.

 

FAS157 defines fair value as the price that would be received to sell an asset orpaid to transfer a liability in an orderly transaction between marketparticipants at the measurement date. In assessing the fair value of aparticular contract, the market participant would consider the credit risk ofthe counterparty to the contract. Consequently, when it is appropriate to doso, we adjust our valuation models to incorporate a measure of credit risk.

 

**a) Assetsand Liabilities Measured at Fair Value on a Recurring Basis**

 

**Fair ValueMeasurements at December 31, 2008**

 
| ** **                                          | ** ** | **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                                    |       | $                         | 904        |               | $          | —             |       | $             | —     |   | $ | 904 |   |
| Available-for-sale securities                       |       | 31                        |       | —             |       | —             |       | 31            |       |
| Receivables from provisional copper and  gold sales |       | —                    |       | 50                 |       | —             |       | 50            |       |
| Derivative instruments                              |       | —                    |       | (43                | )          | —             |       | (43           | )          |
|                                                |       | $                         | 935        |               | $          | 7                  |       | $             | —     |   | $ | 942 |   |
|                                                     |            |                           |            |                    |            |                    |            |               |            |  |  |  |  |  |  |

 

**b) Assets Measured at FairValue on a Recurring Basis Using Significant Unobservable Inputs**

** **

**Fair Value Measurements Using Significant Unobservable Inputs (Level 3)**

 
| ** **                | ** ** | **Held-to-maturity** | ** ** |
|---------------------------|------------|----------------------|------------|
| ** **                | ** ** | **securities**       | ** ** |
| At January 1, 2008   |       | $                    | 46         |   |
| Impairment charge(1)      |       | (39                  | )          |
| Sales(2)                  |       | (7                   | )          |
| At December 31, 2008 |       | $                    | —     |   |

 

----

(1)          Inthe first quarter, we recorded an impairment charge on ABCP of $39 million.

(2)          Inthe second quarter, we reached a settlement agreement with respect to ABCP forproceeds of $49 million.

 

**c) ValuationTechniques**

 

**CashEquivalents**

 

The fair value of our cashequivalents are classified within Level 1 of the fair value hierarchy becausethey are valued using quoted market prices in active markets. Our cashequivalents are comprised of U.S. Treasury bills and money market securitiesthat are invested primarily in U.S. Treasury bills.

 

**Available-for-SaleSecurities**

 

The fair value ofavailable-for-sale securities is determined based on a market approach reflectingthe closing price of each particular security at the balance sheet date. Theclosing price is a quoted market price obtained from the exchange that is theprincipal active market for the particular security, and thereforeavailable-for-sale securities are classified within Level 1 of the fair valuehierarchy established by FAS 157.

 

**DerivativeInstruments**

 

The fair value of derivativeinstruments is determined using either present value techniques or optionpricing models that utilize a variety of inputs that are a combination ofquoted prices and market-corroborated inputs. Due to the recent instability ofthe financial markets, counterparty credit risk has had a larger impact on ourderivative valuations than in previous periods. The fair value of ourderivative contracts is adjusted for credit risk based upon the observed creditdefault swap spread for each particular counterparty, as appropriate. The fairvalue of US dollar interest rate and currency swap contracts is determined bydiscounting contracted cash flows using a discount rate derived from observedLIBOR and swap rate curves for comparable assets and liabilities. In the caseof currency contracts, we convert non-US dollar cash flows into US dollarsusing an exchange rate derived from currency swap curves for comparable assetsand liabilities. The fair value of commodity forward contracts is determined bydiscounting contractual cash flows using a discount rate derived from observedLIBOR and swap rate curves. Contractual cash flows are calculated using aforward pricing

 

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curve derived from observedforward prices for each commodity. The fair value of commodity options isdetermined using option-pricing models that utilize a combination of inputsincluding quoted market prices and market-corroborated inputs. Derivativeinstruments are classified within Level 2 of the fair value hierarchy.

 

**Receivablesfrom Provisional Copper and Gold Sales**

 

The fair value ofreceivables rising from copper and gold sales contracts that containprovisional pricing mechanisms is determined using the appropriate quotedforward price from the exchange that is the principal active market for theparticular metal. As such, these receivables are classified within Level 2 ofthe fair value hierarchy.

 

**d) FairValue Information**

 
| ** **                       | ** ** | **2008**     | ** ** | **2007**      | ** ** |
|----------------------------------|------------|--------------|------------|---------------|------------|
| ** **                       | ** ** | ** **   | ** ** | **Estimated** | ** ** | ** ** | ** ** | **Estimated** | ** ** |
| ** **                       | ** ** | **Carrying** | ** ** | **fair**      | ** ** | **Carrying** | ** ** | **fair** | ** ** |
| **At December 31**     | ** ** | **amount**   | ** ** | **value**     | ** ** | **amount** | ** ** | **value** | ** ** |
| Financial assets                 |       |         |       |          |       |   |   |   |   |
| Cash and equivalents(1)          | ** ** | **$**        | **1,437**  | ** **    | **$**      | **1,437** |   | $ | 2,207 |   | $ | 2,207 |   |
| Accounts receivable(1)           | ** ** | **197**      | ** ** | **197**       |       | 256 |   | 256 |   |
| Available-for-sale securities(2) | ** ** | **31**       | ** ** | **31**        |       | 96 |   | 96 |   |
| Equity-method investments(3)     | ** ** | **1,085**    | ** ** | **1,085**     |       | 1,085 |   | 1,113 |   |
| Derivative assets                | ** ** | **832**      | ** ** | **832**       |       | 554 |   | 554 |   |
| Held-to-maturity securities(3)   |       | —       |       | —        |       | 46 |   | 46 |   |
|                             | ** ** | **$**        | **3,582**  | ** **    | **$**      | **3,582** |   | $ | 4,244 |   | $ | 4,272 |   |
| Financial liabilities            |       |         |       |          |       |   |   |   |   |
| Accounts payable(1)              | ** ** | **$**        | **970**    | ** **    | **$**      | **970** |   | $ | 808 |   | $ | 808 |   |
| Long-term debt(4)                | ** ** | **4,350**    | ** ** | **3,507**     |       | 3,255 |   | 3,151 |   |
| Derivative liabilities           | ** ** | **875**      | ** ** | **875**       |       | 165 |   | 165 |   |
| Restricted share units(5)        | ** ** | **120**      | ** ** | **120**       |       | 100 |   | 100 |   |
| Deferred share units(5)          | ** ** | **5**        | ** ** | **5**         |       | 4 |   | 4 |   |
|                             | ** ** | **$**        | **6,320**  | ** **    | **$**      | **5,477** |   | $ | 4,332 |   | $ | 4,228 |   |

 

----

(1)          Recordedat cost. Fair value approximates the carrying amounts due to the short-termnature and generally negligible credit losses.

(2)          Recordedat fair value. Quoted market prices are used to determine fair value.

(3)          IncludesABCP.

(4)          Long-termdebt is generally recorded at cost except for obligations that are designatedin a fair-value hedge relationship, which are recorded at fair value in periodswhen a hedge relationship exists. The fair value of long-term debt is primarilydetermined using quoted market prices.

(5)          Recordedat fair value based on our period-end closing market share price.

 

**22****·****Asset RetirementObligations**

** **
| **Asset Retirement Obligations (AROs)**           | ** ** | **2008**  | ** ** | **2007**   | ** ** |
|------------------------------------------------------------------|------------|-----------|------------|------------|------------|
| At January 1                                                | ** ** | **$**     | **966**    | ** ** | $          | 893 |   |
| AROs acquired during the year                                    | ** ** | **37**    | ** ** | —     |       |
| AROs arising in the period                                       | ** ** | **56**    | ** ** | 53         |       |
| Impact of revisions to expected cash flows Recorded  in earnings | ** ** | **9**     | ** ** | 6          |       |
| Settlements                                                      |       |      | ** ** |       |       |
| Cash payments                                                    | ** ** | **(40**   | **)**      | (33        | )          |
| Settlement gains                                                 | ** ** | **(5**    | **)**      | (3         | )          |
| Accretion                                                        | ** ** | **43**    | ** ** | 50         |       |
| At December 31                                              | ** ** | **1,066** | ** ** | 966        |       |
| Current portion                                                  | ** ** | **(93**   | **)**      | (74        | )          |
| ** **                                                       |       | **$**     | **973**    | ** ** | $          | 892 |   |

 

Each period we assess costestimates and other assumptions used in the valuation of AROs at each of ourmineral properties to reflect events, changes in circumstances and newinformation available. Changes in these cost estimates and assumptions have acorresponding impact on the fair value of the ARO. For closed mines, any changein the fair value of AROs results in a corresponding charge or credit withinother expense, whereas at operating mines the charge is recorded as anadjustment to the carrying amount of the corresponding asset. In 2008, chargesof $9 million were recorded for changes in cost estimates for AROs at closedmines (2007: $6 million; 2006: $53 million).

 
| **At December 31** | ** ** | **2008** | ** ** | **2007**   | ** ** |
|------------------------------|------------|----------|------------|------------|------------|
| Operating mines              |       |     | ** ** |       |       |
| ARO increase(1)              | ** ** | **$**    | **56**     | ** ** | $          | 53 |   |
| ARO decrease(2)              | ** ** | **(7**   | **)**      | —     |       |
| Closed mines                 |       |     | ** ** |       |       |
| ARO increase(3)              | ** ** | **9**    | ** ** | 6          |       |
|                              |            |          |            |            |            |  |  |

 

----

(1)          Theseadjustments were recorded with a corresponding adjustment to property, plantand equipment.

(2)          Representsa decrease in AROs at a mine where the corresponding ARO asset had been fullyamortized and was therefore recorded as a recovery in other income.

(3)          Forclosed mines, any change in the fair value of AROs results in a correspondingcharge or credit to other expense or other income, respectively.

 

AROs arise from theacquisition, development, construction and normal operation of mining property,plant and equipment, due to government controls and regulations that protectthe environment on the closure and reclamation of mining properties. The majorparts of the carrying amount of AROs relate to tailings and heap leach padclosure/rehabilitation; demolition of buildings/mine facilities;

 

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ongoing water treatment; andongoing care and maintenance of closed mines. The fair values of AROs aremeasured by discounting the expected cash flows using a discount factor thatreflects the credit-adjusted risk-free rate of interest. We prepare estimatesof the timing and amount of expected cash flows when an ARO is incurred. Weupdate expected cash flows to reflect changes in facts and circumstances. Theprincipal factors that can cause expected cash flows to change are: theconstruction of new processing facilities; changes in the quantities ofmaterial in reserves and a corresponding change in the life-of-mine plan;changing ore characteristics that impact required environmental protectionmeasures and related costs; changes in water quality that impact the extent ofwater treatment required; and changes in laws and regulations governing theprotection of the environment. When expected cash flows increase, the revisedcash flows are discounted using a current discount factor whereas when expectedcash flows decrease the reduced cash flows are discounted using a historicdiscount factor, and then in both cases any change in the fair value of the AROis recorded. We record the fair value of an ARO when it is incurred. Atproducing mines AROs incurred and changes in the fair value of AROs arerecorded as an adjustment to the corresponding asset carrying amounts. Atclosed mines, any adjustment to the fair value of an ARO is charged directly toearnings. AROs are adjusted to reflect the passage of time (accretion)calculated by applying the discount factor implicit in the initial fair-valuemeasurement to the beginning-of-period carrying amount of the AROs. Forproducing mines, development projects and closed mines, accretion is recordedin amortization and accretion. Upon settlement of an ARO, we record a gain orloss if the actual cost differs from the carrying amount of the ARO. Settlementgains/losses are recorded in Other (income) expense. Other environmentalremediation costs that are not AROs as defined by FAS 143 are expensed asincurred (see note 8a).

 

**23****·****Other Non-currentLiabilities**

 
| **At  December 31**                 | ** ** | **2008** | ** ** | **2007** | ** ** |
|------------------------------------------|------------|----------|------------|----------|------------|
| Pension benefits (note 28)               | ** ** | **$**    | **113**    |     | $          | 87 |   |
| Other post-retirement benefits (note 28) | ** ** | **29**   |       | 27       |       |
| Derivative liabilities (note 20c)        | ** ** | **435**  |       | 65       |       |
| Restricted share units (note 27)         | ** ** | **120**  |       | 94       |       |
| Deferred revenue                         | ** ** | **8**    |       | 88       |       |
| Other                                    | ** ** | **76**   |       | 70       |       |
|                                     | ** ** | **$**    | **781**    |     | $          | 431 |   |

 

**24****·****Deferred Income Taxes**

 

**Recognitionand Measurement**

 

We record deferred incometax assets and liabilities where temporary differences exist between thecarrying amounts of assets and liabilities in our balance sheet and their taxbases. The measurement and recognition of deferred income tax assets andliabilities takes into account: enacted rates that will apply when temporarydifferences reverse; interpretations of relevant tax legislation; tax planningstrategies; estimates of the tax bases of assets and liabilities; and thedeductibility of expenditures for income tax purposes. We recognize the effectof changes in our assessment of these estimates and factors when they occur.Changes in deferred income tax assets, liabilities and valuation allowances areallocated between net income, other comprehensive income and goodwill based onthe source of the change.

 

Deferredincome taxes have not been provided on the undistributed earnings of foreignsubsidiaries, which are considered to be reinvested indefinitely outsideCanada. The determination of the unrecorded deferred income tax liability isnot considered practicable.

 

**Sources ofDeferred Income Tax Assets and Liabilities**

 
| **At December 31**                      | ** ** | **2008**   | ** ** | **2007**   | ** ** |
|---------------------------------------------------|------------|------------|------------|------------|------------|
| Deferred tax assets                               |       |       | ** ** |       |       |
| Tax loss carry forwards                           | ** ** | **$**      | **657**    | ** ** | $          | 729 |   |
| Alternative minimum tax (“AMT”) credits | ** ** | **251**    | ** ** | 247        |       |
| Asset retirement obligations                      | ** ** | **366**    | ** ** | 342        |       |
| Property, plant and equipment                     | ** ** | **232**    | ** ** | 279        |       |
| Post-retirement benefit obligations               | ** ** | **32**     | ** ** | 23         |       |
| Derivative instruments                            | ** ** | **90**     | ** ** | —     |       |
| Accrued interest payable                          | ** ** | **70**     | ** ** | 45         |       |
| Other                                             | ** ** | **3**      | ** ** | 10         |       |
|                                              | ** ** | **1,701**  | ** ** | 1,675      |       |
| Valuation allowances                              | ** ** | **(318**   | **)**      | (419       | )          |
|                                              | ** ** | **1,383**  | ** ** | 1,256      |       |
| Deferred tax liabilities                          |       |       | ** ** |       |       |
| Property, plant and equipment                     | ** ** | **(1,102** | **)**      | (1,145     | )          |
| Derivative instruments                            |       | —     | ** ** | (122       | )          |
| Inventory                                         | ** ** | **(162**   | **)**      | (98        | )          |
| Other                                             | ** ** | **(4**     | **)**      | (10        | )          |
|                                              | ** ** | **$**      | **115**    | ** ** | $          | (119 | ) |
| Classification:                                   |       |       | ** ** |       |       |
| Non-current assets                                | ** ** | **$**      | **869**    | ** ** | $          | 722 |   |
| Non-current liabilities                           | ** ** | **(754**   | **)**      | (841       | )          |
|                                              | ** ** | **$**      | **115**    | ** ** | $          | (119 | ) |

 

129

----

** **

**ExpiryDates of Tax Losses and AMT Credits**

 
| ** **     | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | **No**     | ** ** | ** ** | ** ** |
|----------------|------------|------------|------------|------------|------------|------------|------------|------------|------------|------------|------------|------------|------------|------------|------------|
| ** **     | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | **expiry** | ** ** | ** ** | ** ** |
| ** **     | ** ** | **2009**   | ** ** | **2010**   | ** ** | **2011**   | ** ** | **2012**   | ** ** | **2013+**  | ** ** | **date**   | ** ** | **Total**  | ** ** |
| Tax losses(1)  |       |       |       |       |       |       |       |       |       |       |       |       |       |       |       |
| Canada         |       | $          | 5          |       | $          | —     |       | $          | —     |       | $          | —     |       | $          | 1,193      |   | $ | — |   | $ | 1,198 |   |
| Australia      |       | —     |       | —     |       | —     |       | —     |       | —     |       | 157        |       | 157        |       |
| Barbados       |       | —     |       | —     |       | —     |       | —     |       | 967        |       | —     |       | 967        |       |
| Chile          |       | —     |       | —     |       | —     |       | —     |       | —     |       | 684        |       | 684        |       |
| Tanzania       |       | —     |       | —     |       | —     |       | —     |       | —     |       | 230        |       | 230        |       |
| U.S.           |       | —     |       | —     |       | —     |       | —     |       | 143        |       | —     |       | 143        |       |
| Other          |       | —     |       | 4          |       | —     |       | —     |       | —     |       | 50         |       | 54         |       |
|           |       | $          | 5          |       | $          | 4          |       | $          | —     |       | $          | —     |       | $          | 2,303      |   | $ | 1,121 |   | $ | 3,433 |   |
| AMT credits(2) |       | —     |       | —     |       | —     |       | —     |       | —     |       | $          | 251        |       | $          | 251 |   |

 

----

(1)          Representsthe gross amount of tax loss carry forwards translated at closing exchangerates at December 31, 2008.

(2)          Representsthe amounts deductible against future taxes payable in years when taxes payableexceed “minimum tax” as defined by United States tax legislation.

 

**NetDeferred Tax Assets**

 
| ** **                | ** ** | **2008**  | ** ** | **2007**   | ** ** |
|---------------------------|------------|-----------|------------|------------|------------|
| Gross deferred tax assets |       |      |       |       |       |
| Canada                    | ** ** | **$**     | **384**    | ** ** | $          | 494 |   |
| Chile                     | ** ** | **41**    | ** ** | 117        |       |
| Argentina                 | ** ** | **61**    | ** ** | 37         |       |
| Australia                 | ** ** | **171**   | ** ** | 14         |       |
| Tanzania                  | ** ** | **199**   | ** ** | 197        |       |
| United States             | ** ** | **289**   | ** ** | 225        |       |
| Other                     | ** ** | **42**    | ** ** | 57         |       |
|                      | ** ** | **1,187** | ** ** | 1,141      |       |
| Valuation allowances      |       |      | ** ** |       |       |
| Canada                    | ** ** | **(50**   | **)**      | (55        | )          |
| Chile                     | ** ** | **(23**   | **)**      | (105       | )          |
| Argentina                 | ** ** | **(61**   | **)**      | (26        | )          |
| Australia                 | ** ** | **(9**    | **)**      | (2         | )          |
| Tanzania                  | ** ** | **(30**   | **)**      | (30        | )          |
| United States             | ** ** | **(123**  | **)**      | (190       | )          |
| Other                     | ** ** | **(22**   | **)**      | (11        | )          |
|                      | ** ** | **$**     | **(318**   | **)**      | $          | (419 | ) |
| Non-current assets        | ** ** | **$**     | **869**    | ** ** | $          | 722 |   |

 

**ValuationAllowances**

 

We consider the need torecord a valuation allowance against deferred tax assets, taking into accountthe effects of local tax law. A valuation allowance is not recorded when weconclude that sufficient positive evidence exists to demonstrate that it ismore likely than not that a deferred tax asset will be realized. The mainfactors considered are: 

 

· Historic and expected future levels oftaxable income;

· Tax plans that affect whether taxassets can be realized; and

· The nature, amount and expected timingof reversal of taxable temporary differences.

 

Levels of future taxableincome are mainly affected by: market gold and silver prices; forecasted futurecosts and expenses to produce gold reserves; quantities of proven and probablegold reserves; market interest rates; and foreign currency exchange rates. Ifthese factors or other circumstances change, we record an adjustment tovaluation allowances to reflect our latest assessment of the amount of deferredtax assets that will more likely than not be realized.

 

Adeferred income tax asset totaling $334 million has been recorded in Canada.This deferred tax asset primarily arose due to mark-to-market losses realizedfor acquired Placer Dome derivative instruments. Projections of various sourcesof income support the conclusion that the realizability of this deferred taxasset is more likely than not, and consequently no valuation allowance has beenset up for this deferred tax asset.

 

Adeferred tax asset of $169 million has been recorded in Tanzania following therelease of tax valuation allowances totaling $189 million in 2007. The releaseof tax valuation allowances resulted from the impact of rising market goldprices on expectations of future taxable income and the ability to realizethese tax assets.

 

Apartial valuation allowance of $123 million has been set up against deferredtax assets in the United States at December 31, 2008. The majority of thisvaluation allowance relates to AMT credits in periods when partly due to low marketgold prices, Barrick was an AMT taxpayer in the United States. If market goldprices continue to rise, it is reasonably possible that some or all of thesevaluation allowances could be released in future periods.

 

130

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** **

**Source ofChanges in Deferred Tax Balances**

 
| **For the years ended December 31**        | ** ** | **2008** | ** ** | **2007**   | ** ** | **2006** | ** ** |
|---------------------------------------------------------------------|------------|----------|------------|------------|------------|----------|------------|
| **Temporary differences**                                           |       |     | ** ** |       |       |     |       |
| Property, plant and equipment                                       | ** ** | **$**    | **(3**     | **)**      | $          | 24       |       | $ | (1,111 | ) |
| Asset retirement obligations                                        | ** ** | **24**   | ** ** | 39         |       | 128      |       |
| Tax loss carry forwards                                             | ** ** | **(72**  | **)**      | (69        | )          | 546      |       |
| Derivatives                                                         | ** ** | **212**  | ** ** | (113       | )          | 52       |       |
| Other                                                               | ** ** | **(2**   | **)**      | 9          |       | (17      | )          |
|                                                                | ** ** | **$**    | **159**    | ** ** | $          | (110     | )          | $ | (402 | ) |
| Net currency translation gains/(losses) on  deferred tax balances   | ** ** | **(98**  | **)**      | 76         |       | 5        |       |
| Canadian tax rate changes                                           |       | —   | ** ** | (64        | )          | (12      | )          |
| Adjustment to deferred tax balances due to  change in tax status(1) |       | —   | ** ** | —     |       | 31       |       |
| Release of end of year Tanzanian valuation  allowances              |       | —   | ** ** | 156        |       | —   |       |
| Release of other valuation allowances                               | ** ** | **175**  | ** ** | 88         |       | 53       |       |
|                                                                | ** ** | **$**    | **236**    | ** ** | $          | 146      |       | $ | (325 | ) |
| Intraperiod allocation to:                                          |       |     | ** ** |       |       |     |       |
| Income from continuing operations before  income taxes              | ** ** | **$**    | **45**     | ** ** | $          | 174      |       | $ | 109 |   |
| Placer Dome acquisition (note 3f)                                   |       | —   | ** ** | —     |       | (432     | )          |
| Porgera mine acquisition (note 3d)                                  |       | —   | ** ** | 20         |       | —   |       |
| Cortez acquisition (note 3b)                                        | ** ** | **11**   | ** ** | —     |       | —   |       |
| Barrick Energy Inc. acquisition (note 3a)                           | ** ** | **(22**  | **)**      | —     |       | —   |       |
| Kainantu acquisition (note 3e)                                      | ** ** | **(19**  | **)**      | —     |       | —   |       |
| Other acquisition                                                   | ** ** | **2**    | ** ** | —     |       | —   |       |
| OCI (note 26)                                                       | ** ** | **219**  | ** ** | (48        | )          | (2       | )          |
| Other                                                               | ** ** | **(2**   | **)**      | 5          |       | 28       |       |
|                                                                | ** ** | **$**    | **234**    | ** ** | $          | 151      |       | $ | (297 | ) |

 

----

(1)  Relates to changes in taxstatus in Australia (note 9).

 

**UnrecognizedTax Benefits**

 
| ** **                                                    | ** ** | **2008**   | ** ** | **2007**   | ** ** |
|---------------------------------------------------------------|------------|------------|------------|------------|------------|
| Balance at January 1                                     | ** ** | **$**      | **15**     | ** ** | $          | 20 |   |
| Additions based on tax positions related to  the current year | ** ** | **2**      | ** ** | 1          |       |
| Additions for tax positions of prior years                    | ** ** | **40**     | ** ** | —     |       |
| Reductions for tax positions of prior years                   | ** ** | **—** | ** ** | (2         | )          |
| Settlements                                                   | ** ** | **(11**    | **)**      | (4         | )          |
| Balance at December 31(1),(2)                            | ** ** | **$**      | **46**     | ** ** | $          | 15 |   |

 

----

(1)          Ifrecognized, the total amount of $46 million would be recognized as a benefit toincome taxes on the income statement, and therefore would impact the reportedeffective tax rate.

(2)          Includesinterest and penalties of $1 million.

 

We expect the amount ofunrecognized tax benefits to decrease within 12 months of the reporting date byapproximately $21 to $22 million, related primarily to the expected settlementof Canadian and US income tax and Canadian mining tax assessments.

 

**Tax YearsStill Under Examination**

 
| Canada           |   | 2004–2008 |   |
|------------------|--------|----------------|--------|
| United States    |   | 2005–2008 |   |
| Peru             |   | 2004–2008 |   |
| Chile(1)         |   | 2005–2008 |   |
| Argentina        |   | 2003–2008 |   |
| Australia        |   | all years open |   |
| Papua New Guinea |   | 2003–2008 |   |
| Tanzania         |   | all years open |   |

 

----

(1)          Inaddition, operating loss carry forwards from earlier periods are still open forexamination.

 

**PeruvianTax Assessment**

 

On September 30, 2004,the Tax Court of Peru issued a decision in our favor in the matter of ourappeal of a 2002 income tax assessment for an amount of $32 million, excludinginterest and penalties. The assessment mainly related to the validity of arevaluation of the Pierina mining concession, which affected its tax basis forthe years 1999 and 2000. The full life-of-mine effect on current and deferredincome tax liabilities totaling $141 million was fully recorded atDecember 31, 2002, as well as other related costs of about $21 million.

 

InJanuary 2005, we received written confirmation that there would be noappeal of the September 30, 2004 Tax Court of Peru decision. InDecember 2004, we recorded a $141 million reduction in current anddeferred income tax liabilities and a $21 million reduction in other accruedcosts. The confirmation concluded the administrative and judicial appealsprocess with resolution in Barrick’s favor.

 

        Notwithstanding the favorable Tax Courtdecision we received in 2004 on the 1999 to 2000 revaluation matter, in anaudit concluded in 2005, SUNAT has reassessed us on the same issue for taxyears 2001 to 2003. On October 19, 2007, SUNAT confirmed theirreassessment. The tax assessment is for $49 million of tax, plus interest andpenalties of $116 million. We filed an appeal to the Tax Court of Peru within thestatutory period. We believe that the audit reassessment has no merit, that wewill prevail in court again, and accordingly no liability has been recorded forthis reassessment.

 

131

----

 

**25****·****Capital Stock**

 

**a) CommonShares**

 

Our authorized capital stockincludes an unlimited number of common shares (issued 872,738,664 commonshares); 9,764,929 First preferred shares Series A (issued nil); 9,047,619Series B (issued nil); 1 Series C special voting share (issued 1); and14,726,854 Second preferred shares Series A (issued nil).

 

In2008, we declared and paid dividends in US dollars totaling $0.40 per share($349 million) (2007: $0.30 per share, $261 million; 2006: $0.22 per share,$191 million).

 

**b) ExchangeableShares**

 

In connection with a 1998acquisition, Barrick Gold Inc. (“BGI”) issued 11.1 million BGI exchangeableshares, which are each exchangeable for 0.53 of a Barrick common share at anytime at the option of the holder, and have essentially the same voting, dividend(payable in Canadian dollars), and other rights as 0.53 of a Barrick commonshare. BGI is a subsidiary that holds our interest in the Hemlo and Eskay CreekMines.

 

AtDecember 31, 2008, 0.5 million (2007: 1.4 million) BGI exchangeable shareswere outstanding, which are equivalent to 0.3 million Barrick common shares(2007: 0.7 million common shares), and are reflected in the number of commonshares outstanding. We have the right to require the exchange of eachoutstanding BGI exchangeable share for 0.53 of a Barrick common share.

 

**26****·****Other Comprehensive Income (Loss) (“OCI”)**

 
| ** **                                                                    | ** ** | **2008** | ** ** | **2007** | ** ** | **2006** | ** ** |
|-------------------------------------------------------------------------------|------------|----------|------------|----------|------------|----------|------------|
| Accumulated OCI at January 1                                             |       |     |       |     |       |     |       |
| Cash flow hedge gains, net of tax of $105,  $60, $61                          | ** ** | **$**    | **250**    |     | $          | 223      |       | $ | 128 |   |
| Investments, net of tax of $4, $7, $nil                                       | ** ** | **37**   |       | 46       |       | 12       |       |
| Currency translation adjustments, net of  tax of $nil, $nil, $nil             | ** ** | **(143** | **)**      | (143     | )          | (143     | )          |
| Pension plans and other post-retirement  benefits, net of tax of $2, $4, $nil | ** ** | **7**    |       | (7       | )          | (28      | )          |
|                                                                          | ** ** | **$**    | **151**    |     | $          | 119      |       | $ | (31 | ) |
| Other comprehensive income (loss) for the  period:                            |       |     |       |     |       |     |       |
| Changes in fair value of cash flow hedges                                     | ** ** | **(301** | **)**      | 257      |       | 17       |       |
| Changes in fair value of investments                                          | ** ** | **(52**  | **)**      | 58       |       | 43       |       |
| Currency translation adjustments(1)                                           | ** ** | **(54**  | **)**      | —   |       | —   |       |
| Pension plans and other post-retirement  benefits:                            |       |     |       |     |       |     |       |
| Adjustments to minimum pension liability  prior to adoption of FAS 158        |       | —   |       | —   |       | 15       |       |
| FAS 158 adjustments (note 28c):                                               |       |     |       |     |       |     |       |
| Elimination of minimum pension liability                                      |       | —   |       | —   |       | 13       |       |
| Net actuarial gain (loss)                                                     | ** ** | **(62**  | **)**      | 19       |       | (9       | )          |
| Transition obligation (asset)                                                 | ** ** | **1**    |       | 1        |       | (2       | )          |
| Less: reclassification adjustments for  gains/losses recorded in earnings:    |       |     |       |     |       |     |       |
| Transfers of cash flow hedge (gains) losses  to earnings:                     |       |     |       |     |       |     |       |
| On recording hedged items in earnings                                         | ** ** | **(267** | **)**      | (185     | )          | 77       |       |
| Investments:                                                                  |       |     |       |     |       |     |       |
| Other than temporary impairment charges                                       | ** ** | **26**   |       | 1        |       | 4        |       |
| Gains realized on sale                                                        | ** ** | **(17**  | **)**      | (71      | )          | (6       | )          |
| Other comprehensive income (loss), before  tax                                | ** ** | **(726** | **)**      | 80       |       | 152      |       |
| Income tax recovery (expense) related to  OCI                                 | ** ** | **219**  |       | (48      | )          | (2       | )          |
| Other comprehensive income (loss), net of  tax                                | ** ** | **$**    | **(507**   | **)**    | $          | 32       |       | $ | 150 |   |
| Accumulated OCI at December 31                                           |       |     |       |     |       |     |       |
| Cash flow hedge gains (losses), net of tax  of $89, $105, $60                 | ** ** | **(124** | **)**      | 250      |       | 223      |       |
| Investments, net of tax of $nil, $4, $7                                       | ** ** | **(2**   | **)**      | 37       |       | 46       |       |
| Currency translation adjustments, net of  tax of $nil, $nil, $nil             | ** ** | **(197** | **)**      | (143     | )          | (143     | )          |
| Pension plans and other post-retirement  benefits, net of tax of $19, $2, $4  | ** ** | **(33**  | **)**      | 7        |       | (7       | )          |
|                                                                          | ** ** | **$**    | **(356**   | **)**    | $          | 151      |       | $ | 119 |   |

 

----

(1)  Representscurrency transiation adjustments for Barrick Energy.

 

132

----

 

**27****·****Stock-based Compensation**

 

**a) StockOptions**

 

Under Barrick’s stock optionplan, certain officers and key employees of the Corporation may purchase commonshares at an exercise price that is equal to the closing share price on the daybefore the grant of the option. The grant date is the date when the details ofthe award, including the number of options granted by individual and theexercise price, are approved. Stock options vest evenly over four years,beginning in the year after granting. Options granted in July 2004 andprior are exercisable over 10 years, whereas options granted since December 2004are exercisable over seven years. At December 31, 2008, 7.4 million (2007:10 million; 2006: 13 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 ofcommon shares issued by Barrick.

 

Compensationexpense for stock options was $25 million in 2008 (2007: $25 million; 2006: $27million), and is presented as a component of cost of sales, corporateadministration and other expense, consistent with the classification of otherelements of compensation expense for those employees who had stock options. Therecognition of compensation expense for stock options reduced earnings pershare for 2008 by $0.03 per share (2007: $0.03 per share, 2006: $0.03 pershare).

 

Totalintrinsic value relating to options exercised in 2008 was $61 million (2007:$58 million; 2006: $27 million).

 

**EmployeeStock Option Activity (Number of Shares in Millions)**

 
| ** **                           | ** ** | **2008**   | ** ** | **2007**    | ** ** | **2006**   | ** ** |
|--------------------------------------|------------|------------|------------|-------------|------------|------------|------------|
| ** **                           | ** ** | ** ** | ** ** | **Average** | ** ** | ** ** | ** ** | **Average** | ** ** | ** ** | ** ** | **Average** | ** ** |
| ** **                           | ** ** | **Shares** | ** ** | **price**   | ** ** | **Shares** | ** ** | **price** | ** ** | **Shares** | ** ** | **price** | ** ** |
| C$ options                      |       | ** ** | ** ** | ** **  | ** ** |       |       |   |   |   |   |   |   |
| At January 1                    | ** ** | **7.1**    | ** ** | **$**       | **27**     | ** ** | 11.9       |   | $ | 28 |   | 14.7 |   | $ | 28 |   |
| Issued on acquisition of Placer Dome |       | **—** | ** ** | **—**  | ** ** | —     |       | — |   | 1.7 |   | 34 |   |
| Exercised                            | ** ** | **(2.1**   | **)**      | **28**      | ** ** | (3.9       | )          | 28 |   | (2.4 | ) | 26 |   |
| Forfeited                            |       | **—** | ** ** | **—**  | ** ** | (0.1       | )          | 29 |   | (0.2 | ) | 27 |   |
| Cancelled/expired                    | ** ** | **(0.2**   | **)**      | **28**      | ** ** | (0.8       | )          | 35 |   | (1.9 | ) | 40 |   |
| At December 31                  | ** ** | **4.8**    | ** ** | **$**       | **27**     | ** ** | 7.1        |   | $ | 27 |   | 11.9 |   | $ | 28 |   |
| US$ options                     |       | ** ** | ** ** | ** **  | ** ** |       |       |   |   |   |   |   |   |
| At January 1                    | ** ** | **7.0**    | ** ** | **$**       | **28**     | ** ** | 7.7        |   | $ | 25 |   | 6.9 |   | $ | 24 |   |
| Granted                              | ** ** | **2.8**    | ** ** | **34**      | ** ** | 1.4        |       | 40 |   | 1.1 |   | 30 |   |
| Issued on acquisition of Placer Dome |       | **—** | ** ** | **—**  | ** ** | —     |       | — |   | 1.0 |   | 19 |   |
| Exercised                            | ** ** | **(0.8**   | **)**      | **24**      | ** ** | (1.7       | )          | 23 |   | (0.9 | ) | 21 |   |
| Forfeited                            | ** ** | **(0.1**   | **)**      | **31**      | ** ** | (0.3       | )          | 25 |   | (0.4 | ) | 24 |   |
| Cancelled/expired                    |       | **—** | ** ** | **—**  | ** ** | (0.1       | )          | 22 |   | — |   | 25 |   |
| At December 31                  | ** ** | **8.9**    | ** ** | **$**       | **28**     | ** ** | 7.0        |   | $ | 28 |   | 7.7 |   | $ | 25 |   |

 

**StockOptions 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                              |       | 2.8             |       | $               | 24         |   | 3 |   | $ | 58 |   | 2.8 |   | $ | 24 |   | $ | 58 |   |
| $28 – $31                              |       | 2.0             |       | 29              |       | 5 |   | 30 |   | 2.0 |   | 29 |   | 30 |   |
|                                        |       | 4.8             |       | $               | 26         |   | 4 |   | $ | 88 |   | 4.8 |   | $ | 26 |   | $ | 88 |   |
| US$ options                            |       |            |       |            |       |   |   |   |   |   |   |   |   |   |   |
| $  9 – $19                   |       | 0.1             |       | $               | 13         |   | 4 |   | $ | 4 |   | 0.1 |   | $ | 13 |   | $ | 3 |   |
| $20 – $27                              |       | 5.0             |       | 25              |       | 4 |   | 58 |   | 3.2 |   | 24 |   | 41 |   |
| $28 – $32                              |       | 1.3             |       | 30              |       | 7 |   | 8 |   | 0.6 |   | 30 |   | 4 |   |
| $33 – $42                              |       | 2.5             |       | 42              |       | 6 |   | (13 | ) | 0.3 |   | 41 |   | (1 | ) |
|                                        |       | 8.9             |       | $               | 30         |   | 5 |   | $ | 57 |   | 4.2 |   | $ | 26 |   | $ | 47 |   |

 

----

(1)  Based on the closing market share price on December 31,2008 of C$44.71 and US$36.77.

 

133

----

 

**OptionInformation**

 
| **For the years ended December 31**                         | ** ** | ** **          | ** **  | ** **     | ** ** | ** **     | ** ** |
|--------------------------------------------------------------------------------------|------------|---------------------|-------------|----------------|------------|----------------|------------|
| **(per share and per option amounts in dollars)** | ** ** | **2008**            | ** **  | **2007**       | ** ** | **2006**       | ** ** |
| Valuation assumptions                                                                | ** ** | **Lattice**         | **(1),(2)** | Lattice        | (1),(2)    | Lattice        | (1),(2)    |
| Expected term (years)                                                                | ** ** | **4.5–5.2**    | ** **  | 4.5–5     |       | 4.5–5     |       |
| Expected volatility(2)                                                               | ** ** | **30%–70%**    | ** **  | 30%–38%   |       | 30%–38%   |       |
| Weighted average expected volatility(2)                                              | ** ** | **43%**             | ** **  | 36.6%          |       | 31.6%          |       |
| Expected dividend yield                                                              | ** ** | **0.7%–1.5%**  | ** **  | 0.7%–0.9% |       | 0.7%–0.9% |       |
| Risk-free interest rate(2)                                                           | ** ** | **0.25%–5.1%** | ** **  | 3.2%–5.1% |       | 4.3%–5.1% |       |
|                                                                                 | ** ** | ** **          | ** **  |           |       |           |       |
| Options  granted (in millions)                                                       | ** ** | **2.8**             | ** **  | 1.4            |       | 1.1            |       |
| Weighted  average fair value per option                                              | ** ** | **$**               | **12.07**   | ** **     | $          | 12.91          |       | $ | 9.42 |   |
|                                                                                      |            |                     |             |                |            |                |            |  |  |  |

 

----

(1)  Different assumptions were used for themultiple stock option grants during the year.

(2)  The volatility and risk-free interest rateassumption varied over the expected term of these stock option grants.

 

The expected volatilityassumptions have been developed taking into consideration both historical andimplied volatility of our US dollar share price. The risk-free rate for periodswithin the contractual life of the option is based on the US Treasury yieldcurve in effect at the time of the grant.

 

Weuse the straight-line method for attributing stock option expense over thevesting period. Stock option expense incorporates an expected forfeiture rate.The expected forfeiture rate is estimated based on historical forfeiture ratesand expectations of future forfeitures rates. We make adjustments if the actualforfeiture rate differs from the expected rate.

 

Theexpected term assumption is derived from the option valuation model and is inpart based on historical data regarding the exercise behavior of option holdersbased on multiple share-price paths. The Lattice model also takes intoconsideration employee turnover and voluntary exercise patterns of option holders.

 

Asat December 31, 2008, there was $42 million (2007: $33 million; 2006: $39million) of total unrecognized compensation cost relating to unvested stockoptions. We expect to recognize this cost over a weighted average period of twoyears (2007: two years; 2006: two years).

 

**b)Restricted Share Units (RSUs) and Deferred Share Units (DSUs)**

 

Under our RSU plan, selectedemployees are granted RSUs where each RSU has a value equal to one Barrickcommon share. RSUs vest at the end of a two and a half or three-year period andare settled in cash on the third anniversary of the grant date. Additional RSUsare credited to reflect dividends paid on Barrick common shares over thevesting period.

 

Aliability for RSUs is recorded at fair value on the grant date, with acorresponding amount recorded as a deferred compensation asset that isamortized on a straight-line basis over the vesting period. Changes in the fairvalue of the RSU liability are recorded each period, with a correspondingadjustment to the deferred compensation asset. Compensation expense for RSUsincorporates an expected forfeiture rate. The expected forfeiture rate isestimated based on historical forfeiture rates and expectations of futureforfeiture rates. We make adjustments if the actual forfeiture rate differsfrom the expected rate. At December 31, 2008, the weighted averageremaining contractual life of RSUs was 1.90 years.

 

Compensationexpense for RSUs was $33 million in 2008 (2007: $16 million; 2006: $6 million)and is presented as a component of cost of sales, corporate administration andother expense, consistent with the classification of other elements ofcompensation expense for those employees who had RSUs. As at December 31,2008 there was $84 million of total unamortized compensation cost relating tounvested RSUs (2007: $75 million; 2006: $36 million).

 

Underour DSU plan, Directors must receive a specified portion of their basic annualretainer in the form of DSUs, with the option to elect to receive 100% of suchretainer in DSUs. Each DSU has the same value as one Barrick common share. DSUsmust be retained until the Director leaves the Board, at which time the cashvalue of the DSUs will be paid out. Additional DSUs are credited to reflectdividends paid on Barrick common shares. DSUs are recorded at fair value on thegrant date and are adjusted for changes in fair value. The fair value ofamounts granted each period together with changes in fair value are expensed.

 

134

----

 

**DSU and RSU Activity**

 
| ** **                    | ** ** | ** **      | ** ** | **Fair**       | ** ** | ** **      | ** ** | **Fair**       | ** ** |
|-------------------------------|------------|-----------------|------------|----------------|------------|-----------------|------------|----------------|------------|
| ** **                    | ** ** | **DSUs**        | ** ** | **value**      | ** ** | **RSUs**        | ** ** | **value**      | ** ** |
| ** **                    | ** ** | **(thousands)** | ** ** | **(millions)** | ** ** | **(thousands)** | ** ** | **(millions)** | ** ** |
| At December 31, 2005     |       | 47              |       | $              | 1.4        |            | 611        |           | $          | 16.4 |   |
| Settled for cash              |       | —          |       | —         |       | (82             | )          | (2.5           | )          |
| Forfeited                     |       | —          |       | —         |       | (58             | )          | (1.6           | )          |
| Granted(1)                    |       | 22              |       | 0.7            |       | 893             |       | 27             |       |
| Converted to stock options(1) |       | —          |       | —         |       | (18             | )          | (0.5           | )          |
| Credits for dividends         |       | —          |       | —         |       | 8               |       | 0.2            |       |
| Change in value               |       | —          |       | —         |       | —          |       | 2.6            |       |
| At December 31, 2006     |       | 69              |       | $              | 2.1        |            | 1,354      |           | $          | 41.6 |   |
| Settled for cash              |       | (11             | )          | (0.3           | )          | (119            | )          | (4.9           | )          |
| Forfeited                     |       | —          |       | —         |       | (38             | )          | (1.4           | )          |
| Granted                       |       | 42              |       | 1.4            |       | 1,174           |       | 47.5           |       |
| Credits for dividends         |       | —          |       | —         |       | 12              |       | 0.4            |       |
| Change in value               |       | —          |       | 0.9            |       | —          |       | 17.0           |       |
| At December 31, 2007     |       | 100             |       | $              | 4.1        |            | 2,383      |           | $          | 100.2 |   |
| Settled for cash              |       | (4              | )          | (0.1           | )          | (348            | )          | (10.3          | )          |
| Forfeited                     |       | —          |       | —         |       | (262            | )          | (10.6          | )          |
| Granted                       |       | 34              |       | 1.2            |       | 1,493           |       | 42.0           |       |
| Credits for dividends         |       | —          |       | —         |       | 20              |       | 0.7            |       |
| Change in value               |       | —          |       | (0.5           | )          | —          |       | (1.7           | )          |
| At December 31, 2008     |       | 130             |       | $              | 4.7        |            | 3,286      |           | $          | 120.3 |   |

 

----

(1)  In January 2006, under our RSU plan,18,112 restricted share units were converted to 72,448 stock options.

 

**c)Performance Restricted Share Units (PRSUs)**

 

In 2008, Barrick launched aPRSU plan. Under this plan, selected employees are granted PRSUs, where eachPRSU has a value equal to one Barrick common share. PRSUs vest at the end of athree-year period and are settled in cash on the third anniversary of the grantdate. Additional RSUs are credited to reflect dividends paid on Barrick commonshares over the vesting period. Vesting is based on the achievement ofperformance goals and the target settlement will range from 0% to 200% of thevalue. At December 31, 2008, 133 thousand units were outstanding.

 

**d) EmployeeShare Purchase Plan (ESPP)**

 

In 2008, Barrick launched anEmployee Share Purchase Plan. This plan enables Barrick employees to purchaseCompany shares through payroll deduction. Each year, employees may contribute1%–6% of their combined base salary and annual bonus, and Barrick will match50% of the contribution, up to a maximum of $5,000 per year. During 2008,Barrick contributed $0.5 million to this plan.

 

**28****·****Post-retirement Benefits**

 

**a) DefinedContribution Pension Plans**

 

Certain employees take partin defined contribution employee benefit plans. We also have a retirement planfor certain officers of the Company, under which we contribute 15% of theofficer’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 $47 million in2008, $49 million in 2007 and $36 million in 2006.

 

**b) DefinedBenefit Pension Plans**

 

We have qualified definedbenefit pension plans that cover certain of our United States and Canadianemployees and provide benefits based on employees’ years of service. Throughthe acquisition of Placer Dome, we acquired pension plans in the United States,Canada and Australia. Our policy is to fund the amounts necessary on anactuarial basis to provide enough assets to meet the benefits payable to planmembers. Independent trustees administer assets of the plans, which areinvested mainly in fixed income and equity securities. In 2007, one of ourqualified defined benefit plans in Canada was wound up. No curtailment gain orloss resulted and the obligations of the plans are expected to be settled atthe end of 2009. Also in 2007, both of our defined benefit plans in Australiawere wound up. No curtailment gain or loss resulted for either plan. In 2006,actuarial assumptions were amended for one of our qualified defined benefitplans in Canada and another one of our other plans in Canada was partiallywound up; no curtailment gain or loss resulted for either plan. Also in 2006,one of our qualified defined benefit plans in the United States was amended tofreeze benefits accruals for all employees, resulting in a curtailment gain of$8 million.

 

Aswell as the qualified plans, we have non-qualified defined benefit pensionplans covering certain employees and former directors of the Company. Anirrevocable trust (“rabbi trust”) was set up to fund these plans. The fairvalue of assets held in this trust was $9 million in 2008 (2007: $19 million),and is recorded in our consolidated balance sheet under available-for-salesecurities.

 

Actuarialgains and losses arise when the actual return on plan assets differs from theexpected return on plan assets for a period, or when the expected and actuarialaccrued benefit obligations differ at the end of the year. We amortizeactuarial gains and losses over the average remaining life expectancy of planparticipants, in excess of a 10% corridor.

 

135

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**Pension Expense (Credit)**

 
| **For the years ended December 31** | ** ** | **2008**   | ** ** | **2007**   | ** ** | **2006** | ** ** |
|--------------------------------------------------------------|------------|------------|------------|------------|------------|----------|------------|
| Expected  return on plan assets                              |       | **$**      | **(19**    | **)**      | $          | (21      | )          | $ | (20 | ) |
| Service cost                                                 |       | **—** | ** ** | 2          |       | 4        |       |
| Interest  cost                                               |       | **21**     | ** ** | 21         |       | 22       |       |
| Actuarial  losses                                            |       | **1**      | ** ** | 1          |       | 1        |       |
| Curtailment  gains                                           |       | **—** | ** ** | —     |       | (8       | )          |
|                                                         |       | **$**      | **3**      | ** ** | $          | 3        |       | $ | (1 | ) |

 

**c) Pension Plan Information**

 

**Fair Value of Plan Assets**

 
| **For the years ended December 31** | ** ** | **2008**      | ** ** | **2007**   | ** ** | **2006**   | ** ** |
|--------------------------------------------------------------|------------|---------------|------------|------------|------------|------------|------------|
| Balance at  January 1                                        |       | **$**         | **293**    | ** ** | $          | 301        |       | $ | 166 |   |
| Increase for  plans assumed on acquisitions                  |       | **9**         | ** ** | —     |       | 127        |       |
| Actual  return on plan assets                                |       | **(41**       | **)**      | 31         |       | 35         |       |
| Company  contributions                                       |       | **12**        | ** ** | 10         |       | 10         |       |
| Settlements                                                  |       | **—**    | ** ** | (14        | )          | —     |       |
| Benefits  paid                                               |       | **(33**       | **)**      | (35        | )          | (37        | )          |
| Foreign  currency adjustments                                |       | **(3**        | **)**      | —     |       | —     |       |
| Balance at  December 31                                 |       | **$**         | **237**    | ** ** | $          | 293        |       | $ | 301 |   |
|                                                         |       |          |       |       |       |
| ** **                                                   | ** ** | **2008**      | ** ** | **2008**   | ** ** |
| **At December 31**                                 | ** ** | **Target(1)** | ** ** | **Actual** | ** ** | **Actual** | ** ** |
| Composition  of plan assets:                                 |       |          |       |       |       |       |       |
| Equity  securities                                           |       | **43**        | **%**      | **43**     | **%**      | **$**      | **103**    | ** ** |
| Fixed income  securities                                     |       | **57**        | **%**      | **57**     | **%**      | **134**    | ** ** |
|                                                         |       | **100**       | **%**      | **100**    | **%**      | **$**      | **237**    | ** ** |

 

----

(1)  Based on the weighted average target for alldefined benefit plans.

 

**Projected Benefit Obligation (PBO)**

 
| **For the years ended December 31** | ** ** | **2008**   | ** ** | **2007**   | ** ** |
|--------------------------------------------------------------|------------|------------|------------|------------|------------|
| Balance at  January 1                                   |       | **$**      | **364**    | ** ** | $          | 389 |   |
| Increase for  plans assumed on acquisition of 40% of Cortez  |       | **9**      | ** ** | —     |       |
| Service cost                                                 |       | **—** | ** ** | 2          |       |
| Interest  cost                                               |       | **21**     | ** ** | 21         |       |
| Actuarial  (gains) losses                                    |       | **4**      | ** ** | 1          |       |
| Benefits  paid                                               |       | **(33**    | **)**      | (35        | )          |
| Foreign  currency adjustments                                |       | **(8**     | **)**      | —     |       |
| Curtailments                                                 |       | **—** | ** ** | (14        | )          |
| Balance at  December 31                                 |       | **$**      | **357**    | ** ** | $          | 364 |   |
| Funded  status(1)                                            |       | **$**      | **(120**   | **)**      | $          | (71 | ) |
| ABO(2),(3)                                                   |       | **$**      | **357**    | ** ** | $          | 254 |   |

 

----

(1)  Represents the fair value ofplan assets less projected benefit obligations. Plan assets exclude investmentsheld in a rabbi trust that are recorded separately on our balance sheet underInvestments (fair value $9 million at December 31, 2008).

(2)  For 2008, we used ameasurement date of December 31, 2008 to calculate accumulated benefitobligations.

(3)  Represents the accumulatedbenefit obligation (“ABO”) for all plans. The ABO for plans where the PBOexceeds the fair value of plan assets was $326 million (2007: $254 million).

 

**Pension PlanAssets/Liabilities**

 
| **For the years ended December 31** | ** ** | **2008** | ** ** | **2007**   | ** ** |
|--------------------------------------------------------------|------------|----------|------------|------------|------------|
| Non-current  assets                                          |       | **$**    | **—** | ** ** | $          | 25 |   |
| Current  liabilities                                         |       | **(7**   | **)**      | (8         | )          |
| Non-current  liabilities                                     |       | **(113** | **)**      | (87        | )          |
| Other comprehensive  income(1)                               |       | **52**   | ** ** | (9         | )          |
|                                                         |       | **$**    | **(68**    | **)**      | $          | (79 | ) |

 

----

(1)Amounts represent actuarial (gains) losses.

 

The projected benefitobligation and fair value of plan assets for pension plans with a projectedbenefit obligation in excess of plan assets at December 31, 2008 and 2007were as follows:

 
| **For the years ended December 31** | ** ** | **2008** | ** ** | **2007**   | ** ** |
|--------------------------------------------------------------|------------|----------|------------|------------|------------|
| Projected  benefit obligation, end of year                   |       | **$**    | **326**    | ** ** | $          | 329 |   |
| Fair value  of plan assets, end of year                      |       | **$**    | **205**    | ** ** | $          | 258 |   |

 

136

----

 

The projected benefitobligation and fair value of plan assets for pension plans with an accumulatedbenefit obligation in excess of plan assets at December 31, 2008 and 2007were as follows:

 
| **For the years ended December 31** | ** ** | **2008** | ** ** | **2007** | ** ** |
|--------------------------------------------------------------|------------|----------|------------|----------|------------|
| Projected  benefit obligation, end of year                   |       | **$**    | **357**    |     | $          | 329 |   |
| Accumulated  benefit obligation, end of year                 |       | **$**    | **326**    |     | $          | 330 |   |
| Fair value  of plan assets, end of year                      |       | **$**    | **205**    |     | $          | 258 |   |

 

**Expected Future Benefit Payments**

 
| ** **                                                    |       |       |       |   |
|---------------------------------------------------------------|------------|------------|------------|--------|
| **For the years ending December 31** | ** ** | ** ** | ** ** |
| 2009                                                          |       | $          | 57         |   |
| 2010                                                          |       | 29         |       |
| 2011                                                          |       | 24         |       |
| 2012                                                          |       | 24         |       |
| 2013                                                          |       | 24         |       |
| 2014 – 2018                                              |       | $          | 116        |   |

 

**d) Actuarial Assumptions**

 
| **For the years ended December 31** | ** ** | **2008**           | ** ** | **2007**       | ** ** | **2006**       | ** ** |
|--------------------------------------------------------------|------------|--------------------|------------|----------------|------------|----------------|------------|
| Discount  rate(1)                                            |       |               |       |           |       |           |       |
| Benefit  obligation                                          | ** ** | **4.50–6.25** | **%**      | 4.50–6.30 | %          | 4.40–5.90 | %          |
| Pension cost                                                 | ** ** | **4.50–6.25** | **%**      | 4.50–5.81 | %          | 4.40–5.90 | %          |
| Return on  plan assets(1)                                    | ** ** | **3.75–7.00** | **%**      | 4.50–7.25 | %          | 7.00–7.25 | %          |
| Wage  increases                                              | ** ** | **3.50–5.00** | **%**      | 3.50–5.00 | %          | 3.50–5.00 | %          |

 

----

(1)  Effect of a one-percent change: Discount rate:$25 million decrease in ABO and $1 million increase in pension cost; Return onplan assets: $3 million decrease in pension cost.

 

Pension plan assets, whichconsist primarily of fixed-income and equity securities, are valued usingcurrent market quotations. Plan obligations and the annual pension expense aredetermined on an actuarial basis and are affected by numerous assumptions andestimates including the market value of plan assets, estimates of the expectedreturn on plan assets, discount rates, future wage increases and otherassumptions. The discount rate, assumed rate of return on plan assets and wageincreases are the assumptions that generally have the most significant impacton our pension cost and obligation.

 

Thediscount rate for benefit obligation and pension cost purposes is the rate atwhich the pension obligation could be effectively settled. This rate wasdeveloped by matching the cash flows underlying the pension obligation with aspot rate curve based on the actual returns available on high-grade (Moody’sAa) US corporate bonds. Bonds included in this analysis were restricted tothose with a minimum outstanding balance of $50 million. Only non-callablebonds, or bonds with a make-whole provision, were included. Finally, outlyingbonds (highest and lowest 10%) were discarded as being non-representative andlikely to be subject to a change in investment grade. The resulting discountrate from this analysis was rounded to the nearest five basis points. Theprocedure was applied separately for pension and post-retirement plan purposes,and produced the same rate in each case.

 

Theassumed rate of return on assets for pension cost purposes is the weightedaverage of expected long-term asset return assumptions. In estimating the long-termrate of return for plan assets, historical markets are studied and long-termhistorical returns on equities and fixed-income investments reflect the widelyaccepted capital market principle that assets with higher volatility generate agreater return over the long run. Current market factors such as inflation andinterest rates are evaluated before long-term capital market assumptions arefinalized.

 

Wageincreases reflect the best estimate of merit increases to be provided,consistent with assumed inflation rates.

 

**e) OtherPost-retirement Benefits**

 

We provide post-retirementmedical, dental, and life insurance benefits to certain employees. We use thecorridor approach in the accounting for post-retirement benefits. Actuarialgains and losses resulting from variances between actual results and economicestimates or actuarial assumptions are deferred and amortized over the averageremaining life expectancy of participants when the net gains or losses exceed10% of the accumulated post-retirement benefit obligation.

 

**Other Post-retirement Benefits Expense**

 
| **For the years ended December 31** | ** ** | **2008**   | ** ** | **2007** | ** ** | **2006** | ** ** |
|--------------------------------------------------------------|------------|------------|------------|----------|------------|----------|------------|
| Interest  cost                                               |       | **$**      | **2**      |     | $          | 2        |       | $ | 2 |   |
| Other                                                        |       | **—** |       | —   |       | —   |       |
|                                                         |       | **$**      | **2**      |     | $          | 2        |       | $ | 2 |   |

 

137

----

 

**Fair Valueof Plan Assets**

 
| **For the years ended December 31** | ** ** | **2008** | ** ** | **2007**   | ** ** | **2006**   | ** ** |
|--------------------------------------------------------------|------------|----------|------------|------------|------------|------------|------------|
| Balance at  January 1                                   | ** ** | **$**    | **—** | ** ** | **$**      | **—** |       | **$** | — |   |
| Contributions                                                | ** ** | **2**    | ** ** | 2          |       | 3          |       |
| Benefits  paid                                               | ** ** | **(2**   | **)**      | (2         | )          | (3         | )          |
| Balance at  December 31                                 | ** ** | **$**    | **—** | ** ** | **$**      | **—** |       | **$** | — |   |

 

**Accumulated Post-retirement Benefit Obligation (APBO)**

 
| **For the years ended December 31** | ** ** | **2008** | ** ** | **2007**   | ** ** | **2006** | ** ** |
|--------------------------------------------------------------|------------|----------|------------|------------|------------|----------|------------|
| Balance at  January 1                                   |       | **$**    | **30**     | ** ** | $          | 37       |       | $ | 39 |   |
| Interest  cost                                               |       | **2**    | ** ** | 2          |       | 2        |       |
| Actuarial  (gains) losses                                    |       | **2**    | ** ** | (7         | )          | (1       | )          |
| Benefits  paid                                               |       | **(2**   | **)**      | (2         | )          | (3       | )          |
| Balance at  December 31                                 |       | **$**    | **32**     | ** ** | $          | 30       |       | $ | 37 |   |
| Funded  status                                               |       | **(32**  | **)**      | (30        | )          | (37      | )          |
| 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 Assets/Liabilities**

 
| **For the years ended December 31** | ** ** | **2008**   | ** ** | **2007** | ** ** |
|--------------------------------------------------------------|------------|------------|------------|----------|------------|
| Current  liability                                           |       | **$**      | **(3**     | **)**    | $          | (3 | ) |
| Non-current  liability                                       |       | **(29**    | **)**      | (27      | )          |
| Accumulated  other comprehensive income                      |       | **—** | ** ** | (1       | )          |
|                                                         |       | **$**      | **(32**    | **)**    | $          | (31 | ) |

 

Amounts recognized inaccumulated other comprehensive income consist of : (1)

 
| **For the years ended December 31** | ** ** | **2008** | ** ** | **2007**   | ** ** |
|--------------------------------------------------------------|------------|----------|------------|------------|------------|
| Net  actuarial loss (gain)                                   |       | **$**    | **1**      | ** ** | $          | (2 | ) |
| Transition  obligation (asset)                               |       | **(1**   | **)**      | 1          |       |
|                                                         |       | **$**    | **—** | ** ** | $          | (1 | ) |

 

----

(1) The estimated amounts that will be amortizedinto net periodic benefit cost in 2008.

 

We have assumed a healthcare cost trend of 8% in 2008, decreasing ratability to 5% in 2011 andthereafter. The assumed health care cost trend had a minimal effect on theamounts reported. A one percentage point change in the assumed health care costtrend rate at December 31, 2008 would have had no significant effect onthe post-retirement obligation and would have had no significant effect on thebenefit expense for 2008.

 

**Expected Future Benefit Payments**

 
| **For the years ending December 31** | ** ** | ** ** | ** ** |
|---------------------------------------------------------------|------------|------------|------------|
| 2009                                                          |       | **$**      | **3**      | ** ** |
| 2010                                                          |       | **3**      | ** ** |
| 2011                                                          |       | **3**      | ** ** |
| 2012                                                          |       | **3**      | ** ** |
| 2013                                                          |       | **2**      | ** ** |
| 2014 – 2018                                              |       | **$**      | **11**     | ** ** |

 

**29****·****Litigation and Claims**

 

Certain conditions may existas of the date the financial statements are issued, which may result in a lossto the Company but which will only be resolved when one or more future eventsoccur or fail to occur. In assessing loss contingencies related to legalproceedings that are pending against us or unasserted claims that may result insuch proceedings, the Company and its legal counsel evaluate the perceivedmerits of any legal proceedings or unasserted claims as well as the perceivedmerits of the amount of relief sought or expected to be sought.

 

Ifthe assessment of a contingency suggests that a loss is probable, and theamount can be reliably estimated, then a loss is recorded. When a contingentloss is not probable but is reasonably possible, or is probable but the amount ofloss cannot be reliably estimated, then details of the contingent loss aredisclosed. Loss contingencies considered remote are generally not disclosedunless they involve guarantees, in which case we disclose the nature of theguarantee. Legal fees incurred in connection with pending legal proceedings areexpensed as incurred.

 

**WagnerComplaint**

 

On June 12, 2003, acomplaint was filed against Barrick and several of its current or formerofficers in the U.S. District Court for the Southern District of New York. Thecomplaint is on behalf of Barrick shareholders who purchased Barrick sharesbetween February 14, 2002 and September 26, 2002. It alleges thatBarrick and the individual defendants violated U.S. securities laws by makingfalse and misleading statements concerning Barrick’s projected operatingresults and earnings in 2002. The complaint seeks an unspecified amount ofdamages. In November 2008, near the completion of discovery, this matterwas scheduled for trial in March 2009. The trial date has since beenadjourned because of a settlement in principle among the parties. Efforts tofinalize the settlement and seek the necessary Court approval are ongoing. Noamounts have been accrued for any potential loss under this complaint.

 

138

----

 

**Cortez HillsComplaint**

 

On November 12, 2008,the United States Bureau of Land Management issued a Record of Decisionapproving the Cortez Hills Expansion Project. On November 20, 2008, theTeMoak Shoshone Tribe, the East Fork Band Council of the TeMoak Shoshone Tribeand the Timbisha Shoshone Tribe, the Western Shoshone Defense Project, andGreat Basin Resource Watch filed a lawsuit against the United States seeking toenjoin the majority of the activities comprising the Project on grounds that itviolated the Western Shoshone rights under the *ReligiousFreedom Restoration Act*(“RFRA”), that it violated the *Federal Land Policy and Management Act*’sprohibition on “unnecessary and undue degradation,” and that the Project’s EnvironmentImpact Statement did not meet the requirements of the *National Environmental Policy Act*. ThePlaintiffs’ RFRA claim is based on the assertion that the Project and adjoiningareas are sacred to certain Western Shoshone. On November 24, 2008, the Plaintiffsfiled a Motion for a Temporary Restraining Order and a Preliminary Injunctionbarring work on the Project until after a trial on the merits. After a four dayhearing, on January 26, 2009, the Court denied the Plaintiffs’ Motion fora Preliminary Injunction, concluding that the Plaintiffs had failed todemonstrate a likelihood of success on the merits. The Plaintiffs have appealedthat decision to the United States Court of Appeals for the Ninth Circuit.

 

**MarinduqueComplaint**

 

Placer Dome has been namedthe sole defendant in a Complaint filed on October 4, 2005, by theProvincial Government of Marinduque, an island province of the Philippines (“Province”),with the District Court in Clark County, Nevada. The action was removed to theNevada Federal District Court on motion of Placer Dome. The Complaint assertsthat Placer Dome is responsible for alleged environmental degradation withconsequent economic damages and impacts to the environment in the vicinity ofthe Marcopper mine that was owned and operated by Marcopper Mining Corporation(“Marcopper”). Placer Dome indirectly owned a minority shareholding of 39.9% inMarcopper until the divestiture of its shareholding in 1997. The Province seeks“to recover damages for injuries to the natural, ecological and wildliferesources within its territory”, but “does not seek to recover damages forindividual injuries sustained by its citizens either to their persons or theirproperty”. In addition to damages for injury to natural resources, the Provinceseeks compensation for the costs of restoring the environment, an orderdirecting Placer Dome to undertake and complete “the remediation, environmentalcleanup, and balancing of the ecology of the affected areas,” and payment ofthe costs of environmental monitoring. The Complaint addresses the discharge ofmine tailings into Calancan Bay, the 1993 Maguila - guila dam breach, the 1996Boac river tailings spill, and alleged past and continuing damage from acidrock drainage.

 

Atthe time of the amalgamation of Placer Dome and Barrick Gold Corporation, avariety of motions were pending before the District Court, including motions todismiss the action for lack of personal jurisdiction and for *forum non conveniens*(improper choice offorum). On June 29, 2006, the Province filed a Motion to join Barrick GoldCorporation as an additional named Defendant and for leave to file a ThirdAmended Complaint which the Court granted on March 2, 2007. On March 6,2007, the Court issued an order setting a briefing schedule on the Company’smotion to dismiss on grounds of *forum nonconveniens*. On June 7, 2007, the Court issued an order grantingthe Company’s motion to dismiss. On June 25, 2007, the Province filed amotion requesting the Court to reconsider its Order dismissing the action. On January 16,2008, the district court issued an order denying the Province’s motion forreconsideration. Following the district court’s order, the Province filedNotice of Appeal to the U.S. Court of Appeals for the Ninth Circuit. Under thebriefing schedule established by the Court of Appeals the Province’s initialbrief in the Appeal was filed on August 15, 2008, the Company’s responsivebrief was filed on September 15, 2008, and the Province’s reply brief wasfiled on October 15, 2008. Oral argument before the U.S. Court of Appealsis set for March 10, 2009. We will challenge the claims of the Province onvarious grounds and otherwise vigorously defend the action. No amounts havebeen accrued for any potential loss under this complaint.

 

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**Calancan Bay(Philippines) Complaint**

 

On July 23, 2004, acomplaint was filed against Marcopper and Placer Dome Inc. (“PDI”) in theRegional Trial Court of Boac, on the Philippine island of Marinduque, on behalfof a putative class of fishermen who reside in the communities around CalancanBay, in northern Marinduque. The complaint alleges injuries to health andeconomic damages to the local fisheries resulting from the disposal of minetailings from the Marcopper mine. The total amount of damages claimed isapproximately US$900 million.

 

OnOctober 16, 2006, the court granted the plaintiffs’ application forindigent status, allowing the case to proceed without payment of filing fees.On January 17, 2007, the Court issued a summons to Marcopper and PDI. On March 25,2008, an attempt was made to serve PDI by serving the summons and complaint onPlacer Dome Technical Services (Philippines) Inc. (“PDTS”). PDTS has returnedthe summons and complaint with a manifestation stating that PDTS is not anagent of PDI for any purpose and is not authorized to accept service or to takeany other action on behalf of PDI. On April 3, 2008, PDI made a specialappearance by counsel to move to dismiss the complaint for lack of personaljurisdiction and on other grounds. The plaintiffs have opposed the motion todismiss. A hearing on the motion to dismiss originally set by the trial courtfor November 27, 2008 has been rescheduled for March 11, 2009.

 

TheCompany intends to defend the action vigorously. No amounts have been accruedfor any potential loss under this complaint.

 

**PakistaniConstitutional Litigation**

 

On November 28, 2006, aConstitutional Petition was filed in the High Court of Balochistan by threePakistani citizens against: Barrick, the governments of Balochistan andPakistan, the Balochistan Development Authority (“BDA”), Tethyan Copper Company(“TCC”), Antofagasta Plc (“Antofagasta”), Muslim Lakhani and BHP (Pakistan) PvtLimited (“BHP”).

 

ThePetition alleged, among other things, that the entry by the BDA into the 1993Joint Venture Agreement (“JVA”) with BHP to facilitate the exploration of theReko Diq area and the grant of related exploration licenses were illegal andthat the subsequent transfer of the interests of BHP in the JVA and thelicenses to TCC was also illegal and should therefore be set aside. Barrickcurrently indirectly holds 50% of the shares of TCC, with Antofagastaindirectly holding the other 50%.

 

OnJune 26, 2007, the High Court of Balochistan dismissed the Petitionagainst Barrick and the other respondents in its entirety. On August 23,2007, the petitioners filed a Civil Petition for Leave to Appeal in the SupremeCourt of Pakistan. The Supreme Court of Pakistan has not yet considered theCivil Petition for Leave to Appeal. Barrick intends to defend this actionvigorously. No amounts have been accrued for any potential loss under thiscomplaint.

 

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