##### 



Exhibit 2 Managements Responsibility Managements Responsibility for Financial Statements The accompanying consolidated financial statements have been prepared by and are the
responsibility of the Board of Directors and Management of the Company. The consolidated financial statements have been prepared in accordance with United States generally
accepted accounting principles and reflect Managements best estimates and judgements based on
currently available information. The Company has developed and maintains a system of internal
accounting controls in order to ensure, on a reasonable and cost effective basis, the reliability
of its financial information. The consolidated financial statements have been audited by PricewaterhouseCoopers LLP, Chartered
Accountants. Their report outlines the scope of their examination and opinion on the consolidated
financial statements. /s/ Jamie C. SokalskyJamie C. Sokalsky
Executive Vice President
and Chief Financial Officer
Toronto, Canada
March 15, 2005 74 BARRICK Annual Report 2004




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##### 



Auditors Report To the Shareholders of Barrick Gold Corporation We have audited the consolidated balance sheets of Barrick Gold Corporation as at December 31,
2004 and 2003 and the consolidated statements of income, cash flows, shareholders equity and
comprehensive income for each of the years in the three-year period ended December 31, 2004. These
financial statements are the responsibility of the Companys Management. Our responsibility is to
express an opinion on these financial statements based on our audits. We conducted our audits in accordance with Canadian generally accepted auditing standards and the
standards of the Public Company Accounting Oversight Board (United States). Those standards require
that we plan and perform an audit to obtain reasonable assurance whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by Management, as well as
evaluating the overall financial statement presentation. We believe our audits provide a reasonable
basis for our opinion. In our opinion, these consolidated financial statements present fairly, in all material respects,
the financial position of the Company as at December 31, 2004 and 2003 and the results of its
operations and its cash flows for each of the years in the three-year period ended December 31,
2004 in accordance with United States generally accepted accounting principles. As discussed in Note 2 to the consolidated financial statements, during 2003 the Company changed
its policy on accounting for amortization of underground development costs and for asset retirement
obligations, and during 2002 the Company changed its policy on deferred stripping costs. On March 15, 2005 we reported separately to the shareholders of Barrick Gold Corporation on the
financial statements for the same periods, prepared in accordance with Canadian generally accepted
accounting principles. /s/ PricewaterhouseCoopers LLPChartered Accountants
Toronto, Canada
March 15, 2005 75 BARRICK Annual Report 2004




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##### 



Financial
Statements Consolidated Statements of Income Barrick Gold CorporationFor the years ended December 31 (in millions of United States dollars,except per share data)
    
    2004
    
    
    
    2003
    
    
    2002Gold sales(notes 3 and 4)
    
    $
    1,932
    
    
    
    $
    2,035
    
    
    $
    1,967Costs and expensesCost of sales1(note 5)
    
    
    1,071
    
    
    
    
    1,072
    
    
    
    1,070Amortization (note 3)
    
    
    452
    
    
    
    
    522
    
    
    
    519Administration
    
    
    71
    
    
    
    
    73
    
    
    
    50Exploration, development and business development
    
    
    141
    
    
    
    
    137
    
    
    
    104Other (income) expense (note 6)
    
    
    158
    
    
    
    
    (4
    )
    
    
    161,893
    
    
    
    
    1,800
    
    
    
    1,759Interest income
    
    
    25
    
    
    
    
    31
    
    
    
    26Interest expense (note 16b)
    
    
    (19
    )
    
    
    
    (44
    )
    
    
    (57
    )Income before income taxes and other items
    
    
    45
    
    
    
    
    222
    
    
    
    177Income tax recovery (expense) (note 7)
    
    
    203
    
    
    
    
    (5
    )
    
    
    16Income before cumulative effect
of changes in accounting principles
    
    
    248
    
    
    
    
    217
    
    
    
    193Cumulative effect of changes in accounting principles (note 2b)
    
    
    
    
    
    
    
    (17
    )
    
    
    Net income for the year
    
    $
    248
    
    
    
    $
    200
    
    
    $
    193Earnings per share data(note 8)Income before cumulative effect
of changes in accounting principlesBasic
    
    $
    0.47
    
    
    
    $
    0.40
    
    
    $
    0.36Diluted
    
    $
    0.46
    
    
    
    $
    0.40
    
    
    $
    0.36Net incomeBasic
    
    $
    0.47
    
    
    
    $
    0.37
    
    
    $
    0.36Diluted
    
    $
    0.46
    
    
    
    $
    0.37
    
    
    $
    0.36
   1. Exclusive of
amortization (note 5).
 The accompanying notes are an integral part of these consolidated financial statements. 76 BARRICK Annual Report 2004




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##### 



FINANCIAL STATEMENTS Consolidated Statements of Cash Flow Barrick Gold CorporationFor the years ended December 31 (in millions of United States dollars)2004
    
    
    
    2003
    
    
    2002Operating ActivitiesNet income
    
    $
    248
    
    
    
    $
    200
    
    
    $
    193Amortization
    
    
    452
    
    
    
    
    522
    
    
    
    519Deferred income taxes (note 18)
    
    
    (225
    )
    
    
    
    (49
    )
    
    
    (75
    )Inmet litigation settlement (note 6)
    
    
    
    
    
    
    
    (86
    )
    
    
    Gains on sale of long-lived assets (note 6)
    
    
    (34
    )
    
    
    
    (34
    )
    
    
    (4
    )Other items (note 9)
    
    
    65
    
    
    
    
    (34
    )
    
    
    (45
    )Net cash provided by operating activities
    
    
    506
    
    
    
    
    519
    
    
    
    588Investing ActivitiesProperty, plant and equipmentCapital expenditures (note 3)
    
    
    (824
    )
    
    
    
    (322
    )
    
    
    (228
    )Sales proceeds
    
    
    43
    
    
    
    
    40
    
    
    
    8Investments (note 10)Purchases
    
    
    (47
    )
    
    
    
    (60
    )
    
    
    Sales proceeds
    
    
    9
    
    
    
    
    8
    
    
    
    3Proceeds on maturity of term deposits
    
    
    
    
    
    
    
    
    
    
    
    159Net cash used in investing activities
    
    
    (819
    )
    
    
    
    (334
    )
    
    
    (58
    )Financing ActivitiesCapital stockProceeds from shares issued on exercise of stock options
    
    
    49
    
    
    
    
    29
    
    
    
    83Repurchased for cash (note 19a)
    
    
    (95
    )
    
    
    
    (154
    )
    
    
    Long-term debt (note 16b)Proceeds
    
    
    974
    
    
    
    
    
    
    
    
    Repayments
    
    
    (41
    )
    
    
    
    (23
    )
    
    
    (25
    )Dividends (note 19a)
    
    
    (118
    )
    
    
    
    (118
    )
    
    
    (119
    )Other items
    
    
    (28
    )
    
    
    
    
    
    
    
    Net cash provided by (used in) financing activities
    
    
    741
    
    
    
    
    (266
    )
    
    
    (61
    )Effect of exchange rate changes on cash and equivalents
    
    
    
    
    
    
    
    7
    
    
    
    1Net increase (decrease) in cash and equivalents
    
    
    428
    
    
    
    
    (81
    )
    
    
    469Cash and equivalents at beginning of year(note 16a)
    
    
    970
    
    
    
    
    1,044
    
    
    
    574Cash and equivalents at end of year(note 16a)
    
    $
    1,398
    
    
    
    $
    970
    
    
    $
    1,044
 The accompanying notes are an integral part of these consolidated financial statements. 77 BARRICK Annual Report 2004




---



##### 



FINANCIAL STATEMENTS Consolidated Balance Sheets Barrick Gold CorporationAt December 31 (in millions of United States dollars) 2004
    
    
    
    2003AssetsCurrent assetsCash and equivalents (note 16a)
    
    $
    1,398
    
    
    
    $
    970Accounts receivable (note 11)
    
    
    58
    
    
    
    
    56Inventories (note 11)
    
    
    215
    
    
    
    
    164Other current assets (note 11)
    
    
    286
    
    
    
    
    1781,957
    
    
    
    
    1,368Investments (note 10)
    
    
    134
    
    
    
    
    130Property, plant and equipment (note 12)
    
    
    3,391
    
    
    
    
    3,128Capitalized mining costs (note 13)
    
    
    226
    
    
    
    
    235Other assets (note 14)
    
    
    566
    
    
    
    
    497Total assets
    
    $
    6,274
    
    
    
    $
    5,358Liabilities and Shareholders EquityCurrent liabilitiesAccounts payable
    
    $
    335
    
    
    
    $
    245Other current liabilities (note 15)
    
    
    83
    
    
    
    
    119418
    
    
    
    
    364Long-term debt (note 16b)
    
    
    1,655
    
    
    
    
    719Other long-term obligations (note 17)
    
    
    499
    
    
    
    
    464Deferred income tax liabilities (note 18)
    
    
    139
    
    
    
    
    317Total liabilities
    
    
    2,711
    
    
    
    
    1,864Shareholders equityCapital stock (note 19)
    
    
    4,129
    
    
    
    
    4,115Deficit
    
    
    (624
    )
    
    
    
    (694
    )Accumulated other comprehensive income (note 20)
    
    
    58
    
    
    
    
    73Total shareholders equity
    
    
    3,563
    
    
    
    
    3,494Contingencies and commitments (notes 12d, 16 and 23)Total liabilities and shareholders equity
    
    $
    6,274
    
    
    
    $
    5,358
 The accompanying notes are an integral part of these consolidated financial statements. Signed on behalf of the Board, /s/ Gregory C. Wilkins
    
    /s/ Howard L. BeckGregory C. Wilkins
    
    Howard L. BeckDirector
    
    Director
 78 BARRICK Annual Report 2004




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##### 



FINANCIAL STATEMENTS Consolidated Statements of Shareholders Equity Barrick Gold CorporationFor the years ended December 31 (in millions of United States dollars) 2004
    
    
    
    2003
    
    
    2002Common
shares (number in millions)At January 1
    
    
    535
    
    
    
    
    542
    
    
    
    536Issued on exercise of stock options (note 21a)
    
    
    3
    
    
    
    
    2
    
    
    
    6Repurchased (note 19a)
    
    
    (4
    )
    
    
    
    (9
    )
    
    
    At December 31
    
    
    534
    
    
    
    
    535
    
    
    
    542Common sharesAt January 1
    
    $
    4,115
    
    
    
    $
    4,148
    
    
    $
    4,062Issued on exercise of stock options (note 21a)
    
    
    49
    
    
    
    
    34
    
    
    
    86Repurchased (note 19a)
    
    
    (35
    )
    
    
    
    (67
    )
    
    
    At December 31
    
    $
    4,129
    
    
    
    $
    4,115
    
    
    $
    4,148DeficitAt January 1
    
    $
    (694
    )
    
    
    $
    (689
    )
    
    $
    (763
    )Net income
    
    
    248
    
    
    
    
    200
    
    
    
    193Adjustment on repurchase of common shares (note 19a)
    
    
    (60
    )
    
    
    
    (87
    )
    
    
    Dividends (note 19a)
    
    
    (118
    )
    
    
    
    (118
    )
    
    
    (119
    )At December 31
    
    $
    (624
    )
    
    
    $
    (694
    )
    
    $
    (689
    )Accumulated other comprehensive income (loss) (note 20)
    
    $
    58
    
    
    
    $
    73
    
    
    $
    (125
    )Total shareholders equity at December 31
    
    $
    3,563
    
    
    
    $
    3,494
    
    
    $
    3,334
 Consolidated Statements of Comprehensive Income 2004
    
    
    
    2003
    
    
    2002Net income
    
    $
    248
    
    
    
    $
    200
    
    
    $
    193Other comprehensive income (loss), net of tax (note 20)
    
    
    (15
    )
    
    
    
    198
    
    
    
    (18
    )Comprehensive income
    
    $
    233
    
    
    
    $
    398
    
    
    $
    175
 The accompanying notes are an integral part of these consolidated financial statements. 79 BARRICK Annual Report 2004




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##### 



Notes to Consolidated Financial Statements  Barrick Gold Corporation.Tabular dollar
amounts in millions of United States dollars,
unless otherwise shown. References to C$, A$ and
 are to Canadian dollars, Australian dollars and
Euros, respectively. 1. Nature of Operations Barrick Gold Corporation (Barrick or the
Company) engages in the production and sale of
gold from underground and open-pit mines,
including related activities such as exploration
and mine development. Our operations are mainly
located in North America, South America,
Australia and Africa. 2. Significant Accounting Policies a) Basis of presentation These financial statements are prepared under
United States generally accepted accounsting
principles (US GAAP). We also include financial
statements prepared under Canadian GAAP in our
Proxy Statement that we file with various
Canadian regulatory authorities. To ensure
comparability of financial information, certain
prior-year amounts have been reclassified to
conform with the current year presentation. Consolidation policy These financial statements reflect
consolidation of the accounts of Barrick and
other entities in which we have a controlling
financial interest. The usual condition for a
controlling financial interest is ownership of a
majority of the voting interests of an entity.
However, a controlling financial interest may
also exist in entities through arrangements that
do not involve voting interests, where the
entities are variable interest entities (VIEs)
under the principles of FIN 46R. Inter-company
balances and transactions are eliminated on
consolidation. A VIE is defined as an entity that by design either lacks
enough equity investment at risk to permit the entity to
finance its activities without additional subordinated
financial support from other parties; has equity owners
who are unable to make decisions about the entity; or has
equity owners that do not have the obligation to absorb
the entitys expected losses or the right to receive the
entitys expected residual returns. VIEs can arise from a
variety of entities or legal structures. FIN 46R requires a variable interest holder (i.e. a
counterparty to a VIE) to consolidate the VIE if that
party will absorb a majority of the expected losses of
the VIE, receive a majority of the residual returns of
the VIE, or both. This party is considered the primary
beneficiary of the entity. The determination of whether
a variable interest holder meets the criteria to be
considered the primary beneficiary of a VIE requires an
evaluation of all transactions by the entity. The
foundation for this evaluation is a calculation
prescribed by FIN 46R. We hold our interests in the Round Mountain, Hemlo,
Marigold and Kalgoorlie mines through unincorporated
joint ventures. Under long-standing practice for
extractive industries, we use the proportionate
consolidation method to account for our interests in
these unincorporated joint ventures. Our 70% interest in the Tulawaka development project is
held through an unincorporated joint venture. In years
prior to 2004 we used the proportionate consolidation
method to account for our interest. In 2004, we entered
into an agreement to finance the other joint venture
partners share of mine construction costs, which caused
us to reconsider whether this joint venture is a VIE. We
concluded that the joint venture is in fact a VIE, and
that Barrick is the primary beneficiary. From June 2004
onwards, we consolidated this joint venture using the
principles of FIN 46R. The creditors of this VIE have no
recourse to the general credit of Barrick. 80 BARRICK Annual Report 2004




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##### 



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Foreign currency translation In 2003, various changes in economic facts
and circumstances led us to conclude that the
functional currency of our Argentinean operations
is the United States dollar rather than the
Argentinean Peso. These changes included the
completion of the Veladero mine feasibility
study, the expected denomination of selling
prices for future gold production and the
occurrence of higher amounts of US dollar
expenditures. Following this change the functional currency of all our operations is the US dollar. We re-measure
non-US dollar balances as follows: >
    
    
    
    non-monetary assets and liabilities using historical rates;>
    
    
    
    monetary assets and liabilities using period-end exchange rates; and>
    
    
    
    income and expenses using average exchange rates, except for expenses related to
assets and liabilities re-measured at historical exchange rates.
 Gains and losses arising from re-measurement of
foreign currency balances and transactions are
recorded in earnings. Use of estimates The preparation of these financial statements requires us to make estimates and assumptions.
The most significant estimates and assumptions are quantities of proven and probable gold reserves;
expected value of mineral resources not considered proven and probable reserves; expected future
costs and expenses to produce proven and probable reserves; expected future commodity prices and
foreign currency exchange rates; and expected costs to meet asset retirement obligations. Critical
estimates and assumptions include: >
    
    
    
    decisions as to whether mine development costs should be capitalized or expensed;>
    
    
    
    assessments of whether groups of long-lived assets are impaired and the fair value of
those groups of assets that are the basis for measuring impairment charges;>
    
    
    
    assessments of our ability to realize the benefits of deferred income tax assets;>
    
    
    
    the useful lives of long-lived assets and the measurement of amortization recorded in
earnings; and>
    
    
    
    the fair value of asset retirement obligations.
 We regularly review estimates and assumptions that affect our financial statements; however, actual
outcomes could differ from estimates and assumptions. b) Accounting changes Effect of accounting changes on earnings  Earnings increase (decrease)For the years endedDecember 31
    
    2004
    
    
    2003
    
    
    2002Changes in accounting policiesCumulative effectAdoption of FAS 1431
(note 17a)
    
    $
    
    
    
    $
    4
    
    
    $
    Amortization of
underground development
costs2 (note 12a)
    
    
    
    
    
    
    (21
    )
    
    
    
    
    
    
    (17
    )
    
    
    Pro forma effect(excluding tax effects)Adoption of FAS 1433
    
    
    
    
    
    
    
    
    
    
    (4
    )Total
    
    $
    
    
    
    $
    (17
    )
    
    $
    (4
    )
   1. On adoption of FAS 143 in first quarter
2003 (see note 17a), we recorded on our balance
sheet an increase in property, plant and
equipment of $39 million; an increase in other
long-term obligations of $32 million; and an
increase in deferred income tax liabilities of
$3 million; as well as a $4 million credit in
earnings for the cumulative effect of this
change.
 2.

On January 1, 2003, we changed our accounting
policy for amortization of underground mine
development costs to exclude estimates of future
underground development costs (see note 12a). On
adoption of this change, we decreased property,
plant and equipment by $19 million, and
increased deferred income tax liabilities by $2
million. We recorded in our income statement a
$21 million charge for the cumulative effect of
this accounting change. 3.
FAS 143 was followed in the preparation of
financial results for 2004 and 2003. For 2002,
because prior years were not restated, the
amount disclosed is the pro forma effect of
following FAS 143. 81 BARRICK Annual Report 2004




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##### 



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Emerging Issues Task Force (EITF)
Issue No. 04-2: Whether Mineral Rights are
Tangible or Intangible Assets (EITF 04-2) EITF 04-2 was issued in 2004 and concludes
that mineral rights, which are defined as the
legal right to explore, extract and retain at
least a portion of the benefits from mineral
deposits, are tangible assets. EITF 04-2 was
effective in third quarter 2004, and had no
impact on the classification of such assets in
our financial statements. EITF Issue No. 04-3, Mining Assets:
Impairment and Business Combinations (EITF
04-3) EITF 04-3 was issued in 2004 and establishes
guidance for the inclusion of the expected value
of mineralization not considered proven and
probable reserves when allocating the purchase
price in a business combination and also when
testing a mining asset for impairment. The
principles of EITF 04-3 are required to be
adopted prospectively and were effective in
second quarter 2004. c) Accounting developments EITF Issue No. 03-1, The Meaning of
Other-Than-Temporary Impairment and Its
Application to Certain Investments (EITF 03-1) EITF 03-1 was issued in 2004 and establishes
guidance to be used in determining when an
investment is considered impaired, whether that
impairment is other than temporary, and the
measurement of an impairment loss. Under the
application of our previous accounting policy for
impairment of investments, an impairment on a
specific investment was recorded in earnings on
determination that the impairment was other than
temporary or after an investment had been
impaired for six months, whichever is the
earlier. Under EITF 03-1, there is no requirement
to automatically record an impairment loss in
earnings after a six-month period; instead the
recognition of impairment losses in earnings is
based on the assessment of whether the loss is
other than temporary. The adoption of the
measurement requirements of EITF 03-1 in third
quarter 2004 had no effect on impairment charges
recorded in earnings. EITF 03-1 also provides the guidance on accounting subsequent to the
recognition of an other-than-temporary impairment and requires certain
disclosures about impairment losses included in other comprehensive income
that have not been recorded in earnings. The measurement requirements of
EITF 03-1 were effective for the fiscal quarter ended September 30, 2004,
but the disclosure requirements are not effective until fiscal 2005. EITF Issue No. 04-6, Accounting for
Stripping Costs Incurred during Production
in the Mining Industry (EITF 04-6) In the mining industry, companies may be
required to remove overburden and other mine
waste materials to access mineral deposits. The
costs of removing overburden and waste materials
are often referred to as stripping
costs. During the development of a mine (before
production begins), it is generally accepted in
practice that stripping costs are capitalized as
part of the depreciable cost of building,
developing, and constructing the mine. Those
capitalized costs are typically amortized over
the productive life of the mine using the
units-of-production method. A mining company may
continue to remove overburden and waste
materials, and therefore incur stripping costs,
during the production phase of the mine.
Questions have been raised about the appropriate
accounting for stripping costs incurred during
the production phase, and diversity in practice
exists. In response to these questions, the EITF
has undertaken a project to develop an Abstract
to address the questions and clarify the
appropriate accounting treatment for stripping
costs under US GAAP. The EITF is in the process
of deliberating these questions and upon
completion of their deliberations they are
expected to issue EITF 04-6, which will represent
an authorative US GAAP pronouncement for
stripping costs. Our accounting policy for
stripping costs is disclosed in note 13. EITF
04-6 may require us to change our accounting
policy for stripping costs in future periods. FAS 123R, Accounting for
Stock-Based Compensation (FAS 123R) In December 2004, the FASB issued FAS 123R.
FAS 123R is applicable to transactions in which
an entity exchanges its equity instruments for
goods and services. 82 BARRICK Annual Report 2004




---



##### 



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS It focuses primarily on transactions in which an
entity obtains employee services in share-based
payment transactions. FAS 123R requires that the
fair value of such equity instruments is recorded
as an expense as services are performed. Prior to
FAS 123R, only certain pro forma disclosures of
accounting for these transactions at fair value
were required. FAS 123R will be effective for our
third quarter 2005 financial statements, and
permits varying transition methods including:
retroactive adjustment of prior periods as far
back as 1995 to give effect to the fair value
based method of accounting for awards granted in
those prior periods; retrospective application to
all interim periods in 2005; or prospective
application to future periods beginning in third
quarter 2005. We are presently evaluating the
effect of the varying methods of adopting FAS
123R. We expect to adopt FAS 123R using the
modified prospective method effective July 1,
2005. Under this method we will begin recording
stock option expense based on a similar method to
the one used for pro forma purposes that is
disclosed in note 21, starting in the third
quarter of 2005. FAS 151, Inventory Costs (FAS 151) FAS 151 was issued in November 2004 as an
amendment to ARB No. 43. FAS 151 specifies the
general principles applicable to the pricing and
allocation of certain costs to inventory. Under FAS 151, abnormal amounts of
idle facility expense, freight, handling costs
and wasted materials are recognized as current
period charges rather than capitalized to
inventory. FAS 151 also requires that the
allocation of fixed production overhead to the
cost of inventory be based on the normal capacity
of production facilities. FAS 151 will be
effective for inventory costs incurred beginning
in our 2006 fiscal year. We are presently
evaluating the impact of FAS 151 on our financial
statements. FAS 153, Exchanges of



 Non-Monetary Assets (FAS 153) FAS 153 was issued in December 2004 as an
amendment to APB Opinion No. 29. FAS 153 provides
guidance on the measurement of exchanges of
non-monetary assets, with exceptions for
exchanges that do not have commercial substance.
Under FAS 153, a non-monetary exchange has commercial substance if, as a
result of the exchange, the future cash flows of
an entity are expected to change significantly. Under FAS 153, a non-monetary exchange is
measured based on the fair values of the assets
exchanged. If fair value is not determinable, the
exchange lacks commercial substance or the
exchange is to facilitate sales to customers, a
non-monetary exchange is measured based on the
recorded amount of the non-monetary asset
relinquished. FAS 153 will be effective for
non-monetary exchanges that occur in fiscal
periods beginning after June 15, 2005. d) Other significant accounting policies Note
    
    
    PageSegment information
    
    
    3
    
    
    
    p.84Revenue and gold sales contracts
    
    
    4
    
    
    
    p.86Cost of sales
    
    
    5
    
    
    
    p.88Other (income) expense
    
    
    6
    
    
    
    p.89Income tax (recovery) expense
    
    
    7
    
    
    
    p.90Earnings per share
    
    
    8
    
    
    
    p.92Supplemental cash flow information
    
    
    9
    
    
    
    p.92Investments
    
    
    10
    
    
    
    p.93Accounts receivable, inventories
and other current assets
    
    
    11
    
    
    
    p.94Property, plant and equipment
    
    
    12
    
    
    
    p.95Capitalized mining costs
    
    
    13
    
    
    
    p.97Other assets
    
    
    14
    
    
    
    p.97Other current liabilities
    
    
    15
    
    
    
    p.97Financial instruments
    
    
    16
    
    
    
    p.97Other long-term obligations
    
    
    17
    
    
    
    p.107Deferred income taxes
    
    
    18
    
    
    
    p.107Capital stock
    
    
    19
    
    
    
    p.109Other comprehensive income (loss)
    
    
    20
    
    
    
    p.110Stock-based compensation
    
    
    21
    
    
    
    p.111Post-retirement benefits
    
    
    22
    
    
    
    p.113Contingencies, litigation and claims
    
    
    23
    
    
    
    p.115Joint ventures
    
    
    24
    
    
    
    p.117Differences from Canadian GAAP
    
    
    25
    
    
    
    p.117
 83 BARRICK Annual Report 2004




---



##### 



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 3. Segment Information Our operations are managed on a regional
basis. Our three regional business units are
North America, Australia/Africa and South
America. Financial information for each of our
operating mines, development projects and our
exploration group is reviewed regularly by our
chief operating decision maker. Segment income for operating segments comprises
segment revenues less segment operating costs and
segment amortization in the format that internal
management reporting is presented to the chief
operating decision maker. For internal management
reporting purposes, we measure segment revenues
and income using the average consolidated
realized gold selling price for each period.
Segment operating costs represent our internal
presentation of costs incurred to produce gold at
each operating mine, and exclude the following
costs that we do not allocate to operating
segments: accretion expense; environmental
remediation costs at closed mines; regional
business unit overhead; amortization of corporate
assets; business development costs;
administration costs; other income/expense; and
the costs of financing their activities. Segment
operating costs for development projects and the
exploration group represent expensed exploration,
mine development and mine start-up costs. Income statement informationGold sales
    
    
    Segment operating costs
    
    
    Segment income (loss)For the years ended December 31
    
    2004
    
    
    2003
    
    
    2002
    
    
    2004
    
    
    2003
    
    
    2002
    
    
    2004
    
    
    2003
    
    
    2002Goldstrike
    
    $
    745
    
    
    $
    813
    
    
    $
    678
    
    
    $
    475
    
    
    $
    531
    
    
    $
    436
    
    
    $
    121
    
    
    $
    122
    
    
    $
    95Round Mountain
    
    
    148
    
    
    
    139
    
    
    
    132
    
    
    
    83
    
    
    
    66
    
    
    
    73
    
    
    
    48
    
    
    
    53
    
    
    
    38Eskay Creek
    
    
    112
    
    
    
    130
    
    
    
    121
    
    
    
    9
    
    
    
    18
    
    
    
    14
    
    
    
    52
    
    
    
    65
    
    
    
    59Hemlo
    
    
    93
    
    
    
    98
    
    
    
    97
    
    
    
    57
    
    
    
    60
    
    
    
    64
    
    
    
    24
    
    
    
    27
    
    
    
    23Other operating segments
    
    
    42
    
    
    
    50
    
    
    
    177
    
    
    
    21
    
    
    
    29
    
    
    
    96
    
    
    
    11
    
    
    
    7
    
    
    
    56North America
    
    
    1,140
    
    
    
    1,230
    
    
    
    1,205
    
    
    
    645
    
    
    
    704
    
    
    
    683
    
    
    
    256
    
    
    
    274
    
    
    
    271Plutonic
    
    
    122
    
    
    
    120
    
    
    
    105
    
    
    
    69
    
    
    
    62
    
    
    
    57
    
    
    
    42
    
    
    
    48
    
    
    
    37Kalgoorlie
    
    
    183
    
    
    
    153
    
    
    
    124
    
    
    
    107
    
    
    
    87
    
    
    
    82
    
    
    
    56
    
    
    
    46
    
    
    
    23Cowal
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    (1
    )
    
    
    
    
    
    
    Bulyanhulu
    
    
    135
    
    
    
    109
    
    
    
    134
    
    
    
    96
    
    
    
    73
    
    
    
    78
    
    
    
    5
    
    
    
    (1
    )
    
    
    16Tulawaka
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2
    
    
    
    3
    
    
    
    
    
    
    
    (2
    )
    
    
    (3
    )Other operating segments
    
    
    101
    
    
    
    91
    
    
    
    89
    
    
    
    60
    
    
    
    53
    
    
    

    45
    
    
    
    27
    
    
    
    26
    
    
    
    33Australia/Africa
    
    
    541
    
    
    
    473
    
    
    
    452
    
    
    
    333
    
    
    
    277
    
    
    
    265
    
    
    
    129
    
    
    
    117
    
    
    
    106Pierina
    
    
    251
    
    
    
    332
    
    
    
    303
    
    
    
    69
    
    
    
    76
    
    
    
    72
    
    
    
    75
    
    
    
    90
    
    
    
    70Veladero
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5
    
    
    
    18
    
    
    
    20
    
    
    
    (5
    )
    
    
    (18
    )
    
    
    (20
    )Pascua-Lama
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4
    
    
    
    
    
    
    
    
    
    
    
    (4
    )
    
    
    
    
    
    
    Lagunas Norte
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12
    
    
    
    29
    
    
    
    29
    
    
    
    (12
    )
    
    
    (29
    )
    
    
    (29
    )Other operating segments
    
    
    
    
    
    
    
    
    
    
    7
    
    
    
    3
    
    
    
    
    
    
    
    5
    
    
    
    (3
    )
    
    
    
    
    
    
    2South America
    
    
    251
    
    
    
    332
    
    
    
    310
    
    
    
    93
    
    
    
    123
    
    
    
    126
    
    
    
    51
    
    
    
    43
    
    
    
    23Exploration group
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    96
    
    
    
    67
    
    
    
    42
    
    
    
    (96
    )
    
    
    (67
    )
    
    
    (42
    )Segment total
    
    $
    1,932
    
    
    $
    2,035
    
    
    $
    1,967
    
    
    $
    1,167
    
    
    $
    1,171
    
    
    $
    1,116
    
    
    $
    340
    
    
    $
    367
    
    
    $
    358
 84 BARRICK Annual Report 2004




---



##### 



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Geographic informationAssets
    
    
    Gold salesFor the years ended December 31
    
    2004
    
    
    2003
    
    
    2004
    
    
    2003
    
    2002United States
    
    $
    1,976
    
    
    $
    1,835
    
    
    $
    911
    
    
    $
    970
    
    
    $
    906Canada
    
    
    492
    
    
    
    480
    
    
    
    229
    
    
    
    260
    
    
    
    299North America
    
    
    2,468
    
    
    
    2,315
    
    
    
    1,140
    
    
    
    1,230
    
    
    
    1,205Australia
    
    
    838
    
    
    
    552
    
    
    
    406
    
    
    
    364
    
    
    
    318Tanzania
    
    
    774
    
    
    
    707
    
    
    
    135
    
    
    
    109
    
    
    
    134Australia/Africa
    
    
    1,612
    
    
    
    1,259
    
    
    
    541
    
    
    
    473
    
    
    
    452Peru
    
    
    811
    
    
    
    757
    
    
    
    251
    
    
    
    332
    
    
    
    303Argentina
    
    
    645
    
    
    
    219
    
    
    
    
    
    
    
    
    
    
    
    Chile
    
    
    120
    
    
    
    90
    
    
    
    
    
    
    
    
    
    
    
    South America
    
    
    1,576
    
    
    
    1,066
    
    
    
    251
    
    
    
    332
    
    
    
    303Other
    
    
    618
    
    
    
    718
    
    
    
    
    
    
    
    
    
    
    
    7$
    6,274
    
    
    $
    5,358
    
    
    $
    1,932
    
    
    $
    2,035
    
    
    $
    1,967
 Reconciliation of segment incomeFor the years ended December 31
    
    2004
    
    
    2003
    
    
    2002Segment income
    
    $
    340
    
    
    $
    367
    
    
    $
    358Accretion expense at producing mines
    
    
    (11
    )
    
    
    (10
    )
    
    
    Environmental remediation costs
    
    
    
    
    
    
    
    
    
    
    (34
    )Other expenses at producing mines
    
    
    (16
    )
    
    
    (11
    )
    
    
    (14
    )Amortization of corporate assets
    
    
    (27
    )
    
    
    (25
    )
    
    
    (26
    )Business development costs
    
    
    (18
    )
    
    
    (17
    )
    
    
    (10
    )Administration
    
    
    (71
    )
    
    
    (73
    )
    
    
    (50
    )Interest income
    
    
    25
    
    
    
    31
    
    
    
    26Interest expense
    
    
    (19
    )
    
    
    (44
    )
    
    
    (57
    )Other income (expense)
    
    
    (158
    )
    
    
    4
    
    
    
    (16
    )Income before income taxes and other items
    
    $
    45
    
    
    $
    222
    
    
    $
    177
 85 BARRICK Annual Report 2004




---



##### 



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Asset informationSegment capitalSegment assets
    
    
    Amortization
    
    
    expendituresFor the years ended December 31
    
    2004
    
    
    2003
    
    
    2004
    
    
    2003
    
    
    2002
    
    
    2004
    
    
    2003
    
    
    2002Goldstrike
    
    $
    1,290
    
    
    $
    1,372
    
    
    $
    149
    
    
    $
    160
    
    
    $
    147
    
    
    $
    72
    
    
    $
    51
    
    
    $
    46Round Mountain
    
    
    67
    
    
    
    75
    
    
    
    17
    
    
    
    20
    
    
    
    21
    
    
    
    5
    
    
    
    6
    
    
    
    8Eskay Creek
    
    
    91
    
    
    
    203
    
    
    
    51
    
    
    
    47
    
    
    
    48
    
    
    
    7
    
    
    
    5
    
    
    
    8Hemlo
    
    
    63
    
    
    
    65
    
    
    
    12
    
    
    
    11
    
    
    
    10
    
    
    
    8
    
    
    
    10
    
    
    
    6Other operating segments
    
    
    28
    
    
    
    29
    
    
    
    10
    
    
    
    14
    
    
    
    25
    
    
    
    12
    
    
    
    8
    
    
    
    19North America
    
    
    1,539
    
    
    
    1,744
    
    
    
    239
    
    
    
    252
    
    
    
    251
    
    
    
    104
    
    
    
    80
    
    
    
    87Plutonic
    
    
    92
    
    
    
    84
    
    
    
    11
    
    
    
    10
    
    
    
    11
    
    
    
    15
    
    
    
    44
    
    
    
    20Kalgoorlie
    
    
    277
    
    
    
    250
    
    
    
    20
    
    
    
    20
    
    
    
    19
    
    
    
    10
    
    
    
    14
    
    
    
    14Cowal
    
    
    130
    
    
    
    49
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    73
    
    
    
    24
    
    
    
    13Bulyanhulu
    
    
    566
    
    
    
    539
    
    
    
    34
    
    
    
    37
    
    
    
    40
    
    
    
    46
    
    
    
    36
    
    
    
    56Tulawaka
    
    
    70
    
    
    
    22
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    48
    
    
    
    1
    
    
    
    Other operating segments
    
    
    89
    
    
    
    84
    
    
    
    14
    
    
    
    12
    
    
    
    11
    
    
    
    12
    
    
    
    21
    
    
    
    14Australia/Africa
    
    
    1,224
    
    
    
    1,028
    
    
    
    79
    
    
    
    79
    
    
    
    81
    
    
    
    204
    
    
    
    140
    
    
    
    117Pierina
    
    
    269
    
    
    
    434
    
    
    
    107
    
    
    
    166
    
    
    
    161
    
    
    
    8
    
    
    
    17
    
    
    
    5Veladero
    
    
    456
    
    
    
    88
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    284
    
    
    
    68
    
    
    
    Pascua-Lama
    
    
    273
    
    
    
    236
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    35
    
    
    
    9
    
    
    
    11Lagunas Norte
    
    
    220
    
    
    
    9
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    182
    
    
    
    4
    
    
    
    5South America
    
    
    1,218
    
    
    
    767
    
    
    
    107
    
    
    
    166
    
    
    
    161
    
    
    
    509
    
    
    
    98
    
    
    
    21Segment total
    
    
    3,981
    
    
    
    3,539
    
    
    
    425
    
    
    
    497
    
    
    
    493
    
    
    
    817
    
    
    
    318
    
    
    
    225Cash and equivalents
    
    
    1,398
    
    
    
    970
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Other items not allocated to segments
    
    
    895
    
    
    
    849
    
    
    
    27
    
    
    
    25
    
    
    
    26
    
    
    
    7
    
    
    
    4
    
    
    
    3Enterprise total
    
    $
    6,274
    
    
    $
    5,358
    
    
    $
    452
    
    
    $
    522
    
    
    $
    519
    
    
    $
    824
    
    
    $
    322
    
    
    $
    228
 4. Revenue and Gold Sales Contracts For the years endedDecember 31
    
    2004
    
    
    2003
    
    
    2002Gold bullion salesGold sales contracts
    
    $
    709
    
    
    $
    1,504
    
    
    $
    1,401Spot market sales
    
    
    1,111
    
    
    
    426
    
    
    
    4601,820
    
    
    
    1,930
    
    
    
    1,861Concentrate sales
    
    
    112
    
    
    
    105
    
    
    
    106$
    1,932
    
    
    $
    2,035
    
    
    $
    1,967
 We record revenue when the following conditions
are met: persuasive evidence of an arrangement
exists; delivery has occurred under the terms of
the arrangement; the price is fixed or
determinable; and collectability is reasonably
assured. Bullion sales We record revenue from gold and silver
bullion sales at the time of delivery and
transfer of title to the gold or silver to
counterparties. Incidental revenues from the sale
of by-products such as silver are classified
within cost of sales. 86 BARRICK Annual Report 2004




---



##### 



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS At December 31, 2004, we had fixed-price gold
sales contracts with various counterparties for a
total of 13.5 million ounces of future gold
production and floating-price forward gold sales
contracts for 0.5 million ounces. In 2004, we
allocated 6.5 million ounces of fixed-price gold
sales contracts specifically to Pascua-Lama. The
allocation of these contracts will help reduce
gold price risk at Pascua-Lama and will help
secure financing for its construction. In
addition to the gold sales contracts allocated to
Pascua-Lama, we have 7.0 million ounces of
corporate gold sales contracts that we intend to
settle through delivery of future gold production
from our operating mines and development
projects, excluding Pascua-Lama. The terms of the
contracts
are governed by master trading agreements (MTAs)
that we have in place with the counterparties to
the contracts. The contracts have final delivery
dates primarily over the next 10 years, but we
have the right to settle these contracts at any
time over this period. Contract prices are
established at inception through to an interim
date. If we do not deliver at this interim date,
a new interim date is set. The price for the new
interim date is determined in accordance with the
MTAs which have contractually agreed price
adjustment mechanisms based on the market gold
price. The MTAs have both fixed and floating
price mechanisms. The fixed-price mechanism
represents the market price at the start date (or
previous interim date) of the contract plus a
premium based on the difference between the
forward price of gold and the current market
price. If at an interim date we opt for a
floating price, the floating price represents the
spot market price at the time of delivery of gold
plus or minus the difference between the
previously fixed price and the market gold price
at that interim date. The final realized selling
price under a contract primarily depends upon the
timing of the actual future delivery date, the
market price of gold at the start of the contract
and the actual amount of the premium of the
forward price of gold over the spot price of gold
for the periods that fixed selling prices are
set. The mark-to-market on the fixed-price gold
sales contracts (at December 31, 2004) was
negative $966 million for the Pascua-Lama Gold
Sales Contracts and negative $949 million for the
Corporate Gold Sales Contracts. The difference between the forward price of gold
and the current market price, referred to as
contango, can be expressed as a percentage that
is closely correlated to the difference between
US dollar interest rates and gold lease rates.
Historically short-term gold lease rates have
been lower than longer-term rates. We use gold
lease rate swaps to achieve a more economically
optimal term structure for gold lease rates
implicit in contango. Under the swaps we receive
a fixed gold lease rate, and pay a floating gold
lease rate, on a notional 2.1 million ounces of
gold spread from 2005 to 2013. The swaps are
associated with fixed-price gold sales contracts
with expected delivery dates beyond 2006. Lease
rate swaps are classified as non-hedge
derivatives (note 16c). Floating spot price sales contracts were
previously fixed-price forward sales contracts
for which, in accordance with the terms of our
MTAs, we have elected to receive floating spot
gold and silver prices, adjusted by the
difference between the spot price and the
contract price at the time of such election.
Floating prices were elected for these contracts
so that we could economically regain spot gold
price leverage under the terms of delivery into
these contracts. Furthermore, floating price
mechanisms were elected for these contracts at a
time when the then current market price was
higher than the fixed price in the contract. The
mark-to-market on these contracts (at December
31, 2004) was negative $25 million, which equates
to an average reduction to the future spot sales
price of approximately $52 per ounce, when we
deliver gold at spot prices against these
contracts. At December 31, 2004, one counterparty made up
11% of the ounces committed under gold bullion
sales contracts. 87 BARRICK Annual Report 2004




---



##### 



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Concentrate sales Our Eskay Creek and Bulyanhulu mines produce
gold in concentrate form. Our Pascua-Lama mine
will also produce gold in concentrate form. Under
the terms of our concentrate sales contracts with
independent smelting companies, gold sales prices
are set on a specified future date after shipment
based on market prices. We record revenues under
these contracts at the time of shipment, which is
when title passes to the smelting companies,
using forward market gold prices on the expected
date that final sales prices will be set.
Variations between the price recorded at the
shipment date and the actual final price set
under the smelting contracts are caused by
changes in market gold prices, and result in an
embedded derivative in the accounts receivable.
The embedded derivative is recorded at fair value
each period until final settlement occurs, with
changes in fair value classified as a component
of revenue. Impact of derivative
embedded in concentrate sales receivablesFor the years endedDecember 31
    
    2004
    
    
    2003
    
    
    2002Gains included in revenue
    
    $
    
    
    
    $
    
    
    
    $
    1
 5. Cost of Sales For the years endedDecember 31
    
    2004
    
    
    2003
    
    
    2002Cost of goods sold1,3
    
    $
    1,136
    
    
    $
    1,110
    
    
    $
    1,133By-product revenues2
    
    
    (146
    )
    
    
    (114
    )
    
    
    (119
    )Royalty expense
    
    
    53
    
    
    
    50
    
    
    
    37Mining taxes
    
    
    12
    
    
    
    15
    
    
    
    5Other expenses at
producing mines4
    
    
    16
    
    
    
    11
    
    
    
    14$
    1,071
    
    
    $
    1,072
    
    
    $
    1,070
   1.
    
    The presentation of cost of goods sold
includes accretion expense at producing mines of
$11 million (2003  $10 million; 2002  $nil).
The cost of inventory sold in the period
reflects the components described in note 11,
except that for presentation purposes the
component of inventory cost relating to
amortization of property, plant and equipment
is classified in the income statement under
amortization. Some companies present this
amount under cost of sales. The amount
presented in amortization rather than cost of
sales is $425 million in 2004; $497 million in
2003 and $493 million in 2002.2.
    
    We use silver sales contracts to sell a
portion of silver produced as a by-product.
Silver sales contracts have similar delivery
terms and pricing mechanisms as gold sales
contracts. At December 31, 2004, we had
fixed-price commitments to deliver 12.4 million
ounces of silver at an average price of $5.50
per ounce and floating spot price sales
contracts for 12 million ounces over periods
primarily of up to 10 years.3.
    
    Cost of goods sold includes environmental remediation costs of $34 million in 2002.4.
    
    Includes the reversal of $15 million of accrued costs on resolution of the Peruvian tax
assessment (see note 7). Royalties Certain of our properties are subject to
royalty arrangements based on mineral production
at the properties. The most significant royalties
are at the Goldstrike and Bulyanhulu mines and
the Pascua-Lama and Veladero projects. The
primary type of royalty is a net smelter return
(NSR) royalty. Under this type of royalty we pay
the holder an amount calculated as the royalty
percentage multiplied by the value of gold
production at market gold prices less third-party
smelting, refining and transportation costs. Most
Goldstrike production is subject to an NSR or net
profits interest (NPI) royalty. The highest
Goldstrike royalties are a 5% NSR and a 6% NPI
royalty. Bulyanhulu is subject to an NSR-type
royalty of 3%. Pascua-Lama gold production from
the areas located in Chile is subject to a gross
proceeds sliding scale royalty, ranging from 1.5%
to 10%, and a 2% NSR on copper production. For
areas located in Argentina, Pascua-Lama is
subject to a 3% NSR on extraction of all gold,
silver and other ores. Production at Veladero is
subject to a 3.75% NSR on extraction of all gold,
silver and other ores. Royalty expense is recorded at the time of sale
of gold production, measured using the applicable
royalty percentage for NSR royalties or estimates
of NPI amounts. 88 BARRICK Annual Report 2004




---



##### 



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 6. Other (Income) Expense For the years endedDecember 31
    
    2004
    
    
    2003
    
    
    2002Non-hedge derivative
(gains) losses (note 16c)
    
    $
    (5
    )
    
    $
    (71
    )
    
    $
    6Gains
realized on sale of assets
    
    
    (34
    )
    
    
    (34
    )
    
    
    (4
    )Environmental remediation costs2
    
    
    43
    
    
    
    55
    
    
    
    Impairment of long-lived assetsEskay Creek
    
    
    58
    
    
    
    
    
    
    
    Peruvian
exploration properties
    
    
    67
    
    
    
    
    
    
    
    Other
    
    
    14
    
    
    
    5
    
    
    
    11Impairment charges on
investments (note 10)
    
    
    5
    
    
    
    11
    
    
    
    World Gold Council fees
    
    
    9
    
    
    
    10
    
    
    
    12Litigation costs
    
    
    
    
    
    
    16
    
    
    
    Currency translation
(gains) losses
    
    
    1
    
    
    
    (2
    )
    
    
    (1
    )Pension expense (note 22b)
    
    
    
    
    
    
    4
    
    
    
    2Other items1
    
    
    
    
    
    
    2
    
    
    
    (10
    )$
    158
    
    
    $
    (4
    )
    
    $
    16
   1.
    
    In 2004, includes the reversal of $6
million of accrued costs on resolution of the
Peruvian tax assessment (see note 7) and $4
million in severance costs related to the sale
of the Holt McDermott mine.2.
    
    Includes costs at development projects and closed mines. Gains realized on sale of assets In 2004 we sold various assets, including the
Holt McDermott mine in Canada and certain land
positions around our inactive mine sites in the
United States. These land positions were fully
amortized in prior years and
therefore any proceeds generate gains on sale,
before selling costs and taxes. Environmental remediation
costs at closed mines During the production phases of a mine, we
incur and expense the cost of various activities
connected with environmental aspects of normal
operations, including compliance with and
monitoring of environmental regulations; disposal
of hazardous waste produced from normal
operations; and operation of equipment designed
to reduce or eliminate environmental effects. In
limited circumstances, costs to acquire and install plant and equipment are capitalized during the
production phase of a mine if the costs are expected to mitigate risk or prevent future
environmental contamination from normal operations. When a contingent loss arises from the improper use of an asset, a loss accrual is recorded
if the loss is probable and reasonably estimable. Amounts recorded are measured on an
undiscounted basis, and adjusted as further information develops or if circumstances change. Recoveries of
environmental remediation costs from other parties are recorded as assets when receipt is deemed probable. Impairment of long-lived assets Eskay Creek The asset group that comprises the Eskay
Creek mine was tested for impairment effective
December 31, 2004. The principal factors that
caused us to test this asset group for impairment
included: downward revisions to proven and
probable reserves; the impact of the continued
strengthening of the C$ against the US$ and
upward revisions to expected asset retirement
costs in the fourth quarter of 2004. An
impairment charge of $58 million was recorded,
which represents the amount by which the carrying
amount of the asset group exceeds its estimated
fair value. Fair value was estimated using the
method described in note 12c. Peruvian exploration properties At the end of 2004, upon completion of the
exploration program for the year, we assessed the
results and updated our future plans for various
exploration properties in Peru that were
originally acquired through the Arequipa
acquisition in 1996. We concluded that the
results and future potential did not merit any
further investment for these properties. The
assets were tested for impairment, and an
impairment charge of $67 million was recorded
that reflects the amounts by which their carrying
amounts exceed their estimated fair values. The
fair value of this group of assets was judged to
be minimal due to the unfavorable results of
exploration work in the properties. 89
BARRICK Annual Report 2004




---



##### 



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Litigation costs In November 2003, we paid Inmet C$111 million
(US$86 million), in full settlement of the Inmet
litigation. The settlement resulted in an expense
of US$14 million in fourth quarter 2003, combined
with post-judgment interest of $2 million in the
first nine months of 2003. 7. Income Tax (Recovery) Expense For the years endedDecember 31
    
    2004
    
    
    2003
    
    
    2002CurrentCanada
    
    $
    19
    
    
    $
    40
    
    
    $
    44International
    
    
    24
    
    
    
    14
    
    
    
    15$
    43
    
    
    $
    54
    
    
    $
    59DeferredCanada
    
    $
    (26
    )
    
    $
    (32
    )
    
    $
    (45
    )International
    
    
    7
    
    
    
    45
    
    
    
    (8
    )$
    (19
    )
    
    $
    13
    
    
    $
    (53
    )Income tax expense
before elements below1
    
    $
    24
    
    
    $
    67
    
    
    $
    6Release of beginning of year
valuation allowances
    
    
    (5
    )
    
    
    (62
    )
    
    
    Outcome of
tax uncertainties
    
    
    (141
    )
    
    
    
    
    
    
    (22
    )Change in tax status
in Australia
    
    
    (81
    )
    
    
    
    
    
    
    Total (recovery) expense
    
    $
    (203
    )
    
    $
    5
    
    
    $
    (16
    )
   1.
    
    All amounts are deferred tax items except
for a $21 million portion of the $141 million
recovery on resolution of the Peruvian tax
assessment in 2004, which is a current tax item. Release of beginning of
year valuation allowances In 2004, we released valuation allowances
totaling $5 million in Australia following the
consolidated tax return election described above.
In 2003, we released valuation allowances
totaling $62 million, which mainly included: $21
million in North America following a corporate
reorganization of certain subsidiaries that
enabled us to utilize certain previously
unrecognized tax assets; $16 million in Australia realized in 2003
due to an increase in taxable income from higher
gold prices; and $15 million in Argentina after
the approval to begin construction of our new
Veladero mine and classification of
mineralization as a proven and probable reserve. Outcome of tax uncertainties Peruvian tax assessment On September 30, 2004, the Tax Court of Peru
issued a decision in our favor in the matter of
our appeal of a 2002 income tax assessment of $32
million, excluding interest and penalties. The
Peruvian tax agency, SUNAT, had until mid-January
2005 to appeal the decision. The 2002 income tax assessment related to a tax
audit of our Pierina Mine for the 1999 and 2000
fiscal years. The
assessment mainly related to the validity of a
revaluation of the Pierina mining concession,
which affects its tax basis. Under the valuation
proposed by SUNAT, the tax basis of the Pierina
mining concession would have changed from what we
previously assumed with a resulting increase in
current and deferred income taxes. The full life
of mine effect on our current and deferred income
tax liabilities, totaling $141 million, was
recorded at December 31, 2002, as were other
related costs of about $21 million for periods
through 2003. In January 2005, we received confirmation in
writing that there would be no appeal of the
September 30, 2004 Tax Court of Peru decision.
The confirmation concluded the administrative and
judicial appeals process with resolution in
Barricks favor. As a result, we recorded a $141
million reduction in current and deferred income
tax liabilities and a $21 million reduction in
other accrued costs in 2004; $15 million of which
is classified in other expenses at producing
mines within cost of sales and $6 million of
which is classified in other (income) expense. Other uncertainties In 2002, we recorded a credit of $22 million
reflecting the net impact of tax planning
completed in the period and the outcome of
certain tax uncertainties. 90 BARRICK Annual Report 2004




---



##### 



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Changes in tax status in Australia A new tax law has been enacted in Australia
that allows wholly owned groups of companies
resident in Australia to elect to be treated as a
single entity and to file consolidated tax
returns. This new regime is elective and the
election is irrevocable. Under certain
circumstances, the rules governing the election
allow for a choice to reset the tax cost basis of
certain assets within a consolidated group. This
election will be effective for us for the 2004
fiscal year. This election results in an
estimated upward revaluation of the tax basis of
our assets in Australia, by $110 million, with a
corresponding $33 million adjustment to deferred
taxes. In 2004, we filed an election to use US dollars
as the functional currency for Australian tax
calculations and tax returns, whereas previously
Australian dollars were used. Prior to this
election, the favorable impact of changes in the
tax basis of non-monetary assets caused by
changes in the US$:A$ exchange rate were not
recorded, as their realization was not certain.
The election in 2004 created certainty about the
realization of these favorable tax temporary
differences and resulted in our recognition of
these as deferred tax assets amounting to $48
million. The impact of the change in tax status
was to increase the amount of deductible
temporary differences relating to non-monetary assets by $160 million. Reconciliation to Canadian federal rateFor the years ended December 31
    
    2004
    
    
    2003
    
    
    2002At 38% statutory federal rate
    
    $
    17
    
    
    $
    84
    
    
    $
    67Increase (decrease) due to:Allowances and special tax deductions1
    
    
    (34
    )
    
    
    (17
    )
    
    
    (12
    )Impact of foreign tax rates2
    
    
    (5
    )
    
    
    (42
    )
    
    
    (67
    )Expenses not tax-deductible
    
    
    10
    
    
    
    11
    
    
    
    9Release of beginning of year valuation allowances
    
    
    (5
    )
    
    
    (62
    )
    
    
    Recognition of deferred tax assets3
    
    
    (81
    )
    
    
    
    
    
    
    Valuation allowances set up against current year tax losses
    
    
    29
    
    
    
    23
    
    
    
    3Outcome of tax uncertainties
    
    
    (141
    )
    
    
    
    
    
    
    (22
    )Withholding taxes on intercompany interest
    
    
    1
    
    
    
    1
    
    
    
    11Mining taxes
    
    
    5
    
    
    
    8
    
    
    
    3Other items
    
    
    1
    
    
    
    (1
    )
    
    
    (8
    )Income tax expense (recovery)
    
    $
    (203
    )
    
    $
    5
    
    
    $
    (16
    )
   1.
    
    We are able to claim certain allowances and tax deductions unique to extractive
industries that result in a lower effective tax rate.2.
    
    We operate in multiple foreign tax jurisdictions that have different tax rates than
the Canadian federal rate.3.
    
    In 2004, we recognized a $81 million deferred tax asset in Australia due to a change
in tax status. Income tax returns Our income tax returns for the major
jurisdictions where we operate have been fully
examined through the following years: Canada 
2000, United States  2001, and Peru  2000. American Jobs Creation Act of 2004 The American Jobs Creation Act of 2004 (the
Act) was signed into law on October 22, 2004.
The Act creates an elective incentive for U.S.
multinationals to repatriate accumulated earnings from controlled
foreign corporations. The repatriation incentive
is only available for 2004 or 2005. We are
currently evaluating the application of the
repatriation incentive; however, we cannot
complete our analysis until additional
legislation and/or IRS guidance is provided to
clarify key elements of the legislation. 91 BARRICK Annual Report 2004




---



##### 



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 8. Earnings per Share For the years ended December 31($ millions, except shares in millions and per share amounts in dollars)
    
    2004
    
    
    2003
    
    
    2002Income available to common stockholdersBasic
    
    $
    248
    
    
    $
    200
    
    
    $
    193Effect of dilutive stock options
    
    
    
    
    
    
    
    
    
    
    Diluted
    
    $
    248
    
    
    $
    200
    
    
    $
    193Weighted average shares outstandingBasic
    
    
    533
    
    
    
    539
    
    
    
    541Effect of dilutive stock options
    
    
    1
    
    
    
    
    
    
    
    Diluted
    
    
    534
    
    
    
    539
    
    
    
    541Earnings per shareBasic
    
    $
    0.47
    
    
    $
    0.37
    
    
    $
    0.36Diluted
    
    $
    0.46
    
    
    $
    0.37
    
    
    $
    0.36
 9. Supplemental Cash Flow Information For the years ended December 31
    
    2004
    
    
    2003
    
    
    2002Income statement items:Currency translation losses
    
    $
    1
    
    
    $
    5
    
    
    $
    (Gains) losses on investments (note 10)
    
    
    (1
    )
    
    
    7
    
    
    
    3Accounting changes (note 2b)
    
    
    
    
    
    
    17
    
    
    
    Accretion expense (note 17a)
    
    
    18
    
    
    
    17
    
    
    
    Non-hedge derivative (gains) losses (note 16c)
    
    
    (5
    )
    
    
    (71
    )
    
    
    6Inmet litigation
    
    
    
    
    
    
    16
    
    
    
    Current income tax expense (note 7)
    
    
    22
    
    
    
    54
    
    
    
    59Impairment charges on long-lived assets (note 6)
    
    
    139
    
    
    
    5
    
    
    
    11Revisions to expected cost of AROs at closed mines (note 17a)
    
    
    22
    
    
    
    10
    
    
    
    Amortization of debt issue costs
    
    
    3
    
    
    
    1
    
    
    
    1Losses on write-down of inventory to market value (note 11)
    
    
    9
    
    
    
    3
    
    
    
    6Changes in:Accounts receivable
    
    
    (2
    )
    
    
    3
    
    
    
    (12
    )Inventories
    
    
    (51
    )
    
    
    (1
    )
    
    
    26Accounts payable
    
    
    4
    
    
    
    4
    
    
    
    (25
    )Capitalized mining costs
    
    
    9
    
    
    
    37
    
    
    
    29Other assets and liabilities
    
    
    (25
    )
    
    
    6
    
    
    
    (12
    )Cash payments:Merger and related costs
    
    
    
    
    
    
    
    
    
    
    (50
    )Asset retirement obligations
    
    
    (33
    )
    
    
    (40
    )
    
    
    (70
    )Current income taxes
    
    
    (45
    )
    
    
    (111
    )
    
    
    (52
    )Other items
    
    
    
    
    
    
    4
    
    
    
    35Other net operating activities
    
    $
    65
    
    
    $
    (34
    )
    
    $
    (45
    )Interest paid, net of amounts capitalized
    
    $
    19
    
    
    $
    44
    
    
    $
    57
 92 BARRICK Annual Report 2004




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##### 



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 10. Investments Available-for-sale securitiesAt December 31
    
    2004
    
    
    2003Gains
    
    
    
    
    
    
    GainsFair value
    
    
    in OCI
    
    
    Fair value
    
    
    in OCIBenefit plans:1Fixed-income securities
    
    $
    11
    
    
    $
    
    
    
    $
    6
    
    
    $
    Equity securities
    
    
    19
    
    
    
    10
    
    
    
    26
    
    
    
    8Strategic investments:Equity securities2
    
    
    104
    
    
    
    
    
    
    
    98
    
    
    
    30Total
    
    $
    134
    
    
    $
    10
    
    
    $
    130
    
    
    $
    38
   1.
    
    Under various benefit plans for certain former Homestake executives, a portfolio of
marketable fixed-income and equity securities are held in a rabbi trust that is used to fund
obligations under the plans.2.
    
    Other investments mainly include an investment in Highland Gold with a fair value of $75
million at December 31, 2004. Available-for-sale securities are recorded at
fair value with unrealized gains and losses
recorded in OCI. Realized gains and losses are
recorded in earnings when investments mature or
on sale, calculated using the average cost of
securities sold. We recognize in earnings any
unrealized declines in fair value judged to be
other than temporary (2004  $5 million; 2003 
$11 million; 2002  $nil). Total proceeds from
the sale of investments were $9 million in 2004
(2003  $8 million; 2002  $3 million). Gains (losses) on investments recorded in earnings For the years endedDecember 31
    
    2004
    
    
    2003
    
    
    2002Realized on saleGains
    
    $
    6
    
    
    $
    5
    
    
    $
    Losses
    
    
    
    
    
    
    (1
    )
    
    
    (3
    )Impairment charges
    
    
    (5
    )
    
    
    (11
    )
    
    
    $
    1
    
    
    $
    (7
    )
    
    $
    (3
    )
 Investment in Highland Gold Mining PLC
(Highland) In 2004, we acquired a further 9.3 million
common shares of Highland for $40 million in
cash. Combined with the purchase of 11.1 million
common shares for $46 million in October 2003, we
held a 14% interest in Highland common shares at
December 31, 2004. We have also formed a strategic partnership with
Highland under which:  >
    We have the right to participate on an exclusive basis for up to 50% on any
acquisition made by Highland in Russia; and a similar right extends to Highland for any
acquisition made by us in certain regions in Russia, excluding Irkutsk.>
    We have a right of first refusal with respect to third-party investment in Highlands
Mayskoye property in the Chutotka region, Russia, and plan to pursue discussions with
Highland on establishing a joint venture at Mayskoye. Investment in Celtic Resources Holdings
PLC (Celtic) On December 2, 2004, Barrick and Celtic
entered into a subscription agreement under which
we agreed to subscribe for 3,688,191 units of
Celtic for $7.562 per unit. Each unit consists of
one ordinary share of Celtic and one-half of one
share purchase warrant. Each whole warrant
entitles us to acquire one ordinary share of
Celtic for $7.562, expiring on December 31, 2005.
In the event that Celtic does not acquire 100% of
the license to the Nezhdaninskoye deposit before
June 1, 2005, the number of warrants will
automatically increase by 50%. Completion of the
subscription occurred on January 5, 2005 upon
which we held a 9% interest in Celtics
outstanding ordinary shares. 93 BARRICK Annual Report 2004




---



##### 



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS In connection with the completion of the
subscription, Barrick and Celtic entered into the
following agreements:  >
    We have the pre-emptive right to subscribe for up to $75 million of Celtic shares at
$7.562 per share.>
    Nezhdaninskoye Right of First Refusal.Celtic has granted us the right of first
refusal on any proposed sale of its direct or indirect interest in Nezhdaninskoye.>
    Nezhdaninskoye Purchase Option.Celtic has granted us the right to indirectly
purchase 51% of its interest in Nezhdaninskoye for $195 million, exercisable for a period
of six months starting if and when Celtic indirectly acquires 100% of Nezhdaninskoye.>
    Kazakhstan Participation.Celtic has granted to us the right to acquire 50% of any
interest in any mineral property in Kazakhstan that Celtic acquires. We have 12 months to elect to participate in any such acquisitions by Celtic. To
participate, we must pay Celtic 50% of the cost to Celtic of its interest in the mineral
property. 11. Accounts Receivable, Inventories
and Other Current Assets At December 31
    
    2004
    
    
    2003Accounts receivableAmounts due from
concentrate sales
    
    $
    29
    
    
    $
    26Other
    
    
    29
    
    
    
    30$
    58
    
    
    $
    56InventoriesGold in process and
ore in stockpiles
    
    $
    198
    
    
    $
    163Mine operating supplies
    
    
    82
    
    
    
    58280
    
    
    
    221Non-current ore in stockpiles1
    
    
    (65
    )
    
    
    (57
    )$
    215
    
    
    $
    164Other current assetsDerivative assets (note 16c)
    
    $
    165
    
    
    $
    154Taxes recoverable
    
    
    104
    
    
    
    9Prepaid expenses
    
    
    17
    
    
    
    15$
    286
    
    
    $
    178
   1.
    Ore that we do not expect to process in
the next 12 months is classified in other assets
(note 14). Inventories Material extracted from our mines is
classified as either ore or waste. Ore represents
material that can be mined, processed into a
saleable form and sold at a profit. Ore, which
represents material included in proven and
probable reserves, is recorded as an asset that
is classified within inventory at the point it is
extracted from the mine. Ore is accumulated in
stockpiles that are subsequently processed into
gold in a saleable form under a mine plan that
takes into consideration optimal scheduling of
production of our reserves, present plant
capacity, and the market price of gold. We record gold in process and ore in stockpiles
at cost, less provisions required to reduce
inventory to market value. Costs capitalized to
inventory include direct and indirect materials
and consumables; direct labor; repairs and
maintenance; utilities; amortization of property,
plant and equipment; amortization of capitalized
mining costs; and local mine administrative
expenses. Costs are removed from inventory and
recorded in cost of sales based on the average
cost per ounce of gold in inventory. Average cost
is calculated based on the cost of inventory at
the beginning of a period, plus the cost of
inventory produced in a period. Significant ore in stockpilesAt December 31
    
    2004
    
    
    2003GoldstrikeOre that requires roasting
    
    $
    23
    
    
    $
    22Ore that requires autoclaving
    
    
    17
    
    
    
    19Kalgoorlie
    
    
    46
    
    
    
    32
 At Goldstrike, we expect to fully process the
autoclave stockpile by 2009 and the roaster
stockpile by 2016. At Kalgoorlie, we expect to
process the stockpile by 2017. Mine operating supplies are recorded at purchase
cost, less provisions to reduce slow-moving and
obsolete supplies to market value. Cost of sales includes losses recorded to reduce
inventory cost to market value as follows: 2004 
$9 million; 2003  $3 million; 2002  $6 million. 94 BARRICK Annual Report 2004




---



##### 



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 12. Property, Plant and Equipment At December 31
    
    2004
    
    
    2003Acquired mineral properties
and capitalized mine
development costs
    
    $
    4,489
    
    
    $
    4,242Buildings, plant and equipment
    
    
    3,289
    
    
    
    2,8317,778
    
    
    
    7,073Accumulated amortization
    
    
    (4,387
    )
    
    
    (3,945
    )$
    3,391
    
    
    $
    3,128
 a) Acquired mineral properties
and capitalized mine development
costs Exploration and development stage properties We capitalize the cost of acquisition of land
and mineral rights. The cost is allocated between
proven and probable reserves and mineralization
not considered proven and probable reserves at
the date of acquisition, based on relative fair
values. If we later establish that some
mineralization meets the definition of proven and
probable gold reserves, we classify a portion of
the capitalized acquisition cost as relating to
reserves. After acquisition, various factors can affect the
recoverability of the capitalized cost of land
and mineral rights, particularly the results of
exploration drilling. The length of time between
the acquisition of land and mineral rights and
when we undertake exploration work varies based
on the prioritization of our exploration projects
and the size of our exploration budget. If we
conclude that the carrying amount of land and
mineral rights is impaired, we reduce this
carrying amount to estimated fair value through
an impairment charge. We capitalize costs incurred at development
projects that meet the definition of an asset
after mineralization is classified as proven and
probable gold reserves (as defined by United
States reporting standards). Before classifying
mineralization as proven and probable gold
reserves, costs incurred at development projects
are considered exploration costs, and are
expensed as incurred. Effective May 1, 2004, we
determined that mineralization at Lagunas Norte
met the definition of proven and probable
reserves for United States reporting purposes.
Following this determination, we began
capitalizing costs that meet the definition of an asset at
Lagunas Norte prospectively for future periods.
The cost of start-up activities at new mines such
as recruiting and training is expensed as
incurred. At December 31, 2004 the following assets were in
an exploration, development or construction stage
and amortization of the capitalized costs had not
yet begun. Carrying amount
    
    
    Targeted timingat December 31,
    
    
    of production2004
    
    
    start-upDevelopment stage projectsVeladero
    
    $
    362
    
    
    
    2005Lagunas Norte
    
    
    196
    
    
    
    2005Tulawaka
    
    
    70
    
    
    
    2005Cowal
    
    
    128
    
    
    
    2006Pascua-Lama
    
    
    230
    
    
    
    2009Buzwagi
    
    
    102
    
    
    
    Nevada Power Plant
    
    
    18
    
    
    
    2005Total
    
    $
    1,106
 Interest cost is considered an element of the
historical cost of an asset when a period of time
is necessary to prepare it for its intended use.
We capitalize interest costs to assets under
development or construction while activities are
in progress. We stop capitalizing interest costs
when construction of an asset is substantially
complete and it is ready for its intended use. We
measure the amount capitalized based on
cumulative capitalized costs, exclusive of the
impact, if any, of impairment charges on the
carrying amount of an asset. Producing mines We start amortizing capitalized mineral
property acquisition and mine development costs
when production begins. Amortization is
capitalized as a component of the cost of
inventory. Amortization is calculated using the
units-of-production method, where the numerator
is the number of ounces produced and the
denominator is the estimated recoverable ounces
of gold contained in proven and probable
reserves. During production at underground mines, we incur
development costs to build new shafts, drifts and
ramps that will enable us to physically access
ore underground. 95 BARRICK Annual Report 2004




---



##### 



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The time over which we will continue to incur
these costs depends on the mine life, and in some
cases could be up to 25 years. These underground
development costs are capitalized as incurred. In
years prior to 2003 we amortized the aggregate
total of historically capitalized costs, and
estimated costs that will be incurred to enable
access to the ore body over the remaining mine
life, using the units-of-production method. In
2003, we changed the method of amortizing these
costs to better attribute these costs to ounces
of gold produced, as well as to remove the
uncertainty inherent in using estimates of future
underground development costs in the measurement
of amortization. Under our revised method of measuring
amortization for underground development costs,
the cost incurred to access specific ore blocks
or areas of the mine, which only provides an
economic benefit over the period of mining that
ore block or area, is attributed to earnings
using the units-of-production method where the
denominator is estimated recoverable ounces of
gold contained in proven and probable reserves
within that ore block or area. If capitalized
costs provide an economic benefit over the entire
mine life, the costs are attributed to earnings
using the units-of-production method, where the
denominator is the estimated recoverable ounces
of gold contained in total accessible proven and
probable reserves. b) Buildings, plant and equipment We record buildings, plant and equipment at
cost. We capitalize costs that extend the
productive capacity or useful economic life of an
asset. Repairs and maintenance expenditures are
expensed as incurred. We amortize the cost less
estimated residual value, using the straight-line
method over the estimated useful economic life of
the asset. The longest estimated useful economic
life for buildings and equipment at ore
processing facilities is 25 years and for mining
equipment is 15 years. c) Impairment evaluations  operating mines
and development projects We review and test the carrying amounts of
assets when events or changes in circumstances
suggest that the carrying amount may not be recoverable. We group
assets at the lowest level for which identifiable
cash flows are largely independent of the cash
flows of other assets and liabilities. For
operating mines and development projects, all
assets are included in one group. If there are
indications that an impairment may have occurred,
we prepare estimates of expected future cash
flows for each group of assets. Expected future
cash flows are based on a probability-weighted
approach applied to potential outcomes. Estimates of expected future cash flow reflect:  >
    Estimated sales proceeds from the production and sale of recoverable ounces of gold
contained in proven and probable reserves;>
    Expected future commodity prices and currency exchange rates (considering historical
and current prices, price trends and related factors). In impairment assessments
conducted in 2004 we used an expected future market gold price of $400 per ounce, and an
expected future market A$:US$ exchange rate of $0.70 and C$:US$ exchange rate of $0.82;>
    Expected future operating costs and capital expenditures to produce proven and
probable gold reserves based on mine plans that assume current plant capacity, but exclude
the impact of inflation;>
    Expected cash flows associated with value beyond proven and probable reserves, which
includes the expected cash outflows required to develop and extract the value beyond
proven and probable reserves; and>
    Environmental remediation costs excluded from the measurement of asset retirement
obligations. We record a reduction of a group of assets to
fair value as a
charge to earnings if expected future cash flows
are less than the carrying amount. We estimate
fair value by discounting the expected future
cash flows using a discount factor that reflects
the risk-free rate of interest for a term
consistent with the period of expected cash
flows. d) Capital commitments At December 31, 2004, we had capital
commitments of $322 million for 2005/2006 in
connection with construction at our development
projects and of a power plant in Nevada for the
Goldstrike mine. 96 BARRICK Annual Report 2004




---



##### 



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 13. Capitalized Mining Costs We capitalize and amortize certain costs
relating to the removal of waste rock at open-pit
mines, commonly referred to as stripping costs.
We include in inventory, amortization of amounts
capitalized based on a stripping ratio using
the units-of-production method. This accounting method results in the smoothing
of these costs over the life of a mine. Instead
of capitalizing and amortizing these costs, some
mining companies capitalize them to inventory as
incurred, which may result in the reporting of
greater volatility in period-to-period results.
If we followed a policy of capitalizing these
costs to inventory as incurred, rather than using
our present policy, our reported cost of sales
would have been $9 million lower in 2004 (2003 
$37 million lower, 2002  $29 million lower). Stripping ratios1For the years ended
    
    Mine lifeDecember 31
    
    (years)2
    
    
    2004
    
    
    2003
    
    
    2002Goldstrike Open Pit
    
    
    14
    
    
    
    109:1
    
    
    
    112:1
    
    
    
    112:1Pierina
    
    
    4
    
    
    
    60:1
    
    
    
    48:1
    
    
    
    48:1
   1. The stripping ratio is calculated as
the ratio of total tons (ore and waste) of
material to be moved compared to total
recoverable proven and probable gold
reserves.
 2. Costs capitalized will be fully amortized by
the end of the mine lives. The carrying amount
of capitalized mining costs is grouped with
property, plant and equipment for impairment
evaluation purposes. 14. Other Assets At December 31
    
    2004
    
    
    2003Derivative assets (note 16c)
    
    $
    257
    
    
    $
    256Ore in stockpiles (note 11)
    
    
    65
    
    
    
    57Taxes recoverable
    
    
    50
    
    
    
    52Deferred income tax assets (note 18)
    
    
    97
    
    
    
    59Debt issue costs
    
    
    38
    
    
    
    11Deferred stock-based
compensation (note 21b)
    
    
    5
    
    
    
    6Other
    
    
    54
    
    
    
    56$
    566
    
    
    $
    497
 Debt issue costs Additions to debt issue costs in 2004
principally relate to new debt financings put in
place during the year. Amortization of debt issue
costs is calculated on a straight-line basis or
using the interest method over the term of each
debt obligation, and classified as a component of
interest cost. 15. Other Current Liabilities At December 31
    
    2004
    
    
    2003Asset retirement
obligations (note 17a)
    
    $
    33
    
    
    $
    36Current part of
long-term debt (note 16b)
    
    
    31
    
    
    
    41Derivative liabilities (note 16c)
    
    
    11
    
    
    
    3Post-retirement benefits (note 22)
    
    
    2
    
    
    
    5Deferred revenue
    
    
    5
    
    
    
    17Other
    
    
    1
    
    
    
    17$
    83
    
    
    $
    119
 16. Financial Instruments Financial instruments include cash; evidence
of ownership in an entity; or a contract that
imposes an obligation on one party and conveys a
right to a second entity to deliver/receive cash
or another financial instrument. Information on
certain types of financial instruments is
included in these financial statements as
follows: accounts receivable  note 11;
investments  note 10; restricted stock units 
note 21. a) Cash and equivalents Cash and equivalents include cash, term
deposits and treasury bills with original
maturities of less than 90 days. 97 BARRICK Annual Report 2004




---



##### 



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS b) Long-term debt For the years ended December 31At December 31
    
    
    2004
    
    
    2003
    
    
    2002Interest
    
    
    Effective
    
    
    Interest
    
    
    Effective
    
    
    Interest
    
    
    Effective2004
    
    
    2003
    
    
    cost
    
    
    rate1
    
    
    cost
    
    
    rate1
    
    
    cost
    
    
    rate17  1/2% debentures2
    
    $
    495
    
    
    $
    501
    
    
    $
    31
    
    
    
    6.1
    %
    
    $
    31
    
    
    
    6.1
    %
    
    $
    38
    
    
    
    5.7
    %5 4/5% notes3
    
    
    397
    
    
    
    
    
    
    
    3
    
    
    
    6.0
    %
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4 7/8% notes4
    
    
    348
    
    
    
    
    
    
    
    2
    
    
    
    5.0
    %
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Veladero financing5
    
    
    198
    
    
    
    
    
    
    
    4
    
    
    
    7.5
    %
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Bulyanhulu financing6
    
    
    150
    
    
    
    174
    
    
    
    14
    
    
    
    8.0
    %
    
    
    15
    
    
    
    7.7
    %
    
    
    15
    
    
    
    7.2
    %Variable-rate bonds7
    
    
    63
    
    
    
    80
    
    
    
    1
    
    
    
    1.2
    %
    
    
    1
    
    
    
    1.1
    %
    
    
    1
    
    
    
    1.4
    %Capital leases
    
    
    5
    
    
    
    5
    
    
    
    
    
    
    
    7.8
    %
    
    
    
    
    
    
    8.2
    %
    
    
    1
    
    
    
    7.9
    %Construction debt under
build to suit lease8
    
    
    30
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Other interest
    
    
    
    
    
    
    
    
    
    
    5
    
    
    
    
    
    
    
    2
    
    
    
    
    
    
    
    4
    
    
    
    1,686
    
    
    
    760
    
    
    
    60
    
    
    
    6.1
    %
    
    
    49
    
    
    
    6.3
    %
    
    
    59
    
    
    
    6.8
    %Less: current part/
interest capitalized
    
    
    (31
    )
    
    
    (41
    )
    
    
    (41
    )
    
    
    
    
    
    
    (5
    )
    
    
    
    
    
    
    (2
    )$
    1,655
    
    
    $
    719
    
    
    $
    19
    
    
    
    
    
    
    $
    44
    
    
    
    
    
    
    $
    57
   1. The effective rate includes the stated interest rate under the debt agreement, amortization
of debt issue costs, and the impact of interest rate contracts designated in a hedging relationship
with long-term debt.
 2. On April 22, 1997, we issued $500 million of debentures that mature on May 1, 2007. 3. On November 12, 2004, we issued $400 million of debentures that mature on November 15, 2034.
The debentures were issued at a $3 million discount. 4. On November 12, 2004, we issued $350 million of debentures that mature on November 15, 2014. The
debentures were issued at a $2 million discount. 5. One of our wholly owned subsidiaries, Minera Argentina Gold S.A. in Argentina has a
variable-rate limited recourse amortizing loan facility for $250 million. At December 31, 2004, a
total of $198 million had been drawn down under this facility. We have guaranteed the loan until
completion occurs, after which it will become non-recourse. The loan is insured for political risks
by branches of the Canadian and German governments. 6. One of our wholly owned subsidiaries, Kahama Mining Corporation Ltd. in Tanzania, has a
variable-rate non-recourse amortizing loan for $150 million. The loan is insured for political
risks equally by branches of the Canadian government and the World Bank. 7. Certain of our wholly owned subsidiaries have issued variable-rate, tax-exempt bonds of $25
million (due 2029) and $38 million (due 2032) for a total of $63 million. 8. One of our wholly owned subsidiaries, Minera Barrick Misquichilca, has entered into a $56
million build to suit lease facility to finance the construction of the leach pad and process
facilities at the Lagunas Norte project. The five year lease term begins on October 1, 2005.
Amounts reimbursed for construction costs at December 31, 2004 have been presented as construction
debt until the lease term begins. Obligations under the lease will be repayable in 20 equal
quarterly installments over the term of the lease. We also 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 billion or the equivalent amount
in Canadian currency. The credit facility, which is unsecured, matures in April 2008 and has an
interest rate of LIBOR plus 0.27% to 0.35% when used, and an annual fee of 0.08%. We have not drawn
any amounts under the credit facility. 98 BARRICK Annual Report 2004




---



##### 



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Scheduled debt repayments1 2009 and2005
    
    
    2006
    
    
    2007
    
    
    2008
    
    
    thereafter7 1/2% debentures
    
    $
    
    
    
    $
    
    
    
    $
    500
    
    
    $
    
    
    
    $
    5 4/5% notes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4004 7/8 % notes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    350Veladero financing
    
    
    
    
    
    
    24
    
    
    
    46
    
    
    
    38
    
    
    
    90Bulyanhulu financing
    
    
    31
    
    
    
    34
    
    
    
    34
    
    
    
    34
    
    
    
    17Variable-rate bonds
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    63$
    31
    
    
    $
    58
    
    
    $
    580
    
    
    $
    72
    
    
    $
    920
   1. Excludes capital leases and build to suit lease facility.
 Minimum payments under capital leases1 Years ending December 312005
    
    $
    122006
    
    
    152007
    
    
    122008
    
    
    112009
    
    
    11Capital lease obligations
    
    $
    61
   1. Includes the $56 million build to suit lease facility.
 c) Use of derivative instruments (derivatives) in risk management In the normal course of business, our assets, liabilities and forecasted transactions are
impacted by various market risks including: Item
    
    Impacted by> Cost of sales  Consumption of oil and propane
    
    > Prices of oil and propane Local currency denominated expenditures
    
    > Currency exchange rates  US dollar versus A$ and C$> Administration costs in local currencies
    
    > Currency exchange rates  US dollar versus A$ and C$> Capital expenditures in local currencies
    
    > Currency exchange rates  US dollar versus A$, C$ and > Interest earned on cash
    
    > US dollar interest rates> Interest payments on variable-rate debt
    
    > US dollar interest rates> Fair value of fixed-rate debt
    
    > US dollar interest rates
 Under our risk management policy we seek to
mitigate the impact of these market risks to
control costs and enable us to plan our business
with greater certainty. The timeframe and manner
in which we manage these risks varies for each
item based upon our assessment the risk and
available alternatives for mitigating risk. For
these particular risks, we believe that
derivatives are an effective means of managing
risk. The primary objective of the hedging elements of
our derivative positions is that changes in the
values of hedged items are offset by changes in
the values of derivatives. Most of the
derivatives we use meet the FAS 133 hedge
effectiveness criteria and are designated in a
hedge accounting relationship. Some of the
derivative positions are effective in achieving
our risk management objectives but they do not
meet the strict FAS 133 hedge effectiveness
criteria, and they are classified as non-hedge
derivatives. 99 BARRICK Annual Report 2004




---



##### 



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Our use of derivatives is based on
established practices and parameters, which are
subject to the oversight of the Finance Committee
of the Board of Directors. A Compliance Function
independent of the Corporate Treasury Group
monitors derivative transactions and has
responsibility for recording and accounting for
derivatives. Accounting policy for derivatives We record derivatives on the balance sheet at
fair value except for gold and silver sales
contracts, which are excluded from the scope of
FAS 133, because the obligations will be met by
physical delivery of our gold and silver
production and they meet the other requirements
set out in paragraph 10(b) of FAS 133. In
addition, our past sales practices, productive
capacity and delivery intentions are consistent
with the definition of a normal sales contract.
Accordingly, we have elected to designate our
gold and silver sales contracts as normal sales
contracts with the result that the principles of
FAS 133 are not applied to them. Instead we apply
revenue recognition accounting principles as
described in note 4. On the date we enter into a derivative that is
accounted for under FAS 133, we designate it as
either a hedging instrument or a non-hedge
derivative. A hedging instrument is designated in
either:  > a fair value hedge relationship with a recognized asset or liability; or> a cash flow hedge relationship with either a forecasted
transaction or the variable future cash flows arising from a recognized asset or
liability. At the inception of a hedge, we formally document
all relationships between hedging instruments and
hedged items, including the related
risk-management strategy. This documentation
includes linking all hedging instruments to
either specific assets and liabilities, specific
forecasted transactions or variable future cash
flows. It also includes the method of assessing
retrospective and prospective hedge
effectiveness. In cases where we
use regression analysis to assess prospective
effectiveness, we consider regression outputs for
the coefficient of determination (R-squared), the
slope coefficient and the t-statistic to assess
whether a hedge is expected to be highly
effective. Each period, using a dollar offset
approach, we retrospectively assess whether
hedging instruments have been highly effective in
offsetting changes in the fair value of hedged
items and we measure the amount of any hedge
ineffectiveness. We also assess each period
whether hedging instruments are expected to be
highly effective in the future. If a hedging
instrument is not expected to be highly
effective, we stop hedge accounting
prospectively. In this case accumulated gains or
losses remain in other comprehensive income
(OCI) until the hedged item


affects earnings. We also stop hedge accounting
prospectively if:  > a derivative is settled;> it is no longer highly probable that a forecasted transaction will occur; or> we de-designate a hedging relationship. If we conclude that it is probable that a
forecasted transaction will not occur in the
originally specified time frame, or within a
further two-month period, gains and losses
accumulated in OCI are immediately transferred to
earnings. In all situations when hedge accounting
stops, a derivative is classified as a non-hedge
derivative prospectively. Cash flows from
derivative transactions are included under
operating activities, except for derivatives
designated as a cash flow hedge of forecasted
capital expenditures, which are included under
investing activities. Changes in the fair value of derivatives each
period are recorded as follows:  > Fair value hedges: recorded in
earnings as well as changes in fair
value of the hedged item.> Cash flow hedges: recorded in
OCI until earnings are affected by the
hedged item, except for any hedge
ineffectiveness which is recorded in
earnings immediately.> Non-hedge derivatives: recorded in earnings. 100 BARRICK Annual Report 2004




---



##### 



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Summary of derivatives at December 31, 20041  Notional amount
    
    
    Accounting classificationby term to maturity
    
    
    by notional amountWithin
    
    
    2 to 5
    
    
    Over 5
    
    
    
    
    
    
    Cash flow
    
    
    Fair value
    
    
    Non-
    
    
    Fair1 year
    
    
    years
    
    
    years
    
    
    Total
    
    
    hedge
    
    
    hedge
    
    
    hedge
    
    
    valueUS dollar interest rate contractsReceive-fixed swaps (millions)
    
    $
    75
    
    
    $
    725
    
    
    $
    
    
    
    $
    800
    
    
    $
    300
    
    
    $
    500
    
    
    $
    
    
    
    
    (5
    )Pay-fixed swaps (millions)
    
    
    
    
    
    
    150
    
    
    
    125
    
    
    
    275
    
    
    
    150
    
    
    
    
    
    
    
    125
    
    
    
    (24
    )Net notional position
    
    $
    75
    
    
    $
    575
    
    
    $
    (125
    )
    
    $
    525
    
    
    $
    150
    
    
    $
    500
    
    
    $
    (125
    )
    
    $
    (29
    )Currency contractsC$:US $
contracts
(C$ millions)
    
    C$
    350
    
    
    C$
    600
    
    
    C$
    
    
    
    C$
    950
    
    
    C$
    935
    
    
    C$
    
    
    
    C$
    15
    
    
    $
    99A$:US $
contracts
(A$ millions)
    
    A$
    844
    
    
    A$
    1,291
    
    
    A$
    
    
    
    A$
    2,135
    
    
    A$
    2,125
    
    
    A$
    
    
    
    A$
    10
    
    
    $
    198:US$ contracts ( millions)
    
    
    26
    
    
    
    
    
    
    
    
    
    
    
    26
    
    
    
    26
    
    
    
    
    
    
    
    
    
    
    $
    1Commodity contractsFuel
(WTI)
(thousands of barrels)
    
    
    738
    
    
    
    1,618
    
    
    
    
    
    
    
    2,356
    
    
    
    1,946
    
    
    
    
    
    
    
    410
    
    
    $
    7Propane
contracts
(millions of gallons)
    
    
    11
    
    
    
    18
    
    
    
    
    
    
    
    29
    
    
    
    29
    
    
    
    
    
    
    
    
    
    
    $
    (3
    )
   1. Excludes normal sales contracts.
 US dollar interest rate contractsCash flow hedges  cash balances Receive-fixed swaps have been
designated against the first $300 million of our cash balances as a
hedge of the variability of forecasted interest
receipts on the balances caused by changes in
Libor. Prior to December 2004, prospective and
retrospective hedge effectiveness was assessed
using the hypothetical derivative method under
FAS 133. The prospective test involves comparing
the effect of a theoretical shift in the forward
interest rate curve on the fair value of both the
actual and hypothetical derivative. The
retrospective test
involves comparing the effect of actual changes
in interest rates in each period on the fair
value of both the actual and hypothetical
derivative using a dollar offset approach. In
December 2004, we de-designated these swaps and
immediately re-designated them in a new hedging
relationship in order to adopt a new method of
assessing prospective and retrospective
effectiveness. At the time of the redesignation
these swaps had a fair value near zero. From
December 2004 onwards, under
the new method, prospective and retrospective
hedge effectiveness is assessed using the change
in variable cash flows method. This involves a
comparison of the floating-rate leg of the swap
to the variable-rate cash flows from interest
receipts on cash. Each period the effective portion of changes in
the fair value of the swaps, which relates to
future interest receipts, is recorded in OCI.
Also, as interest is received and recorded in
earnings, an amount equal to the difference
between the fixed-rate interest earned on the
swaps and the variable-rate interest earned on
cash is recorded in earnings as a component of
interest income. Cash flow hedges  Bulyanhulu financing Pay-fixed swaps totaling $150 million have been
designated against the Bulyanhulu financing, as a
hedge of the variability in forecasted interest
payments caused by changes in Libor. We have
concluded that the hedges are 100% effective
under FAS 133, because the conditions of FAS 133
for the assumption of no hedge ineffectiveness
have been met. Changes in fair value of the
swaps, which relate to future interest payments,
are recorded 101 BARRICK Annual Report 2004






---



##### 



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS in OCI. Also, as interest payments on the
financing are recorded in earnings, an amount
equal to the difference between the fixed-rate
interest paid on the swap and the variable-rate
interest paid on the financing is recorded in
earnings as a component of interest costs. Fair value hedges Receive-fixed swaps totaling $500 million have
been designated against the 7 1/2% debentures
as a hedge of the variability in the fair value
of the debentures caused by changes in Libor. We
have concluded that the hedges are 100% effective
under FAS 133, because the critical terms
(including: notional amount, maturity date,
interest payment and underlying interest rate 
i.e. Libor) of the swaps and the debentures are
the same. Changes in fair value of the swaps,
together with an equal corresponding change in
fair value of the debentures, caused by changes
in Libor, are recorded in earnings each period.
Also, as interest payments on the debentures are
recorded in earnings, an amount equal to the
difference between the fixed-rate interest
received under the swap less the variable-rate
interest paid under the swap is recorded in
earnings as a component of interest costs. Non-hedge contracts We use gold lease rate swaps as described in note
4. The valuation of gold lease rate swaps is
impacted by market US dollar interest rates. Our
non-hedge pay-fixed swap position mitigates the
impact of changes in US dollar interest rates on
the valuation of gold lease rate swaps. Currency contracts Cash flow hedges Currency contracts totaling C$935 million,
A$2,125 million and 26 million have been
designated against forecasted local currency
denominated expenditures as a hedge of the
variability of the US dollar amount of those
expenditures caused by changes in currency
exchange rates. Hedged items are identified as
the first stated quantity of dollars of
forecasted expenditures in a future month. For a
C$730 million and A$1,671 million portion of the
contracts, we have concluded that the
hedges are 100% effective under FAS 133 because
the critical terms (including: notional amount
and maturity date) of the hedged items and
currency contracts are the same. For 26 million,
and the remaining C$205 million and A$454 million
portions, prospective and retrospective hedge
effectiveness is assessed using the hypothetical
derivative method under FAS 133. The prospective
test involves comparing the effect of a
theoretical shift in forward exchange rates on
the fair value of both the actual and
hypothetical derivative. The retrospective test
involves comparing the effect of historic changes
in exchange rates
each period on the fair value of both the actual
and hypothetical derivative using a dollar offset
approach. The effective portion of changes in
fair value of the currency contracts is recorded
in OCI until the forecasted expenditure impacts
earnings. For expenditures capitalized to the
cost of inventory, this is upon sale of
inventory, and for capital expenditures, this is
when amortization of the capital assets is
recorded in earnings. If it is probable that a hedged item will no
longer occur, the accumulated gains or losses in
OCI for the associated currency contract are
reclassified to earnings immediately. The
identification of which currency contracts are
associated with these hedged items uses a
last-in, first-out (LIFO) approach, based on
the order in which currency contracts were
originally designated in a hedging relationship. Commodity contracts Cash flow hedges Commodity contracts totaling 1,946 thousand
barrels of diesel fuel and 29 million gallons of
propane have been designated against forecasted
purchases of the commodities for expected
consumption at our mining operations. The
contracts act as a hedge of the impact of
variability in market prices on the cost of
future commodity purchases. Hedged items are
identified as the first stated quantity in
millions of barrels/gallons of forecasted
purchases in a future month. Prospective 102 BARRICK Annual Report 2004




---



##### 



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS and retrospective hedge effectiveness is
assessed using the hypothetical derivative method
under FAS 133. The prospective test is based on
regression analysis of the month-on-month change
in fair value of both the actual derivative and a
hypothetical derivative caused by actual historic
changes in commodity prices over the last three
years. The retrospective test involves comparing
the effect of historic changes in commodity
prices each period on the fair value of both the
actual and hypothetical derivative using a dollar
offset approach. The effective portion of changes
in fair value of the commodity contracts is
recorded in OCI until the forecasted transaction
impacts earnings. The cost of commodity
consumption is capitalized to the cost of
inventory, and therefore this is upon the sale of
inventory. If it is probable that a hedged item will no
longer occur, the accumulated gains or losses in
OCI for the associated commodity contract are
reclassified to earnings immediately. The
identification of which commodity contracts are
associated with these hedged items uses a LIFO
approach, based on the order in which commodity
contracts were originally designated in a hedging
relationship. Non-hedge contracts Non-hedge fuel contracts are used to mitigate the
risk of oil price changes on consumption at the
Pierina, Eskay Creek and Lagunas Norte mines. On
completion of regression analysis, we concluded
that the contracts do not meet the highly
effective criterion in FAS 133 due to currency
and basis differences between contract prices and
the prices charged to the mines by oil suppliers.
Despite not qualifying as an accounting hedge,
the contracts protect the Company to a

significant extent from the effects of oil price
changes. Derivative assets and liabilities 2004
    
    
    2003At January 1
    
    $
    337
    
    
    $
    29Derivatives settled
    
    
    (120
    )
    
    
    (91
    )Change in fair value of:Non-hedge derivatives
    
    
    3
    
    
    
    52Cash flow hedgesEffective portion
    
    
    147
    
    
    
    348Ineffective portion
    
    
    
    
    
    
    1Fair value hedges
    
    
    (8
    )
    
    
    (2
    )At December 31
    
    $
    359
    1
    
    $
    337
    1Classification:
    
    
    
    
    
    
    
    

Other current assets
    
    $
    165
    
    
    $
    154Other assets
    
    
    257
    
    
    
    256Other current liabilities
    
    
    (11
    )
    
    
    (3
    )Other long-term obligations
    
    
    (52
    )
    
    
    (70
    )$
    359
    
    
    $
    337
   1. Derivative assets and liabilities are
presented net and related amounts due to/from
counterparties if the conditions of FIN No. 39,
Offsetting of Amounts Related to Certain
Contracts, are met. Amounts receivable from
counterparties netted against derivative
liabilities totaled $16 million at December 31,
2004.
 Non-hedge derivative gains (losses)1 For the years endedDecember 31
    
    2004
    
    
    2003
    
    
    2002Non-hedge derivativesCommodity contracts
    
    $
    (9
    )
    
    $
    3
    
    
    $
    (2
    )Currency contracts
    
    
    (4
    )
    
    
    17
    
    
    
    8Interest rate contracts
    
    
    16
    
    
    
    32
    
    
    
    (12
    )3
    
    
    
    52
    
    
    
    (6
    )Hedge ineffectivenessOngoing hedge inefficiency
    
    
    
    
    
    
    1
    
    
    
    Due to changes in timing of
hedged items
    
    
    2
    
    
    
    18
    
    
    
    $
    5
    
    
    $
    71
    
    
    $
    (6
    )
   1. Non-hedge derivative gains (losses)
are classified as a component of other
(income) expense.
 103 BARRICK Annual Report 2004




---



##### 



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Cash Flow Hedge Gains (losses) in OCICommodity
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Interest rateprice hedges
    
    
    Currency hedges
    
    
    hedgesOper-
    
    
    Admin-
    
    
    Capital
    
    
    
    
    
    
    Long-Gold/
    
    
    
    
    
    
    ating
    
    
    istration
    
    
    expen-
    
    
    Cash
    
    
    termSilver
    
    
    Fuel
    
    
    costs

    
    
    costs
    
    
    ditures
    
    
    balances
    
    
    debt
    
    
    TotalAt December 31, 2001
    
    $
    25
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    25Effective portion of change in
fair value of hedging instruments
    
    
    (4
    )
    
    
    
    
    
    
    33
    
    
    
    
    
    
    
    
    
    
    
    37
    
    
    
    (17
    )
    
    
    49Transfers to earnings:On recording hedged items in earnings
    
    
    (12
    )
    
    
    
    
    
    
    (7
    )
    
    
    
    
    
    
    
    
    
    
    (11
    )
    
    
    5
    
    
    
    (25
    )At December 31, 2002
    
    
    9
    
    
    
    
    
    
    
    26
    
    
    
    
    
    
    
    
    
    
    
    26
    
    
    
    (12
    )
    
    
    49Effective portion of change in
fair value of hedging instruments
    
    
    4
    
    
    
    (1
    )
    
    
    251
    
    
    
    32
    
    
    
    54
    
    
    
    9
    
    
    
    (1
    )
    
    
    348Transfers to earnings:On recording hedged
items in earnings
    
    
    (13
    )
    
    
    
    
    
    
    (58
    )
    
    
    (7
    )
    
    
    
    
    
    
    (18
    )
    
    
    5
    
    
    
    (91
    )Hedge ineffectiveness due to
changes in timing of hedged items
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (18
    )1
    
    
    
    
    
    
    
    
    
    
    (18
    )At December 31, 2003
    
    
    
    
    
    
    (1
    )
    
    
    219
    
    
    
    25
    
    
    
    36
    
    
    
    17
    
    
    
    (8
    )
    
    
    288Effective portion of change in
fair value of hedging instruments
    
    
    
    
    
    
    7
    
    
    
    117
    
    
    
    19
    
    
    
    19
    
    
    
    5
    
    
    
    (20
    )
    
    
    147Transfers to earnings:On recording hedged
items in earnings
    
    
    
    
    
    
    (4
    )
    
    
    (96
    )
    
    
    (11
    )
    
    
    (5
    )
    
    
    (19
    )
    
    
    3
    
    
    
    (132
    )Hedge ineffectiveness due to
changes in timing of hedged items
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2
    )1
    
    
    
    
    
    
    
    
    
    
    (2
    )At December 31, 2004
    
    $
    
    
    
    $
    2
    
    
    $
    240
    
    
    $
    33
    
    
    $
    48
    
    
    $
    3
    
    
    $
    (25
    )
    
    $
    301
    2
 Gold
    
    
    Cost of
    
    
    Cost of
    
    
    Admin-
    
    
    Amorti-
    
    
    Interest
    
    
    InterestHedge gains/losses classified within
    
    sales
    
    
    sales
    
    
    sales
    
    
    istration
    
    
    zation
    
    
    income
    
    
    costPortion of hedge gain (loss)
expected to affect 2005 earnings2
    
    $
    
    
    
    $
    3
    
    
    $
    110
    
    
    $
    18
    
    
    $
    2
    
    
    $
    7
    
    
    $
    (4
    )
    
    $
    136
   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, 2004. 104 BARRICK Annual Report 2004




---



##### 



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS d) Fair Value of Financial
Instruments Fair value is the value at which a financial
instrument could be closed out or sold in a
transaction with a willing and knowledgeable
counterparty over a period of time consistent
with our risk management or investment strategy.
Fair value is based on quoted market
prices, where available. If market quotes are not available, fair value is based
on internally developed models that use market-based or independent information
as inputs. These models could produce a fair value that may not be reflective of
future fair value. Fair value information At December 31
    
    2004
    
    
    2003Carrying
    
    
    Estimated
    
    
    Carrying
    
    
    Estimatedamount
    
    
    fair value
    
    
    amount
    
    
    fair valueFinancial assetsCash and
equivalents1
    
    $
    1,398
    
    
    $
    1,398
    
    
    $
    970
    
    
    $
    970Accounts
receivable1
    
    
    58
    
    
    
    58
    
    
    
    56
    
    
    
    56Investments2
    
    
    134
    
    
    
    134
    
    
    
    130
    
    
    
    130Derivative
assets3
    
    
    422
    
    
    
    422
    
    
    
    410
    
    
    
    410$
    2,012
    
    
    $
    2,012
    
    
    $
    1,566
    
    
    $
    1,566Financial liabilitiesAccounts
payable1
    
    $
    335
    
    
    $
    335
    
    
    $
    245
    
    
    $
    245Long-term
debt4
    
    
    1,686
    
    
    
    1,731
    
    
    
    760
    
    
    
    841Derivative
liabilities3
    
    
    63
    
    
    
    63
    
    
    
    73
    
    
    
    73Restricted
stock
units5
    
    
    6
    
    
    
    6
    
    
    
    10
    
    
    
    10$
    2,090
    
    
    $
    2,135
    
    
    $
    1,088
    
    
    $
    1,169
   1.
    Recorded at cost. Fair value approximates the carrying amounts due to the short-term
nature and generally negligible credit losses.2.
    Recorded at fair value. Quoted market prices, when available, are used to determine fair value.
If quoted market prices are not available, then fair values are estimated by using quoted prices of
instruments with similar characteristics or discounted cash flows.3.
    Recorded at fair value using liquid market pricing based on exchange traded prices,
broker-dealer quotations or related input factors which assume all counterparties have the same
credit rating.4.
    Long-term debt is generally recorded at cost except for obligations that are designated in a
fair value hedge relationship, which are recorded at fair value in periods where a hedge
relationship exists. The fair value of long-term debt is based on current market interest rates,
adjusted for our credit quality.5.
    Recorded at fair value based on the period end market stock price. e) Credit risk Credit risk is the risk that a third party
might fail to fulfill its performance obligations
under the terms of a financial instrument. For
cash and equivalents and accounts receivable,
credit risk represents the carrying amount on the
balance sheet. For derivatives, when the fair value is positive,
this creates credit risk. When the fair value of
a derivative is negative, we assume no credit
risk. In cases where we have a legally
enforceable master netting agreement with a
counterparty, credit risk exposure represents the
net amount of the positive and negative fair
values for 105 BARRICK Annual Report 2004




---



##### 



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS similar types of derivatives. For a net
negative amount, we regard credit risk as being
zero. A net positive amount for a counterparty is
a reasonable measure of credit risk when there is
a legally enforceable master netting agreement.
We mitigate credit risk by: >
    
    entering into derivatives with high credit-quality counterparties;>
    
    limiting the amount of exposure to each counter-party; and>
    
    monitoring the financial condition
of counterparties.
 Credit quality of financial assets At December 31, 2004
    
    S&P credit ratingAA - or higher
    
    
    A - or higher
    
    
    B to BBB
    


    
    TotalCash and equivalents
    
    $
    744
    
    
    $
    654
    
    
    $
    
    
    
    $
    1,398Derivatives1
    
    
    303
    
    
    
    71
    
    
    
    
    
    
    
    374Accounts receivable
    
    
    
    
    
    
    
    
    
    
    58
    
    
    
    58$
    1,047
    
    
    $
    725
    
    
    $
    58
    
    
    $
    1,830Number of counterparties2
    
    
    14
    
    
    
    5
    
    
    
    Largest counterparty (%)
    
    
    31.5
    
    
    
    35.1
    
    
    
    
 Concentrations of credit risk At December 31, 2004United States
    
    
    Canada
    
    
    Other international
    
    
    TotalCash and equivalents
    
    $
    1,172
    
    
    $
    69
    
    
    $
    157
    
    
    $
    1,398Derivatives1
    
    
    145
    
    
    
    193
    
    
    
    36
    
    
    
    374Accounts receivable
    
    
    7
    
    
    
    22
    
    
    
    29
    
    
    
    58$
    1,324
    
    
    $
    284
    
    
    $
    222
    
    
    $
    1,830
   1.
    
    The amounts presented reflect the net credit exposure after considering the effect of master
netting agreements.2.
    
    For cash and equivalents and derivatives combined. f ) Risks relating to the use of derivatives By using derivatives, in addition to credit
risk, we are affected by market risk and market
liquidity risk. Market risk is the risk that the
fair value of a derivative might be adversely
affected by a change in commodity prices,
interest rates, gold lease rates, or currency
exchange rates, and that this in turn affects our
financial condition. We manage market risk by
establishing and monitoring parameters that limit
the types and degree of market risk that may be
undertaken. We mitigate this risk by establishing
trading agreements with counterparties under
which we are not required to post any collateral
or make any margin calls on
our derivatives. Our counterparties cannot
require settlement solely because of an adverse
change in the fair value of a derivative. Market liquidity risk is the risk that a
derivative cannot be eliminated quickly, by
either liquidating it or by establishing an
offsetting position. Under the terms of our
trading agreements, counterparties cannot require
us to immediately settle outstanding derivatives,
except upon the occurrence of customary events of
default such as covenant breaches, including
financial covenants, insolvency or bankruptcy. We
generally mitigate market liquidity risk by
spreading out the maturity of our derivatives
over time. 106 BARRICK Annual Report 2004




---



##### 



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 17.Other Long-Term Obligations At December 31
    
    2004
    
    
    2003Asset retirement obligations
    
    $
    334
    
    
    $
    282Pension benefits (note 22)
    
    
    49
    
    
    
    48Post-retirement benefits (note 22)
    
    
    26
    
    
    
    26Derivative liabilities (note 16c)
    
    
    52
    
    
    
    70Restricted stock units (note 21b)
    
    
    6
    
    
    
    10Other
    
    
    32
    
    
    
    28$
    499
    
    
    $
    464
 a) Asset retirement obligations (AROs) 2004
    
    
    2003At January 1
    
    $
    318
    
    
    $
    334AROs incurred in the period
    
    
    14
    
    
    
    Impact of revisions to expected
cash flowsAdjustments to carrying
amount of assets
    
    
    32
    
    
    
    Charged to earnings
    
    
    22
    
    
    
    10SettlementsCash payments
    
    
    (33
    )
    
    
    (40
    )Settlement gains
    
    
    (4
    )
    
    
    (3
    )Accretion
    
    
    18
    
    
    
    17At December 31
    
    
    367
    
    
    
    318Current part
    
    
    (33
    )
    
    
    (36
    )$
    334
    
    
    $
    282
 In 2003 we adopted FAS 143 and changed our
accounting policy for reclamation and closure
costs. Previously we accrued estimated
reclamation and closure costs over the life of
our mines using the units-of-production method
based on the estimated recoverable ounces of gold
in proven and probable reserves. AROs arise from the acquisition, development,
construction and normal operation of mining
property, plant and equipment, due to government
controls and regulations that protect the
environment on the closure and reclamation of
mining properties. Under FAS 143 we record the
fair value of an ARO when it is incurred. At
operating mines the effect is recorded as an
adjustment to the corresponding asset carrying
amount. At closed mines, the adjustment is
charged directly to earnings. The fair value of
AROs are measured by discounting the expected
cash flows using a discount factor that
reflects the risk-free rate of interest. We
prepare estimates of timing and amount of
expected cash flows when an ARO is incurred,
which are updated to reflect changes in facts and
circumstances, or if we are required to submit
updated mine closure plans to regulatory
authorities. The principal factors that can cause
expected cash flows to change are: the
construction of new processing facilities;
changes in the
quantities of material in reserves and a
corresponding change in the life of mine plan;
changing ore characteristics can impact required
environmental protection measures and related
costs; changes in water quality that impact the
extent of water treatment required; and changes
in laws and regulations governing the protection
of the environment. In general, as the end of the
mine life becomes nearer, the reliability of
expected cash flows increases. AROs are adjusted
to reflect the passage of time (accretion)
calculated by applying the discount factor
implicit in the initial fair value measurement to
the beginning of period carrying amount of the
AROs. Accretion is recorded in earnings as an
operating expense. Upon settlement of an ARO we
record a gain or loss if the actual cost differs
from the carrying amount of the ARO. Settlement
gains are classified in other (income) expense.
Other environmental remediation costs that are
not AROs as defined by FAS 143 are expensed as
incurred (see note 6). The major parts of the carrying amount of AROs at
the end of 2004 relate to: tailing and heap leach
pad closure/rehabilitation  $69 million;
demolition of buildings/mine facilities  $29
million; ongoing water treatment  $93 million;
ongoing care and maintenance  $89 million; and other
activities  $87 million. 18.Deferred Income Taxes Recognition and measurement We record deferred income tax assets and
liabilities where temporary differences exist
between the carrying amounts of assets and
liabilities in our balance sheet and their tax
bases. The measurement and recognition of
deferred income tax assets and liabilities takes
into 107 BARRICK Annual Report 2004




---



##### 



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS account: enacted rates that will apply when
temporary differences reverse; interpretations of
relevant tax legislation; tax planning
strategies; estimates of the tax bases of assets
and liabilities; and the deductibility of
expenditures for income tax purposes. We
recognize the effect of changes in our assessment
of these estimates and factors when they occur.
Changes in deferred income tax assets,
liabilities and valuation allowances are
allocated between net income and other
comprehensive income based on the source of the
change. Deferred income taxes have not been provided on
the undistributed earnings of foreign
subsidiaries, which are considered to be
reinvested indefinitely outside Canada. The
determination of the unrecorded deferred income
tax liability is not considered practicable. Sources of deferred income tax assets and liabilities At December 31
    
    2004
    
    

20031Deferred tax assetsTax loss carry forwards
    
    $
    295
    
    
    $
    388Capital tax loss carry forwards
    
    
    48
    
    
    
    52Alternative minimum tax
(AMT) credits
    
    
    121
    
    
    
    120Foreign tax credits
    
    
    3
    
    
    
    3Asset retirement obligations
    
    
    106
    
    
    
    85Property, plant and equipment
    
    
    158
    
    
    
    129Post-retirement benefit obligations
    
    
    18
    
    
    
    21Other
    
    
    9
    
    
    
    40Gross deferred tax assets
    
    
    758
    
    
    
    838Valuation allowances
    
    
    (578
    )
    
    
    (554
    )Net deferred tax assets
    
    
    180
    
    
    
    284Deferred tax liabilitiesProperty, plant and equipment
    
    
    (127
    )
    
    
    (443
    )Derivatives
    
    
    (95
    )
    
    
    (99
    )$
    (42
    )
    
    $
    (258
    )Classification:Non-current assets (note 14)
    
    $
    97
    
    
    $
    59Non-current liabilities
    
    
    (139
    )
    
    
    (317
    )$
    (42
    )
    
    $
    (258
    )
   1.
    
    2003 deferred tax asset balances for
property, plant and equipment and other have
been restated with a corresponding restatement
of valuation allowances. Expiry dates of tax losses and AMT credits Noexpiry05
    
    
    06
    
    
    07
    
    
    08
    
    
    09+
    
    
    date
    
    
    TotalTax losses1Chile
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    670
    
    
    $
    670Tanzania
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    152
    
    
    
    152U.S.
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    224
    
    
    
    
    
    
    
    224Other
    
    
    28
    
    
    
    23
    
    
    
    6
    
    
    
    14
    
    
    
    109
    
    
    
    24
    
    
    
    204$
    28
    
    
    $
    23
    
    
    $
    6
    
    
    $
    14
    
    
    $
    333
    
    
    $
    846
    
    
    $
    1,250AMT credits2
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    121
    
    
    $
    121
   1.
    
    Represents the gross amount of tax loss
carry forwards translated at closing exchange
rates at December 31, 2004.2.
    
    Represents the amounts deductible against
future taxes payable in years when taxes
payable exceeds minimum tax as defined by
United States tax legislation. Valuation allowances We consider the need to record a valuation
allowance against deferred tax assets on a
country-by-country basis, taking into account the
effects of local tax law. A valuation allowance
is not recorded when we conclude that sufficient
positive evidence exists to demonstrate that it
is more likely than not that a deferred tax asset
will be realized. The main factors considered
are: >
    
    historic and expected future levels of future taxable income;>
    
    opportunities to implement tax plans that affect whether tax assets can be realized; and>
    
    the nature, amount and expected timing of reversal of taxable temporary differences.
 Levels of future taxable income are mainly
affected by: market gold and silver prices;
forecasted future costs and expenses to produce
gold reserves; quantities of proven and probable
gold reserves; market interest rates and foreign
currency exchange rates. If these factors or
other circumstances change, we record an
adjustment to the valuation allowances to reflect
our latest assessment of the amount of deferred
tax assets that will more likely than not be
realized. A valuation allowance of $34 million has been set
up against certain deferred tax assets in
Argentina. Historically, we have had no income
generating 108 BARRICK Annual Report 2004




---



##### 



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS operations in Argentina, but following the
production start-up at Veladero in 2005, various factors will affect
future levels of taxable income in Argentina, including the volume of
gold produced and sold, gold selling prices and costs incurred to
produce gold. It is reasonably possible that an adjustment will be
made to this valuation allowance in the near term.
A valuation allowance of $189 million has been set up against certain deferred
tax assets in the United States. A majority of this valuation allowance relates to
AMT credits which have an unlimited carry forward period. Increasing levels of future
taxable income due to gold selling prices and other factors and circumstances may result
in an adjustment to this valuation allowance. Source of changes in deferred tax balances For the years endedDecember 31
    
    2004
    
    
    2003
    
    
    2002Temporary differencesProperty, plant
and equipment
    
    $
    (86
    )
    
    $
    26
    
    
    $
    (30
    )Asset retirement obligations
    
    
    (21
    )
    
    
    (2
    )
    
    
    4Tax loss carry forwards
    
    
    93
    
    
    
    (10
    )
    
    
    (22
    )Derivatives
    
    
    (4
    )
    
    
    82
    
    
    
    13Other
    
    
    (5
    )
    
    
    4
    
    
    
    (5
    )$
    (23
    )
    
    $
    100
    
    
    $
    (40
    )Adjustment to deferred
tax balances due to
change in tax status1
    
    
    (81
    )
    
    
    
    
    
    
    Release of beginning of year
valuation allowances
    
    
    (5
    )
    
    
    (62
    )
    
    
    Outcome of tax uncertainties
    
    
    (120
    )
    
    
    
    
    
    
    (22
    )$
    (229
    )
    
    $
    38
    
    
    $
    (62
    )Intraperiod allocation to:Income before
income taxes
    
    $
    (225
    )
    
    $
    (49
    )
    
    $
    (75
    )Cumulative
accounting changes
    
    
    
    
    
    
    5
    
    
    
    OCI
    
    
    (4
    )
    
    
    82
    
    
    
    17Balance sheet reclassifications
    
    
    13
    
    
    
    23
    
    
    
    (17
    )$
    (216
    )
    
    $
    61
    
    
    $
    (75
    )
   1.
    
    Relates to change in tax status in Australia (note 7). 19.Capital Stock a) Common shares Our authorized capital stock includes an
unlimited number of common shares (issued
533,575,185 shares); 9,764,929 First preferred
shares, Series A (issued nil); 9,047,619 Series B
(issued nil); 1 Series C special voting share
(issued 1); and 14,726,854 Second preferred
shares Series A (issued nil). During 2004, we repurchased 4.47 million common
shares (2003: 8.75 million) for $95 million
(2003: $154 million), at an average cost of
$21.20 per share (2003: $17.56). This resulted in
a reduction of common share capital by $35
million (2003: $67 million) and a $60 million
charge (being the difference between the
repurchase cost and the average historic book
value of shares repurchased) to retained earnings
(2003: $87 million). In 2004, we declared and paid dividends in US
dollars totaling $0.22 per share (2003  $0.22
per share, 2002   $0.22 per share). b) Exchangeable Shares In connection with a 1998 acquisition,
Barrick Gold Inc. (BGI), issued 11.1 million
BGI exchangeable shares, which are each
exchangeable for 0.53 of a Barrick common share
at any time 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 common share. BGI is a subsidiary that
holds our interest in the Hemlo and Eskay Creek
Mines. At December 31, 2004,
1.4 million (2003  1.5
million) BGI exchangeable shares were
outstanding, which are equivalent to 0.7 million
Barrick common shares (2003  0.8 million common
shares). The equivalent common share amounts are
reflected in the number of common shares
outstanding. At any time on or after December 31, 2008, or
when fewer than 1.4 million BGI exchangeable
shares are outstanding, we have the right to
require the exchange of each outstanding BGI
exchangeable share for 0.53 of a 109 BARRICK Annual Report 2004




---



##### 



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Barrick common share. While there are
exchangeable shares outstanding, we are required
to present summary consolidated financial
information relating to BGI. Summarized financial information for BGI For the years endedDecember 31
    
    2004
    
    
    2003
    
    
    2002Total revenues
and other income
    
    $
    216
    
    
    $
    226
    
    
    $
    203Less: costs and expenses
    
    
    287
    
    
    
    238
    
    
    
    191Income (loss) before taxes
    
    $
    (71
    )
    
    $
    (12
    )
    
    $
    12Net loss
    
    $
    (41
    )
    
    $
    (31
    )
    
    $
    (1
    )
 At December 31
    
    2004
    
    
    2003AssetsCurrent assets
    
    $
    67
    
    
    $
    81Non-current assets
    
    
    119
    
    
    
    236$
    186
    
    
    $
    317Liabilities and
shareholders equityOther current liabilities
    
    
    24
    
    
    
    20Intercompany notes payable
    
    
    395
    
    
    
    545Other long-term liabilities
    
    
    36
    
    
    
    9Deferred income taxes
    
    
    20
    
    
    
    67Shareholders equity
    
    
    (289
    )
    
    
    (324
    )$
    186
    
    
    $
    317
 20.Other Comprehensive Income (Loss) (OCI) 2004
    
    
    2003
    
    
    2002Accumulated OCI at January 1Cash flow hedge gains, net of tax of $99, $17, $nil
    
    $
    189
    
    
    $
    32
    
    
    $
    25Investments, net of tax of $nil,
$nil, $nil
    
    
    38
    
    
    
    (6
    )
    
    
    (4
    )Currency translation adjustments,
net of tax of $nil, $nil, $nil
    
    
    (147
    )
    
    
    (144
    )
    
    
    (123
    )Additional pension liability, net of tax of $nil, $nil, $nil
    
    
    (7
    )
    
    
    (7
    )
    
    
    (5
    )$
    73
    
    
    $
    (125
    )
    
    $
    (107
    )OCI for the year:Changes in fair value of cash flow
hedges
    
    
    147
    
    
    
    348
    
    
    
    49Changes in fair value of investments
    
    
    (27
    )
    
    
    37
    
    
    
    (5
    )Currency translation adjustments
    
    
    1
    
    
    
    (3
    )
    
    
    (21
    )Adjustments to pension liability
    
    
    (5
    )
    
    
    
    
    
    
    (2
    )Less: reclassification adjustments for gains/losses
recorded in earningsTransfers of cash flow hedge gains to
earnings:On recording hedged items in earnings
    
    
    (132
    )
    
    
    (91
    )
    
    
    (25
    )Hedge ineffectiveness due to changes in timing of hedged items
    
    
    (2
    )
    
    
    (18
    )
    
    
    Investments:(Gains) losses realized on sale
    
    
    (6
    )
    
    
    (4
    )
    
    
    3Other than temporary impairment
charges
    
    
    5
    
    
    
    11
    
    
    
    OCI, before tax
    
    
    (19
    )
    
    
    280
    
    
    
    (1
    )Income tax recovery (expense)
related to OCI
    
    
    4
    
    
    
    (82
    )
    
    
    (17
    )Other comprehensive income (loss), net
of tax
    
    $
    (15
    )
    
    $
    198
    
    
    $
    (18
    )Accumulated OCI at December 31Cash flow hedge gains, net of tax of
$95, $99, $17
    
    
    206
    
    
    
    189
    
    
    
    32Investments, net of tax of $nil,
$nil, $nil
    
    
    10
    
    
    
    38
    
    
    
    (6
    )Currency translation adjustments,
net of tax of $nil, $nil, $nil
    
    
    (146
    )
    
    
    (147
    )
    
    
    (144
    )Additional pension liability, net of tax of $nil, $nil, $nil
    
    
    (12
    )
    
    
    (7
    )
    
    
    (7
    )$
    58
    
    
    $
    73
    
    
    $
    (125
    )
 110 BARRICK Annual Report 2004




---



##### 



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 21.Stock-Based Compensation a) Stock options Employee stock option activity (number of shares in millions)2 2004
    
    
    2003
    
    
    2002Average
    
    
    
    
    
    
    Average
    
    
    
    
    
    
    AverageShares
    
    
    price
    
    
    Shares
    
    
    price
    
    
    Shares
    
    
    priceC$ optionsAt January 1
    
    
    22
    
    
    
    
    
    
    
    19
    
    
    
    
    
    
    
    19Granted
    
    
    1
    
    
    $
    28
    
    
    
    5
    
    
    $
    29
    
    
    
    6
    
    
    $
    25Exercised1
    
    
    (2
    )
    
    $
    25
    
    
    
    (1
    )
    
    $
    24
    
    
    
    (4
    )
    
    $
    25Cancelled/expired
    
    
    (2
    )
    
    $
    28
    
    
    
    (1
    )
    
    $
    28
    
    
    
    (2
    )
    
    $
    34At December 31
    
    
    19
    
    
    
    
    
    
    
    22
    
    
    
    
    
    
    
    19US $ optionsAt January 1
    
    
    2
    
    
    
    
    
    
    
    3
    
    
    
    
    
    
    
    6Granted
    
    
    5
    
    
    $
    24
    
    
    
    
    
    
    
    
    
    
    
    Exercised1
    
    
    (1
    )
    
    $
    15
    
    
    
    (1
    )
    
    $
    13
    
    
    
    (2
    )
    
    $
    12Cancelled/expired
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1
    )
    
    $
    25At December 31
    
    
    6
    
    
    
    
    
    
    
    2
    
    
    
    
    
    
    
    3
   1.
    
    The exercise price of the options is the closing share price on the day before the grant
date. They vest evenly over four years, beginning in the year after granting, and are
exercisable over 7  10 years. At December 31, 2004,
13 million (2003  1 million, 2002 
5 million) common shares, in addition to those currently outstanding, were available for
granting options.2.
    
    We are also obliged to issue about
0.3 million common shares (2003  0.5 million common shares)
in connection with outstanding stock options assumed as part of a business combination in 1999.
These options have an average exercise price of C$20 (2003  C$20) and an average remaining term of
one year. Stock options outstanding (number of shares in millions) Outstanding
    
    
    ExercisableRange of
    
    
    
    
    
    Average
    
    
    Average life
    
    
    
    
    
    
    Averageexercise prices
    
    Shares
    
    
    price
    
    
    (years)
    
    
    Shares
    
    
    priceC$ options$22   $31
    
    
    17
    
    
    $
    27
    
    
    
    7
    
    
    
    10
    
    
    $
    26$32   $43
    
    
    2
    
    
    $
    39
    
    
    
    2
    
    
    
    2
    
    
    $
    3919
    
    
    
    

    
    
    
    6
    
    
    
    12US$ options$9  $18
    
    
    1
    
    
    $
    12
    
    
    
    5
    
    
    
    
    
    
    
    $22   $37
    
    
    5
    
    
    $
    24
    
    
    
    6
    
    
    
    1
    
    
    $
    306
    
    
    
    

    
    
    
    6
    
    
    
    1
 We record compensation cost for stock options
based on the excess of the market price of the
stock at the grant date of an award over the
exercise price. Historically, the exercise price for stock
options has equaled the market price of stock at
the grant date, resulting in no compensation
cost. 111 BARRICK Annual Report 2004




---



##### 



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Option information For the years ended December 31(per share and optionamounts in dollars)
    
    2004
    
    
    2003
    
    
    2002Fair value per option
    
    $
    6.87
    
    
    $
    8.50
    
    
    $
    6.40Valuation assumptions:Expected term (years)
    
    
    5
    
    
    
    6
    
    
    
    6Volatility
    
    
    30
    %
    
    
    40
    %
    
    
    40
    %Dividend yield
    
    
    1.0
    %
    
    
    1.0
    %
    
    
    1.4
    %Risk-free interest rate
    
    
    3.8
    %
    
    
    4.5
    %
    
    
    5.0
    %Pro forma effectsNet income, as reported
    
    $
    248
    
    
    $
    200
    
    
    $
    193Stock-option expense
    
    
    (29
    )
    
    
    (24
    )
    
    
    (21
    )Pro forma net income
    
    $
    219
    
    
    $
    176
    
    
    $
    172Net income per share:As reported - Basic
    
    $
    0.47
    
    
    $
    0.37
    
    
    $
    0.36As reported - Diluted
    
    $
    0.46
    
    
    $
    0.37
    
    
    $
    0.36Pro forma1
    
    $
    0.41
    
    
    $
    0.33
    
    
    $
    0.32
   1. Basic and
diluted.
 b) Restricted Stock Units (RSUs)
and Deferred Share Units (DSUs) Under our RSU Plan, selected employees are
granted RSUs, where each RSU has a value equal to
one Barrick common share. RSUs vest and will be

settled on the
third anniversary of the grant date. Additional
RSUs are credited to reflect dividends paid on
Barrick common shares. RSUs are recorded at fair
value on the grant date, with a corresponding
amount recorded as deferred compensation that is
amortized on a straight-line basis over
the vesting period. Changes in the fair value of
the RSUs are recorded, with a corresponding
adjustment to deferred compensation. Compensation
expense for 2004 was $4 million (2003 - $4
million). At December 31, 2004, the weighted
average remaining contractual life of RSUs was 2
years. Under our DSU plan, Directors receive 50% of
their basic annual retainer in the form of DSUs,
with the option to elect to receive 100% of such
retainer in DSUs. Each DSU has the same value as
one Barrick common share. DSUs must be retained
until the Director leaves the Board, at which
time the cash value of the DSUs will be paid out.
Additional DSUs are credited to reflect dividends
paid on Barrick common shares. DSUs are recorded
at fair value on the grant date and are adjusted
for changes in fair value. Directors fee expense
for DSUs for 2004 was $0.6 million (2003: $0.2
million). DSU and RSU activity Fair value
    
    
    
    
    
    
    Fair valueDSUs
    
    
    per unit
    
    
    RSUs
    
    
    per unit(in thousands)
    
    
    (in dollars)
    
    
    (in thousands)
    
    
    (in dollars)At December 31, 2001
    
    
    
    
    
    $
    
    
    
    
    515
    
    
    $
    16Canceled
    
    
    
    
    
    
    
    
    
    
    (30
    )
    
    
    20Dividends
    
    
    
    
    
    
    
    
    
    
    4
    
    
    
    17At December 31, 2002
    
    
    
    
    
    $
    
    
    
    
    489
    
    
    $
    15Canceled
    
    
    
    
    
    
    
    
    
    
    (171
    )
    
    
    17Granted
    
    
    8
    
    
    
    21
    
    
    
    130
    
    
    
    22Dividends
    
    
    
    
    
    
    
    
    
    
    4
    
    
    
    20At December 31, 2003
    
    
    8
    
    
    $
    23
    
    
    
    452
    
    
    $
    23Canceled
    
    
    
    
    
    
    
    
    
    
    (58
    )
    
    
    23Settled
    
    
    
    
    
    
    
    
    
    
    (293
    )
    
    
    25Granted
    
    
    23
    
    
    
    22
    
    
    
    131
    
    
    
    24Dividends
    
    
    
    
    
    
    
    
    
    
    3
    
    
    
    20At December 31, 2004
    
    
    31
    
    
    $
    24
    
    
    
    235
    
    
    $
    24
 112 BARRICK Annual Report 2004




---



##### 



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 22. Post-Retirement Benefits a) Defined contribution pension plans Certain employees take part in defined
contribution employee benefit plans. We also have
a retirement plan for certain officers of the
Company, under which we contribute 15% of the
officers annual salary and bonus. Our share of
contributions to these plans, which is expensed
in the year it is earned by the employee, was $19
million in 2004, $16 million in 2003 and $13
million in 2002. b) Defined benefit pension plans We have one qualified defined benefit pension
plan that covers certain of our United States
employees and provides benefits based on
employees years of service. Our policy is to
fund the amounts necessary on an actuarial basis
to provide enough assets to meet the benefits
payable to plan members under the Employee
Retirement Income Security Act of 1974.
Independent trustees administer assets of the
plans, which are invested mainly in fixed-income
and equity securities. On December 31, 2004, the
qualified defined benefit plan was amended to
freeze benefit accruals for all employees,
resulting in a curtailment gain of $2 million. As well as the qualified plan, we have
nonqualified defined benefit pension plans
covering certain employees and former directors
of the Company. An irrevocable trust (rabbi
trust) was set up to fund these plans. The fair
value of assets held in this trust was $31
million in 2004 (2003  $32 million), and is
recorded in our consolidated balance sheet under
Investments. Actuarial gains and losses arise when the actual
return on plan assets differs from the expected
return on plan assets for a period, or when the
expected and actuarial accrued benefit
obligations differ at the end of the year. We
amortize actuarial gains and losses over the
average remaining life expectancy of plan
participants, in excess of a 10% corridor. Pension expense For the years endedDecember 31
    
    2004
    
    
    2003
    
    
    2002Return on plan assets
    
    $
    (11
    )
    
    $
    (11
    )
    
    $
    (17
    )Service cost
    
    
    
    
    
    
    
    
    
    
    3Interest cost
    
    
    12
    
    
    
    14
    
    
    
    16Actuarial gains (losses)
    
    
    1
    
    
    
    
    
    
    
    (1
    )Gain (loss) on
curtailment/settlement
    
    
    (2
    )
    
    
    1
    
    
    
    1$
    
    
    
    $
    4
    
    
    $
    2
 c) Pension plan information Fair value of plan assets For the years endedDecember 31
    
    2004
    
    
    2003Balance at January 1
    
    $
    166
    
    
    $
    170Actual return on plan assets
    
    
    14
    
    
    
    19Company contributions
    
    
    6
    
    
    
    8Benefits paid
    
    
    (16
    )
    
    
    (31
    )Balance at December 31
    
    $
    170
    
    
    $
    166
 At December 31
    
    
    
    
    
    
    2004
    
    
    
    
    
    2003Target

    
    Actual

    
    Actual
    
    
    ActualComposition of
plan assets:Equity securities
    
    
    50
    %
    
    
    46
    %
    
    $
    78
    
    
    $
    66Debt securities
    
    
    50
    %
    
    
    54
    %
    
    
    92
    
    
    
    100100
    %
    
    
    100
    %
    
    $
    170
    
    
    $
    166
 113

BARRICK Annual Report 2004




---



##### 



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Projected benefit obligation (PBO)
 For the years endedDecember 31
    
    2004
    
    
    2003Balance at January 1
    
    $
    221
    
    
    $
    227Interest cost
    
    
    12
    
    
    
    14Actuarial losses
    
    
    3
    
    
    
    11Benefits paid
    
    
    (16
    )
    
    
    (31
    )Curtailments/settlements
    
    
    (2
    )
    
    
    Balance at December 31
    
    $
    218
    
    
    $
    221Funded status1
    
    $
    (48
    )
    
    $
    (55
    )Unrecognized actuarial losses
    
    
    11
    
    
    
    11Net benefit liability recorded
    
    $
    (37
    )
    
    $
    (44
    )ABO2,3
    
    $
    217
    
    
    $
    217
  1.
    Represents the fair value of plan assets
less projected benefit obligations. Plan assets
exclude investments held in a rabbi trust that
are recorded separately on our balance sheet
under Investments (fair value $31 million at
December 31, 2004). In the year ending December
31, 2005, we do not expect to make any further
contributions.2.
    For 2004 we used a measurement date of
December 31, 2004 to calculate accumulated
benefit obligations.3.
    Represents the ABO for all plans. The ABO for
plans where the PBO exceeds the fair value of
plan assets was $49 million (2003: $217
million). Investment strategy We employ a total return investment approach,
whereby a mix of equities and fixed-income
investments is used to maximize the long-term
return of plan assets. Risk is diversified
through a blend of equity and fixed-income
investments, and also across geography and market
capitalization in US large cap stocks, US small
cap stocks, and international securities.
Investment risk is measured and monitored on an
ongoing basis through annual liability
measurements, periodic asset/liability studies,
and quarterly investment portfolio reviews. Rate of return on plan assets In estimating the long-term rate of return
for plan assets, historical markets are studied
and long-term historical returns on equities and
fixed-income investments reflect the widely
accepted capital market principle that assets
with higher volatility generate a greater return
over the long run. Current market factors such as
inflation and interest rates are evaluated before
long-term capital market assumptions are
finalized. Expected future benefit payments For the years ending December 312005
    
    $
    162006
    
    
    152007
    
    
    162008
    
    
    162009
    
    
    162010  2014
    
    $
    89
 Total recorded benefit liability At December 31
    
    2004
    
    
    2003Current
    
    $
    
    
    
    $
    3Non-current
    
    
    37
    
    
    
    41Benefit plan liability
    
    $
    37
    
    
    $
    44Additional minimum liability (note 20)
    
    
    12
    
    
    
    7$
    49
    
    
    $
    51
 d) Actuarial assumptions  For the years endedDecember 31
    
    2004

    
    2003

    
    2002Discount rate1Benefit obligation
    
    
    5.50
    %
    
    
    6.25
    %
    
    
    6.50
    %Pension cost
    
    
    6.25
    %
    
    
    6.50
    %
    
    
    6.75
    %Return on plan assets1
    
    
    7.00
    %
    
    
    7.00
    %
    
    
    8.50
    %Wage increases
    
    
    5.00
    %
    
    
    5.00
    %
    
    
    5.00
    %  1.
    Effect of a one-percent change: Discount
rate: $22 million change in ABO and change in
pension cost; Return on plan assets: $2 million
change in pension cost. e) Other post-retirement benefits We provide post-retirement medical, dental,
and life insurance benefits to certain employees.
We use the corridor approach in the accounting
for post-retirement benefits. Actuarial gains and
losses resulting from variances between actual
results and economic estimates or actuarial
assumptions are deferred and amortized over the
average remaining life expectancy of participants
when the net gains or losses exceed 10% of the
accumulated post-retirement benefit obligation.
In 2004, we recorded a benefit expense of $2
million (2003  $nil, 2002  $nil). 114

BARRICK Annual Report 2004




---



##### 



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Other post-retirement benefits expense For the years endedDecember 31
    
    2004
    
    
    2003
    
    
    2002Interest cost
    
    $
    2
    
    
    $
    1
    
    
    $
    2Prior service cost
    
    
    
    
    
    
    
    
    
    
    (1
    )Curtailments/settlements
    
    
    
    
    
    
    (1
    )
    
    
    (1
    )$
    2
    
    
    $
    
    
    
    $
    
 Fair value of plan assets For the years endedDecember 31
    
    2004
    
    
    2003Balance at January 1
    
    $
    
    
    
    $
    Contributions
    
    
    2
    
    
    
    2Benefits paid
    
    
    (2
    )
    
    
    (2
    )Balance at December 31
    
    $
    
    
    
    $
    
 Accumulated post-retirement
benefit obligation (APBO) For the years endedDecember 31
    
    2004
    
    
    2003Balance at January 1
    
    $
    24
    
    
    $
    28Interest cost
    
    
    2
    
    
    
    1Actuarial losses
    
    
    5
    
    
    
    (3
    )Benefits paid
    
    
    (2
    )
    
    
    (2
    )Balance at December 31
    
    $
    29
    
    
    $
    24Funded status
    
    
    (29
    )
    
    
    (24
    )Unrecognized actuarial losses
    
    
    1
    
    
    
    (4
    )Net benefit liability recorded
    
    $
    (28
    )
    
    $
    (28
    )
 We have assumed a health care cost trend of 10%
in 2004, decreasing ratability to 5% in 2009 and
thereafter. The assumed health care cost trend
had a minimal effect on the amounts reported. A one percentage point change
in the assumed health care cost trend rate at
December 31, 2004 would have increased the
post-retirement obligation by $3 million or
decreased the post-retirement benefit obligation
by $2 million and would have had no significant
effect on the benefit expense for 2004. Expected future benefit payments For the years ending December 312005
    
    $
    22006
    
    
    22007
    
    
    22008
    
    
    22009
    
    
    22010  2014
    
    $
    9
 23. Contingencies, Litigation and Claims Certain conditions may exist as of the date
the financial statements are issued, which may
result in a loss to the Company but which will
only be resolved when one or more future events
occur or fail to occur. In assessing loss
contingencies related to legal proceedings that
are pending against us or unasserted claims that
may result in such proceedings, the Company and
its legal counsel evaluate the perceived merits
of any legal proceedings or unasserted claims as
well as the perceived merits of the amount of
relief sought or expected to be sought. If the assessment of a contingency suggests that
a loss is probable, and the amount can be
reliably estimated, then a loss is recorded. When
a contingent loss is not probable but is
reasonably possible, or is probable but the
amount of loss cannot be reliably estimated, then
details of the contingent loss are disclosed.
Loss contingencies considered remote are
generally not disclosed unless they involve
guarantees, in which case we disclose the nature
of the guarantee. Legal fees incurred in
connection with pending legal proceedings are
expensed as incurred. Bre-X Minerals In 1998, we were added as a defendant in a
class action lawsuit initiated against Bre-X
Minerals Ltd., and certain others in the United
States District Court for the Eastern District of
Texas, Texarkana Division. The class action
alleges, among other things, that statements made
by us in connection with our efforts to secure
the right to develop and operate the Busang gold
deposit in East Kalimantan, Indonesia were
materially false and 115
BARRICK Annual Report 2004




---



##### 



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS misleading and omitted to state material
facts relating to the preliminary due diligence
investigation undertaken by us in late 1996. On March 31, 2003, the Court denied all of the
Plaintiffs motions to certify the case as a
class action. The Plaintiffs have not filed an
interlocutory appeal of the Courts decision
denying class certification to the Fifth Circuit
Court of Appeals. On June 2, 2003, the Plaintiffs
submitted a proposed Trial and Case Management
Plan, suggesting that the Plan would cure the
defects in the Plaintiffs motions to certify the
class. The Court has taken no action with respect
to the proposed Trial and Case Management Plan.
The Plaintiffs case against the Defendants may
now proceed in due course, but not on behalf of a
class of Plaintiffs but only with respect to the
specific claims of the Plaintiffs named in the
lawsuit. Having failed to certify the case as a
class action, we believe that the likelihood of
any of the named Defendants succeeding against
Barrick with respect to their claims for
securities fraud is remote. The amount of
potential loss, if any, which we may incur
arising out of the Plaintiffs claims is not
determinable. Blanchard complaint On January 7, 2003, we were served with a
Complaint for Injunctive Relief by Blanchard and
Company, Inc. (Blanchard), and Herbert Davies
(Davies). The complaint, which is pending in
the U.S. District Court for the Eastern District
of Louisiana, also names J.P. Morgan Chase &
Company (J.P. Morgan) as a defendant, along
with an unspecified number of additional
defendants to be named later. The complaint,
which has been amended several times, alleges
that we and bullion banks with whom we entered
into spot deferred gold sales contracts have
manipulated the price of gold, in violation of
U.S. anti-trust laws and the Louisiana Unfair
Trade Practices and Consumer Protection Law.
Blanchard and Davies both allege that they have
been injured as a seller of gold due to reduced
interest in gold as an investment. The complaint
seeks damages and an injunction terminating
certain of our trading agreements with J.P.
Morgan and other bullion banks. In September 2003
the Court issued an Order granting in part and denying in part Barricks motions to
dismiss this action. Discovery has commenced in
the case and a trial date has been tentatively
set for July 2005. We intend to defend the action
vigorously. McKenzie complaint On September 21, 2004, a putative class
action complaint was filed in the U.S. District
Court for the Eastern District of Louisiana
against Barrick and J.P. Morgan. The plaintiffs,
Dr. Gregg McKenzie and others are alleged
purchasers of gold and gold derivatives. The
complaint alleges violations of the U.S. anti-trust laws
and also of the Commodity Exchange Act, based
upon the same conduct as alleged in the Blanchard
complaint. The complaint seeks damages and an
injunction terminating certain of our trading
agreements with J.P. Morgan. On December 17,
2004, a second and substantially identical
complaint was filed in the same court against the
same defendants. Barrick has not yet been served
with this second complaint. Barrick intends to
defend both actions vigorously. Wagner complaint On June 12, 2003, a complaint was filed
against Barrick and several of its current or
former officers in the U.S. District Court for
the Southern District of New York. The complaint
is on behalf of Barrick shareholders who
purchased Barrick shares between February 14,
2002 and September 26, 2002. It alleges that
Barrick and the individual defendants violated
U.S. securities laws by making false and
misleading statements concerning Barricks
projected operating results and earnings in 2002.
The complaint seeks an unspecified amount of
damages. Other parties on behalf of the same
proposed class of Barrick shareholders filed
several other complaints, making the same basic
allegations against the same defendants. In
September 2003, the cases were consolidated into
a single action in the Southern District of New
York. The plaintiffs filed a Consolidated and/or
Amended Complaint on November 5, 2003. On January
14, 2004 Barrick filed a motion to dismiss the
complaint. On September 29, 2004, the Court
issued an order granting in part and denying in
part Barricks motion to dismiss the action. The
Court granted the 116

BARRICK Annual Report 2004




---



##### 



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS plaintiffs leave to file a Second Amended
Complaint, which was filed on October 20, 2004.
The plaintiffs filed a Third Amended Complaint on
January 6, 2005. We intend to defend the action
vigorously. Wilcox complaint On September 8, 2004, two of our U.S.
subsidiaries, Homestake Mining Company of
California (Home-stake California) and
Homestake Mining Company (Homestake) were
served with a First Amended Complaint by persons
alleging to be current or former residents of a
rural area near the former Grants Uranium Mill.
The Complaint, which was filed in the U.S.
District Court for the District of New Mexico,
identifies 26 plaintiffs. Homestake and Homestake
California, along with an unspecified number of
unidentified defendants, are named as defendants.
The plaintiffs allege that they have suffered a
variety of physical, emotional and financial
injuries as a result of exposure to radioactive
and other hazardous substances. The Complaint
seeks an unspecified amount of damages. A motion to dismiss the claim
was filed with the Court, but the Court has not
yet ruled on the motion. We intend to defend the
action vigorously. 24. Joint Ventures Our major interests in joint ventures are a
50% interest in the Kalgoorlie Mine in Australia;
a 50% interest in the Round Mountain Mine in the
United States; and a 50% interest in the Hemlo
Mine in Canada. Summary financial information (100%) Income statement and cash flow information For the years endedDecember 31
    
    2004
    
    
    2003
    
    
    2002Revenues
    
    $
    889
    
    
    $
    775
    
    
    $
    650Costs and expenses
    
    
    663
    
    
    
    638
    
    
    
    582Net income
    
    $
    226
    
    
    $
    137
    
    
    $
    68Operating activities1
    
    $
    291
    
    
    $
    127
    
    
    $
    175Investing activities1
    
    $
    (46
    )
    
    $
    (60
    )
    
    $
    (54
    )Financing activities1
    
    $
    
    
    
    $
    
    
    
    $
    
   1.
    Net cash inflow (outflow). Balance sheet information At December 31
    
    2004
    
    
    2003AssetsInventories
    
    $
    102
    
    
    $
    99Property, plant and equipment
    
    
    506
    
    
    
    543Other assets
    
    
    93
    
    
    
    64$
    701
    
    
    $
    706LiabilitiesCurrent liabilities
    
    $
    87
    
    
    $
    77Long-term obligations
    
    
    110
    
    
    
    104$
    197
    
    
    $
    181
 25. Differences from Canadian Generally Accepted Accounting Principles These consolidated financial statements have
been prepared in accordance with US GAAP. A
reconciliation of our income statement and
balance sheet between US GAAP and Canadian GAAP
is presented below together with a description of
the significant measurement differences affecting
these financial statements. a) Business combinations The acquisitions of Sutton Resources Ltd.
(Sutton) and Homestake Mining Company
(Homestake), which were accounted for using the
pooling-of-interests method under US GAAP, were
accounted for as a purchase under Canadian GAAP.
Under US GAAP, the assets, liabilities and
shareholders equity of Sutton and Homestake were
combined with the Companys own recorded amounts.
Comparative figures were restated for all periods
presented prior to the acquisitions to include
the combined statements of income, cash flow and
balance sheets of the merged entities adjusted to
conform to our US GAAP accounting policies. Under
Canadian GAAP, rules which existed at the time of
the Sutton and Homestake acquisitions prior to
the effective date of CICA 1581, Business
Combinations, allowed for two possible accounting
methods, the purchase method or the
pooling-of-interests method. The selection of the
method of accounting used for business
combinations under the previous rules depended
upon whether or not 117
BARRICK Annual Report 2004




---



##### 



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS one of the combining companies could be
identified as an acquirer. In situations where
voting shares were issued or exchanged to effect
the combination, factors relating to control over
the resultant combined company were considered.
Under these previous rules, due to the fact that
the Barrick shareholders (as a group) held more
than 50% of the voting shares of the combined
company after the acquisitions of Sutton and
Homestake, Barrick was identified as the
acquirer, thereby requiring the purchase method
to be used under Canadian GAAP. The application
of the purchase method under Canadian GAAP
required that identifiable assets and liabilities
of the acquired entity be recorded at fair values
at the date of acquisition, with any excess
purchase price allocated to goodwill. This
resulted in certain assets and liabilities being
recorded at different carrying amounts under
Canadian GAAP compared with US GAAP. These
differences arise because their fair values at
the date of acquisition differed from historic
cost, which is the basis of accounting under the
pooling-of-interests method under US GAAP. The
assets and liabilities most significantly
affected are: property, plant and equipment,
inventories, and goodwill. b) Exploration and development expenditures For Canadian GAAP purposes, we capitalize
mine development costs on our properties after
proven and probable reserves have been found as
well as on some properties where we have found
non-reserve material that does not meet all the
criteria required for classification as proven or
probable reserves. The determination as to
whether the existence of non-reserve material
should result in the capitalization of mine
development costs is based on various factors,
including: the existence and nature of known
mineralization; the location of the property (for example, whether the presence of existing mines
and ore bodies in the immediate vicinity
increases the likelihood of development of a mine
on the property); whether the ore body is an
extension of an existing producing ore body on an
adjacent property; the results of recent drilling
on the property; and the existence of a
feasibility study or other analysis to
demonstrate that mineralization is expected to be
commercially recoverable. Under US GAAP, exploration and development expenditures
incurred on properties where mineralization has
not been classified as a proven and probable
reserve under SEC rules are expensed as incurred.
Accordingly, certain expenditures are capitalized
for Canadian GAAP purposes but expensed under US
GAAP. c) Amortization of property, plant and equipment Under Canadian GAAP, amortization of
property, plant and equipment using the
units-of-production method is calculated using
proven and probable mineral reserves and
non-reserve material (when sufficient objective
evidence exists to support a conclusion that it
is probable the non-reserve material will be
produced). For US GAAP purposes, amortization is
calculated for historical capitalized costs
incurred to access specific ore blocks or areas
using only proven and probable reserves within
the specific block or area; infrastructure and
other common costs which have a useful life over
the entire mine are amortized over total
accessible proven and probable reserves of the
mine. These different methods result in a
different rate of amortization for Canadian GAAP
compared to US GAAP. In addition, a difference in the amount of
amortization expense results where differences
exist in the carrying amounts of property, plant
and equipment between US GAAP and Canadian GAAP,
due to the historic effects of the application of
GAAP to these items (for example, arising from
differences in business combinations accounting,
capitalization of exploration expenditures, and
accounting for asset retirement obligations). d) Goodwill Under Canadian GAAP, on the acquisition of
Home-stake, goodwill was identified and was
allocated to reporting units by preparing
estimates of the fair value of each reporting
unit and comparing this amount to the fair value
of assets and liabilities in the reporting unit. Under Canadian GAAP, we test goodwill for
impairment annually in the fourth quarter of our
fiscal year, however, if there is indication of
an impairment in goodwill during the year, we
will do an assessment at that time. This
impairment assessment involves estimat- 118

BARRICK Annual Report 2004




---



##### 



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ing the fair value of each reporting unit
that includes goodwill. We compare this fair
value to the total carrying amount of the
reporting unit (including goodwill). If the fair
value exceeds this carrying amount, we consider
that goodwill is not impaired. If the fair value
is less than this carrying amount, then we
estimate the fair values of all identifiable
assets and liabilities in the reporting unit, and
compare this net fair value of assets less
liabilities to the estimated fair value of the
entire reporting unit. The difference represents
the fair value of goodwill, and if necessary, we
reduce the carrying amount of goodwill to this
fair value. e) Future income taxes Under US GAAP, acquisitions occurring prior
to January 1, 2000 have been accounted for by
grossing up assets and deferred tax liabilities
for the underlying tax effect of treating the
purchase consideration allocated to assets
acquired that is not tax deductible as a
temporary taxable difference. Under the
transition provisions of CICA 3465, that was
adopted effective January 1, 2000, the recorded
amounts of assets acquired were not restated to
reflect differences in their carrying amounts at
acquisition for tax and accounting purposes.
Consequently, under Canadian GAAP, property,
plant and equipment was $190 million lower and
future income tax liabilities were $94 million
higher than the amounts recorded under US GAAP. Where assets and liabilities are recorded at
different carrying amounts for US GAAP and
Canadian GAAP, due to differences in the
accounting policies that affect these assets and
liabilities, a difference also arises in the
amount of temporary differences that give rise to
deferred tax assets and liabilities.
Consequently, the amounts of deferred tax assets
and liabilities recorded under US GAAP differ
from the amounts of future income taxes recorded
under Canadian GAAP. f) Impairment evaluations for long-lived assets Under US GAAP, financing costs are excluded
from the evaluation of long-lived assets for
impairment purposes. Under Canadian GAAP, in
years 2003 and prior, financing costs were included in impairment
evaluations, but where an asset was impaired, the
asset was reduced to its net recoverable amount,
calculated as the estimated future undiscounted
net cash flow expected to be generated by the
asset. Under US GAAP, if assets are impaired, a
reduction in the carrying amount to estimated
fair value is required. Fair value is estimated
by discounting the expected future net cash flows
using a discount factor. The adoption of CICA
3063 under Canadian GAAP on January 1, 2004
conformed the measurement of impairment with US
GAAP prospectively for future periods. g) Investments Under US GAAP available for sale securities
are recorded at fair value, with unrealized gains
or losses included in other comprehensive income.
Under Canadian GAAP, the concept of comprehensive
income does not exist and these investments are
recorded at cost. h) Derivatives Under Canadian GAAP, derivatives that qualify
for hedge accounting treatment are recognized on
the balance sheet only to the extent that cash
has been paid or received together with
adjustments necessary to offset recognized gains
or losses arising on the hedged items. Under US
GAAP, such derivatives are recognized on the
balance sheet at fair value with a corresponding
charge or credit recorded in other comprehensive
income. i) Minimum pension liability Under US GAAP, if the accumulated pension
plan benefit obligation exceeds the market value
of plan assets, a minimum pension liability for
the excess is recognized to the extent that the
liability recorded in the balance sheet is less
than the minimum liability. Any portion of this
additional liability that relates to unrecognized
prior service cost is recognized as an intangible
asset while the remainder is charged to
comprehensive income. Canadian GAAP does not
require us to record a minimum liability and does
not have the concept of comprehensive income. 119
BARRICK Annual Report 2004




---



##### 



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS j) Asset retirement obligations Under US GAAP, FAS 143 was adopted effective
January 1, 2003 relating to asset retirement
obligations. Under Canadian GAAP, a similar
standard was effective for our 2004 fiscal year,
CICA 3110  Asset Retirement Obligations. CICA
3110 required retroactive restatement of
financial statements for prior periods, and
accordingly comparative information for Canadian
GAAP now reflects the requirements of CICA 3110.
Both of these standards are established for the
recognition and measurement of liabilities for
legal obligations associated with the retirement
of a long-lived asset that result from its
acquisition, construction, development or normal
operation. Under US GAAP, the effect of the
adoption of FAS 143 was recorded in the income
statement for the three months ended March 31,
2003. Under Canadian GAAP, the cumulative effect
was recorded as an adjustment to the opening
retained earnings for the earliest period presented. Due to the
difference in timing of adoption of FAS 143 and
CICA 3110, the amount of amortization and
accretion recorded differ under US and Canadian
GAAP. k) Foreign currency Under US GAAP, translation adjustments that
arise on the translation of financial statements
of entities whose functional currency is not the
US dollar are reported as a component of
comprehensive income. Under Canadian GAAP, the
concept of comprehensive income does not exist
and these translation adjustments are reported as
a separate component of shareholders equity,
called cumulative translation adjustments. l) Revenue Under Canadian GAAP purchase accounting
rules, Homestake gold sales contracts existing at
the date of acquisition were recorded at fair
value and any previous deferred revenue balances
eliminated. As these contracts are delivered
into, the revenue recorded under Canadian GAAP is
reduced to the extent of the original fair value
adjustment. Under US GAAP pooling rules, existing
Homestake deferred revenue balances were carried
forward and recorded in the period of delivery.
Differences between Canadian and US GAAP revenue
arise from these different business combination
accounting practices. m) Stock-based compensation Under US GAAP, through the end of 2004 we
continued to account for stock-based compensation
using the intrinsic value method under APB 25.
Under Canadian GAAP, effective January 1, 2004,
CICA 3870, Stock-Based Compensation and Other
Stock-Based Payments became effective, and
required us to record a compensation expense in
our income statement based on the fair value of
options granted. We elected to adopt CICA 3870
retroactively with restatement of prior periods
to include an expense of the type that was
previously included under the pro forma note
disclosure. The cumulative amount of compensation
expense under Canadian GAAP was recorded within
contributed surplus in the balance sheet. The
adoption of FAS 123R under US GAAP in 2005 will
conform the accounting treatment with Canadian
GAAP for future stock option grants, but some
differences will remain between US and Canadian
GAAP for stock option grants in 2004 and prior
years due to the differing transition rules under
CICA 3870 and FAS 123R. 120 BARRICK Annual Report 2004




---



##### 



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS n) Consolidated Balance Sheets For the years ended December 31
    
    
    
    
    
    2004
    
    2003Canadian
    
    
    
    
    
    
    
    
    
    
    CanadianNotes
    
    
    US GAAP
    
    
    Adjustments
    
    
    GAAP
    
    
    US GAAP
    
    
    Adjustments
    
    
    GAAPAssetsCurrent assetsCash and equivalents
    
    
    
    
    
    $
    1,398
    
    
    $
    
    
    
    $
    1,398
    
    
    $
    970
    
    
    $
    
    
    
    $
    970Accounts receivable
    
    
    
    
    
    
    58
    
    
    
    
    
    
    
    58
    
    
    
    56
    
    
    
    
    
    
    
    56Inventories
    
    
    a
    
    
    
    215
    
    
    
    2
    
    
    
    217
    
    
    
    164
    
    
    
    3
    
    
    
    167Other current assets
    
    
    h, l
    
    
    
    286
    
    
    
    (105
    )
    
    
    181
    
    
    
    178
    
    


    
    (112
    )
    
    
    661,957
    
    
    
    (103
    )
    
    
    1,854
    
    
    
    1,368
    
    
    
    (109
    )
    
    
    1,259Investments
    
    
    g
    
    
    
    134
    
    
    
    (10
    )
    
    
    124
    
    
    
    130
    
    
    
    (38
    )
    
    
    92Property, plant
and equipment
    
    
    a, b, c, f, j
    
    
    
    3,391
    
    
    
    1,138
    
    
    
    4,529
    
    
    
    3,128
    
    
    
    1,331
    
    
    
    4,459Capitalized mining costs, net
    
    
    
    
    
    
    226
    
    
    
    
    
    
    
    226
    
    
    
    235
    
    
    
    
    
    
    
    235Goodwill
    
    
    a, d
    
    
    
    
    
    
    
    868
    
    
    
    868
    
    
    
    
    
    
    
    1,081
    
    
    
    1,081Other assets
    
    
    a, e, h, l
    
    
    
    566
    
    
    
    (333
    )
    
    
    233
    
    
    
    497
    
    
    
    (284
    )
    
    
    213Total assets
    
    
    
    
    
    $
    6,274
    
    
    $
    1,560
    
    
    $
    7,834
    
    
    $
    5,358
    
    
    $
    1,981
    
    
    $
    7,339Liabilities and Shareholders EquityAccounts payable
    
    
    
    
    
    $
    335
    
    
    $
    
    
    
    $
    335
    
    
    $
    245
    
    
    $
    
    
    
    $
    245Other current liabilities
    
    
    h, j
    
    
    
    83
    
    
    
    (11
    )
    
    
    72
    
    
    
    119
    
    
    
    14
    
    
    
    133418
    
    
    
    (11
    )
    
    
    407
    
    
    
    364
    
    
    
    14
    
    
    
    378Long-term debt
    
    
    h
    
    
    
    1,655
    
    
    
    5
    
    
    
    1,660
    
    
    
    719
    
    
    
    (1
    )
    
    
    718Other long-term obligations
    
    
    h, i, j
    
    
    
    499
    
    
    
    (28
    )
    
    
    471
    
    
    
    464
    
    
    
    (30
    )
    
    
    434Deferred/Future income tax liabilities
    
    
    e
    
    
    
    139
    
    
    
    (34
    )
    
    
    105
    
    
    
    317
    
    
    
    59
    
    
    
    376Total liabilities
    
    
    
    
    
    
    2,711
    
    
    
    (68
    )
    
    
    2,643
    
    
    
    1,864
    
    
    
    42
    
    
    
    1,906Capital stock
    
    
    a
    
    
    
    4,129
    
    
    
    859
    
    
    
    4,988
    
    
    
    4,115
    
    
    
    861
    
    
    
    4,976Retained earnings (deficit)
    
    
    a
    
    
    
    (624
    )
    
    
    819
    
    
    
    195
    
    
    
    (694
    )
    
    
    1,162
    
    
    
    468Accumulated other
comprehensive
income (loss)
    
    
    g, h, i, k
    
    
    
    58
    
    
    
    (58
    )
    
    
    
    
    
    
    73
    
    
    
    (73
    )
    
    
    Contributed surplus
    
    
    m
    
    
    
    
    
    
    
    31
    
    
    
    31
    
    
    
    
    
    
    
    13
    
    
    
    13Cumulative translation adjustments
    
    
    k
    
    
    
    
    
    
    
    (23
    )
    
    
    (23
    )
    
    
    
    
    
    
    (24
    )
    
    
    (24
    )Total shareholders equity
    
    
    
    
    
    
    3,563
    
    
    
    1,628
    
    
    
    5,191
    
    
    
    3,494
    
    
    
    1,939
    
    
    
    5,433Total liabilities and
shareholders equity
    
    
    
    
    
    $
    6,274
    
    
    $
    1,560
    
    
    $
    7,834
    
    
    $
    5,358
    
    
    $
    1,981
    
    
    $
    7,339
   1.
    Effective January 1, 2004, we adopted CICA 3870 and CICA 3110 and changed our accounting
policies for stock options and asset retirement obligations. These pronouncements were adopted
retroactively with restatement of prior periods. 121
BARRICK Annual Report 2004




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##### 



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS o) Reconciliation of shareholders equity At December 31, 2004Retained
    
    
    Other
    
    
    CumulativeCapital
    
    
    earnings
    
    
    comprehensive
    
    
    translationNotes
    
    
    stock
    
    
    (deficit)
    
    
    income
    
    
    adjustmentsBalance per US GAAP
    
    
    
    
    
    $
    4,129
    
    
    $
    (624
    )
    
    $
    58
    
    
    $
    Adjustments (net of tax effects):Valuation of equity issued in business combinations1
    
    
    
    
    
    
    (293
    )Cumulative effect of differences in accounting policiesAmortization of property, plant and equipment
    
    
    c
    
    
    
    
    
    
    
    183Exploration and development costs
    
    
    b
    
    
    
    
    
    
    
    159Provisions for mining assets in 2000 and 19972
    
    
    
    
    
    
    
    
    
    
    683Investments
    
    
    g
    
    
    
    
    
    
    
    
    
    
    
    (10
    )Derivatives accounted for as cash flow hedges
    
    
    h
    
    
    
    
    
    
    
    
    
    
    
    (206
    )Non-hedge derivative adjustments
    
    
    
    
    
    
    
    
    
    
    (25
    )Minimum pension liability
    
    
    i
    
    
    
    
    
    
    
    
    
    
    
    12Asset retirement obligations
    
    
    j
    
    
    
    
    
    
    
    (5
    )Interest capitalization
    
    
    p2
    
    
    
    
    
    
    
    8Stock-based compensation expense
    
    
    m
    
    
    
    
    
    
    
    (35
    )Classification of exchangeable shares
    
    
    
    
    
    
    (11
    )Other
    
    
    
    
    
    
    (1
    )
    
    
    1Cumulative effect of differences in accounting for
business combinations under the pooling-of-
interests versus the purchase methodExcess of fair value of shareholders equity
over historic book value
    
    
    a
    
    
    
    1,185
    
    
    
    
    
    
    
    122
    
    
    
    1Deficit of Sutton and Homestake at acquisition
    
    
    a
    
    
    
    
    
    
    
    749Amortization of property, plant and equipment
    
    
    c
    
    
    
    
    
    
    
    (111
    )Deferred revenue
    
    
    l
    
    
    
    
    
    
    
    (23
    )Gains on asset sales
    
    
    a
    
    
    
    
    
    
    
    (40
    )Merger related costs
    
    
    
    
    
    
    
    
    
    
    19Impairment of long-lived assets
    
    
    p7, p8
    
    
    
    
    
    
    
    (107
    )Homestake inventory
    
    
    a
    
    
    
    
    
    
    
    (23
    )Impairment of goodwill
    
    
    d
    
    
    
    
    
    
    
    (232
    )Effect of different book values of capital stock
on common share repurchases
    
    
    
    
    
    
    (21
    )
    
    
    21Deferred income taxesEffect of difference in timing of adoption of
CICA 3465 versus FAS 109
    
    
    e
    
    
    
    
    
    
    
    (284
    )Effect on deferred tax assets and liabilities
of temporary differences for US GAAP and
Canadian GAAP purposes
    
    
    e
    
    
    
    
    
    
    
    16Tax valuation allowances
    
    
    p3
    
    
    
    
    
    
    
    (135
    )Reclassification of translation adjustments
    
    
    k
    
    
    
    
    
    
    
    
    
    
    
    24
    
    
    
    (24
    )Balance per Canadian GAAP
    
    
    
    
    
    $
    4,988
    
    
    $
    195
    
    
    $
    
    
    
    $
    (23
    )
   1.
 In determining the value of the shares exchanged in acquisitions, for accounting purposes
under US GAAP we used the unadjusted quoted market prices of our shares. For Canadian GAAP
purposes, the value was adjusted by a 5% to 20% discount reflecting the fact that the market value
for a large block of common shares is less than our quoted share price. The recognition of this
discount to the value of common shares issued for Canadian GAAP purposes resulted in a reduction in
the value of the shares for accounting purposes and cost of acquisitions by $293 million.2. The impact of applying US GAAP in calculating the provisions for mining assets in 2000 and 1997
was to reduce property, plant and equipment by $780 million offset by future income taxes of $97
million for a net reduction in shareholders equity of $683 million. 122 BARRICK Annual Report 2004




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##### 



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS p) Reconciliation of consolidated net income For the years ended December 31
    
    Notes
    
    
    2004
    
    
    2003
    
    
    2002Net income  US GAAP
    
    
    
    
    
    $
    248
    
    
    $
    200
    
    
    $
    193Amortization of property, plant and equipment
    
    
    c
    
    
    
    (16
    )
    
    
    4
    
    
    
    28Exploration and development expenditures
    
    
    b
    
    
    
    25
    
    
    
    53
    
    
    
    52Asset retirement obligations
    
    
    j
    
    
    
    1
    
    
    
    10
    
    
    
    (9
    )Cumulative effect of accounting changes under US GAAP
    
    
    c, j
    
    
    
    
    
    
    
    17
    
    
    
    Gains on asset sales1
    
    
    a
    
    
    
    (32
    )
    
    
    (10
    )
    
    
    Interest capitalized2
    
    
    
    
    
    
    4
    
    
    
    9
    
    
    
    Release of deferred income tax valuation allowances3
    
    
    a, e
    
    
    
    (29
    )
    
    
    (87
    )
    
    
    (19
    )Future income tax expense4
    
    
    e
    
    
    
    60
    
    
    
    10
    
    
    
    15Deferred revenue
    
    
    l
    
    
    
    
    
    
    
    (29
    )
    
    
    (20
    )Non-hedge derivative adjustments5
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (26
    )Homestake inventory6
    
    
    a
    
    
    
    (1
    )
    
    
    (2
    )
    
    
    (21
    )Impairment of goodwill7
    
    
    d
    
    
    
    (184
    )
    
    
    (48
    )
    
    
    Impairment of long-lived assets8
    
    
    
    
    
    
    (160
    )
    
    
    
    
    
    
    Stock-based compensation expense9
    
    
    
    
    
    
    (21
    )
    
    
    (12
    )
    
    
    (2
    )Other items
    
    
    
    
    
    
    3
    
    
    
    2
    
    
    
    11Net income
(loss)  Canadian GAAP
    
    
    
    
    
    $
    (102
    )
    
    $
    117
    
    
    $
    202Net income (loss) per share (dollars)Basic and fully diluted
    
    
    
    
    
    $
    (0.19
    )
    
    $
    0.22
    
    
    $
    0.37
   1. The gains on sale under Canadian GAAP are different from US GAAP due to the fact that the
carrying amount of assets sold was higher under Canadian GAAP.2. Under Canadian GAAP the Lagunas Norte and Veladero projects met the criteria for interest
capitalization earlier than under US GAAP.3. In 2004, a release of valuation allowance of $29 million was recorded as a reduction of goodwill
under Canadian GAAP, but this amount was recorded in earnings under US GAAP. In 2003, under
Canadian GAAP, differences in the carrying amount of certain assets recorded at fair value at the
acquisition of Homestake resulted in valuation allowances totaling $23 million not being
historically required under Canadian GAAP. The remaining amount in 2003 relates to a release of
valuation allowances under US GAAP totaling $118 million that has been recorded as a reduction of
goodwill and other intangible assets under Canadian GAAP, offset by the release of certain
valuation allowances to earnings under Canadian GAAP totaling $54 million.4. The adjustment to future tax expense reflects the reversal of temporary differences under
Canadian GAAP caused by other adjustments that were made to reconcile US GAAP net income to
Canadian GAAP net income. The adjustment also reflects other differences in accounting for
income taxes as described in note 25e.5. Certain derivatives classified as non-hedge derivatives under US GAAP were accounted for
under Canadian GAAP as either hedge derivatives; or recorded at cost with gains and losses
recorded either at maturity or when losses were determined to be other than temporary.6. Certain ore in stockpile and in process inventory held by Homestake, which was adjusted
to fair value at the date of acquisition, caused an adjustment to cost of sales when the
inventory was processed and sold.7. In 2004, an impairment charge of $184 million (2003  $48 million) was recorded against
goodwill that arose in the Homestake merger under Canadian GAAP.8. Various exploration properties in Peru were written down by $67 million under US GAAP in 2004
on completion of an impairment test. The carrying amount of these properties was $nil under
Canadian GAAP due to historic differences in the purchase accounting treatment between US and
Canadian GAAP when the properties were originally acquired in 1996. Under Canadian GAAP,
impairment charges totaling $227 million were recorded against the carrying amount of the
Cowal development project and various Australian exploration-stage properties acquired in the
Homestake merger whose carrying amounts are higher than US GAAP because they were recorded at
fair value at the date of acquistition.9. Under Canadian GAAP a new accounting standard was adopted in 2004 that requires the expensing
of stock options. The new Canadian GAAP accounting standard was adopted retroactively with restatement of prior
periods. Under US GAAP, the adoption of FAS 123R in 2005 will conform the accounting treatment of
stock options, although due to differing transitional rules under US GAAP some differences from
Canadian GAAP will remain. 123 BARRICK Annual Report 2004




---



##### 



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS q) Consolidated statements of cash flow under Canadian GAAP Exploration and development expenditures that were capitalized under Canadian GAAP, but
expensed under US GAAP, were $25 million in 2004 (2003  $53 million; 2002  $52 million). This
represents the differences in cash flows from operating and investing activities between US GAAP
and Canadian GAAP. For the years ended December 31
    
    2004
    
    
    2003
    
    
    2002Activities:Operating
    
    $
    535
    
    
    $
    581
    
    
    $
    651Investing
    
    
    (848
    )
    
    
    (396
    )
    
    
    (121
    )Financing
    
    
    741
    
    
    
    (266
    )
    
    
    (61
    )Effect of foreign exchange rate changes on cash
    
    
    
    
    
    
    7
    
    
    
    1Cash and equivalents at beginning of period
    
    
    970
    
    
    
    1,044
    
    
    
    574Cash and equivalents at end of period
    
    $
    1,398
    
    
    $
    970
    
    
    $
    1,044
 124 BARRICK Annual Report 2004