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Exhibit 3 Managements
Discussion and Analysis (MD&A) 
 Contents Core Business
    
    pg.26Executive Overview and 2005 Outlook
    
    pg.26Vision and Strategy
    
    pg.28Capability to Deliver Results
    
    pg.29Impact of Key Economic Trends
    
    pg.30Results
    
    pg.35Overview of 2004 versus 2003
    
    pg.35Consolidated Gold
Production and Sales
    
    pg.36Results of Operating Segments
    
    pg.38Other Costs and Expenses
    
    pg.45Cash Flow
    
    pg.48Overview of 2003 versus 2002
    
    pg.49Balance Sheet
    
    pg.50Quarterly Information
    
    pg.52Off-Balance Sheet Arrangements
    
    pg.53Liquidity
    
    pg.57Canadian Supplement
    
    pg.60Critical Accounting Policies
and Estimates
    
    pg.60Non-GAAP Performance Measures
    
    pg.67Cautionary Statement on
Forward-Looking Information
    
    pg.71Glossary of Technical Terms
    
    pg.72
 This MD&A has been prepared as of February 9,
2005, and is intended to supplement and
complement our audited financial statements and
notes thereto for the year ended December 31,
2004 prepared in accordance with United States
generally accepted accounting principles, or US
GAAP (collectively, our Financial Statements).
As required by Canadian Securities Authorities, a
reconciliation of our US GAAP Financial
Statements to Canadian GAAP is included in note
25 to the Financial Statements. You are
encouraged to review our Financial Statements in
conjunction with your review of this MD&A.
Additional information relating to the Company,
including our Annual Information Form, is
available on SEDAR at www.sedar.com and on EDGAR
at www.sec.gov. For an explanation of terminology
used in this MD&A that is unique to the mining
industry, readers should refer to the
glossary on pages 72 and 73. All dollar amounts
in this MD&A are in US dollars, unless otherwise
specified. Unless otherwise indicated, the
financial information in this MD&A has been
prepared in accordance with US GAAP. For the purposes of preparing this MD&A, we
consider the materiality of information.
Information is considered material if: (i) such
information results in, and would reasonably be
expected to result in, a significant change in
the market price or value of Barrick Gold
Corporations shares; or (ii) there is a
substantial likelihood that a reasonable investor
would consider it important in making an
investment decision, or if it would significantly
alter the total mix of information available to
investors. Materiality is evaluated by reference
to all relevant circumstances, including
potential market sensitivity. 25 BARRICK Annual Report 2004




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MANAGEMENTS DISCUSSION AND ANALYSIS Core Business Barrick Gold Corporation (Barrick) is one
of the worlds largest gold producers in terms of
market capitalization, annual gold production and
gold reserves. Our operations are concentrated in
three regions: North America, Australia/Africa
and South America. Over the next two years, after production begins
at four of our development projects, we are
targeting our annual gold production to grow to
6.87.0 million ounces, with South America
contributing an increasing proportion of our
production. To grow our business, we are also
exploring for gold in areas of the world outside
of our three regions, particularly in Russia and
Central Asia. Ounces Produced by Region in 2004 (PIE CHART) We generate revenue and cash flow from the
production and sale of gold in both bullion and
concentrate form. We sell our gold production
through three primary distribution channels: gold
bullion is sold in either the gold spot market or
under gold sales contracts between Barrick and
various third parties, and gold concentrate is
sold to independent smelting companies. Selling
prices reflect the market price for gold at the
time an agreement is reached on pricing. Executive Overview and 2005 Outlook Our share price appreciated by 6.65% in
2004, outperforming senior gold producers Newmont
Mining Corporation, Placer Dome Inc., Anglogold
Ashanti Limited and Gold Fields Limited, while
the spot gold price appreciated by 5.54% over the
same period. In 2004, we produced 4.96 million ounces of gold
at an average total cash cost of $2121per ounce, achieving our original guidance
for the year. Higher gold production at
Goldstrike Open Pit, Goldstrike Underground and
Pierina more than offset lower production at the
Plutonic, Round Mountain, Darlot and Eskay Creek
mine sites. Despite an environment of rising commodity prices, appreciation of
currencies against the US dollar, and increased
royalty and mining tax payments driven by higher
market gold prices, we met our original total
cash costs per ounce guidance. Our currency and
commodity hedge programs enabled us to mitigate
the impact of commodity prices and currency
exchange rates on total cash costs per ounce and
operating cash flow. We had earnings of $248 million ($0.46 per share)
and generated operating cash flow of $506 million
($0.95 per share) in 2004. Our 2004 earnings and
operating cash flow included an after-tax
opportunity cost of $89 million ($0.17 per share)
due to the voluntary reduction of our fixed-price
gold sales contracts, with deliveries into
contracts at prices below the prevailing market
gold price, and corresponding lower revenues from
gold sales. Earnings in 2004 also included tax
credits totaling $227 million relating to the
resolution of a Peruvian tax assessment and a
change in tax status   1.
    Total cash costs per ounce is a non-GAAP performance measure that is used throughout this
MD&A. For more information see pages 67 to 70. 26 BARRICK Annual Report 2004




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MANAGEMENTS DISCUSSION AND ANALYSIS in Australia; as well as impairment charges
recorded against long-lived assets of $139
million pre-tax. In 2004, we exceeded our target
(of 1.5 million ounces) for reducing our
fixed-price gold sales contracts with a reduction
of 2 million ounces. At year-end, we had proven and probable reserves
of 89.1 million ounces of gold2, based
on a $375 gold price, after producing 5.5 million
contained ounces. Reserve increases in 2004 were
due to exploration projects at operating mines
and development projects, and a lower cut-off
grade as a result of a higher gold price
assumption in 2004. We continue to effectively support and shape our
growth profile, including a focus on Russia and
Central Asia. We made steady progress on the
construction of four new mines, with three of
them planned to enter production in 2005.
Construction is proceeding on schedule for
Lagunas Norte in Peru, Veladero in Argentina,
Tulawaka in Tanzania, and Cowal in Australia. We
are making progress in planning for our
Pascua-Lama Project, which straddles the Chilean
and Argentine border, our fifth development
project, and East Archimedes which is located in
Nevada, our sixth development project. We have the capital resources to fund our
development projects without the need for any
equity dilution. During the year, we entered into
a nine-year commitment in Argentina for $250
million in Veladero project financing and
completed a $750 million public debenture
offering. We also continued to optimize our
capital structure through a share buyback
program. At the same time, we have the gold
mining industrys only A-rated balance sheet, as
rated by Standard & Poors. During 2004, we implemented a number of
initiatives to strengthen our organization,
including making changes to the composition of
our Board of Directors and governance practices
as part of a commitment towards improved
corporate governance. An organizational redesign
was fully implemented in 2004. The new
organizational design consolidated life-of-mine
accountabilities under our Chief Operating Officer and established regional
business units to add greater value to the global
enterprise. We expect 2005 gold production to be between
5.45.5 million ounces at an average total cash
cost of $220$230 per ounce, and we remain
committed to our 40% targeted growth plan and
gold production target for 2007 of 6.87.0
million ounces, at total cash costs slightly
above $200 per
ounce.3 The first and
second quarters of 2005 are expected to have
lower production and higher cash costs, with the
second half of the year improving as Lagunas
Norte and Veladero come on stream. For the year, amortization is expected to be
about $475$485 million, and administration
expense is expected to be approximately $90
million, including an estimated $15 million in
costs on adoption of new accounting rules that
require the expensing of stock options beginning
in the second half of 2005. Exploration,
development and business development expense is
expected to be approximately $150 million, with
the possibility that positive results could lead
to additional exploration spending. Capital
expenditures for 2005 are anticipated to be
approximately $743 million for development
excluding capitalized interest of $103 million
and $245 million for sustaining capital.   2.
    For a breakdown of reserves by category
and additional information relating to reserves,
see page 127 of this Annual Report.  3.
    See page 36 for further
information on forward-looking
estimates of gold production and total
cash costs per ounce. 27 BARRICK Annual Report 2004




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MANAGEMENTS DISCUSSION AND ANALYSIS Vision and Strategy Our vision is to be the worlds best gold
company by finding, developing and producing
quality reserves in a profitable and socially
responsible manner. The overriding goal of our strategy is to create
value for our shareholders. To achieve this, cash
flow from our mines is consistently reinvested in
exploration, development projects and other
strategic investments to work towards sustainable
growth in production and cash flow. It can take a
number of years for a project to move from the
exploration stage through
to mine construction and production. Our business
strategy reflects this long lead time, but
shorter-term priorities are also set for current
areas of focus. We use strategic relationships to share risk and
expertise. Examples include joint venture
arrangements for the Hemlo, Round Mountain and
Kalgoorlie mines, and also for exploration
programs in certain areas. We have investments in
Highland Gold Mining PLC (Highland Gold) and
Celtic Resources Holdings PLC (Celtic
Resources), as well as strategic alliances with
both companies, as part of our plan to develop a
business unit in Russia and Central Asia. Long-termStrategy Elements
    
    
    
    Focus Areas
    
    
    
    MeasuresGrowth in reserves
    
    >
    
    Growth at existing mine sites by finding new
    
    >
    
    Additions to reservesand production
    
    
    
    resources and converting to reserves.
    
    
    
    and resources.>
    
    Growth through successful exploration focused
    
    >
    
    Consistent investment inprincipally in key exploration districts (Goldstrike,
    
    
    
    exploration and development.Frontera, Lake Victoria, Alto Chicama) and
    
    >
    
    Growth in annualin Russia/Central Asia.
    
    
    
    gold production.>
    
    Execute the development and construction
    
    >
    
    Size of gold reserves.of Veladero, Lagunas Norte, Tulawaka, Cowal,
    
    >
    
    Construction progressPascua-Lama and East Archimedes.
    
    
    
    versus schedules.>
    
    Develop a business unit in Russia/Central Asia
    
    >
    
    Actual construction costs.through investments in, and strategic alliances
    
    >
    
    Status of regulatorywith Highland Gold and Celtic Resources.
    
    
    
    requirements.Operational excellence
    
    >
    
    Control costs.
    
    >
    
    Total cash costs per ounce.1  Global supply chain management.
    
    >
    
    Amortization per ounce.1  Continuous improvement initiatives.
    
    >
    
    Ore throughput.  Currency, interest rate and
    
    >
    
    Equipment utilizationfuel/propane hedge programs.
    
    
    
    statistics.>
    
    Optimize productivity through
    
    >
    
    Liquidity  operating cashcontinuous improvement initiatives.
    
    
    
    flow and credit rating.>
    
    Effective assessment and management of risk.
    
    >
    
    Key balance sheet ratios.>
    
    Effective capital allocation and management.>
    
    Sourcing of funding for capital needs.Strengthen
    
    >
    
    Workforce  identify and develop talent.
    
    >
    
    Talent review andthe organization
    
    >
    
    Leadership development and succession planning.
    
    
    
    performance management.>
    
    Adopt best practices in corporate governance,
    
    >
    
    Compliance withincluding strengthening internal controls.
    
    
    
    Sarbanes-Oxley Act.Responsible mining
    
    >
    
    Reinforce health and safety culture.
    
    >
    
    Safety leadership and>
    
    Enhance environmental performance, including use
of innovative technology to protect the environment.
    
    >
    
    other training initiatives.
Medical aid injury frequency.>
    
    Maintain positive community and
government relations.
    
    >
    
    Environmental performance.
   1.
    Total cash costs per ounce and amortization per ounce are non-GAAP performance measures.
For more information, see pages 67 to 70. 28 BARRICK Annual Report 2004




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MANAGEMENTS DISCUSSION AND ANALYSIS Capability to Deliver Results Resources and processes provide us with the
capability to execute our strategy and deliver
results. Our critical resources and processes are
as follows: Critical Non-Capital Resources and
Processes Experienced Management Team
and Skilled Workforce We have an experienced management team that
has a proven track record in the mining industry.
Our management team is critical to the
achievement of our strategic goals, and we are
focused on retaining and developing key members.
The team is focused on the execution of our
strategy and business plan. Strong leadership and
governance are critical to the successful
implementation of our core strategy. We are
focusing on leadership development for key
members of executive-level and senior mine
management. A skilled workforce is one of our most
significant non-capital resources. Competition
for appropriately trained and skilled employees
is high in the mining industry. Employee
retention, the ability to recruit skilled
employees, and labor relations have a significant
impact on the effectiveness of our workforce, and
ultimately the efficiency and effectiveness of
our operations. We maintain training programs to
develop the skills that certain employees need to
fulfill their roles and responsibilities. The
remote nature of many mine sites can present a
challenge to us in maintaining an appropriately
skilled workforce. Priorities for our Human
Resources group include strengthening our
workforce and developing leadership and
succession capabilities by focusing on attracting
and retaining the best people, as well as
enhancing the process for identifying and
developing the leadership pool. We are
implementing Human Resources systems solutions to
enhance our ability to analyze and compare labor
costs, productivity and other key statistics to
better manage the effect our workforce has on our
mining operations. Health and Safety As part of our commitment to corporate
responsibility, we focus on continuously
improving health and safety programs, systems and
resources to help control workplace hazards.
Continuous monitoring and integration of health
and safety into decision-making enables us to
operate effectively, while also focusing on
health and safety. Key areas of focus include
safety leadership through training and risk
management practices; designing and enhancing
processes and programs to ensure safety
requirements are met; and communicating a safety
culture as part of Company and personal core
values. Environmental We are subject to extensive laws and
regulations governing the protection of the
environment, endangered and protected species,
waste disposal and worker safety. We incur
significant expenditures each year to comply with
such laws and regulations. We seek to
continuously implement operational improvements
to enhance environmental performance. We also
integrate environmental evaluation, planning, and
design into the development stage of new projects
to ensure environmental matters are identified
and managed at an early stage. Cost Control Successful cost control depends upon our
ability to obtain and maintain equipment,
consumables and supplies as required by our
operations at competitive prices. Through a
culture of continuous improvement, we are also
focusing on identifying and implementing steps to
make our operations more effective and efficient. Our Supply Chain group is focusing on improving
long-term cost controls and sourcing strategies
for major consumables and supplies used in our
mining activities through global commodity
purchasing teams. They are also focusing on
knowledge sharing across our global business and
implementing best practices in procurement. We
are developing strategies to help us analyze and
source consumables and supplies at the lowest
cost over the life of a mine, as well as
long-term alliances with suppliers. 29 BARRICK Annual Report 2004




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MANAGEMENTS DISCUSSION AND ANALYSIS Maintenance is a significant component of
our operating costs. Our Global Maintenance team
is working to reduce maintenance costs and
increase equipment utilization through an
internal maintenance community. Key areas of
focus include setting standards for maintenance
to optimize usage of mine equipment and enable
cost-effective purchasing of mine equipment. They
are implementing a global maintenance system to
facilitate sharing of best practices and tracking
of capital equipment statistics such as
utilization, availability and useful lives. Technology Our Information Technology group monitors
significant risks, such as security, the risk of
failure of critical systems, risks relating to
the implementation of new applications, and the
potential impact of a systems failure. They are
implementing strategies to manage these risks,
including ongoing enhancements to security;
monitoring of operating procedures; the
effectiveness of system controls to safeguard
data; evaluating technology resources; and
maintaining disaster recovery plans. Other areas
of focus include reducing technology diversity
through standardizing systems solutions, and
ongoing analysis of business needs and the
potential benefits that can be gained from new
applications. Internal Controls We maintain a system of internal controls
designed to safeguard assets and ensure financial
information is reliable. We undertake ongoing
evaluations of the effectiveness of internal
controls and implement control enhancements,
where appropriate, to improve the effectiveness
of controls. In 2004 and 2003, we focused on the
design, testing and assessment of the
effectiveness of internal controls to enable us
to meet the certification and attestation
requirements of the Sarbanes-Oxley Act. We
presently file management certifications annually
under Section 302 and Section 906 and expect to
comply with the reporting requirements of Section
404 as required by law. We also maintain a system of disclosure controls
and procedures designed to ensure the
reliability, completeness and timeliness of the
information we disclose in this MD&A and other
public disclosure documents. Critical Capital Resources
and Processes We expect to fund capital requirements of
about $2.5 billion over the next four years to
finish construction activities at our development
projects and for a power plant to supply our
Goldstrike mine. Adequate funding is in place or
available for all our development projects. We
plan to put in place project financing for a
portion of the expected construction cost of
Pascua-Lama, however, if we are unable to do so
because of unforeseen political or other
challenges, we expect to be able to fund the
capital required through a combination of
existing capital resources and future operating
cash flow. We may also invest capital in Russia and Central
Asia in 2005 to exercise certain rights we hold
through agreements with Highland Gold and Celtic
Resources to acquire interests in various mineral
properties, and also to acquire future common
shares of Celtic. These rights are described in
note 10 to the Financial Statements. We expect
that any capital required will be funded from a
combination of our existing cash position and
operating cash flow in 2005. Impact of Key Economic Trends 1. Higher Market Gold Prices Gold Prices(Dollars per Ounce) (LINE GRAPH) 30 BARRICK Annual Report 2004




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MANAGEMENTS DISCUSSION AND ANALYSIS Market gold prices are subject to volatile price
movements over short periods of time, and are affected by
numerous industry and macroeconomic factors that are beyond
our control. The US dollar gold price has increased over
the past few years, mainly due to the weakening of the US
dollar against most major currencies, a decline in gold
supply and an increase in demand for gold. The gold price
over the last few years has had a high correlation with the
US dollar, and we expect this correlation to continue. With global financial markets experiencing significant
volatility, political and security issues in a state of
uncertainty, and with the US dollar  the secure
investment of choice globally  coming under pressure, the
global investment community has reawakened to the potential
for gold as an alternative investment vehicle. The past few
years have seen a resurgence in gold as an investment
vehicle, and we believe the prospects for gold to
experience further investment interest are good,
particularly in light of expected global economic/political
uncertainties going forward. We believe that the
introduction of more readily accessible and more liquid
gold investment vehicles (such as gold exchange traded
funds  ETFs) will further enhance golds appeal to
investors. Our revenues are significantly impacted by the market price
of gold. We have historically used fixed-price gold sales
contracts to provide protection in periods of low market
gold prices, but since 2001 we have been focusing on
reducing the level of outstanding fixed-price gold sales
contracts. In 2004, we reduced our fixed-price gold sales
contracts by 2 million ounces. The terms of our fixed-price
gold sales contracts enable us to deliver gold whenever we
choose over the primarily ten-year term of the contracts.
Our fixed-price gold sales contracts have allowed us to
benefit from higher market gold prices, while the
flexibility implicit in contract terms allows us to reduce
the outstanding sales contracts over time. Over the last three years, our realized gold sales prices
have largely tracked the rising market gold price. Periods
when our average realized price was below average market
prices were primarily caused by us voluntarily choosing to
deliver into gold sales contracts at prices lower than
prevailing market prices to reduce outstanding gold sales
contracts. We view the outlook for market gold prices to be
positive due to our view of a declining US dollar and the
present supply/demand fundamentals. In the future, we
expect to be able to benefit from higher gold prices. The
flexibility under our fixed-price gold sales contracts will
enable us to deliver gold at market prices, however, if we
choose to deliver a portion of our production under gold
sales contracts, the prices for those deliveries may be
below prevailing market prices. 2. Higher Market Silver Prices Spot Silver Prices(Dollars per Ounce) (LINE GRAPH) Market silver prices are subject to volatile price
movements over short periods of time, and are affected by
numerous industry and macroeconomic factors that are beyond
our control. Market silver prices have increased since late
2003 mainly due to increasing investment and industrial
demand, along with higher world economic growth in 2004.
Market prices fluctuated in 2004 as higher prices caused
demand from jewelry and silverware fabrication to decrease.
An expected decline in the use of silver for photographic
film due to increases in digital photography may negatively
impact market prices, but this trend has been partly offset
by increased demand for photographic film in developing
countries. 31 BARRICK Annual Report 2004




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MANAGEMENTS DISCUSSION AND ANALYSIS Market silver prices impact the value of silver
produced as a by-product at some of our mines. When the
silver price increases, by-product credits increase and our
total cash costs per ounce decrease. In the past, we have
used silver sales contracts to sell a portion of our annual
silver production, which has helped to mitigate the impact
of volatility in market prices, and we may use such
contracts in the future. The flexibility under our silver
sales contracts allows us to benefit from higher market
silver prices by choosing to deliver silver production into
the silver spot market. If we choose to deliver a portion
of our silver production under silver sales contracts, the
prices for those deliveries may be below prevailing market
prices. 3. Weakening of the US dollar Against Major
Currencies AUD$ Spot and Average Monthly Hedge Rates(A$:US$ exchange rate) (LINE GRAPH) CAD$ Spot and Average Monthly Hedge Rates(C$:US$ exchange rate) (LINE GRAPH) The US dollar significantly depreciated against many
major currencies in 2003 and 2004. The weakening of the US
dollar was largely due to a record US trade deficit and low
interest rates that, after taking into account inflation,
provided negative real returns. As these conditions remain,
and as the United States seeks to improve the
competitiveness of its exports, further devaluation of the
US dollar may occur. Results of our mining operations in Australia and Canada,
reported in US dollars, are affected by exchange rates
between the Australian and Canadian dollar and the US
dollar, because a portion of our annual expenditures are
based in local currencies. A weaker US dollar causes costs
reported in US dollars to increase, because local currency
denominated expenditures have become more expensive in US
dollars. We have a currency hedge position as part of our
strategy to control costs by mitigating the impact of a
weaker US dollar on Canadian and Australian dollar-based
expenditures. Over the last three years, our currency hedge
position has provided benefits to us in the form of hedge
gains when contract exchange rates are compared to
prevailing market exchange rates as follows: 2004  $96
million; 2003  $58 million; 2002  $7 million. These gains
are included in our operating costs. At December 31, 2004, we had hedged local currency-based
expenditures for about the next three years at average
exchange rates that are more favorable than market rates in
early 2005. The average rates for currency contracts
designated against operating costs over the next three
years are $0.64 for Australian dollar contracts and $0.72
for Canadian dollar contracts. Further details of our
currency hedge position are included in note 16 to the
Financial Statements. Beyond three years, most of our local
currency denominated costs are subject to market currency
exchange rates. If the trend of a weakening US dollar
continues, we do not expect that this will significantly
impact our results of 32 BARRICK Annual Report 2004




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MANAGEMENTS DISCUSSION AND ANALYSIS operations over the next three years because of the
protection we have under our currency hedge position.
Beyond the next three years, our results could be affected,
depending upon whether we add to our currency hedge
positions in the future. 4. Higher Energy Prices Crude Oil Market Price(Dollars per Barrel) (LINE GRAPH) Diesel Fuel and Propane Prices of commodities, such as diesel fuel and
propane, are subject to volatile price movements over short
periods of time and are affected by factors that are beyond
our control. Annually, we consume about 1.31.7 million
barrels of diesel fuel and 2025 million gallons of propane
at our mines. The cost of these commodities affects our
costs to produce gold. Crude oil is refined into diesel fuel that is used by us at
our mines. Due mainly to global supply shortages and a
weakening US dollar, crude oil prices rose in 2004, with a
corresponding rise in diesel fuel prices. To control costs
by mitigating the impact of rising diesel fuel prices, we
put in place a fuel hedge position of 2.4 million barrels,
a portion of estimated future diesel fuel consumption over
the next three years with an average cap price of $39 per
barrel and participation to an average floor price of $29
per barrel on about half the position. In 2004, we realized
benefits in the form of hedge gains totaling $4 million
when contract prices were compared to market prices. If the
trend of increasing diesel fuel prices continues, this
could impact future gold production costs, albeit mitigated
by our present fuel hedge position. We also have a propane
hedge position of 29 million gallons at an average price of
$0.79 per gallon, that will help to control the cost of a
portion of propane consumption at our mining operations
over the next two years, and mitigate the impact of
volatility in propane prices. Electricity Electricity prices have risen in recent years as a
result of diesel fuel price increases and natural gas
demand, as well as excess demand for electricity. Annually
we consume about 1.31.5 billion kilowatts of electricity
at our mines. Fluctuations in electricity prices or in
electricity supply impact costs to produce gold. To control
electricity costs, we are building a 115-megawatt natural
gas-fired power plant in Nevada that will supply our
Goldstrike mine, and reduce the mines dependence on the
regulated utility in Nevada. The sourcing of electricity
from this power plant is expected to reduce total cash
costs by an average of about $10 per ounce at Goldstrike
over the remaining life of the mine, compared to recent
costs of obtaining power from the regulated power utility.
The plant is targeted to begin operating in fourth quarter
2005. We are also entering into long-term power supply
arrangements for some mines; building powerlines to link
into power grids; actively reviewing alternative sources of
supply of electricity; and looking at other options across
many of our larger mines and development projects. 33 BARRICK Annual Report 2004




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MANAGEMENTS DISCUSSION AND ANALYSIS 5. Other Inflationary Cost Pressures The mining industry has been experiencing significant
inflationary cost pressures with increasing costs of labor
and prices of consumables such as steel, concrete and
tires. The cost of consumables such as steel and concrete
mainly impacts mine construction costs. The costs of tires
mainly impacts cash production costs. For steel in
particular, world demand in excess of supply caused steel
prices to increase significantly in 2004. We are directly
and indirectly impacted by rising steel prices through the
cost of new mine equipment and grinding media, as well as
structural steel used in mine construction. We are focusing
on supply chain management and continuous improvement
initiatives to mitigate the impact of higher steel prices,
including controlling usage and extending the life of plant
and equipment, where possible. 6. Declining US dollar interest rates Interest Rate % (LINE GRAPH) US dollar interest rates have been relatively low by
historic standards over the past three years due mainly to
ongoing weak economic conditions; easy monetary policies;
low inflation expectations; and increasing demand for
low-risk investments. This lower interest-rate environment
has enabled us to secure new sources of financing in 2004
at relatively attractive interest rates. Volatility in interest rates mainly affects interest
receipts on our cash balances ($1,398 million outstanding
at the end of 2004), and interest payments on variable-rate
long-term debt ($411 million outstanding at the end of
2004). Based on the relative amounts of variable-rate
financial assets and liabilities at the end of 2004,
declining interest rates would have a negative impact on
our results. In the future we expect these relative amounts
to change as we invest cash in our development projects.
The amount of cash balances may decrease from levels at
December 31, 2004, subject to the amount of operating cash
flow we generate in the future, as well as other sources of
and uses for cash. In response to the volatility in
interest rates, we have used interest rate swaps to alter
the relative amounts of variable-rate financial assets and
liabilities and to mitigate the overall impact of changes
in interest rates. Management of interest-rate risk takes
into account the term structure of variable-rate financial
assets and liabilities. On $300 million of our cash
balances, we have fixed the interest rate through 2008 at
3.3%. On our Bulyanhulu project financing, we have fixed
the Libor-based rate for the remaining term of the debt at
4.45%. These interest rate swaps have provided benefits to
us in the form of hedge gains, when rates under the swaps
are compared to market interest rates, totaling $16 million
in 2004, $13 million in 2003 and $6 million in 2002. In the
future we may alter the notional amounts of interest rate
swaps outstanding, as the relative amounts of variable-rate
assets and liabilities change, to attempt to manage our
exposure to interest rates. Interest rates have historically been correlated with
forward gold prices compared to current market prices. In
periods of higher interest rates, forward gold prices have
generally been higher. Consequently in periods of higher
interest rates we have been able to secure more favorable
future prices under fixed-price gold sales contracts. 34 BARRICK Annual Report 2004




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##### 



MANAGEMENTS DISCUSSION AND ANALYSIS Results Selected Annual Information
 For the years ended December 31($ millions, except per shareand per ounce data in dollars)
    
    Targets for 20041
    
    
    2004
    
    
    2003
    
    
    2002Gold production (000s oz)
    
    
    4,9005,000
    
    
    
    4,958
    
    
    
    5,510
    
    
    
    5,695Gold sales(000s oz)
    
    
    
    
    
    
    4,936
    
    
    
    5,554
    
    
    
    5,805$ millions
    
    
    
    
    
    $
    1,932
    
    
    $
    2,035
    
    
    $
    1,967Market gold price3
    
    
    
    
    
    
    409
    
    
    
    363
    
    
    
    310Realized gold price3
    
    
    
    
    
    
    391
    
    
    
    366
    
    
    
    339Total cash costs3,4
    
    $
    205215
    
    
    
    212
    
    
    
    189
    
    
    
    177Amortization
    
    
    480490
    
    
    
    452
    
    
    
    522
    
    
    
    519Net income
    
    
    
    
    
    
    248
    
    
    
    200
    
    
    
    193Net income per shareBasic
    
    
    
    
    
    
    0.47
    
    
    
    0.37
    
    
    
    0.36Diluted
    
    
    
    
    
    
    0.46
    
    
    
    0.37
    
    
    
    0.36Dividends per share
    
    
    
    
    
    
    0.22
    
    
    
    0.22
    
    
    
    0.22Cash inflow (outflow)Operating activities
    
    
    
    
    
    
    506
    
    
    
    519
    
    
    
    588Capital expenditures
    
    
    (900
    )2
    
    
    (824
    )
    
    
    (322
    )
    
    
    (228
    )Financing activities
    
    
    
    
    
    
    741
    
    
    
    (266
    )
    
    
    (61
    )Total assets
    
    
    
    
    
    
    6,274
    
    
    
    5,358
    
    
    
    5,261Total long-term financial liabilities
    
    
    
    
    
    $
    1,707
    
    
    $
    789
    
    
    $
    819Gold reserves (millions of contained oz)
    
    
    
    
    
    
    89.1
    
    
    
    85.9
    
    
    
    86.9Fixed-price gold sales contracts (millions of oz)
    
    
    
    
    
    
    13.5
    
    
    
    15.5
    
    
    
    18.1
   1.
    As disclosed in the 2003 Annual Report.2.
    As disclosed in the second quarter 2004 report.3.
    Per ounce weighted average.4.
    For an explanation of the use of non-GAAP performance measures, refer to pages 67 to 70
of Managements Discussion and Analysis. Overview of 2004 Versus 2003 Earnings In 2004, higher cash production costs were offset by
higher gold selling prices, but earnings were impacted by
lower gold sales volumes. Based on the difference between
average realized gold prices and average total production
costs per ounce, the impact of lower sales volumes was to
decrease pre-tax earnings by about $54 million. As expected, gold production in 2004 was lower than 2003,
and total cash costs per ounce were higher, mainly due to
the expected mining of lower ore grades in 2004. Higher
spot gold prices enabled us to realize higher selling
prices for our gold production, and mitigate the impact on
revenue of 11% lower sales volumes. We sold about 59% of
our production into the spot market, and 41% into our gold
sales contracts at prices lower than prevailing market
prices. By voluntarily delivering into some of our gold
sales contracts, we reduced our fixed-price gold sales
contracts by 2 million ounces, and we accepted an $89
million opportunity cost, compared to delivering all of our
production at market prices, with corresponding lower
revenues from gold sales. 35 BARRICK Annual Report 2004




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##### 



MANAGEMENTS DISCUSSION AND ANALYSIS Earnings in 2004 benefited from $25 million lower
pre-tax interest expense, a $203 million income tax
recovery, and pre-tax gains on sale of assets totaling $34
million, partly offset by pre-tax impairment charges
totaling $139 million on long-lived assets. Interest
expense decreased by $25 million mainly due to amounts
capitalized at development projects in 2004. The $203
million income tax recovery in 2004 included a credit of
$141 million following the resolution of a tax assessment
in Peru, and a credit of $81 million due to a change in tax
status in Australia following the adoption of certain
aspects of new tax legislation. Earnings in 2003 included a
$60 million post-tax non-hedge derivative gain (2004  $9
million post-tax) and deferred tax credits totaling $62
million, partly offset by post-tax charges of $11 million
on settlement of the Inmet litigation and $17 million for
the cumulative effect of accounting changes. Special Items  Effect on earnings increase (decrease) ($ millions)
 2004
    
    
    2003
    
    
    2002For the years ended December 31
    
    Pre-tax
    
    
    Post-Tax
    
    
    Pre-tax
    
    
    Post-Tax
    
    
    Pre-tax
    
    
    Post-TaxNon-hedge derivative gains (losses)
    
    $
    5
    
    
    $
    9
    
    
    $
    71
    
    
    $
    60
    
    
    $
    (6
    )
    
    $
    6Inmet litigation costs
    
    
    
    
    
    
    
    
    
    
    (16
    )
    
    
    (11
    )
    
    
    
    
    
    
    Gains on asset sales
    
    
    34
    
    
    
    28
    
    
    
    34
    
    
    
    27
    
    
    
    8
    
    
    
    5Impairment charges on long-lived assets
    
    
    (139
    )
    
    
    (96
    )
    
    
    (5
    )
    
    
    (3
    )
    
    
    (11
    )
    
    
    (11
    )Impairment charges on investments
    
    
    (5
    )
    
    
    (5
    )
    
    
    (11
    )
    
    
    (11
    )
    
    
    
    
    
    
    Changes in asset retirement obligation cost estimates
    
    
    (22
    )
    
    
    (17
    )
    
    
    (10
    )
    
    
    (10
    )
    
    
    
    
    
    
    Cumulative effect of accounting changes
    
    
    
    
    
    
    
    
    
    
    (17
    )
    
    
    (17
    )
    
    
    
    
    
    
    Resolution of Peruvian tax assessmentOutcome of tax uncertainties
    
    
    
    
    
    
    141
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Reversal of other accrued costs
    
    
    21
    
    
    
    15
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Deferred tax creditsChange in Australian tax status
    
    
    
    
    
    
    81
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Release of valuation allowances/outcome of
uncertainties
    
    
    
    
    
    
    5
    
    
    
    
    
    
    
    62
    
    
    
    
    
    
    
    22Total
    
    
    (106
    )
    
    
    161
    
    
    
    46
    
    
    
    97
    
    
    
    (9
    )
    
    
    22
 Cash Flow Our closing cash position at the end of 2004 increased
by $428 million to $1,398 million. Operating cash flow
decreased slightly in 2004 mainly due to the lower gold
sales volumes and increases in supplies inventory at our
development projects, partly offset by lower payments for
income taxes. Capital expenditures increased by $502
million to $824 million mainly due to construction activity
at our development projects. We received $974 million from
new financing put in place primarily to fund construction
at our development projects; we paid dividends totaling
$118 million and we spent $95 million on our share buyback
program. Consolidated Gold Production and Sales Gold production and production costs By replacing gold reserves depleted by production year
over year, we can maintain production levels over the long
term. If depletion of reserves exceeded discoveries over
the long term, then we may not be able to sustain gold
production levels. Reserves can be replaced by expanding
known orebodies or by locating new deposits. Once a site
with gold mineralization is discovered, it may take several
years from the initial phases of drilling until production
is possible, during which time the economic feasibility of
production may change. Substantial expenditures are
required to establish 36
BARRICK Annual Report 2004




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##### 



MANAGEMENTS DISCUSSION AND ANALYSIS proven and probable reserves and to construct mining
and processing facilities. Given that gold exploration is
speculative in nature, some exploration projects may prove
unsuccessful. Our financial performance is affected by our ability to
achieve targets for production volumes and total cash
costs. We prepare estimates of future production and total
cash costs of production for our operations. These
estimates are based on mine plans that reflect the expected
method by which we will mine reserves at each mine, and the
expected costs associated with the plans. Actual gold
production and total cash costs may vary from these
estimates for a number of reasons, including if the volume
of ore mined and ore grade differs from estimates, which
could occur because of changing mining rates; ore dilution;
metallurgical and other ore characteristics; and short-term
mining conditions that require different sequential
development of ore bodies or mining in different areas of
the mine. Mining rates are impacted by various risks and
hazards inherent at each operation, including natural
phenomena, such as inclement weather conditions, floods,
and earthquakes; and unexpected labor shortages or strikes.
Total cash costs per ounce are also affected by changing
waste-to-ore stripping ratios, ore metallurgy that impacts
gold recovery rates, labor costs, the cost of mining
supplies and services, and foreign currency exchange rates.
In the normal course of our operations, we attempt to
manage each of these risks to mitigate, where possible, the
effect they have on our operating results. In 2004, production from our portfolio of mines was in line
with plan. As expected, production in 2004 was 10% lower
than in 2003 primarily as a result of mining lower-grade
ore at Goldstrike Open Pit, Pierina and Eskay Creek, partly
offset by higher production at Bulyanhulu. Ounces sold
decreased by 11% compared to 2003, consistent with the
lower production levels. As our development projects
commence production beginning in 2005, we are targeting
annual gold production to rise to between 6.8 and 7.0
million ounces by 2007 at total cash costs slightly above
$200 per ounce. In 2005, we expect to produce about 5.45.5
million ounces at total cash costs of between $220 and $230
per ounce. Our Pierina and Eskay Creek mines produced about 17 million
ounces of silver by-products in 2004. The incidental
revenue from sales of silver is classified as a component
of our reported total cash costs per ounce statistics,
which is one of the key performance measures that we use to
manage our business. At December 31, 2004, the silver
content in our gold reserves was about 911 million ounces.
After production begins at Pascua-Lama, we expect that our
annual silver production will increase significantly. Consolidated Total Cash Costs Per Ounce
 For the years ended December 31(in dollars per ounce)
    
    Target for 2004
    
    
    2004
    
    
    2003
    
    
    2002Cost of sales1
    
    
    
    
    
    $
    248
    
    
    $
    210
    
    
    $
    191Currency hedge gains
    
    
    
    
    
    
    (19
    )
    
    
    (12
    )
    
    
    (1
    )By-product credits
    
    
    
    
    
    
    (30
    )
    
    
    (21
    )
    
    
    (20
    )Cash operating costs
    
    
    
    
    
    
    199
    
    
    
    177
    
    
    
    170Royalties/mining taxes
    
    
    
    
    
    
    13
    
    
    
    12
    
    
    
    7Total cash costs2
    
    $
    205215
    
    
    $
    212
    
    
    $
    189
    
    
    $
    177
   1.
    At market currency exchange rates.2.
    For an explanation of the use of non-GAAP performance measures, refer to pages 67 to 70
of Managements Discussion and Analysis. 37
BARRICK Annual Report 2004




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##### 



MANAGEMENTS DISCUSSION AND ANALYSIS Total cash costs for 2004 were in line with the
original full-year guidance. As expected, total cash costs
in 2004 were higher than in 2003, primarily due to
processing lower-grade ore at Goldstrike Open Pit, Round
Mountain and Pierina, combined with the effect of changes
in average currency hedge rates on total cash costs at our
Australian mines. Revenue from gold sales We realized an average selling price of $391 per ounce
for our gold production in 2004, compared to $366 per ounce
in 2003, when average market gold prices were lower. Our
average realized price in 2004 reflects delivery of 59% of
ounces sold into the spot market at market prices, and 41%
into gold sales contracts at selling prices below
prevailing market prices. We exceeded our target for
reducing our fixed-price gold sales contracts by 0.5
million ounces in 2004, ending the year with a 2 million
ounce reduction. The price realized for gold sales in 2005
and beyond will depend upon spot market conditions and the
selling prices of any gold sales contracts into which we
voluntarily deliver, which could be below prevailing spot
market prices. Results of Operating Segments In our Financial Statements we present a measure of
historical segment income that reflects gold sales at
average consolidated realized gold prices, less segment
operating costs and amortization of segment property, plant
and equipment. Our segments include: producing mines,
development projects and our corporate exploration group.
For each segment, factors influencing consolidated realized
gold prices apply equally to the segments, and therefore
the factors have not been repeated in the discussion of
individual segment results. We monitor segment operating
costs using total cash costs per ounce statistics that
represent segment operating costs divided by ounces of gold
sold in each period. The discussion of results for each
segment focuses on this statistic in explaining changes in
segment operating costs. We also discuss significant
variances from prior public guidance for gold production
and total cash costs per ounce statistics for each segment. Conducting mining activities in countries outside North
America subjects us to various risks and uncertainties that
arise from carrying on business in foreign countries
including: uncertain political and economic environments;
war and civil disturbances; changes in laws or fiscal
policies; interpretation of foreign taxation legislation;
and tax implications on repatriation of foreign earnings.
We monitor these risks on an ongoing basis and mitigate
their effects where possible, but events or changes in
circumstances could materially impact our results and
financial condition. For development projects, we prepare estimates of capital
expenditures; reserves and costs to produce reserves. We
also assess the likelihood of obtaining key governmental
permits, land rights and other government approvals.
Estimates of capital expenditures are based on studies
completed for each project, which also include estimates of
annual production and production costs. Adverse changes in
any of the key assumptions in these studies or other
factors could affect estimated capital expenditures,
production levels and production costs, and also the
economic feasibility of a project. We take steps to
mitigate potentially adverse effects of changes in
assumptions or other factors. Prior to the commencement of
production, the segment results for development projects
reflect expensed mine development and mine start-up costs. North America In 2004, production was at the low end of the original
guidance for the year and total cash costs were better than the original guidance for
the year. Total cash costs per ounce reflected lower costs
than plan at the Goldstrike Open Pit and Eskay Creek,
partly offset by higher costs at Round Mountain and Hemlo.
Total cash costs for the North America region in 2004 were
not significantly affected by the impact of a weakening US
dollar on our Canadian mines or by rising fuel prices,
because we mitigated these exposures through our currency 38 BARRICK Annual Report 2004




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##### 



MANAGEMENTS DISCUSSION AND ANALYSIS and fuel hedge programs as part of our focus on
controlling costs. The region produced 8% less gold in 2004 compared with 2003
mainly because of the expected mining of lower-grade ore at
the Goldstrike Open Pit and Eskay Creek. Compared to 2003,
total cash costs per ounce were 6% higher in 2004, as a
result of the processing of lower-grade ore. In 2005, gold production from the North America region is
expected to decline by 5% to about 2.8 million ounces due
to the processing of lower-grade ore at Eskay Creek and
following the depletion of reserves at Holt-McDermott in
2004. Total cash costs for the region are expected to
increase by 10% to about $245 per ounce, mainly due to the
processing of lower-grade ore at Round Mountain and Eskay
Creek, as well as slightly higher costs at Goldstrike. Goldstrike, United States Segment income decreased by $1 million in 2004 from
2003 levels, mainly due to 14% lower gold sales volumes and
5% higher total cash costs per ounce, partly offset by 7%
higher realized gold prices and 7% lower amortization
expense. Gold production at the open pit was slightly higher than
plan in 2004, and total cash costs per ounce were slightly
lower than plan. With the planned mining of lower-grade ore
in 2004, partly offset by better gold recovery rates,
open-pit production was 11% lower and total cash costs per
ounce were 6% higher than in 2003. Revenues decreased by
8%, with a 17% decrease in ounces sold, due to the lower
gold production levels in 2004, partly offset by a 7%
increase in realized gold prices. At the underground mine, production was 5% below the low
end of the original range of guidance due to lower than
expected availability of the Rodeo backfill raise, changes
to mine sequencing, and higher maintenance costs due to
unexpected repairs to electrical transformers. Total cash
costs per ounce were at the high end of the original range
of guidance for 2004 due to the lower production volumes
and higher backfill haulage costs. Production was slightly
higher than 2003 and total cash costs per ounce were
similar to 2003, mainly due to better gold recovery rates
and processing of slightly higher-grade ore in 2004. Amortization expense decreased by $11 million in 2004
mainly due to the effect of lower gold sales volumes,
combined with the impact of reserve increases at the
beginning of 2004 that caused a $15 million decrease in
amortization expense. In 2004, the Nevada Public Utilities Commission approved
our proposal to build a 115-megawatt natural gas-fired
power plant in Nevada to supply our Goldstrike mine. The
plant is targeted to commence operations in fourth quarter
2005. Highlights include:  >
    The construction permit for the foundation and buried services was received in fourth
quarter 2004.  >
    Engineering work for the project is substantially complete and site preparation
commenced in fourth quarter 2004. Construction of the power plant was subcontracted to a
third-party contractor, and $18 million was spent on construction in 2004.  >
    We expect to file an application for a building construction permit in first quarter
2005.  >
    The natural gas supplier to the power plant is applying for permits to enable the
construction of a short extension from an existing gas pipeline to the power plant site. Eskay Creek, Canada Segment income decreased by $13 million in 2004,
mainly due to 18% lower gold sales volumes and 9% higher amortization expense,
partly offset by 40% lower total cash costs per ounce and
7% higher realized gold prices. Revenues decreased by 14%,
with an 18% decrease in ounces sold, due to the lower gold
production levels in 2004, partly offset by a 7% increase
in realized gold prices. Production for 2004 was slightly lower than plan due to
lower than expected ore grades and unscheduled backfill
plant maintenance. Total cash costs per ounce were better
than plan, mainly due 39 BARRICK Annual Report 2004




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##### 



MANAGEMENTS DISCUSSION AND ANALYSIS to higher by-product credits caused by higher silver
prices, partly offset by the impact of processing
lower-grade ore and higher maintenance costs. Compared to
2003, as expected, production decreased by 18% because of a
4% decline in quantity of ore processed, and an 18% decline
in ore grade. Total cash costs per ounce were 40% lower
than 2003 mainly due to higher by-product credits in 2004
caused by higher silver prices, partly offset by the impact
of lower ore grades. Amortization expense increased by $4 million in 2004 mainly
due to the impact of downward revisions to reserve
estimates in 2004 that increased amortization rates, partly
offset by the effect of lower gold sales volumes. In fourth quarter 2004, the Eskay Creek mine was tested for
impairment effective December 31, 2004. An impairment
charge of $58 million was recorded, which is not included
in the measure of segment income. For further details see
page 64. Round Mountain (50% owned), United States Segment income decreased by $5 million in 2004, mainly
due to 28% higher total cash costs, partly offset by 7%
higher realized gold prices. Revenues increased by 6%
mainly due to 7% higher realized gold prices. Production was 4% higher than the high end of the original
range of guidance for 2004, but at slightly higher total
cash costs per ounce. Production was positively impacted by
the continuing recovery of gold from leach pads where ore
was placed in prior years. Higher total cash costs per
ounce were mainly due to higher royalty costs, caused by
higher market gold prices, as well as higher purchase costs
and consumption of both cyanide and lime. Compared to 2003,
gold production was 3% lower due to an expected decline in
ore grades partly offset by an increase in quantities of
ore processed. Total cash costs per ounce increased by 28%
over 2003 as a result of mining lower-grade ore in 2004,
higher royalties, and higher purchase costs and consumption
of both cyanide and lime. Higher recovery rates of gold
from leach pads in 2003 also contributed to the year on
year change in total cash costs per ounce. Amortization expense decreased by $3 million mainly due to
slightly lower gold sales volumes combined with the effect
of reserve increases at the beginning of 2004 on
amortization rates. Hemlo (50% owned), Canada Segment income decreased by $3 million in 2004, mainly
due to 10% lower gold sales volumes, combined with 6%
higher total cash costs per ounce, partly offset by 7%
higher realized gold prices. Revenues decreased by $5
million as 10% lower gold sales volumes were partly offset
by 7% higher realized gold prices. In 2004, production was 10% lower than plan and total cash
costs per ounce were 13% higher than plan primarily because
ground stability issues caused mining to occur in
lower-grade areas of the mine. A decline in ore grades in
2004 was the primary reason for the lower gold production
and higher total cash costs per ounce compared with 2003. East Archimedes, United States In September 2004, a decision was made to proceed with
the East Archimedes project at the Ruby Hill mine site in
Nevada. The project is an open-pit, heap leach operation
exploiting the East Archimedes deposit, a deeper
continuation of the ore mined previously at Ruby Hill.
Construction capital is estimated at about $75 million over an expected two-year construction phase
that begins once permitting is secured. The mining fleet
has been ordered and permitting work is ongoing. The
project has an expected life-of-mine strip ratio of 9:1 and
assumes an average mining rate of 100,000 tons per day. The
first gold pour is targeted for mid-2007. 40 BARRICK Annual Report 2004




---



##### 



MANAGEMENTS DISCUSSION AND ANALYSIS South America In 2004, all production was from the Pierina mine.
Lagunas Norte and Veladero are expected to begin production
and contribute to the South America regions results in the
second half of 2005. In 2005, we expect production to
increase by about 90% to about 1.2 million ounces, mainly
due to the production start-up at Lagunas Norte and
Veladero. Total cash costs are expected to increase by 25%
to about $133 per ounce, mainly due to higher costs at
Pierina following an increase in the stripping ratio from
60:1 to 86:1 and the impact of new production from Veladero
and Lagunas Norte. The higher stripping ratio at Pierina
mainly reflects the updating of the mine plan to
incorporate additions to reserves at the end of 2004. Pierina, Peru Segment income decreased by $15 million in 2004 mainly
due to 29% lower gold sales volumes, combined with 28%
higher total cash costs per ounce, partly offset by 7%
higher realized gold prices and lower amortization rates.
Revenues decreased by $81 million as 29% lower gold sales
volumes were partly offset by 7% higher realized gold
prices. In 2004, production was slightly higher than plan, however
total cash costs per ounce were 6% higher than the upper
end of the range of guidance for the year. The ability to
access higher-grade ore at the mine was delayed due to a
change in the mining plan to adjust for minor pit slope
instability in the west pit wall. Higher fuel prices and
lower by-product credits, due to lower quantities of silver
contained in the ore processed in 2004, as well as
processing of lower-grade ore, all contributed to higher
total cash costs per ounce. Compared to 2003, production
was 29% lower and total cash costs per ounce were 28%
higher, due to the expected mining of lower-grade ore.
Higher labor costs in 2004 also contributed to the increase
in total cash costs over 2003. Amortization expense decreased by $59 million mainly due to
the lower gold sales volumes, combined with the effect of
reserve increases at the beginning of the year that lowered
amortization rates and caused amortization expense to
decrease in 2004 by $9 million. Lagunas Norte, Peru In 2004, the segment loss of $12 million represents
expensed mine development costs prior to May 1, 2004 when
the project achieved the criteria to classify
mineralization as a reserve for US reporting purposes,
together with $3 million of expensed mine start-up costs.
In 2003, the segment loss of $29 million represented
expensed mine development costs for a full year. The project remains on schedule for its first gold pour in
the third quarter of 2005. The first three full years of
production at Lagunas Norte are now expected to average
approximately 800,000 ounces of gold annually at total cash
costs of about $155 per ounce. The projects reserves
increased by 2.0 million ounces, or 28%, to 9.1 million
ounces at year-end 2004. Higher gold prices have allowed us
to bring more ounces into production in the first three
full years, but due to the lower ore grades associated with
these ounces, our total cash costs per ounce have also
increased. Highlights include:  >
    The Lagunas Norte/Alto Chicama Legal Stability Agreement between Barrick and the
Peruvian Government was executed in January 2005. This agreement will provide greater
certainty over the foreign exchange and fiscal administrative regime for 15 years,
including real estate taxes, custom duties, VAT and excise taxes.  >
    Construction of the overall project was about 70% complete at the end of 2004, with
about 4,000 workers on-site.  >
    Construction costs of $182 million were spent in 2004, of which $40 million relates to
the purchase of the mine fleet, main auxiliary mine equipment and other mine equipment.  >
    Approval of the Environmental Impact Statement and principal construction permit was received in first quarter 2004.  >
    Overliner material is being placed on the leach pad.  >
    The power line was completed and energized in January 2005. 41 BARRICK Annual Report 2004




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##### 



MANAGEMENTS DISCUSSION AND ANALYSIS Veladero, Argentina In 2004, the segment loss of $5 million represents
expensed mine start-up costs. In 2003, the segment loss of
$18 million represented expensed mine development costs
prior to October 1, 2003 when the project achieved the
criteria to classify mineralization as a reserve for US
reporting purposes. The project remains on schedule for its first gold pour in
the fourth quarter of 2005. The first three full years of
production at Veladero are now expected to average
approximately 700,000 ounces of gold annually at total cash
costs of about $2001per ounce. The projects
reserves increased by 1.7 million ounces, or 16%, to 12.8
million ounces at year-end 2004. Higher gold prices have
allowed us to bring more ounces into production in the
first three full years, but due to the lower ore grades
associated with these ounces, our total cash costs per
ounce have also increased. During 2004, we revised our
construction capital estimate upwards to about $540 million
from our previous estimate of $475 million due to a number
of factors including: increases in prices for commodities,
such as fuel, concrete and steel; exchange rate variations;
higher labor costs; increased winter operations costs; and
some preliminary changes to the scope of the project.
Estimated future total cash costs are also being affected
by similar cost pressures. We are evaluating a number of
alternatives to control the cost increases, which may
require some additional capital investment. Highlights
include:  >
    Construction costs of $284 million were spent in 2004 and the project is about 65% complete.  >
    Internal mine road construction is complete.  >
    Work on the truck shop facility was complete in December 2004.  >
    Steel erection on the secondary crusher is progressing on schedule and the main crusher
components have been installed. Construction of the other plant facilities is well
advanced.  >
    The assay lab was commissioned in fourth quarter 2004.  >
    Construction of the valley-fill heap leach facility embankment began in 2004 and was complete in February 2005.  >
    Pre-stripping activities have steadily improved in fourth quarter 2004 due to
improvements in equipment availability, blasting techniques and the use of experienced
shovel operators brought in to assist with mining activities and to train others. Pascua-Lama, Chile/Argentina In 2004, we made a decision to proceed with the
development of the Pascua-Lama project in Chile/Argentina.
The development is contingent on obtaining the necessary
permits, approvals and fiscal regimes. Pascua-Lama is a
large, low total cash cost, long-life asset that is
expected to contribute to our production, cash flow and
earnings for many years. We believe that few undeveloped
gold deposits exist in the world that are of comparable
size and quality to Pascua-Lama. Pascua-Lama is also
expected to increase our leverage to silver. Furthermore,
development of the Pascua-Lama project, combined with
Veladero and the large associated land holdings with
regional exploration potential, presents an opportunity to
develop the area as one large gold district. Annual production is estimated between 750,000-775,000
ounces of gold and about 30 million ounces of silver over
the first ten years at estimated total cash costs of about
$1301401per ounce. The projects gold reserves
increased by 0.8 million ounces, or 5%, to 17.6 million
ounces at year-end 2004. Pre-production construction costs
are estimated at about $1.41.5 billion, excluding
capitalized interest. A further $0.3 billion of capital is
expected to be spent in the three years after production
startup for a plant expansion and flotation circuit to
increase capacity from 33,000 to 44,000 metric tons per
day. The permitting phase of the Pascua-Lama project is
expected to be completed by the end of 2005. An expected
three-year construction phase will begin once permitting
has been completed and other fiscal and taxation matters
have been finalized, with production targeted to commence
in 2009.   1.
    
    Subject to exchange rate fluctuations and applicable export duties. 42 BARRICK Annual Report 2004




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##### 



MANAGEMENTS DISCUSSION AND ANALYSIS In 2004, the segment loss of $4 million represents
expensed mine start-up costs. In 2003, all project costs
incurred were capitalized, resulting in no segment income
or loss. We incurred capital expenditures of $35 million in
2004. Recent focus has been on community/government relations,
permitting, protocol implementation and tax stability. A
mining protocol for the project, which straddles the border
of Chile and Argentina, was signed by both governments. The
protocol provides the framework for resolving certain
issues such as border crossings by personnel and materials.
Environmental impact assessments were filed by the end of
2004 and approval is sought by the end of 2005. Australia /Africa Gold production in 2004 was slightly higher than plan
mainly due to the mining of higher-grade ore at Kalgoorlie,
partly offset by slightly lower production than plan at
Plutonic and Bulyanhulu. Total cash costs per ounce were 3%
higher than the upper end of the range of original guidance
for the year mainly due to higher costs at Plutonic and
Bulyanhulu. Changes in market currency exchange rates in
2004 did not significantly impact total cash costs per
ounce because we mitigated this exposure through our
currency hedge program. In 2004, gold production was 1% higher than 2003 as higher
production at Kalgoorlie and Bulyanhulu was partly offset
by lower production at Plutonic. Total cash costs per ounce
were 14% higher than 2003 mainly because of the processing
of lower-grade ore at Plutonic, combined with the effect of
increases in average Australian dollar currency hedge
rates. The average rates of currency hedge contracts vary
year on year, which impacts reported total cash costs per
ounce. The average exchange rate of hedge contracts in 2004
was $0.58 compared to $0.55 in 2003, which caused total
cash costs per ounce to increase slightly in 2004. In 2005, production from the Australia/Africa region is
expected to increase by 7% to about 1.4 million ounces,
mainly due to the production start-up at Tulawaka in first
quarter 2005. Total cash costs per ounce are expected to
increase by 7% to about $257 per ounce, mainly due to a 5%
increase in the average exchange rate of Australian
currency hedge contracts designated for 2005, but the
average exchange rate remains significantly better than
current spot exchange rates. Kalgoorlie (50% owned), Australia Segment income increased by $10 million in 2004,
mainly due to the combined effect of 12% higher gold sales
volumes and 7% higher realized gold prices, partly offset
by 11% higher total cash costs per ounce. Production was higher than plan in 2004 due to
better-than-expected ore grades and gold recovery rates.
Total cash costs per ounce were at the low end of the range
of the guidance for the year as better ore grades and
recovery rates were partly offset by higher than expected
maintenance costs. Gold production was consistent with 2003
as ore tons processed and ore grades were similar to 2003.
Total cash costs per ounce were 11% higher than 2003
primarily due to higher maintenance and labor costs, higher
fuel prices, and the year on year effect of average
exchange rates of currency hedge contracts. Plutonic, Australia Segment income decreased by $6 million in 2004 as 4%
lower gold sales volumes, combined with 16% higher total
cash costs per ounce, were partly offset by 7% higher
realized gold prices. Revenues were higher in 2004 as 7%
higher realized gold prices were partly offset by 4% lower
gold sales volumes. Production in 2004 was slightly lower than plan and total
cash costs per ounce were 14% higher than the upper end of
the range of guidance for the year primarily due to the
mining of greater quantities of lower-grade open-pit ore.
Temporary problems with ground conditions restricted mining 43 BARRICK Annual Report 2004




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##### 



MANAGEMENTS DISCUSSION AND ANALYSIS of higher-grade ore in the Timor underground area for
part of the year, and consequently the mine processed more
open-pit ore than planned. Compared with 2003, gold
production was 9% lower mainly due to a 12% decrease in ore
tons processed. In 2003, ore tons processed were higher
because a secondary mill was operating but this mill ceased
operating in mid-2004. Total cash costs per ounce were 16%
higher than 2003 mainly due to the combined effect of
higher fuel, haulage and maintenance costs and the year on
year effect of average rates of currency hedge contracts. Bulyanhulu, Tanzania Segment income was $6 million higher in 2004 as 14%
higher gold sales volumes, combined with 7% higher realized
gold prices, were partly offset by 15% higher total cash
costs per ounce. Revenues were 24% higher in 2004
reflecting the higher gold sales volumes and realized gold
prices. Gold production in 2004 was slightly lower than plan and
total cash costs per ounce were 9% higher than the upper
end of the range of guidance for the year. Both production
and total cash costs per ounce were impacted by higher ore
dilution, which caused an 8% decline in the grade of ore
processed compared with plan. Compared with 2003, gold
production was 12% higher mainly due to a 15% increase in
the tons of ore processed due to improved mill performance.
Total cash costs per ounce were 15% higher than 2003 due to
higher costs of mine site administration and underground
maintenance, partly offset by higher copper byproduct
credits due to higher market copper prices. Cowal, Australia In 2004, the segment loss of $1 million represents
expensed mine start-up costs. In 2003, all project costs
incurred were capitalized, resulting in no segment income
or loss. The Cowal project in Australia is progressing well and
production is expected to commence in first quarter 2006.
The first full three years of production at Cowal are
expected to be approximately 230,000 ounces of gold
annually at total cash costs of about $2401per
ounce. During 2004, we revised our construction capital
estimate up to approximately $305 million due to factors
including increases in commodity and consumable prices, and
the very competitive construction labor market in
Australia. Expected total cash costs per ounce are also
being affected by similar cost pressures. Highlights
include:  >
    Capital expenditures were $73 million, slightly higher than plan as expenditures,
originally expected to occur in 2006, were brought forward to 2005 to realize construction
efficiencies.  >
    The pipeline for water supply is complete.  >
    Bulk excavation for the primary crusher is substantially complete.  >
    Drilling of pit dewatering bores is complete and the design of additional bores for water supply is underway.  >
    Purchase orders have been placed for major mining equipment items.  >
    The construction contract for the electricity transmission line was awarded to a contractor.
The contractor started construction on permitted sections in early 2005 and the timing of
completion of the entire line is dependent upon receipt of the remaining permits.  >
    Earthworks is progressing with the northern tailings facility 80% complete and the
tailings return pipeline substantially complete.  >
    The principal authorizations necessary for construction of Cowal have been obtained or
are in process, with the additional required sectoral permits expected in due course. Tulawaka (70% owned), Tanzania In 2004, development costs were capitalized from
January 1, 2004, when the project achieved the criteria to
classify mineralization as a reserve for US reporting
purposes, resulting in no segment income or loss. In 2003,
all mine development costs were expensed as incurred. The Tulawaka project is on schedule for its first gold pour
in first quarter 2005. Our economic share under the terms
of the joint venture of the   1.
    
    Subject to exchange rate fluctuations. 44 BARRICK Annual Report 2004




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##### 



MANAGEMENTS DISCUSSION AND ANALYSIS first full three years of production at Tulawaka is
expected to average about 90,000 ounces of gold annually at
total cash costs of approximately $180 per ounce.
Highlights include:  >
    Construction capital of $48 million (100% basis) was spent in 2004.  >
    Earthworks and site preparation were near completion at the end of 2004. Other Costs and Expenses Exploration, Development and Business Development Expense
 For the years endedDecember 31 ($ millions)
    
    2004
    
    
    2003
    
    
    2002Exploration costsNorth America
    
    $
    30
    
    
    $
    22
    
    
    $
    16Australia/Africa
    
    
    40
    
    
    
    22
    
    
    
    15South America
    
    
    20
    
    
    
    19
    
    
    
    7Russia/Central Asia
    
    
    5
    
    
    
    4
    
    
    
    4Other countries
    
    
    1
    
    
    
    
    
    
    
    96
    
    
    
    67
    
    
    
    42Mine development costsVeladero
    
    
    
    
    
    
    18
    
    
    
    20Lagunas Norte
    
    
    9
    
    
    
    29
    
    
    
    29Other projects
    
    
    5
    
    
    
    6
    
    
    
    314
    
    
    
    53
    
    
    
    52Mine start-up costsVeladero
    
    
    5
    
    
    
    
    
    
    
    Lagunas Norte
    
    
    3
    
    
    
    
    
    
    
    Cowal
    
    
    1
    
    
    
    
    
    
    
    Pascua-Lama
    
    
    4
    
    
    
    
    
    
    
    13
    
    
    
    
    
    
    
    Business development/other
    
    
    18
    
    
    
    17
    
    
    
    10$
    141
    
    
    $
    137
    
    
    $
    104
  >
    The mining contract has been awarded to an external contractor.>
    Process plant construction is well underway with the completion of power plant
installation and commissioning, substantial completion of the SAG mill, concrete and
structured steel installation and other site infrastructure buildings.>
    Plant handover is expected in first quarter 2005. In 2004, we spent more than both plan and the prior year on
our exploration program as part of our strategy to grow our
reserves. Higher activity at Goldstrike, Eskay Creek and
Round Mountain led to an increase in expenditures for North
America. Higher activity in Tanzania, primarily at the
Buzwagi project, led to the increase in Australia/Africa. Development costs are expensed until mineralization is
classified as proven and probable reserves for US reporting
purposes. At Lagunas Norte, we expensed development costs
until May 1, 2004, and at Veladero, we expensed development
costs until October 1, 2003, which are the dates when the
projects achieved the criteria to classify mineralization
as a reserve for US reporting purposes. In 2005, we expect to spend $150 million on exploration,
development and business development. Our exploration
expense reflects our planned funding of our various
exploration projects. We may spend more or less on these
projects depending on the results of ongoing exploration
activities, and we may also fund further exploration
projects in addition to the presently planned projects for
2005. 45 BARRICK Annual Report 2004




---



##### 



MANAGEMENTS DISCUSSION AND ANALYSIS Other Income Statement Variances 
 For the years ended December 31($ millions, except per ounce
    
    
    
    
    
    
    
    
    
    %data and percentages)
    
    2004
    
    
    2003
    
    
    change
    
    
    CommentsAmortizationAbsolute amount
    
    $
    452
    
    
    $
    522
    
    
    
    (13
    )%
    
    11% lower sales volumes, combined with lower amortizationrates per ounce. For 2005, amortization expense will reflectan expected 810% increase in gold sales volumes and afurther expected decline in rates per ounce.Per ounce (dollars)1
    
    
    86
    
    
    
    90
    
    
    
    (4
    )%
    
    Reserve increases effective January 1, 2004 caused rates perounce to decrease. For 2005, rates per ounce are expected todecrease to between         $80 and $85 due to reserve additions atthe end of 2004 and the effect of an impairment charge recordedat Eskay Creek in 2004.Administration
    
    
    71
    
    
    
    73
    
    
    
    (3
    )%
    
    Severance costs of $9 million were incurred in 2003. Higherregulatory compliance costs impacted 2004. Costs in 2005 willincrease due to the expensing of stock options in the second halfof the year, which is estimated to add about $15 million to costs.Interest income
    
    
    25
    
    
    
    31
    
    
    
    (19
    )%
    
    The decrease in 2004 is due to lower average cash balancesin 2004 compared to 2003. In 2005, interest income is expectedto increase due to higher expected average cash balances.Interest costsIncurred
    
    
    60
    
    
    
    49
    
    
    
    22
    %
    
    The impact of new financings in second half of 2004 causedan increase over 2003. Interest incurred is expected to increaseto between $115 to $120 million in 2005 due to new financingput in place in 2004.Capitalized
    
    
    (41
    )
    
    
    (5
    )
    
    
    720
    %
    
    Higher amounts were capitalized at development projects dueto construction costs capitalized in 2004, and capitalization atPascua-Lama from July 1, 2004. In 2005, we expect to capitalizeabout $103 million at our development projects.Expensed
    
    
    19
    
    
    
    44
    
    
    
    (57
    )%
   1.
    For an explanation of the use of non-GAAP performance measures, refer to pages 67 to 70 of Managements
Discussion and Analysis. Other (Income) Expense 
 For the years ended December 31($ millions)
    
    2004
    
    
    2003
    
    
    CommentsNon-hedge derivative gains
    
    $
    (5
    )
    
    $
    (71
    )
    
    Gains in 2003 included $32 million on gold lease rate swaps(2004       $16 million); and           $18 million on currency hedgecontracts that became ineffective for hedge accounting purposes.Impairment chargeEskay Creek
    
    
    58
    
    
    
    
    
    
    See page 64.Peruvian exploration
properties
    
    
    67
    
    
    
    
    
    
    See page 64.Gains on asset sales
    
    
    (34
    )
    
    
    (34
    )Environmental
remediation costs
    
    
    43
    
    
    
    55Litigation costs
    
    
    
    
    
    
    16
    
    
    Costs in 2003 relate to the settlement of the Inmet litigation.(Gains) losses
    
    
    (1
    )
    
    
    7
    
    
    Losses in 2003 mainly related to investments underon investments
    
    
    
    
    
    
    
    
    
    a deferred compensation plan.Other items
    
    
    30
    
    
    
    23$
    158
    
    
    $
    (4
    )
 46 BARRICK Annual Report 2004




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##### 



MANAGEMENTS DISCUSSION AND ANALYSIS Income Taxes 
 For the years ended December 31($ millions, except percentages)
    
    2004
    
    
    2003Income tax
    
    
    
    
    
    
    
    
    
    
    Income taxEffective income tax rates on
    
    Pre-tax
    
    
    Effective
    
    
    expense
    
    
    Pre-tax
    
    
    Effective
    
    
    expenseelements of income
    
    income
    
    
    tax rate
    
    
    (recovery)
    
    
    income
    
    
    tax rate
    
    
    (recovery)Net income excluding elements below
    
    $
    118
    
    
    
    28
    %
    
    $
    33
    
    
    $
    116
    
    
    
    20
    %
    
    $
    23Deliveries into gold sales
contracts1
    
    
    (89
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Non-hedge derivative gains (losses)
    
    
    (5
    )
    
    
    (80
    %)
    
    
    (4
    )
    
    
    71
    
    
    
    15
    %
    
    
    11Other items
    
    
    21
    
    
    
    30
    %
    
    
    6
    
    
    
    35
    
    
    
    34
    %
    
    
    1245
    
    
    
    78
    %
    
    
    35
    
    
    
    222
    
    
    
    21
    %
    
    
    46Tax only items:Change in Australian tax status
    
    
    
    
    
    
    (180
    %)
    
    
    (81
    )
    
    
    
    
    
    
    
    
    
    
    Outcome of tax uncertainties
    
    
    
    
    
    
    (313
    %)
    
    
    (141
    )
    
    
    
    
    
    
    
    
    
    
    Release of deferred tax valuation allowances
recorded in prior years
    
    
    
    
    
    
    (11
    %)
    
    
    (5
    )
    
    
    
    
    
    
    (17
    %)
    
    
    (36
    )Other items
    
    
    
    
    
    
    (25
    %)
    
    
    (11
    )
    
    
    
    
    
    
    (2
    %)
    
    
    (5
    )$
    45
    
    
    
    (451
    %)
    
    $
    (203
    )
    
    $
    222
    
    
    
    2
    %
    
    $
    5
   1.
    Impact of deliveries in a low tax-rate jurisdiction at contract prices below prevailing
market prices. Our income tax expense or recovery is a
function of an underlying effective tax rate
applied to income plus the effect of other items
that we track separately. The underlying
effective rate increased to 28% in 2004
reflecting the higher market gold price
environment, with an average market gold price of
$409 per ounce. In 2005, we expect our underlying
effective tax rate to decrease to about 22% due
to a change in the geographic mix of gold
production and therefore taxable income by
jurisdiction. As gold prices increase, this
underlying tax rate also increases, reaching a
high of about 25% with market gold prices at or
above $475 per ounce. The underlying rate
excludes deferred tax credits from changes in
valuation allowances; taxes on non-hedge
derivative gains and losses; and the impact of
deliveries into gold sales contracts in a low tax
rate jurisdiction. Deliveries into gold sales
contracts in a low tax rate jurisdiction can
distort the overall effective tax rate if market
gold prices differ from the contract prices, but
do not affect the absolute amount of income tax
expense. We record deferred tax charges or credits if
changes in facts or circumstances affect the
estimated tax
basis of assets and therefore the amount of
deferred tax assets or liabilities or because of
changes in
valuation allowances reflecting changing
expectations in our ability to realize deferred
tax assets. In 2004, we recorded a credit of $141
million on final resolution of a Peruvian tax
assessment in our favor. We also recorded credits
of $81 million due to a change in tax status in
Australia following an election that resulted in
a revaluation of assets for tax purposes; and
also an election to file tax returns from 2004
onwards in US dollars, rather than Australian
dollars. As well, $5 million of valuation
allowance was released in Australia in 2004. The interpretation of tax regulations and
legislation and their application to our business
is complex and subject to change. We have
significant amounts of deferred tax assets,
including tax loss carry forwards, and also
deferred tax liabilities. Potential changes to
any of these amounts, as well as our ability to
realize deferred tax assets, could significantly
affect net income or cash flow in future periods.
For more information on tax valuation allowances,
see page 66. 47 BARRICK Annual Report 2004




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##### 



MANAGEMENTS DISCUSSION AND ANALYSIS Cash Flow Cash Flow Components (BAR CHART) Operating Activities Operating cash flow decreased by $13 million in 2004 to $506 million. The key factors that
contributed to the year over year decrease are summarized in the table below. Key Factors Affecting Operating Cash Flow  
 For the years ended December 31
    
    
    
    
    
    
    
    
    
    Impact on($ millions, except
    
    
    
    
    
    
    
    
    
    operatingper ounce data)
    
    2004
    
    
    2003
    
    
    cash flow
    
    
    CommentsGold sales volumes (000s oz)
    
    
    4,936
    
    
    
    5,554
    
    
    $
    (109
    )Realized gold prices ($/oz)
    
    $
    391
    
    
    $
    366
    
    
    
    123Total cash costs ($/oz)1
    
    
    212
    
    
    
    189
    
    
    
    (114
    )Sub-total
    
    
    
    
    
    
    
    
    
    
    (100
    )
    
    Refer to pages 36 to 38 for explanations of changesin gold production and sales.Income tax payments
    
    
    45
    
    
    
    111
    
    
    
    66
    
    
    Payments in 2005 are expected to be similar to 2004.Non-cash working capital
    
    
    141
    
    
    
    34
    
    
    
    (107
    )
    
    Increases in inventory primarily
reflect supplies required to support construction at development
projects. Inventory is expected to increase again in 2005 at
development projects reflecting higher ore in process and in
stockpiles. Tax recoverable increased in 2004 for goods and services
tax on supplies and material used in construction at development
projects. Amounts are expected to be recovered after production begins.Cost of Inmet settlement
    
    
    
    
    
    
    86
    
    
    
    86
    
    
    Settlement reached in 2003.Interest expense
    
    
    19
    
    
    
    44
    
    
    
    25
    
    
    Increase in amounts capitalized to developmentprojects in 2004.Effect of other factors
    
    
    
    
    
    
    
    
    
    
    17Total
    
    
    
    
    
    
    
    
    
    $
    (13
    )
   1. Total cash costs per ounce is a non-GAAP performance measure. For more information, see pages
67 to 70. 48 BARRICK Annual Report 2004




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##### 



MANAGEMENTS DISCUSSION AND ANALYSIS Investing Activities 
 For the yearsended December 31($ millions)
    
    2005E
    
    
    2004
    
    
    2003
    
    
    $ change
    
    
    CommentsGrowth capital expenditures 1Veladero
    
    $
    208
    
    
    $
    284
    
    
    $
    68
    
    
    $
    216
    
    
    Full year of construction activity in 2004.Lagunas Norte
    
    
    147
    
    
    
    182
    
    
    
    4
    
    
    
    178
    
    
    Construction started in Q2, 2004.Tulawaka
    
    
    3
    
    
    
    48
    
    
    
    1
    
    
    
    47
    
    
    Construction started in Q1, 2004.Cowal
    
    
    268
    
    
    
    73
    
    
    
    24
    
    
    
    49
    
    
    Construction started in Q1, 2004.Pascua-Lama
    
    
    93
    
    
    
    35
    
    
    
    9
    
    
    
    26
    
    
    Increased development activity andcapitalization of interest from Q3, 2004.Nevada Power Plant
    
    
    84
    
    
    
    18
    
    
    
    
    
    
    
    18
    
    
    Construction started in Q4, 2004.East Archimedes
    
    
    43
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Construction expected to start in 2005.Sub-total
    
    
    846
    
    
    
    640
    
    
    
    106
    
    
    
    534Sustaining capital expendituresNorth America
    
    
    
    
    
    
    86
    
    
    
    80
    
    
    
    6Australia/Africa
    
    
    
    
    
    
    83
    
    
    
    115
    
    
    
    (32
    )
    
    2003 was higher due to a transition toowner mining at Plutonic that resulted inequipment purchases.South America
    
    
    
    
    
    
    8
    
    
    
    17
    
    
    
    (9
    )Other
    
    
    
    
    
    
    7
    
    
    
    4
    
    
    
    3Sub-total
    
    
    245
    
    
    
    184
    
    
    
    216
    
    
    
    (32
    )
    
    The increase in 2005 mainly
reflects capital planned for 2004 at Goldstrike that was deferred into 2005, and sustaining capital at Lagunas
Norte after production begins.Total
    
    $
    1,091
    
    
    $
    824
    
    
    $
    322
    
    
    $
    502
   1.
    Includes construction costs and capitalized interest. We plan to fund the expected capital
expenditures for 2005 from a combination of our
$1,398 million cash position at the end of 2004,
and operating cash flow that we expect to
generate in 2005. Financing Activities The most significant financing cash flows in
2004 were $974 million on issue of new long-term
debt obligations, $49 million received on the
exercise of employee stock options, dividend
payments totaling $118 million, and $95 million
spent repurchasing 4 million common shares under
our share buyback program. We also made scheduled
payments under our long-term debt obligations
totaling $41 million in 2004. Overview of 2003 Versus 2002 Earnings Earnings in 2003 were slightly higher than
in 2002. We benefited from higher spot gold
prices, which enabled us to realize a $27 per
ounce higher selling price for our gold
production (an increase in revenue of $150
million in comparison to 2002). In a higher spot
gold price environment, we pay higher royalties,
production taxes and income taxes. Royalties and
production taxes increased by $5 per ounce, or
$23 million, over the prior year, and our
underlying effective income tax rate increased
from 3% in 2002 to 20% in 2003, or an increase of
$38 million. 49 BARRICK Annual Report 2004




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##### 



MANAGEMENTS DISCUSSION AND ANALYSIS As a result of the closure of five mines in
2002 on depletion of their reserves, we produced
and sold 3% fewer ounces in 2003 compared to the
prior year. These five closed mines generated a
profit contribution, before tax, of $42 million
in 2002. Excluding the closed mines, cash operating costs
per ounce excluding royalties and production
taxes were $7 per ounce higher in 2003, mainly
due to higher costs at Goldstrike Open Pit and
Bulyanhulu, which added $39 million to our cash
operating costs. We invested $33 million more in exploration, mine
development and business development in 2003
compared to 2002. Development costs are expensed
until mineralization is classified as proven and
probable reserves for US reporting purposes. In
2003, we expensed $53 million of development
costs, mainly at Veladero and Lagunas Norte,
compared with $52 million in 2002. A $25 million
increase in exploration costs to $67 million
accounts for most of the increase in exploration,
development and business development expense year
over year. Earnings in both 2003 and 2002 included various
items that significantly impacted the
comparability of our results year on year. In
2003, the major items included gains of $71
million on non-hedge derivatives and gains
totaling $34 million on the sale of various
assets, offset by a $19 million higher charge for
reclamation and closure costs following a change
in accounting policy for these types of costs. We recorded tax credits of $62 million in 2003.
We released valuation allowances totaling $15
million in Argentina following the decision to
begin construction at Veladero and the
classification of mineralization there as a
proven and probable reserve, $16 million in
Australia due to higher levels of taxable income
in a higher gold price environment, and $21
million in North America following a corporate
reorganization. In 2002, we recorded a credit of
$22 million due to the outcome of various tax
uncertainties. These credits were offset by
valuation allowances against unrecognized tax
losses. Cash Flow We generated $69 million less operating cash
flow in 2003 compared to 2002. Excluding the $86
million settlement of the Inmet litigation, our
operating cash
flow would have been $17 million higher in 2003
than 2002. Higher realized gold selling prices in
2003 were partly offset by higher total cash
costs per ounce and higher payments of income
taxes. Both our cash expenditures for investing and
financing activities increased in 2003 compared
to 2002. In part, this was a result of increased
capital spending with the construction start up
at Veladero, as well as $154 million spent on our
share buyback program. Balance Sheet Key Balance Sheet Ratios 
 Year ended December 31
    
    2004
    
    
    2003Non-cash working
capital ($ millions)1
    
    $
    141
    
    
    $
    34Net debt (cash) ($ millions)2
    
    $
    288
    
    
    $
    (210
    )Net debt:equity ratio3
    
    
    0.08:1
    
    
    
    (0.06:1
    )Current ratio4
    
    
    4.68:1
    
    
    
    3.75:1
   1.
    Represents current assets, excluding cash and equivalents, less current liabilities.2.
    Represents long-term debt less cash and equivalents.3.
    Represents net debt divided by shareholders equity.4.
    Represents current assets divided by current liabilities. We regularly review our capital structure
with an overall goal of lowering our cost of
capital, while preserving the balance sheet
strength and flexibility that is important due to
the cyclical nature of commodity markets, and
ensuring that we have access to cash for
strategic purposes. Following a review of our
capital structure during 2003, we concluded that
a share buyback program was consistent with 50 BARRICK Annual Report 2004




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##### 



MANAGEMENTS DISCUSSION AND ANALYSIS this goal. In 2004, we repurchased 4 million
shares at a total cost of $95 million which was
in addition to repurchasing 9 million shares at a
total cost of $154 million in 2003. The combined
impact of new financing secured in 2004 to fund
our development projects, and activity under the
share buyback program in 2004, caused an increase
in our net debt:equity ratio at the end of 2004. Non-cash working capital increased in 2004 mainly
due to a build-up of supplies inventory at our
development projects to support normal operating
activities, combined with an increase in tax
recoverable that relates to goods and services
taxes on various elements of mine construction
costs that will be recoverable after production
begins. Our net cash position at the end of 2003 changed
to net debt at the end of 2004 mainly because our
investment in capital expenditures in 2004
exceeded operating cash flow. Shareholders Equity Outstanding Share Data As at February 9, 2005, 532.9 million of our
common shares, one special voting share and 1.4
million Exchangeable Shares not owned by Barrick
(exchangeable into 0.7 million of our common
shares) were issued and outstanding. As at
February 9, 2005, options to purchase 24.1
million common shares were outstanding under our
option plans, as well as options to purchase 1.3
million common shares under certain option plans
inherited by us in connection with prior
acquisitions. For further information regarding
the outstanding shares and stock options, please
refer to the Financial Statements and our 2005
Management Information Circular and Proxy
Statement. Dividend Policy In each of the last three years, we paid a
total cash dividend of $0.22 per share  $0.11 in
mid-June and $0.11 in mid-December. The amount
and timing of any dividends is within the
discretion of our Board of Directors. The Board
of Directors reviews the dividend policy
semi-annually based on the cash requirements of
our operating assets, exploration and
development activities, as well as potential
acquisitions, combined with our current and
projected financial position. Comprehensive Income Comprehensive income consists of net income
or loss, together with certain other economic
gains and losses that collectively are described
as other comprehensive income, and excluded
from the income statement. In 2004, the other comprehensive loss of $15
million mainly included gains of $147 million on
hedge contracts designated for future periods
caused primarily by changes in currency exchange
rates and fuel prices; offset by reclassification
adjustments totaling $132 million for gains on
hedge contracts designated for 2004 that were
transferred to earnings in 2004; and a $32
million decrease in the fair value of
investments. Included in other comprehensive income at
December 31, 2004 were unrealized pre-tax gains
on currency hedge contracts totaling $321
million, based on December 31, 2004 market
foreign exchange rates. The related hedge
contracts are designated against operating costs
and capital expenditures primarily over the next
three years, and are expected to help protect
against the impact of strengthening of the
Australian and Canadian dollar against the US
dollar. The hedge gains are expected to be
recorded in earnings at the same time as the
corresponding hedged operating costs and
amortization of capital expenditures are also
recorded in earnings. 51 BARRICK Annual Report 2004




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##### 



MANAGEMENTS DISCUSSION AND ANALYSIS Quarterly Information ($ millions,
    
    2004
    
    
    2003except where indicated)
    
    Q4
    
    
    Q3
    
    
    Q2
    
    
    Q1
    
    
    Q4
    
    
    Q3
    
    
    Q2
    
    
    Q1Gold production (000s oz)
    
    
    1,169
    
    
    
    1,232
    
    
    
    1,279
    
    
    
    1,278
    
    
    
    1,301
    
    
    
    1,479
    
    
    
    1,467
    
    
    
    1,263Gold sales (000s oz)
    
    
    1,200
    
    
    
    1,267
    
    
    
    1,222
    
    
    
    1,247
    
    
    
    1,362
    
    
    
    1,505
    
    
    
    1,395
    
    
    
    1,292Gold sales
    
    $
    501
    
    
    $
    500
    
    
    $
    454
    
    
    $
    477
    
    
    $
    536
    
    
    $
    549
    
    
    $
    491
    
    
    $
    459Income (loss) before taxes
    
    
    (47
    )
    
    
    37
    
    
    
    15
    
    
    
    40
    
    
    
    73
    
    
    
    57
    
    
    
    44
    
    
    
    48Income tax recovery (expense)
    
    
    203
    
    
    
    (5
    )
    
    
    19
    
    
    
    (14
    )
    
    
    4
    
    
    
    (22
    )
    
    
    15
    
    
    
    (2
    )Net income
    
    
    156
    
    
    
    32
    
    
    
    34
    
    
    
    26
    
    
    
    77
    
    
    
    35
    
    
    
    59
    
    
    
    29Net income per share 
basic (dollars)
    
    
    0.30
    
    
    
    0.06
    
    
    
    0.06
    
    
    
    0.05
    
    
    
    0.14
    
    
    
    0.07
    
    
    
    0.11
    
    
    
    0.05Per ounce statistics (dollars)Average spot gold price
    
    
    434
    
    
    
    401
    
    
    
    393
    
    
    
    408
    
    
    
    392
    
    
    
    364
    
    
    
    347
    
    
    
    352Average realized gold price
    
    
    417
    
    
    
    395
    
    
    
    372
    
    
    
    382
    
    
    
    394
    
    
    
    365
    
    
    
    352
    
    
    
    355Total cash costs per ounce1
    
    
    221
    
    
    
    218
    
    
    
    209
    
    
    
    199
    
    
    
    199
    
    
    
    180
    
    
    
    185
    
    
    
    194Cash inflow (outflow) fromOperating activities
    
    
    120
    
    
    
    152
    
    
    
    108
    
    
    
    126
    
    
    
    140
    
    
    
    187
    
    
    
    62
    
    
    
    130Investing activities
    
    
    (242
    )
    
    
    (219
    )
    
    
    (194
    )
    
    
    (164
    )
    
    
    (156
    )
    
    
    (58
    )
    
    
    (59
    )
    
    
    (61
    )Financing activities
    
    
    742
    
    
    
    154
    
    
    
    (73
    )
    
    
    (82
    )
    
    
    (54
    )
    
    
    (83
    )
    
    
    (130
    )
    
    
    1
   1.

    For an explanation of the use of non-GAAP performance measures, refer to pages 67 to 70. Our financial results for the last eight
quarters reflect the following general trends:
rising spot gold prices with a corresponding rise
in prices realized from gold sales; and declining
gold production, sales volumes, and rising total
cash costs per ounce as a number of our mines
were processing lower grade ore. These historic
trends are discussed elsewhere in this MD&A. The
quarterly trends are consistent with explanations
for annual trends over the last two years.
Beginning in the second half of 2005, we expect
that the historic trend in gold production, sales
volumes, and total cash costs per ounce will
reverse as our lower cost mines in development
begin production. Net income in each quarter also
reflects the timing of various special items that
are presented in the table on page 36. Fourth Quarter Results Revenue for fourth quarter 2004 was $501
million on gold sales of 1.2 million ounces,
compared to $536 million in revenue on gold sales
of 1.36 million ounces for the prior-year quarter. During the quarter, spot gold prices averaged $434 per ounce. We realized
an average price of $417 per ounce during the quarter compared to $394 per ounce in the prior-year quarter. For the quarter, we produced 1.17 million ounces
at total cash costs of $221 per ounce compared to
1.30 million ounces at total cash costs of $199
per ounce in the prior-year quarter. Earnings for fourth quarter 2004 were $156
million ($0.29 per share) as compared to earnings
of $77 million ($0.14 per share) in the
prior-year quarter. This increase in earnings
over the prior-year quarter reflects a $23 per
ounce higher realized gold price, a $141 million
tax recovery on final resolution of the Peruvian
tax assessment and a $48 million deferred tax
credit due to a change in tax status in
Australia. These increases were partly offset by
higher total cash costs, and an impairment charge
for certain long-lived assets of $131 million
pre-tax. 52 BARRICK Annual Report 2004




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##### 



MANAGEMENTS DISCUSSION AND ANALYSIS Effect on earnings increase (decrease) 
 Three months ended December 31
    
    2004
    
    
    2003($ millions)
    
    Pre-tax
    
    
    Post-tax
    
    
    Pre-tax
    
    
    Post-taxNon-hedge derivative gains
    
    $
    6
    
    
    $
    6
    
    
    $
    46
    
    
    $
    37Gains on asset sales
    
    
    29
    
    
    
    24
    
    
    
    5
    
    
    
    3Litigation costs
    
    
    
    
    
    
    
    
    
    
    (16
    )
    
    
    (11
    )Impairment charges on long-lived assets
    
    
    (131
    )
    
    
    (91
    )
    
    
    (5
    )
    
    
    (3
    )Impairment charges on investments
    
    
    (4
    )
    
    
    (4
    )
    
    
    (4
    )
    
    
    (4
    )Change in asset retirement obligation estimates
    
    
    (19
    )
    
    
    (15
    )
    
    
    (6
    )
    
    
    (6
    )Resolution of Peruvian tax assessmentOutcome of tax uncertainties
    
    
    
    
    
    
    141
    
    
    
    
    
    
    
    Reversal of other accrued costs
    
    
    21
    
    
    
    15
    
    
    
    
    
    
    
    Deferred tax creditsChange in Australian tax status
    
    
    
    
    
    
    48
    
    
    
    
    
    
    
    Other
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    41Total
    
    $
    (98
    )
    
    $
    124
    
    
    $
    20
    
    
    $
    57
 In the quarter, we generated operating cash
flow of $120 million as compared to operating
cash flow of $134 million in the prior-year
period. Lower operating cash flow in the quarter
primarily relates to
the combined effect of lower gold sales volumes
and higher total cash costs per ounce, partly
offset by higher realized gold prices. Off-Balance Sheet Arrangements Gold Sales Contracts We have historically used gold sales
contracts as a means of selling a portion of our
annual gold production. The contracting parties
are bullion-banking counterparties whose business
includes entering into contracts to purchase gold
from gold mining companies. Since 2001, we have
been focusing on reducing the level of
outstanding gold sales contracts. In 2004, spot
market sales made up the majority of our
consolidated gold sales. Allocation of Gold Sales Contracts to
SupportPascua-Lama Financing and Construction In July 2004, we announced a decision to
proceed with the Pascua-Lama project
(Pascua-Lama) subject to receiving required
permits and clarification of the applicable
fiscal regimes from the governments of Argentina
and Chile. We currently expect to put in place third-party
financing for up to $750 million of the expected
$1.4$1.5 billion initial construction cost of
Pascua-Lama. In anticipation of building
Pascua-Lama and in support of any related
financing, we allocated 6.5 million ounces of
existing fixed-price gold sales contracts
specifically to Pascua-Lama (the Pascua-Lama
Gold Sales Contracts) in fourth quarter 2004.
The allocation of these contracts will help
reduce gold price risk at Pascua-Lama and will
help secure the financing for its construction.
We expect the allocation of these contracts to
eliminate any requirement by lenders to add any
incremental gold sales contracts in the future to
support the financing of Pascua-Lama. 53 BARRICK Annual Report 2004




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##### 



MANAGEMENTS DISCUSSION AND ANALYSIS Key
Aspects of Pascua-Lama Gold Sales Contracts(as of December 31, 2004)Expected delivery dates.1
    
    20092017, the term of the expected financing.Future estimated average realizable selling price.
    
    $372/oz.2Mark-to-market value at December 31, 2004.
    
    ($966) million.3
   1.
    
    The contract termination dates are 20142017 in most cases, but we expect to deliver Pascua-Lama
production against these contracts starting in 2009.2.
    
    Upon delivery of production from 20092017, the term of expected financing. Approximate
estimated value based on current market US dollar interest rates and an average lease rate
assumption of 1%.3.
    
    At a spot gold price of $436 per ounce and market interest rates. The allocation of 6.5 million ounces of gold
sales contracts to Pascua-Lama involves: i) the
identification of contracts, in quantities, and
for terms that mitigate gold price risk for
Pascua-Lama during the term of the expected
financing (contracts were chosen where the
existing termination dates are spread between
2009, the targeted first year of production, and
2017, the expected retirement of financing for
the project); ii) the segregation of these
contracts from the remaining non-Pascua-Lama gold
sales contracts (the Corporate Gold Sales
contracts); iii) the eventual settlement of
proceeds from these contracts for the benefit of
Pascua-Lama production. Barrick will continue to guarantee the
Pascua-Lama Gold Sales Contracts, and the
remaining Corporate Gold Sales Contracts. The
Barrick guarantee is a critical component in
allocating long-term contracts with termination
dates out to 20092017 to support the future
Pascua-Lama financing. Through allocation of these gold sales contracts
to Pascua-Lama, we significantly reduce capital
risk. It protects the gold price during the term
of the forecasted financing, while leaving the
remaining reserves fully levered to spot gold prices. The
contracts represent just over 35% of the 17.6
million ounces of gold reserves at Pascua-Lama,
and do not impact any of the 643 million ounces
of silver contained in gold reserves at
Pascua-Lama. These Pascua-Lama Gold Sales Contracts, while
allocated to Pascua production, retain all the
benefits of our gold sales Master Trading
Agreements (MTAs) and are not subject to
margining, downgrade or unilateral and discretionary right to break
provisions. Furthermore, as part of our MTAs,
these Pascua-Lama Gold Sales Contracts are not
subject to any provisions regarding any final
go-ahead decisions with Pascua-Lama construction,
or any possible delay or change in the
Pascua-Lama project. Corporate Gold Sales Contracts In addition to the gold sales contracts
allocated against Pascua-Lama, we have Corporate
Gold Sales Contracts, which at December 31, 2004
totaled 7.0 million ounces of fixed-price gold
sales contracts. This represents slightly over
one year of expected future gold production and
approximately 10% of our proven and probable
reserves, excluding Pascua-Lama. 54 BARRICK Annual Report 2004




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##### 



MANAGEMENTS DISCUSSION AND ANALYSIS Key Aspects of Corporate Gold Sales Contracts(as
of December 31, 2004)Current termination date of contracts.
    
    2014 in most cases.Average estimated realizable selling price in 2014.
    
    $426/oz.1Mark-to-market value at December 31, 2004.
    
    ($949) million.2
   1.
    
    Approximate estimated value based on current market US dollar interest rates and an average
lease rate assumption of 1%. Accelerating gold deliveries would likely lead to reduced contango
that would otherwise have built up over time. Barrick may choose to settle any gold sales contract
in advance of this termination date at any time, at its discretion. Historically, delivery has
occurred in advance of the contractual termination date.2.
    
    At a spot gold price of $436 per ounce, and market interest rates. We have an obligation to deliver gold by the
termination date (currently 2014 in most cases).
However, because we typically fix the price of
gold under our gold sales contracts to a date
that is earlier than the termination date of the
contract (referred to as the interim
price-setting date), the actual realized price
on the contract termination date depends upon the
actual gold market forward premium (contango)
between the interim price-setting date and the
termination date. Therefore, the $426/oz price
estimate could change over time due to a number
of factors, including but not limited to: US
dollar interest rates, gold lease rates, spot
gold prices, and extensions of the termination
date. This price, which is an average for the
total Corporate Gold Sales Contract position, is
not necessarily representative of the prices that
may be realized each quarter for actual
deliveries into gold sales contracts, in
particular if we choose to settle any gold sales
contract in advance of the termination date
(which we have the right to do at our
discretion). If we chose to accelerate gold
deliveries, this would likely lead to reduced
contango that would otherwise have built up over
time (and therefore a lower realized price). The gold market forward premium, or contango, is
typically closely correlated with the difference
between US dollar interest rates and gold lease
rates. An increase or decrease in US dollar
interest rates would generally lead to a
corresponding increase or decrease in contango, and therefore an increase
or decrease in the estimated future price of the
contract at the termination date. Furthermore,
the greater the time period between the interim price-setting
date and the termination date, the greater the
sensitivity of the final realized price to US
dollar interest rates. A short-term spike in gold lease rates would not
have a material negative impact on us because we
are not significantly exposed under our
fixed-price gold sales contracts to short-term
gold lease rate variations. A prolonged rise in
gold lease rates could result in lower contango
(or negative contango, i.e. backwardation).
Gold lease rates have historically tended to be
low, and any spikes short-lived, because of the
large amount of gold available for lending
relative to demand. In addition to the Corporate Gold Sales
Contracts, we also have floating spot-price gold
sales contracts under which we are committed to
deliver 0.5 million ounces of gold over the next
ten years at spot prices, less an average
fixed-price adjustment of $52 per ounce. These
floating spot-price contracts were previously
fixed-price contracts, for which, under the
price-setting mechanisms of the MTAs, we elected
to receive a price based on the market gold spot
price at the time of delivery adjusted by the
difference between the spot price and the
contract price at the time of such election. 55 BARRICK Annual Report 2004




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##### 



MANAGEMENTS DISCUSSION AND ANALYSIS Fixed-price Silver Sales Contracts(as of December 31, 2004)Millions of silver ounces
    
    12.4Current termination date of silver sales contracts
    
    2014 in most cases.Average estimated realizable selling price at 2014 termination date
    
    $8.50/oz.1Mark-to-market value at December 31, 2004
    
    ($14) million.2
   1.
    
    Approximate estimated value based on current market US dollar interest rates and an average
lease rate assumption of 1%. Accelerating silver deliveries could potentially lead to reduced
contango that would otherwise have built up over time. Barrick may choose to settle any silver
sales contract in advance of this termination date at any time, at its discretion. Historically,
delivery has occurred in advance of the contractual termination date.2.
    
    At a spot silver price of $6.82 per ounce. We also have floating spot-price silver
sales contracts under which we are committed to
deliver 12 million ounces of silver over the next
ten years at spot prices, less an average
fixed-price adjustment of $0.96 per ounce. These
floating spot-price contracts were previously
fixed-price contracts, for which, under the
price-setting mechanisms of the MTAs, we elected
to receive a price based on the market silver
spot price at the time of delivery adjusted by
the difference between the spot price and the
contract price at the time of such election. Key terms of Gold and Silver Sales Contracts
In all of our MTAs, which govern the terms
of gold and silver sales contracts with our 19
counterparties, the following applies:  >
    The counterparties do not have unilateral and discretionary right to break provisions.>
    There are no credit downgrade provisions.>
    We are not subject to any margin calls  regardless of the price of gold or silver.>
    We have the right to settle our gold and silver sales contracts on two days notice at
any time during the life of the contracts, or keep these forward gold and silver sales
contracts outstanding for up to 15 years.>
    At our option, we can sell gold or silver at the market price or the contract price,
whichever is higher, up to the termination date of the contracts (currently 2014 in most
cases). The MTAs with our counterparties do provide for
early close out of certain transactions in the
event of a material adverse change in our ability
or that of our principal hedging subsidiarys
ability to perform our or its gold and silver
delivery and other obligations under the trading
agreements and related parent guarantees or a
lack of gold or silver market, and for customary
events of default such as covenant breaches,
insolvency or bankruptcy. The principal
financial covenants are:  >
    We must maintain a minimum consolidated net worth of at least $2 billion; currently,
it is $3.6 billion. The MTAs exclude unrealized mark-to-market valuations in the
calculation of consolidated net worth.>
    We must maintain a maximum long-term debt to consolidated net worth ratio of 2:1;
currently it is 0.51:1. In most cases, under the terms of the MTAs, the
period over which we are required to deliver gold
is extended annually by one year, or kept
evergreen, regardless of the intended delivery
dates, unless otherwise notified by the
counterparty. This means that, with each year
that passes, the termination date of most MTAs is
extended into the future by one year. 56 BARRICK Annual Report 2004




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##### 



MANAGEMENTS DISCUSSION AND ANALYSIS As spot gold prices increase or decrease,
the value of our gold mineral reserves and amount

of potential operating cash inflows generally
increases or decreases. The unrealized
mark-to-market loss on our fixed-price forward
gold sales contracts also increases or decreases.
The mark-to-market value represents the
cancellation value of these contracts based on
current market levels, and does not represent an
immediate economic obligation for payment by us.
Our obligations under the gold forward sales
contracts are to deliver an agreed upon quantity
of gold at a contracted price by the termination
date of the contracts (currently 2014 in most
cases). Gold sales contracts are not recorded on
our balance sheet. The economic impact of these
contracts is reflected in our Financial
Statements within gold sales based on selling
prices under the contracts at the time we record
revenue from the physical delivery of gold and
silver under the contracts. Change in the Fair Value
of Gold and Silver Sales
Contracts ($ millions)
    
    Gold1
    
    
    SilverUnrealized loss
at January 1, 2004
    
    $
    1,725
    
    
    $
    20Impact of change in spot price2
    
    
    288
    
    
    
    11Contango earned in the period
    
    
    (119
    )
    
    
    (1
    )Impact of change in valuation inputs3
    
    
    136
    
    
    
    2Mark-to-market impact of
deliveries into contracts
    
    
    (89
    )
    
    
    (6
    )Unrealized loss at
December 31, 2004
    
    $
    1,941
    
    
    $
    26
  1.
    Includes both the Pascua-Lama Gold Sales
Contracts and the Corporate Gold Sales
Contracts.2.
    From $415 per ounce to $436 per ounce for
gold, and $5.92 per ounce to $6.82 per ounce
for silver.3.

    Other than spot metal prices (i.e. interest
rates and gold and silver lease rates). Fair Value of Derivative Positions At December 31, 2004
    
    Unrealized($ millions)
    
    Gain/(Loss)Corporate Gold Sales Contracts
    
    $
    (949
    )Pascua-Lama Gold Sales Contracts
    
    
    (966
    )Floating Spot-Price Gold Sales Contracts
    
    
    (26
    )Silver Sales Contracts
    
    
    (14
    )Floating Spot-Price Silver Sales Contracts
    
    
    (12
    )Foreign currency contracts
    
    
    298Interest rate contracts
    
    
    45Fuel contracts
    
    
    4$
    (1,620
    )
 Liquidity Liquidity Management Liquidity is managed dynamically, and
factors that could impact liquidity are regularly
monitored. The primary factors that affect
liquidity include gold production levels,
realized gold sales prices, cash production costs, future capital expenditure
requirements, scheduled repayments of long-term
debt obligations, our credit capacity and
expected future debt market conditions. Working
capital requirements have not historically had a
material effect on liquidity. Counterparties to
the financial instruments and gold sales
contracts that we hold do not have unilateral and
discretionary rights to accelerate settlement of
financial instruments or gold sales contracts,
and we are not subject to any margin calls. We consider our liquidity profile to be sound, as
there are no reasonably foreseeable trends,
demands, commitments, events or circumstances
expected to prevent us from funding the capital
needed to implement our strategy. 57 BARRICK Annual Report 2004




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##### 



MANAGEMENTS DISCUSSION AND ANALYSIS Capital Resources1($ millions)
    
    2004
    
    
    2003
    
    
    2002Opening capital resource
    
    $
    1,970
    
    
    $
    2,044
    
    
    $
    1,733New sourcesOperating cash flow
    
    
    506
    
    
    
    519
    
    
    
    588New financing facilities 2
    
    
    1,056
    
    
    
    
    
    
    
    3,532
    
    
    
    2,563
    
    
    
    2,321AllocationsGrowth capital3
    
    
    (640
    )
    
    
    (106
    )
    
    
    (29
    )Sustaining capital4
    
    
    (184
    )
    
    
    (216
    )
    
    
    (199
    )Dividends/share buyback
    
    
    (213
    )
    
    
    (272
    )
    
    
    (119
    )Other
    
    
    (19
    )
    
    
    1
    
    
    
    70Closing capital resources
    
    $
    2,476
    
    
    $
    1,970
    
    
    $
    2,044Components of closing
capital resourcesCash and equivalents
    
    $
    1,398
    
    
    $
    970
    
    
    $
    1,044Unutilized
credit facilities
    
    
    1,078
    
    
    
    1,000
    
    
    
    1,000Total
    
    $
    2,476
    
    
    $
    1,970
    
    
    $
    2,044
   1.
    Capital resources include cash balances and
sources of financing that have been arranged
but not utilized.2.

    Includes the $250 million Veladero
financing, $750 million bond offering, and
$56 million lease facility for Lagunas
Norte.3.

    Growth capital represents capital invested
in new projects to bring new mines into
production.4.

    Sustaining capital represents capital
required at existing mining operations. Credit rating  Credit ratings at December 31, 2004,
from major rating agencies
  Standard and Poors
    
    AMoodys
    
    Baa1DBRS
    
    A
 Our ability to access unsecured debt markets
and the related cost of debt financing is, in
part, dependent upon maintaining an acceptable
credit rating. A deterioration in our credit
rating would not adversely affect existing debt
securities or the terms of gold sales contracts,
but could impact funding costs for any new debt
financing. The key factors that are important to
our credit rating include the following: our
market capitalization; the strength of our
balance sheet, including the amount of net debt
and our debt-to-equity ratio; our net cash flow,
including cash generated by operating activities
and expected capital expenditure requirements;
the quantity of our gold reserves; and our
geo-political risk profile. Contractual Obligations and Commitments Payments dueAt December 31, 2004
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2010 and($ millions)
    
    2005
    
    
    2006
    
    
    2007
    
    
    2008
    
    
    2009
    
    
    thereafter
    
    
    TotalContractual obligations
Long-term debt (1)
    
    $
    31
    
    
    $
    58
    
    
    $
    580
    
    
    $
    72
    
    
    $
    17
    
    
    $
    903
    
    
    $
    1,661Asset retirement obligations (2)
    
    
    35
    
    
    
    28
    
    
    
    19
    
    
    
    42
    
    
    
    35
    
    
    
    208
    
    
    
    367Capital leasesA
    
    
    12
    
    
    
    15
    
    
    
    12
    
    
    
    11
    
    
    
    11
    
    
    
    
    
    
    
    61Operating leases
    
    
    16
    
    
    
    16
    
    
    
    16
    
    
    
    17
    
    
    
    5
    
    
    
    6
    
    
    
    76Post-retirement benefits
    
    
    16
    
    
    
    15
    
    
    
    16
    
    
    
    16
    
    
    
    16
    
    
    
    89
    
    
    
    168Other post-retirement benefits
    
    
    2
    
    
    
    2
    
    
    
    2
    
    
    
    2
    
    
    
    2
    
    
    
    9
    
    
    
    19Royalty arrangements (3)
    
    
    61
    
    
    
    66
    
    
    
    66
    
    
    
    67
    
    
    
    67
    
    
    
    510
    
    
    
    837Purchase obligations for
supplies and consumables
    
    
    11
    
    
    
    3
    
    
    
    1
    
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    16Power contracts (4)
    
    
    6
    
    
    
    5
    
    
    
    1
    
    
    
    5
    
    
    
    2
    
    
    
    
    
    
    
    19Capital commitments (5)
    
    
    314
    
    
    
    8
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    322Total
    
    
    504
    
    
    
    216
    
    
    
    713
    
    
    
    233
    
    
    
    155
    
    
    
    1,725
    
    
    
    3,546
   A.
    Includes the $56 million build to suit lease facility. 58 BARRICK Annual Report 2004




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##### 



MANAGEMENTS DISCUSSION AND ANALYSIS Contractual Obligations and Commitments (1) Long-term debt Our debt obligations do not include any
subjective acceleration clauses or other clauses
that enable the holder of the debt to call for
early repayment, except in the event that we
breach any of the terms and conditions of the
debt or for other customary events of default.
The Bulyanhulu and Veladero project financings
are secured by assets at the Bulyanhulu Mine and
Veladero project respectively. Other than this
security, we are not required to post any
collateral under any debt obligations. The terms
of our debt obligations would not be affected by
a deterioration in our credit rating. (2) Asset retirement obligations Amounts presented in the table represent the
discounted future payments for the expected cost
of asset retirement obligations. (3) Royalties Virtually all of the royalty arrangements
give rise to obligations as we produce gold. In
the event that we do not produce gold at our
mining properties, we have no payment obligation
to the royalty holders. The amounts disclosed are
based on expected future gold production, using a
$425 gold price assumption. The most significant
royalty agreements are disclosed in note 5 to our
Financial Statements. (4) Power contracts We enter into contracts to purchase power at
each of our operating mines. These contracts
provide for fixed prices, which, in certain
circumstances, are adjusted for inflation. Some
agreements obligate us to purchase fixed
quantities per hour, seven days a week, while
others are based on a percentage of actual
consumption. These contracts extend through
various dates in 2005 to 2009. In addition to the purchase obligations set out
in the table, we purchase about 1 billion
kilowatt-hours annually at market rates. Under
the terms of the Goldstrike Power contract, we purchase power
based on actual consumption; this contract has an exit fee that we will pay when we commence
commercial operation of our Nevada Power Plant
and leave the utility. (5) Capital commitments Purchase obligations for capital
expenditures include only those items where
binding commitments have been entered into.
Commitments at the end of 2004 mainly related to
construction at our development projects and also
the power plant in Nevada. Capital expenditures not yet committed We expect to incur about $2.5 billion to
complete the development/construction of our
present development projects over the next five
years (Veladero, Lagunas Norte, Tulawaka, Cowal,
Pascua-Lama and East Archimedes) and the Nevada
Power Plant, as well as an average of
approximately $175 million per year in sustaining
capital at our producing mines over the same time
period. A total of $322 million of these amounts
had been committed at the end of 2004, with the
remainder not yet committed. Payments to maintain land tenure and mineral property rights In the normal course of business, we are
required to make annual payments to maintain
title to certain of our properties and to
maintain our rights to mine gold at certain of
our properties. If we choose to abandon a
property or discontinue mining operations, the
payments relating to that property can be
suspended, resulting in our rights to the
property lapsing. The validity of mining claims
can be uncertain and may be contested. Although
we have attempted to acquire satisfactory title
to our properties, some risk exists that some
titles, particularly title to undeveloped
properties, may be defective. Contingencies  Litigation We are currently subject to various
litigation as disclosed in note 23 to the
Financial Statements, and we may be involved in
disputes with other parties in the future that
may result in litigation. If we are unable to
resolve these disputes favorably, it may have a
material adverse impact on our financial
condition, cash flow and results of operations. 59 BARRICK Annual Report 2004




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##### 



MANAGEMENTS DISCUSSION AND ANALYSIS Canadian Supplement In note 25 to our Financial Statements we
have provided a reconciliation between Canadian
and US GAAP, including a description of the
significant measurement differences affecting our
balance sheet, income statement and statement of
cash flow. Under Canadian GAAP we incurred a loss of $102
million ($0.19 per share) compared to income of
$248 million ($0.46 per share). The principal
continuing reconciling differences that affect
earnings relate to the amortization of property,
plant and equipment under Canadian GAAP, as well
as the outcome of impairment assessments for
property, plant and equipment and goodwill and
the measurement of gains on sale of long-lived
assets. These differences primarily arise due to
differences in the carrying amounts of the assets
due to differences in historic accounting for
business combinations. In addition, the
measurement of amortization under Canadian GAAP
includes certain mineralization not classified as
a reserve under SEC rules. We expect to see
continuing differences in the measurement of
amortization and impairment of property, plant
and equipment and goodwill. In 2004, we adopted new accounting rules that
require the expensing of stock options under
Canadian GAAP, with retroactive restatement of
prior periods. Similar rules will become
effective for US GAAP in 2005, but we expect to
see continuing differences due to different
transition methods for these new rules between US
and Canadian GAAP. Certain mine development costs are expensed under
US GAAP, but capitalized for Canadian GAAP
purposes. These differences exist at development
projects where mineralization has not yet been
classified as a reserve under SEC rules. We
expect to see continuing differences in our
accounting for exploration and development
expenditures, where some expenditures qualify for
capitalization under Canadian GAAP, but are
expensed under US GAAP. The major expenditures in
2005 that will be affected by this difference in
accounting are expenditures on our Buzwagi
project, which will not qualify for
capitalization under US GAAP until mineralization
at the project qualifies as a reserve for US reporting purposes. Critical Accounting Policies and Estimates Management has discussed the development and
selection of our critical accounting estimates
with the Audit Committee of the Board of
Directors, and the Audit Committee has reviewed
the disclosure relating to such estimates in
conjunction with its review of this MD&A. The
accounting policies and methods we utilize
determine how we report our financial condition
and results of operations, and they may require
management to make estimates or rely on
assumptions about matters that are inherently
uncertain. Our financial condition and results of operations
are reported using accounting policies and
methods prescribed by US GAAP. In certain cases,
US GAAP allows accounting policies and methods to
be selected from two or more alternatives, any of
which might be reasonable yet result in our
reporting materially different amounts.
Management exercises judgment in selecting and
applying our accounting policies and methods to
ensure that, while US GAAP compliant, they
reflect our judgment of an appropriate manner in
which to record and report our financial
condition and results of operations. Accounting Policy Changes There were no changes in accounting policies
in 2004 that significantly impacted our financial
statements. As disclosed in note 2c to the
Financial Statements, in 2005 we are required to
adopt FAS 123R, Accounting for Stock-based
Compensation, and we may be required to change
our accounting policy for stripping costs once
the Emerging Issues Task Force has completed its
deliberations on EITF 04-6. 60 BARRICK Annual Report 2004




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##### 



MANAGEMENTS DISCUSSION AND ANALYSIS Critical Accounting Estimates Certain accounting estimates have been
identified as being critical to the
presentation of our financial condition and
results of operations because they require
management to make particularly subjective and/or
complex judgments about matters that are
inherently uncertain; and there is a reasonable
likelihood that materially different amounts
could be reported under different conditions or
using different assumptions and estimates.
Critical accounting estimates include:  >
    Reserve estimates used to measure amortization of property, plant and equipment;>
    Stripping ratios used to measure amortization of capitalized mining costs;>
    Impairment assessments of long-lived assets;>
    The fair value of asset retirement obligations; and>
    The measurement of deferred income tax assets and liabilities and assessments of the
amounts of valuation allowances recorded. Reserve Estimates Used to Measure Amortization of Property,
Plant and Equipment We record amortization expense based on the
estimated useful economic lives of long-lived
assets. The estimate that most significantly
affects the measurement of amortization is
quantities of proven and probable gold reserves,
because we amortize a large portion of property,
plant and equipment using the units-of-production
method. Reserves are estimated in accordance with
the principles in Industry Guide No. 7, issued by
the SEC. The estimation of quantities of gold
reserves is complex, requiring significant
subjective assumptions that arise from the
evaluation of geological, geophysical,
engineering and economic data for a given ore
body. This data could change over time as a
result of numerous factors, including new
information gained from development activities,
evolving production history and a reassessment of
the viability of production under different
economic conditions. Changes in data and/or
assumptions could cause reserve estimates to
substantially change from period to period.
Because mineral reserves are estimates, there is a risk that
actual gold production could differ from expected
gold production from our reserves. Factors that
could cause actual gold production to differ
include adverse changes in gold or silver prices,
which could make the reserve uneconomic to mine;
and variations in actual ore grade and gold and silver recovery
rates from estimates. A key trend that could reasonably impact reserve
estimates is rising market gold prices. As market
gold prices rise, the gold price assumption used
in reserve estimation also rises. This assumption
is closely related to the trailing three-year
average market price. As this assumption rises,
this could result in an upward revision to
reserve estimates as material not previously
classified as a reserve becomes economic at
higher gold prices. Changes in reserve estimates
are generally calculated at the end of each year
and cause amortization expense to increase or
decrease prospectively. In general, amortization expense is more
significantly impacted by changes in reserve
estimates at underground mines than open-pit
mines due to the following factors:  >
    Underground development costs incurred to access ore at underground mines are
significant and amortized using the units-of-production method; and>
    Reserves at underground mines are often more sensitive to gold price assumptions and
changes in production costs. Production costs at underground mines are impacted by factors
such as dilution, which can significantly impact mining and processing costs per ounce. The mines where amortization expense is most
sensitive to changes in reserve estimates are:
Pierina, Goldstrike Underground, Eskay Creek and
Bulyanhulu. These mines have significant carrying
amounts of property, plant and equipment that are
amortized using the units-of-production method
and make up a significant proportion of property,
plant and equipment at our operating mines. 61 BARRICK Annual Report 2004




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##### 



MANAGEMENTS DISCUSSION AND ANALYSIS Impact of Historic Changes in Reserve Estimates on Amortization For the years endedDecember 31($ millions, except reservesin millions of contained oz)
    
    2004
    
    
    2003Reserves
    
    
    Amortization
    
    
    Reserves
    
    
    Amortizationincrease (decrease)1
    
    
    increase (decrease)
    
    
    increase (decrease)1
    
    
    increase (decrease)GoldstrikeUnderground
    
    
    0.2
    
    
    $
    (8
    )
    
    
    0.6
    
    
    $
    (10
    )Open Pit
    
    
    1.5
    
    
    
    (7
    )
    
    
    1.3
    
    
    
    (6
    )Plutonic
    
    
    0.5
    
    
    
    (2
    )
    
    
    1.3
    
    
    
    (4
    )Eskay Creek
    
    
    (0.1
    )
    
    
    4
    
    
    
    
    
    
    
    Kalgoorlie
    
    
    0.9
    
    
    
    (3
    )
    
    
    
    
    
    
    Pierina
    
    
    0.3
    
    
    
    (9
    )
    
    
    
    
    
    
    
   1.
    
    Each year we updated our reserve estimates as at the end of the year as part of our normal
business cycle. Reserve changes presented were calculated at the beginning of the applicable fiscal
year and are in millions of contained ounces. Stripping Ratios Used to Measure Amortization of Capitalized Mining Costs Amortization of capitalized mining costs is
recorded in the cost of inventory produced using
a stripping ratio. The stripping ratio is
calculated as the total tons of ore and waste
that must be mined compared to recoverable proven
and probable gold reserves. Both reserve estimates and the estimated tons of
ore and waste that must be mined to produce
reserves are estimates that are highly uncertain.
The assumptions and uncertainty relating to
reserve estimates are described on page 61 under
Reserve
 Estimates Used to Measure Amortization of
Property, Plant and Equipment. The estimated
tons of ore and waste that must be mined to
produce reserves are calculated based on a mine
plan that contemplates a design for the open pit
relating to the mining of reserves. As reserve
estimates change, the design of the open pit also
changes, and both of these factors impact the
stripping ratio. Changes in this ratio affect the amortization of
capitalized mining costs to inventory, and
ultimately cost of sales when the inventory is
sold. In general, stripping ratios are higher at
open-pit mines where the ore body is deep below
the surface of the earth. Impact of Historic Changes in Stripping Ratios ($ millions, except ratios)
    
    Stripping ratio used in
    
    
    Amortization increase (decrease)12005
    
    
    2004
    
    
    2003
    
    
    2005
    
    
    2004
    
    
    2003GoldstrikeOpen Pit
    
    
    127:1
    
    
    
    109:1
    
    
    
    112:1
    
    
    $
    5
    
    
    $
    (1
    )
    
    $
    Pierina
    
    
    89:1
    
    
    
    60:1
    
    
    
    48:1
    
    
    
    20
    
    
    
    7
    
    
    
    
   1.
    
    Impact of the year on year change in the stripping ratio used to amortize capitalized mining
costs. Stripping ratios are updated annually at the
same time as reserve estimates are updated. At
the end of 2004, the stripping ratios for
Goldstrike Open-Pit and Pierina were updated to
reflect the updated reserves at the end of 2004. The amount presented
represents the estimated impact on annual
amortization caused by these changes, based on
production levels and sales volumes in 2004. 62 BARRICK Annual Report 2004




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##### 



MANAGEMENTS DISCUSSION AND ANALYSIS Impairment Assessments of Operating
Mines, Development Projects and
Exploration Stage Properties We review and test the carrying amounts of
assets when events or changes in circumstances
suggest that the carrying amount may not be
recoverable. We group assets at the lowest level
for which identifiable cash flows are largely
independent of the cash flows of other assets and
liabilities. For operating mines 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 $400 per ounce, and an expected
future market US$:A$ exchange rate of $0.70 and US$:C$ 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 estimated 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. Expected future cash flows are inherently
uncertain, and could materially change over time.
They are significantly affected by reserve
estimates, together with economic factors such as
gold and silver prices, and currency exchange
rates, estimates of costs to produce reserves and
future sustaining capital. The assessment and
measurement of impairment excludes the impact of
derivatives designated in a cash flow
hedge relationship for future cash flows arising
from operating mines and development projects. Because of the significant capital investment
that is required at many mines, if an impairment
occurs, it could materially impact earnings. Due
to the long-life nature of many mines, the
difference between total estimated undiscounted
net cash flows and fair value can be substantial.
An impairment is generally only recorded when the
carrying amount of a long-lived asset exceeds the
total estimated undiscounted net cash flows.
Therefore, although the value of a mine may
decline gradually over multiple reporting
periods, the application of impairment accounting
rules could lead to recognition of the full
amount of the decline in value in one period. Due
to the highly uncertain nature of future cash
flows, the determination of when to record an
impairment charge can be very subjective.
Management makes this determination using
available evidence taking into account current
expectations for each mining property. For acquired exploration-stage properties, the
purchase price is capitalized, but
post-acquisition exploration expenditures are
expensed. The future economic viability of
exploration stage properties largely depends upon
the outcome of exploration activity, which can
take a number of years to complete for large
properties. Management monitors the results of
exploration activity over time to assess whether
an impairment may have occurred. 63 BARRICK Annual Report 2004




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##### 



MANAGEMENTS DISCUSSION AND ANALYSIS The measurement of any impairment is made
more difficult because there is not an active
market for exploration properties, and because it
is not possible to use discounted cash flow
techniques due to the very limited information
that is available to accurately model future cash
flows. In general, if an impairment occurs at an
exploration stage property, it would probably
have minimal value and most of the acquisition
cost may have to be written down. Impairment charges are recorded in other income/
expense and impact earnings in the year they are
recorded. Prospectively, the impairment could
also impact the calculation of amortization of an
asset. In fourth quarter 2004, we performed
detailed impairment assessments for three groups
of assets: the Eskay Creek mine in North America;
various exploration-stage properties in Peru; and
the Cowal mine in Australia. For the Eskay Creek mine, the requirement to
complete an impairment test was due to the
following combination of factors: downward
revisions to reserves in 2004; the continued
weakening of the US dollar that impacts Canadian
dollar operating costs measured at market rates;
and upward revisions in asset retirement
obligations at the end of 2004. On completion of
this test, we concluded that the mine was
impaired at the end of 2004, and we recorded a
pre-tax impairment charge of $58 million. For a group of Peruvian exploration-stage
properties acquired as part of the Arequipa
acquisition in 1996, we completed an impairment
test in fourth quarter 2004 following the
finalization of the exploration program for the
year and based on an updated assessment of future
plans for the properties. On completion of this
test, we concluded that the properties were
impaired at the end of 2004 and we recorded a
pre-tax impairment charge of $67 million. For the Cowal development project, an impairment
test was completed following upward revisions to
estimated capital and operating costs for the
project; and the continued weakening of the US
dollar that impacts the amounts reported in US dollars for
Australian dollar expenditures, measured at
market prices. On completion of this test we
concluded that the mine was not impaired at the
end of 2004. We completed these impairment tests using a $400
average future gold price assumption. If a
significant adverse change in the market gold
price occurred that caused us to revise this
price assumption downwards, the amount by which
the Eskay Creek mine is impaired could increase
and the conclusion on the Cowal impairment test
could change, subject to the effect of changes in
other factors and assumptions. The revised gold
price assumption would have no impact on the
Peruvian exploration-stage properties because the
properties were fully written down at the end of
2004. Fair Value of Asset Retirement Obligations (AROs) AROs arise from the acquisition,
development, construction and normal operation of
mining property, plant and equipment, due to
government controls and regulations that protect
the environment on the closure and reclamation of
mining properties. We record the fair value of an
ARO in our Financial Statements when it is
incurred and capitalize this amount as an
increase in the carrying amount of the related
asset. At operating mines, the effect is recorded
as an adjustment to the corresponding asset
carrying amount and results in a prospective
increase or decrease in amortization expense. At
closed mines, the adjustment is charged directly
to earnings. The fair values of AROs are measured by
discounting the expected cash flows using a
discount factor that reflects the risk-free rate
of interest. We prepare estimates of the timing
and amounts of expected cash flows when an ARO is
incurred, which are updated to reflect changes in
facts and circumstances, or if we are required to
submit updated mine closure plans to regulatory
authorities. In the future, changes in
regulations or laws or enforcement could
adversely affect our operations; 64 BARRICK Annual Report 2004




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##### 



MANAGEMENTS DISCUSSION AND ANALYSIS and any instances of noncompliance with laws
or regulations that result in fines or
injunctions or delays in projects, or any
unforeseen environmental contamination at, or
related to, our mining properties could result in
us suffering significant costs. We mitigate these
risks through environmental and health and safety
programs under which we monitor compliance with
laws and regulations and take steps to reduce the
risk of environmental contamination occurring. We
maintain insurance for some environmental risks,
however, for some risks coverage cannot be
purchased at a reasonable cost. Our coverage may
not provide full recovery for all possible causes
of loss. The principal factors that can cause
expected cash flows to change are: the
construction of new processing facilities;
changes in the quantities of material in reserves
and a corresponding change in the life of mine
plan; changing ore characteristics that
ultimately impact the environment; changes in
water quality that impact the extent of water
treatment required; and changes in laws and
regulations governing the protection of the
environment. In general, as the end of the mine
life becomes nearer, the reliability of expected
cash flows increases, but earlier in the mine
life, the estimation of an ARO is inherently more
subjective. Significant judgments and estimates
are made when estimating the fair value of AROs.
Expected cash flows relating to AROs could occur
over periods up to 40 years and the assessment of
the extent of environmental remediation work is
highly subjective. Considering all of these
factors, the fair value of AROs can materially
change over time. In 2004, we recorded charges in AROs totaling $54
million, of which $32 million was recorded as an
adjustment to the corresponding asset and $22
million was recorded as a charge to earnings. The
$22 million charge to earnings mainly reflects
increases in the expected cost of water treatment
at certain closed mines. In 2003, we recorded
revisions to AROs totaling $10 million for
various closed mines that were charged to
earnings and mainly reflect increases in the
expected cost of water treatment. AROs at December 31, 2004 ($ millions)Operating mines
    
    $
    204Closed mines
    
    
    148Development projects
    
    
    15Total
    
    $
    367
 At our operating mines, it is reasonably
possible that circumstances could arise by the
end of the mine life that will require material
revisions to AROs. In particular, the extent of
water treatment can have a material effect on the
fair value of AROs, and the expected water
quality at the end of the mine life, which is the
primary driver of the extent of water treatment,
can change significantly. We periodically prepare
updated studies for certain mines, following
which it may be necessary to adjust the fair
value of AROs. At one closed mine, the principal uncertainty
that could impact the fair value of an ARO is the
manner in which a tailings facility will need to
be remediated. In measuring the ARO, we have
concluded that there are two possible methods
that could be used. We have recorded the ARO
using the more costly method, which we believe to
be the most probable, but it is reasonably
possible that a less costly method may ultimately
prove to be technically feasible, in which case
the ARO may decrease and any revision to the ARO
would be recorded in earnings in the period of
change. The period of time over which we have assumed
that water quality monitoring and treatment will
be required also have a significant impact on
AROs at closed mines. The amount of AROs recorded
reflects the expected cost taking into account
the probability of particular scenarios. The
difference between the upper end of the range of
these assumptions and the lower end of the range
is significant, and consequently changes in these
assumptions could have a material effect on the
fair value of AROs and future earnings in a
period of change. 65 BARRICK Annual Report 2004




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##### 



MANAGEMENTS DISCUSSION AND ANALYSIS Deferred Tax Assets and Liabilities Measurement of Timing Differences We are periodically required to estimate the tax
basis of assets and liabilities. Where applicable
tax laws and regulations are either unclear or
subject to varying interpretations, it is
possible that changes in these estimates could
occur that materially affect the amounts of
deferred income tax assets and liabilities
recorded in our Financial Statements. Changes in
deferred tax assets and liabilities generally
have a direct impact on earnings in the period of
changes. The most significant such estimate is
the tax basis of certain Australian assets
following elections in 2004 under new tax regimes
in Australia. These elections resulted in the
revaluation of certain assets in Australia for
income tax purposes. Part of the revalued tax
basis of these assets was estimated based on a
valuation completed for tax purposes. This
valuation is under review by the Australian Tax
Office (ATO) and the amount finally accepted by
the ATO may differ from the assumption used to
measure deferred tax balances at the end of 2004. Valuation Allowances Each period, we evaluate the likelihood of
whether some portion or all of each deferred tax
asset will not be realized. This evaluation is
based on historic and future expected levels of
taxable income, the pattern and timing of
reversals of taxable temporary timing differences
that give rise to deferred tax liabilities, and
tax planning initiatives. Levels of future
taxable income are affected by, among other
things, market gold prices, production costs,
quantities of proven and probable gold reserves,
interest rates and foreign currency exchange
rates. If we determine that it is more likely
than not (a likelihood of more than 50%) that all
or some portion of a deferred tax asset will not
be realized, then we record a valuation allowance
against the amount we do not expect to realize.
Changes in valuation allowances are recorded as a
component of income tax expense or recovery for
each period. The most significant recent trend
impacting expected levels of future taxable
income and valuation allowances has been rising
gold prices. A continuation of this trend
could lead to the release of some of the
valuation allowances recorded, with a corresponding effect
on earnings in the period of release. We released valuation allowances totaling $5
million in 2004 and $62 million in 2003. In 2004,
the release was as a consequence of an election
to consolidate our Australian operations into one
tax group. The $62 million release in 2003 was
mainly a result of a corporate reorganization for
tax purposes in North America and the impact of
higher expected levels of taxable income in
Australia and Argentina caused by rising market
gold prices. A further continuation of the recent trend of
rising gold prices could lead to the release of
some portion or all of the valuation allowances
in the United States and Argentina. Valuation allowances at December 31 ($ millions)
    
    2004
    
    
    2003United States
    
    $
    189
    
    
    $
    181Chile
    
    
    141
    
    
    
    146Argentina
    
    
    75
    
    
    
    73Canada
    
    
    73
    
    
    
    72Tanzania
    
    
    89
    
    
    
    68Australia
    
    
    3
    
    
    
    8Other
    
    
    8
    
    
    
    6$
    578
    
    
    $
    554
 United States:most of the valuation
allowances relate to the full amount of
Alternative Minimum Tax 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 these valuation
allowances. Chile:valuation allowances relate to the full
amount of tax assets in subsidiaries that do not
have any present sources of income. In the event
that these subsidiaries have sources of income in
the future, we may release some or all of the
allowances. Argentina:a valuation allowance of $75 million
has been set up against certain deferred tax
assets in Argentina. Historically, we have had no
income 66 BARRICK Annual Report 2004




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##### 



MANAGEMENTS DISCUSSION AND ANALYSIS generating 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 to a $34 million portion of this valuation
allowance that relates to Veladero will be made in
the near term. Canada:substantially all of the valuation allowances
relate to capital losses that will only be utilized if
any capital gains arise. Tanzania:considering the local fiscal regime applicable
to mining companies and expected levels of
future taxable income from the Bulyanhulu mine, a
valuation allowance exists against a portion of the
deferred tax assets. If we conclude that expected
levels of future taxable income from Bulyanhulu
will be higher, we may release some or all of the
valuation allowance. Non-GAAP Performance
Measures For the years ended December 31($ millions, exceptper ounce information)
    
    2004
    
    
    2003Total cash costs  per US GAAP1
    
    $
    1,062
    
    
    $
    1,065Accretion expense and reclamation
costs at the operating mines
    
    
    (18
    )
    
    
    (14
    )Total cash costs  per Gold Institute
Production Cost Standard
    
    $
    1,044
    
    
    $
    1,051Ounces sold
(thousands)
    
    
    4,936
    
    
    
    5,554Total cash costs per ounce
 per US GAAP (dollars)2
    
    $
    215
    
    
    $
    192Total cash costs per ounce 
per Gold Institute Production
Cost Standard (dollars)2
    
    $
    212
    
    
    $
    189
   1.
    Equal to cost of sales and other operating expenses
less accretion expense and reclamation costs at
non-operating mines.2.
    Per ounce weighted average. We have included total cash costs per ounce
data because these statistics are a key
performance measure that management uses to
monitor performance. We use these statistics to assess how well our
producing mines are performing compared to plan
and also to assess the overall effectiveness and
efficiency of our mining operations. We believe
that the inclusion of these statistics in MD&A
helps an investor to assess performance through
the eyes of management. We understand that certain investors
also use these statistics to assess our
performance. The inclusion of total cash costs
per ounce statistics enables investors to better
understand year on year changes in production
costs, which in turn affect profitability and the
ability to generate operating cash flow for use
in investing and other activities. We report
total cash costs per ounce data calculated in
accordance with The Gold Institute Production
Cost Standard (the Standard). Adoption of the
Standard is voluntary, but we understand that
most senior gold producers follow the Standard
when reporting cash cost per ounce data. The data
does not have a meaning prescribed by US GAAP and
therefore amounts presented may not be comparable
to data presented by gold producers who do not
follow the Standard. Total cash costs per ounce
are derived from amounts included in the
Statements of Income and mine site operating
costs such as mining, processing, administration,
royalties and production taxes, but exclude
amortization, reclamation costs, financing costs,
and capital, development and exploration costs. A
US GAAP measure of costs per ounce has also been
presented as required by securities regulations
that govern non-GAAP performance measures.
Commentary within this Managements Discussion
and Analysis is focused on the total cash costs
measure as defined by the Standard. The data is intended to provide additional
information and should not be considered in
isolation or as a substitute for measures of
performance prepared in accordance with GAAP. The
measures are not necessarily indicative of
operating profit or cash flow from operations as
determined under GAAP. As can be seen from the
tables on pages 68 to 70 reconciling the GAAP and
non-GAAP measures, the GAAP and non-GAAP measures
are not significantly different. 67 BARRICK Annual Report 2004




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##### 



MANAGEMENTS DISCUSSION AND ANALYSIS Reconciliation of Total Cash Costs per Ounce to Financial Statements Goldstrike 
    
    
    Goldstrike 
    
    
    Eskay
    
    
    RoundOpen pit
    
    
    Underground
    
    
    Creek2
    
    
    MountainFor the yearsended December 31
    
    2004
    
    
    2003
    
    
    2004
    
    
    2003
    
    
    2004
    
    
    2003
    
    
    2004
    
    
    2003Total cash production
costs  per US GAAP1
    
    $
    336.5
    
    
    $
    380.6
    
    
    $
    141.2
    
    
    $
    152.1
    
    
    $
    9.3
    
    
    $
    18.6
    
    
    $
    84.5
    
    
    $
    67.2Accretion expense and
reclamation costs at
operating mines
    
    
    (2.5
    )
    
    
    (2.5
    )
    
    
    (0.2
    )
    
    
    
    
    
    
    (0.2
    )
    
    
    (0.3
    )
    
    
    (1.6
    )
    
    
    (1.6
    )Total cash production costs
per Gold Institute
Production Cost Standard
    
    $
    334.0
    
    
    $
    378.1
    
    
    $
    141.0
    
    
    $
    152.1
    
    
    $
    9.1
    
    
    $
    18.3
    
    
    $
    82.9
    
    
    $
    65.6Ounces sold
(thousands)
    
    
    1,352
    
    
    
    1,625
    
    
    
    554
    
    
    
    600
    
    
    
    290
    
    
    
    354
    
    
    
    375
    
    
    
    379Total cash costs per ounce sold
per US GAAP (dollars)3
    
    $
    249
    
    
    $
    234
    
    
    $
    256
    
    
    $
    253
    
    
    $
    32
    
    
    $
    53
    
    
    $
    225
    
    
    $
    177Total cash costs per ounce sold 
per Gold Institute Production
Cost Standard (dollars)4
    
    $
    247
    
    
    $
    233
    
    
    $
    255
    
    
    $
    253
    
    
    $
    31
    
    
    $
    52
    
    
    $
    221
    
    
    $
    173
 TotalHemlo
    
    
    Holt-McDermott
    
    
    Marigold
    
    
    North AmericaFor the yearsended December 31
    
    2004
    
    
    2003
    
    
    2004
    
    
    2003
    
    
    2004
    
    
    2003
    
    
    2004
    
    
    2003Total cash production
costs  per US GAAP1
    
    $
    57.6
    
    
    $
    60.4
    
    
    $
    12.3
    
    
    $
    20.9
    
    
    $
    9.1
    
    
    $
    8.1
    
    
    $
    650.5
    
    
    $
    707.9Accretion expense and
reclamation costs at
operating mines
    
    
    (0.2
    )
    
    
    (0.2
    )
    
    
    (0.1
    )
    
    
    (0.1
    )
    
    
    (0.1
    )
    
    
    (0.1
    )
    
    
    (4.9
    )
    
    
    (4.8
    )Total cash production costs
per Gold Institute
Production Cost Standard
    
    $
    57.4
    
    
    $
    60.2
    
    
    $
    12.2
    
    
    $
    20.8
    
    
    $
    9.0
    
    
    $
    8.0
    
    
    $
    645.6
    
    
    $
    703.1Ounces sold
(thousands)
    
    
    239
    
    
    
    266
    
    
    
    62
    
    
    
    87
    
    
    
    46
    
    
    
    47
    
    
    
    2,918
    
    
    
    3,358Total cash costs per ounce sold
per US GAAP (dollars)3
    
    $
    241
    
    
    $
    227
    
    
    $
    198
    
    
    $
    240
    
    
    $
    198
    
    
    $
    172
    
    
    $
    223
    
    
    $
    211Total cash costs per ounce sold 
per Gold Institute Production
Cost Standard (dollars)4
    
    $
    240
    
    
    $
    226
    
    
    $
    197
    
    
    $
    239
    
    
    $
    197
    
    
    $
    171
    
    
    $
    221
    
    
    $
    209
   1.
    Represents cost of sales and other operating costs (excluding amortization and accretion expense and reclamation
costs for non-operating mines).2.
    Eskay Creeks total cash costs in 2004 are impacted by higher silver prices which the Company treats as
a by-product. Total cash costs on a co-product basis are: 2004  gold $202 per ounce, silver $3.36 per ounce
(2003  gold $175 per ounce, silver $2.37 per ounce).3.
    Represents total cash production costs per US GAAP divided by ounces sold.4.
    Represents total cash production costs per Gold Institute Production Cost Standard divided by ounces sold. 68 BARRICK Annual Report 2004




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##### 



MANAGEMENTS DISCUSSION AND ANALYSIS TotalPierina
    
    
    South America
    
    
    Plutonic
    
    
    DarlotFor the yearsended December 31
    
    2004
    
    
    2003
    
    
    2004
    
    
    2003
    
    
    2004
    
    
    2003
    
    
    2004
    
    
    2003Total cash production
costs  per US GAAP1
    
    $
    72.2
    
    
    $
    78.9
    
    
    $
    72.2
    
    
    $
    78.9
    
    
    $
    69.2
    
    
    $
    62.6
    
    
    $
    30.0
    
    
    $
    25.4Accretion expense and
reclamation costs at
operating mines
    
    
    (3.5
    )
    
    
    (3.2
    )
    
    
    (3.5
    )
    
    
    (3.2
    )
    
    
    (0.1
    )
    
    
    (0.2
    )
    
    
    (0.1
    )
    
    
    (0.1
    )Total cash production costs
per Gold Institute
Production Cost Standard
    
    $
    68.7
    
    
    $
    75.7
    
    
    $
    68.7
    
    
    $
    75.7
    
    
    $
    69.1
    
    
    $
    62.4
    
    
    $
    29.9
    
    
    $
    25.3Ounces sold
(thousands)
    
    
    649
    
    
    
    911
    
    
    
    649
    
    
    
    911
    
    
    
    310
    
    
    
    324
    
    
    
    142
    
    
    
    154Total cash costs per ounce sold
per US GAAP (dollars)2
    
    $
    111
    
    
    $
    87
    
    
    $
    111
    
    
    $
    87
    
    
    $
    223
    
    
    $
    193
    
    
    $
    211
    
    
    $
    165Total cash costs per ounce sold 
per Gold Institute Production
Cost Standard (dollars)3
    
    $
    106
    
    
    $
    83
    
    
    $
    106
    
    
    $
    83
    
    
    $
    223
    
    
    $
    193
    
    
    $
    210
    
    
    $
    164
 TotalLawlers
    
    
    Kalgoorlie
    
    
    Bulyanhulu
    
    
    Australia/AfricaFor the yearsended December 31
    
    2004
    
    
    2003
    
    
    2004
    
    
    2003
    
    
    2004
    
    
    2003
    
    
    2004
    
    
    2003Total cash production
costs  per US GAAP1
    
    $
    28.3
    
    
    $
    23.8
    
    
    $
    108.5
    
    
    $
    88.1
    
    
    $
    103.2
    
    
    $
    77.1
    
    
    $
    339.2
    
    
    $
    277.0Accretion expense and
reclamation costs at
operating mines
    
    
    (0.1
    )
    
    
    (0.1
    )
    
    
    (1.5
    )
    
    
    (1.5
    )
    
    
    (7.5
    )
    
    
    (4.1
    )
    
    
    (9.3
    )
    
    
    (6.0
    )Total cash production costs
per Gold Institute
Production Cost Standard
    
    $
    28.2
    
    
    $
    23.7
    
    
    $
    107.0
    
    
    $
    86.6
    
    
    $
    95.7
    
    
    $
    73.0
    
    
    $
    329.9
    
    
    $
    271.0Ounces sold
(thousands)
    
    
    115
    
    
    
    95
    
    
    
    463
    
    
    
    415
    
    
    
    339
    
    
    
    297
    
    
    
    1,369
    
    
    
    1,285Total cash costs per ounce sold
per US GAAP (dollars)2
    
    $
    247
    
    
    $
    250
    
    
    $
    234
    
    
    $
    212
    
    
    $
    304
    
    
    $
    260
    
    
    $
    248
    
    
    $
    216Total cash costs per ounce sold 
per Gold Institute Production
Cost Standard (dollars)3
    
    $
    246
    
    
    $
    249
    
    
    $
    231
    
    
    $
    209
    
    
    $
    283
    
    
    $
    246
    
    
    $
    241
    
    
    $
    210
   1.
    Represents cost of sales and other operating costs (excluding amortization and accretion expense and reclamation
costs for non-operating mines).2.
    Represents total cash production costs per US GAAP divided by ounces sold.3.
    Represents total cash production costs per Gold Institute Production Cost Standard divided by ounces sold. 69 BARRICK Annual Report 2004




---



##### 



MANAGEMENTS DISCUSSION AND ANALYSIS Reconciliation of Amortization Costs per Ounce to Financial Statements For the years ended December 31
    
    2004
    
    
    2003
    
    
    2002Amortization expense per consolidated financial statements
    
    $
    452
    
    
    $
    522
    
    
    $
    519Amortization expense recorded on property,
plant and equipment not at operating mine sites
    
    
    (27
    )
    
    
    (25
    )
    
    
    (26
    )Amortization expense for per ounce calculation
    
    $
    425
    
    
    $
    497
    
    
    $
    493Ounces sold
(thousands)
    
    
    4,936
    
    
    
    5,554
    
    
    
    5,805Amortization
per ounce (dollars)
    
    $
    86
    
    
    $
    90
    
    
    $
    85
 70 BARRICK Annual Report 2004




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##### 



MANAGEMENTS DISCUSSION AND ANALYSIS Cautionary Statement on Forward-Looking
Information Certain information contained or
incorporated by reference in this Annual Report
2004, including any information as to our future
financial or operating performance, constitutes
forward-looking statements. All statements,
other than statements of historical fact, are
forward-looking statements. The words believe,
expect, anticipate, contemplate, target,
plan, intends, continue, budget,
estimate, may, will, schedule and similar
expressions identify forward-looking statements.
Forward-looking statements are necessarily based
upon a number of estimates and assumptions that,
while considered reasonable by us, are inherently
subject to significant business, economic and
competitive uncertainties and contingencies.
Known and unknown factors could cause actual
results to differ materially from those projected
in the forward-looking statements. Such factors
include, but are not limited to: fluctuations in
the currency markets (such as the Canadian and
Australian dollars versus the U.S. dollar);
fluctuations in the spot and forward price of
gold or certain other commodities (such as
silver, copper, diesel fuel and electricity);
changes in U.S. dollar interest rates or gold
lease rates that could impact the mark to market
value of outstanding derivative instruments and
ongoing payments/receipts under interest rate
swaps and variable rate debt obligations; risks
arising from holding derivative instruments (such
as credit risk, market liquidity risk and mark to
market risk); changes in national and local
government legislation, taxation, controls,
regulations and political or economic
developments in Canada, the United States,
Australia, Chile, Peru, Argentina, Tanzania,
Russia or Barbados or other countries in
which we do or may carry on business in the
future; business opportunities that may be
presented to, or pursued by, us; our ability to
successfully integrate acquisitions; operating or
technical difficulties in connection with mining
or development activities; the speculative nature
of gold exploration and development, including
the risks of obtaining necessary licenses and
permits; diminishing quantities or grades of
reserves; adverse changes in our credit rating;
and contests over title to properties,
particularly title to undeveloped properties. In
addition, there are risks and hazards associated
with
the business of gold exploration, development and
mining, including environmental hazards,
industrial accidents, unusual or unexpected
formations, pressures, cave-ins, flooding and
gold bullion losses (and the risk of inadequate
insurance, or inability to obtain insurance, to
cover these risks). Many of these uncertainties
and contingencies can affect our actual results
and could cause actual results to differ
materially from those expressed or implied in any
forward-looking statements made by, or on behalf
of, us. Readers are cautioned that
forward-looking statements are not guarantees of
future performance. All of the forward-looking
statements made in this Annual Report 2004 are
qualified by these cautionary statements.
Specific reference is made to Barricks most
recent Form 40-F/Annual Information Form on file
with the US Securities and Exchange Commission
and Canadian provincial securities regulatory
authorities for a discussion of some of the
factors underlying forward-looking statements. We disclaim any intention or obligation to update
or revise any forward-looking statements whether
as a result of new information, future events or
otherwise. 71 BARRICK Annual Report 2004




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##### 



MANAGEMENTS DISCUSSION AND ANALYSIS Glossary of Technical Terms AUTOCLAVE:Oxidation process in which
high temperatures and pressures are applied to
convert refractory sulphide mineralization into
amenable oxide ore. BACKFILL:Primarily waste sand or rock
used to support the roof or walls after removal
of ore from a stope. BY-PRODUCT:A secondary metal or mineral
product recovered in the milling process such as
copper and silver. CONCENTRATE:A very fine, powder-like
product containing the valuable ore mineral from
which most of the waste mineral has been
eliminated. CONTAINED OUNCES:Represents ounces in
the ground before reduction of ounces not able to
be recovered by the applicable metallurgical
process. CONTANGO:The positive difference
between the spot market gold price and the
forward market gold price. It is often expressed
as an interest rate quoted with reference to the
difference between inter-bank deposit rates and
gold lease rates. DEVELOPMENT:Work carried out for the
purpose of opening up a mineral deposit. In an
underground mine this includes shaft sinking,
crosscutting, drifting and raising. In an open
pit mine, development includes the removal of
overburden. DILUTION:The effect of waste or
low-grade ore which is unavoidably included in
the mined ore, lowering the recovered grade. DORÉ:Unrefined gold and silver bullion
bars usually consisting of approximately 90
percent precious metals that will be further
refined to almost pure metal. EXPLORATION:Prospecting, sampling,
mapping, diamond-drilling and other work involved
in searching for ore. GRADE:The amount of metal in each ton
of ore, expressed as troy ounces per ton or grams
per tonne for precious metals and as a percentage
for most other metals.
Cut-off grade:the minimum metal grade at which
an orebody can be economically mined (used in the
calculation of ore reserves).
Mill-head grade:metal content of mined ore going
into a mill for processing.
Recovered grade:actual metal content of ore
determined after processing.
Reserve grade:estimated metal content of an
ore-body, based on reserve calculations. HEAP LEACHING:A process whereby gold is
extracted by heaping broken ore on sloping
impermeable pads and continually applying to the
heaps a weak cyanide solution which dissolves the
contained gold. The gold-laden solution is then
collected for gold recovery. HEAP LEACH PAD:A large impermeable
foundation or pad used as a base for ore during
heap leaching. LIBOR:The London Inter-Bank Offered
Rate for deposits. MILL:A processing facility where ore is
finely ground and thereafter undergoes physical
or chemical treatment to extract the valuable
metals. MINERAL RESERVE:See page 125  Gold
Mineral Reserves and Mineral Resources. 72 BARRICK Annual Report 2004




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MANAGEMENTS DISCUSSION AND ANALYSIS MINERAL RESOURCE:See page 125  Gold
Mineral Reserves and Mineral Resources. MINING CLAIM:That portion of applicable
mineral lands that a party has staked or marked
out in accordance with applicable mining laws to
acquire the right to explore for and exploit the
minerals under the surface. MINING RATE:Tons of ore mined per day
or even specified time period. MINING SEQUENCE:Sequence by which ore
is extracted from the mine is based on the mine
plan. OPEN PIT:A mine where the minerals are
mined entirely from the surface. ORE:Rock, generally containing metallic
or non-metallic minerals, which can be mined and
processed at a profit. OREBODY:A sufficiently large amount of
ore that can be mined economically. OUNCES:Troy ounces of a fineness of
999.9 parts per 1,000 parts. RECLAMATION:The process by which lands
disturbed as a result of mining activity are
modified to support beneficial land use.
Reclamation activity may include the removal of
buildings, equipment, machinery and other
physical remnants of mining, closure of tailings
storage facilities, leach pads and other mine
features, and contouring, covering and
re-vegetation of waste rock and other disturbed
areas. RECLAMATION AND CLOSURE COSTS:The cost
of reclamation plus other costs, including
without limitation certain personnel costs,
insurance, property holding costs such as taxes,
rental and claim fees, and community programs
associated with closing an operating mine. RECOVERY RATE:A term used in process
metallurgy to indicate the proportion of valuable
material physically recovered in the processing
of ore. It is generally stated as a percentage of
the material recovered compared to the total
material originally present. REFINING:The final stage of metal
production in which impurities are removed from
the molten metal. ROASTING:The treatment of ore by heat
and air, or oxygen enriched air, in order to
remove sulphur, carbon, antimony or arsenic. STRIPPING:Removal of overburden or
waste rock overlying an ore body in preparation
for mining by open pit methods. Expressed as the
total number of tons mined or to be mined for
each ounce of gold. TAILINGS:The material that remains
after all economically and technically
recoverable precious
metals have been removed from the ore during
processing. 73 BARRICK Annual Report 2004