---

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UNITED STATES


SECURITIES AND EXCHANGE COMMISSION


Washington, D.C. 20549











FORM 10-Q











|x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934.
|- | ----------------------------------------------------------------------------------------




For the Quarterly Period Ended June 30, 2001





| ̈ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934.
|- | -----------------------------------------------------------------------------------------




For the transition period from  to





Commission File Number 1-8736











HOMESTAKE MINING COMPANY





A Delaware Corporation


IRS Employer Identification No. 94-2934609





1600 Riviera Avenue, Suite 200


Walnut Creek, California 94596-3568


Telephone: (925) 817-1300


http://www.homestake.com











Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13
or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. 
   Yes x No  ̈





The number of shares of common stock outstanding as of July 31, 2001 was 263,370,076. *





|* | Includes 3,125,850 Homestake Canada Inc. exchangeable shares that may be exchanged at any time for Homestake common stock on
a one-for-one basis.
|- | -------------------------------------------------------------------------------------------------------------------------------------------------




---

---




Homestake Mining Company and Subsidiaries





FORM 10-Q





For the Quarter Ended June 30, 2001





INDEX





PART IFINANCIAL INFORMATION





|Item 1. |  | Financial Statements                                                                                                       
|------- |  | ---------------------------------------------------------------------------------------------------------------------------
|       
|       
|       
|        |  | a)    Condensed Statements of Consolidated Operations For the Three and Six Months Ended

          
June 30, 2001 and 2000
|       
|       
|       
|        |  | b)    
Condensed Consolidated Balance Sheets As of June 30, 2001 and December 31, 2000                                     
|       
|       
|       
|        |  | c)    
Condensed Statements of Consolidated Cash Flows For the Six Months Ended June 30, 2001
and 2000                     
|       
|       
|       
|        |  | d)    
Notes to Condensed Consolidated Financial Statements                                                                
|       
|       
|       
|Item 2. |  | Managements Discussion and Analysis of Financial Condition and Results of Operations                                      
|       
|       

|
|

PART IIOTHER INFORMATION


|
|







|       
|-------
|Item 1.
|       
|       
|       
|Item 5.
|       
|       
|       
|Item 6.
|       
|       
|       
|Item 7.




PART IFINANCIAL INFORMATION





Item 1.     Financial Statements





A.  Condensed Statements of Consolidated Operations (unaudited)





|                                                 
|-------------------------------------------------
|
|
|
|Revenues                                         
|Gold and ore sales                               
|Interest income                                  
|Other income (loss) (note 4)                     
|                                                 
|                                                 
|                                                 
|Costs and Expenses                               
|Production costs                                 
|Depreciation, depletion and amortization         
|Administrative and general expense               
|Exploration expense                              
|Interest expense                                 
|Other expense                                    
|                                                 
|                                                 
|                                                 
|Income (Loss) Before Taxes and Minority Interests
|Income taxes                                     
|Minority interests                               
|                                                 
|Income (Loss) From Continuing Operations         
|Loss From Discontinued Operations                
|Gain on DisposalDiscontinued Operations         
|                                                 
|Net Income (Loss)                                
|                                                 
|Per Share AmountsBasic and Diluted:             
|Income (loss) from continuing operations         
|Loss from discontinued operations                
|Gain on disposaldiscontinued operations         
|                                                 
|Net Income (Loss) Per Share                      
|                                                 
|Average Shares Used in the Computationbasic     
|                                                 
|Average Shares Used in the Computationdiluted(1)
|                                                 
|Dividends Paid Per Common Share                  
|                                                 




|(1) | Options to purchase common shares are not included in the Year 2000 diluted loss per share calculations as their effect is
anti-dilutive.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------




The accompanying notes are an integral part of these condensed consolidated financial statements.





B.  Condensed Consolidated Balance Sheets


|                                                                                              
|----------------------------------------------------------------------------------------------
|
|
|
|ASSETS                                                                                        
|Current Assets                                                                                
|Cash and equivalents                                                                          
|Short-term investments                                                                        
|Receivables                                                                                   
|Inventories (note 7)                                                                          
|Deferred income taxes                                                                         
|Other                                                                                         
|                                                                                              
|Total current assets                                                                          
|                                                                                              
|Property, Plant and Equipment, net                                                            
|Investments and Other Assets                                                                  
|                                                                                              
|Total Assets                                                                                  
|                                                                                              
|LIABILITIES AND SHAREHOLDERS EQUITY                                                          
|Current Liabilities                                                                           
|Accounts payable                                                                              
|Accrued liabilities                                                                           
|Income and other taxes payable                                                                
|Current portion of deferred gain on close-out of forward sales contracts

            (note 9)
|Current portion of long-term debt and capital leases                                          
|                                                                                              
|Total current liabilities                                                                     
|                                                                                              
|Long-term Liabilities                                                                         
|Long-term debt and capital leases (note 8)                                                    
|Other long-term obligations                                                                   
|                                                                                              
|Total long-term liabilities                                                                   
|                                                                                              
|Deferred Gain on Close-out of Forward Sales Contracts(note 9)                                 
|Deferred Income Taxes                                                                         
|Minority Interests in Consolidated Subsidiaries                                               
|Shareholders Equity                                                                          
|Capital stock, $1 par value per preferred and common share:                                   
|AuthorizedPreferred: 10,000 shares; no shares
outstanding                                    
|Common: 450,000 shares                                                                       
|OutstandingHCI exchangeable shares:
20013,198; 20003,375                                   
|Common: 2001260,156; 2000259,846                                                           
|Additional paid-in capital                                                                    
|Deficit                                                                                       
|Accumulated other comprehensive loss                                                          
|                                                                                              
|Total shareholders equity                                                                    
|                                                                                              
|Total Liabilities and Shareholders Equity                                                    
|                                                                                              




The accompanying notes are an integral part of these condensed consolidated financial statements.





C.  Condensed Statements of Consolidated Cash Flows (unaudited)





|                                                                                   |  | Six Months Ended

June 30,
|---------------------------------------------------------------------------------- |  | --------------------------
|
|
|Operating Activities                                                               |  |                           
|Net income (loss)                                                                  |  | $8,073                    
|Reconciliation to net cash provided by continuing operations:                      |  |                           
|Depreciation, depletion
and amortization                                           |  | 73,825                    
|Gains on investment sales
and asset disposals                                      |  | (4,755                    
|Gain on sale of
discontinued operations                                            |  | (4,312                    
|Loss from discontinued
operations                                                  |  |                          
|Deferred taxes, minority
interests and other                                       |  | (1,190                    
|Effect of changes in
operating working capital items                               |  | (8,809                    
|                                                                                   |  |                           
|Net cash provided by continuing operations                                         |  | 62,832                    
|                                                                                   |  |                           
|Investment Activities                                                              |  |                           
|Decrease in investments                                                            |  | 4,933                     
|Additions to property, plant and equipment                                         |  | (48,874                   
|Proceeds from sale-leaseback of equipment                                          |  | 3,710                     
|Payment upon disposition of business                                               |  | (607                      
|Proceeds from investment and asset sales                                           |  | 3,573                     
|Decrease (increase) in restricted cash                                             |  | (3,086                    
|                                                                                   |  |                           
|Net cash provided by (used in) investment activities                               |  | (40,351                   
|                                                                                   |  |                           
|Financing Activities                                                               |  |                           
|Borrowings                                                                         |  | 4,498                     
|Debt repayments                                                                    |  | (5,840                    
|                                                                                   |  |                           
|Net cash used in financing activities                                              |  | (1,342                    
|                                                                                   |  |                           
|Effect of Exchange Rate Changes on Cash and Equivalents                            |  | 1,357                     
|                                                                                   |  |                           
|Net Cash Used in Discontinued Operations                                           |  | (3,849                    
|                                                                                   |  |                           
|Net Increase in Cash and Equivalents                                               |  | 18,647                    
|                                                                                  
|                                                                                  
|                                                                                  
|Cash and Equivalents, January 1                                                    |  | 193,422                   
|                                                                                   |  |                           
|Cash and Equivalents, June 30                                                      |  | $212,069                  
|                                                                                   |  |                           
|Supplemental Information Included in Cash Flows Provided by Continuing Operations: |  |                           
|Exchange loss on intercompany debt                                                 |  | $    6,245                
|                                                                                   |  |                           




The accompanying notes are an integral part of these condensed consolidated financial statements.





Notes to Condensed Consolidated Financial Statements (unaudited)





| | 1.    General Information
| | -------------------------




The condensed consolidated financial statements include Homestake Mining Company and its majority owned
subsidiaries, and their undivided interests in joint ventures (collectively, Homestake or the Company) after elimination of intercompany amounts.





The information furnished in this report reflects all normal recurring adjustments which, in the opinion of
management, are necessary for a fair statement of the results for the interim periods. Results of operations for interim periods are not necessarily indicative of results for the full year. These unaudited condensed consolidated financial statements
should be read in conjunction with the financial statements and notes thereto, which include information as to significant accounting policies, in the Companys Annual Report, which is incorporated by reference in the Form 10-K for the year
ended December 31, 2000.





All amounts are in United States dollars unless otherwise indicated.





| | 2.    Merger
| | ------------




On June 25, 2001, the Company and Barrick Gold Corporation (Barrick), a publicly traded Canadian
gold producer, announced an intention to merge. The transaction is subject to regulatory and Homestake shareholder approval. On July 20, 2001, Homestake and Barrick filed with the Securities and Exchange Commission the Homestake preliminary proxy
statement/Barrick F-4 registration statement with respect to the proposed merger transaction, whereby Barrick will issue 0.53 Barrick shares for each share of Homestake Common Stock and Homestake will become a wholly owned subsidiary of Barrick. The
merger will be accounted for as a pooling of interest subject to regulatory approval.





| | 3.    Property Acquisition
| | --------------------------




On May 30, 2001, the Company reached an agreement with North Gold (WA) Ltd., a subsidiary of Rio Tinto
Limited, to acquire a 100% interest in the Cowal Gold Project located in central New South Wales, Australia, approximately 250 miles west of Sydney. Under the terms of the agreement, Homestake paid a deposit of $375,000 (A$724,000) in June 2001, an
additional $9.6 million (A$18.8 million) in July 2001, and will pay a further $2.7 million (A$5.2 million) on the fourth anniversary of the agreement. In addition, Homestake will make a payment of $15.0 million (A$29.3 million) upon reaching a
decision to develop a mine. Homestake is in the process of mobilizing drilling equipment to commence its own evaluation of the Project.





| | 4.    Other Income (Loss)
| | -------------------------




|                                                         |  | Three Months Ended

June 30, |   | Six Months Ended

June 30,
|-------------------------------------------------------- |  | ---------------------------- | - | --------------------------
|
|
|Foreign currency contract gains (losses)                 |  | $    314                     |   |                           
|Foreign currency exchange gains (losses) on intercompany |  |                              |   |                           
|loans and other                                          |  | 6,460                        |   |                           
|Oil sales                                                |  | 2                            |   |                           
|Gains on investments and asset disposals                 |  | 1,391                        |   |                           
|Royalty income                                           |  | 401                          |   |                           
|Pension plan curtailment and settlement gains            |  | 1,689                        |   |                           
|Other                                                    |  | (4                           | ) |                           
|                                                         |  |                              |   |                           
|                                                         |  | $10,253                      |   |                           
|                                                         |  |                              |   |                           




In the 2001 first quarter, Homestake recorded a non-recurring gain of $2.4 million related to the sale of
mining information in conjunction with an agreement to sublease its Just-in-Case property in Western Australia for a ten-year period. Homestake received a payment of $2.4 million (A$5.0 million) for the sale of the mining information, and subject to
receiving government approvals, will receive lease payments of $3.6 million (A$7.5 million) and $6.0 million (A$12.5 million) no later than December 31, 2006 and December 31, 2008, respectively. Accordingly, lease revenue of $9.6 million (A$20.0
million) will be accrued over the ten-year lease term. Homestake will also receive a 3.5% net smelter return royalty (NSR) on all production from the Just-in-Case sublease, and in addition, is entitled to a payment of up to $6.3 million (A$13.0
million) in the event that production from the sublease does not reach a specified cumulative level by contracted dates. This payment is creditable against the NSR.





| | 5.    Disposition of Main Pass 299
| | ----------------------------------




On May 9, 2001, the Company entered into a purchase and sale agreement with Freeport-McMoRan Sulfur LLC
(Freeport), the operator and 83.3% owner of Main Pass 299, under which the Companys 16.7% undivided joint-venture interest in the Main Pass 299 sulfur and oil and gas assets and liabilities have been sold to Freeport. Under the
agreement, the Company made a payment of $2.6 million to Freeport and Freeport assumed and agreed to discharge all of the Companys Main Pass 299 sulfur and oil and gas reclamation obligations. For the quarter ended June 30, 2001, the Company
recognized a gain of $1.3 million in continuing operations related to its disposition of its interest in the Main Pass 299 oil and gas operations and a gain of $4.3 million in discontinued operations related to the disposition of its interest in the
Main Pass 299 sulfur operations. The sulfur operations were recorded as a discontinued operation in the second quarter of 2000, at which time the Company recorded a provision of $3.5 million for estimated operating losses during the closure period
and $8.5 million for mine reclamation and closure costs. The $4.3 million gain on disposal of the Main Pass 299 sulfur operations primarily arose as a result of the discharge of these environmental liabilities for an amount less than the original
estimate.





| | 6.    Comprehensive Income (Loss)
| | ---------------------------------




|                                                                  |  | Three Months Ended

June 30, |   | Six Months Ended

June 30,
|----------------------------------------------------------------- |  | ---------------------------- | - | --------------------------
|
|
|Net Income (Loss)                                                 |  | $20,067                      |   |                           
|                                                                  |  |                              |   |                           
|Other Comprehensive Income (Loss):                               
|Changes in unrealized gains (losses) on securities:              
|Unrealized holding gains (losses) arising during the period       |  | 697                          |   |                           
|Less: Reclassification adjustments for gains (losses) included in |  |                              |   |                           
|net loss                                                          |  | 421                          |   |                           
|Income taxes                                                      |  |                             |   |                           
|                                                                  |  |                              |   |                           
|                                                                  |  | 276                          |   |                           
|                                                                  |  |                              |   |                           
|Foreign currency translation adjustments (before and after tax)   |  | 15,819                       |   |                           
|                                                                  |  |                              |   |                           
|Hedged Production:                                               
|SFAS 133 transition adjustment (note 9)                           |  |                             |   |                           
|Reclassification adjustment for deferred gains on close-out of    |  |                              |   |                           
|forward sales contracts included in net loss                      |  | (1,610                       | ) |                           
|Income taxes                                                      |  | (254                         | ) |                           
|                                                                  |  |                              |   |                           
|                                                                  |  | (1,864                       | ) |                           
|                                                                  |  |                              |   |                           
|Other Comprehensive Income (Loss)                                 |  | 14,231                       |   |                           
|                                                                  |  |                              |   |                           
|Comprehensive Income (Loss)                                       |  | $34,298                      |   |                           
|                                                                  |  |                              |   |                           










|
|



|                                        
|----------------------------------------
|
|
|
|
|Finished products                       
|Ore and in process                      
|Supplies                                
|                                        
|                                        
|                                        
|                                        
|8.    Long-term Debt and Capital Leases 
|                                        
|                                        
|
|
|Cross-border credit facility (due 2003) 
|Pollution control bonds:                
|Lawrence County, South Dakota (due 2032)
|State of California (due 2004)          
|Capital leases                          
|                                        
|                                        
|Less: current portion of capital leases 
|                                        
|                                        
|                                        
|9.Derivative Financial Instruments      




| | 
| | 




The Company uses derivative financial instruments as part of an overall risk-management strategy. These
instruments are used as a means of hedging exposure to precious metals prices and foreign currency exchange rates. The Company does not hold or issue derivative financial instruments for trading purposes.





Effective January 1, 2001, the Company adopted Statement of Financial Accounting Standards No. 133,
Accounting for Derivative Instruments and Hedging Activities (SFAS 133), as amended by SFAS 138, Accounting for Certain Derivative Instruments and Certain Hedging Activities (SFAS 138). The adoption of
SFAS 133, as amended by SFAS 138, had no impact on the Companys results for the period. However, gains of $35.1 million relating to gold and silver hedging contracts previously closed out have been reclassified on adoption from deferred gains
to accumulated other comprehensive loss.





SFAS 133 requires that derivatives be recognized as assets or liabilities and be measured at fair value.
Gains or losses resulting from changes in the fair value of derivatives in each period are to be accounted for either in current earnings or other comprehensive income depending on the use of the derivatives and whether they are designated as, and
qualify for, hedge accounting.





The Company uses combinations of put and call options to hedge its exposure to foreign currency exchange
rates. In accordance with SFAS 133, the Company has elected not to designate its foreign currency options as hedges and, accordingly, gains and losses resulting from changes in the fair value of these contracts will continue to be recorded in
earnings each period.





At January 1, 2001 and June 30, 2001, the Companys hedging contracts used to reduce exposure to
precious metal prices, consisted entirely of forward sales contracts. The Company settles these contracts through the physical delivery of production from its operations at the contract settlement dates. Therefore, the forward sales contracts meet
the criteria for the normal purchases and sales exemption of SFAS 133, as amended by SFAS 138. Accordingly, recognition of the precious metals forward sales contracts will continue to be deferred until settlement.





| | Foreign Currency Contracts
| | --------------------------




Under the Companys foreign currency protection program, the Company has entered into a series of
foreign currency option contracts to minimize the effects of a strengthening of either the Canadian or Australian currencies in relation to the United States dollar. In July 2000, the Company discontinued its foreign currency protection program.
Contracts outstanding at June 30, 2001 are expected to remain in place until maturity.





At June 30, 2001, the Company had foreign exchange currency option contracts outstanding as
follows:





|                                           |  | Expected Maturity or

Transaction Date
|------------------------------------------ |  | --------------------------------------
|
|
|Canadian $ / US $ option contracts:       
|US $ covered                               |  | $21.1                                 
|Written puts, average exchange rate (1)    |  | 0.64                                  
|US $ covered                               |  | $25.1                                 
|Purchased calls, average exchange rate (2) |  | 0.68                                  
|US $ covered                               |  | $  3.0                                
|Purchased puts, average exchange rate (3)  |  | 0.65                                  
|                                          
|                                          
|                                          
|Australian $ / US $ option contracts:     
|US $ covered                               |  | $39.0                                 
|Written puts, average exchange rate (1)    |  | 0.67                                  
|US $ covered                               |  | $39.0                                 
|Purchased calls, average exchange rate (2) |  | 0.67                                  
|US $ covered                               |  | $37.0                                 
|Purchased puts, average exchange rate (3)  |  | 0.65                                  




|(1) | Assuming exercise by the counterparty at the expiration date, the Company would exchange U.S. dollars for Canadian or
Australian dollars at the put exchange rate. The counterparty would be expected to exercise the option if the spot exchange rate was below the put exchange rate.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------




|(2) | Assuming exercise by the Company at the expiration date, the Company would exchange U.S. dollars for Canadian or Australian
dollars at the call exchange rate. The Company would exercise the option if the spot exchange rate was above the call exchange rate.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------




|(3) | Assuming exercise by the Company at the expiration date, the Company would exchange Canadian or Australian dollars for U.S.
dollars at the put exchange rate. The Company would exercise the option if the spot exchange rate was below the put exchange rate.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------




| | Precious Metal Contracts
| | ------------------------




Homestakes hedging policy provides for the use of forward sales contracts to hedge up to 30% of each
of the following ten years expected annual gold production, and up to 30% of each of the following five years expected annual silver production, at prices in excess of certain targeted prices. The policy also provides for the use of
combinations of put and call option contracts to establish minimum floor prices.





At June 30, 2001, the unamortized portion of the pretax gain resulting from the early settlement of certain
gold forward sales and option contracts prior to the adoption of SFAS 133, maturing in the years 2001, 2002 and 2003 was $30.1 million which has been recorded in accumulated other comprehensive loss and will be reclassified into income as the
originally designated production is sold. Of this amount, $12.4 million will be recognized in income in the twelve-month period to June 30, 2002. In March 2000, the Company closed out and financially settled its remaining US dollar denominated
silver forward sales contracts covering 3.6 million
ounces maturing in 2000 and 2001. At June 30, 2001, the unamortized pretax portion of this gain of $414,000, realized on this transaction has been recorded in accumulated other comprehensive loss and will be reclassified in income as the originally
designated production is sold.





At June 30, 2001, the Company had gold forward sales contracts outstanding as follows:





|                                          |  | Expected Maturity or Transaction Date
|----------------------------------------- |  | -------------------------------------
|
|US $ dominated contracts:                 |  |                                      
|Forward sales contracts:                  |  |                                      
|Ounces                                    |  | 10,000                               
|Average price (US$ per oz.)               |  | $400                                 
|                                         
|                                         
|                                         
|Australian $ dominated

contracts:(1)     |  |                                      
|Forward sales contracts:                  |  |                                      
|Ounces                                    |  | 222,000                              
|Average price (A$ per oz.)                |  | $511                                 
|Average price (US$ per

          oz.)(1) |  | $262                                 




|(1) | Expressed in U.S. dollars at June 30, 2001 exchange rate of A$ = US$ 0.5115
|--- | ---------------------------------------------------------------------------




| | 10.Segment Information
| | ----------------------




The Company is primarily engaged in gold mining and related activities. Gold operations are managed and
internally reported based on the following geographic areas: North America (United States and Canada), Australia and South America. The Company also has other foreign exploration activities and an oil recovery operation in the Gulf of Mexico
(disposed of in May 2001), which are included in Corporate and All Other. Within each geographic segment, operations are managed on a mine-by-mine basis. However, because each mine has similar economic characteristics, the Company has
geographically aggregated its operations.





Segment information for the three and six months ended June 30, 2001 and 2000 are as follows:





|                                    |  | North

America |   | Australia |           | South

America |  | Corporate

and All

Other |   | Reconciling

Items(a) |        | Total
|----------------------------------- |  | -------------- | - | --------- | --------- | -------------- |  | ------------------------- | - | --------------------- | ------ | -----
|
|For the three months ended June 30: |  |                |   |           |           |                |  |                           |   |                       |        |      
|2001                                |  |                |   |           |           |                |  |                           |   |                       |        |      
|Gold and ore sales                  |  | $119,284       |   |           | $  67,373 |                |  | $1,759                    |   |                       | $     |      
|Other revenues                      |  | 2,043          |   |           | 1,923     |                |  | (992                      | ) |                       | 12,495 |      
|Total revenues and other income     |  | 121,327        |   |           | 69,296    |                |  | 767                       |   |                       | 12,495 |      
|Operating earnings (loss)(b)        |  | 14,883         |   |           | 13,022    |                |  | (1,227                    | ) |                       | 12,520 |      
|                                   
|                                   
|                                   
|2000                                |  |                |   |           |           |                |  |                           |   |                       |        |      
|Gold and ore sales                  |  | $101,969       |   |           | $  64,441 |                |  | $3,498                    |   |                       | $     |      
|Other revenues                      |  | (1,199         | ) |           | (1,836    | )              |  | 88                        |   |                       | 6,744  |      
|Total revenues and other income     |  | 100,770        |   |           | 62,605    |                |  | 3,586                     |   |                       | 6,744  |      
|Operating earnings(b)               |  | 11,993         |   |           | 8,010     |                |  | 81                        |   |                       | 6,359  |      
|                                   
|                                   
|                                   
|For the six months ended June 30:   |  |                |   |           |           |                |  |                           |   |                       |        |      
|2001                                |  |                |   |           |           |                |  |                           |   |                       |        |      
|Gold and ore sales                  |  | $225,048       |   |           | $124,790  |                |  | $4,034                    |   |                       | $     |      
|Other revenues                      |  | 2,837          |   |           | 3,571     |                |  | (912                      | ) |                       | 6,797  |      
|Total revenues and other income     |  | 227,885        |   |           | 128,361   |                |  | 3,122                     |   |                       | 6,797  |      
|Operating earnings (loss)(b)        |  | 21,094         |   |           | 20,560    |                |  | (1,852                    | ) |                       | 6,572  |      
|                                   
|                                   
|                                   
|2000                                |  |                |   |           |           |                |  |                           |   |                       |        |      
|Gold and ore sales                  |  | $202,883       |   |           | $125,590  |                |  | $6,960                    |   |                       | $     |      
|Other revenues                      |  | (981           | ) |           | (8,759    | )              |  | 428                       |   |                       | 8,385  |      
|Total revenues and other income     |  | 201,902        |   |           | 116,831   |                |  | 7,388                     |   |                       | 8,385  |      
|Operating earnings(b)               |  | 27,396         |   |           | 7,434     |                |  | 511                       |   |                       | 7,872  |      




|(a) | Primarily intercompany financing.
|--- | ---------------------------------

|(b) | Operating earnings representing total revenues and other income less production costs and depreciation, depletion and
amortization.
|--- | -----------------------------------------------------------------------------------------------------------------------------------




| | 11.Contingencies
| | ----------------




Environmental Contingencies





The Comprehensive Environmental Response, Compensation and Liability Act of 1980 imposes heavy liabilities
on any person who discharges hazardous substances. The Environmental Protection Agency publishes a National Priorities List (NPL) of known or threatened releases of such substances.





Homestakes former uranium millsite near Grants, New Mexico is listed on the NPL. Pursuant to the
Energy Policy Act of 1992, the United States Department of Energy (DOE) is responsible for 51.2% of past and future costs of reclaiming the Grants site in accordance with Nuclear Regulatory Commission license requirements. At June 30,
2001, Homestake had received $35.5 million from the DOE and had a receivable of $1.5 million for the DOEs share of reclamation expenditures made by Homestake through June 30, 2001.





In 1983, the state of New Mexico filed claims against Homestake for natural resource damages resulting from
the Grants site. To date, the state of New Mexico has taken no action to enforce its claims.





Other Contingencies





In addition to the above, the Company is party to legal actions and administrative proceedings and is
subject to claims arising in the ordinary course of business. The Company believes the disposition of these matters will not have a material adverse effect on its financial position or results of operations.





| | 12.    Homestake Canada Inc. (HCI)
| | ------------------------------------




In connection with the 1998 acquisition of the minority interests in Prime Resources Group Inc., HCI issued
11.1 million HCI exchangeable shares. Each HCI exchangeable share is exchangeable for one Homestake common share at any time at the option of the holder and has the same voting, dividend (payable in Canadian dollars), and other rights as one
Homestake common share. A share of special voting stock, which was issued to the transfer agent in trust for the holders of the HCI exchangeable shares, provides the mechanism for holders of the HCI exchangeable shares to receive their voting
rights.





Homestake, through a wholly owned subsidiary, owns all the common shares outstanding of HCI. At June 30,
2001, 3.2 million of the HCI exchangeable shares outstanding were held by the public.





Following the 1999 business combination with Argentina Gold, Homestakes investment in Argentina Gold
was transferred to HCI in exchange for a Canadian dollar-denominated intercompany note payable by HCI to its parent company of approximately C$282.0 million (US$191.0 million). In accordance with United States generally accepted accounting
principles, the assets, liabilities and shareholders equity of Argentina Gold have been recorded in HCIs financial statements at their historical cost basis. The difference between the historical cost basis of Argentina Gold
shareholders equity and its fair value at the date of transfer has been recorded as a reduction to HCIs shareholders equity.





Summarized consolidated financial information for HCI is as follows:





|                                                |  | June 30,

2001 |   | December 31,

2000
|----------------------------------------------- |  | -------------- | - | ------------------
|
|Current assets                                  |  | $    40,667    |   |                   
|Noncurrent assets                               |  | 423,195        |   |                   
|                                                |  |                |   |                   
|Total assets                                    |  | $  463,862     |   |                   
|                                                |  |                |   |                   
|Current portion of notes payable to the Company |  | $  129,604     |   |                   
|Other current liabilities                       |  | 18,406         |   |                   
|Long-term debt                                  |  | 147,423        |   |                   
|Notes payable to the Company                    |  | 190,872        |   |                   
|Other long-term liabilities                     |  | 15,148         |   |                   
|Deferred income taxes                           |  | 150,382        |   |                   
|Shareholders equity                            |  | (187,973       | ) |                   
|                                                |  |                |   |                   
|Total liabilities and shareholders equity      |  | $  463,862     |   |                   
|                                                |  |                |   |                   




|                                |  | Three Months Ended

June 30, |   | Six Months Ended

June 30,
|------------------------------- |  | ---------------------------- | - | --------------------------
|
|Total revenues and other income |  | $54,545                      |   |                           
|Less: Costs and expenses        |  | 61,897                       |   |                           
|                                |  |                              |   |                           
|Income (loss) before taxes      |  | $(7,352                      | ) |                           
|                                |  |                              |   |                           
|Net loss                        |  | $(4,924                      | ) |                           
|                                |  |                              |   |                           




| | 13.    Write-Downs and Other Unusual Charges
| | --------------------------------------------




On September 11, 2000, the Company announced a restructuring of the operations of the Homestake mine in
South Dakota. The mine is expected to complete operations by December 2001. In connection with the restructuring, the Company recorded a $23.0 million provision for employee termination benefits and other exit costs in the third quarter of 2000. By
no later than December 2001, the workforce will be reduced from the
current level of 366 employees, to approximately 40 employees who will oversee the reclamation and other closure procedures. The classifications of the affected employees include mining engineers, geologists, administrative employees and mine
workers. The following table presents a roll-forward of the liability accrued in connection with the Homestake mine restructuring plan:





|                                       |  | (in thousands)
|-------------------------------------- |  | --------------
|Liability balance at December 31, 2000 |  | $22,427       
|Severance payments                     |  | (798          
|                                       |  |               
|Liability balance at June 30, 2001     |  | $21,629       
|                                       |  |               




Pension and other post-retirement curtailment gains of $1.7 million and $3.4 million were recognized during
the three and six months ended June 30, 2001, respectively, reflecting the termination of employees and the settlement of obligation.








Item 2.    Managements Discussion and Analysis of Financial Condition and Results of Operations





(Unless specifically stated otherwise, the following information relates to amounts included in the
condensed consolidated financial statements without reduction for minority interests. Homestake reports per ounce production costs in accordance with the Gold Institute Production Cost Standard.)





This discussion should be read in conjunction with the Managements Discussion and Analysis included in
Homestake Mining Companys (Homestake or the Company) Annual Report which is incorporated by reference in the Form 10-K for the year ended December 31, 2000.





On June 25, 2001, the Company and Barrick Gold Corporation (Barrick), a publicly traded Canadian
gold producer, announced an intention to merge. The transaction is subject to regulatory and Homestake shareholder approval. On July 20, 2001, Homestake and Barrick filed with the Securities and Exchange Commission the Homestake preliminary proxy
statement/Barrick F-4 registration statement with respect to the proposed merger transaction, whereby Barrick will issue 0.53 Barrick shares for each share of Homestake Common Stock and Homestake will become a wholly owned subsidiary of
Barrick.





On May 30, 2001, the Company reached an agreement with North Gold (WA) Ltd., a subsidiary of Rio Tinto
Limited, to acquire a 100% interest in the Cowal Gold Project located in central New South Wales, Australia, approximately 250 miles west of Sydney. Under the terms of the agreement, Homestake paid a deposit of $375,000 (A$724,000) in June 2001, an
additional $9.6 million (A$18.8 million) in July 2001, and will pay a further $2.7 million (A$5.2 million) on the fourth anniversary of the agreement. In addition, Homestake will make a payment of $15.0 million (A$29.3 million) upon reaching a
decision to develop a mine. Homestake is in the process of mobilizing drilling equipment to commence its own evaluation of the project.





RESULTS OF OPERATIONS





Summary





Homestake recorded net income of $20.1 million ($0.08 per share) and $8.1 million ($0.03 per share) in the
quarter and six months ended June 30, 2001, compared with the losses of $17.2 million ($0.07 per share) and $33.5 million ($0.13 per share) in the respective 2000 periods.





The second quarter and year-to-date 2001 results include after-tax foreign currency gains of $6.3 million
($0.02 per share) and losses of $7.8 million ($0.03 per share), respectively. During the second quarter of 2001, the Australian and Canadian currencies strengthened in relation to the U.S. dollar, however, this strengthening was not sufficient to
allow the recovery of all the losses recorded during the first quarter of 2001, in which both of these currencies weakened significantly in relation to the U.S. dollar. The majority of the foreign currency losses in 2001 relate to intercompany
advances established between the U.S. parent and its Australian and Canadian subsidiaries to finance corporate acquisitions and capital development projects. Second quarter and year-to-date results in 2000 include after-tax foreign currency exchange
losses of $6.3 million ($0.02 per share) and $19.3 million ($0.07 per share), respectively.





The following table outlines the closing U.S. dollar exchange rate for Canadian and Australian dollars on
dates indicated:





|                  |  | Australian Dollar |  | Canadian Dollar
|----------------- |  | ----------------- |  | ---------------
|December 31, 1999 |  | 0.6539            |  | 0.6929         
|March 31, 2000    |  | 0.6132            |  | 0.6880         
|June 30, 2000     |  | 0.5967            |  | 0.6760         
|December 31, 2000 |  | 0.5588            |  | 0.6666         
|March 31, 2001    |  | 0.4858            |  | 0.6340         
|June 30, 2001     |  | 0.5115            |  | 0.6589         




Excluding the effect of the foreign currency exchange gains and losses, the Company recorded net income of
$13.8 million ($0.05 per share) and $15.9 million ($0.06 per share) for the quarter and six months ended June 30, 2001, respectively, compared to net losses of $10.9 million ($0.04 per share) and $14.2 million ($0.05 per share) for the corresponding
periods in 2000. The improvement in the current years results primarily reflects higher sales volumes, lower exploration spending, an $8 per ounce decrease in production costs, a gain of $2.4 million on the sale of mining information with
respect to the Just-in-Case property, and gains of $4.3 million and $1.3 million on the sale of the discontinued sulfur operations and oil and gas assets in the Gulf of Mexico, respectively, partially offset by a $21 per ounce decline in the
realized gold price from the first half of the prior year.





On July 20, 2000, Freeport-McMoRan Sulphur LLC, the operator and 83.3% owner of the Main Pass joint venture,
located in the Gulf of Mexico, announced a phased closure of the sulfur operations. Homestakes 16.7% interest in the joint venture was reflected as a discontinued operation at June 30, 2000. The 2000 second quarter loss included a
non-recurring charge of $12.0 million, reflecting Homestakes $8.5 million share of unaccrued reclamation and closure costs and a $3.5 million allowance for project operating losses during the shutdown period.





On May 9, 2001, the Company entered into a purchase and sale agreement with Freeport-McMoRan Sulfur LLC
(Freeport), the operator and 83.3% owner of Main Pass 299, under which the Companys 16.7% undivided joint-venture interest in the Main Pass 299 sulfur and oil and gas assets and liabilities have been sold to Freeport. Under the
agreement, the Company made a payment of $2.6 million to Freeport and Freeport assumed and agreed to discharge all of the Companys Main Pass 299 sulfur and oil and gas reclamation obligations. For the quarter ended June 30, 2001, the Company
recognized a gain of $4.3 million in discontinued operations related to the disposition of its interest in the Main Pass 299 sulfur operations and a gain of $1.3 million in continuing operations related to the disposition of its interest in the Main
Pass 299 oil and gas operations.





Gold Operations





Revenues from gold and ore sales totaled $188.4 million and $353.9 million in the three and six months ended
June 30, 2001, respectively, compared to $169.9 million and $335.4 million in the respective periods in 2000. Higher sales volumes in 2001 were offset by lower realized gold prices as reflected in the following table:





|                                 |  | Three Months Ended

June 30, |  | Six Months Ended

June 30,
|-------------------------------- |  | ---------------------------- |  | --------------------------
|
|Ounces sold                      |  | 666,400                      |  | 557,000                   
|Average realized price per ounce |  | $270                         |  | $289                      




The following table details Homestakes gold production by location:





|                       |  | Production

(ounces in thousands)
|---------------------- |  | ---------------------------------
|
|
|Australia              |  |                                  
|Kalgoorlie (50)        |  | 109.0                            
|Yilgarn:               |  |                                  
|Plutonic (100)         |  | 94.5                             
|Darlot (100)           |  | 31.8                             
|Lawlers (100)          |  | 21.6                             
|                       |  |                                  
|Total Australia        |  | 256.9                            
|Canada                 |  |                                  
|Eskay Creek (100)      |  | 82.4                             
|Hemlo (50)             |  | 75.8                             
|                       |  |                                  
|Total Canada           |  | 158.2                            
|United States          |  |                                  
|Round Mountain (50)(a) |  | 97.7                             
|Ruby Hill (100)        |  | 34.4                             
|McLaughlin (100)       |  | 28.6                             
|Marigold (33)          |  | 8.9                              
|Homestake (100)        |  | 55.7                             
|                       |  |                                  
|Total United
States    |  | 225.3                            
|Chile                  |  |                                  
|Agua de la Falda (51)  |  | 3.4                              
|                       |  |                                  
|Homestake Total        |  | 643.8                            
|                       |  |                                  




|(a) | Homestake acquired an additional 25% interest in the Round Mountain mine effective July 1, 2000 increasing its ownership from
25% to 50%.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------




The following table details Homestakes total cash costs per ounce by location:





|                      |  | Total Cash Costs
|--------------------- |  | ----------------
|
|
|
|Australia             |  |                 
|Kalgoorlie (50)       |  | $175            
|Yilgarn:              |  |                 
|Plutonic (100)        |  | 147             
|Darlot (100)          |  | 165             
|Lawlers (100)         |  | 221             
|                      |  |                 
|Total Australia       |  | 167             
|Canada                |  |                 
|Eskay Creek (100)(a)  |  | 48              
|Hemlo (50)            |  | 201             
|                      |  |                 
|Total Canada          |  | 122             
|United States         |  |                 
|Round Mountain (50)   |  | 172             
|Ruby Hill (100)       |  | 95              
|McLaughlin (100)      |  | 220             
|Marigold (33)         |  | 146             
|Homestake (100)       |  | 182             
|                      |  |                 
|Total United
States   |  | 168             
|Chile                 |  |                 
|Agua de la Falda (51) |  | 258             
|                      |  |                 
|Homestake Total       |  | $157            
|                      |  |                 




|(a) | Eskay Creeks costs per ounce were calculated on a by-product basis. Included as a credit against costs in the 2001
second quarter and year-to-date were revenues from the sale of 3.9 million and 7.5 million ounces of silver, respectively, at average prices of $4.32 and $4.46 per ounce respectively. Included as a credit against costs in the 2000 second quarter and
year-to-date were revenues from the sale of 3.3 million and 7.1 million ounces of silver at average prices of $5.12 and $5.11 per ounce, respectively. If Eskay Creek silver production had been accounted for as a co-product, whereby costs would have
been $166 and $185 per ounce, in the 2001 and 2000 second quarters, respectively, and $173 and $189 for the year-to-date periods in 2001 and 2000, respectively. For comparison purposes, costs per ounce include estimated third-party costs incurred by
smelter owners and others to produce marketable gold and silver.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The following table details Homestakes total cash costs per ounce by location:





|                               |  | Consolidated Production Costs per Ounce (1)
|------------------------------ |  | -------------------------------------------
|
|
|
|Realized Gold Price            |  | $270                                       
|                               |  |                                            
|Per Ounce Costs                |  |                                            
|Direct mining costs            |  | $162                                       
|Deferred stripping adjustments |  | 1                                          
|Costs of third-party smelters  |  | 15                                         
|By-product credits             |  | (28                                        
|Other                          |  |                                           
|                               |  |                                            
|Cash Operating Costs           |  | 150                                        
|Royalties                      |  | 6                                          
|Production taxes               |  | 1                                          
|                               |  |                                            
|Total Cash Costs               |  | 157                                        
|Depreciation and amortization  |  | 52                                         
|Reclamation and mine closure   |  | 16                                         
|                               |  |                                            
|Total Production Costs         |  | $225                                       
|                               |  |                                            




|(1) | Homestake reports per ounce production costs in accordance with the Gold Institute Cost Standard.
|--- | ---------------------------------------------------------------------------------------------------




Australia





Australian production increased by 20% to 256,900 ounces during the second quarter of 2001 from 214,100
ounces during the second quarter of 2000, due to increases in production at the Kalgoorlie and Plutonic mines, partially offset by slightly lower production at the Darlot and Lawlers mines. The weighted average total cash cost at the Australian
mines was $167 per ounce during the second quarter of 2001 compared to $195 per ounce during the same period in 2000.





During the second quarter of 2001, production at Homestakes 50% owned Kalgoorlie mine increased
by 8% to 109,000 ounces at a total cash cost of $175 per ounce compared to 101,000 ounces at a total cash cost of $190 during the second quarter a year ago. The improved performance was achieved through increased mill throughput resulting in higher
production, a reduction of production costs due to a weaker Australian dollar and the benefit of operating efficiencies gained from the recent transition from contract to owner mining partially offset by higher mining costs.





Homestakes 100%-owned Yilgarnoperations, consisting of the Plutonic, Darlot and Lawlers mines,
increased production by 31% to 147,900 ounces at a weighted average total cash cost of $162 per ounce during the second quarter of 2001 compared to 113,100 ounces at a weighted average total cash cost of $199 per ounce a year ago, reflecting higher
production at the Plutonic mine partially offset by slightly lower production at the Darlot and Lawlers mines. Production at the Plutonic mine totaled 94,500 ounces at a total cash cost of $147 per ounce during the second quarter of 2001 compared to
57,400 ounces at a total cash cost of $188 per ounce during the same period in 2000. The increase in ounces is due to operating efficiencies resulting from higher grade and recovery in the second quarter of 2001 compared to the same period in 2000.
Cash costs decreased by $41 per ounce primarily due to the increased production and the weaker Australian dollar. During the first quarter of 2001, the Darlot mine produced 31,800 ounces at a total cash cost of $165 per ounce compared to 33,400
ounces at a total cash cost of $191 per ounce during the second quarter of 2000. The decrease in total cash cost is a result of reduced production costs resulting from the conversion from contract to owner mining and the favorable impact of a weaker
Australian dollar. The Lawlers mine produced 21,600 ounces at a total cash cost of $221 per ounce compared to 22,300 ounces at a total cash cost of $240 per ounce a year ago.





Canada





Canadian gold production decreased 3% to 158,200 ounces during the second quarter of 2001 from 162,700
ounces in 2000. During the second quarter of 2001, the weighted average total cash cost per ounce from the Companys Canadian mines increased by 12% to $122 per ounce from $109 per ounce a year ago primarily due to lower silver by-product
credits at the Eskay Creek mine and increased unit mining costs at the Hemlo operations, as a result of lower ore grades.





At the Eskay Creek mine, second quarter 2001 production totaled 82,400 ounces at a total cash cost of
$48 per ounce compared to 83,500 ounces at a total cash cost of $34 per ounce during the same period in 2000. The decrease in production was as a result of lower grades in the direct shipment ore. The increase in total cash costs reflects lower
silver by-product credits due to lower silver production and silver prices and increased smelter, fuel, transportation and mining costs compared to the second quarter of 2000. At the Hemlo operations, Homestakes 50% share of the second
quarter of 2001 production from the combined Williams and David Bell mines totaled 75,800 ounces at an average total cash cost of $201 per ounce compared to 79,200 ounces at an average total cash cost of $188 per ounce for the same quarter of 2000.
The marginal reduction in gold production and the increase in total cash costs during the second quarter of 2001 is mainly due to greater quantities of lower grade material sourced from the open pit, and production from the lower grade stopes. The
effect of processing lower grade material was partially offset by higher mill throughput, which in the second quarter averaged 10,653 tons of ore per day.





United States





United States production increased by 53% to 225,300 ounces during the second quarter of 2001 compared to
146,800 ounces in the corresponding quarter of 2000, primarily due to higher attributable production associated with the increase in Homestakes ownership interest in the Round Mountain mine. The weighted average United States total cash cost
decreased by 21% to $168 per ounce during the second quarter of 2001 compared to $213 per ounce during the second quarter of 2000.





During the second quarter of 2001, Homestakes 50% share of production from the Round Mountain
mine amounted to 97,700 ounces compared to 38,200 ounces representing its 25% share of production in the second quarter of 2000. In July 2000, the Company increased its ownership in the Round Mountain mine through the purchase of Case Pomeroy &
Companys 25% interest. Total cash costs decreased to $172 per ounce during the second quarter of 2001 from $225 per ounce during the same period in 2000. Higher mill throughput and a decrease in in-process ounces contributed to the higher
production. Lower cash costs were mainly due to the increase in production. Homestakes wholly-owned Ruby Hillmine produced 34,400 ounces at a total cash cost of $95 per ounce during the second quarter of 2001 compared to 33,100
ounces at a total cash cost of $99 per ounce for the comparable period of 2000. The increase in production was due to higher ore grades during the second quarter of 2001. The Ruby Hill mine will complete mining in December 2002. Production from the
Homestake mine increased to 55,700 ounces during the second quarter of 2001 from 44,100 ounces during the same period in 2000. Total cash cost during the second quarter of 2001 was $182 per ounce compared to $268 per ounce during the
corresponding period of 2000. The reduction in cash costs is mainly due to lower mining costs associated with the planned mine closure.The Homestake mine is gradually reducing its workforce and site costs in accordance with a planned
mine-out schedule. During the second quarter of 2001, gold production from the processing of the residual stockpiles at the McLaughlinminetotaled 28,600 ounces compared to 26,400 ounces during the second quarter in 2000. Total cash
costs decreased to $220 per ounce during the second quarter of 2001 compared to $239 per ounce for the second quarter of 2000. The Companys share of production from the Marigoldmine was 8,900 ounces during the second quarter of 2001 at
a total cash cost of $146 per ounce compared to 5,000 ounces at a total cash cost of $273 per ounce during the same period in 2000.





South America





Homestakes share of production at its 51%-owned Agua de la Faldamine amounted to 3,400 ounces
at a total cash cost of $258 per ounce during the second quarter of 2001 compared to 6,400 ounces of gold at a total cash cost of $208 per ounce in the second quarter of 2000. The decline in production and corresponding increase in total cash costs
are primarily due to lower recovery rates.





Homestakes 60%-owned Veladero project in northwestern Argentina has completed its 2000-2001
field season. During the second quarter, Homestake focused on continuing the metallurgical testing, incorporating and interpreting new drill results and updating the mine planning, process design, permitting, capital and operating cost estimates,
and financial models. Capitalized costs during the second quarter of 2001 were $9.5 million, including capitalized interest of $586,000.





On July 20, 2001, the Company reported a substantial increase in reserves at the Veladero project.
Proven and probable reserves on a 100% basis are now estimated to contain 8.0 million ounces of gold and 130.3 million ounces of silver. Homestakes share of reserves now amounts to 4.8 million ounces of gold and 78.2 million ounces of
silver.





Other income for the three months ended June 30, 2001 includes foreign exchange gains of $6.8
million, $6.5 million related to intercompany loans and $314,000 related to foreign currency contracts. During the 2001 second quarter, other income also includes a $1.3 million gain from the sale of oil and gas assets and $1.7 million of pension
plan curtailment and settlement gains. Other income (loss) during the first half of 2001 includes foreign exchange losses of $8.7 million, $2.5 million related to foreign currency contracts and $6.2 million related to intercompany loans. In
addition, other income (loss) during the 2001 first half also includes the $1.3 million gain from the sale of oil and gas assets, a gain of $2.4 million for the sale of mining information related to the Just-in-Case property in Western Australia and
$3.4 million for the recognition of pension plan curtailment and settlement gains. Other loss in the six month period of 2000 includes foreign exchange losses of $21.9 million, $12.0 million related to foreign currency contracts and $9.9 million
related to intercompany loans, respectively.





Depreciation, depletion and amortization expense of $73.8 million during the first half of 2001 was
comparable to $70.2 million in the same period of 2000. The effects of higher production and the increases in property, plant and equipment resulting from the conversion of certain Australian mines from contract to owner mining were partially offset
by reserve expansions.





Exploration expense for thefirst half of 2001 decreased to $12.4 million compared to $19.6
million a year ago reflecting a reduction in the current years program and the capitalization of Veladero project development costs effective April 1, 2000.





Income tax expense for the first six months of 2001 was a benefit of $2.7 million compared to an
expense of $3.3 million for the same period in 2000. The $2.7 million tax benefit in the first half of 2001 reflects the geographic mix of pre-tax income and losses and the recognition of certain Australian and U.S. deferred tax assets following the
closing of the Just-in-Case transaction and disposition of the Companys interest in Main Pass 299. The Companys consolidated effective income tax rate fluctuates depending on the geographic mix of pre-tax income and losses.





Minority interests: During the first six months of 2001, minority interests share of losses in
consolidated subsidiaries increased to $1.1 million compared to $832,000 in the first half of 2000, primarily due to higher losses at the Agua de la Falda joint venture.





LIQUIDITY AND CAPITAL RESOURCES





Cash provided by continuing operations totaled $62.8 million in the first six months of 2001 compared to
$81.9 million in the first six months of 2000. Working capital at June 30, 2001, amounted to $222.3 million, including cash and equivalents and short-term investments of $213.4 million.





Capital expenditures of $48.9 million during the first six months of 2001 compares to capital expenditures
of $45.7 million during the first six months of 2000. Capital expenditures in 2001 include $9.5 million of capitalized development costs at the Veladero project, $9.4 million at Round Mountain, primarily for new haul trucks, $17.3 million at the
Yilgarn operations, primarily for capitalized mine development costs and mining equipment resulting from conversion to owner mining and $5.6 million at Kalgoorlie primarily for the purchase of additional haul trucks. The balance of the 2001 capital
expenditures primarily relate to sustaining capital at the Companys other operating mines. Capital expenditures in 2000 included approximately $16.2 million at the Yilgarn operations primarily for underground development work, $12.6 million at
Kalgoorlie primarily for owner mining equipment and a flotation circuit upgrade, $5.8 million for development costs at the Veladero property, and $4.6 million at the Homestake mine for various infrastructure and other capital improvements with the
balance primarily relating to sustaining capital at the Companys operating mines.





Debt repayments during the first half of 2001 were $5.8 million compared to $136.2 million in the prior
years first six months. Debt repayments in 2001 reflect mainly principal payments on the capitalized leases. In addition, the Company received $3.7 million of capital proceeds related to the acquisition of the haul trucks at Kalgoorlie. During
the first six months of 2000, the Company drew down $99.2 million on the cross-border credit facility and repaid $135.0 million of the 5.5% convertible subordinated notes. In addition, the Company received $6.7 million of capital lease
proceeds.





The Company has a cross-border credit facility (Credit Facility) providing a total availability
of $430.0 million. The facility is available through July 14, 2003 and provides for borrowings in United States, Canadian and Australian dollars, or gold, or a combination of these. At June 30, 2001, Canadian dollar borrowings under the Credit
Facility of $147.4 million (C$224.7 million) were outstanding. Repayments are reflected in the financial statements. The Company pays a commitment fee on the unused portion of this facility ranging from 0.15% to 0.35% per annum, depending upon
rating agencies ratings for the Companys senior debt. The credit agreement includes a minimum consolidated net worth test. Interest on the Canadian dollar borrowings is payable quarterly and is based on the Bankers Acceptance
discount rate plus a stamping fee. At June 30, 2001, this rate was 5.54%.





Foreign currency, gold and other commitments





Homestakes precious metals hedging policy provides for the use of forward sales contracts to hedge up
to 30% of each of the following ten years expected annual gold production, and up to 30% of each of the following five years expected annual silver production, at prices in excess of certain targeted prices. The policy also provides for
the use of combinations of put and call option contracts to establish minimum floor prices. Homestake does not hold or issue financial instruments or derivative financial instruments for trading purposes or to create hedge positions in excess of
forecast identifiable exposures.





During the second quarter of 2001 and 2000, the Company delivered 111,000 and 87,000 ounces of gold under
hedge contracts at average prices of $262 and $276 per ounce, respectively. During the first half of 2001 and 2000, the Company delivered 198,000 and 178,300 ounces of gold under hedge contracts at average prices of $268 and $300 per ounce,
respectively. During the first half of 2000, the Company also delivered 655,000 ounces of silver at an average price of $6.30 per ounce under maturing forward sales and option contracts. The foregoing hedging activities increased revenues in the six
months ended June 30, 2001 and 2000 by approximately $79,000 and $346,000, respectively, versus the then prevailing spot prices. The estimated fair value of the Companys remaining gold hedging position at June 30, 2001 is approximately $43.0
million. The Companys gold hedging program at June 30, 2001, covers approximately 10% of its proven and probable reserves and contains no exposure to floating lease rates or margin call requirements.








Under the Companys foreign currency protection program, the Company has entered into foreign
currency option contracts to minimize the effects of the strengthening of the Canadian and/or Australian currencies in relation to the United States dollar. In July 2000, the Company discontinued its foreign currency protection program. Contracts
outstanding at June 30, 2001, are expected to remain in place until maturity. Realized and unrealized gains and losses on this program are recorded in other income. At June 30, 2001, the Company had a net unrealized loss of $2.4 million on open
contracts under this program.





PART IIOTHER INFORMATION





Item 1.    Legal Proceedings





In October 1997, HCI entered into an agreement with Inmet Mining Corporation (Inmet) to purchase
the Troilus mine in Quebec for $110.0 million plus working capital. In December 1997, HCI terminated the agreement after determining that, on the basis of due diligence studies conditions to closing the arrangement would not be satisfied. On
February 23, 1998, Inmet filed suit against HCI in the British Columbia Supreme Court, disputing the termination of the agreement, and alleging that HCI had breached the agreement. Inmet seeks specific performance or, in the alternative, equitable
damages. Homestake believes that the agreement with Inmet was terminated properly and that the action by Inmet is without merit. Trial of this action commenced in February and was completed by June 2001. The judges final decision is
pending.





In addition, Homestake and its subsidiaries are defendants in various legal actions in the ordinary course
of business.





In the opinion of management, the above matters will be resolved without a material adverse effect on
Homestakes financial condition, results of operations or cash flow.





Item 5.    Other Information





| | (a) | CAUTIONARY STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
| | --- | -------------------------------------------------------------------------------




Certain statements contained in this Form 10-Q that are not statements of historical facts are forward
looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are based on beliefs of management, as well as assumptions made by and information currently available to management. Forward
looking statements include those preceded by the words believe, estimate, expect, intend, will, and similar expressions, and include estimates of reserves, future production, costs per
ounce, dates of construction completion, costs of capital projects and commencement of operations. Forward looking statements are subject to risks, uncertainties and other factors that could cause actual results to differ materially from expected
results. Some important factors and assumptions that could cause actual results to differ materially from expected results are discussed below. Those listed are not exclusive.





Estimates of reserves and future production for particular properties and for the Company as a whole are
derived from annual mine plans that have been developed based on mining experience, assumptions regarding ground conditions and physical characteristics of ore (such as hardness and metallurgical characteristics), expected rates and costs of
production, and estimated future sales prices. Actual production may vary for a variety of reasons, such as the factors described above, ore mined varying from estimates of grade and metallurgical and other characteristics, mining dilution, actions
by labor, and government imposed restrictions. Estimates of production from properties and facilities not yet in production are based on similar factors but there is a greater likelihood that actual results will vary from estimates due to a lack of
actual experience. Cash cost estimates are based on such things as past experience, reserve and production estimates, anticipated mining conditions, estimated costs of materials, supplies and utilities, and estimated exchange rates. Noncash cost
estimates, based on total capital costs and reserve estimates, change based on actual amounts of unamortized capital, changes in reserve estimates, and changes in estimates of final reclamation. Estimates of future capital costs are based on a
variety of factors and include past operating experience, estimated levels of future production, estimates by and contract terms with third-party suppliers, expectations as to government and legal requirements, feasibility reports by Company
personnel and outside consultants, and other factors. Capital cost estimates for new projects are subject to greater uncertainties than additional capital costs for existing operations. Estimated time for completion of capital projects is based on
such factors as the Companys experience in completing capital projects, and estimates provided by and contract terms with contractors, engineers, suppliers and others involved in design and construction of projects. Estimates reflect
assumptions
about factors beyond the Companys control, such as the time government agencies take in processing applications, issuing permits and otherwise completing processes required under applicable laws and regulations. Actual time to completion can
vary significantly from estimates.





See the Companys Form 10-K Report for the year ended December 31, 2000, RISK
FACTORS and CAUTIONARY STATEMENTS included under Part IItem 1, for a more detailed discussion of factors that may impact on expected future results.





Item 6.    Exhibits and Reports on Form 8-K





(a) Exhibits





| | None.
| | -----




(b) Form 8-K





The Company filed one report on Form 8-K during the quarter ended June 30, 2001. The report filed on June
27, 2001, contained the press release announcing the proposed merger of Barrick Gold Corporation and the Company.





The Company filed a Form 8-K on July 3, 2001 to provide details of the proposed merger and the related
agreements.





SIGNATURES





Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly authorized.





| | HOMESTAKE MINING COMPANY
| | ------------------------




August 14, 2001





| | By  /S
/    DAVID
W. PEAT
| | -------------------------

| | 
| | 

| | David W. Peat
| | -------------

| | Vice President, Finance and Chief Financial Officer (Principal Financial Officer)
| | ---------------------------------------------------------------------------------




August 14, 2001





| | By  /S
/    ALEX
G. MORRISON
| | ----------------------------

| | 
| | 

| | Alex G. Morrison
| | ----------------

| | Vice President and Controller (Principal Accounting Officer)
| | ------------------------------------------------------------