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(BARRICK LOGO) BARRICK GOLD CORPORATION Consolidated Financial Statements and  FOR THE YEAR ENDED DECEMBER 31, 2004 In accordance with Canadian Generally Accepted Accounting Principles




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BARRICK YEAR-END 2004CONTENTS
    
    PAGEManagements Discussion and Analysis
    
    
    1Core Business
    
    
    1Executive Overview and 2005 Outlook
    
    
    2Vision and Strategy
    
    
    3Capability to Deliver Results
    
    
    3Impact of Key Economic Trends
    
    
    5Results
    
    
    8Overview of 2004 versus 2003
    
    
    8Consolidated Gold Production and Sales
    
    
    9Results of Operating Segments
    
    
    10Other Costs and Expenses
    
    
    16Cash Flow
    
    
    18Overview of 2003 versus 2002
    
    
    20Balance Sheet
    
    
    20Quarterly Information
    
    
    21Off-Balance Sheet Arrangements
    
    
    22Liquidity
    
    
    25Critical Accounting Policies and Estimates
    
    
    27Non-GAAP Performance Measures
    
    
    34Cautionary Statement on Forward-Looking Information
    
    
    34Glossary of Technical Terms
    
    
    38Consolidated Statements of Income
    
    
    39Consolidated Statements of Cash Flow
    
    
    40Consolidated Balance Sheet
    
    
    41Consolidated Statements of Shareholders Equity
    
    
    42Notes to Consolidated Financial Statements
    
    
    43
 BARRICK YEAR-END 2004




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MANAGEMENTS DISCUSSION AND ANALYSIS (MD&A) 
 Core Business
    
    
    1Executive Overview and 2005 Outlook
    
    
    2Vision and Strategy
    
    
    3Capability to Deliver Results
    
    
    3Impact of Key Economic Trends
    
    
    5ResultsOverview of 2004 versus 2003
    
    
    8Consolidated Gold Production and Sales
    
    
    9Results of Operating Segments
    
    
    10Other Costs and Expenses
    
    
    16Cash Flow
    
    
    18Overview of 2003 versus 2002
    
    
    20Balance Sheet
    
    
    20Quarterly Information
    
    
    21Off-Balance Sheet Arrangements
    
    
    22Liquidity
    
    
    25Critical Accounting Policies and Estimates
    
    
    27Non-GAAP Performance Measures
    
    
    34Cautionary Statement on Forward-Looking
Information
    
    
    34Glossary of Technical Terms
    
    
    38
 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 Canadian generally accepted
accounting principles, or Canadian GAAP (collectively, our 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 page 38. 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 Canadian
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. 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. BARRICK YEAR-END 2004
    
    
    1
    
    
    MANAGEMENTS DISCUSSION AND ANALYSIS




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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
$2121 per 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 incurred a loss of $102 million ($0.19 per
share) and generated operating cash flow of $535
million ($1.00 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. The loss in 2004
included impairment charges recorded against
long-lived assets of $299 million pre-tax and
goodwill impairment charges of $184 million
pre-tax, partly offset by tax credits totaling
$222 million relating to the resolution of a
Peruvian tax assessment and a change in tax
status in Australia. 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.3The 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.   1
    
    Total cash costs per ounce is a non-GAAP
performance measure that is used throughout
this MD&A. For more information see pages 36
to 37.2
    
    For a breakdown of reserves by
category and additional information relating
to reserves, see page 126 of the Annual
Report.  3
    
    See page 9 for further information on
forward-looking estimates of gold production
and total cash costs per ounce. BARRICK YEAR-END 2004
    
    
    2
    
    
    MANAGEMENTS DISCUSSION AND ANALYSIS




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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term Strategy
    
    Focus Areas
    
    MeasuresElementsGrowth in reserves and
production
    
    
    
    Growth at existing mine sites by finding new resources and
converting to reserves.
    
    

    
    Additions to reserves and
resources.
Consistent investment in exploration and
    
    Growth through successful exploration focused principally in
key exploration districts (Goldstrike, Frontera, Lake Victoria,
Alto Chicama) and in Russia/Central Asia.
    
    

    
    development.
Growth in annual gold production.
Size of gold reserves.
    
    Execute the development and construction of Veladero,
Lagunas Norte, Tulawaka, Cowal, Pascua-Lama and East
Archimedes.
    
    


    
    Construction progress versus
schedules.
Actual construction costs.

Status of regulatory requirements.
    
    Develop a business unit in Russia/Central Asia through
investments in, and strategic alliances with Highland Gold and
Celtic Resources.Operational excellence
    
    
    
    Control costs.
o   Global supply chain management.
o   Continuous improvement initiatives.
o   Currency, interest rate and fuel/propane hedge programs.
    
    



    
    Total cash costs per ounce.1
Amortization per ounce.1
Ore throughput.
Equipment utilization statistics.
    
    Optimize productivity through continuous improvement
initiatives.
    
    
    
    Liquidity - operating cash 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 the organization
    
    
    
    Workforce - identify and develop talent.
    
    
    
    Talent review and performance management.
    
    Leadership development and succession planning.
    
    
    
    Compliance with Sarbanes Oxley Act.
    
    Adopt best practices in corporate governance, including
strengthening internal controls.Responsible mining
    
    
    
    Reinforce health and safety culture.
    
    
    
    Safety leadership and other training initiatives.
    
    Enhance environmental performance, including use of
innovative technology to protect the environment.
    
    

    
    Medical aid injury frequency.
Environmental performance.
    
    Maintain positive community and government relations.
   1
    
    Total cash costs per ounce and amortization per ounce are non-GAAP performance
measures. For more information, see pages 36 to 37. 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: BARRICK YEAR-END 2004
    
    
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    MANAGEMENTS DISCUSSION AND ANALYSIS




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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. 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, BARRICK YEAR-END 2004
    
    
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    MANAGEMENTS DISCUSSION AND ANALYSIS




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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 (LINE GRAPH) 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 re-awakened 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 BARRICK YEAR-END 2004
    
    
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    MANAGEMENTS DISCUSSION AND ANALYSIS




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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 (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. 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 (LINE GRAPH) (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 BARRICK YEAR-END 2004
    
    
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    MANAGEMENTS DISCUSSION AND ANALYSIS




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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 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 (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. 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 BARRICK YEAR-END 2004
    
    
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    MANAGEMENTS DISCUSSION AND ANALYSIS




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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 (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. RESULTS Selected Annual Information For the years ended December 31   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
    
    
    $
    2,006
    
    
    $
    1,947Market gold price2
    
    
    
    
    
    
    409
    
    
    
    363
    
    
    
    310Realized gold price2
    
    
    
    
    
    
    391
    
    
    
    361
    
    
    
    336Total cash costs2,3
    
    $
    205215
    
    
    
    212
    
    
    
    190
    
    
    
    180Amortization
    
    
    
    
    
    
    468
    
    
    
    518
    
    
    
    491Net income (loss)
    
    
    
    
    
    
    (102
    )
    
    
    117
    
    
    
    202Net income (loss) per shareBasic
    
    
    
    
    
    
    (0.19
    )
    
    
    0.22
    
    
    
    0.37Diluted
    
    
    
    
    
    
    (0.19
    )
    
    
    0.22
    
    
    
    0.37Dividends per share
    
    
    
    
    
    
    0.22
    
    
    
    0.22
    
    
    
    0.22Cash inflow (outflow)Operating activities
    
    
    
    
    
    
    535
    
    
    
    581
    
    
    
    651Capital expenditures
    
    
    
    
    
    
    (853
    )
    
    
    (384
    )
    
    
    (291
    )Financing activities
    
    
    
    
    
    
    741
    
    
    
    (266
    )
    
    
    (61
    )Total assets
    
    
    
    
    
    
    7,834
    
    
    
    7,339
    
    
    
    7,696Total longterm financial liabilities
    
    
    
    
    
    $
    1,676
    
    
    $
    749
    
    
    $
    757Gold 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
    
    Per ounce weighted average.3
    
    For an explanation of the use of non-GAAP performance measures, refer to pages 36 to 37 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 $51 million.  BARRICK YEAR-END 2004
    
    8
    
    MANAGEMENTS DISCUSSION AND ANALYSIS




---



##### 



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. The loss in 2004 included pre-tax
impairment charges
totaling $299 million on long-lived
assets, and pre-tax goodwill impairment charges of $184 million, partly
offset by a $20 million lower pretax interest
expense and a $234 million income tax recovery.
Interest expense decreased by $20 million mainly
due to amounts capitalized at development projects
in 2004. The $234 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 $42 million, partly
offset by posttax charges of $11 million on
settlement of the Inmet litigation and $48 million
pretax for the impairment charges of goodwill.  Special Items - Effect on earnings increase (decrease) ($ 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
    
    
    $
    (32
    )
    
    $
    10Inmet litigation costs
    
    
    
    
    
    
    
    
    
    
    (16
    )
    
    
    (11
    )
    
    
    
    
    
    
    Gains on asset sales
    
    
    2
    
    
    
    2
    
    
    
    24
    
    
    
    
    
    
    
    4
    
    
    
    3Impairment charges on longlived assetsEskay
    
    
    (56
    )
    
    
    (30
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Cowal
    
    
    (211
    )
    
    
    (148
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Other
    
    
    (32
    )
    
    
    (25
    )
    
    
    (5
    )
    
    
    (3
    )
    
    
    (11
    )
    
    
    (11
    )Impairment charges on investments
    
    
    (5
    )
    
    
    (5
    )
    
    
    (11
    )
    
    
    (11
    )
    
    
    
    
    
    
    Changes in asset retirement obligation
cost estimates
    
    
    (22
    )
    
    
    (17
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Resolution of Peruvian tax assessmentOutcome of tax uncertainties
    
    
    
    
    
    
    141
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Reversal of other accrued costs
    
    
    21
    
    
    
    15
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Future tax creditsChange in Australian tax status
    
    
    
    
    
    
    81
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Release of valuation
allowances/outcome of uncertainties
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (42
    )
    
    
    
    
    
    
    19Goodwill impairment charge
    
    
    (184
    )
    
    
    (184
    )
    
    
    (48
    )
    
    
    (48
    )
    
    
    
    
    
    
    Total
    
    $
    (482
    )
    
    $
    (161
    )
    
    $
    15
    
    
    $
    (55
    )
    
    $
    (39
    )
    
    $
    21
 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 $469 million to $853 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  BARRICK YEAR-END 2004
    
    9
    
    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) Targetfor 2004
    
    
    2004
    
    
    2003
    
    
    2002Cost of sales1
    
    
    
    
    
    $
    248
    
    
    $
    211
    
    
    $
    194Currency hedge gains
    
    
    
    
    
    
    (19
    )
    
    
    (12
    )
    
    
    (1
    )By-product credits
    
    
    
    
    
    
    (30
    )
    
    
    (21
    )
    
    
    (20
    )Cash operating costs
    
    
    
    
    
    
    199
    
    
    
    178
    
    
    
    173Royalties/mining taxes
    
    
    
    
    
    
    13
    
    
    
    12
    
    
    
    7Total cash costs1
    
    $
    205215
    
    
    $
    212
    
    
    $
    190
    
    
    $
    180
   1
    
    At market currency exchange rates.2
    
    For an explanation of the use of non-GAAP
performance measures, refer to pages 36 to 37
of 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 $361 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  BARRICK YEAR-END 2004
    
    10
    
    MANAGEMENTS DISCUSSION AND ANALYSIS




---



##### 



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 and fuel hedge programs as part of
our focus on controlling costs. The region produced 9% 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 $4 million in 2004
from 2003 levels, mainly due to 14% lower gold
sales volumes and 12% higher total cash costs
per ounce, partly offset by 7% higher realized
gold prices and 3% higher 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.  BARRICK YEAR-END 2004
    
    11
    
    MANAGEMENTS DISCUSSION AND ANALYSIS




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##### 



Amortization expense increased by $4 million in
2004. 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 $10 million in 2004,
mainly due to 18% lower gold sales volumes and
7% 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 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 $3 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 $56 million
was recorded, which is not included in the
measure of segment income. For further details
see page 38. Round Mountain (50% owned), United States Segment income increased by $1 million in
2004, mainly due to 7% higher realized gold
prices and 24% lower amortization expense,
partly offset by 27% higher total cash costs
per ounce. 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 27% 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 $6 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 $2 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 $4 million as 10%
lower gold sales volumes were partly offset by
7% higher realized gold prices. Segment income
in 2004 excludes a goodwill impairment charge of
$36 million. For further details see page 29. 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  BARRICK YEAR-END 2004
    
    12
    
    MANAGEMENTS DISCUSSION AND ANALYSIS




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##### 



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. 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 $12 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 $76 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 $57 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 $5 million. Lagunas Norte, Peru In 2004, the segment loss of $3 million
represents expensed mine start-up costs. In
2003, all project costs incurred were
capitalized resulting in no segment income or
loss. 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 $193 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. BARRICK YEAR-END 2004
    
    13
    
    MANAGEMENTS DISCUSSION AND ANALYSIS




---



##### 



Veladero, Argentina In 2004, the segment loss of $5 million
represents expensed mine start-up costs. In
2003, all project costs incurred were
capitalized resulting in no segment income or
loss. 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 $2001 per 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 $286 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.   1
    
    Subject to exchange rate fluctuations and applicable export duties. 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
$130-1401 per 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 start-up 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. 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 $34
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. BARRICK YEAR-END 2004
    
    14
    
    MANAGEMENTS DISCUSSION AND ANALYSIS




---



##### 



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 $11 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. Segment
income in 2004 excludes a goodwill impairment
charge of $28 million. For further details see
page 29. 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 $5 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 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 $9 million better in 2004 as
14% higher gold sales volumes, combined with 7%
higher realized gold prices, were partly offset
by 17% 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 a 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 by-product
credits due to higher market copper prices. BARRICK YEAR-END 2004
    
    15
    
    MANAGEMENTS DISCUSSION AND ANALYSIS




---



##### 



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 measure of segment loss in 2004
excludes a $211 million impairment charge for
property, plant and equipment that was recorded
on completion of an impairment test in fourth
quarter 2004, as well as a $120 million
goodwill impairment charge. For further details
see page 29. 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 $2401
per 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.   1
    
    Subject to exchange rate fluctuations. Tulawaka (70% owned), Tanzania In 2004 and 2003, all project costs incurred
were capitalized, resulting in no segment
income or loss. 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 first full three years of
production at Tulawaka is expected to average
about 72,000 ounces of gold annually at total
cash costs of approximately $215 per ounce.
Highlights include:  
    Construction capital of $48 million (100% basis) was spent in 2004.  
    Earthworks and site preparation were near completion at the end of 2004.  
    The mining contract has been awarded to an external contractor.  
    Process plant construction is well underway with the completion of power plant
installation and commissioning, substantial completion of the SAG mill, concrete and
structured steel installation and other site infrastructure buildings.  
    Plant handover is expected in first quarter 2005. OTHER COSTS AND EXPENSES Exploration, Development and
Business Development Expense For the years ended December 31 ($ millions)
    
    2004
    
    
    2003
    
    
    2002Exploration costsNorth America
    
    $
    30
    
    
    $
    22
    
    
    $
    16Australia/Africa
    
    
    27
    
    
    
    22
    
    
    
    15South America
    
    
    20
    
    
    
    19
    
    
    
    7Russia/Central Asia
    
    
    5
    
    
    
    4
    
    
    
    4Other countries
    
    
    1
    
    
    
    
    
    
    
    83
    
    
    
    67
    
    
    
    42Mine development costs
    
    
    2
    
    
    
    
    
    
    
    Mine start-up costsVeladero
    
    
    5
    
    
    
    
    
    
    
    Lagunas Norte
    
    
    3
    
    
    
    
    
    
    
    Cowal
    
    
    1
    
    
    
    
    
    
    
    Pascua-Lama
    
    
    4
    
    
    
    
    
    
    
    13
    
    
    
    
    
    
    
    Business development/other
    
    
    15
    
    
    
    17
    
    
    
    10$
    113
    
    
    $
    84
    
    
    $
    52
 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. BARRICK YEAR-END 2004
    
    16
    
    MANAGEMENTS DISCUSSION AND ANALYSIS




---



##### 



Other Income Statement Variances   2004
    
    2003
    
    % change
    
    CommentsAmortizationAbsolute amount
    
    $
    468
    
    
    $
    518
    
    
    
    (10
    )%
    
    11% lower sales volumes.Per ounce (dollar)1
    
    
    89
    
    
    
    89
    
    
    
    
    %Administration
    
    $
    92
    
    
    $
    83
    
    
    
    11
    %
    
    Severance costs of $9 million were incurred in 2003. Higher regulatory
compliance
costs impacted 2004.Interest income
    
    
    25
    
    
    
    31
    
    
    
    (19
    )%
    
    The decrease in 2004 is due to lower average cash balances in 2004
compared to
2003. In 2005, interest income is expected to increase due to higher
expected average
cash balances.Interest costsIncurred
    
    
    60
    
    
    
    49
    
    
    
    22
    %
    
    The impact of new financings in second half of 2004 caused an increase
over 2003.
Interest incurred is expected to increase to between $115 to $120
million in 2005 due to
new financing put in place in 2004.Capitalized
    
    
    (45
    )
    
    
    (14
    )
    
    
    221
    %
    
    Higher amounts were capitalized at development projects due to
construction costs
capitalized in 2004, and capitalization at Pascua-Lama from July 1,
2004. In 2005, we
expect to capitalize about $105-$110 million at our development projects.Expensed
    
    $
    15
    
    
    $
    35
    
    
    
    (57
    )%
   1
    
    For an explanation of the use of non-GAAP performance measures, refer to pages 36 to 37. Other 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 hedge contracts that became ineffective for hedge
accounting
purposes.Impairment of property,
plant and equipmentEskay Creek
    
    
    56
    
    
    
    
    
    
    See page 30.Cowal
    
    
    211
    
    
    
    
    
    
    See page 30.Other
    
    
    32
    
    
    
    5
    
    
    In 2004, includes write-down of certain Australian exploration properties.Gains on asset sales
    
    
    (2
    )
    
    
    (24
    )Environmental remediation costs
    
    
    44
    
    
    
    34Litigation costs
    
    
    
    
    
    
    16
    
    
    Costs in 2003 relate to the settlement of the Inmet litigation.Impairment of
investments
    
    
    5
    
    
    
    11
    
    
    Losses in 2003 mainly related to investments under a deferred
compensation plan.Impairment of goodwill
    
    
    184
    
    
    
    48
    
    
    See page 29.Other items
    
    
    8
    
    
    
    14$
    533
    
    
    $
    33
 BARRICK YEAREND 2004
    
    17
    
    MANAGEMENTS DISCUSSION AND ANALYSIS




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##### 



Income Taxes For the years ended December 31
    
    
    
    
    
    2004
    
    
    
    
    
    
    
    
    
    
    2003($ millions, except percentages)
    
    
    
    
    
    
    
    
    
    Income tax
    
    
    
    
    
    
    
    
    
    
    Income taxEffective income tax rates on elements of
    
    Pre-tax
    
    
    Effective
    
    
    expense
    
    
    Pre-tax
    
    
    Effective
    
    
    expenseincome
    
    income
    
    
    tax rate
    
    
    (recovery)
    
    
    income
    
    
    tax rate
    
    
    (recovery)Net income excluding elements below
    
    $
    132
    
    
    
    28
    %
    
    $
    37
    
    
    $
    93
    
    
    
    20
    %
    
    $
    19Deliveries into gold sales contracts1
    
    
    (89
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Non-hedge derivative gains (losses)
    
    
    (5
    )
    
    
    (80
    %)
    
    
    (4
    )
    
    
    71
    
    
    
    15
    %
    
    
    11Goodwill impairment charge
    
    
    (184
    )
    
    
    
    
    
    
    
    
    
    
    (48
    )
    
    
    
    
    
    
    Other items
    
    
    (190
    )
    
    
    20
    %
    
    
    (38
    )

    
    
    83
    
    
    
    69
    %
    
    
    57$
    (336
    )
    
    
    2
    %
    
    $
    (5
    )
    
    $
    199
    
    
    
    44
    %
    
    $
    87Tax only items:Change in Australian tax status
    
    
    
    
    
    
    24
    %
    
    
    (81
    )
    
    
    
    
    
    
    
    
    
    
    Outcome of tax uncertainties
    
    
    
    
    
    
    42
    %
    
    
    (141
    )
    
    
    
    
    
    
    
    
    
    
    Other items
    
    
    
    
    
    
    2
    %
    
    
    (7
    )
    
    
    
    
    
    
    (3
    %)
    
    
    (5
    )$
    (336
    )
    
    
    70
    %
    
    $
    (234
    )
    
    $
    199
    
    
    
    41
    %
    
    $
    82
   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 future tax charges or credits if
changes in facts or circumstances affect the
estimated tax basis of assets and therefore the
amount of future tax assets or liabilities or
because of changes in valuation allowances
reflecting changing expectations in our ability
to realize future 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. The interpretation of tax regulations and
legislation and their application to our business
is complex and subject to change. We have
significant amounts of future tax assets,
including tax loss carry forwards, and also
future tax liabilities. Potential changes to any
of these amounts, as well as our ability to
realize future tax assets, could significantly
affect net income or cash flow in future periods.
For more information on tax valuation allowances,
see page 33. CASH FLOW (CHART BAR) Operating
Activities
Operating cash flow decreased by $46 million
in 2004 to $535 million. The key factors
that contributed to the year over year
decrease are summarized in the table below. BARRICK YEAR-END 2004
    
    
    18
    
    
    MANAGEMENTS DISCUSSION AND ANALYSIS




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##### 



Key factors affecting operating cash flow Impact onFor the years ended December 31
    
    
    
    
    
    
    
    
    
    operating($ millions, except per ounce data)
    
    2004
    
    
    2003
    
    
    cash flow
    
    
    CommentsGold sales volumes
    
    
    4,936
    
    
    
    5,554
    
    
    $
    (106
    )(000s oz)Realized gold prices
    
    $
    391
    
    
    $
    361
    
    
    
    148($/oz)Total cash costs ($/oz)1
    
    
    212
    
    
    
    190
    
    
    
    (109
    )Sub-total
    
    
    
    
    
    
    
    
    
    
    (67
    )
    
    Refer to pages 9 and 10 for
explanations of changes in gold production and sales.Income tax payments
    
    
    45
    
    
    
    111
    
    
    
    66
    
    
    Payments in 2005 are expected to be similar to 2004.Non-cash
working capital
    
    
    49
    
    
    
    (89
    )
    
    
    (138
    )
    
    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
    
    
    15
    
    
    
    35
    
    
    
    20
    
    
    Increase in amounts capitalized to development projects in 2004.Effect of other factors
    
    
    
    
    
    
    
    
    
    
    (15
    )Total
    
    
    
    
    
    
    
    
    
    $
    (48
    )
   1

    Total cash costs per ounce is a nonGAAP performance measure. For more
information, see pages 36 to 37. Investing Activities For the years ended December 31($ millions)
    
    2004
    
    
    2003
    
    
    $ change
    
    
    CommentsGrowth capital expenditures1Veladero
    
    $
    286
    
    
    $
    91
    
    
    $
    195
    
    
    Full year of construction activity in 2004.Lagunas Norte
    
    
    193
    
    
    
    36
    
    
    
    157
    
    
    Construction started in Q2, 2004.Tulawaka
    
    
    48
    
    
    
    4
    
    
    
    44
    
    
    Construction started in Q1, 2004.Cowal
    
    
    73
    
    
    
    24
    
    
    
    49
    
    
    Construction started in Q1, 2004.Pascua-Lama
    
    
    34
    
    
    
    9
    
    
    
    25
    
    
    Increased development activity and capitalization of interest from Q3, 2004.Nevada Power Plant
    
    
    18
    
    
    
    
    
    
    
    18
    
    
    Construction started in Q4, 2004.Subtotal
    
    
    652
    
    
    
    164
    
    
    
    488Sustaining capital expendituresNorth America
    
    
    86
    
    
    
    80
    
    
    
    6Australia/Africa
    
    
    87
    
    
    
    119
    
    
    
    (32
    )
    
    2003 was higher due to a transition to owner mining at Plutonic that resulted in equipment purchases.South America
    
    
    8
    
    
    
    17
    
    
    
    (9
    )Other
    
    
    20
    
    
    
    4
    
    
    
    16Subtotal
    
    
    201
    
    
    
    220
    
    
    
    (19
    )Total
    
    $
    853
    
    
    $
    384
    
    
    $
    469
   1Includes construction costs and capitalized interest. BARRICK YEAR-END 2004
    
    
    19
    
    
    MANAGEMENTS DISCUSSION AND ANALYSIS




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##### 



In 2005, we expect to spend about $1.1
billion on capital expenditures, mainly for
construction activities at our development
projects. 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
2002Earnings
Earnings in 2003 were lower than in 2002. We
benefited from higher spot gold prices, which
enabled us to realize a $25 per ounce higher
selling price for our gold production (an
increase in revenue of $139 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 changed from a recovery of $12 million
in 2002 to an expense of $82 million in 2003. 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 $5 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 $32 million more in exploration, mine
development and business development in 2003
compared to 2002. A $25 million increase in
exploration costs to $67 million in 2003 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, offset by a $48
million goodwill impairment charge. In 2003, we had an income tax expense of $82
million. In 2002, we recorded a tax recovery of
$12 million; including tax credits totaling $19
million due to the outcome of various tax
uncertainties. These credits were offset by
valuation allowances against unrecognized tax
losses. Cash Flow
We generated $70 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 $16 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 SHEETKey Balance Sheet Ratios Year ended December 31
    
    2004
    
    
    2003Non-cash working capital ($ millions)1
    
    $
    49
    
    
    $
    (89
    )Net debt (cash) ($ millions)2
    
    $
    293
    
    
    $
    (211
    )Net debt:equity ratio3
    
    
    0.05:1
    
    
    
    (0.04:1
    )Current ratio4
    
    
    4.56:1
    
    
    
    3.33:1
   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 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 BARRICK YEAR-END 2004
    
    
    20
    
    
    MANAGEMENTS DISCUSSION AND ANALYSIS




---



##### 



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 EquityOutstanding 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 $0.11 in mid-December. The amount
and timing of any dividends is within the
discretion of our Board of Directors. The Board
of Directors reviews the dividend policy
semi-annually based on the cash requirements of
our operating assets, exploration and development
activities, as well as potential acquisitions,
combined with our current and projected financial
position.  QUARTERLY INFORMATION($ millions, except where indicated)2004
    
    
    2003Q4
    
    
    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
    
    
    $
    529
    
    
    $
    541
    
    
    $
    487
    
    
    $
    449Income (loss) before taxes
    
    
    (441
    )
    
    
    40
    
    
    
    23
    
    
    
    42
    
    
    
    23
    
    
    
    72
    
    
    
    55
    
    
    
    49Income tax recovery (expense)
    
    
    241
    
    
    
    (7
    )
    
    
    15
    
    
    
    (15
    )
    
    
    (59
    )
    
    
    (28
    )
    
    
    7
    
    
    
    (2
    )Net income (loss)
    
    $
    (200
    )
    
    $
    33
    
    
    $
    38
    
    
    $
    27
    
    
    $
    (49
    )
    
    $
    44
    
    
    $
    69
    
    
    $
    53Net income
(loss) per share -
basic (dollars)
    
    
    (0.37
    )
    
    
    0.06
    
    
    
    0.07
    
    
    
    0.05
    
    
    
    (0.06
    )
    
    
    0.08
    
    
    
    0.11
    
    
    
    0.09Per ounce statistics (dollars)Average spot gold price
    
    
    434
    
    
    
    401
    
    
    
    393
    
    
    
    408
    
    
    
    392
    
    
    
    364
    
    
    
    347
    
    
    
    352Average realized gold price
    
    
    417
    
    
    
    395
    
    
    
    372
    
    
    
    382
    
    
    
    388
    
    
    
    359
    
    
    
    349
    
    
    
    348Total cash costs per ounce1
    
    
    221
    
    
    
    218
    
    
    
    209
    
    
    
    199
    
    
    
    199
    
    
    
    180
    
    
    
    185
    
    
    
    194Cash inflow (outflow) fromOperating activities
    
    $
    127
    
    
    $
    158
    
    
    $
    117
    
    
    $
    133
    
    
    $
    156
    
    
    $
    204
    
    
    $
    76
    
    
    $
    145Investing activities
    
    
    (249
    )
    
    
    (225
    )
    
    
    (203
    )
    
    
    (171
    )
    
    
    (172
    )
    
    
    (75
    )
    
    
    (73
    )
    
    
    (76
    )Financing activities
    
    $
    742
    
    
    $
    154
    
    
    $
    (73
    )
    
    $
    (82
    )
    
    $
    (54
    )
    
    $
    (83
    )
    
    $
    (130
    )
    
    $
    1
   1For an explanation of the use of non-GAAP performance measures, refer to pages 36
to 37. BARRICK YEAR-END 2004
    
    
    21
    
    
    MANAGEMENTS DISCUSSION AND ANALYSIS




---



##### 



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 15. Fourth Quarter
Results
Revenue for fourth quarter 2004 was $501 million
on gold sales of 1.2 million ounces, compared to
$529 million in revenue on gold sales of 1.4
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 $388 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 1.36 million ounces at total cash costs of
$199 per ounce in the prior-year quarter. In fourth quarter 2004 we incurred a loss of $200
million ($0.37 per share) as compared to a loss
of $49 million ($0.06 per share) in the
prior-year quarter. This higher loss over the
prior-year quarter reflects an impairment charge
for certain long-lived assets of $291 million
pre-tax, and a goodwill impairment charge of $184
million, pre-tax partly offset by a $29 per ounce
higher realized gold price, a $141 million tax
recovery on final resolution of the Peruvian tax
assessment, and a $81 million future tax credit
due to a change in tax status in Australia,
offset by higher total cash costs. Effect on earnings increase (decrease) Three months ended December 31($ millions)
    
    2004

    2003Pre-tax
    
    
    Post-tax
    
    
    Pre-tax
    
    
    Post-taxNon-hedge derivative gains
    
    $
    6
    
    
    $
    6
    
    
    $
    46
    
    
    $
    37Gains (losses) on asset sales
    
    
    (2
    )
    
    
    (2
    )
    
    
    3
    
    
    
    2Litigation costs
    
    
    
    
    
    
    
    
    
    
    (16
    )
    
    
    (11
    )Impairment
charges on longlived assets
    
    
    (291
    )
    
    
    (198
    )
    
    
    (5
    )
    
    
    (3
    )Impairment charges on
investments
    
    
    (4
    )
    
    
    (4
    )
    
    
    (4
    )
    
    
    (4
    )Change in asset retirement
obligation estimates
    
    
    (19
    )
    
    
    (15
    )
    
    
    
    
    
    
    Resolution of Peruvian tax
assessmentOutcome of tax uncertainties
    
    
    
    
    
    
    141
    
    
    
    
    
    
    
    Reversal of other accrued
costs
    
    
    21
    
    
    
    15
    
    
    
    
    
    
    
    Future tax creditsChange in Australian tax
status
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Goodwill impairment charge
    
    
    (184
    )
    
    
    (184
    )
    
    
    (48
    )
    
    
    (48
    )Total
    
    $
    (473
    )
    
    $
    (241
    )
    
    $
    (24
    )
    
    $
    (27
    )
 In the quarter, we generated operating cash
flow of $127 million as compared to operating
cash flow of $156 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 ARRANGEMENTSGold 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
Support Pascua-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- BARRICK YEAR-END 2004
    
    
    22
    
    
    MANAGEMENTS DISCUSSION AND ANALYSIS




---



##### 



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. 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. 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 BARRICK YEAR-END 2004
    
    
    23
    
    
    MANAGEMENTS DISCUSSION AND ANALYSIS




---



##### 



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. 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. BARRICK YEAR-END 2004
    
    
    24
    
    
    MANAGEMENTS DISCUSSION AND ANALYSIS




---



##### 




    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. 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
    )
 LIQUIDITYLiquidity 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. BARRICK YEAR-END 2004
    
    
    25
    
    
    MANAGEMENTS DISCUSSION AND ANALYSIS




---



##### 



Capital Resources1($ millions)
    
    2004
    
    
    2003
    
    
    2002Opening capital resource
    
    $
    1,970
    
    
    $
    2,044
    
    
    $
    1,733New sourcesOperating cash flow
    
    
    535
    
    
    
    581
    
    
    
    651New financing facilities2
    
    
    1,056
    
    
    
    
    
    
    
    $
    3,561
    
    
    $
    2,625
    
    
    $
    2,384AllocationsGrowth capital3
    
    $
    (652
    )
    
    $
    (164
    )
    
    $
    (81
    )Sustaining capital4
    
    
    (201
    )
    
    
    (220
    )
    
    
    (210
    )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 ($ millions)
    
    
    
    
    
    
    
    
    
    Payments due2010 andAt December 31, 2004
    
    2005
    
    
    2006
    
    
    2007
    
    
    2008
    
    
    2009
    
    
    thereafter
    
    
    TotalContractual obligationsLong-term debt (1)
    
    $
    31
    
    
    $
    58
    
    
    $
    580
    
    
    $
    72
    
    
    $
    17
    
    
    $
    903
    
    
    $
    1,661Asset retirement obligations (2)
    
    
    35
    
    
    
    28
    
    
    
    17
    
    
    
    41
    
    
    
    33
    
    
    
    190
    
    
    
    344Capital leases1
    
    
    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
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    322$
    504
    
    
    $
    216
    
    
    $
    711
    
    
    $
    232
    
    
    $
    153
    
    
    $
    1,707
    
    
    $
    3,523
   1

    Includes the $56 million build to suite lease facility. 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 BARRICK YEAREND 2004
    
    
    26
    
    
    MANAGEMENTS DISCUSSION AND ANALYSIS




---



##### 



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 6 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. 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 Canadian
GAAP. In certain cases, Canadian 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 Canadian 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
In first quarter 2004, we adopted several new
accounting standards as disclosed in note 3 to
the interim financial statements. CICA 3110, Asset Retirement Obligations
We adopted CICA 3110 in first quarter 2004, and
changed our accounting policy for recording
obligations relating to the retirement of
long-lived assets. CICA 3110 requires
retroactive adoption, and we restated
comparative amounts for the effects of adoption. BARRICK YEAR-END 2004
    
    
    27
    
    
    MANAGEMENTS DISCUSSION AND ANALYSIS




---



##### 



CICA 3110 applies to legal obligations
associated with the retirement of long-lived
assets that result from the acquisition,
construction, development and/or the normal
operation of a long-lived asset. Under CICA 3110,
we record the fair value of a liability for an
asset retirement obligation in the period in
which it is incurred. Over time, the liability is
increased to reflect an interest element
(accretion) considered in its initial measurement
at fair value, and the capitalized cost is
amortized over the useful life of the related
asset. Upon settlement of the liability, we will
record a gain or loss if the actual cost incurred
is different than the liability recorded. The measurement basis for asset retirement
obligations under CICA 3110 is fair value, as
opposed to the previous accounting policy, which
was to accrue the total expected cost of these
obligations over the duration of our mine lives.
The impact of this change in measurement basis
was to increase the recorded amounts of asset
retirement obligations by $104 million. The
unamortized amount of the corresponding increase
in property, plant and equipment was $36 million,
with a further $50 million (net of tax) of
related amortization/ accretion expense through
December 31, 2003 that was recorded as an
adjustment to retained earnings on January 1,
2004. Compared to the previous accounting policy,
the retroactive adoption of CICA 3110 caused a
$12 million (net of tax) decrease in net income
in the year ended December 31, 2004 (2003 -
$17). The adoption of CICA 3110 had no effect on
the consolidated statement of cash flows. CICA 3870, Stock-Based Compensation and other
Stock-Based Payments
We adopted CICA 3870 in first quarter 2004. CICA
3870 requires us to recognize in income a
compensation expense for all employee stock-based
awards, using the fair value method of
accounting. The fair value of each employee stock
option grant is estimated on the date of the grant using a
Black-Scholes option-pricing model.
We elected to adopt CICA 3870 retroactively with
restatement of prior periods to include an
expense of the type that was previously included
under the prior pro forma note disclosure. The
impact of adopting CICA 3870 was to record a
cumulative amount of stock option expense of $14
million through December 31, 2003 for stock
options granted on or after January 1, 2002.
This method of adopting CICA 3870 excludes
options granted prior to January 1, 2002 from
its scope. The impact of adopting CICA 3870 was
a $21 million decrease in net income in for the year ended December 31,
2004 (2003 - $12 million decrease, 2002  $2
million decrease). The adoption of CICA 3870 had
no effect on the consolidated statement of cash
flows. CICA 3870 would also have permitted prospective
application if we had adopted it for our 2003
fiscal year. Because we chose to adopt CICA 3870
beginning in fiscal 2004, we were not allowed to
choose this alternative. If we had elected to
adopt 3870 in fiscal 2003, and we had chosen
prospective application, we would have applied
the principles of CICA 3870 to stock options
granted on or after January 1, 2003. The impact
of this method of adoption would have been to
exclude stock options granted in fiscal 2002 from
the scope of CICA 3870. Amounts recorded for
stock option expense in the year ended December
31, 2004, would have been $10 million lower than
under the actual method we used for adoption of
CICA 3870 (2003 - $10 million lower). CICA Accounting Guideline 13, Hedging
Relationships (AcG-13) and Emerging Issues
Committee Abstract 128, Accounting for Trading,
Speculative on Non-Hedging Derivative Financial
Instruments (EIC - 128)
We adopted AcG-13 and EIC-128 in first quarter
2004. These accounting standards include in their
scope our interest rate contracts, currency
contracts, gold lease rate swaps, commodity
options and fuel contracts, which are all
disclosed in note 17 to the Financial Statements.
Our gold and silver sales contracts are not
included in the scope of these pronouncements
because the contracts are expected to be settled
through physical delivery of gold and silver. AcG-13 sets out the criteria that must be met in
order to apply hedge accounting for derivatives
(and is based on many of the principles outlined
in FAS 133, which is the US GAAP pronouncement
relating to derivative instruments and hedging
activities). AcG-13 provides detailed guidance on
the identification, designation, documentation
and effectiveness of hedging relationships, for
purposes of applying hedge accounting. Derivative
instruments that do not qualify for hedge
accounting under AcG - 13, or are not designated
as a hedge, are recorded in the consolidated
balance sheet at fair value as either an asset or liability, with changes in fair value
recorded in earnings. The adoption of AcG-13 and EIC-128 did not have
any effect on our consolidated financial
statements because prior to adoption of these
new standards, our accounting policy for
derivative instruments was BARRICK YEAR-END 2004
    
    
    28
    
    
    MANAGEMENTS DISCUSSION AND ANALYSIS




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##### 



consistent with the principles of
both pronouncements. 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:  
    Impairment assessments of goodwill;  
    Reserve estimates used to measure amortization
of property, plant and equipment and
intangible assets;  
    Stripping ratios used to measure amortization of
capitalized mining costs;  
    Impairment assessments of long-lived assets
(including intangible assets);  
    The fair value of asset retirement
obligations; and  
    The measurement of future income tax assets
and liabilities and assessments of the
amounts of valuation allowances recorded. Impairment Assessments of Goodwill
In accounting for the Homestake merger, we
determined that goodwill existed at the date of
acquisition. The allocation to reporting units
was based on estimates of the individual fair
values of those reporting units acquired or
benefiting from synergies arising directly from
the merger. Subsequent to the acquisition, we are
required to test this goodwill annually for
impairment. This impairment assessment is
fundamentally based on updated estimates of the
fair values of those reporting units, which could
be affected by, among other things, changes in
quantities of gold mineral reserves and
resources; changes in the price of gold; changes
in foreign currency exchange rates; changes in
expected future operating costs; and changes in
expected future capital expenditures and mine
closure costs. An adverse change in any one or a
number of these factors could cause us to
recognize an impairment charge relating to
goodwill. In particular if we were unable to
replace or increase gold mineral reserves and
resources at the mines where we have allocated
goodwill, then we would expect the value of
goodwill to be depleted over time as we approach
the end of the mine life. In 2004, on finalization of the annual goodwill
impairment test, we recorded an impairment
charge of $184 million, of which $120 million relates
to the Cowal project $28 million relates to
Kalgoorlie and $36 million relates to Hemlo.
These impairment were mainly caused by the
continued strengthening of the A$ and C$ against
the US dollar, as well as revisions to estimates
of future capital expenditures and production
costs due to the impact of inflationary cost
pressures. 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 National Instrument 43-101. 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. BARRICK
YEAR-END 2004
    
    
    29
    
    
    MANAGEMENTS DISCUSSION AND ANALYSIS




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##### 



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. Impact of Historic Changes in Reserve Estimates
on Amortization For the years ended Dec.31
    
    2004
    
    
    2003($ millions,except reserves
    
    Reserves
    
    
    Amortization
    
    
    Reserves
    
    
    Amortizationin millions of
    
    increase
    
    
    increase
    
    
    increase
    
    
    increasecontained oz)
    
    (decrease)1
    
    
    (decrease)
    
    
    (decrease)1
    
    
    (decrease)GoldstrikeUnderground
    
    
    0.2
    
    
    $
    (3
    )
    
    
    0.6
    
    
    $
    (5
    )Open Pit
    
    
    1.5
    
    
    
    (6
    )
    
    
    1.3
    
    
    
    (4
    )Plutonic
    
    
    0.5
    
    
    
    (2
    )
    
    
    1.3
    
    
    
    (5
    )Eskay Creek
    
    
    (0.1
    )
    
    
    4
    
    
    
    
    
    
    
    Kalgoorlie
    
    
    0.9
    
    
    
    (2
    )
    
    
    
    
    
    
    Pierina
    
    
    0.3
    
    
    
    (5
    )
    
    
    
    
    
    
    
   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 33 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 Amortization increaseStripping Ratio used in
    
    
    (decrease)1($ millions, except ratios)
    
    2005
    
    
    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. 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; BARRICK YEAR-END 2004
    
    
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    MANAGEMENTS DISCUSSION AND ANALYSIS




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##### 




    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-150;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. 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 and
Australia; 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 $56 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 BARRICK YEAR-END 2004
    
    
    31
    
    
    MANAGEMENTS DISCUSSION AND ANALYSIS




---



##### 



the mine was impaired at the end of 2004, and
we recorded a pre-tax impairment charge of $211
million. 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 and Cowal mines are impaired
could increase, subject to the effect of changes
in other factors and assumptions. The revised
gold price assumption would have no impact on
the Australian 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; 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 $22 million charge to earnings
mainly reflects increases in the expected cost
of water treatment at certain closed mines. AROs at December 31, 2004($ millions)Operating mines
    
    $
    196Closed mines
    
    
    165Development projects
    
    
    14Total
    
    $
    375
 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. BARRICK YEAR-END 2004
    
    
    32
    
    
    MANAGEMENTS DISCUSSION AND ANALYSIS




---



##### 



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. Future Tax Assets and
LiabilitiesMeasurement 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
future income tax assets and liabilities recorded
in our Financial Statements. Changes in future
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 future tax balances at the end of 2004. Valuation
Allowances
Each period, we evaluate the likelihood of
whether some portion or all of each future 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 future 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 future 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
either a component of income tax expense or
recovery for each period or an adjustment to
goodwill if the valuation allowances were
originally recorded in acquired companies at the
date of acquisition. 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 either earnings or
goodwill in the period of release. 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. Valuation allowances at December 31($ millions)
    
    
    2004
    
    
    
    2003United States
    
    
    $
    146
    
    
    
    $
    154Chile
    
    
    
    99
    
    
    
    
    104Argentina
    
    
    
    45
    
    
    
    
    43Canada
    
    
    
    73
    
    
    
    
    72Tanzania
    
    
    
    18
    
    
    
    
    2Australia
    
    
    
    3
    
    
    
    
    8Other
    
    
    
    8
    
    
    
    
    6$
    392
    
    
    
    $
    389
 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 and Argentina: 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. BARRICK YEAR-END 2004
    
    
    33
    
    
    MANAGEMENTS DISCUSSION AND ANALYSIS




---



##### 



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
future 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, except per ounce information)
    
    2004
    
    
    2003Total cash
costs - per Canadian GAAP1
    
    $
    1,064
    
    
    $
    1,068Accretion expense and reclamation costs
at the operating mines
    
    
    (18
    )
    
    
    (15
    )Total cash
costs - per Gold
Institute Production Cost Standard
    
    $
    1,046
    
    
    $
    1,053Ounces sold (thousands)
    
    
    4,936
    
    
    
    5,554Total cash
costs per ounce - per Canadian
GAAP (dollars)2
    
    $
    216
    
    
    $
    192Total cash
costs - per Gold Institute
Production Cost Standard (dollars)2
    
    $
    212
    
    
    $
    190
   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 Canadian
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
Canadian 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
table on page 38 reconciling the GAAP and
non - GAAP measures, the GAAP and non-GAAP measures
are not significantly different. 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 BARRICK YEAR-END 2004
    
    
    34
    
    
    MANAGEMENTS DISCUSSION AND ANALYSIS




---



##### 



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. BARRICK
YEAR-END 2004
    
    
    35
    
    
    MANAGEMENTS DISCUSSION AND ANALYSIS




---



##### 



Reconciliation of Total Cash Costs Per Ounce to Financial Statements
 Goldstrike -
    
    
    Goldstrike -Open Pit
    
    
    Underground
    
    
    Eskay Creek2
    
    
    Round MountainFor the years ended December 31
    
    2004
    
    
    2003
    
    
    2004
    
    
    2003
    
    
    2004
    
    
    2003
    
    
    2004
    
    
    2003Total cash production costs -
per Canadian GAAP1
    
    $
    335.7
    
    
    $
    379.8
    
    
    $
    141.7
    
    
    $
    152.7
    
    
    $
    9.5
    
    
    $
    18.6
    
    
    $
    85.8
    
    
    $
    68.6Accretion expense and reclamation
costs at operating mines
    
    
    (1.7
    )
    
    
    (1.7
    )
    
    
    (0.7
    )
    
    
    (0.6
    )
    
    
    (0.4
    )
    
    
    (0.3
    )
    
    
    (1.7
    )
    
    
    (1.6
    )Total cash production costs per Gold
Institute Production Cost Standard
    
    $
    334.0
    
    
    $
    378.1
    
    
    $
    141.0
    
    
    $
    152.1
    
    
    $
    9.1
    
    
    $
    18.3
    
    
    $
    84.1
    
    
    $
    67.0Ounces sold (thousands)
    
    
    1,352
    
    
    
    1,625
    
    
    
    554
    
    
    
    600
    
    
    
    290
    
    
    
    354
    
    
    
    375
    
    
    
    379Total cash costs per ounce sold per Canadian GAAP (dollars)3
    
    $
    248
    
    
    $
    234
    
    
    $
    257
    
    
    $
    254
    
    
    $
    33
    
    
    $
    53
    
    
    $
    229
    
    
    $
    181Total cash costs per ounce sold -
per Gold Institute Production
Cost Standard (dollars)4
    
    $
    247
    
    
    $
    233
    
    
    $
    255
    
    
    $
    253
    
    
    $
    31
    
    
    $
    52
    
    
    $
    224
    
    
    $
    177
 Hemlo
    
    
    Holt-McDermott
    
    
    Marigold
    
    
    Total North AmericaFor the years ended December 31
    
    2004
    
    
    2003
    
    
    2004
    
    
    2003
    
    
    2004
    
    
    2003
    
    
    2004
    
    
    2003Total cash production costs -
per Canadian GAAP1
    
    $
    58.0
    
    
    $
    60.5
    
    
    $
    12.3
    
    
    $
    20.9
    
    
    $
    9.1
    
    
    $
    8.1
    
    
    $
    652.1
    
    
    $
    709.2Accretion expense and reclamation
costs at operating mines
    
    
    (0.6
    )
    
    
    (0.3
    )
    
    
    (0.1
    )
    
    
    (0.1
    )
    
    
    (0.1
    )
    
    
    (0.1
    )
    
    
    (5.3
    )
    
    
    (4.7
    )Total cash production costs per Gold
Institute Production Cost Standard
    
    $
    57.4
    
    
    $
    60.2
    
    
    $
    12.0
    
    
    $
    20.8
    
    
    $
    9.0
    
    
    $
    8.0
    
    
    $
    646.5
    
    
    $
    704.5Ounces sold (thousands)
    
    
    239
    
    
    
    266
    
    
    
    62
    
    
    
    87
    
    
    
    46
    
    
    
    47
    
    
    
    2,918
    
    
    
    3,358Total cash costs per ounce sold
per Canadian GAAP (dollars)3
    
    $
    243
    
    
    $
    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
    
    
    $
    222
    
    
    $
    210
 Pierina
    
    
    Total South America
    
    
    Plutonic
    
    
    DarlotFor the years ended December 31
    
    2004
    
    
    2003
    
    
    2004
    
    
    2003
    
    
    2004
    
    
    2003
    
    
    2004
    
    
    2003Total cash production costs -
per Canadian GAAP1
    
    $
    71.8
    
    
    $
    78.7
    
    
    $
    71.8
    
    
    $
    78.7
    
    
    $
    69.3
    
    
    $
    62.6
    
    
    $
    30.0
    
    
    $
    25.4Accretion expense and reclamation
costs at operating mines
    
    
    (3.1
    )
    
    
    (3.0
    )
    
    
    (3.1
    )
    
    
    (3.0
    )
    
    
    (0.2
    )
    
    
    (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 Canadian GAAP (dollars)3
    
    $
    111
    
    
    $
    86
    
    
    $
    111
    
    
    $
    86
    
    
    $
    223
    
    
    $
    193
    
    
    $
    211
    
    
    $
    165Total cash costs per ounce sold -
per Gold Institute Production
Cost Standard (dollars)4
    
    $
    106
    
    
    $
    83
    
    
    $
    106
    
    
    $
    83
    
    
    $
    223
    
    
    $
    193
    
    
    $
    210
    
    
    $
    164
   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. BARRICK YEAR-END 2004
    
    36
    
    MANAGEMENTS DISCUSSION AND ANALYSIS




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##### 



Lawlers
    
    
    Kalgoorlie
    
    
    Bulyanhulu
    
    
    Total Australia/AfricaFor the years ended December 31
    
    2004
    
    
    2003
    
    
    2004
    
    
    2003
    
    
    2004
    
    
    2003
    
    
    2004
    
    
    2003Total cash production costs -
per Canadian GAAP1
    
    $
    28.3
    
    
    $
    23.8
    
    
    $
    109.2
    
    
    $
    88.4
    
    
    $
    103.1
    
    
    $
    77.1
    
    
    $
    339.9
    
    
    $
    277.3Accretion expense and reclamation
costs at operating mines
    
    
    (0.1
    )
    
    
    (0.1
    )
    
    
    (2.2
    )
    
    
    (1.8
    )
    
    
    (7.4
    )
    
    
    (4.1
    )
    
    
    (10.0
    )
    
    
    (6.3
    )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 Canadian GAAP (dollars)3
    
    $
    247
    
    
    $
    250
    
    
    $
    236
    
    
    $
    213
    
    
    $
    304
    
    
    $
    260
    
    
    $
    248
    
    
    $
    216Total cash costs per ounce sold -
per Gold Institute Production
Cost Standard (dollars)4
    
    $
    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. Reconciliation of Amortization Costs per Ounce to Financial Statements For the years ended December 31
    
    2004
    
    
    2003
    
    
    2002Amortization expense per consolidated financial statements
    
    $
    468
    
    
    $
    518
    
    
    $
    491Amortization expense recorded on property, plant and equipment
not at operating mine sites
    
    
    (29
    )
    
    
    (27
    )
    
    
    (26
    )Amortization expense for per ounce calculation
    
    $
    439
    
    
    $
    491
    
    
    $
    465Ounces sold (thousands)
    
    
    4,936
    
    
    
    5,554
    
    
    
    5,805Amortization per ounce (dollars)
    
    $
    89
    
    
    $
    89
    
    
    $
    80
 BARRICK YEAR-END 2004
    
    37
    
    MANAGEMENTS DISCUSSION AND ANALYSIS




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##### 



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
orebody, 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 79 of the Annual
Report Gold Mineral Reserves and Mineral
Resources. MINERAL RESOURCE:See page 81 of the Annual
Report 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. BARRICK YEAR-END 2004
    
    38
    
    MANAGEMENTS DISCUSSION AND ANALYSIS




---



##### 



Consolidated Statements of Income Barrick Gold CorporationFor the years ended December 31,(in millions of United States dollars, except per share data, CANADIAN GAAP basis)
 2004
    
    
    
    2003
    
    
    2002Gold sales(notes 3 and 4)
    
    $
    1,932
    
    
    
    $
    2,006
    
    
    $
    1,947Costs and expensesCost of sales1 (note 5)
    
    
    1,072
    
    
    
    
    1,085
    
    
    
    1,067Amortization
    
    
    468
    
    
    
    
    518
    
    
    
    491Administration
    
    
    92
    
    
    
    
    83
    
    
    
    52Exploration, development and business development
    
    
    113
    
    
    
    
    84
    
    
    
    52Other expense (note 6)
    
    
    533
    
    
    
    
    33
    
    
    
    642,278
    
    
    
    
    1,803
    
    
    
    1,726Interest income
    
    
    25
    
    
    
    
    31
    
    
    
    26Interest expense (note 17B)
    
    
    (15
    )
    
    
    
    (35
    )
    
    
    (57
    )Income (loss) before income taxes and other items
    
    
    (336
    )
    
    
    
    199
    
    
    
    190Income tax recovery (expense) (note 7)
    
    
    234
    
    
    
    
    (82
    )
    
    
    12Net income (loss) for the year
    
    $
    (102
    )
    
    
    $
    117
    
    
    $
    202Earnings per share data (note 8):Net income (loss)Basic and diluted
    
    $
    (0.19
    )
    
    
    $
    0.22
    
    
    $
    0.37
   1
    Exclusive of amortization (note 5). The accompanying notes are an integral part of these consolidated financial statements. BARRICK YEAR-END 2004
    
    39
    
    FINANCIAL STATEMENTS




---



##### 



Consolidated Statements of Cash Flow Barrick Gold Corporation
For the years ended December 31,
(in millions of United States dollars, CANADIAN GAAP basis)
 2004
    
    
    
    2003
    
    
    2002OPERATING ACTIVITIESNet income (loss)
    
    $
    (102
    )
    
    
    $
    117
    
    
    $
    202Amortization
    
    
    468
    
    
    
    
    518
    
    
    
    491Future income taxes (note 19)
    
    
    (256
    )
    
    
    
    28
    
    
    
    (71
    )Inmet litigation settlement (note 6)
    
    
    
    
    
    
    
    (86
    )
    
    
    Gains on sale of long-lived assets (note 6)
    
    
    (2
    )
    
    
    
    (24
    )
    
    
    (4
    )Impairment charge on goodwill (note 14)
    
    
    184
    
    
    
    
    48
    
    
    
    Impairment charge on long-lived assets (note 6)
    
    
    299
    
    
    
    
    5
    
    
    
    11Other items (note 9)
    
    
    (56
    )
    
    
    
    (25
    )
    
    
    22Net cash provided by operating activities
    
    
    535
    
    
    
    
    581
    
    
    
    651INVESTING ACTIVITIESProperty, plant and equipmentCapital expenditures (note 3)
    
    
    (853
    )
    
    
    
    (384
    )
    
    
    (291
    )Sales proceeds
    
    
    43
    
    
    
    
    40
    
    
    
    8Investments (note 10)Purchases
    
    
    (47
    )
    
    
    
    (60
    )
    
    
    Sales proceeds
    
    
    9
    
    
    
    
    8
    
    
    
    3Proceeds on maturity of term deposits
    
    
    
    
    
    
    
    
    
    
    
    159Net cash used in investing activities
    
    
    (848
    )
    
    
    
    (396
    )
    
    
    (121
    )FINANCING ACTIVITIESCapital stockProceeds from shares issued on exercise of stock options
    
    
    49
    
    
    
    
    29
    
    
    
    83Repurchased for cash (note 20A)
    
    
    (95
    )
    
    
    
    (154
    )
    
    
    Long-term debt (note 17B)Proceeds
    
    
    974
    
    
    
    
    
    
    
    
    Repayments
    
    
    (41
    )
    
    
    
    (23
    )
    
    
    (25
    )Dividends (note 20A)
    
    
    (118
    )
    
    
    
    (118
    )
    
    
    (119
    )Other items
    
    
    (28
    )
    
    
    
    
    
    
    
    Net cash provided by (used in) financing activities
    
    
    741
    
    
    
    
    (266
    )
    
    
    (61
    )Effect of exchange rate changes on cash and equivalents
    
    
    
    
    
    
    
    7
    
    
    
    1Net increase (decrease) in cash and equivalents
    
    
    428
    
    
    
    
    (81
    )
    
    
    469Cash and equivalents at beginning of year(note 17A)
    
    
    970
    
    
    
    
    1,044
    
    
    
    574Cash and equivalents at end of year(note 17A)
    
    $
    1,398
    
    
    
    $
    970
    
    
    $
    1,044
 The accompanying notes are an integral part of these consolidated financial statements. BARRICK YEAR-END 2004
    
    40
    
    FINANCIAL STATEMENTS




---



##### 



Consolidated Balance Sheets Barrick Gold Corporation
At December 31,
(in millions of United States dollars, CANADIAN GAAP basis)
 2004
    
    
    
    2003ASSETSCurrent assetsCash and equivalents (note 17A)
    
    $
    1,398
    
    
    
    $
    970Accounts receivable (note 11)
    
    
    58
    
    
    
    
    56Inventories (note 11)
    
    
    217
    
    
    
    
    167Other current assets (note 11)
    
    
    181
    
    
    
    
    661,854
    
    
    
    
    1,259Investments (note 10)
    
    
    124
    
    
    
    
    92Property, plant and equipment (note 12)
    
    
    4,529
    
    
    
    
    4,459Capitalized mining costs (note 13)
    
    
    226
    
    
    
    
    235Goodwill (note 14)
    
    
    868
    
    
    
    
    1,081Other assets (note 15)
    
    
    233
    
    
    
    
    213Total assets
    
    $
    7,834
    
    
    
    $
    7,339LIABILITIES AND SHAREHOLDERS EQUITYCurrent liabilitiesAccounts payable
    
    $
    335
    
    
    
    $
    245Other current liabilities (note 16)
    
    
    72
    
    
    
    
    133407
    
    
    
    
    378Long-term debt (note 17B)
    
    
    1,660
    
    
    
    
    718Other long-term obligations (note 18)
    
    
    471
    
    
    
    
    434Future income tax liabilities (note 19)
    
    
    105
    
    
    
    
    376Total liabilities
    
    
    2,643
    
    
    
    
    1,906Shareholders equityCapital stock (note 20)
    
    
    4,988
    
    
    
    
    4,976Retained earnings
    
    
    195
    
    
    
    
    468Contributed surplus
    
    
    31
    
    
    
    
    13Cumulative foreign currency translation adjustments
    
    
    (23
    )
    
    
    
    (24
    )Total shareholders equity
    
    
    5,191
    
    
    
    
    5,433Contingencies and commitments (notes 12D, 17 and 23)Total liabilities and shareholders equity
    
    $
    7,834
    
    
    
    $
    7,339
 The accompanying notes are an integral part of these consolidated financial statements. BARRICK YEAR-END 2004
    
    41
    
    FINANCIAL STATEMENTS




---



##### 



Consolidated Statements of Shareholders Equity  Barrick Gold Corporation
For the years ended December 31,
(in millions of United States dollars, CANADIAN GAAP basis)
 2004
    
    
    
    2003Common shares(number in millions)As previously reported, at January 1
    
    
    535
    
    
    
    
    542Change in accounting policy for exchangeable shares (note 2B)
    
    
    (1
    )
    
    
    
    (1
    )Adjusted, at January 1
    
    
    534
    
    
    
    
    541Issued on exercise of stock options (note 21A)
    
    
    3
    
    
    
    
    2Repurchased (note 20A)
    
    
    (4
    )
    
    
    
    (9
    )At December 31
    
    
    533
    
    
    
    
    534Common shares(amount in millions)As previously reported, at January 1
    
    
    4,988
    
    
    
    
    5,040Change in accounting policy for stock options (note 2B and 21A)
    
    
    1
    
    
    
    
    Change in accounting policy for exchangeable shares (note 2B)
    
    
    (13
    )
    
    
    
    (13
    )Adjusted, at January 1
    
    $
    4,976
    
    
    
    $
    5,027Issued on exercise of stock options (note 21A)
    
    
    49
    
    
    
    
    29Issued on exercise of exchangeable shares (note 2B)
    
    
    2
    
    
    
    
    Repurchased (note 20A)
    
    
    (42
    )
    
    
    
    (81
    )Transfer to capital stock on exercise of stock options
    
    
    3
    
    
    
    
    1At December 31
    
    $
    4,988
    
    
    
    $
    4,976Contributed surplus(amount in millions)As previously reported, at January 1
    
    $
    
    
    
    
    $
    Change in accounting policy for stock options (note 2B)
    
    
    13
    
    
    
    
    2Adjusted, at January 1
    
    $
    13
    
    
    
    $
    2Stock option expense (note 21)
    
    
    21
    
    
    
    
    12Transfer to capital stock on exercise of stock options
    
    
    (3
    )
    
    
    
    (1
    )At December 31
    
    $
    31
    
    
    
    $
    13Retained earningsAs previously reported, at January 1
    
    $
    532
    
    
    
    $
    577Change in accounting policy for stock options (note 2B)
    
    $
    (14
    )
    
    
    $
    (2
    )Change in accounting policy for asset retirement obligations (note 2B and 18A)
    
    $
    (50
    )
    
    
    $
    (33
    )Adjusted, at January 1
    
    $
    468
    
    
    
    $
    542Net income (loss)
    
    
    (102
    )
    
    
    
    117Dividends
    
    
    (118
    )
    
    
    
    (118
    )Adjustment on repurchase of common shares (note 20A)
    
    
    (53
    )
    
    
    
    (73
    )At December 31
    
    $
    195
    
    
    
    $
    468Cumulative foreign currency translation adjustments
    
    $
    (23
    )
    
    
    $
    (24
    )Total shareholders equity at December 31
    
    $
    5,191
    
    
    
    $
    5,433
 The accompanying notes are an integral part of these consolidated financial
statements. BARRICK YEAR-END 2004
    
    42
    
    FINANCIAL STATEMENTS




---



##### 



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Barrick Gold Corporation.Tabular dollar
amounts in millions of United States dollars,
unless otherwise shown. References to C$, A$ and
 are to Canadian dollars, Australian dollars
and Euros, respectively. 1 > NATURE OF OPERATIONS Barrick Gold Corporation (Barrick or the
Company) engages in the production and sale of
gold from underground and open-pit mines,
including related activities such as exploration
and mine development. Our operations are mainly
located in North America, South America,
Australia and Africa. 2 > SIGNIFICANT ACCOUNTING POLICIES A Basis of preparation These financial statements are prepared under
Canadian generally accepted accounting
principles (Canadian GAAP) in United States
dollars and included in our Proxy Statement that
we file with various Canadian regulatory
authorities. We prepare our primary consolidated
financial statements in United States dollars
and under United States generally accepted
accounting principles (US GAAP). These US GAAP
financial statements are also filed with
Canadian and US regulatory authorities. To
ensure comparability of financial information,
certain prior-year amounts have been
reclassified to conform with the current year
presentation. Consolidation policy These financial statements reflect consolidation
of the accounts of Barrick and other entities in
which we have a controlling financial interest.
The usual condition for a controlling financial
interest is ownership of a majority of the
voting interests of an entity. However, a
controlling financial interest may also exist in
entities through arrangements that do not
involve voting interests, where the entities are
variable interest entities (VIEs) under the
principles of AcG-15. Intercompany balances and
transactions are eliminated on consolidation. A VIE is defined as an entity that by design
either lacks enough equity investment at risk to
permit the entity to finance its activities
without additional subordinated financial
support from other parties; has equity owners
who are unable to make decisions about the
entity; or has equity owners that do not have
the obligation to absorb the entitys expected
losses or the right to receive the entitys
expected
residual returns. VIEs can arise from a
variety of entities or legal structures. AcG-15 requires a variable interest holder (i.e.
a counterparty to a VIE) to consolidate the VIE
if that party will absorb a majority of the
expected losses of the VIE, receive a majority
of the residual returns of the VIE, or both.
This party is considered the primary beneficiary
of the entity. The determination of whether a
variable interest holder meets the criteria to
be considered the primary beneficiary of a VIE
requires an evaluation of all transactions by
the entity. The foundation for this evaluation
is a calculation prescribed by AcG-15. We hold our interests in the Round Mountain,
Hemlo, Marigold and Kalgoorlie mines through
unincorporated joint ventures. We use the
proportionate consolidation method to account
for our interests in these unincorporated joint
ventures. Our 70% interest in the Tulawaka development
project is held through an unincorporated joint
venture. In years prior to 2004 we used the
proportionate consolidation method to account for
our interest. In 2004, we entered into an
agreement to finance the other joint venture
partners share of mine construction costs, which
caused us to reconsider whether this joint
venture is a VIE. We concluded that the joint
venture is in fact a VIE, and that Barrick is the
primary beneficiary. From June 2004 onwards, we
consolidated this joint venture using the
principles of AcG-15. The creditors of this VIE
have no recourse to the general credit of
Barrick. Foreign currency translation In 2003, various changes in economic facts and
circumstances led us to conclude that the
functional currency of our Argentinean
operations is the United States dollar rather
than the Argentinean Peso. These changes
included the completion of the Veladero mine
feasibility study, the expected denomination of
selling prices for future gold production and
the occurrence of higher amounts of US dollar
expenditures. Following this change the functional currency of
all our operations is the US dollar. We
re-measure non-US dollar balances as follows:  Ø
    non-monetary assets and liabilities using
historical rates; BARRICK YEAR-END 2004
    
    43
    
    NOTES TO FINANCIAL STATEMENTS




---



##### 



Ø
    monetary assets and liabilities using
period-end exchange rates; andØ
    income and expenses using average exchange rates, except
for expenses related to assets and liabilities
re-measured at historical exchange rates. Gains and losses arising from re-measurement
of foreign currency balances and transactions
are recorded in earnings. Use of estimates The preparation of these financial statements
requires us to make estimates and assumptions.
The most significant estimates and assumptions
are quantities of proven and probable gold
reserves; expected value of mineral resources
not considered proven and probable reserves;
expected future costs and expenses to produce
proven and probable reserves; expected future
commodity prices and foreign currency exchange
rates; and expected costs to meet asset
retirement obligations. Critical estimates and
assumptions include:  Ø
    decisions as to whether mine development costs should be capitalized or
expensed;Ø
    assessments of whether groups of long-lived assets or goodwill are impaired and
the fair value of those groups of assets or
goodwill that are the basis for measuring
impairment charges;Ø
    assessments of our ability to realize the benefits of future income tax
assets;Ø
    the useful lives of long-lived assets and the measurement of amortization recorded in
earnings; andØ
    the fair value of asset retirement obligations. We regularly review estimates and assumptions
that affect our financial statements; however,
actual outcomes could differ from estimates and
assumptions. B Accounting changes CICA 3110, Asset Retirement Obligations On January 1, 2004, we retroactively adopted
CICA Handbook Section 3110, Asset Retirement
Obligations (CICA 3110) with restatement of
prior periods to change our accounting policy
for recording obligations relating to the
retirement of long-lived assets. CICA 3110
applies to legal obligations associated with the
retirement of long-lived assets that result from
the acquisition, construction, development
and/or the normal operation of a long-lived
asset. Under CICA 3110, we record the fair value
of a liability for an asset retirement
obligation in the period in which it is
incurred. Over time, the liability is increased
to reflect an interest element (accretion)
considered in its initial measurement at fair
value, and the capitalized cost is amortized
over the useful life of the related asset. Upon
settlement of the liability, we will record a
gain or loss if the actual cost incurred is
different than the liability recorded. Effective
January 1, 2004 we recorded the cumulative
effect of adopting CICA 3110 as a charge to
retained earnings of $50 million, net of tax
effects of $18 million. Effective January 1,
2004, we recorded in our balance sheet an
increase in property, plant and equipment of $36
million; an increase in other long-term
obligations of $104 million; and a decrease in
future income tax liabilities of $18 million. On adoption of CICA 3110 at January 1, 2004,
the total amount of recorded liabilities for
asset retirement obligations was $341 million.
These liabilities mainly relate to obligations
at our active and inactive mines to perform
reclamation and remediation activities to meet
existing environmental laws and regulations

that govern our mining properties. For the year ended December 31, 2004, the effect
on earnings of adopting CICA 3110 was a decrease
in net income of $12 million, net of tax effects
of $7 million ($0.02 per share) (2003 - decrease
in net income of $17 million, net of tax effects
of $7 million ($0.03 per share); 2002 - decrease
in net income of $25 million, net of tax effects
of $11 million ($0.05 per share)). CICA 3870, Stock-Based Compensation and other
Stock-Based Payments On January 1, 2004, we adopted the
recommendations of CICA Handbook section 3870,
Stock-Based Compensation and other Stock-Based
payments (CICA 3870). We elected to adopt CICA
3870 retroactively with restatement of prior
periods to include an expense of the type that
was previously included under the prior pro forma
note disclosure. CICA 3870 requires us to
recognize in income a compensation expense for
all employee stock-based awards, using the fair
value method of accounting. The fair value of
each employee stock option grant is estimated on
the date of the grant using a Black-Scholes
option-pricing model. Effective January 1, 2004,
we recorded the cumulative effect of adopting
CICA 3870 as a charge to retained earnings of $14
million, net of tax effects of $nil, a credit to
capital stock of $1 million and a credit to
contributed surplus of $13 million. The effect of
the retroactive adoption of CICA 3870 on earnings
for the year December 31,  BARRICK YEAR-END 2004
    
    44
    
    NOTES TO FINANCIAL STATEMENTS




---



##### 



2004 was a charge to compensation expense of $21
million, net of tax effects of $nil, (2003 - $12
million charge net of tax effects of $nil and
2002 - $2 million charge, net of tax effects of
$nil). CICA Accounting Guideline 13, Hedging
Relationships and Emerging Issues Committee
Abstract 128, Accounting for Trading,
Speculative or Non-Hedging Derivative Financial
Instruments On January 1, 2004, we adopted CICA Accounting
Guideline 13: Hedging Relationships (AcG-13) and
related Emerging Issues Committee Abstract 128,
Accounting for Trading, Speculative or
Non-Hedging Derivative Financial Instruments
(EIC-128). The scope of derivative financial
instruments within these pronouncements includes
our interest rate contracts, currency contracts,
gold lease rate swaps, commodity options and
fuel contracts, disclosed in note 17. Our gold
and silver sales contracts are not included in
the scope of these pronouncements because the
contracts are expected to be settled through
physical delivery of gold and silver. AcG-13
sets out the criteria that must be met in order
to apply hedge accounting for derivatives (and
is based on many of the principles outlined in
FAS 133, which is the US GAAP pronouncement
relating to derivative instruments and hedging
activities). Specifically, AcG-13 provides
detailed guidance on the identification,
designation, documentation and effectiveness of
hedging relationships, for purposes of applying
hedge accounting. Derivative instruments that do
not qualify for hedge accounting under AcG-13,
or are not designated as a hedge, are recorded
in our consolidated balance sheet at fair value
as either an asset or liability, with changes in
fair value recorded in earnings. The adoption of AcG-13 and EIC-128 did not have
any effect on our consolidated financial
statements because prior to adoption our
accounting policy for derivative instruments was
consistent with the principles of both new CICA
pronouncements. CICA 3063, Impairment of Long-lived Assets
(CICA 3063) Effective January 1, 2004, we adopted CICA 3063
as described in note 12C. EIC 151: Exchangeable Securities Issued by
Subsidiaries of Income Trusts (EIC 151) EIC 151 requires certain forms of exchangeable shares
to be classified outside shareholders equity.
On adoption of EIC 151 in 2004 we reclassified
outstanding BGI exchangeable shares from
capital stock to other long-term obligations.
Outstanding exchangeable shares were
previously included in weighted average common
shares outstanding for the purposes of
calculating basic net income per share, but
following the adoption of EIC 151 the
exchangeable shares only affect the
calculation of diluted net income per share.
The adoption of EIC 151 did not change
previously reported basic and diluted net
income per share. C Other significant accounting policies Note
    
    PageSegment information
    
    
    3
    
    
    
    45Revenue and gold sales contracts
    
    
    4
    
    
    
    47Cost of sales
    
    
    5
    
    
    
    48Other expense
    
    
    6
    
    
    
    49Income tax (recovery) expense
    
    
    7
    
    
    
    50Earnings per share
    
    
    8
    
    
    
    51Supplemental cash flow information
    
    
    9
    
    
    
    51Investments
    
    
    10
    
    
    
    52Accounts receivable, inventories and other current assets
    
    
    11
    
    
    
    53Property, plant and equipment
    
    
    12
    
    
    
    53Capitalized mining costs
    
    
    13
    
    
    
    55Goodwill
    
    
    14
    
    
    
    55Other assets
    
    
    15
    
    
    
    56Other current liabilities
    
    
    16
    
    
    
    56Financial instruments
    
    
    17
    
    
    
    56Other long-term obligations
    
    
    18
    
    
    
    62Future income taxes
    
    
    19
    
    
    
    63Capital stock
    
    
    20
    
    
    
    64Stock-based compensation
    
    
    21
    
    
    
    65Post-retirement benefits
    
    
    22
    
    
    
    66Contingencies, litigation and claims
    
    
    23
    
    
    
    68Joint ventures
    
    
    24
    
    
    
    69
 3 > SEGMENT INFORMATION Our operations are managed on a regional
basis. Our three regional business units are
North America, Australia/Africa and South
America. Financial information for each of our
operating mines, development projects and our
exploration group is reviewed regularly by our
chief operating decision maker. Segment income for operating segments comprises
segment revenues less segment operating costs
and segment amortization in the format that
internal management reporting is presented to
the chief operating decision maker. For internal
management reporting purposes, we measure
segment revenues and income using the average
consolidated realized gold selling price for
each period. Segment operating costs represent
our internal presentation of costs incurred to
produce gold at each operating mine, and exclude
the following costs that we do not allocate to
operating segments: accretion expense; BARRICK YEAR-END 2004
    
    45
    
    NOTES TO FINANCIAL STATEMENTS




---



##### 



environmental remediation costs at closed mines;
regional business unit overhead; amortization of
corporate assets; business development costs;
administration costs; other income/expense; and
the costs of financing their activities. Segment
operating costs for development projects and
the exploration group represent expensed
exploration, mine development and mine
start-up costs. Income statement information
 Gold sales
    
    
    Segment operating costs
    
    
    Segment income (loss)For the years ended Dec.31
    
    2004
    
    
    2003
    
    
    2002
    
    
    2004
    
    
    2003
    
    
    2002
    
    
    2004
    
    
    2003
    
    
    2002Goldstrike
    
    $
    745
    
    
    $
    801
    
    
    $
    671
    
    
    $
    475
    
    
    $
    531
    
    
    $
    436
    
    
    $
    126
    
    
    $
    130
    
    
    $
    119Round Mountain
    
    
    148
    
    
    
    137
    
    
    
    131
    
    
    
    84
    
    
    
    68
    
    
    
    83
    
    
    
    45
    
    
    
    44
    
    
    
    23Eskay Creek
    
    
    112
    
    
    
    128
    
    
    
    120
    
    
    
    9
    
    
    
    18
    
    
    
    19
    
    
    
    59
    
    
    
    69
    
    
    
    59Hemlo
    
    
    93
    
    
    
    97
    
    
    
    96
    
    
    
    57
    
    
    
    60
    
    
    
    62
    
    
    
    22
    
    
    
    24
    
    
    
    22Other
    
    
    42
    
    
    
    50
    
    
    
    175
    
    
    
    21
    
    
    
    29
    
    
    
    100
    
    
    
    (1
    )
    
    
    (1
    )
    
    
    49North America
    
    
    1,140
    
    
    
    1,213
    
    
    
    1,193
    
    
    
    646
    
    
    
    706
    
    
    
    700
    
    
    
    251
    
    
    
    266
    
    
    
    272Plutonic
    
    
    122
    
    
    
    118
    
    
    
    104
    
    
    
    69
    
    
    
    62
    
    
    
    59
    
    
    
    36
    
    
    
    41
    
    
    
    30Kalgoorlie
    
    
    183
    
    
    
    151
    
    
    
    123
    
    
    
    107
    
    
    
    87
    
    
    
    84
    
    
    
    57
    
    
    
    46
    
    
    
    23Cowal
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    (1
    )
    
    
    
    
    
    
    Bulyanhulu
    
    
    135
    
    
    
    107
    
    
    
    132
    
    
    
    96
    
    
    
    73
    
    
    
    78
    
    
    
    
    
    
    
    (9
    )
    
    
    8Tulawaka
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Other
    
    
    101
    
    
    
    90
    
    
    
    88
    
    
    
    57
    
    
    
    49
    
    
    
    46
    
    
    
    32
    
    
    
    33
    
    
    
    32Australia/Africa
    
    
    541
    
    
    
    466
    
    
    
    447
    
    
    
    330
    
    
    
    271
    
    
    
    267
    
    
    
    124
    
    
    
    111
    
    
    
    93Pierina
    
    
    251
    
    
    
    327
    
    
    
    300
    
    
    
    69
    
    
    
    76
    
    
    
    72
    
    
    
    73
    
    
    
    85
    
    
    
    71Veladero
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5
    
    
    
    
    
    
    
    
    
    
    
    (5
    )
    
    
    
    
    
    
    Pascua-Lama
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4
    
    
    
    
    
    
    
    
    
    
    
    (4
    )
    
    
    
    
    
    
    Lagunas Norte
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3
    
    
    
    
    
    
    
    
    
    
    
    (3
    )
    
    
    
    
    
    
    Other
    
    
    
    
    
    
    
    
    
    
    7
    
    
    
    3
    
    
    
    
    
    
    
    4
    
    
    
    (3
    )
    
    
    
    
    
    
    3South America
    
    
    251
    
    
    
    327
    
    
    
    307
    
    
    
    84
    
    
    
    76
    
    
    
    76
    
    
    
    58
    
    
    
    85
    
    
    
    74Exploration group
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    83
    
    
    
    67
    
    
    
    42
    
    
    
    (83
    )
    
    
    (67
    )
    
    
    (42
    )Segment total
    
    $
    1,932
    
    
    $
    2,006
    
    
    $
    1,947
    
    
    $
    1,143
    
    
    $
    1,120
    
    
    $
    1,085
    
    
    $
    350
    
    
    $
    395
    
    
    $
    397
 Geographic information Assets
    
    
    Gold salesFor the yearsended Dec.31
    
    2004
    
    
    2003
    
    
    2004
    
    
    2003
    
    
    2002United States
    
    $
    2,203
    
    
    $
    2,113
    
    
    $
    911
    
    
    $
    988
    
    
    $
    897Canada
    
    
    612
    
    
    
    646
    
    
    
    229
    
    
    
    225
    
    
    
    296North America
    
    
    2,815
    
    
    
    2,759
    
    
    
    1,140
    
    
    
    1,213
    
    
    
    1,193Australia
    
    
    1,396
    
    
    
    1,478
    
    
    
    406
    
    
    
    359
    
    
    
    315Tanzania
    
    
    1,004
    
    
    
    928
    
    
    
    135
    
    
    
    107
    
    
    
    132Australia/Africa
    
    
    2,400
    
    
    
    2,406
    
    
    
    541
    
    
    
    466
    
    
    
    447Peru
    
    
    862
    
    
    
    733
    
    
    
    251
    
    
    
    327
    
    
    
    300Argentina
    
    
    978
    
    
    
    554
    
    
    
    
    
    
    
    
    
    
    
    Chile
    
    
    593
    
    
    
    571
    
    
    
    
    
    
    
    
    
    
    
    South America
    
    
    2,433
    
    
    
    1,858
    
    
    
    251
    
    
    
    327
    
    
    
    300Other
    
    
    186
    
    
    
    316
    
    
    
    
    
    
    
    
    
    
    
    7$
    7,834
    
    
    $
    7,339
    
    
    $
    1,932
    
    
    $
    2,006
    
    
    $
    1,947
 Reconciliation of segment income For the years ended Dec.31
    
    2004
    
    
    2003
    
    
    2002Segment income
    
    $
    350
    
    
    $
    395
    
    
    $
    397Accretion expense at producing mines
    
    
    (11
    )
    
    
    (10
    )
    
    
    (10
    )Other expenses at producing mines
    
    
    (16
    )
    
    
    (22
    )
    
    
    (14
    )Amortization of corporate assets
    
    
    (29
    )
    
    
    (27
    )
    
    
    (26
    )Business development costs
    
    
    (15
    )
    
    
    (17
    )
    
    
    (10
    )Administration
    
    
    (92
    )
    
    
    (83
    )
    
    
    (52
    )Interest income
    
    
    25
    
    
    
    31
    
    
    
    26Interest expense
    
    
    (15
    )
    
    
    (35
    )
    
    
    (57
    )Other expense
    
    
    (533
    )
    
    
    (33
    )
    
    
    (64
    )Income (loss) before income taxes
and other items
    
    $
    (336
    )
    
    $
    199
    
    
    $
    190
 BARRICK YEAR-END 2004
    
    46
    
    NOTES TO FINANCIAL STATEMENTS




---



##### 



Asset information  Segment assets
    
    
    Amortization
    
    
    Segment capital expendituresFor the years ended Dec.31
    
    2004
    
    
    2003
    
    
    2004
    
    
    2003
    
    
    2002
    
    
    2004
    
    
    2003
    
    
    2002Goldstrike
    
    $
    1,488
    
    
    $
    1,569
    
    
    $
    144
    
    
    $
    140
    
    
    $
    116
    
    
    $
    72
    
    
    $
    51
    
    
    $
    46Round Mountain
    
    
    108
    
    
    
    117
    
    
    
    19
    
    
    
    25
    
    
    
    25
    
    
    
    5
    
    
    
    6
    
    
    
    8Eskay Creek
    
    
    114
    
    
    
    220
    
    
    
    44
    
    
    
    41
    
    
    
    42
    
    
    
    7
    
    
    
    5
    
    
    
    8Hemlo
    
    
    170
    
    
    
    213
    
    
    
    14
    
    
    
    13
    
    
    
    12
    
    
    
    8
    
    
    
    10
    
    
    
    6Other operating segments
    
    
    102
    
    
    
    113
    
    
    
    22
    
    
    
    22
    
    
    
    26
    
    
    
    12
    
    
    
    8
    
    
    
    19North America
    
    
    1,982
    
    
    
    2,232
    
    
    
    243
    
    
    
    241
    
    
    
    221
    
    
    
    104
    
    
    
    80
    
    
    
    87Plutonic
    
    
    318
    
    
    
    320
    
    
    
    17
    
    
    
    15
    
    
    
    15
    
    
    
    15
    
    
    
    44
    
    
    
    20Kalgoorlie
    
    
    498
    
    
    
    505
    
    
    
    19
    
    
    
    18
    
    
    
    16
    
    
    
    10
    
    
    
    14
    
    
    
    14Cowal
    
    
    45
    
    
    
    295
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    73
    
    
    
    24
    
    
    
    13Bulyanhulu
    
    
    754
    
    
    
    732
    
    
    
    39
    
    
    
    43
    
    
    
    46
    
    
    
    46
    
    
    
    36
    
    
    
    56Tulawaka
    
    
    83
    
    
    
    50
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    48
    
    
    
    4
    
    
    
    3Other operating segments
    
    
    262
    
    
    
    248
    
    
    
    12
    
    
    
    8
    
    
    
    10
    
    
    
    16
    
    
    
    25
    
    
    
    25Australia/Africa
    
    
    1,960
    
    
    
    2,150
    
    
    
    87
    
    
    
    84
    
    
    
    87
    
    
    
    208
    
    
    
    147
    
    
    
    131Pierina
    
    
    249
    
    
    
    349
    
    
    
    109
    
    
    
    166
    
    
    
    157
    
    
    
    8
    
    
    
    17
    
    
    
    5Veladero
    
    
    789
    
    
    
    423
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    286
    
    
    
    91
    
    
    
    20Pascua-Lama
    
    
    746
    
    
    
    717
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    34
    
    
    
    9
    
    
    
    11Lagunas Norte
    
    
    291
    
    
    
    70
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    193
    
    
    
    36
    
    
    
    34South America
    
    
    2,075
    
    
    
    1,559
    
    
    
    109
    
    
    
    166
    
    
    
    157
    
    
    
    521
    
    
    
    153
    
    
    
    70Segment total
    
    
    6,017
    
    
    
    5,941
    
    
    
    439
    
    
    
    491
    
    
    
    465
    
    
    
    833
    
    
    
    380
    
    
    
    288Cash and equivalents
    
    
    1,398
    
    
    
    970
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Other items not allocated to
segments
    
    
    419
    
    
    
    428
    
    
    
    29
    
    
    
    27
    
    
    
    26
    
    
    
    20
    
    
    
    4
    
    
    
    3Enterprise total
    
    $
    7,834
    
    
    $
    7,339
    
    
    $
    468
    
    
    $
    518
    
    
    $
    491
    
    
    $
    853
    
    
    $
    384
    
    
    $
    291
 4 > REVENUE AND GOLD SALES CONTRACTS For the years ended Dec.31
    
    2004
    
    
    2003
    
    
    2002Gold bullion salesGold sales contracts
    
    $
    709
    
    
    $
    1,475
    
    
    $
    1,381Spot market sales
    
    
    1,111
    
    
    
    426
    
    
    
    4601,820
    
    
    
    1,901
    
    
    
    1,841Concentrate sales
    
    
    112
    
    
    
    105
    
    
    
    106$
    1,932
    
    
    $
    2,006
    
    
    $
    1,947
 We record revenue when the following conditions
are met: persuasive evidence of an arrangement
exists; delivery has occurred under the terms of
the arrangement; the price is fixed or
determinable; and collectability is reasonably
assured. Bullion sales We record revenue from gold and silver bullion
sales at the time of delivery and transfer of
title to the gold or silver to counterparties.
Incidental revenues from the sale of by-products
such as silver are classified within cost of
sales. At December 31, 2004, we had fixed-price gold
sales contracts with various counterparties for
a total of 13.5 million ounces of future gold
production and floating-price forward gold sales
contracts for 0.5 million ounces. In 2004, we
allocated 6.5 million ounces of fixed-price gold
sales contracts specifically to Pascua-Lama. The
allocation of these contracts will help reduce gold price risk at
Pascua-Lama and will help secure financing for its
construction. In addition to the gold sales contracts
allocated to Pascua-Lama, we have 7.0 million
ounces of corporate gold sales contracts that we
intend to settle through delivery of future gold
production from our operating mines and
development projects, excluding Pascua-Lama. The
terms of the contracts are governed by master
trading agreements (MTAs) that we have in place
with the counterparties to the contracts. The
contracts have final delivery dates primarily over the
next 10 years, but we have the right to settle these
contracts at any time over this period. Contract
prices are established at inception through to an
interim date. If we do not deliver at this interim
date, a new interim date is set. The price for the new
interim date is determined in accordance with the
MTAs, which have contractually agreed price
adjustment mechanisms based on the market gold
price. The MTAs have both fixed and floating price
mechanisms. The fixed-price mechanism represents
the market price at the start date (or previous
interim date) of the contract plus a premium based
on the difference between the forward price of gold
and the current market price. If at an interim date
we opt for a floating price, the floating price
represents the spot market price at the time of
delivery of gold plus or minus the difference between
the previously fixed price and the market gold price BARRICK YEAR-END 2004
    
    47
    
    NOTES TO FINANCIAL STATEMENTS




---



##### 



at that interim date. The final realized
selling price under a contract primarily
depends upon the timing of the actual future
delivery date, the market price of gold at the
start of the contract and the actual amount of
the premium of the forward price of gold over
the spot price of gold for the periods that
fixed selling prices are set. The
mark-to-market on the fixed-price gold sales
contracts (at December 31, 2004) was negative
$966 million for the Pascua-Lama Gold Sales
Contracts and negative $949 million for the
Corporate Gold Sales Contracts. The difference between the forward price of
gold and the current market price, referred to
as contango, can be expressed as a percentage
that is closely correlated to the difference
between US dollar interest rates and gold lease
rates. Historically short-term gold lease rates have
been lower than longer-term rates. We use gold
lease rate swaps to achieve a more economically
optimal term structure for gold lease rates
implicit in contango. Under the swaps we receive
a fixed gold lease rate, and pay a floating gold
lease rate, on a notional 2.1 million ounces of
gold spread from 2005 to 2013. The swaps are
associated with fixed-price gold sales contracts
with expected delivery dates beyond 2006. Lease
rate swaps are classified as non-hedge
derivatives (note 17C). Floating spot price sales contracts were
previously fixed-price forward sales contracts
for which, in accordance with the terms of our
MTAs, we have elected to receive floating spot
gold and silver prices, adjusted by the
difference between the spot price and the
contract price at the time of such election.
Floating prices were elected for these
contracts so that we could economically regain
spot gold price leverage under the terms of
delivery into these contracts. Furthermore,
floating price mechanisms were elected for
these contracts at a time when the then current
market price was higher than the fixed price in
the contract. The mark-to-market on these
contracts (at December 31, 2004) was negative
$25 million, which equates to an average
reduction to the future spot sales price of
approximately $52 per ounce, when we deliver
gold at spot prices against these contracts. At December 31, 2004, one counterparty made up
11% of the ounces committed under gold bullion
sales contracts. Concentrate sales Our Eskay Creek and Bulyanhulu mines produce gold
in concentrate form. We expect that our
Pascua-Lama mine will also produce gold in concentrate
form. Under the terms of our concentrate sales
contracts with independent smelting companies,
gold sales prices are set on a specified future
date after shipment based on market prices. We
record revenues under these contracts at the
time of shipment, which is when title passes to
the smelting companies, using forward market
gold prices on the expected date that final
sales prices will be set. Variations between the
price recorded at the shipment date and the
actual final price set under the smelting
contracts are caused by changes in market gold
prices, and result in an embedded derivative in
the accounts receivable. The embedded derivative
is recorded at fair value each period until
final settlement occurs, with changes in fair
value classified as a component of revenue. Impact of derivative embedded in concentrate sales receivables For the years ended Dec.31
    
    2004
    
    
    2003
    
    
    2002Gains included in revenue
    
    $
    
    
    
    $
    
    
    
    $
    1
 5 > COST OF SALES For the years ended Dec.31
    
    2004
    
    
    2003
    
    
    2002Cost of goods sold1
    
    $
    1,137
    
    
    $
    1,112
    
    
    $
    1,130By-product revenues2
    
    
    (146
    )
    
    
    (114
    )
    
    
    (119
    )Royalty expense
    
    
    53
    
    
    
    50
    
    
    
    37Mining taxes
    
    
    12
    
    
    
    15
    
    
    
    5Other expenses at producing mines3
    
    
    16
    
    
    
    22
    
    
    
    14$
    1,072
    
    
    $
    1,085
    
    
    $
    1,067
   1
    
    The presentation of cost of goods sold
includes accretion expense at producing mines
of $11 million (2003 - $10 million; 2002 - $10
million). The cost of inventory sold in the
period reflects the components described in
note 11, except that for presentation purposes
the component of inventory cost relating to
amortization of property, plant and equipment
is classified in the income statement under
amortization. Some companies present this
amount under cost of sales. The amount
presented in amortization rather than cost of
sales is $439 million in 2004; $491 million in
2003 and $465 million in 2002.2
    
    We use silver sales contracts to sell a portion
of silver produced as a byproduct. Silver sales
contracts have similar delivery terms and
pricing mechanisms as gold sales contracts. At
December 31, 2004, we had fixed-price
commitments to deliver 12.4 million ounces of
silver at an average price of $5.50 per ounce
and floating spot price sales contracts for 12
million ounces over periods primarily of up to
10 years.3
    
    Includes the reversal of $15 million of accrued
costs on resolution of the Peruvian tax
assessment (see note 7). Royalties Certain of our properties are subject to
royalty arrangements based on mineral
production at the properties. The most
significant royalties are at the Goldstrike and
Bulyanhulu mines and the Pascua-Lama and
Veladero projects. The primary type of royalty
is a net smelter return (NSR) royalty. Under
this type of royalty we pay the holder an
amount BARRICK YEAR-END 2004
    
    48
    
    NOTES TO FINANCIAL STATEMENTS




---



##### 



calculated as the royalty percentage
multiplied by the value of gold production at
market gold prices less third-party smelting,
refining and transportation costs. Most
Goldstrike production is subject to an NSR or net
profits interest (NPI) royalty. The highest
Goldstrike royalties are a 5% NSR and a 6% NPI
royalty. Bulyanhulu is subject to an NSR-type
royalty of 3%. Pascua-Lama gold production from
the areas located in Chile is subject to a gross
proceeds sliding scale royalty, ranging from 1.5%
to 10%, and a 2% NSR on copper production. For
areas located in Argentina, Pascua-Lama is
subject to a 3% NSR on extraction of all gold,
silver and other ores. Production at Veladero is
subject to a 3.75% NSR on extraction of all gold,
silver and other ores. Royalty expense is recorded at the time of sale
of gold production, measured using the
applicable royalty percentage for NSR royalties
or estimates of NPI amounts. 6 > OTHER EXPENSE For the years ended Dec.31
    
    2004
    
    
    2003
    
    
    2002Non-hedge derivative (gains)
losses (note 17C)
    
    $
    (5
    )
    
    $
    (71
    )
    
    $
    32Gains realized on sale of assets
    
    
    (2
    )
    
    
    (24
    )
    
    
    (4
    )Environmental remediation costs2
    
    
    44
    
    
    
    34
    
    
    
    33Impairment
of long-lived assetsEskay Creek
    
    
    56
    
    
    
    
    
    
    
    Cowal
    
    
    211
    
    
    
    
    
    
    
    Other
    
    
    32
    
    
    
    5
    
    
    
    11Impairment of goodwill (note 14)
    
    
    184
    
    
    
    48
    
    
    
    Impairment of investments (note 10)
    
    
    5
    
    
    
    11
    
    
    
    World Gold Council fees
    
    
    9
    
    
    
    10
    
    
    
    12Litigation costs
    
    
    
    
    
    
    16
    
    
    
    Currency translation (gains) losses
    
    
    1
    
    
    
    (2
    )
    
    
    (1
    )Pension expense (note 22B)
    
    
    
    
    
    
    4
    
    
    
    2Other items1
    
    
    (2
    )
    
    
    2
    
    
    
    (21
    )$
    533
    
    
    $
    33
    
    
    $
    64
   1
    
    In 2004, includes the reversal
of $6 million of accrued costs on resolution
of the Peruvian tax assessment (see note 7)
and $4 million in severance costs related to
the sale of the Holt McDermott mine.2
    
    Includes costs at development projects and closed mines. Environmental remediation costs at closed mines During the production phases of a mine, we incur
and expense the cost of various activities
connected with environmental aspects of normal
operations, including compliance with and
monitoring of environmental regulations;
disposal of hazardous waste produced from normal
operations; and operation of equipment designed
to reduce or eliminate environmental effects.
In limited circumstances, costs to acquire and
install plant and equipment are capitalized
during the production phase of a mine if the
costs are expected to mitigate risk or prevent
future environmental contamination from normal
operations. When a contingent loss arises from the improper
use of an asset, a loss accrual is recorded if
the loss is probable and reasonably estimable.
Amounts recorded are measured on an undiscounted
basis, and adjusted as further information
develops or if circumstances change. Recoveries
of environmental remediation costs from other
parties are recorded as assets when receipt is
deemed probable. Impairment of long-lived assets Eskay Creek The asset group that comprises the Eskay Creek
mine was tested for impairment effective
December 31, 2004. The principal factors that
caused us to test this asset group for
impairment included: downward revisions to
proven and probable reserves; the impact of the
continued strengthening of the C$ against the
US$ and upward revisions to expected asset
retirement costs in the fourth quarter of 2004.
An impairment charge of $56 million was
recorded, which represents the amount by which
the carrying amount of the asset group exceeds
its estimated fair value. Fair value was
estimated using the method described in note
12C. Cowal The asset group that comprises the Cowal mine
was tested for impairment effective December 31,
2004. The principal factors that caused us to
test this asset group for impairment included:
the impact of the continued strengthening of the
A$ against the US$ and revisions to estimates of
future capital expenditures and production costs
due to the impact of inflationary cost
pressures. An impairment charge of $211 million
was recorded, which represents the amount by
which the carrying amount of the asset group
exceeds its estimated fair value. Fair value
was estimated using the method described in note
12C. Other In 2004, we conducted an impairment test of
various Australian exploration-stage properties
acquired in the Homestake merger upon completion
of the 2004 exploration program. On
finalization of their assessment, we concluded
that certain of the properties were impaired and
recorded an impairment charge to reduce them to
estimated fair value using the method described
in note 12A. BARRICK YEAR-END 2004
    
    49
    
    NOTES TO FINANCIAL STATEMENTS




---



##### 



Litigation costs In November 2003, we paid Inmet C$111 million (US
$86 million), in full settlement of the Inmet
litigation. The settlement resulted in an
expense of US$14 million in fourth quarter 2003,
combined with post-judgment interest of $2
million in the first nine months of 2003. 7 > INCOME TAX (RECOVERY) EXPENSE For the years ended Dec.31
    
    2004
    
    
    2003
    
    
    2002CurrentCanada
    
    $
    19
    
    
    $
    40
    
    
    $
    44International
    
    
    24
    
    
    
    14
    
    
    
    15$
    43
    
    
    $
    54
    
    
    $
    59FutureCanada
    
    $
    (28
    )
    
    $
    (54
    )
    
    $
    (58
    )International
    
    
    (27
    )
    
    
    82
    
    
    
    9$
    (55
    )
    
    $
    28
    
    
    $
    (49
    )Income tax expense before
elements below1
    
    $
    (12
    )
    
    $
    82
    
    
    $
    10Outcome of tax uncertainties
    
    
    (141
    )
    
    
    
    
    
    
    (22
    )Change in tax status in Australia
    
    
    (81
    )
    
    
    
    
    
    
    Total (recovery) expense
    
    $
    (234
    )
    
    $
    82
    
    
    $
    (12
    )
   1
    
    All amounts are future tax
items except for a $21 million portion of
the $141 million recovery on resolution of
the Peruvian tax assessment in 2004, which
is a current tax item. Outcome of tax uncertainties Peruvian tax assessment On September 30, 2004, the Tax Court of Peru
issued a decision in our favor in the matter of
our appeal of a 2002 income tax assessment of
$32 million, excluding interest and penalties.
The Peruvian tax agency, SUNAT, had until
mid-January 2005 to appeal the decision. The 2002 income tax assessment related to a tax
audit of our Pierina Mine for the 1999 and 2000
fiscal years. The assessment mainly related to
the validity of a revaluation of the Pierina
mining concession, which affects its tax basis.
Under the valuation proposed by SUNAT, the tax
basis of the Pierina mining concession would have
changed from what we previously assumed with a
resulting increase in current and future income
taxes. The full life of mine effect on our
current and future income tax liabilities,
totaling $141 million, was recorded at December
31, 2002, as were other related costs of about
$21 million for periods through 2003. In January 2005, we received confirmation in
writing that there would be no appeal of the
September 30, 2004 Tax Court of Peru decision.
The confirmation concluded the administrative and
judicial appeals process with resolution in
Barricks favor. As a result, we recorded a $141
million reduction in current and future income
tax liabilities and a $21 million reduction in
other accrued costs in 2004; $15 million of which
is classified in other expenses at producing
mines within cost of sales and $6 million of
which is classified in other expense. Other uncertainties In 2002, we recorded a credit of $22 million
reflecting the net impact of tax planning
completed in the period and the outcome of
certain tax uncertainties. Changes in tax status in Australia A new tax law has been enacted in Australia that
allows wholly owned groups of companies resident
in Australia to elect to be treated as a single
entity and to file consolidated tax returns.
This new regime is elective and the election is
irrevocable. Under certain circumstances, the
rules governing the election allow for a choice
to reset the tax cost basis of certain assets
within a consolidated group. This election will
be effective for us for the 2004 fiscal year.
This election results in an estimated upward
revaluation of the tax basis of our assets in
Australia, by $110 million, with a corresponding
$33 million adjustment to future income taxes. In 2004, we filed an election to use US dollars
as the functional currency for Australian tax
calculations and tax returns, whereas previously
Australian dollars were used. Prior to this
election, the favorable impact of changes in the
tax basis of non-monetary assets caused by
changes in the US$:A$ exchange rate were not
recorded, as their realization was not certain.
The election in 2004 created certainty about the
realization of these favorable tax temporary
differences and resulted in our recognition of
these as future tax assets amounting to $48
million. The impact of the change in tax status
was to increase the amount of deductible
temporary differences relating to non-monetary
assets by $160 million. BARRICK YEAR-END 2004
    
    50
    
    NOTES TO FINANCIAL STATEMENTS




---



##### 



Reconciliation to Canadian federal rate For the years ended Dec. 31
    
    2004
    
    
    2003
    
    
    2002At 38% statutory federal rate
    
    $
    (128
    )
    
    $
    76
    
    
    $
    72Increase (decrease) due to:Allowances and special tax
deductions1
    
    
    (26
    )
    
    
    (17
    )
    
    
    (12
    )Impact of foreign tax rates2
    
    
    13
    
    
    
    (46
    )
    
    
    (67
    )Nondeductible goodwill
impairment
    
    
    94
    
    
    
    18
    
    
    
    Expenses not tax-deductible
    
    
    21
    
    
    
    17
    
    
    
    9Change in valuation allowances
    
    
    3
    
    
    
    42
    
    
    
    3Recognition of future tax assets3
    
    
    (81
    )
    
    
    
    
    
    
    Outcome of tax uncertainties
    
    
    (141
    )
    
    
    
    
    
    
    (22
    )Withholding taxes on
intercompany interest
    
    
    1
    
    
    
    1
    
    
    
    11Mining taxes
    
    
    5
    
    
    
    8
    
    
    
    3Other items
    
    
    5
    
    
    
    (17
    )
    
    
    (9
    )Income tax (recovery) expense
    
    $
    (234
    )
    
    $
    82
    
    
    $
    (12
    )
   1
    
    We are able to claim certain
allowances and tax deductions unique to
extractive industries that result in a
lower effective tax rate.2
    
    We operate in multiple foreign tax
jurisdictions that have different tax
rates than the Canadian federal rate.3
    
    In 2004, we recognized a $81 million
future tax asset in Australia due to a
change in tax status. Income tax returns Our income tax returns for the major
jurisdictions where we operate have been fully
examined through the following years: Canada - 2000, United States - 2001, and Peru - 2000. American Jobs Creation Act of 2004 The American Jobs Creation Act of 2004 (the
Act) was signed into law on October 22, 2004.
The Act creates an elective incentive for U.S.
multinationals to repatriate accumulated earnings
from controlled foreign corporations. The
repatriation incentive is only available for 2004
or 2005. We are currently evaluating the
application of the repatriation incentive;
however, we cannot complete our analysis until
additional legislation and/or IRS guidance is
provided to clarify key elements of the
legislation. 8 > EARNINGS PER SHARE For the years ended Dec. 31($ millions, except shares in millionsand per share amounts in dollars)
    
    2004
    
    
    2003
    
    
    2002Income (loss) available to common stockholdersBasic
    
    $
    (102
    )
    
    $
    117
    
    
    $
    202Effect of dilutive stock options
and exchangeable shares
    
    
    
    
    
    
    
    
    
    
    Diluted
    
    $
    (102
    )
    
    $
    117
    
    
    $
    202Weighted
average shares outstandingBasic
    
    
    532
    
    
    
    538
    
    
    
    540Effect of dilutive stock options
and exchangeable shares
    
    
    2
    
    
    
    1
    
    
    
    1Diluted
    
    
    534
    
    
    
    539
    
    
    
    541Earnings (loss) per shareBasic
    
    $
    (0.19
    )
    
    $
    0.22
    
    
    $
    0.37Diluted
    
    $
    (0.19
    )
    
    $
    0.22
    
    
    $
    0.37
 9 > SUPPLEMENTAL CASH
FLOW INFORMATION For the years ended Dec. 31
    
    2004
    
    
    2003
    
    
    2002Income statement items:Currency translation losses
    
    $
    1
    
    
    $
    5
    
    
    $
    (Gains) losses on investments
(note 10)
    
    
    (1
    )
    
    
    7
    
    
    
    3Accretion expense (note 18A)
    
    
    19
    
    
    
    19
    
    
    
    19Non-hedge derivative (gains)
losses (note 17C)
    
    
    (5
    )
    
    
    (71
    )
    
    
    6Inmet litigation
    
    
    
    
    
    
    16
    
    
    
    Current income tax expense
(note 7)
    
    
    22
    
    
    
    54
    
    
    
    59Revisions to expected cost of AROs
at closed mines (note 18A)
    
    
    22
    
    
    
    
    
    
    
    Amortization of debt issue costs
    
    
    3
    
    
    
    1
    
    
    
    1Losses on write-down of inventory
to market value (note 11)
    
    
    9
    
    
    
    3
    
    
    
    6Stock-based compensation
expense
    
    
    21
    
    
    
    12
    
    
    
    2Changes in:Accounts receivable
    
    
    (2
    )
    
    
    3
    
    
    
    (12
    )Inventories
    
    
    (50
    )
    
    
    1
    
    
    
    47Accounts payable
    
    
    4
    
    
    
    4
    
    
    
    (25
    )Capitalized mining costs
    
    
    9
    
    
    
    37
    
    
    
    29Other assets and liabilities
    
    
    (28
    )
    
    
    27
    
    
    
    24Cash payments:Merger and related costs
    
    
    
    
    
    
    
    
    
    
    (50
    )Asset retirement obligations
    
    
    (34
    )
    
    
    (36
    )
    
    
    (70
    )Current income taxes
    
    
    (45
    )
    
    
    (111
    )
    
    
    (52
    )Other items
    
    
    (1
    )
    
    
    4
    
    
    
    35Other net operating activities
    
    $
    (56
    )
    
    $
    (25
    )
    
    $
    22Interest paid, net of amounts
capitalized
    
    $
    (15
    )
    
    $
    (35
    )
    
    $
    (57
    )
 BARRICK YEAR-END 2004
    
    51
    
    NOTES TO FINANCIAL STATEMENTS




---



##### 



10 > INVESTMENTS Debt and equity securities At Dec. 31
    
    2004
    
    
    2003Carrying
    
    
    Fair
    
    
    Carrying
    
    
    Fairamount
    
    
    Value
    
    
    amount
    
    
    valueBenefit plans:1Fixed-income
securities
    
    $
    11
    
    
    $
    11
    
    
    $
    6
    
    
    $
    6Equity securities
    
    
    9
    
    
    
    19
    
    
    
    18
    
    
    
    26Strategic investments:Equity securities2
    
    
    104
    
    
    
    104
    
    
    
    68
    
    
    
    98Total
    
    $
    124
    
    
    $
    134
    
    
    $
    92
    
    
    $
    130
   1
    
    Under various benefit plans for
certain former Homestake executives, a
portfolio of marketable fixed-income and
equity securities are held in a rabbi trust
that is used to fund obligations under the
plans.2
    
    Other investments mainly include an
investment in Highland Gold with a fair
value of $75 million at December 31, 2004. Investments in debt and equity securities are
recorded at cost. Realized gains and losses are
recorded in earnings when investments mature or
on sale, calculated using the average cost of
securities sold. We recognize in earnings any
unrealized declines in fair value judged to be
other than temporary (2004 - $5 million; 2003 -
$11 million; 2002 - $nil). Total proceeds from
the sale of investments were $9 million in 2004
(2003 - $8 million; 2002 - $3 million). Gains (losses) on investments recorded
in earnings For the years ended Dec. 31
    
    2004
    
    
    2003
    
    
    2002Realized on saleGains
    
    $
    6
    
    
    $
    5
    
    
    $
    Losses
    
    
    
    
    
    
    (1
    )
    
    
    (3
    )Impairment charges
    
    
    (5
    )
    
    
    (11
    )
    
    
    $
    1
    
    
    $
    (7
    )
    
    $
    (3
    )
 Investment in Highland Gold Mining PLC
(Highland) In 2004, we acquired a further 9.3 million
common shares of Highland for $40 million in
cash. Combined with the purchase of 11.1
million common shares for $46 million in
October 2003, we held a 14% interest in
Highland common shares at December 31, 2004. We have also formed a strategic partnership
with Highland under which:  
    We have the right to participate on an
exclusive basis for up to 50% on any
acquisition made by Highland in Russia; and a
similar right extends to Highland for any
acquisition made by us in certain regions in
Russia, excluding Irkutsk.
    We have a right of first refusal with respect
to third-party investment in Highlands
Mayskoye property in the Chutotka region,
Russia, and plan to pursue discussions with
Highland on establishing a joint venture at
Mayskoye. Investment in Celtic Resources Holdings PLC
(Celtic) On December 2, 2004, Barrick and Celtic entered
into a subscription agreement under which we
agreed to subscribe for 3,688,191 units of Celtic
for $7.562 per unit. Each unit consists of one
ordinary share of Celtic and one-half of one
share purchase warrant. Each whole warrant
entitles us to acquire one ordinary share of
Celtic for $7.562, expiring on December 31, 2005.
In the event that Celtic does not acquire 100%
of the license to the Nezhdaninskoye deposit
before June 1, 2005, the number of warrants will
automatically increase by 50%. Completion of the
subscription occurred on January 5, 2005 upon
which we held a 9% interest in Celtics
outstanding ordinary shares. In connection with the completion of the
subscription, Barrick and Celtic entered
into the following agreements:  
    We have the pre-emptive right to subscribe
for up to $75 million of Celtic shares at
$7.562 per share.
    Nezhdaninskoye Right of First Refusal.Celtic
has granted us the right of first refusal on
any proposed sale of its direct or indirect
interest in Nezhdaninskoye.
    Nezhdaninskoye Purchase Option.Celtic has
granted us the right to indirectly purchase
51% of its interest in Nezhdaninskoye for $195
million, exercisable for a period of six
months starting if and when Celtic indirectly
acquires 100% of Nezhdaninskoye.
    Kazakhstan Participation.Celtic has granted
to us the right to acquire 50% of any interest
in any mineral property in Kazakhstan that
Celtic acquires. We have 12 months to elect
to participate in any such acquisitions by
Celtic. To participate, we must pay Celtic
50% of the cost to Celtic of its interest in
the mineral property. BARRICK YEAR-END 2004
    
    52
    
    NOTES TO FINANCIAL STATEMENTS




---



##### 



11 > ACCOUNTS RECEIVABLE, INVENTORIES
AND OTHER CURRENT ASSETS At Dec. 31
    
    2004
    
    
    2003Accounts receivableAmounts due from concentrate sales
    
    $
    29
    
    
    $
    26Other
    
    
    29
    
    
    
    30$
    58
    
    
    $
    56InventoriesGold in process and ore in stockpiles
    
    $
    200
    
    
    $
    166Mine operating supplies
    
    
    82
    
    
    
    58282
    
    
    
    224Non-current ore in stockpiles1
    
    
    (65
    )
    
    
    (57
    )$
    217
    
    
    $
    167Other current assetsDerivative assets (note 17C)
    
    $
    58
    
    
    $
    43Taxes recoverable
    
    
    104
    
    
    
    9Prepaid expenses
    
    
    19
    
    
    
    14$
    181
    
    
    $
    66
   1
    
    Ore that we do not expect to
process in the next 12 months is classified
in other assets (note 15). Inventories Material extracted from our mines is classified
as either ore or waste. Ore represents material
that can be mined, processed into a saleable
form and sold at a profit. Ore, which
represents material included in proven and
probable reserves, is recorded as an asset that
is classified within inventory at the point it
is extracted from the mine. Ore is accumulated
in stockpiles that are subsequently processed
into gold in a saleable form under a mine plan
that takes into consideration optimal scheduling
of production of our reserves, present plant
capacity, and the market price of gold. We record gold in process and ore in stockpiles
at cost, less provisions required to reduce
inventory to market value. Costs capitalized to
inventory include direct and indirect materials
and consumables; direct labor; repairs and
maintenance; utilities; amortization of property,
plant and equipment; amortization of capitalized
mining costs; and local mine administrative
expenses. Costs are removed from inventory and
recorded in cost of sales based on the average
cost per ounce of gold in inventory. Average
cost is calculated based on the cost of inventory
at the beginning of a period, plus the cost of
inventory produced in a period. Significant ore in stockpiles At Dec. 31
    
    2004
    
    
    2003GoldstrikeOre that requires roasting
    
    $
    23
    
    
    $
    22Ore that requires autoclaving
    
    
    17
    
    
    
    19Kalgoorlie
    
    
    46
    
    
    
    32
 At Goldstrike, we expect to fully
process the autoclave stockpile by 2009
and the roaster stockpile by 2016. At Kalgoorlie, we
expect to process the stockpile by 2017. Mine operating supplies are recorded at
purchase cost, less provisions to reduce
slow-moving and obsolete supplies to market
value. Cost of sales includes losses recorded to reduce
inventory cost to market value as follows: 2004 - $9 million;
2003 - $3 million; 2002 - $6
million. 12 > PROPERTY, PLANT AND EQUIPMENT At Dec. 31
    
    2004
    
    
    2003Acquired mineral properties and
capitalized mine development costs
    
    $
    4,969
    
    
    $
    4,886Buildings, plant and equipment
    
    
    2,262
    
    
    
    1,8157,231
    
    
    
    6,701Accumulated amortization
    
    
    (2,702
    )
    
    
    (2,242
    )$
    4,529
    
    
    $
    4,459
 A Acquired mineral properties and capitalized
mine development costs Exploration and development stage properties
We capitalize the cost of acquisition of land and
mineral rights. The cost is allocated between
proven and probable reserves and mineralization
not considered proven and probable reserves at
the date of acquisition, based on relative fair
values. If we later establish that some
mineralization meets the definition of proven and
probable gold reserves, we classify a portion of
the capitalized acquisition cost as relating to
reserves. After acquisition, various factors can affect the
recoverability of the capitalized cost of land
and mineral rights, particularly the results of
exploration drilling. The length of time between
the acquisition of land and mineral rights and
when we undertake exploration work varies based
on the prioritization of our exploration projects
and the size of our exploration budget. If we
conclude that the carrying amount of land and
mineral rights is impaired, we reduce this

carrying amount to estimated fair value through
an impairment charge. We capitalize mine development costs on our
properties after proven and probable reserves
have been found. We also capitalize costs for
certain material that does not meet all the
criteria required for classification as proven
or probable reserves. Managements
determination as to whether the existence of
non-reserve material should result in the
capitalization of costs or the material should
be BARRICK YEAR-END 2004
    
    53
    
    NOTES TO FINANCIAL STATEMENTS




---



##### 



included in the amortization and recoverability
calculations is based on the existence of
various factors, including, but not limited to:
the existence and nature of known
mineralization; the location of the property
(for example, whether the presence of existing
mines and ore bodies in the immediate vicinity
increases the likelihood of development of a
mine on the property); the existence of proven
and probable reserves on the property; whether
the ore body is an extension of an existing
producing ore body on an adjacent property; the
results of recent drilling on the property; and
the existence of a feasibility study or other
analysis to demonstrate that the ore is
commercially recoverable. At December 31, 2004 the following assets were in
an exploration, development or construction stage
and amortization of the capitalized costs had not
yet begun. Carrying amount
    
    
    Targeted timing ofAt Dec.31, 2004
    
    
    production start-upDevelopment stage projectsVeladero
    
    $
    402
    
    
    
    2005Lagunas Norte
    
    
    267
    
    
    
    2005Tulawaka
    
    
    83
    
    
    
    2005Cowal
    
    
    25
    
    
    
    2006Pascua-Lama
    
    
    479
    
    
    
    2009Buzwagi
    
    
    120
    
    
    
    Nevada Power Plant
    
    
    18
    
    
    
    2005Total
    
    $
    1,394
 Interest cost is considered an element of the
historical cost of an asset when a period of
time is necessary to prepare it for its intended
use. We capitalize interest costs to assets
under development or construction while
activities are in progress. We stop
capitalizing interest costs when construction of
an asset is substantially complete and it is
ready for its intended use. We measure the
amount capitalized based on cumulative
capitalized costs, exclusive of the impact, if
any, of impairment charges on the carrying
amount of an asset. Producing mines

We start amortizing capitalized mineral property
acquisition and mine development costs when
production begins. Amortization is capitalized
as a component of the cost of inventory.
Amortization is calculated using the
units-of-production method, where the
numerator is the number of ounces produced and
the denominator is the estimated recoverable
ounces of gold contained in proven and probable

reserves, and non-reserve material expected to
be converted into proven and probable reserves. During production at underground mines, we incur
development costs to build new shafts, drifts
and ramps that will enable us to physically
access ore underground. The time over which we
will continue to incur these costs depends on
the mine life, and in some cases could be up to
25 years. These underground development costs
are capitalized as incurred. In years prior to
2003 we amortized the aggregate total of
historically capitalized costs, and estimated
costs that will be incurred to enable access to
the ore body over the remaining mine life, using
the units-of-production method. In 2003, we
changed the method of amortizing these costs to
better attribute these costs to ounces of gold produced, as well as to remove the uncertainty
inherent in using estimates of future
underground development costs in the measurement
of amortization. Under our revised method of measuring
amortization for underground development costs,
the cost incurred to access specific ore blocks
or areas of the mine, which only provides an
economic benefit over the period of mining that
ore block or area, is attributed to earnings
using the units-of-production method where the
denominator is estimated recoverable ounces of
gold contained in proven and probable reserves
within that ore block or area. If capitalized
costs provide an economic benefit over the
entire mine life, the costs are attributed to
earnings using the units-of-production method,
where the denominator is the estimated
recoverable ounces of gold contained in total
accessible proven and probable reserves, and
non-reserve material expected to be converted
into proven and probable reserves. B Buildings, plant and
equipment

We record buildings, plant and equipment at
cost. We capitalize costs that extend the
productive capacity or useful economic life of an
asset. Repairs and maintenance expenditures are
expensed as incurred. We amortize the cost less
estimated residual value, using the straight-line
method over the estimated useful economic life of
the asset. The longest estimated useful economic
life for buildings and equipment at ore
processing facilities is 25 years and for mining
equipment is 15 years. BARRICK YEAR-END 2004
    
    54
    
    NOTES TO FINANCIAL STATEMENTS




---



##### 



C Impairment evaluations  operating mines and
development projects

In 2004, we adopted CICA 3063, Impairment of
Long-lived Assets (CICA 3063), and changed our
accounting policy for the impairment of
longlived assets. Under CICA 3063, we review
and test the carrying amounts of assets when
events or changes in circumstances suggest that
the carrying amount may not be recoverable. We
group assets at the lowest level for which
identifiable cash flows are largely independent
of the cash flows of other assets and
liabilities. For operating mines and development
projects, all assets are included in one group.
If there are indications that an impairment may
have occurred, we prepare estimates of expected
future cash flows for each group of assets.
Expected future cash flows are based on a
probability-weighted approach applied to
potential outcomes. Estimates of expected future cash flow reflect:  
    Estimated sales proceeds from the production and sale of recoverable ounces of gold contained in proven and probable reserves;
    Expected future commodity prices and currency exchange rates (considering historical and current prices, price trends and related factors). In impairment assessments
conducted in 2004 we used an expected future market gold price of $400 per ounce, and an expected future market A$:US$ exchange rate of
$0.70 and C$:US$ exchange rate of $0.82;
    Expected future operating costs and capital expenditures to produce proven and probable gold reserves based on mine plans that
assume current plant capacity, but exclude the impact of inflation;
    Expected cash flows associated with value beyond proven and probable reserves, which includes the expected cash
outflows required to develop and extract the value beyond proven and probable reserves; and
    Environmental remediation costs excluded from the measurement of asset retirement obligations. We record a reduction of a group of assets to
fair value as a charge to earnings if expected
future cash flows are less than the carrying
amount. We estimate fair value by discounting
the expected future cash flows using a discount
factor that reflects the risk-free rate of
interest for a term consistent with the period of
expected cash flows. Under our previous policy, the principal
difference was that the amount of an impairment
charge was measured as the difference between
the estimated net recoverable amount and the
carrying amount. Net recoverable amount
represented the undiscounted expected future
net cash flows. D Capital commitments

At December 31, 2004, we had capital
commitments of $322 million for 2005/2006 in
connection with construction at our development
projects and of a power plant in Nevada for the
Goldstrike mine. 13 > CAPITALIZED
MINING COSTS

We capitalize and amortize certain costs
relating to the removal of waste rock at
open-pit mines, commonly referred to as
stripping costs. We include in inventory,
amortization of amounts capitalized based on a
stripping ratio using the units-of-production
method. This accounting method results in the smoothing
of these costs over the life of a mine. Instead
of capitalizing and amortizing these costs, some
mining companies capitalize them to inventory as
incurred, which may result in the reporting of
greater volatility in period-to-period results.
If we followed a policy of capitalizing these
costs to inventory as incurred, rather than using
our present policy, our reported cost of sales
would have been $9 million lower in 2004 (2003 
$37 million lower, 2002  $29 million lower). Stripping ratios1 For the years ended
    
    Mine lifeDec.31
    
    (years)2

    
    2004

    
    2003

    
    2002Goldstrike Open Pit
    
    
    14
    
    
    
    109:1
    
    
    
    112:1
    
    
    
    112:1Pierina
    
    
    4
    
    
    
    60:1
    
    
    
    48:1
    
    
    
    48:1
   1
    
    The stripping ratio is
calculated as the ratio of total tons (ore
and waste) of material to be moved compared
to total recoverable proven and probable
gold reserves.2
    
    Costs capitalized will be fully
amortized by the end of the mine lives. The
carrying amount of capitalized mining costs
is grouped with property, plant and
equipment for impairment evaluation
purposes. 14 >
GOODWILL

We allocate goodwill arising from business
combinations to reporting units acquired by
preparing estimates of the fair value of the
entire reporting unit and comparing this amount
to the fair value of assets and liabilities
(including intangibles) in the reporting unit.
The difference represents the amount of goodwill
allocated to each reporting unit. Details of
goodwill by reporting unit are as follows: BARRICK YEAR-END 2004
    
    55
    
    NOTES TO FINANCIAL STATEMENTS




---



##### 



At December 31
    
    2004
    
    
    2003Kalgoorlie
    
    $
    205
    
    
    $
    239Pascua-Lama
    
    
    224
    
    
    
    229Veladero
    
    
    137
    
    
    
    141Cowal
    
    
    18
    
    
    
    138Hemlo
    
    
    61
    
    
    
    100Plutonic
    
    
    107
    
    
    
    113Eskay Creek
    
    
    24
    
    
    
    25Round Mountain
    
    
    12
    
    
    
    12Other
    
    
    80
    
    
    
    84$
    868
    
    
    $
    1,081
 In 2004, we released certain future income tax
valuation allowances totaling $29 million (2003
- $118 million) that were originally recorded as
part of the fair value of assets and liabilities
acquired at the date of acquisition of
Homestake. The amounts released were recorded
as a reduction of goodwill. We test goodwill for impairment annually in the
fourth quarter of our fiscal year. This
impairment assessment involves estimating the
fair value of each reporting unit that includes
goodwill. We compare this fair value to the
total carrying amount of each reporting unit
(including goodwill). If the fair value exceeds
this carrying amount, we consider that goodwill
is not impaired. If the fair value is less than
this carrying amount, then we estimate the fair
values of all identifiable assets and liabilities
in the reporting unit, and compare this net fair
value of assets less liabilities to the estimated
fair value of the entire reporting unit. The
difference represents the fair value of goodwill,
and if necessary, we reduce the carrying amount
of goodwill to this fair value. In 2004, our
goodwill impairment test resulted in a write down
of goodwill of $184 million, including $120
million for Cowal, $28 million for Kalgoorlie and
$36 million for Hemlo, (2003 - $48 million relating to Cowal). The impairment
in 2004 is mainly attributable to the continued
strengthening of the A$ and C$ against the US$
and revisions to estimates of future capital
expenditures and production costs, due to the
impact of inflationary cost pressures. We do not
expect any of the acquired goodwill to be
deductible for income tax purposes. 15 > OTHER ASSETS At Dec.31
    
    2004
    
    
    2003Derivative assets (note 17C)
    
    $
    21
    
    
    $
    31Ore in stockpiles (note 11)
    
    
    65
    
    

    
    57Taxes recoverable
    
    
    50
    
    
    
    52Debt issue costs
    
    
    38
    
    
    
    11Deferred stock-based compensation (note 21B)
    
    
    5
    
    
    
    6Other
    
    
    54
    
    
    
    56$
    233
    
    
    $
    213
 Debt issue costs Additions to debt issue costs in 2004
principally relate to new debt financings put in
place during the year. Amortization of debt
issue costs is calculated on a straight-line
basis or using the interest method over the term
of each debt obligation, and classified as a
component of interest cost. 16 > OTHER CURRENT LIABILITIES At Dec.31
    
    2004
    
    
    2003Asset retirement obligations (note 18A)
    
    $
    33
    
    
    $
    52Current part of long-term debt (note 17B)
    
    
    31
    
    
    
    41Post-retirement benefits (note 22)
    
    
    2
    
    
    
    5Deferred revenue
    
    
    5
    
    
    
    17Other
    
    
    1
    
    
    
    18$
    72
    
    
    $
    133
 17 > FINANCIAL INSTRUMENTS Financial instruments include cash; evidence
of ownership in an entity; or a contract that
imposes an obligation on one party and conveys a
right to a second entity to deliver/receive cash
or another financial instrument. Information on
certain types of financial instruments is
included in these financial statements as
follows: accounts receivable  note 11;
investments  note 10; restricted stock units 
note 21. A Cash and equivalents Cash and equivalents include cash, term deposits
and treasury bills with original maturities of
less than 90 days. BARRICK YEAR-END 2004
    
    56
    
    NOTES TO FINANCIAL STATEMENTS




---



##### 



B Long-term debt For the years ended Dec.31At Dec.31
    
    
    2004

    
    
    2003
    
    
    2002Interest
    
    
    Effective
    
    
    Interest
    
    
    Effective
    
    
    Interest
    
    
    Effective2004
    
    
    2003
    
    
    cost
    
    
    rate1
    
    
    cost
    
    
    rate1
    
    
    cost
    
    
    rate17 1/2% debentures2
    
    $
    500
    
    
    $
    500
    
    
    $
    31
    
    
    
    6.1
    %
    
    $
    31
    
    
    
    6.1
    %
    
    $
    38
    
    
    
    5.7
    %5 4/5% notes3
    
    
    397
    
    
    
    
    
    
    
    3
    
    
    
    6.0
    %
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4 7/8% notes4
    
    
    348
    
    
    
    
    
    
    
    2
    
    
    
    5.0
    %
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Veladero financing5
    
    
    198
    
    
    
    
    
    
    
    4
    
    
    
    7.5
    %
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Bulyanhulu financing6
    
    
    150
    
    
    
    174
    
    
    
    14
    
    
    
    8.0
    %
    
    
    15
    
    
    
    7.7
    %
    
    
    15
    
    
    
    7.2
    %Variable-rate bonds7
    
    
    63
    
    
    
    80
    
    
    
    1
    
    
    
    1.2
    %
    
    
    1
    
    
    
    1.1
    %
    
    
    1
    
    
    
    1.4
    %Capital leases
    
    
    5
    
    
    
    5
    
    
    
    
    
    
    
    7.8
    %
    
    
    
    
    
    
    8.2
    %
    
    
    1
    
    
    
    7.9
    %Construction debt under build to suit lease8
    
    
    30
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Other interest
    
    
    
    
    
    
    
    
    
    
    5
    
    
    
    
    
    
    
    2
    
    
    
    
    
    
    
    4
    
    
    
    1,691
    
    
    
    759
    
    
    
    60
    
    
    
    6.1
    %
    
    
    49
    
    
    
    6.3
    %
    
    
    59
    
    
    
    6.8
    %Less: current part/interest capitalized
    
    
    (31
    )
    
    
    (41
    )
    
    
    (45
    )
    
    
    
    
    
    
    (14
    )
    
    
    
    
    
    
    (2
    )$
    1,660
    
    
    $
    718
    
    
    $
    15
    
    
    
    
    
    
    $
    35
    
    
    
    
    
    
    $
    57
   1
    
    The effective rate includes the stated interest rate under the debt agreement,
amortization of debt issue costs, and the impact of interest rate contracts designated in a
hedging relationship with long-term debt.2
    
    On April 22, 1997, we issued $500 million of debentures that mature on May 1, 2007.3
    
    On November 12, 2004, we issued $400 million of debentures that mature on November 15,
2034. The debentures were issued at a $3 million discount.4
    
    On November 12, 2004, we issued $350 million of debentures that mature on November 15,
2014. The debentures were issued at a $2 million discount.5
    
    One of our wholly owned subsidiaries, Minera Argentina Gold S.A. in Argentina has a
variable-rate limited recourse amortizing loan facility for $250 million. At December 31,
2004, a total of $198 million had been drawn down under this facility. We have guaranteed the
loan until completion occurs, after which it will become non-recourse. The loan is insured
for political risks by branches of the Canadian and German governments.6
    
    One of our wholly owned subsidiaries, Kahama Mining Corporation Ltd. in Tanzania, has
a variable-rate non-recourse amortizing loan for $150 million. The loan is insured for
political risks equally by branches of the Canadian government and the World Bank.7
    
    Certain of our wholly owned subsidiaries have issued variable-rate, tax-exempt bonds of $25
million (due 2029) and $38 million (due 2032) for a total of $63 million.8
    
    One of our wholly owned subsidiaries, Minera Barrick Misquichilca, has entered into a
$56 million build to suit lease facility to finance the construction of the leach pad and process
facilities at the Lagunas Norte project. The five year lease term begins on October 1, 2005.
Amounts reimbursed for construction costs at December 31, 2004 have been presented as construction
debt until the lease term begins. Obligations under the lease will be repayable in 20 equal
quarterly installments over the term of the lease.

We also have a credit and guarantee agreement
with a group of banks (the Lenders), which requires the Lenders to make available to us a credit
facility of up to $1 billion or the equivalent amount in Canadian currency. The credit facility,
which is unsecured, matures in April 2008 and has an interest rate of LIBOR plus 0.27% to 0.35%
when used, and an annual fee of 0.08%. We have not drawn any amounts under the credit facility. Scheduled debt repayments1 2009 and2005
    
    
    2006
    
    
    2007
    
    
    2008
    
    
    thereafter7 1/2% debentures
    
    $
    
    
    
    $
    
    
    
    $
    500
    
    
    $
    
    
    
    $
    5 4/5% notes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4004 7/8% notes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    350Veladero financing
    
    
    
    
    
    
    24
    
    
    
    46
    
    
    
    38
    
    
    
    90Bulyanhulu financing
    
    
    31
    
    
    
    34
    
    
    
    34
    
    
    
    34
    
    
    
    17Variable-rate bonds
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    63$
    31
    
    
    $
    58
    
    
    $
    580
    
    
    $
    72
    
    
    $
    920
   1
    
    Excludes capital leases and build to suit lease facility. Minimum payments under capital leases1 Years ending Dec.312005
    
    $
    122006
    
    
    152007
    
    
    122008
    
    
    112009
    
    
    11$
    61
   1
    
    Includes the $56 million build to suit lease facility. C Use of derivative instruments (derivatives)
in risk management In the normal course of business, our assets,
liabilities and forecasted transactions are
impacted by various market risks including: BARRICK YEAR-END 2004
    
    57
    
    NOTES TO FINANCIAL STATEMENTS




---



##### 



Item  
    Cost of sales  o
    Consumption of oil and propaneo
    Local currency
denominated
expenditures  
    Administration costs in
local currencies
    Capital expenditures in
local currencies
    Interest earned on cash
    Interest payments on
variable-rate debt
    Fair value of fixed-rate
debt
 Impacted by  
    Prices of oil and propane
    Currency exchange rates - US dollar versus A$ and
C$
    Currency exchange rates - US dollar versus A$ and
C$
    Currency exchange rates - US dollar versus A$ , C$
and 
    US dollar interest rates
    US dollar interest rates
    US dollar interest rates
   Under our risk management policy we seek to mitigate the
impact of these market risks to control costs and enable
us to plan our business with greater certainty. The
timeframe and manner in which we manage these risks varies
for each item based upon our assessment of the risk and
available alternatives for mitigating risk. For these
particular risks, we believe that derivatives are an
effective means of managing risk. The primary objective of the hedging elements of our
derivative positions is that changes in the values of
hedged items are offset by changes in the values of
derivatives. Most of the derivatives we use meet the
AcG-13 hedge effectiveness criteria and are designated in
a hedge accounting relationship. Some of the derivative
positions are effective in achieving our risk management
objectives but they do not meet the strict AcG-13 hedge
effectiveness criteria, and they are classified as
non-hedge derivatives. Our use of derivatives is based on established practices
and parameters, which are subject to the oversight of
the Finance Committee of the Board of Directors. A
Compliance Function independent of the Corporate
Treasury Group monitors derivative transactions and has
responsibility for recording and accounting for
derivatives. Accounting policy for derivatives The scope of derivative financial instruments includes
our interest rate contracts,
currency contracts, gold lease rate swaps, commodity
options and fuel contracts. Our gold and silver sales
contracts are not included in the scope of these
pronouncements because the contracts are expected to be
settled through physical delivery of gold and silver. On the date we enter into a derivative that is accounted
for under AcG-13, we designate it as either a hedging
instrument or a non-hedge derivative. A hedging instrument
is designated in either:  Ø
    a fair value hedge relationship
with a recognized asset or liability; orØ
    a cash flow hedge
relationship with either a forecasted transaction or the
variable future cash flows arising from a recognized asset
or liability. At the inception of a hedge, we formally document all
relationships between hedging instruments and hedged items,
including the related risk-management strategy. This
documentation includes linking all hedging instruments to
either specific assets and liabilities, specific forecasted
transactions or variable future cash flows. It also
includes the method of assessing retrospective and
prospective hedge effectiveness. In cases where we use
regression analysis to assess prospective effectiveness, we
consider regression outputs for the coefficient of
determination (R-squared), the slope coefficient and the
t-statistic to assess whether a hedge is expected to be
highly effective. Each period, using a dollar offset
approach, we retrospectively assess whether hedging
instruments have been highly effective in offsetting
changes in the fair value of hedged items and we measure
the amount of any hedge ineffectiveness. We also assess
each period whether hedging instruments are expected to be
highly effective in the future. If a hedging instrument is
not expected to be highly effective, we stop hedge
accounting prospectively. We also stop hedge accounting
prospectively if:  Ø
    a derivative is settled;Ø
    it is no
longer highly probable that a forecasted transaction will
occur; orØ
    we de-designate a hedging relationship. If we conclude that it is probable that a forecasted
transaction will not occur in the originally specified
time frame, or within a further two-month period,
accumulated unrecorded gains and losses are immediately
recorded in earnings. In all situations when hedge
accounting stops, a derivative is classified as a
non-hedge derivative prospectively. Cash flows from
derivative transactions are included under operating
activities, except for derivatives designated as a cash
flow hedge of forecasted BARRICK YEAR-END 2004
    
    58
    
    NOTES TO FINANCIAL STATEMENTS




---



##### 



capital expenditures, which are included under
investing activities. Changes in the fair value of derivatives each period are
recorded as follows:  Ø
    Fair value hedges: we record in
earnings the net interest income/expense accrued on an
interest rate derivative as an adjustment to the yield of
the item being hedged over the term of the
derivative.  Ø
    Cash flow hedges: recorded in earnings at the same time
as earnings are affected by the hedged item, except for
any hedge ineffectiveness which is recorded in earnings
immediately.  Ø
    Non-hedge derivatives: recorded in earnings. Summary of derivatives at Dec.31, 20041Accounting Classification byNotional Amount by Term to Maturity
    
    
    Notional AmountCashWithin 1
    
    
    2 to 5
    
    
    Over 5
    
    
    
    
    
    
    flow
    
    
    Fair value
    
    
    Non-year
    
    
    years
    
    
    years
    
    
    Total
    
    
    hedge
    
    
    hedge
    
    
    Hedge
    
    
    Fair valueUS dollar Interest rate contractsReceive-fixed swaps (millions)
    
    $
    75
    
    
    $
    725
    
    
    $
    
    
    
    $
    800
    
    
    $
    300
    
    
    $
    500
    
    
    $
    
    
    
    $
    (5
    )Pay-fixed swaps (millions)
    
    
    
    
    
    
    150
    
    
    
    125
    
    
    
    275
    
    
    
    150
    
    
    
    
    
    
    
    125
    
    
    
    (24
    )Net notional position
    
    $
    75
    
    
    $
    575
    
    
    $
    (125
    )
    
    $
    525
    
    
    $
    150
    
    
    $
    500
    
    
    $
    (125
    )
    
    $
    (29
    )Currency contractsC$:US$ contracts (C$ millions)
    C
    $
    350
    
    C
    $
    600
    
    C
    $
    
    
    C
    $
    950
    
    C
    $
    935
    
    C
    $
    
    
    C
    $
    15
    
    
    $
    99A$:US$ contracts (A$ millions)
    A
    $
    844
    
    A
    $
    1,291
    
    A
    $
    
    
    A
    $
    2,135
    
    A
    $
    2,125
    
    A
    $
    
    
    A
    $
    10
    
    
    $
    198:
US$ contracts ( millions)
    
    

    26
    

    
    

    
    
    
    
    
    
    
    
    26
    

    
    
    26
    
    

    
    
    
    

    
    
    
    
    $
    1Commodity contractsFuel (WTI) (thousands of barrels)
    
    
    738
    
    
    
    1,618
    
    
    
    
    
    
    
    2,356
    
    
    
    1,946
    
    
    
    
    
    
    
    410
    
    
    $
    7Propane contracts (millions of gallons)
    
    
    11
    
    
    
    18
    
    
    
    
    
    
    
    29
    
    
    
    29
    
    
    
    
    
    
    
    
    
    
    $
    (3
    )
   1
    
    Excludes normal sales contracts. US dollar interest rate contracts Cash flow hedges - cash balances Receive-fixed swaps have been designated against
the first $300 million of our cash balances as a
hedge of the variability of forecasted interest
receipts on the balances caused by changes in Libor. Prior to December 2004, prospective and
retrospective hedge effectiveness was assessed
using a hypothetical derivative method under AcG-13.
The prospective test involves comparing the effect
of a theoretical shift in the forward interest rate
curve on the fair value of both the actual and
hypothetical derivative. The retrospective test
involves comparing the effect of actual changes in
interest rates in each period on the fair value of both
the actual and hypothetical derivative using a dollar
offset approach. In December 2004, we de-
designated these swaps and immediately re-
designated them in a new hedging relationship in
order to adopt a new method of assessing
prospective and retrospective effectiveness. At the
time of the re-designation these swaps had a fair
value near zero. From December 2004 onwards,
under the new method, prospective and
retrospective hedge effectiveness is assessed using
a change in variable cash flows method. This
involves a comparison of the floating-rate leg of the
swap to the variable-rate cash flows from interest
receipts on cash. As interest is received and recorded in earnings, an
amount equal to the difference between the fixed-
rate interest earned on the swaps and the variable-
rate interest earned on cash is recorded in earnings
as a component of interest income. Cash flow hedges - Bulyanhulu financing Pay-fixed swaps totaling $150 million have been
designated against the Bulyanhulu financing, as a
hedge of the variability in forecasted interest
payments caused by changes in Libor. We have
concluded that the hedges are 100% effective under
AcG-13, because the conditions of AcG-13 for the
assumption of no hedge ineffectiveness have been
met. As interest payments on the financing are
recorded in earnings, an amount equal to the
difference between the fixed-rate interest paid on BARRICK YEAR-END 2004
    
    59
    
    NOTES TO FINANCIAL STATEMENTS




---



##### 



the swap and the variable-rate interest paid on the
financing is recorded in earnings as a component of
interest costs. Fair value hedges Receive-fixed swaps totaling $500 million have been
designated against the 7 1/2% debentures as a
hedge of the variability in the fair value of the
debentures caused by changes in Libor. We have
concluded that the hedges are 100% effective under
AcG 13, because the critical terms (including: notional
amount, maturity date, interest payment and
underlying interest rate - i.e. Libor) of the swaps and
the debentures are the same. As interest payments
on the debentures are recorded in earnings, an
amount equal to the difference between the fixed-
rate interest received under the swap less the
variable-rate interest paid under the swap is
recorded in earnings as a component of interest
costs. Non-hedge contracts We use gold lease rate swaps as described in note 4.
The valuation of gold lease rate swaps is impacted by
market US dollar interest rates. Our non-hedge pay-
fixed swap position mitigates the impact of changes
in US dollar interest rates on the valuation of gold
lease rate swaps. Currency contracts Cash flow hedges Currency contracts totaling C$935 million, A$2,125
million and 26 million have been designated against
forecasted local currency denominated expenditures
as a hedge of the variability of the US dollar amount
of those expenditures caused by changes in currency
exchange rates. Hedged items are identified as the
first stated quantity of dollars of forecasted
expenditures in a future month. For a C$730 million
and A$1,671 million portion of the contracts, we have
concluded that the hedges are 100% effective under
AcG-13 because the critical terms (including: notional
amount and maturity date) of the hedged items and
currency contracts are the same. For 26 million,
and the remaining C$205 million and A$454 million
portions, prospective and retrospective hedge
effectiveness is assessed using a hypothetical
derivative method under AcG-13. The prospective
test involves comparing the effect of a theoretical
shift in forward exchange rates on the fair value of
both the actual and hypothetical derivative. The
retrospective test involves comparing the effect of
historic changes in exchange rates each period on
the fair value of both the actual and hypothetical
derivative using a dollar offset approach. We record
hedge gains and losses in earnings at the same time
as when the hedged item impacts earnings. For
expenditures capitalized to the cost of inventory, this
is upon sale of inventory, and for capital
expenditures, this is when amortization of the capital
assets is recorded in earnings. If it is probable that a hedged item will no longer
occur, the accumulated gains or losses for the
associated currency contract are recorded in to
earnings immediately. The identification of which
currency contracts are associated with these hedged
items uses a last-in, first-out (LIFO) approach,
based on the order in which currency contracts were
originally designated in a hedging relationship. Commodity contracts Cash flow hedges Commodity contracts totaling 1,946 thousand
barrels of diesel fuel and 29 million gallons of
propane have been designated against forecasted
purchases of the commodities for expected
consumption at our mining operations. The
contracts act as a hedge of the impact of variability
in market prices on the cost of future commodity
purchases. Hedged items are identified as the first
stated quantity in millions of barrels/gallons of
forecasted purchases in a future month. Prospective
and retrospective hedge effectiveness is assessed
using a hypothetical derivative method under AcG-13.
The prospective test is based on regression analysis
of the month-on-month change in fair value of both
the actual derivative and a hypothetical derivative
caused by actual historic changes in commodity
prices over the last three years. The retrospective
test involves comparing the effect of historic
changes in commodity prices each period on the fair
value of both the actual and hypothetical derivative
using a dollar offset approach. We record hedge
gains and losses in earnings at the same time as
when the forecasted transaction impacts earnings.
The cost of commodity consumption is capitalized to
the cost of inventory, and therefore this is upon the
sale of inventory. If it is probable that a hedged item will no longer
occur, the accumulated gains or losses in OCI for the
associated commodity contract are recorded in
earnings immediately. The identification of which
commodity contracts are associated with these
hedged items uses a LIFO approach, based on the
order in which commodity contracts were originally
designated in a hedging relationship. BARRICK YEAR-END 2004
    
    60
    
    NOTES TO FINANCIAL STATEMENTS




---



##### 



Non-hedge contracts Non-hedge fuel contracts are used to mitigate the risk of
oil price changes on consumption at the Pierina, Eskay
Creek and Lagunas Norte mines. On completion of regression
analysis, we concluded that the contracts do not meet the
highly effective criterion in AcG-13 due to currency and
basis differences between contract prices and the prices
charged to the mines by oil suppliers. Despite not
qualifying as an accounting hedge, the contracts protect
the Company to a significant extent from the effects of
oil price changes. Non-hedge derivative gains (losses)1 For the years ended Dec.31
    
    2004
    
    
    2003
    
    
    2002Non-hedge derivativesCommodity contracts
    
    $
    (9
    )
    
    $
    3
    
    
    $
    (2
    )Currency contracts
    
    
    (4
    )
    
    
    17
    
    
    
    8Interest rate contracts
    
    
    16
    
    
    
    32
    
    
    
    (12
    )3
    
    
    
    52
    
    
    
    (6
    )Hedge ineffectivenessOngoing hedge inefficiency
    
    
    
    
    
    
    1
    
    
    
    Due to changes in timing
of hedged items
    
    
    2
    
    
    
    18
    
    
    
    $
    5
    
    
    $
    71
    
    
    $
    (6
    )
   1
    
    Non-hedge derivative gains (losses) are classified as a component of other expense. D Fair Value of Financial Instruments Fair value is the value at which a financial instrument
could be closed out or sold in a transaction with a
willing and knowledgeable counterparty over a period of
time consistent with our risk management or investment
strategy. Fair value is based on quoted market prices,
where available. If market quotes are not available, fair
value is based on internally developed models that use
market-based or independent information as inputs. These
models could produce a fair value that may not be
reflective of future fair value. Fair value information At Dec.31
    

2004
    
    

2003EstimateCarrying
    
    
    d fair
    
    
    Carrying
    
    
    Estimatedamount
    
    
    value
    
    
    amount
    
    
    fair valueFinancial assetsCash and equivalents1
    
    $
    1,398
    
    
    $
    1,398
    
    
    $
    970
    
    
    $
    970Accounts receivable1
    
    
    58
    
    
    
    58
    
    
    
    56
    
    
    
    56Investments2
    
    
    124
    
    
    
    134
    
    
    
    92
    
    
    
    130Derivative assets3
    
    
    79
    
    
    
    422
    
    
    
    74
    
    
    
    410$
    1,659
    
    
    $
    2,012
    
    
    $
    1,192
    
    
    $
    1,566Financial liabilitiesAccounts payable1
    
    $
    335
    
    
    $
    335
    
    
    $
    245
    
    
    $
    245Long-term debt4
    
    
    1,691
    
    
    
    1,731
    
    
    
    759
    
    
    
    841Derivative liabilities3
    
    
    16
    
    
    
    63
    
    
    
    31
    
    
    
    73Restricted stock units5
    
    
    6
    
    
    
    6
    
    
    
    10
    
    
    
    10Exchangeable shares5
    
    
    11
    
    
    
    11
    
    
    
    13
    
    
    
    13$
    2,059
    
    
    $
    2,146
    
    
    $
    1,058
    
    
    $
    1,182
   1
    
    Recorded at cost. Fair value approximates the
carrying amounts due to the short-term nature and
generally negligible credit losses.2
    
    Recorded at fair value. Quoted market prices, when
available, are used to determine fair value. If quoted
market prices are not available, then fair values are
estimated by using quoted prices of instruments with
similar characteristics or discounted cash flows.3
    
    Fair value is estimated using liquid market pricing based
on exchange traded prices, broker-dealer quotations or
related input factors which assume all counterparties
have the same credit rating.4
    
    Long-term debt is generally recorded at cost except for
obligations that are designated in a fair value hedge
relationship, which are recorded at fair value in periods
where a hedge relationship exists. The fair value of
long-term debt is based on current market interest rates,
adjusted for our credit quality.5
    
    Recorded at fair value
based on the period end market stock price. E Credit risk Credit risk is the risk that a third party might fail to
fulfill its performance obligations under the terms of a
financial instrument. For cash and equivalents and
accounts receivable, credit risk represents the carrying
amount on the balance sheet. For derivatives, when the fair value is positive, this
creates credit risk. When the fair value of a derivative
is negative, we assume no credit risk. In cases where we
have a legally enforceable master netting agreement with a
counterparty, credit risk exposure represents the net
amount of the positive and negative fair values for
similar types of derivatives. For a net negative amount,
we regard credit risk as being zero. A net positive amount
for a counterparty is a reasonable measure of credit risk
when there is a legally enforceable master netting
agreement. We mitigate credit risk by:  Ø
    entering into derivatives with high credit-quality counterparties;Ø
    limiting the amount of exposure to each counterparty; andØ
    monitoring the financial condition of counterparties. BARRICK YEAR-END 2004
    
    61
    
    NOTES TO FINANCIAL STATEMENTS




---



##### 



Credit quality of financial assets At Dec.31, 2004
    
    S&P Credit ratingAA or
    
    
    A orhigher
    
    
    higher
    
    
    B to BBB
    
    
    TotalCash and equivalents
    
    $
    744
    
    
    $
    654
    
    
    $
    
    
    
    $
    1,398Derivatives 1
    
    
    303
    
    
    
    71
    
    
    
    
    
    
    
    374Accounts receivable
    
    
    
    
    
    
    
    
    
    
    58
    
    
    
    58$
    1,047
    
    
    $
    725
    
    
    $
    58
    
    
    $
    1,830Number of
counterparties 2
    
    
    14
    
    
    
    5
    
    
    
    Largest counterparty (%)
    
    
    31.5
    
    
    
    35.1
    
    
    
    
 Concentrations of credit risk United
    
    
    
    
    
    
    OtherAt Dec.31, 2004
    
    States
    
    
    Canada
    
    
    International
    
    
    TotalCash and equivalents
    
    $
    1,172
    
    
    $
    69
    
    
    $
    157
    
    
    $
    1,398Derivatives 1
    
    
    145
    
    
    
    193
    
    
    
    36
    
    
    
    374Accounts receivable
    
    
    7
    
    
    
    22
    
    
    
    29
    
    
    
    58$
    1,324
    
    
    $
    284
    
    
    $
    222
    
    
    $
    1,830
   1
    
    The amounts presented reflect the
net credit exposure after considering the effect of master
netting agreements.2
    
    For cash and equivalents and derivatives combined. F      Risks relating to the use of derivatives By using derivatives, in addition to credit risk, we
are affected by market risk and market liquidity risk.
Market risk is the risk that the fair value of a derivative
might be adversely affected by a change in commodity
prices, interest rates, gold lease rates, or currency
exchange rates, and that this in turn affects our financial
condition. We manage market risk by establishing and monitoring parameters that limit
the types and degree of market risk that may be undertaken.
We mitigate this risk by establishing trading agreements
with counterparties under which we are not required to post
any collateral or make any margin calls on our derivatives.
Our counterparties cannot require settlement solely because
of an adverse change in the fair value of a derivative. Market liquidity risk is the risk that a derivative
cannot be eliminated quickly, by either liquidating it or
by establishing an offsetting position. Under the terms
of our trading agreements, counterparties cannot require
us to immediately settle outstanding derivatives, except
upon the occurrence of customary events of default such
as covenant breaches, including financial covenants,
insolvency or bankruptcy. We generally mitigate market
liquidity risk by spreading out the maturity of our
derivatives over time. 18 > OTHER LONG-TERM OBLIGATIONS At Dec.31
    
    2004
    
    
    2003Asset retirement obligations
    
    $
    342
    
    
    $
    289Exchangeable shares
    
    
    11
    
    
    
    13Pension benefits (note 22)
    
    
    42
    
    
    
    41Post- retirement benefits (note 22)
    
    
    26
    
    
    
    26Derivative liabilities (note 17C)
    
    
    16
    
    
    
    31Restricted stock units (note 21B)
    
    
    6
    
    
    
    10Other
    
    
    28
    
    
    
    24$
    471
    
    
    $
    434
 A     Asset retirement obligations 2004
    
    
    2003At Jan.1
    
    $
    341
    
    
    $
    258Change in accounting policy
    
    
    
    
    
    
    104AROs incurred in the period
    
    
    14
    
    
    
    -Impact of revisions to expected cash
flowsAdjustments to carrying
amount of assets
    
    
    18
    
    
    
    -Charged to earnings
    
    
    22
    
    
    
    -SettlementsCash payments
    
    
    (34
    )
    
    
    (36
    )Settlement gains
    
    
    (5
    )
    
    
    (4
    )Accretion
    
    
    19
    
    
    
    19At Dec.31
    
    
    375
    
    
    
    341Current part
    
    
    (33
    )
    
    
    (52
    )$
    342
    
    
    $
    289
 In 2004 we adopted CICA 3110 and changed our accounting
policy for reclamation and closure costs. Previously we
accrued estimated reclamation and closure costs over the
life of our mines using the units-of-production method
based on the estimated recoverable ounces of gold in
proven and probable reserves. AROs arise from the acquisition, development, construction
and normal operation of mining property, plant and
equipment, due to government controls and regulations that
protect the environment on the closure and reclamation of
mining properties. Under CICA 3110 we record the fair
value of an ARO when it is incurred. At operating mines
the effect is recorded as an adjustment to the
corresponding asset carrying amount. At closed mines, the
adjustment is charged directly to earnings. The fair value

of AROs are measured by discounting the expected cash
flows using a discount factor that reflects the riskfree
rate of interest. We prepare estimates of timing and
amount of expected cash flows when an ARO is incurred,
which are updated to reflect changes in facts and
circumstances, or if we are required to submit updated
mine closure plans to regulatory authorities. The
principal factors that can cause BARRICK YEAR-END 2004
    
    62
    
    NOTES TO FINANCIAL STATEMENTS




---



##### 



expected cash flows to change are: the construction of new
processing facilities; changes in the quantities of material in reserves and a
corresponding change in the life of mine plan; changing ore
characteristics can impact required environmental
protection measures and related costs; changes in water
quality that impact the extent of water treatment required;
and changes in laws and regulations governing the
protection of the environment. In general, as the end of
the mine life becomes nearer, the reliability of expected
cash flows increases. AROs are adjusted to reflect the
passage of time (accretion) calculated by applying the
discount factor implicit in the initial fair value
measurement to the beginning of period carrying amount of
the AROs. Accretion is recorded in earnings as an operating
expense. Upon settlement of an ARO we record a gain or loss
if the actual cost differs from the carrying amount of the
ARO. Settlement gains are classified in other (income)
expense. Other environmental remediation costs that are not
AROs as defined by CICA 3110 are expensed as incurred (see
note 6). The major parts of the carrying amount of AROs at the end
of 2004 relate to: tailing and heap leach pad
closure/rehabilitation - $69 million; demolition of
buildings/mine facilities - $29 million; ongoing water
treatment - $93 million; ongoing care and maintenance -
$89 million; and other activities - $87 million. B Exchangeable Shares In connection with a 1998 acquisition, Barrick Gold
Inc. (BGI), issued 11.1 million BGI exchangeable
shares, which are each exchangeable for 0.53 of a Barrick
common share at any time at the option of the holder, and
have essentially the same voting, dividend (payable in
Canadian dollars), and other rights as 0.53 of a Barrick
common share. BGI is a subsidiary that holds our interest
in the Hemlo and Eskay Creek Mines. At
December 31, 2004, 1.4 million (2003 - 1.5 million) BGI
exchangeable shares were outstanding, which are equivalent
to 0.7 million Barrick common shares (2003 - 0.8 million
common shares). At any time on or after December 31, 2008, or when fewer
than 1.4 million BGI exchangeable shares are outstanding,
we have the right to require the exchange of each
outstanding BGI exchangeable share for 0.53 of a Barrick
common share. While there are exchangeable shares
outstanding, we are required to present summary
consolidated financial information relating to BGI. Summarized financial information for BGI For the years ended Dec.31
    
    2004
    
    
    2003
    
    
    2002Total revenues and other
income
    
    $
    216
    
    
    $
    226
    
    
    $
    201Less: costs and expenses
    
    
    318
    
    
    
    242
    
    
    
    187Income (loss) before taxes
    
    $
    (102
    )
    
    $
    (16
    )
    
    $
    14Net loss
    
    $
    (74
    )
    
    $
    (38
    )
    
    $
    1
 At Dec.31
    
    2004
    
    
    2003AssetsCurrent assets
    
    $
    67
    
    
    $
    81Non-current assets
    
    
    249
    
    
    
    401$
    316
    
    
    $
    482Liabilities and shareholders equityOther current liabilities
    
    
    24
    
    
    
    20Intercompany notes payable
    
    
    395
    
    
    
    545Other long-term liabilities
    
    
    36
    
    
    
    9Future income taxes
    
    
    42
    
    
    
    87Shareholders equity
    
    
    (181
    )
    
    
    (179
    )$
    316
    
    
    $
    482
 19 > FUTURE INCOME TAXES Recognition and measurement We record future income tax assets and liabilities where
temporary differences exist between the carrying amounts of assets and liabilities in
our balance sheet and their tax bases. The measurement and
recognition of future income tax assets and liabilities
takes into account: enacted rates that will apply when
temporary differences reverse; interpretations of relevant
tax legislation; tax planning strategies; estimates of the
tax bases of assets and liabilities; and the deductibility
of expenditures for income tax purposes. We recognize the
effect of changes in our assessment of these estimates and
factors when they occur. Future income taxes have not been provided on the
undistributed earnings of foreign subsidiaries, which are
considered to be reinvested indefinitely outside Canada.
The determination of the unrecorded future income tax
liability is not considered practicable. BARRICK YEAR-END 2004
    
    63
    
    NOTES TO FINANCIAL STATEMENTS




---



##### 



Sources of future income tax assets and liabilities At Dec.31
    
    2004
    
    
    20031Future tax assetsTax loss carry forwards
    
    $
    295
    
    
    $
    388Capital tax loss carry forwards
    
    
    48
    
    
    
    52Alternative minimum tax (AMT)
credits
    
    
    121
    
    
    
    120Foreign tax credits
    
    
    3
    
    
    
    3Asset retirement obligations
    
    
    109
    
    
    
    95Property, plant and equipment
    
    
    89
    
    
    
    142Post-retirement benefit obligations
    
    
    18
    
    
    
    21Other
    
    
    15
    
    
    
    46Gross future tax assets
    
    
    698
    
    
    
    867Valuation allowances
    
    
    (392
    )
    
    
    (389
    )Net future tax assets
    
    
    306
    
    
    
    478Future tax liabilitiesProperty, plant and equipment
    
    
    (411
    )
    
    
    (854
    )$
    (105
    )
    
    $
    (376
    )Classification:Non-current liabilities
    
    $
    (105
    )
    
    $
    (376
    )
   1
    
    2003 future tax asset balances for property, plant
and equipment and other have been restated with a
corresponding restatement of Valuation allowances. Expiry dates of tax losses and AMT credits Noexpiry05
    
    
    06
    
    
    07
    
    
    08
    
    
    09+
    
    
    date
    
    
    TotalTax losses 1Chile
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    670
    
    
    $
    670Tanzania
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    152
    
    
    
    152U.S.
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    224
    
    
    
    
    
    
    
    224Other
    
    
    28
    
    
    
    23
    
    
    
    6
    
    
    
    14
    
    
    
    109
    
    
    
    24
    
    
    
    204$
    28
    
    
    $
    23
    
    
    $
    6
    
    
    $
    14
    
    
    $
    333
    
    
    $
    846
    
    
    
    1,250AMT credits 2
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    121
    
    
    $
    121
   1
    
    Represents the gross amount of tax loss carry
forwards translated at closing exchange rates at
December 31, 2004.2
    
    Represents the amounts deductible against future taxes
payable in years when taxes payable exceeds minimum tax
as defined by United States tax legislation. Valuation allowances We consider the need to record a valuation allowance
against future tax assets on a country-by-country basis,
taking into account the effects of local tax law. A
valuation allowance is not recorded when we conclude that
sufficient positive evidence exists to demonstrate that it
is more likely than not that a future tax asset will be
realized. The main factors considered are:  Ø
    historic and expected future levels of future taxable
income;Ø
    opportunities to implement tax plans that
affect whether tax assets can be realized;
andØ
    the nature, amount and expected timing of reversal of
taxable temporary differences. Levels of future taxable income are mainly affected by:
market gold and silver prices; forecasted future costs and
expenses to produce gold reserves; quantities of proven
and probable gold reserves; market interest rates and
foreign currency exchange rates. If these factors or other
circumstances change, we record an adjustment to the
valuation allowances to reflect our latest assessment of
the amount of future tax assets that will more likely than
not be realized. A valuation allowance of $146 million has been set up
against certain future tax assets in the United States. A
majority of this valuation allowance relates to AMT credits
which have an unlimited carry forward period. Increasing
levels of future taxable income due to gold selling prices
and other factors and circumstances may result in an
adjustment to this valuation allowance. 20 > CAPITAL STOCK A Common shares Our authorized capital stock includes an unlimited number
of common shares (issued 533,575,185 shares); 9,764,929
First preferred shares, Series A (issued nil); 9,047,619
Series B (issued nil); 1 Series C special voting share
(issued 1); and 14,726,854 Second preferred shares Series
A (issued nil). During 2004, we repurchased 4.47 million common shares
(2003: 8.75 million) for $95 million (2003: $154 million),
at an average cost of $21.20 per share (2003: $17.56).
This resulted in a reduction of common share capital by
$42 million (2003: $81 million) and a $53 million charge
(being the difference between the repurchase cost and the
average historic book value of shares repurchased) to
retained earnings (2003: $73 million). In 2004, we declared and paid dividends in US dollars
totaling $0.22 per share (2003 - $0.22 per share, 2002 -
$0.22 per share). BARRICK YEAR-END 2004
    
    64
    
    NOTES TO FINANCIAL STATEMENTS




---



##### 



21 > STOCK-BASED COMPENSATION
A Stock options
Employee stock option activity (number of shares in millions)2 2004
    
    
    2003
    
    
    2002Average
    
    
    
    
    
    
    Average
    
    
    
    
    
    
    AverageShares
    
    
    price
    
    
    Shares
    
    
    price
    
    
    Shares
    
    
    priceC$ optionsAt Jan.1
    
    
    22
    
    
    
    
    
    
    
    19
    
    
    
    
    
    
    
    19Granted
    
    
    1
    
    
    $
    28
    
    
    
    5
    
    
    $
    29
    
    
    
    6
    
    
    $
    25Exercised1
    
    
    (2
    )
    
    $
    25
    
    
    
    (1
    )
    
    $
    24
    
    
    
    (4
    )
    
    $
    25Cancelled/expired
    
    
    (2
    )
    
    $
    28
    
    
    
    (1
    )
    
    $
    28
    
    
    
    (2
    )
    
    $
    34At Dec.31
    
    
    19
    
    
    
    
    
    
    
    22
    
    
    
    
    
    
    
    19US$ optionsAt Jan.1
    
    
    2
    
    
    
    
    
    
    
    3
    
    
    
    
    
    
    
    6Granted
    
    
    5
    
    
    $
    24
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Exercised1
    
    
    (1
    )
    
    $
    15
    
    
    
    (1
    )
    
    $
    13
    
    
    
    (2
    )
    
    $
    12Cancelled/expired
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1
    )
    
    $
    25At Dec.31
    
    
    6
    
    
    
    
    
    
    
    2
    
    
    
    
    
    
    
    3
    1
    
    The exercise price of the options is the closing share price on the day before the grant
date. They vest evenly over four years, beginning in the year after granting, and are exercisable
over 7-10 years. At December 31, 2004, 13 million (2003  1 million, 2002  5 million) common
shares, in addition to those currently outstanding, were available for granting options.2
    
    We are also obliged to issue about 0.3 million common shares (2003  0.5 million common shares) in
connection with outstanding stock options assumed as part of a business combination in 1999. These
options have an average exercise price of C$20 (2003  C$20) and an average remaining term of one
year. Stock options outstanding (number of shares in millions) OutstandingRange of
    
    
    
    
    
    
    
    
    
    Average
    
    
Exercisableexercise
    
    
    
    
    

    Average
    
    
    life
    
    
    
    
    
    
    Averageprices
    
    Shares
    
    
    price
    
    
    (years)
    
    
    Shares
    
    
    priceC$ options$22 - $31
    
    
    17
    
    
    $
    27
    
    
    
    7
    
    
    
    10
    
    
    $
    26$32 - $43
    
    
    2
    
    
    $
    39
    
    
    
    2
    
    
    
    2
    
    
    $
    3919
    
    
    
    
    
    
    
    6
    
    
    
    12US$ options$9 - $18
    
    
    1
    
    
    $
    12
    
    
    
    5
    
    
    
    
    
    
    
    $22 - $37
    
    
    5
    
    
    $
    24
    
    
    
    6
    
    
    
    1
    
    
    $
    306
    
    
    
    
    
    
    
    6
    
    
    
    1
 Option information For the years ended Dec.31(per share and option amountsin dollars)
    
    2004
    
    
    2003
    
    
    2002Fair value per option
    
    $
    6.87
    
    
    $
    8.50
    
    
    $
    6.40Valuation assumptions:Expected term (years)
    
    
    5
    
    
    
    6
    
    
    
    6Volatility
    
    
    30
    %
    
    
    40
    %
    
    
    40
    %Dividend yield
    
    
    1.0
    %
    
    
    1.0
    %
    
    
    1.4
    %Risk-free interest rate
    
    
    3.8
    %
    
    
    4.5
    %
    
    
    5.0
    %Compensation cost recorded
in income and credited to
contributed surplus
    
    $
    21
    
    
    $
    12
    
    
    $
    2Amounts credited to capital
stock
on exercise of stock options
    
    $
    3
    
    
    $
    1
    
    
    $
    2
 B Restricted Stock Units (RSUs) and Deferred Share Units
(DSUs) Under our RSU Plan, selected employees are granted
RSUs, where each RSU has a value equal to one Barrick
common share. RSUs vest and will be settled on the third
anniversary of the grant date. Additional RSUs are credited to reflect dividends paid on
Barrick common shares. RSUs are recorded at fair value on
the grant date, with a corresponding amount recorded as
deferred compensation that is amortized on a straight-line
basis over the vesting period. Changes in the fair value
of the RSUs are recorded, with a corresponding adjustment
to deferred compensation. Compensation expense for  BARRICK YEAREND 2004
    
    65
    
    NOTES TO FINANCIAL STATEMENTS




---



##### 



2004 was $4 million (2003  $4 million). At December 31,
2004, the weighted average remaining contractual life of
RSUs was 2.0 years. Under our DSU plan, Directors receive 50% of their basic
annual retainer in the form of DSUs, with the option to
elect to receive 100% of such retainer in DSUs. Each DSU
has the same value as one Barrick common share. DSUs must
be retained until the Director leaves the Board, at which
time the cash value of the DSUs will be paid out.
Additional DSUs are credited to reflect dividends paid on
Barrick common shares. DSUs are recorded at fair value on
the grant date and are adjusted for changes in fair value.
Directors fee expense for DSUs for 2004 was $0.6 million
(2003: $0.2 million). DSU and RSU activity DSUs
    
    
    Fair value
    
    
    RSUs
    
    
    Fair value(in
    
    
    per unit
    
    
    (in
    
    
    per unitthousands)
    
    
    (in dollars)
    
    
    thousands)
    
    
    (in dollars)At Dec.31, 2001
    
    
    
    
    
    $
    
    
    
    
    515
    
    
    $
    16Canceled
    
    
    
    
    
    
    
    
    
    
    (30
    )
    
    
    20Dividends
    
    
    
    
    
    
    
    
    
    
    4
    
    
    
    17At Dec.31, 2002
    
    
    
    
    
    $
    
    
    
    
    489
    
    
    $
    15Canceled
    
    
    
    
    
    
    
    
    
    
    (171
    )
    
    
    17Granted
    
    
    8
    
    
    
    21
    
    
    
    130
    
    
    
    22Dividends
    
    
    
    
    
    
    
    
    
    
    4
    
    
    
    20At Dec.31, 2003
    
    
    8
    
    
    $
    23
    
    
    
    452
    
    
    $
    23Canceled
    
    
    
    
    
    
    
    
    
    
    (58
    )
    
    
    23Settled
    
    
    
    
    
    
    
    
    
    
    (293
    )
    
    
    25Granted
    
    
    23
    
    
    
    22
    
    
    
    131
    
    
    
    24Dividends
    
    
    
    
    
    
    
    
    
    
    3
    
    
    
    20At Dec.31, 2004
    
    
    31
    
    
    $
    24
    
    
    
    235
    
    
    $
    24
 22 > POST-RETIREMENT BENEFITS A Defined contribution pension plans Certain employees take part in defined contribution
employee benefit plans. We also have a retirement plan for
certain officers of the Company, under which we contribute
15% of the officers annual salary and bonus. Our share of
contributions to these plans, which is expensed in the
year it is earned by the employee, was $19 million in
2004, $16 million in 2003 and $13 million in 2002. B Defined benefit pension plans We have one qualified defined benefit pension plan
that covers certain of our United States employees and
provides benefits based on employees years of service.
Our policy is to fund the amounts necessary on an
actuarial basis to provide enough assets to meet the
benefits payable to plan members under the Employee
Retirement Income Security Act of 1974. Independent
trustees administer assets of the plans, which are invested mainly in fixed-income and
equity securities. On December 31, 2004, the qualified
defined benefit plan was amended to freeze benefit
accruals for all employees, resulting in a curtailment
gain of $2 million. As well as the qualified plan, we have nonqualified
defined benefit pension plans covering certain employees
and former directors of the Company. An irrevocable trust
(rabbi trust) was set up to fund these plans. The fair
value of assets held in this trust was $31 million in 2004
(2003  $32 million), and is recorded in our consolidated
balance sheet under Investments. Actuarial gains and losses arise when the actual return
on plan assets differs from the expected return on plan
assets for a period, or when the expected and actuarial
accrued benefit obligations differ at the end of the
year. We amortize actuarial gains and losses over the
average remaining life expectancy of plan participants,
in excess of a 10% corridor. Pension expense For the years ended Dec.31
    
    2004
    
    
    2003
    
    
    2002Return on plan assets
    
    $
    (11
    )
    
    $
    (11
    )
    
    $
    (17
    )Service cost
    
    
    
    
    
    
    
    
    
    
    3Interest cost
    
    
    12
    
    
    
    14
    
    
    
    16Actuarial gains (losses)
    
    
    1
    
    
    
    
    
    
    
    (1
    )Gain (loss) on curtailment/settlement
    
    
    (2
    )
    
    
    1
    
    
    
    1$
    
    
    
    $
    4
    
    
    $
    2
 C Pension plan information Fair value of plan assets For the years ended Dec.31
    
    2004
    
    
    2003Balance at Jan.1
    
    $
    166
    
    
    $
    170Actual return on plan assets
    
    
    14
    
    
    
    19Company contributions
    
    
    6
    
    
    
    8Benefits paid
    
    
    (16
    )
    
    
    (31
    )Balance at Dec.31
    
    $
    170
    
    
    $
    166
 At Dec.31
    
    2004
    
    
    2003Target
    
    
    Actual
    
    
    Actual
    
    
    ActualComposition of plan assets:Equity securities
    
    
    50
    %
    
    
    46
    %
    
    $
    78
    
    
    $
    66Debt securities
    
    
    50
    %
    
    
    54
    %
    
    
    92
    
    
    
    100100
    %
    
    
    100
    %
    
    $
    170
    
    
    $
    166
  BARRICK YEAR-END 2004
    
    66
    
    NOTES TO FINANCIAL STATEMENTS




---



##### 



Projected benefit obligation (PBO) For the years ended Dec. 31
    
    2004
    
    
    2003Balance at Jan.1
    
    $
    221
    
    
    $
    227Interest cost
    
    
    12
    
    
    
    14Actuarial losses
    
    
    3
    
    
    
    11Benefits paid
    
    
    (16
    )
    
    
    (31
    )Curtailments/settlements
    
    
    (2
    )
    
    
    Balance at Dec.31
    
    $
    218
    
    
    $
    221Funded status1
    
    $
    (48
    )
    
    $
    (55
    )Unrecognized actuarial losses
    
    
    11
    
    
    
    11Net benefit liability recorded
    
    $
    (37
    )
    
    $
    (44
    )ABO2,3
    
    $
    217
    
    
    $
    217
   1
    
    Represents the fair value of plan assets less
projected benefit obligations. Plan assets exclude investments held in a
rabbi trust that are recorded separately on our balance
sheet under Investments (fair value $31 million at
December 31, 2004). In the year ending December 31, 2005,
we do not expect to make any further contributions.2
    
    For 2004 we used a measurement date of
December 31, 2004 to calculate accumulated benefit
obligations.3
    
    Represents the ABO for all plans. The ABO for plans
where the PBO exceeds the fair value of
plan assets was $49 million (2003: $217 million). Investment strategy We employ a total return investment approach, whereby a
mix of equities and fixed-income investments is used to
maximize the long-term return of plan assets. Risk is
diversified through a blend of equity and fixed-income
investments, and also across geography and market
capitalization in US large cap stocks, US small cap
stocks, and international securities. Investment risk is
measured and monitored on an ongoing basis through annual
liability measurements, periodic asset/liability studies,
and quarterly investment portfolio reviews. Rate of return on plan assets In estimating the long-term rate of return for plan
assets, historical markets are studied and long-term
historical returns on equities and fixed-income
investments reflect the widely accepted capital market
principle that assets with higher volatility generate a
greater return over the long run. Current market factors
such as inflation and interest rates are evaluated before
long-term capital market assumptions are finalized. Expected future benefit payments For the years ending Dec.312005
    
    $
    162006
    
    
    152007
    
    
    162008
    
    
    162009
    
    
    162010  2014
    
    $
    89
 Total recorded benefit liability At Dec.31
    
    2004
    
    
    2003Current
    
    $
    
    
    
    $
    3Non-current
    
    
    37
    
    
    
    41Benefit plan liability
    
    $
    37
    
    
    $
    44
 D Actuarial assumptions For the years ended Dec.31
    
    2004
    
    
    2003
    
    
    2002Discount rate1Benefit obligation
    
    
    5.50
    %
    
    
    6.25
    %
    
    
    6.50
    %Pension cost
    
    
    6.25
    %
    
    
    6.50
    %
    
    
    6.75
    %Return on plan assets1
    
    
    7.00
    %
    
    
    7.00
    %
    
    
    8.50
    %Wage increases
    
    
    5.00
    %
    
    
    5.00
    %
    
    
    5.00
    %
   1
    
    Effect of a one-percent change: Discount
rate: $22 million change in ABO and change in pension
cost; Return on plan assets: $2 million change in pension
cost. E Other post-retirement benefits We provide post-retirement medical, dental, and life
insurance benefits to certain employees. We use the
corridor approach in the accounting for post-retirement
benefits. Actuarial gains and losses resulting from
variances between actual results and economic estimates or
actuarial assumptions are deferred and amortized over the
average remaining life expectancy of participants when the
net gains or losses exceed 10% of the accumulated
post-retirement benefit obligation. In 2004, we recorded a
benefit expense of $2 million (2003  $nil, 2002  $nil). Other post-retirement benefits expense For the years ended Dec.31
    
    2004
    
    
    2003
    
    
    2002Interest cost
    
    $
    2
    
    
    $
    1
    
    
    $
    2Prior service cost
    
    
    
    
    
    
    
    
    
    
    (1
    )Curtailments/settlements
    
    
    
    
    
    
    (1
    )
    
    
    (1
    )$
    2
    
    
    $
    
    
    
    $
    
 Fair value of plan assets For the years ended Dec.31
    
    2004
    
    
    2003Balance at Jan.1
    
    $
    
    
    
    $
    Contributions
    
    
    2
    
    
    
    2Benefits paid
    
    
    (2
    )
    
    
    (2
    )Balance at
Dec. 31
    
    $
    
    
    
    $
    
  BARRICK YEAR-END 2004
    
    67
    
    NOTES TO FINANCIAL STATEMENTS




---



##### 



Accumulated post-retirement benefit obligation (APBO) For the years ended Dec.31
    
    2004
    
    
    2003Balance at Jan. 1
    
    $
    24
    
    
    $
    28Interest cost
    
    
    2
    
    
    
    1Actuarial losses
    
    
    5
    
    
    
    (3
    )Benefits paid
    
    
    (2
    )
    
    
    (2
    )Balance at Dec. 31
    
    $
    29
    
    
    $
    24Funded status
    
    
    (29
    )
    
    
    (24
    )Unrecognized actuarial losses
    
    
    1
    
    
    
    (4
    )Net benefit liability recorded
    
    $
    (28
    )
    
    $
    (28
    )
 We have assumed a health care cost trend of 10% in 2004,
decreasing ratability to 5% in 2009 and thereafter. The
assumed health care cost trend had a minimal effect on the
amounts reported. A one percentage point change in the
assumed health care cost trend rate at December 31, 2004
would have increased the post-retirement obligation by $3
million or decreased the post-retirement benefit
obligation by $2 million and would have had no
significant effect on the benefit expense for 2004. Expected future benefit payments For the years ending Dec.312005
    
    $
    22006
    
    
    22007
    
    
    22008
    
    
    22009
    
    
    22010  2014
    
    $
    9
 23 > CONTINGENCIES, LITIGATION AND
CLAIMS Certain conditions may exist as of the date the
financial statements are issued, which may result in a
loss to the Company but which will only be resolved when
one or more future events occur or fail to occur. In
assessing loss contingencies related to legal proceedings
that are pending against us or unasserted claims that may
result in such proceedings, the Company and its legal
counsel evaluate the perceived merits of any legal
proceedings or unasserted claims as well as the perceived
merits of the amount of relief sought or expected to be
sought. If the assessment of a contingency suggests that a loss is
probable, and the amount can be reliably estimated, then a
loss is recorded. When a contingent loss is not probable
but is reasonably possible, or is probable but the amount
of loss cannot be reliably estimated, then details of the
contingent loss are disclosed. Loss contingencies
considered remote are generally not disclosed unless
they involve guarantees, in which case we disclose the
nature of the guarantee. Legal fees incurred in
connection with pending legal proceedings are expensed as
incurred. Bre-X Minerals In 1998, we were added as a defendant in a class action
lawsuit initiated against Bre-X Minerals Ltd., and certain
others in the United States District Court for the Eastern
District of Texas, Texarkana Division. The class action
alleges, among other things, that statements made by us in
connection with our efforts to secure the right to develop
and operate the Busang gold deposit in East Kalimantan,
Indonesia were materially false and misleading and omitted
to state material facts relating to the preliminary due
diligence investigation undertaken by us in late 1996. On March 31, 2003, the Court denied all of the Plaintiffs
motions to certify the case as a class action. The
Plaintiffs have not filed an interlocutory appeal of the
Courts decision denying class certification to the Fifth
Circuit Court of Appeals. On June 2, 2003, the Plaintiffs
submitted a proposed Trial and Case Management Plan,
suggesting that the Plan would cure the defects in the
Plaintiffs motions to certify the class. The Court has
taken no action with respect to the proposed Trial and
Case Management Plan. The Plaintiffs case against the
Defendants may now proceed in due course, but not on
behalf of a class of Plaintiffs but only with respect to
the specific claims of the Plaintiffs named in the
lawsuit. Having failed to certify the case as a class
action, we believe that the likelihood of any of the named
Defendants succeeding against Barrick with respect to
their claims for securities fraud is remote. The amount of
potential loss, if any, which we may incur arising out of
the Plaintiffs claims is not determinable. Blanchard complaint On January 7, 2003, we were served with a Complaint for
Injunctive Relief by Blanchard and Company, Inc.
(Blanchard), and Herbert Davies (Davies). The
complaint, which is pending in the U.S. District Court for
the Eastern District of Louisiana, also names J.P. Morgan
Chase & Company (J.P. Morgan) as a defendant, along with
an unspecified number of additional defendants to be named
later. The complaint, which has been amended several
times, alleges that we and bullion banks with whom we
entered into spot deferred gold sales contracts have
manipulated the price of gold, in violation of U.S.
anti-trust laws and the Louisiana  BARRICK YEAR-END 2004
    
    68
    
    NOTES TO FINANCIAL STATEMENTS




---



##### 



Unfair Trade Practices and Consumer Protection Law.
Blanchard and Davies both allege that they have been
injured as a seller of gold due to reduced interest in
gold as an investment. The complaint seeks damages and an
injunction terminating certain of our trading agreements
with J.P. Morgan and other bullion banks. In September
2003 the Court issued an Order granting in part and
denying in part Barricks motions to dismiss this action.
Discovery has commenced in the case and a trial date has
been tentatively set for July 2005. We intend to defend
the action vigorously. McKenzie complaint On September 21, 2004, a putative class action complaint
was filed in the U.S. District Court for the Eastern
District of Louisiana against Barrick and J.P. Morgan. The
plaintiffs, Dr. Gregg McKenzie and others are alleged
purchasers of gold and gold derivatives. The complaint
alleges violations of the U.S. anti-trust laws and also of
the Commodity Exchange Act, based upon the same conduct as
alleged in the Blanchard complaint. The complaint seeks
damages and an injunction terminating certain of our
trading agreements with J.P. Morgan. On December 17, 2004,
a second and substantially identical complaint was filed
in the same court against the same defendants. Barrick has
not yet been served with this second complaint. Barrick
intends to defend both actions vigorously. Wagner complaint On June 12, 2003, a complaint was filed against Barrick
and several of its current or former officers in the U.S.
District Court for the Southern District of New York. The
complaint is on behalf of Barrick shareholders who
purchased Barrick shares between February 14, 2002 and
September 26, 2002. It alleges that Barrick and the
individual defendants violated US securities laws by
making false and misleading statements concerning
Barricks projected operating results and earnings in
2002. The complaint seeks an unspecified amount of
damages. Other parties on behalf of the same proposed
class of Barrick shareholders filed several other
complaints, making the same basic allegations against the
same defendants. In September 2003, the cases were
consolidated into a single action in the Southern District
of New York. The plaintiffs filed a Consolidated and/or
Amended Complaint on November 5, 2003. On January 14, 2004
Barrick filed a motion to dismiss the complaint. On
September 29, 2004, the Court issued an order granting in
part and denying in part Barricks motion to dismiss the
action. The Court granted the plaintiffs leave to file a
Second Amended Complaint,
which was filed on October 20, 2004. The plaintiffs filed
a Third Amended Complaint on January 6, 2005. We intend
to defend the action vigorously. Wilcox complaint On September 8, 2004, two of our U.S. subsidiaries,
Homestake Mining Company of California (Homestake
California) and Homestake Mining Company (Homestake)
were served with a First Amended Complaint by persons
alleging to be current or former residents of a rural area
near the former Grants Uranium Mill. The Complaint, which
was filed in the U.S. District Court for the District of
New Mexico, identifies 26 plaintiffs. Homestake and
Homestake California, along with an unspecified number of
unidentified defendants, are named as defendants. The
plaintiffs allege that they have suffered a variety of
physical, emotional and financial injuries as a result of
exposure to radioactive and other hazardous substances.
The Complaint seeks an unspecified amount of damages. A
motion to dismiss the claim was filed with the Court, but
the Court has not yet ruled on the motion. We intend to
defend the action vigorously. 24 > JOINT VENTURES Our major interests in joint ventures are a 50%
interest in the Kalgoorlie Mine in Australia; a 50%
interest in the Round Mountain Mine in the United
States; and a 50% interest in the Hemlo Mine in Canada. SUMMARY FINANCIAL INFORMATION (100%)
Income statement and cash flow information For the years ended Dec.31
    
    2004
    
    
    2003
    
    
    2002Revenues
    
    $
    889
    
    
    $
    770
    
    
    $
    647Costs and expenses
    
    
    663
    
    
    
    641
    
    
    
    577Net income
    
    $
    226
    
    
    $
    129
    
    
    $
    70Operating activities1
    
    $
    295
    
    
    $
    125
    
    
    $
    175Investing activities1
    
    $
    (46
    )
    
    $
    (60
    )
    
    $
    (54
    )Financing activities1
    
    $
    
    
    
    $
    
    
    
    $
    
   1
    
    Net cash inflow (outflow). Balance sheet information At December 31
    
    2004
    
    
    2003AssetsInventories
    
    $
    108
    
    
    $
    104Property, plant and
equipment
    
    
    605
    
    
    
    633Goodwill
    
    
    278
    
    
    
    351Other assets
    
    
    93
    
    
    
    64$
    1,084
    
    
    $
    1,152LiabilitiesCurrent liabilities
    
    $
    87
    
    
    $
    77Long-term obligations
    
    
    109
    
    
    
    103$
    196
    
    
    $
    180
  BARRICK YEAR-END 2004
    
    69
    
    NOTES TO FINANCIAL STATEMENTS




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