barrick gold corporation (abx-t, $19 · barrick reported adjusted cash flow after working-capital...

Research Report – April 25, 2013

Member of the Canadian Investor Protection Fund

Please see rating structure, disclaimers, and notes on pages 14-17.

) Barrick Gold Corporation (ABX-T, $19.38Rating Buy Kerry Smith, MBA, PEng416-507-2306 [email protected]

Target Price $34.50 (-$9.00) Maria Kalbarczyk, CFA416-507-2437 [email protected]

Return 78% Alejandro Hoyos, MBA416-507-2419 [email protected] Analyst Certification: See page 15; Important Information and Legal Disclaimers: See page 14

A Decent Q1/13…Cash Costs Better than Expected on Cost-Saving Initiatives

Overall Risk Rating Moderate Event Barrick Gold reported its Q1/13 operating and financial results.

Valuation Our $34.50 target price is based on a 6.0x multiple to our 2013E CFPS of US$5.80 at a 2013E gold price of US$1,750 per ounce and a copper price of US$3.65 per pound. At current spot prices of US$1,430 per ounce of gold and US$3.15 per pound of copper, our 2013E CFPS would drop to US$4.02, implying a target price of $24.00 at our assumed CFPS multiple. Barrick now trades at an EV/2013E and a 2013E CFPS multiple of 5.1x and 3.2x respectively. The Company’s peer group currently trades at an average of 8.1x EV/2013E and 6.6x consensus 2013E CFPS.

Impact – Neutral Good quarter on production and costs, but developments at Pascua–Lama and Pueblo Viejo will continue to overshadow the Company.

Barrick reported adjusted cash flow after working-capital changes of US$1,158 million, or US$1.16 per share, and we calculate that adjusted cash flow before working-capital changes was US$1,590 million, or US$1.59 per share, above our expectation and consensus of US$1.43 per share. Q1/13 gold production was 1.8 Moz at a total cash cost of US$561/oz and all-in sustaining cash cost of US$919/oz, with costs better than budgeted. The first quarter of commercial production at Pueblo Viejo (PV) delivered 96 koz at a total cash cost of US$550/oz, a very good start. The Dominican Republic government is pushing the PV JV to “increase” the government’s benefits from the mine through tax measures. Discussions continue, but amendments to the Special Lease Agreement would result in additional payments, reducing the economics of the project.

Forecasts – Barrick left 2013 operating guidance largely unchanged, but decreased all-in sustaining cost guidance by $50/oz to US$950-US$1,050/oz. Barrick reduced capex guidance by US$500M to US$5.2-US$5.7B and exploration guidance by US$100M. We have updated our model accordingly, and have increased our 2013E C1 copper cash cost to US2.28/lb (from US$2.07/lb) on Q1/13A results.

Target Price, Ratings – We have reduced our target multiple to 6.0x 2013E CFPS from 7.5x 2013E CFPS previously given the multiple compression in the sector. Consequently, we lower our target price to $34.50 and reiterate our BUY rating.

Risks We assign a Moderate Risk rating to Barrick Gold. Near-term risks facing the Company include delays to the Pascua–Lama development pipeline and the Dominican Republic’s push for a bigger chunk of profits from Pueblo Viejo.

Catalysts 1) Potential sale of a portion of Australian assets – ongoing; 2) Updates on pre-stripping and construction halts at Pascua–Lama in Chile – ongoing; 3) Barrick Energy sale process – ongoing; 4) Zaldivar deep sulphides prefeasibility study – Q4/13; 5) Initial production at Jabal Sayid – 2014; 6) First production from thiosulphate technology at Goldstrike – Q3/14; 7) Pascua–Lama first production – H2/14.

Forecast Risk (Moderate) 4 Financial Risk (Moderate) 4 Valuation Risk (Low) 3 Political Risk (Moderate) 4 Risk Profile Definitions: See page 16 52-Week High/Low $44.5 / $17.99 YTD Performance (44%) Dividend Yield 4.1% Shares O/S 1,001M (basic)/ 1,009M (F/D) Market Capitalization $18,881M Cash $2,342M Debt $14,101M Working Capital $3,263M Enterprise Value $29,719M Daily Volume 3,800,370 Currency C$ unless noted

Company Profile Website – www.barrick.com CEO – Jamie Sokalsky About the Company – Barrick is the world’s largest gold producer, with ~7.2 million ounces of annual production from global operations.

Estimates 2013E 2014E Production, koz 7,200 7,250 Cash Cost, US$/oz $675 $685 Cash Flow, US$M $5,807 $5,757 CFPS, US$/sh $5.80 $5.75

Price Performance

Source: Capital IQ and Haywood Securities

http://www.barrick.com/

Barrick Gold Corporation (ABX-T) 4/25/13

Kerry Smith , MBA, PEng416-507-2306 [email protected]

Source: Haywood Securities

Shares O/S, millions

Shares F/D, millions

Rating (Risk): BUY (MODERATE) Return, % 78% Market Cap, US$M

Target Price Metric: 6.0x 2013E CFPS 52-Week High / Low, C$ $44.50 / $17.99 Company CEO

Daily Volume (3-month avg) 3,800,370 Company Web Site

Share Capital Dilution

Balance Sheet and Capitalization Number Price Proceeds Expiry

US$M C$M Warrants - - - -

Market Capitalization $18,881 $19,402 Options 8.0M C$33.00 C$(108.9 ) -

Current Cash $2,342 $2,407 Warrants + Options 8.0M C$33.00 C$(108.9 ) -

F/D Cash Adds $2,232 $2,294

Working Capital $3,263 $3,353 Recent Financings / M&A Activity

Long-term Debt ($14,101) ($14,490)

Book Value $22,546 $23,168

Enterprise Value (EV) $29,719 $30,540

EV = Market Capitalization - Working Capital + Long-term Debt

Spot C$/US$ FX Rate: 1.03

Major Shareholders

Financial Forecast O/S (%) F/D (%)

2011A 2012A 2013E 2014E 2015E 2016E Capital World Investments 4.2% 4.2%

Forecast Gold Price, US$/oz $1,578 $1,664 $1,750 $1,750 $1,700 $1,650 Van Eck Associates Corporation 3.6% 3.6%

Forecast Copper Price, US$/lb $3.82 $3.69 $3.65 $3.65 $3.50 $3.25 Blackrock, Inc. 2.6% 2.6%

C$/US$ FX Rate 0.99 1.00 0.99 1.00 1.03 1.04

Shares O/S, millions 1,001.2 1,001.2 1,001.2 1,001.2 1,001.2 1,001.2 Corporate NAV Summary and Sensitivity Spot

Revenue, US$M $14,312.0 $14,547.0 $14,461.5 $14,841.0 $15,740.0 $15,725.0 $1,400 $1,600 $2,000 $1,430

Mine Site Expense, US$M ($4,897.0) ($5,134.1) ($6,022.6) ($6,268.2) ($6,354.1) ($6,273.2) $3.50 $3.75 $5.00 $3.15

Corporate G&A, US$M ($160.0) ($195.0) ($170.0) ($170.0) ($170.0) ($170.0) ($11,759) ($11,759) ($11,759) ($11,759)

EBITDA, US$M $9,415.0 $9,412.9 $8,438.9 $8,572.8 $9,385.9 $9,451.8 $33,716 $47,803 $81,973 $32,666

EV / EBITDA 3.2x 3.2x 3.5x 3.5x 3.2x 3.1x $0 $0 $0 $0

DD&A, US$M ($1,398.0) $1,701.0 ($1,746.9) ($1,788.9) ($1,955.9) ($2,027.3) $21,957 $36,044 $70,214 $20,907

Earnings, US$M $4,675.4 ($660.8) $3,704.3 $3,704.3 $4,204.8 $4,254.9 ($11.55) ($11.55) ($11.55) ($11.55)

EPS, US$ $4.67 ($0.66) $3.70 $3.70 $4.20 $4.25 $33.75 $47.85 $82.05 $32.70

Current Price / EPS 4.2x - 5.3x 5.2x 4.5x 4.4x $0.00 $0.00 $0.00 $0.00

Target Price / EPS 7.5x - 9.4x 9.3x 8.0x 7.8x $22.20 $36.30 $70.50 $21.15

Cash Flow Before W/C Changes, US$M $5,827 $6,057 $5,807 $5,757 $6,407 $6,507 0.9x 0.5x 0.3x 0.9x

CFPS, US$ $5.82 $6.05 $5.80 $5.75 $6.40 $6.50 1.6x 1.0x 0.5x 1.6x

Current Price / CFPS 3.4x 3.2x 3.4x 3.4x 2.9x 2.9x $3.99 $5.09 $7.56 $4.02

Target Price / CFPS 6.0x 5.7x 6.0x 6.0x 5.2x 5.1x $3.80 $4.99 $7.69 $3.81

CFPS Sensitivity, US$ - - $0.25 $0.26 $0.29 $0.30 $23.75 $30.50 $45.25 $24.00

CAPEX, US$M ($5,502) ($5,822) ($5,400) ($3,274) ($1,402) ($1,463) Base case gold price assumption of US$1,750/oz in '13-'14, US$1,700/oz in '15, US$1,650/oz in '16, US$1,600/oz in '17, US$1,500/oz in '18, and US$1,400/oz thereafter.

Dividend Payments, US$M ($509.0) ($750.0) ($800.0) ($800.0) ($800.0) ($800.0) Base case assumes a copper price of US$3.65/lb in '13 and '14, US$3.50/lb in '15 and US$3.25/lb thereafter.

Proceeds from Equity Financing, US$M $6,500.0 $0.0 $0.0 $0.0 $0.0 $0.0 2013E C$/US$ FX Rate: 0.99

Proceeds from Debt Financing, US$M $0.0 $1,000.0 $2,000.0 $0.0 $0.0 $0.0 Metal Inventory - Model Mineable, Reserve, and Resource

Debt Repayment, US$M ($23.0) ($197.0) ($1,810.0) ($1,140.0) ($195.0) ($1,600.0) Au Tons Cu Tons Au Grade Cu Grade Au oz Cu lbs

Free Cash Flow, US$M $325.0 $235.0 $406.7 $2,482.5 $5,005.8 $5,044.2 (000's) (000's) (oz/ton) (%) (000's) (Mlb's)

FCPS, US$ $0.32 $0.23 $0.41 $2.48 $5.00 $5.04 Model Mineable 3,701,312 1,133,860 0.038 0.56% 140,200 12,693

CFPS sensitivity is based on a US$50/oz change in forecast gold price. Proven and Probable Reserve (Attrib.) 3,701,312 1,133,860 0.038 0.56% 140,200 12,693

Additional Measured & Indicated Resource (Attrib.) 2,966,243 1,544,199 0.028 0.50% 83,000 15,288

Production Profile Inferred Resource (Attrib.) 2,102,468 2,134,923 0.019 0.47% 35,000 19,866

2011A 2012E 2013E 2014E 2015E 2016E Total Reserve and Resource (Attrib.) 8,770,023 4,812,982 0.030 0.50% 258,200 47,847

Attributable Gold Production, 000's oz 7,676 7,421 7,200 7,250 7,900 8,250

Attributable Copper Production, Mlb 451 468 510 590 660 650

Total Gold Cash Cost (net of credits), US$/oz $460 $584 $675 $685 $640 $610

Total Copper Cash Cost (net of credits), US$/lb $1.75 $1.71 $2.28 $2.21 $1.97 $1.91

Historical Quarterly Results

Q4/11A Q1/12A Q2/12A Q3/12A Q4/12A Q1/13A

Attributable Gold Production, 000's oz 1,814 1,881 1,742 1,779 2,019 1,797

Attributable Gold Sales, 000's oz 1,865 1,783 1,690 1,792 2,027 1,747

Attributable Copper Production, Mlb 143 117 109 112 130 127

Attributable Copper Sales, Mlb 135 119 116 84 154 115

Total Gold Cash Cost, US$/oz $505 $545 $613 $592 $584 $561 Barrick Gold Consensus Estimate Summary (Reuters data sourced from Capital IQ)

Total Copper Cash Cost, US$/lb $1.99 $2.08 $2.28 $2.33 $2.07 $2.46 Analysts Mean EPS High / Low vs. Cons. Mean CFPS High / Low vs. Cons.

Average Realized Gold Price, US$/oz $1,664 $1,691 $1,608 $1,655 $1,714 $1,629 2012 Consensus Estimate 30 US$3.80 $4.31/ $3.44 -117% US$5.65 $6.55 / $5.08 7%

Average LME Gold Price, US$/oz $1,683 $1,691 $1,609 $1,652 $1,722 $1,632 2013 Consensus Estimate 25 US$3.44 $4.05 / $2.43 8% US$5.12 $5.93 / $4.13 13%

Average Realized Copper Price, US$/lb $3.69 $3.78 $3.45 $3.52 $3.54 $3.56 2014 Consensus Estimate 27 US$4.02 $5.36 / $2.50 -8% US$5.78 $7.44 / $4.30 -1%

Average LME Copper Price, US$/lb $3.41 $3.77 $3.57 $3.50 $3.59 $3.60 Analysts SO Rating SP Rating SU Rating Mean Target High / Low vs. Cons.

Cash Flow, US$M $1,405 $1,579 $817 $1,300 $1,696 $1,590 Consensus Valuation 19 15 17 - C$36.05 $54.46 / $23.12 -4%

CFPS, US$ $1.41 $1.58 $0.82 $1.30 $1.69 $1.59

Earnings, US$M $1,166 $1,086 $784 $849 $1,108 $923 Peer Group Comparables

EPS, US$ $1.17 $1.09 $0.78 $0.85 $1.11 $0.92 Price NAV Px/NAV 13 CFPS Px/CFPS 14 CFPS Px/CFPS

Capex, US$M $1,320 $1,315 $1,582 $1,561 $1,911 $1,430 Barrick Gold Corp. (ABX-T) C$19.38 C$39.75 0.5x US$5.12 3.7x US$5.78 3.3x

Agnico-Eagle Mines Ltd. (AEM-T) C$34.10 - - US$3.48 9.8x US$4.05 8.2x

AngloGold Ashanti Ltd. (AU-N) US$19.35 - - US$5.54 3.5x US$5.86 3.3x

Goldcorp Inc. (G-T) C$30.25 - - US$2.84 10.4x US$3.86 7.6x

Gold Fields Ltd. (GFI-N) US$7.29 - - US$1.60 4.4x US$1.68 4.2x

Kinross Gold Corp. (K-T) C$5.82 - - US$1.21 4.7x US$1.45 3.9x

Newmont Mining Corp. (NEM-N) US$34.33 - - US$5.96 5.8x US$7.23 4.7x

Yamana Gold Inc. (YRI-T) C$12.66 - - US$1.59 7.7x US$1.92 6.4x

Peer Group Average 6.6x 5.5x

Peer Group Average (excluding high/low) 6.5x 5.4x

Kerry Smith, P.Eng. - Research Analyst CFPS sourced from Capital IQ, NAV from Haywood

[email protected] 416-507-2306 Spot C$/US$ FX Rate: 1.03

Barrick Gold Corp. (ABX-T, $19.38)1,001.2

1,009.2

$18,881

Target Price, C$ $34.50

Jamie Sokalsky

www.barrick.com

US$ / O/S Share C$ / O/S Share

$18.86 $19.38

$2.34 $2.40

$2.23 $2.29

$3.26 $3.35

July 19, 2011 - Completed acquisition of Equinox Minerals for C$7.2 billion in cash (879.5 million shares at C$8.15 per share)

$29.68 $30.50

June 1, 2011 - Sold US$4.0 Billion in debt securities with maturities from 2014 to 2041 paying 1.75% to 5.70% interest)

October 13, 2009 - Announced US$1.25 Billion in debt securities (US$400M at 4.95% due 2012 and US$850M at 5.95% due 2039)

($14.08) ($14.47)

$22.52 $23.14

$5.75

September 23, 2009 - US$4.0 Billion in equity (14.21 million shares at US$36.95 per share)

O/S (millions) F/D (millions)

25.8

42.2 42.2

35.9 35.9

$5.80

Additional Exploration Credit, C$/FD share $0.0

$39.75

($11.55)Corporate Adjustments, C$/FD share

$51.30

0.9x

$52,321

Base Case

25.8

$0

$40,562

Implied Target Price, C$ @ 6.0x 2013E CFPS $34.50

Forecast Gold Price, US$/oz

Forecast Copper Price, US$/lb

Corporate Adjustments, US$M

After-Tax Project NAV(3%-10%), US$M

Additional Exploration Credit, US$M

0.5x

2013E CFPS, US$

After-Tax Project NAV(3%-10%), C$/FD share

Target Price/Corporate NAV

Corporate NAV, US$M

Corporate NAV, C$/FD share

Current Price/Corporate NAV

($11,759)

2014E CFPS, US$

$275

$375

$475

$575

$675

$775

6,000

6,500

7,000

7,500

8,000

8,500

2011A 2012E 2013E 2014E 2015E 2016E

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Investment Thesis

Barrick has land positions on some of the most prospective and prolific mineral trends worldwide. The Company continues to advance its project pipeline, and following the successful start-up of Pueblo Viejo this year, has now brought eight new projects on line over the past 5 years. Given the current economic environment and project capital inflation that has plagued the industry, Barrick took a step back in mid-2012 and re-evaluated its project pipeline using a more disciplined capital allocation framework. Barrick is now targeting annual gold production of 8 million ounces in 2016 and is focusing on maximizing risk-adjusted returns and free cash flow by delivering ounces from a high-quality profitable production base. It is hoped this approach will give the Company better control over costs and the ability to return capital to shareholders.

Risks

Significant Investment Risks

The investment to which this report relates carries various risks, which are reflected in our Overall Risk Rating. We consider the following to be the most significant of these investment risks:

Barrick continues to face capital-cost inflation pressures in Argentina at Pascua–Lama. Inflation in Argentina is currently running at a rate of 25% annually, and since 2011 Barrick has increased its initial capex estimate for Pascua–Lama from between US$3.3 billion and US$3.6 billion to between US$8.0 billion and US$8.5 billion currently (including a 15% to 20% contingency). The project was 40% complete as at the end of 2012. However, in April 2013, construction activities were suspended on the Chilean side of the project pending a hearing on a constitutional rights action that alleges non-compliance with the environmental requirements for the project’s Chilean approval. In addition, project pre-stripping activities in Chile have remained suspended since Q4/12 pending resolution with regulators of dust-mitigation issues. We believe that there is a risk of further capex increases should these legal and regulatory issues not be resolved in a timely manner. Barrick would be willing to suspend Pascua–Lama pending resolution of the outstanding issues, which would create uncertainty surrounding the Company’s ability to supplement its production profile with future low-cost production.

Besides Pascua–Lama, the Company currently does not have any development projects in the pipeline that could deliver lower cost production. Barrick currently has no plans to build any additional mines, but will focus its efforts on advancing Turquoise Ridge and Goldrush, as well as on narrowing its exploration focus on Nevada. If Barrick is unable to cut operating costs at operations or to maintain the current grade profile, Company-wide operating cash costs will increase as its mines mature.

Barrick is exposed to significant political risk in the Dominican Republic and Argentina. When in full production, Pueblo Viejo and Pascua–Lama are expected to collectively contribute an average of 1.5 million ounces of production annually at a very low-cost basis to Barrick’s targeted production of 8 million ounces per year. Both countries have high political uncertainty. Businesses in Argentina continue to face onerous and increasing restrictions on flow of capital and goods into and out of the country, while the government in the Dominican Republic continues to push for a bigger share of mining profits. In February 2013, the Dominican Republic’s president submitted to Congress a bill that would establish a tax on the “unforeseen income” of mineral-exporting companies unless Pueblo Viejo Dominicana Corporation (PVDC) agreed to the government’s demands of an increase the government’s benefits under PVDC’s Special Lease Agreement. The Special Lease Agreement cannot be unilaterally altered, and PVDC



is in discussions with representatives of the government to achieve an outcome mutually acceptable to the joint venture and the government. Depending on the imposed measures and the magnitude of the impact on PVDC, the joint venture may pursue its rights under international arbitration.

At current market prices, Barrick expects to be cash-flow negative in 2013, with US$3.53 billion of contractual obligations and commitments payable during the remainder of this year. Barrick’s obligations for the year include US$600 million in principal repayments (following repayment of US$1.2 billion of a credit facility in Q1/13, with the drawdown of US$2 billion under its credit facility maturing in 2018), and the Company will likely need to refinance its debt. Given the deterioration of its balance sheet over the past year and its credit rating downgrade, Barrick may not be able to refinance on terms as favourable as previously available to it.

Our Risk Profile Parameters ratings and Overall Risk Rating are set out on the cover page and are explained in our Rating Structure section under “Overall Risk Rating” and “Risk Profile Parameters”. These ratings are an integral part of our Report.

Valuation

Our $34.50 target price is based on a 6.0x multiple to our 2013E CFPS of US$5.80 at a 2013E gold price of US$1,750 per ounce and a copper price of US$3.65 per pound. We have reduced our target multiple to 6.0x 2013E CFPS from 7.5x 2013E CFPS previously given the multiple compression in the sector, prompting us to reduce our target price from $43.50 previously. At current spot prices of US$1,430 per ounce of gold and US$3.15 per pound of copper, our 2013E CFPS would drop to US$4.02, implying a target price of $24.00 at our assumed CFPS multiple. The Company’s peer group currently trades in a range between 3.5x and 10.4x consensus 2013E CFPS, averaging 6.6x consensus 2013E CFPS. The Company’s peer group currently trades in a range between 3.1x and 15.2x consensus EV/CFPS, averaging 8.1x consensus EV/CFPS. We continue to rate Barrick Gold Corporation (ABX-T) with a BUY rating.

2013E Cash Flow and Target-Price Sensitivity to Gold and Copper Prices

Source: Haywood Securities

Spot

Average Gold Price, US$/oz $1,400 $1,600 $2,000 $1,430

Average Copper Price, US$/lb $3.50 $3.75 $5.00 $3.15

2013E Cash Flow, US$M $5,800 $3,950 $5,050 $7,550 $4,000

2013E CFPS, US$ $5.80 $3.99 $5.09 $7.56 $4.02

Implied Target, C$

6.0x 2013 CFPS$34.50 $23.75 $30.50 $45.25 $24.00

Base case assumes gold price of US$1,750/oz in 2013

Base case assumes a copper price of US$3.65/lb in 2013

C$/US$ FX: 1.03

Base

Case



Peer-Group Comparables

Source: Capital IQ and Haywood Securities

Opportunities and Upcoming Catalysts

Barrick Energy sale process – ongoing

Potential sale of a portion of Australian assets – ongoing

Updates on pre-stripping and construction halts at Pascua–Lama in Chile – ongoing

Zaldivar deep sulphides prefeasibility study – Q4/13

Initial production at Jabal Sayid – 2014

First production from thiosulphate technology at Goldstrike – Q3/14

Pascua–Lama first production – H2/14.

Q1/13 a Decent Start to 2013…Cash Costs Better Than Expected on Cost-Saving Initiatives

Barrick reported Q1/13 adjusted net earnings of US$923 million, or US$0.93 per share, in line with consensus of US$0.92 per share. Barrick reported adjusted cash flow after working-capital changes of US$1,158 million, or US$1.16 per share, and we calculate that adjusted cash flow before working-capital changes for the quarter was US$1,590 million, or US$1.59 per share, above our expectation of US$1.43 per share and consensus of US$1.43 per share. Cash flow for the quarter was adjusted for US$73 million of losses related to the settlement of Australian currency hedge positions. Q1/13 adjusted operating cash flow before working-capital changes was 6% lower than Q4/12 performance and flat compared with Q1/12 performance, while Q1/13 adjusted earnings were ~15% lower than in Q4/12 and a year ago. Profitability was impacted by lower commodity prices, as well as by lower gold and copper sales. These factors were partially offset by success in moderating operating expenses across the Company’s gold operations and lower income tax expenses.

Q1/13 gold production totalled 1.80 million ounces at a total cash cost of US$561 per ounce and a gold all-in sustaining cash cost of US$919 per ounce. Cash costs during the quarter were better than budgeted. Gold sales for the quarter totalled 1.75 million ounces at an average realized gold price of US$1,629 per ounce. Gold production decreased by 14% from Q4/12, but H1 is usually the weaker part of the year for Barrick. Total cash cost and all-in sustaining cash cost were US$23 and US$53 per

Peer Group Comparables

Price NAV Px/NAV 13 CFPS Px/CFPS 14 CFPS Px/CFPS

Barrick Gold Corp. (ABX-T) C$19.38 C$39.75 0.5x US$5.12 3.7x US$5.78 3.3x

Agnico-Eagle Mines Ltd. (AEM-T) C$34.10 - - US$3.48 9.8x US$4.05 8.2x

AngloGold Ashanti Ltd. (AU-N) US$19.35 - - US$5.54 3.5x US$5.86 3.3x

Goldcorp Inc. (G-T) C$30.25 - - US$2.84 10.4x US$3.86 7.6x

Gold Fields Ltd. (GFI-N) US$7.29 - - US$1.60 4.4x US$1.68 4.2x

Kinross Gold Corp. (K-T) C$5.82 - - US$1.21 4.7x US$1.45 3.9x

Newmont Mining Corp. (NEM-N) US$34.33 - - US$5.96 5.8x US$7.23 4.7x

Yamana Gold Inc. (YRI-T) C$12.66 - - US$1.59 7.7x US$1.92 6.4x

Peer Group Average 6.6x 5.5x

Peer Group Average (excluding high/low) 6.5x 5.4x

CFPS sourced from Capital IQ, NAV from Haywood

Spot C$/US$ FX Rate: 1.03



ounce lower respectively than in the previous quarter, despite a grade decrease of 5% to 0.054 ounces per ton versus one year ago, a very encouraging indication that the Company’s cost-saving programs across operations are starting to kick into gear.

On an annualized basis, the Company is on track to meet the mid-point of its 2013 production guidance of 7.0 million to 7.4 million ounces. Barrick is tracking ahead of its 2013 total cash-cost guidance of US$610 to US$660 per ounce, and the Company revised its 2013 all-in sustaining cash-cost guidance to US$950 and US$1,050 per ounce from a range of US$1,000 to US$1,100 per ounce previously.

Q1/13 Production Results in Line, Pueblo Viejo Delivers a Good First Quarter of Commercial Production

During the quarter, production from North American operations totalled 872,000 ounces at a cash cost of US$487 per ounce (all-in sustaining cash cost of US$770 per ounce), with production 9% lower than in the previous quarter. Cash cost was in line with that of US$482 per ounce in the previous quarter and with US$484 per ounce 1 year ago. Production for North America included the first quarter of commercial production from Pueblo Viejo. Barrick’s share of commercial production from Pueblo Viejo was 96,000 ounces at a total cash cost of US$550 per ounce, as the Company processed 507,000 tons of ore at a grade of 0.198 ounces per ton, achieving recoveries of 96%. Barrick is on track to achieve full production during H2/13, and so far seems to be doing a very good job with the ramp-up. For the current year, Barrick expects its share of production to total between 500,000 and 650,000 ounces at a total cash cost of US$375 and US$425 per ounce. During the first 5 years of full production, Barrick anticipates its share of production to be between 625,000 and 675,000 ounces at a total cash cost of US$300 to US$500 per ounce.

During the quarter, production at Cortez was 343,000 ounces, comparable to the previous quarter, but 18% lower than 1 year ago, as higher throughput levels did not fully offset the effect of lower grades. However, production at Cortez exceeded the plan as a result of better grades than expected. At Goldstrike, production of 230,000 ounces was 30% lower than the previous quarter and 5% lower than 1 year ago as a result of lower grades and lower recoveries at the autoclave facility. However, grades and recoveries for the mine were better than budgeted. During the year, production at Goldstrike will continue to be impeded as the Company completes installations related to the thiosulphate technology project, which will extend Goldstrike’s mine life and add 3.5 million ounces to the mine plan by allowing Barrick to blend carbonaceous ore with sulphide ore and process it through the currently underutilized autoclaves. Installation of this technology is expected to be complete in 2014, and will result in 300,000 to 400,000 ounces of incremental annual production starting in Q3/14. In 2013, Barrick continues to expect production of 3.55 million to 3.70 million gold ounces from North American operations at a total cash cost of US$495 to US$545 per ounce (all-in sustaining capital cost of US$820 to US$870 per ounce).

In Q1/13, the South American Business Unit produced 370,000 ounces at a total cash cost of US$405 per ounce (all-in sustaining cash cost of US$638 per ounce), versus 460,000 ounces at a total cash cost of US$528 per ounce (all-in sustaining cash cost of US$742 per ounce) in the previous quarter. Gold production declined 20% and 18% from the previous quarter and year respectively. Higher unit costs, labour costs, and costs associated with increased fuel and explosive use were offset by the positive effect of the drawdown of lower cost ounces from the mines’ leach pads. During the quarter, the all-in sustaining cash cost was positively impacted by delays to sustaining capital spending at Pierina and Veladero. For 2013, Barrick continues to expect production of 1.25 million to 1.35 million ounces of gold in South America, at a total cash cost between US$550 and US$600 per ounce (all-in sustaining capital cost of US$875 to US$925 per ounce, from US$875 to US$970 per ounce previously).



Q1/13 production from the Australia Pacific Regional Business Unit (APRBU) totalled 447,000 ounces at a total cash cost of US$785 per ounce (all-in sustaining capital cost of US$1,096 per ounce); production was 5% lower, and total cash cost was 7% lower than in the previous quarter. At Porgera, mill throughput increased 7% to 1.46 million tons from the previous quarter, and the mine produced 116,000 ounces at a total cash cost of US$934 per ounce, as the impact of pit-wall remediation activities and operational disruptions moderated, and as the mine processed a portion of ore from lower grade stockpiles. For 2013, the Company continues to expects the APRBU to produce 1.70 million to 1.85 million ounces at a total cash cost of US$880 to US$950 per ounce (all-in sustaining capital cost of US$1,200 to US$1,300 per ounce).

For the quarter, Barrick’s net share of African Barrick Gold (ABG) production was 108,000 ounces at total cash cost of US$931 per ounce (all-in sustaining capital cost of US$1,561 per ounce). Production decreased 18% from the previous quarter, which was accompanied by a 3% decrease in total cash cost. Production from the underground at Tulawaka ceased during the quarter, and the mine produced 2,000 ounces of gold in the quarter. High labour and power costs are expected to continue to affect the African operations, but total cash cost during the quarter improved at Bulyanhulu, North Mara, and Buzwagi from the previous quarter. For 2013, the outlook for the Company’s share of ABG production continues to be between 0.40 million and 0.45 million ounces at a total cash cost of US$925 to US$975 per ounce (all-in sustaining cash cost of US$1,550 to US$1,600 per ounce). The African business unit continues to struggle with very high costs, contributes little to the bottom line, and it is hoped will be rationalized over time.

In Q1/13, Barrick produced 127 million pounds of copper at a C1 cash cost of US$2.46 per pound, a decrease of 2% and increase of 18% respectively over the previous quarter. Production included 57 million pounds from Lumwana at a C1 cash cost of US$3.41 per pound, a 23% increase in cash cost from the previous quarter on a flat production profile. The Company attributed the high cash cost to labour and the effects of the rainy season, but Lumwana has been a very tough asset and continues to be a millstone. We fail to see how Barrick will ever get a decent return from this acquisition. During the quarter, the Company mined 22.2 million tonnes and processed 5.7 million tonnes at a grade of 0.55% copper, versus a reserve grade of 0.52% and the Q4/12 processed grade of 0.57%. High cash cost at Lumwana was offset by steady C1 cash costs and production of US$1.54 per pound and 70 million pounds respectively at Zaldivar.

Cash-Cost Pressure at Copper Unit Apparent, Leaving Other Assumptions Unchanged

For 2013, Barrick is continuing to guide copper production of 480 million to 540 million pounds at a C1 cash cost between US$2.10 and US$2.30 per pound. Barrick’s 2013 guidance includes 210 million to 250 million pounds of production from Lumwana at a C1 cash cost between US$2.70 and US$3.10 per pound. The Company was expecting cost pressures at Lumwana to ease as grade improved following mining in the Chimiwungo pit, where Barrick is now mining approximately two-thirds of its mill feed, but so far costs at Lumwana seem to remain on an upward trajectory. The Company continues to make progress with a full transition to an owner-maintained operation, and is attempting to improve the productivity of the mining fleet, although it said that 2013 will be a “transition year”. Accordingly, we have increased our 2013 modelled cash-cost assumption to US$2.28 per pound, from $2.07 per pound previously. We keep our modelled 2013 copper production unchanged at 510 million pounds.

For 2013, Barrick continues to guide gold production of 7.0 million to 7.4 million ounces at a total cash cost between US$610 and US$660 per ounce, and an all-in sustaining cash cost between US$950 and US$1,050 per ounce. Barrick reduced all-in sustaining cash cost guidance from between US$1,000 and US$1,100 per ounce previously. For 2013, we continue to model production of 7.2 million ounces at a total cash cost of US675 per ounce.



Q1/13A Summary

Source: Barrick Gold and Haywood Securities

Q1/12A Q2/12A Q3/12A Q4/12A Q1/13ASequential

% Change3 Months

YoY %

Change2013E 2014E

2013 Guidance

(April 2013)

Revenue from Gold Sales, US$M 3,122$ 2,816$ 3,056$ 4,189$ 2,962$ (29%) 2,962$ (5%) 12,600$ 12,688$

Cost of Gold Sales, US$M 1,433$ 1,477$ 1,529$ 1,771$ 1,503$ (15%) 1,503$ 5% 4,860$ 4,966$ $6,700 - $7,000

Gold Operating Margin, % 54% 48% 50% 58% 49% (15%) 49% (9%)

Revenue from Copper Sales, US$M 445$ 396$ 307$ 541$ 383$ (29%) 383$ (14%) 1,862$ 2,154$

Cost of Copper Sales, US$M 294$ 313$ 254$ 418$ 307$ (27%) 307$ 4% 1,163$ 1,302$ $1,200 - $1,400

Copper Operating Margin, % 34% 21% 17% 23% 20% (13%) 20% (42%)

Total Operating Margin, US$M 1,894$ 1,898$ 1,611$ 1,960$ 1,593$ (19%) 1,593$ (16%) 8,439$ 8,573$

Operating Margin, % 52% 58% 47% 47% 46% (1%) 48% (11%) 58% 58%

Adjusted Earnings, US$M 1,086$ 784$ 849$ 1,108$ 923$ (17%) 923$ (15%) 3,704$ 3,704$

EPS, US$ 1.09$ 0.78$ 0.85$ 1.11$ 0.92$ (17%) 0.92$ (15%) 3.70$ 3.70$

Cash Flow Before W/C Changes*, US$M 1,579$ 817$ 1,300$ 1,696$ 1,590$ (6%) 1,590$ 1% 5,807$ 5,757$

CFPS*, Before W/C Changes, US$ 1.58$ 0.82$ 1.30$ 1.69$ 1.59$ (6%) 1.59$ 1% 5.80$ 5.75$

Adjusted Cash Flow After W/C Changes, US$M 1,374$ 763$ 1,267$ 1,752$ 1,158$ (34%) 1,158$ (16%)

Adjusted CFPS*, After W/C Changes, US$ 1.37$ 0.76$ 1.27$ 1.75$ 1.16$ (34%) 1.16$ (16%)

Unadjusted Cash Flow After W/C Changes*, US$M 1,272$ 763$ 1,732$ 1,672$ 1,085$ (35%) 1,085$ (15%)

Unadjusted CFPS*, After W/C Changes, US$ 1.27$ 0.76$ 1.73$ 1.67$ 1.08$ (35%) 1.08$ (15%)

EBITDA, US$M 1,997$ 1,514$ 1,499$ 2,173$ 1,901$ (13%) 1,901$ (5%) 8,400$ 8,500$

EBITDA per Share, US$ 2.00$ 1.51$ 1.50$ 2.17$ 1.90$ (13%) 1.90$ (5%) 8.35$ 8.45$

Capex, US$M 1,315$ 1,582$ 1,561$ 1,911$ 1,430$ (25%) 1,430$ 9% 5,400$ 3,300$ $5,200-$5,700

Free Cash Flow, US$M 264$ (765)$ (261)$ (215)$ 160$ 174% 160$ (39%) 407$ 2,457$

Note: free cash flow = cash flow before W/C changes - capex

Average Shares O/S, millions 1,000 1,000 1,001 1,001 1,001 0% 1,001 0% 1,001 1,001

IBES Estimates

EPS, US$ 1.14$ 0.94$ 1.03$ 1.16$ 0.92$ 3.86$ 4.25$

CFPS, US$ 1.58$ 1.39$ 1.55$ 1.64$ 1.43$ 5.66$ 6.24$

Gold Production, ounces 000's 1,881 1,742 1,779 2,019 1,797 (11%) 1,797 (4%) 7,200 7,250 7,000 - 7,400

Gold Sold, ounces 000's 1,783 1,690 1,792 2,027 1,747 (14%) 1,747 (2%) 7,200 7,250

Average LME Spot Gold Price, US$/oz 1,691$ 1,609$ 1,652$ 1,722$ 1,632$ (5%) 1,632$ (3%) 1,750$ 1,750$

Average Realized Gold Price, US$/oz 1,691$ 1,608$ 1,655$ 1,714$ 1,629$ (5%) 1,629$ (4%) 1,750$ 1,750$

Premium Realized, US$/oz -$ (1)$ 3$ (8)$ (3)$ 63% (3)$ = - -

Total Gold Cash Cost, US$/oz 545$ 613$ 592$ 584$ 561$ (4%) 561$ 3% 675$ 685$ $610 - $660

All-In Sustaining Cost, US$/oz 737$ 810$ 793$ 972$ 919$ (5%) 919$ 25% - - $950 -$1,050

Copper Production, Mlb 117 109 112 130 127 (2%) 127 9% 510 590 480 - 540

Copper Sold, Mlb 119 116 84 154 115 (25%) 115 (3%) 510 590

Average LME Spot Copper Price, US$/lb 3.77$ 3.57$ 3.50$ 3.59$ 3.60$ 0% 3.60$ (5%) 3.65$ 3.65$

Average Realized Copper Price, US$/lb 3.78$ 3.45$ 3.52$ 3.54$ 3.56$ 1% 3.56$ (6%) 3.65$ 3.65$

C1 Copper Cash Cost, US$/lb 2.08$ 2.28$ 2.33$ 2.07$ 2.46$ 19% 2.46$ 18% 2.28$ 2.21$ $2.10 - $2.30

Total Copper Production Cost, US$/lb 2.67$ 2.97$ 3.28$ 3.04$ 3.00$ (1%) 3.00$ 12% -

Balance Sheet Q1/12A Q2/12A Q3/12A Q4/12A Q1/13ASequential

% Change

YoY

% Change

Current Cash, US$M 2,665$ 2,330$ 2,530$ 2,093$ 2,342$ 12% (12%)

Working Capital, US$M 2,812$ 2,481$ 2,410$ 1,448$ 3,263$ 125% 16%

Long-term Debt, US$M 12,145$ 12,628$ 12,642$ 12,095$ 14,101$ 17% 16%

Shareholders' Equity, US$M 26,508$ 27,145$ 27,750$ 24,508$ 22,546$ (8%) (15%)

Book Value/Share, US$ 26.51$ 27.15$ 27.72$ 24.48$ 22.52$ (8%) (15%)

Debt/Equity 0.46 0.47 0.46 0.49 0.63 27% 37%



Stress-Testing and Survival – Barrick Able to Carry On at US$1,200 per Ounce Gold Prices

Paring Down Capex and Overhead Spending in Trying Times

In its Q2/12 results, Barrick indicated that it is in the process of implementing a more disciplined capital-allocation framework, with a focus on maximizing risk-adjusted returns and free cash flow by focusing on delivering ounces from high-quality assets. The Company initiated a top-to-bottom review of its projects to evaluate those that meet its new, more stringent objectives. Barrick revised its production forecast, with targeted base production of 8 million ounces of gold by 2015 (from 9 million ounces of gold by 2016 previously).

During the year, Barrick also identified a total of US$4.0 billion in capital-cost savings and deferrals over 4 years as a result of the refocus on high-quality assets, and initiated a review of general and administrative (G&A) expenses and Company-wide overhead costs to identify further potential savings. Through this review, Barrick, was able to identify approximately US$100 million in cost reductions. The Company announced it would continue to review its asset portfolio and capital spending plans on an ongoing basis to identify any other potential cuts or deferrals.

In its Q1/13 results, Barrick announced that it was further reducing capital spending for the year, to a range of US$5.2 billion to US$5.7 billion, from a range of US$5.7 billion to US$6.2 billion previously. In addition, it announced a trimmed exploration budget for the current year of US$300 million to US$340 million, from US$400 to US$440 million previously. Consequently, Barrick reduced Company-wide all-in sustaining cash-cost guidance for 2013 to between US$950 and US$1,050 per ounce, from US$1,000 to US$1,050 per ounce previously.

During 2013, Barrick will continue to identify ways to reduce costs further.

A Hard Look at Challenged and Non-Core Assets

As a result of its ongoing portfolio review, Barrick confirmed preliminary discussions with China National Gold Group Corporation (CNG), a state-owned entity, regarding CNG’s purchase of Barrick’s 74% stake in African Barrick Gold in August 2012. However, in January 2013, the Company announced that discussions with CNG had ended without an agreement, a disappointing outcome considering that a sale transaction could have simultaneously shored up Barrick’s balance sheet as well as strengthened the quality of the asset base.

In early 2013, Barrick also announced that it had initiated a process to sell its non-core oil and gas unit, Barrick Energy, which could net some additional cash to the Company. In addition, Barrick may sell its 50% in the Kabanga nickel project, considered a non-core asset, and various media reports have mentioned a potential sale of some of Barrick’s Australian assets.

The shedding of marginal and non-core assets in Barrick’s portfolio would be well received by investors. In Q1/13, the ARBU produced 447,000 ounces at a total cash cost US$785 per ounce (all-in sustaining cash cost of US$1,096 per ounce), and the Company’s attributable share of African Barrick Gold production was 108,000 ounces at a total cash cost of US$931 per ounce (all-in sustaining cash cost of US$1,561 per ounce). Both of these business units produced above the Company-wide total cash cost of US$561 per ounce and all-in sustaining cash cost of US$919 per ounce.

In the annual general meeting and during the conference call, Barrick emphasized that in Q1/13, 57% of the Company’s gold production came from five key mines: Cortez, Goldstrike, Veladero, Lagunas Norte, and Pueblo Viejo. The all-in sustaining cash cost at these five mines averaged a stellar US$591 per ounce. However, we note that Veladero and Lagunas Norte are maturing mines, and Barrick needs new low-cost production to replace them as their costs rise and production declines. The



remaining 43% of production in the quarter came from 21 mines at an implied all-in sustaining cash cost of US$1,348 per ounce. The discrepancy between these two groups is wide, and going forward, Barrick’s plan is to focus more on the former group in order to generate growth in free cash flows.

Q1/13 Barrick’s Gold Production Distribution: Core Versus Non-Core Mines

Source: Barrick Gold

At US$1,200/Ounce Gold, Profitable Production and Free Cash Flow Generation Still Possible

Barrick’s reserves of 140 million ounces of gold are not particularly sensitive to gold prices, and according to the Company, a 20% decline in the gold price assumption used for reserve calculation (from the current assumption of US$1,500 per ounce) would result in a loss of less than 10% of reserves. In a sustained low gold price environment, Barrick also could focus on production from its five key mines rather than from the entire portfolio, materially cut back on investment across operations, and sell or close less profitable assets. Its expansive portfolio, which includes both low-grade mines very leveraged to the gold price as well as comparatively high-grade mines not materially leveraged to the gold price, would give Barrick more manoeuvrability than a company with a handful of assets.

Higher Leverage than Industry Peers, But Not Underwater by Any Means

While Barrick’s balance sheet is more leveraged than we would like to see, with long-term debt of US$14.1 billion as at March 31, 2013, its financial situation is not quite as dire as some investors would believe based on the Company’s recent nosedive in the share price.

In March 2013, the Company drew down US$2.0 billion under its credit facility expiring in Q1/18 to repay the US$1.2 billion balance drawn under the credit facility expiring in April 2013. Subsequent to this financing activity, the Company’s debt maturity profile is reasonable, with US$3.65 billion of debt maturing from 2013 to 2017, versus operating cash flows of ~US$30 billion in our model over the same period.

In addition, Barrick indicated that it is planning to issue long-term debt securities on the U.S. markets in the near term to further bolster liquidity and to extend the maturity profile of the Company’s long-term liabilities. In Q3/12, its debt rating was downgraded to BBB+ from A- by S&P, and in April 2013, Moody’s indicated that it was placing Barrick under review for a possible downgrade, although Moody’s indicated that a downgrade is not likely to be more than one notch. Barrick does not feel that a downgrade would impede its access to the capital markets.



As of March 31, 2013, Barrick had US$2.34 billion in cash and working capital of US$3.26 billion. As well, Barrick has a balance of US$2 billion remaining undrawn under its credit facility expiring in 2018.

With construction at Pascua–Lama continuing to be a drain on the balance sheet, and with muted production levels in 2013/2014, investors will remain focused on the Company’s continued progress with operational improvements.

Barrick’s Debt Repayment Schedule

Source: Barrick Gold

Pascua–Lama (100% Barrick) – Facing Headwinds from More Than One Direction

Capital expenditures at Barrick’s Pascua–Lama project have been on a steady upward trajectory over the past several years. In Q2/11, the Company’s review of underlying assumptions and a trending analysis for Pascua–Lama resulted in a project capital-expenditure estimate increased to between US$4.7 billion and US$5.0 billion, from between US$3.3 billion and US$3.6 billion previously. Barrick cited inflationary pressures, including costs for key consumables, inflation, and labour supply issues, re-estimated quantities of materials, and lower than expected productivity levels as reasons for the increase.

During 2012, Barrick reiterated that it continued to face inflation (on the order of 25% annually in Argentina and 7% to 8% in Chile), labour cost pressures, commodity cost pressures, labour supply issues, lower than expected productivity, and import restrictions on some equipment. In mid-2012, Barrick announced that it had increased its project capital-expenditure estimate for Pascua–Lama to between US$7.5 billion and US$8.0 billion, a 50% to 60% increase from the top end of the previous guidance range, along with a 12-month delay of first production to mid-2014. Barrick cited cost escalation, schedule extension, engineering and planning gaps, and lower than expected productivity as the main reasons behind the capex increase.



The Company announced a change to the project management structure, with engineering, procurement, and construction management (EPCM) contractor Fluor taking on more responsibilities. Fluor dedicated 60 employees to the project, who began completing detailed reviews of the project schedule and major contracts.

In H2/12, Barrick announced that it expected capital costs would be approximately 6% higher, between US$8.0 billion and US$8.5 billion, including a contingency of 15% to 20%, with a production start in H2/14.

During Q4/12, Barrick halted pre-stripping activities at the mine owing to an increase in dust levels in the vicinity of the open pit from strong winds. Barrick halted pre-stripping activities voluntarily, and shortly thereafter, the Chilean regulatory authorities implemented an order to keep pre-stripping under suspension. Barrick has improved dust mitigation and control systems at Pascua–Lama, and is working closely with the regulators. Nonetheless, the Company will not be able to restart pre-stripping until these regulatory issues are resolved, and the authorities feel comfortable with the measures implemented.

Following a flooding event on the Chilean side of the project as a result of record rainfalls, Barrick disclosed that it was in discussions with regulators regarding improvement of some aspects of the water management system. The improvements will utilize a diversion ditch to assure that freshwater is diverted so that it potentially does not come into contact with waste rock on-site. The Company was working to have these measures in place this May, but with stoppage of all activities following the April 2013 preliminary injunction for a halt to construction activities and the onset of winter, the Company is targeting to complete the upgrades in Q1/14.

In early April, the Copiapó Court of Appeals in Chile upheld a complaint filed by several native groups in the area who claimed their water supplies have been contaminated by Pascua–Lama, and that the project was non-compliant with the project’s environmental approval. The groups’ request for a preliminary injunction to halt construction activities was granted, and following confirmation of the order, Barrick halted all construction activities at the site.

The infrastructure on the Chilean side includes the primary crusher, truck maintenance shops, and tunnel/underground conveyor system to the mill on the Argentinean side. Most of the critical infrastructure is located primarily on the Argentinean side, while most of the orebody—approximately 75%—is on the Chilean side. Construction activity on the Argentinean side was not halted by the grant of the injunction.

The Company is waiting for a hearing to be scheduled in the Court of Appeals in Copiapó. Barrick said that it will not continue to spend at the project unless it has a reasonable expectation that the issues surrounding the pre-stripping and construction halts will be resolved. The Company has hired two senior Chilean industry veterans to help spearhead the process, and the CEO imminently will be meeting with senior government officials in Chile to discuss the issues at hand.

In the meantime, the Company is also evaluating various initiatives and options at Pascua–Lama. One of the options preliminarily being evaluated includes accelerated development of the Penelope pit on the Argentinean side, which could provide approximately 6 months of mill feed during the commissioning and ramp-up period at Pascua–Lama. This development option could allow the Company to stick to the current timeline at Pascua–Lama given that construction activity and pre-stripping resume by late 2013. We expect that Barrick has 3 to 5 months to resolve its issues at Pascua–Lama, and if construction has not restarted by then, we suspect the project would be put on hold until a resolution is realized.



Barrick is also looking at other options if the resumption of pre-stripping and construction activities is not timely, or if the Company does not receive sufficient clarity on the legal and regulatory aspects of the proceedings in Chile. In this case, it would consider materially reducing the rate of spending at Pascua–Lama, or suspending construction activities altogether.

Until Barrick has more clarity on the timeline and process surrounding the restart of construction and pre-stripping activities, it will not be in a position to update the schedule, capital budget, and operating-cost assumptions for the project.

At the end of Q1/13, Barrick had spent approximately US$4.8 billion at Pascua–Lama, with project capex spending of approximately US$600 million in Q4/12. For the remainder of the year, Barrick is budgeting capital spending of US$1.7 billion, approximately a US$100 million decrease from the capex budget announced in February 2013.

The project remains on schedule for now, with overall construction 46% complete (versus 40% at year-end). At the end of Q1/13, construction of the tunnel between Argentina and Chile was 80% complete, approximately 70% of the structural steel for the processing plant facility had been erected, 65% of concrete had been poured, and 55% of mass earthworks were completed. For 2013, the Company has reduced anticipated spending by approximately US$100 million, and capex spending for the year is expected to total about US$2.3 billion. Barrick’s progress and productivity on the Argentinean side continue to track well, and the Company is continuing work on the Argentinean side of the tunnel. Critical items remain on schedule.

We tentatively continue to model capital expenditures of US$8.4 billion for the project with a mid-2014 start, but note that there is a high risk of capex budget inflation if issues are not resolved quickly.

We currently model annual full-year production as 800,000 ounces of gold and 35 million ounces of silver at a cash cost (net of silver credits) of US$75 per ounce over the first 5 years of production, based on our long-term silver price assumption of US$24 per ounce. Every increase of US$1.00 per ounce in the silver price would lower the total cash cost by US$35.00 per ounce.



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have the benefit of rights designed to protect investors under the Financial Services and Markets Act 2000 and under the rules of the Financial Conduct Authority (“FCA”).In particular, you will not benefit from the following UK protections:

(a) the right to claim through the UK’s Financial Services Compensation Scheme for losses resulting in the unlikely event of our default; (b) in the event of a dispute, access to the UK’s Financial Ombudsman Service; (c) protection of money held on your behalf under the FCA’s Client Money Rules.

Analyst Certification I, Kerry Smith, hereby certify that the views expressed in this report (which includes the rating assigned to the issuer’s shares as well as the analytical substance and tone of the report) accurately reflect my/our personal views about the subject securities and the issuer. No part of my/our compensation was, is, or will be directly or indirectly related to the specific recommendations.

Important Disclosures Of the companies included in the report the following Important Disclosures apply:

Haywood Securities, Inc. has reviewed lead projects of Barrick Gold Corporation (ABX-T) and a portion of the expenses for this travel have been reimbursed by the issuer.

Other material conflict of interest of the research analyst of which the research analyst or Haywood Securities Inc. knows or has reason to know at the time of publication or at the time of public appearance:

n/a

Rating Structure Each company within an analyst’s universe, or group of companies covered, is assigned: (i) a recommendation or rating, usually BUY, HOLD, or SELL; (ii) a 12 month target price, which represents an analyst’s current assessment of a company’s potential stock price over the next year; (iii) an overall risk rating which represents an analyst’s assessment of the company’s overall investment risk; and (iv) specific risk ratings or risk profile parameters which in their aggregate support an analyst’s overall risk rating. These ratings are more fully explained below. Before acting on our recommendation we caution you to confer with your Haywood investment advisor to determine the suitability of our recommendation for your specific investment objectives, risk tolerance and investment time horizon.

Recommendation Rating BUY – The analyst believes that the security will outperform other companies in their sector on a risk adjusted basis or for the reasons stated in the research report the analyst believes that the security is deserving of a (continued) BUY rating.

HOLD – The analyst believes that the security is expected to perform in line with other companies in their sector on a risk adjusted basis or for the reasons stated in the research report the analyst believes that the security is deserving of a (continued) HOLD rating.

SELL – Investors are advised to sell the security or hold alternative securities within the sector. Stocks in is expected to under-perform other companies on a risk adjusted basis or for the reasons stated in the research report the analyst believes that the security is deserving of a (continued) SELL rating.

TENDER – The analyst is recommending that investors tender to a specific offering for the company’s stock.

RESEARCH COMMENT – An analyst comment about an issuer event that does not include a rating or recommendation.

UNDER REVIEW – Placing a stock Under Review does not revise the current rating or recommendation of the analyst. A stock will be placed Under Review when the relevant company has a significant material event with further information pending or to be announced. An analyst will place a stock Under Review while he/she awaits sufficient information to re-evaluate the company’s financial situation.

COVERAGE DROPPED – Haywood Securities will no longer cover the issuer. Haywood will provide notice to clients whenever coverage of an issuer is discontinued.

Haywood’s focus is to search for undervalued companies which analysts believe may achieve attractive risk-adjusted returns. This research coverage on potentially undervalued companies may result in an outweighed percentage of companies rated as BUY. Management regularly reviews rating and targets in all sectors to ensure fairness and accuracy.

For further information on Haywood Securities’ research dissemination policies, please visit: http://www.haywood.com/research_dissemination.asp



Overall Risk Rating Very High Risk: Venture type companies or more established micro, small, mid or large cap companies whose risk profile parameters and/or lack of liquidity warrant such a designation. These companies are only appropriate for investors who have a very high tolerance for risk and volatility and who are capable of incurring temporary or permanent loss of a very significant portion of their investment capital.

High Risk: Typically micro or small cap companies which have an above average investment risk relative to more established or mid to large cap companies. These companies will generally not form part of the broad senior stock market indices and often will have less liquidity than more established mid and large cap companies. These companies are only appropriate for investors who have a high tolerance for risk and volatility and who are capable of incurring a temporary or permanent loss of a significant loss of their investment capital.

Medium-High Risk: Typically mid to large cap companies that have a medium to high investment risk. These companies will often form part of the broader senior stock market indices or sector specific indices. These companies are only appropriate for investors who have a medium to high tolerance for risk and volatility and who are prepared to accept general stock market risk including the risk of a temporary or permanent loss of some of their investment capital

Moderate Risk: Large to very large cap companies with established earnings who have a track record of lower volatility when compared against the broad senior stock market indices. These companies are only appropriate for investors who have a medium tolerance for risk and volatility and who are prepared to accept general stock market risk including the risk of a temporary or permanent loss of some of their investment capital.

Risk Profile Parameters – Mining and Minerals Sector Forecast Risk: High (7-10) – The Company’s primary project(s) is at an earlier stage of exploration and/or resource delineation whereby grades, tonnages, capital and operating costs, and other economic/operational parameters are not yet reliably established. Moderate (4-6) – The Company has taken steps to de-risk its primary producing, or soon to be producing project(s) and has established reasonably reliable operational and economic parameters. Low (1-3) – The Company has de-risked the majority of its primary project(s) through operational history and established production profile(s).

Financial Risk: High (7-10) – The Company’s near- and medium-term (capital) expenditure considerations, including the current year or next forecast year, are not fully funded through a combination of established debt facilities, cash on hand, and/or anticipated cash flow from existing operations—successful project execution depends, in part, on future (equity) financing(s). Existing and/or forecast levels of leverage are above average relative to the Company’s peer group. The risk of a significant capital cost overrun(s) is high given the early stage of project development. Moderate (4-6) – The Company’s near-term (capital) expenditure program, in the current year or next forecast year, is fully funded through a combination of established debt facilities, cash on hand, and/or anticipated cash flow from existing operations. Medium-term funding requirements will likely require additional financing consideration, but should be achievable assuming no significant uncontrollable events impede access to capital. Existing and/or forecast levels of leverage are in-line with the Company’s peer group. The risk of a significant capital cost overrun(s) is moderate given the advanced stage of project development. Low (1-3) – the Company’s near- and medium-term (capital) expenditure program is fully funded through a combination of established debt facilities, cash on hand, and/or anticipated cash flow from existing operations. Existing and/or forecast levels of leverage are below average relative to the Company’s peer group.

Valuation Risk: High (7-10) – The current valuation is at a premium to peers. The valuation reflects considerable future exploration success and/or commodity appreciation. Where applicable, the current capitalization exceeds the “DCF” evaluation by more than 50%. Moderate (4-6) – The current valuation is within historic ranges and generally consistent with peers. The valuation reflects reasonable exploration success and/or commodity appreciation. Where applicable, the current capitalization exceeds the DCF valuation by 15% to 50%. Low (1-3) – The current valuation is at the low end of historic ranges and at a discount to peer valuations. The valuation reflects limited new exploration success and no commodity appreciation. Where applicable, the current capitalization exceeds the DCF valuation by less than 15% or falls below the current market value.

Political Risk: High (7-10) –Obtaining permits is challenging. Properties are located in an area(s) with high geo-political uncertainty, limited access, and/or have significant new infrastructure requirements. Moderate (4-6) – Properties are located in an area(s) with moderate geo-political risk, reasonable or manageable access, and some established infrastructure. Low (1-3) – Properties are located in areas with a manageable geo-political risk profile and established access/infrastructure.



Distribution of Ratings (as of April 25, 2013) Distribution of Ratings IB Clients

% # (TTM)

Buy 54.2% 77 71.4%

Hold 3.5% 5 0.0%

Sell 2.1% 3 0.0%

Tender 0.0% 0 0.0%

UR (Buy) 18.3% 26 28.6%

UR (Hold) 1.4% 2 0.0%

UR (Sell) 0.7% 1 0.0%

dropped (TTM) 19.7% 28 0.0%

Price Chart, Rating and Target Price History (as of April 25, 2013)

B: Buy; H: Hold; S: Sell; T: Tender; UR: Under Review Source: Capital IQ and Haywood Securities

barrick gold corporation (abx-t, $19 · barrick reported adjusted cash flow after working-capital...

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