Barrick Mining Corporation · TSX:ABX
Barrick Mining — Barrick Gold — Non-Deal Roadshow (November 2004)
37 slides from Barrick Mining's roadshow presentation, Nov 3, 2004
Slide 1: Barrick third largest gold producer
Barrick is the third largest gold producer with a market capitalization of approximately US$11 billion Barrick trades on the NYSE and TSE with a combined average daily trading volume of roughly 4-5 million shares 1
Slide 2: Asset Base – Mines and Projects
Asset Base – Mines and Projects 10 operating mines and 6 development projects: – 7 countries on 4 continents, employing > 7,000 people – 2004 est production: 4.9 – 5.0 M oz – 2004 est cash costs: $205 – 215 per oz – 2004 est CAPEX: $900 million – 2004 est exploration and bus. dev.: $135 – 140 mill
Slide 3: Barrick operating mines and development projects map
The red properties represent Barrick’s operating mines and the blue are development projects Over 70% of costs are USD denominated with the remaining protected for the equivalent of almost 3 years; going to over 80% once the new projects are operating 3
Slide 4: Gold price and currency movements and hedging
This chart reflects movements in the gold price, AUD, CDN and Rand indexed to the USD; it illustrates how significant the currency moves have been – not all gold ounces are equal The Company’s currency hedge positions provide a level of protection for its CDN and AUD operating costs and capital
Slide 5: Cash Costs
Cash Costs (US$ per ounce) 325 Goldfields 300 275 AngloGold 250 Placer Dome 225 Newmont Barrick 200 175 150 2000 2001 2002 2003 2004 Barrick is the lowest cash cost producer among the senior golds The Company has put in place a fuel hedge position for a total of 2.2. million barrels (93.5 millio
Slide 6: Growth Profile – Target Production '04-'07
Growth Profile – Target Production ’04 -’07 millions of ounces 6.8-7.0 6.4-6.6 6.1 5.7 5.5 5.3-5.5 South 12% 4.9-5.0 1.8-1.9 2.5 America CAGR 1.0-1.1 0.6 1.3-1.4 1.4 1.6-1.7 Australia/ 1.9-2.0 Africa North 3.0 2.9-3.0 3.0 2.4-2.5 America 2001 2002 2003 2004 2005 2006 2007 Four of the five projects
Slide 7: Building Mines – Current Projects
Building Mines – Current Projects Construction Avg. 10 year Avg. 10 year Project Reserves Capital Est Production Total Cash Cost 2004 - 2007 oz/millions US$ millions ‘000 ozs/year US$/oz Veladero 11.1 $ 475(1) 525-550 $155-165(1)* (original estimate) (original estimate) Lagunas Norte 7.2 340 535-560
Slide 8: Building Mines – Projects in Construction
Building Mines – Projects in Construction All mines are open-pit with conventional technology Mines have good potential to increase reserve / resource positions These projects are expected to drive future production, earnings and cash flow growth (2005-2007) Three of these mines are expected
Slide 9: Building Mines – Veladero, Frontera District, Argentina
Building Mines – Veladero, Frontera District, Argentina First pour on schedule in Q4, 2005 Gold reserves: 11.1 million oz Gold resources: 1.5 million oz (Measured & Indicated) 1.7 million oz (Inferred) Mine development 50% complete Permanent camp completed Access road construction complete
Slide 10: Veladero construction progress
Assay lab was commissioned in October Construction of the plant facilities is well advanced and preparation of the valley fill leach facility embankment has commenced Mining operations are ramping up to projected levels Unanticipated ore was encountered in the waste cap 10
Slide 11: Veladero pit outline and Cuatro Esquinas resource
The current pit outline from the feasibility study does not include a large part of the Cuatro Esquinas resource In the unexplored area between Cuatro Esquinas and Amable drilling will begin shortly Resource drilling is showing some favorable results suggesting that the reserve has the potenti
Slide 12: Building Mines – Lagunas Norte, Alto Chicama, Peru
Building Mines – Lagunas Norte, Alto Chicama, Peru First pour on schedule in second half 2005 Gold reserves: 7.2 million ounces Gold resources: 1.7 million ounces Access road construction is complete Site preparation is about 75% complete Leach pad is about 60% complete Powerline 70% com
Slide 13: Lagunas Norte development progress
Overall mine development is 55% complete All mining equipment purchased 13
Slide 14: Alto Chicama land position
Barrick’s land position is about 1,350 square kilometers, centered on the Lagunas Norte deposit Known gold showings or resources at all green target dots Programs are now underway with high expectations for good results 14
Slide 15: Building Mines – Cowal, Australia
Building Mines – Cowal, Australia First pour on schedule in first quarter 2006 Gold reserves: 2.5 million ounces Gold resources: 1.6 million ounces Site preparation for process plant completed, construction to begin shortly Water supply pipeline completed & pressure tested Orders for major
Slide 16: Tulawaka project near Bulyanhulu
High return open pit operation located 120 km west of Bulyanhulu Mine Regional synergies and exploration potential make project attractive Permits in place, construction underway with start-up expected within 3-4 months 16
Slide 17: Financial Resources
Financial Resources Strongest balance sheet in gold industry Capable of self-financing our developments without equity dilution Robust operating cash flow growth Adopted a no-hedge policy – 16% of reserves (1) at end of Q3 2004 – exceeded commitment of 1.5 million ounce reduction for 2004 (1
Slide 18: Beyond 2007
Beyond 2007 Reserve replacement and growth Pascua-Lama – positive decision to proceed – world-class, long-life, low cash cost asset – part of new Frontera District with Veladero Consistent investment in exploration – Goldstrike – Alto Chicama District – Frontera District – Buzwagi Opportunis
Slide 19: Beyond 2007 – Reserve Development and Replacement
Beyond 2007 – Reserve Development and Replacement Virtually replaced 2003 reserves Mined below average reserve grade in 2003 Focusing on replacing and growing in 2004 – Create long-term value – Provide flexibility and enhance future cost performance Expect to grow gold reserve base from 2003
Slide 20: Beyond 2007 – Pascua-Lama Project
Beyond 2007 – Pascua-Lama Project Elevation: 3,800m – 5,200m Open pit (~75% Chile ~25% Argentina) Conveyor transport of ore to process plant Dry grind mill with flotation and Merrill-Crowe (33,000 expanding to 44,000 metric tons per day) 20
Slide 21: Beyond 2007 – Pascua-Lama Key Features
Beyond 2007 – Pascua-Lama Key Features Key component of Barrick reserves and future production profile Large, low cash cost production Long mine life Size ranks in world’s top 10 undeveloped deposits Prospective Frontera District Project risks identified and plans to mitigate Leverage
Slide 22: Regional view of Pascua-Lama and Veladero
Regional view of Pascua-Lama showing its proximity to the Veladero project and the Chile-Argentina border Protocol operating area boundary shown Two deposits form a district with over 28 million ounces of gold reserves and 804 million ounces of contained silver 22
Slide 23: Beyond 2007 – Pascua-Lama, Frontera District
Beyond 2007– Pascua-Lama, Frontera District, Chile/Argentina Gold reserves(1): 16.9 million oz Gold resources(1): 3.5 million oz (Measured & Indicated) 3.5 million oz (Inferred) Silver contained in gold reserves: 635 Moz The mining protocol agreement, which covers border crossing issues, was sig
Slide 24: Frontera District land holding
No exploration since 2000 Large land holding has excellent potential (3,041 square kilometres) First time entire district under one owner 24
Slide 25: Frontera District exploration targets
Exploration team is compiling, integrating and digitizing all previous data into comprehensive data set Four known targets in close proximity of Pascua Lama/Veladero Exploration commencing in second half 2004 – early results are encouraging 25
Slide 26: Beyond 2007 – Exploration Strategy
Beyond 2007 – Exploration Strategy More than 95 projects in 9 countries > 2 million ounce greenfield gold deposits; reserve additions in proximity of existing assets 6 high priority countries (Peru, Chile, Argentina, USA, Tanzania, Australia) Robust and balanced pipeline Optimize chances o
Slide 27: Beyond 2007 – Exploration Investment
Beyond 2007 – Exploration Investment Barrick’s exploration spending has been consistent US$ millions 83 79 69 69 67 66 59 400 56 350 Spot Gold Price 300 250 97 98 99 00 01 02 03 04E A strong financial position gave Barrick the means to maintain a consistent exploration investment when gold price
Slide 28: Beyond 2007 – Opportunistic Acquisitions
Beyond 2007 – Opportunistic Acquisitions Focused on value-creating asset deals: Strategic partnerships – Highland Gold – Russia – QGX Limited – Mongolia – Eurasian – Turkey – Falconbridge – Kabanga, Tanzania Leverage development competencies for existing projects Looking for efficient and disc
Slide 29: Leverage to Gold
Leverage to Gold Reserves: 86 M oz (proven & probable) (1) Resources: 25 M oz (measured & indicated) Resources: 17 M oz (inferred) P&P Reserves Over 38 million ounces millions of ounces 86.9 86.0 @ $325/oz of these new reserves 82.3 are now in development 59.3 Historically Barrick has conv
Slide 30: Silver Exposure
Silver Exposure Tremendous leverage to silver prices Will produce about 17 M oz of silver in 2004 886 million ounces of contained silver in gold reserves One of the world’s largest silver producers in future By-product credits reduce costs Barrick is currently the world’s seventh largest
Slide 31: Gold – Supply / Demand Fundamentals
Gold – Supply / Demand Fundamentals Supply Mine Production – likely to decline – Increasingly difficult environment for new mines – Cost pressures at existing mines Central bank sales – transparent and measured Demand Jewelry / fabrication – slow but steady growth Dehedging – establishes flo
Slide 32: Primary investment demand drivers
Primary investment demand drivers A move towards diversifying from financial assets into hard assets Negative real interest rates A long-term continued devaluation of the US dollar Undermining financial assets are burgeoning net government liabilities of the major OECD countries as their pop
Slide 33: US export capital and dollar risk
The US attracts almost 80% of all net available export capital worldwide. This number can’t go above 100%, but it can drop which would be devastating for the US dollar Eventually foreigners will look to reduce some of their investment in US assets. We believe it is inevitable that the US will pa
Slide 34: US current account balance
The US current account balance is far and away the weakest it has ever been and we do not see this trend reversing in the near term Something needs to be done, including probably a weaker US dollar to improve the competitiveness of US exports 34
Slide 35: The Case for Barrick
The Case for Barrick Focus on execution and delivery of 2004-2007 target growth plan Unrivaled growth profile and lowest total cash costs of the major gold producers Building blocks for beyond 2007 are being put in place Supportive gold price environment On track with our original full-yea
Slide 36: Forward Looking Statement
FORWARD LOOKING STATEMENT Certain statements included herein, including those regarding production, costs, development schedules and other statements that express management’s expectations or estimates of our future performance, constitute “forward-looking statements” within the meaning of the Unite
Slide 37: Note on Reserves
NOTE ON RESERVES 1. Based on reserves calculated as at December 31, 2003 using an assumed price of $325 per ounce for gold and $4.75 per ounce for silver, except with respect to the Pascua-Lama project where reserves have been recalculated as at June 30, 2004, based on an updated feasibility analysi