Barrick Mining Corporation · TSX:ABX

Barrick Mining — KPMG 9th Annual Mining Executive Forum (September 2013)

31 slides from Barrick Mining's conference presentation, Sep 19, 2013

  1. Slide 1: KPMG 9th Annual Mining Executive Forum

    KPMG 9th Annual A l Mining Mi i Executive E ti Forum F September 19, 2013 1

  2. Slide 2: Cautionary Statement on Forward-Looking Information

    CAUTIONARY STATEMENT ON FORWARD-LOOKING INFORMATION Certain information contained or incorporated by reference in this presentation, including any information as to our strategy, projects, plans or future financial or operating performance constitutes "forward-looking statements”. All statements, ot

  3. Slide 3: A Decade of Rising Gold Prices

    A Decade of Rising Gold Prices Fear of Cyprus/EU gold sales Spot Gold Price (US$/ounce) to cover bailouts $1,800 $1,600 $1,400 $1,200 Financial Greece QE Tapering Crisis Bailout Announced $1,000 QE2 Announced $800 ETF Launched $600 QE1 Announced $400 $200 01 02 03 04 05 06 07 08 09 10 11 12 13 $0 So

  4. Slide 4: Positive Gold Price Fundamentals

    Positive Gold Price Fundamentals ƒ Uncertain macroeconomic environment and continued accommodative monetaryy p policyy byy manyy central banks ƒ Future inflation prospects ƒ Reserve currency devaluation í limited choice h i off alternative lt ti safe f haven h investments i t t ƒ Geopolitical issues

  5. Slide 5: ETF – the alternative investment

    ETF – the alternative investment Total Known ETF Holdings (tonnes) 2 500 2,500 2,000 , 1,500 1,000 500 05 06 07 08 09 10 11 12 13 0 Source: UBS 5

  6. Slide 6: Equity / Gold Price Disconnect

    Equity / Gold Price Disconnect Gold Equity Index (XAU) - (% of Gold Price) 200% 175% 150% 125% 100% 75% 50% 04 05 06 07 08 09 10 11 12 13 25% Source: FT and Bloomberg 6

  7. Slide 7: Shrinking Junior Miners

    Shrinking Junior Miners Market Cap of Top 100 Junior Miners Listed on TSX-V $20.6B JUNE30,2011 Ͳ43% $11.7B JUNE30,2012 Ͳ70% $6.2B JUNE30,2013 Sources: PricewaterhouseCoopers and Bloomberg 7

  8. Slide 8: Trends in a Rising Gold Price Environment

    Trends in a Rising Gold Price Environment Focus on Rising operating Resource production and nationalism growth capital costs Declining free cash flow Loss of investor confidence Need for fundamental change 8

  9. Slide 9: Focus on Production Growth

    Focus on Production Growth Reserve size over 1 million ounces of gold Pebble Mayskoye Kupol Donlin Gold Blagodatnoe Natalka Sukhoi Log Meadowbank Nezhdaninskoye Éléonore OyuTolgoi Rosia Montana Vasilkovskoye Cortez Hills CortezHills M li Maoling Efemcukuru Çöpler Xietongmen SariGunay PinosAltos Reko

  10. Slide 10: Gold Industry Pipeline

    Gold Industry Pipeline Reserve/Resource Size +15Moz +10Moz +5Moz Grade +1.7g/t Au Eq (2012 Global Wtd Avg Head Grade) Livengood Casino C CourageousLake L k Donlin Gold Natalka Sukhoi Log Galore Schaft Creek Brucejack Creek Kyzyl Rosia Montana KSM MtMilligan NewProsperity Metates Cobre Panama Brisas

  11. Slide 11: Gold Industry Pipeline

    Gold Industry Pipeline InConstruction Reserve/Resource Grade +1.7g/t Au Eq (2012 Global Wtd Avg Head Grade) C CourageousLake L k Donlin Gold Sukhoi Log Brucejack Kyzyl Akyem Kibali Fruta delNorte WafiͲGolpu SouthernFreeStateGoldfield PascuaͲLama CerroNegro Source: SNL-MEG 2013 11

  12. Slide 12: Mine Supply Inelasticity

    Mine Supply Inelasticity Gold Price (US$) Mine Supply (M oz) $1,700 150 $1,400 Price 120 437% $1,100 90 Mine Supply $800 9% 60 $500 30 02 03 04 05 06 07 08 09 10 11 12 $200 0 Sources: Thomson Reuters GFMS, Bloomberg 12

  13. Slide 13: Declining Grades

    Declining Grades Gold Price (US$) Weighted Average Gold Grade (g/t) $1,700 2.2 $1,400 Price 2.1 437% $1,100 2.0 $800 1.9 Grade ߌ 19% $500 1.8 02 03 04 05 06 07 08 09 10 11 12 $200 1.7 Sources: Bloomberg, SNL-MEG 13

  14. Slide 14: Sustaining Capital

    Sustaining Capital +7Ͳ10% PERANNUM ƒ Higher labor costs $300/oz ƒ Higher energy costs +7Ͳ10% UNDERGROUND PERANNUM ƒ Less experienced personnel p $200/oz / ƒ Other inflationary OPENPIT pressures Source: CIBC World Markets Inc. 14

  15. Slide 15: Change in Cost Reporting

    Change in Cost Reporting ƒ Previous industry cost metric did not provide true picture of operating p p g performance p ƒ Led to investor disappointment, unrealistic government expectations ƒ World Gold Council’s all-in sustaining cost (AISC) measure better represents total cost of producing gold ƒ P

  16. Slide 16: Rising Industry “All-In Sustaining” Costs

    Rising Industry “All-In Sustaining” Costs (US$ per ounce) $1,200 $1,000 $800 $600 $400 $200 $0 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013E Source: TD Securities 16

  17. Slide 17: Margin Growth Has Lagged Gold Prices

    Margin Growth Has Lagged Gold Prices Indexed to 100 in 2002 - percent 500% Gold Price 400% 300% 200% EBITDA Margin Major Producers(1) 100% 02 03 04 05 06 07 08 09 10 11 0 (1) See final slide #3. 17

  18. Slide 18: Barrick’s All-In Sustaining Cash Costs

    Barrick’s All-In Sustaining Cash Costs 55% Adjusted Operating 15% Other Costs 10% 40% Maintenance Labor 35% Sustaining 15% Energy Capex 20% Consumables 6% G&A 2% 2% Exploration E l ti & R l Reclamation i Evaluation 18

  19. Slide 19: Project Cost Overruns

    Project Cost Overruns Projected Cost Variances (for selected over-running capital infrastructure projects) 120% 100% For selected over-running projects, average 80% g variance is 71% over-budget 60% 40% 20% 0% Aus. (Magnetite) Aus. (Magnetite) m. (Copper) Aus. (Diamond) fic (Copper) m. (Copper) Aus.

  20. Slide 20: Resource Nationalism

    Resource Nationalism ƒ Venezuela – history of nationalization ƒ Ecuador – 70% windfall tax ƒ Ghana – 10% windfall tax ƒ Quebec – recently imposed new profit-based mining tax ƒ Mexico – proposed 7.5% net profits interest tax ƒ Dominican Republic – revised Special Lease Agreement 20

  21. Slide 21: Maintaining Social License to Operate

    Maintaining Social License to Operate ƒ Rising investor and NGO pressure ƒ Growing G i number b off responsibilities ibiliti 21

  22. Slide 22: A Paradigm Shift is Underway

    A Paradigm Shift is Underway How are companies responding? Shift to Shelving low Focus on cost free cash flow return, high risk reduction vs. production projects p j Disciplined Capital Allocation 22

  23. Slide 23: Barrick is Well Positioned

    Barrick is Well Positioned 9 5 core long life mines in the Americas High quality to generate ~60% of production at AISCe of asset base ~$700/oz $700/oz in 2013 9 High grade reserves Lowest cost 9 Reduced 2013 AISC guidance by $100/oz senior 9 75% of 2013 production at AISCe producer d off <$800/ <$8

  24. Slide 24: High Quality Portfolio

    High Quality Portfolio 2013e: 7.0-7.4 Moz of gold at AISC of $900-$975/oz ~60% Cortez,, Goldstrike,, Veladero, Lagunas Norte, 75% Pueblo Viejo at AISC of <$800/oz(1) ~15% 6 mines ~25% 10 mines (1) Reflects sale of Yilgarn South. 24

  25. Slide 25: Barrick’s Response

    Barrick’s Response Disciplined Capital Allocation Framework ƒ Adopted in mid-2012 prior to gold price weakness ƒ Focuses on maximizing risk-adjusted rates of return and d ffree cash h flow fl ƒ Includes sharp focus on cost control ƒ Allowed us to react quickly in a lower gold price environment Retur

  26. Slide 26: Barrick’s Response

    Barrick’s Response (US$/oz) Gold Price Decline 1,800 What We Have Done Independent of metal price declines 1,700 9 Disciplined Capital Allocation Framework (risk-adjusted returns, free cash flow flow, cost control control, and 1,600 portfolio optimization) 9 Shelved high cost projects 1 500 1,500 9

  27. Slide 27: Barrick’s Response

    Barrick’s Response (US$/oz) Gold Price Decline 1,800 What We are Doing Now In a lower metal price environment 1,700 ƒ Cost control initiatives í$$2B in capital p and cost 1,600 reductions in H1 2013 í New operating model 1 500 1,500 ƒ Maximizing cash flow at every mine (optimize first) 1,400 ƒ New l

  28. Slide 28: Maintaining Social License to Operate

    Maintaining Social License to Operate ƒ CSR Advisory Board ƒ CSR leadership recognition g 28

  29. Slide 29: Industry Challenges and Opportunities

    Industry Challenges and Opportunities Challenges Opportunities Free cash flow growth Shift to disciplined capital allocation Rising all all-in in Sh Sharper focus f on costt reduction d ti sustaining costs Increased reporting transparency transparency, Resource nationalism community/government consu

  30. Slide 30: KPMG 9th Annual Mining Executive Forum

    KPMG 9th Annual A l Mining Mi i Executive E ti Forum F September 19, 2013 30

  31. Slide 31: Footnotes

    Footnotes 1. All-in sustaining costs per ounce are a non-GAAP financial performance measure with no standardized definition under IFRS. See pages 45-48 of Barrick’s Second Quarter 2013 Report. 2. 2013 estimate based on discussions and research estimates from BMO Capital Markets, Bank of America-Merr

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