Barrick Reports Significant Cost And Operational Improvements

TORONTO - "Significant cost and operational improvements achieved this year, including previously announced reductions of $2.0 billion from budgeted 2013 capital and costs, have translated into another quarter of strong results," said Jamie Sokalsky , Barrick Gold's President and CEO. "We continue to make excellent progress at Lumwana in Zambia and are evaluating a number of other opportunities to improve performance further. We have also targeted additional annual savings of approximately $500 million through a simpler, more efficient operating model and other initiatives, demonstrating our commitment to continued cost reductions. The suspension of Pascua-Lama on the border of Chile and Argentina, will also significantly improve our near term cash flows."

Barrick is targeting $500 million of annual cost savings related to: job reductions from a company-wide review launched earlier this year, now largely complete, and through a new operating model (~$150 million), a program to reduce procurement costs (~$250 million) and other initiatives (~$100 million). In addition, African Barrick Gold (ABG) has targeted annual savings of $185 million.

Barrick's commitment to maximizing risk-adjusted returns and free cash flow by focusing on its most profitable production requires a more streamlined operating model. The new model provides a more efficient and simpler decision-making structure that better supports the company's goal of cost reduction. The new model will eliminate the Regional Business Unit structure and will be in place by early next year. As a result of the change in operating structure, the company is eliminating approximately 1,850 positions, 85 percent of which have been achieved to date.

Under the new structure, Cortez, Goldstrike, Pueblo Viejo, Lagunas Norte and Veladero will report directly to the Chief Operating Officer (COO), as will the head of Copper operations. The balance of the mines will report to Operating Heads in North America and Australia Pacific and in turn, to the COO. The new operating model allows mine managers to focus more sharply on the core business of mining, brings senior management closer to the mines, and creates a flatter organization with stronger accountability.

As part of Barrick's increased focus on disciplined capital allocation adopted in 2012, the company has aggressively reduced costs, improved cash flow and is well underway in executing its portfolio optimization plan. During the third quarter, the company has made further progress to divest non-core assets and improve cash flow.

Barrick is developing new mine plans at $1,100 per ounce at its mines. The combination of: i) selling non-core assets; ii) changing mine plans to focus on more profitable production; and, iii) calculating reserves with a lower gold price assumption will reduce year-end reserves and future production. Where possible, Barrick will nevertheless maintain the option to access the metal in the future once gold prices recover.

Third quarter 2013 gold production was 1.85 million ounces at adjusted operating costs and All-in sustaining costs of $573 per ounce and $916 per ounce, respectively. Adjusting for the sale of the Yilgarn South mines, Western Australia, full year gold production is now expected to be at the low end of the original 7.0-7.4 million ounce guidance range. All-in sustaining costs are expected to be within the recently reduced guidance range of $900-$975 per ounce and the company has lowered the top end of its adjusted operating cost guidance to $575-$600 per ounce.

North America produced 0.90 million ounces at (AISC) of $816 per ounce. Barrick's 60 percent share of production from the Pueblo Viejo in Domincan Republic mine was 0.11 million ounces at AISC of $770 per ounce. Barrick's share of 2013 production from Pueblo Viejo is anticipated to be about 500,000 ounces at AISC of $700-$750 per ounce, primarily due to a slower than expected ramp-up. Major modifications to the autoclaves have been completed and all four autoclaves are online after being individually tested to design capacity. The new 215 megawatt power plant was commissioned on schedule in the third quarter. The mine is now expected to reach full capacity in the first half of 2014 following completion of de-bottlenecking modifications to the lime circuit. During the quarter, proposed amendments to the Pueblo Viejo SLA were approved by the Government of the Dominican Republic and Pueblo Viejo Dominicana Corporation (PVDC) and were effective as at the quarter-end.

The Cortez mine in Nevada produced 0.33 million ounces at AISC of $470 per ounce on lower grades and recoveries. Production at Cortez is expected to decline in the fourth quarter due to lower grades as anticipated in the mine plan. Goldstrike also in Nevada produced 0.23 million ounces at AISC of $874 per ounce, reflecting higher open pit grades following a stripping phase in the first half of the year.

The autoclave facility is undergoing modifications for the thiosulphate project, which will enable about 4.0 million ounces to be brought forward in the mine plan. Total project costs are now expected to be about $585 million due to increased steel requirements and higher contractor costs. The company expects first production from this project in the fourth quarter of 2014 and average annual production of 350,000-450,000 ounces over its first full five years of operation. Full year production for North America is expected to be within the original guidance range of 3.55-3.70 million ounces. Full year AISC are anticipated to be at the high end of the previous guidance range of $750-$800 per ounce, primarily on higher costs at Pueblo Viejo due to lower silver by-product credits as a result of the slower than expected ramp-up.

South America produced 0.33 million ounces at AISC of $831 per ounce. The Veladero mine contributed 0.15 million ounces at AISC of $874 per ounce, reflecting lower grades and silver credits compared to the first half of the year. Lagunas Norte produced 0.14 million ounces at AISC of $696 per ounce. Production at Lagunas Norte is expected to increase in the fourth quarter on higher grades and tons as anticipated in the mine plan and as a result of the newly commissioned carbon-in-column plant, which allows for greater solution flow to the expanded leach pad. The company has decided to initiate closure of the Pierina mine in Peru.

Full year production for South America is now expected to be at the high end of the original guidance range of 1.25-1.35 million ounces. Full year AISC are anticipated to be at the low end of the original guidance range of $875-$925 per ounce.

Australia Pacific produced 0.50 million ounces at AISC of $945 per ounce. The Porgera mine contributed 0.12 million ounces at AISC of $1,187 per ounce. Due to the sale of Yilgarn South, full year production for Australia Pacific is now expected to be at the low end of the original 1.70-1.85 million ounce guidance range. Full year AISC are anticipated to be at the low end of the previous guidance range of $1,100-$1,200 per ounce.

Third quarter attributable production from African Barrick Gold plc (ABG)

was 0.12 million ounces at AISC of $1,275 per ounce. Barrick's share of 2013 production from ABG is expected to exceed the top end of the original guidance range of 0.40-0.45 million ounces. Full year AISC are expected to be below the low end of the original guidance range of $1,550-$1,600 per ounce. The improved outlook reflects the implementation of ABG's operational review.