Barrick Gold Revises Cost Estimate For Pascua-Lama

TORONTO - Barrick Gold Corporation reported net earnings of $0.75 billion compared to net earnings of $1.16 billion in the same prior year quarter. Adjusted net earnings were $0.78 billion compared to $1.12 billion in the second quarter of 2011. Operating cash flow and adjusted operating cash flow of $0.76 billion compare to operating cash flow of $0.75 billion and adjusted operating cash flow of $0.94 billion, respectively, in the same prior year quarter.

Operating Highlights reported were: Gold and copper production of 1.74 million ounces and 109 million pounds, respectively; Gold total cash costs of $613 per ounce and net cash costs of $534 per ounce; Gold total cash margins of $995 per ounce, and net cash margins of $1,074 per ounce; C1 copper cash costs of $2.28 per pound and C1 copper cash margins of $1.17 per pound.

Pascua-Lama cost increased due to lower than expected productivity and persistent inflationary and other cost pressures, as previously disclosed, the company initiated a detailed review of the cost and schedule estimates for Pascua-Lama in the second quarter. Preliminary results currently indicate an approximate 50-60 percent increase in capital costs from the top end of the previously announced estimate of $4.7-$5.0 billion, with first production expected in mid-2014. The company will provide a further progress update with third quarter results.

Construction of the Pueblo Viejo and Jabal Sayid projects is essentially complete and capital costs for both projects are anticipated to be within guidance. First gold from Pueblo Viejo is expected in August and initial copper production from Jabal Sayid is anticipated in the third quarter.

Expected gold production for 2012 continues to be in the range of 7.3-7.8 million ounces. Total and net cash costs for gold are now anticipated to be slightly higher in the range of $550-$575 per ounce and $460-$500 per ounce(2), respectively, primarily as a result of higher first half costs in Australia Pacific and at African Barrick Gold. Expected copper production for 2012 has been adjusted to 460-500 million pounds, primarily reflecting lower than expected production from Lumwana, and C1 cash costs are expected to be $2.10-$2.30 per pound. Total capital expenditures for 2012 are now anticipated to be $6.0-$6.3 billion.(3)

In light of the current economic environment and Barrick's increased rigor on disciplined capital allocation, the company has determined that various pipeline projects do not currently meet its investment hurdles. As a result, Barrick gold and copper production base is now expected to be 8+ million ounces by 2015 and 600+ million pounds by 2013, respectively, representing a high quality and profitable core from which to expand further.

"Our second quarter earnings reflected lower gold production and higher operating costs as anticipated, but we continue to generate strong financial results and expect to have a stronger second half," said Jamie Sokalsky, President and Chief Executive Officer. "We have announced a schedule delay and an increase in capital at Pascua-Lama, as well as some short term production challenges at Lumwana. These are disappointing developments but we are focused on addressing these challenges and they are my top priorities. We are taking immediate and strong action to get both on the right path.

I have also initiated a thorough review of our mines and projects to evaluate their rates of return and ability to generate free cash flow as part of a more disciplined capital allocation framework. In my view, rate of return should drive production, not the other way around. Our new Pueblo Viejo mine is an excellent example of an investment with an attractive rate of return that will generate free cash flow. I am very pleased to report that it has been completed on schedule and will begin contributing low cost ounces shortly."

The company's address is 161 Bay Street, Toronto, ON M5J 2S1, 416-861-9911, fax: 416-861-2492.