TEN Out of Ten

Richard (Rick) Mills
Ahead of the Herd

Page 1 of 3

As a general rule, the most successful man in life is the man who has the best information

Barrick Gold Corp. wasn’t always a gold miner, it started as a privately held oil and gas company – Barrick Resources. After suffering huge financial losses Peter Munk, the principal shareholder, decided to focus on gold.

The company’s first acquisition, in 1984, was the Renabie mine near Wawa, Ontario and it produced roughly 16,000 ounces of gold that year for Barrick. Then Barrick acquired Camflo Mining in 1984, Camflo had operations in the province of Quebec and in Nevada, U.S.A.

Barrick’s next acquisition was the Mercur mine in Mercur, Utah in June 1985, followed by the Goldstrike mine, in Nevada, in 1986.

Munk’s change of focus to gold paid off handsomely, acquisition after acquisition pole vaulted his Barrick to the top tier of the gold mining world.

Today Barrick Gold Corp. is the world’s lowest-cost senior gold producer (all-in sustaining cost basis) and is also the world’s largest gold producer.  The company’s 2013 full year gold production guidance is 7.0-7.4 million ounces from a portfolio that includes some of the world’s premier gold assets. As of December 31, 2012, Barrick’s proven and probable mineral reserves were 140.2 million ounces of gold, 1.05 billion ounces of silver contained within its gold reserves, and 13.9 billion pounds of copper. Barrick replaced proven and probable gold reserves for the seventh straight year in 2012.

In 2012, Barrick produced 7.4 million ounces of gold at all-in sustaining costs of $918 per ounce and total cash costs of $558 per ounce.

It’s obvious Barrick is something special in the world of gold mining, but what exactly makes Barrick stand so tall? Well, Barrick considers five of its mines as key assets – Cortez (N), Goldstrike(N), Pueblo Viejo, Veladero and Lagunas Norte. These five mines (two are in Nevada) are expected to generate some 60 percent of 2013 production at an average all-in sustaining costs (AISC) of $650-$700 per ounce.

Of the 2013 exploration budget of $300-$320 million, more than 40 percent is allocated to North America, primarily Nevada. And for good reason…

At double the gold production from Barrick’s next largest area of operation (Australia/Pacific) and with an all in sustaining cost of just $789 an ounce average there’s no doubt of Nevada’s importance to Barrick.

Nevada Operations

The Bald Mountain mine lies 110 kilometers southeast of Elko, Nevada. Probable mineral reserves as of December 31, 2012, were 5.2 million ounces of gold.

The Cortez mine is located 100 kilometers southwest of Elko, Nevada in Lander County. Cortez is one of the world’s largest and lowest cost gold mines, and the property also has excellent upside exploration potential. In the first half of 2013, the mine produced 760,000 ounces of gold at all-in sustaining costs of $392 per ounce and adjusted operating costs of $179 per ounce. Proven and probable mineral reserves as at December 31, 2012, were 15.1 million ounces of gold.

The Goldrush discovery is located approximately 6 kilometers from the Cortez mine in Nevada. There is a measured and indicated resource of 8.4 million ounces as of December 31, 2012 – there are 5.7 million ounces in the inferred category. The footprint of the deposit is greater than seven kilometers and the system remains open in multiple directions. The greater Cortez area contains substantial district-scale opportunities.

The Goldstrike Complex is 60 kilometers northwest of Elko, Nevada. In the first half of 2013, the Goldstrike Property produced 417,000 ounces of gold. Goldstrike’s proven and probable mineral reserves as at December 31, 2012, were 12.3 million ounces of gold.

Marigold is located 64 kilometers southeast of Winnemucca, Nevada. Barrick has a 33% interest in the mine with the remaining interest owned by Goldcorp. In the first half of 2013, Barrick’s share of production was 27,000 ounces of gold. Barrick’s share of proven and probable mineral reserves as at December 31, 2012, was 1.6 million ounces of gold.

Located almost 100 kilometers north of Tonopah in Nye County, Nevada, Round Mountain is a joint venture operation in which Barrick holds a 50% interest with Kinross Gold Corporation — the operator owns the other 50%. In the first half of 2013, Barrick’s share of production was 76,000 ounces of gold. Barrick’s share of proven and probable mineral reserves as at December 31, 2012, was 1.2 million ounces of gold.

The Ruby Hill mine is located less than one kilometer from the town of Eureka and is 193 kilometers south of the Goldstrike Property. In the first half of 2013, Ruby Hill produced 32,000 ounces of gold. Proven and probable mineral reserves as at December 31, 2012, were 326,000 ounces of gold.

The Spring Valley deposit is a large, porphyry hosted gold resource located in the Spring Valley Mining District, Pershing County, Nevada, approximately 20 miles northeast of the town of Lovelock. A May 2011 updated resource estimate released by JV partner Midway Gold reported 2.16 million ounces of gold in the combined Measured and Indicated (M&I) categories plus an additional 1.97 million ounces of gold in the Inferred (I) category. Barrick’s in the process of earning a 70% interest in Spring Valley.