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Cortez underground may soon expand

A drill moves into position in July 2015 in Cortez Hills Underground Mine.

TORONTO – Barrick Gold Corp. reported a net loss of $2.84 billion for last year and plans to reduce its debt another $2 billion this year.

The full-year loss and $2.62 billion in the fourth quarter reflects the impact of $3.1 billion in after-tax impairment charges.

The charges are primarily associated with an adjustment to the company’s short- and long-term gold price assumptions.

In 2015, the company’s total debt was reduced by $3.1 billion, or 24 percent; its debt reduction target for 2016 is at least $2 billion.

In 2015, Barrick produced 6.12 million ounces of gold, in line with the company’s revised outlook for the year. All-in sustaining costs of $831 per ounce in 2015 were below its original guidance of $860-$895 per ounce, and at the low end of its revised outlook of $830-$870 per ounce.

Despite lower gold prices, Barrick recorded positive free cash flow for the first time in four years, generating $471 million in cash flow for the full year and $387 million in the fourth quarter.

Adjusted net earnings were $344 million ($0.30 per share) for the full year and $91 million ($0.08 per share) in the fourth quarter. A net loss of $2.84 billion ($2.44 per share) for the full year and $2.62 billion ($2.25 per share) in the fourth quarter reflects the impact of $3.1 billion in previously announced after-tax impairment charges.

For 2016, production guidance is 5 million to 5.5 million ounces of gold at all-in sustaining costs of $775-$825 per ounce, and 370-410 million pounds of copper at all-in sustaining costs of $2.05-$2.35 per pound.

Nevada Highlights

Barrick’s operations continued to deliver a strong performance in 2015.

Cortez

Cortez produced 999,000 ounces of gold at all-in sustaining costs of $603 per ounce in 2015, exceeding expectations as a result of improved underground productivity, higher grades from the open pit, and higher recoveries.

Production in 2016 is expected to be 0.900-1.000 million ounces at all-in sustaining costs of $640-$710 per ounce. This includes approximately 250,000 ounces from refractory ore which will be treated at Goldstrike. Higher costs in 2016 reflect higher sustaining capital expenditures related to water management projects, and timing of open pit haul truck maintenance.

Best-in-Class initiatives underway at Cortez include optimizing shift change sequencing, revamping fleet maintenance practices, improving underground capital efficiency, installing advanced process controls, and strengthening geo-metallurgical modeling.

The company will provide an update on plans for the expansion of underground mining at Cortez on Feb. 22, as well as the results of a prefeasibility study for the Goldrush project, which is located within the Cortez District.

Goldstrike

Production at Goldstrike was in line with expectations for 2015 at 1.053 million ounces of gold. All-in sustaining costs of $658 per ounce came in below guidance, reflecting improved underground mining costs, optimized haulage, and lower contractor costs. Goldstrike also achieved commercial production from the new thiosulfate leaching (TCM) circuit in the third quarter. Throughput and recoveries from this innovative circuit, which does not use cyanide, continue to improve with ongoing adjustments, in line with expectations for the ramp up of a new technology. The TCM circuit is expected to achieve throughput of approximately 11,000 tonnes per day by the third quarter of 2016, in line with its design capacity.

Production at Goldstrike in 2016 is expected to be 0.975-1.075 million ounces at all-in sustaining costs of $780-$850 per ounce. Higher all-in sustaining costs in 2016 reflect higher sustaining capital expenditures for tailings expansion, water management, and timing of underground equipment replacements.

Best-in-Class initiatives at Goldstrike in 2016 are focused on supply chain cost reductions, optimization of Arturo pit haulage, maintenance improvements, and overall equipment effectiveness of shovels and trucks.

Turquoise Ridge

The Turquoise Ridge Joint Venture — of which Barrick owns 75 percent — exceeded production and cost expectations in 2015, contributing 217,000 ounces of gold (75 percent basis) at all-in sustaining costs of $742 per ounce. The mine benefited from increased productivity and throughput, driven by improved equipment availability, and a change in mining method.

Production in 2016 is expected to be 200,000-220,000 ounces at all-in sustaining costs of $770-$850 per ounce. All-in sustaining costs in 2016 are expected to be higher than 2015 as a result of higher sustaining capital related to water treatment, and timing of equipment replacement.

Productivity improvements are expected to continue in 2016, following the mine’s transition to mechanized top cut mining, and the introduction of more standardized equipment, allowing for greater mining flexibility with higher reliability.

Best-in-Class initiatives for 2016 will focus on operational efficiencies, economic optimization of mine design, and evaluation of potential alternative rock breaking methods.

Barrick will provide an update on plans for the expansion of underground mining at Turquoise Ridge on Feb. 22.

Other Mines

Barrick’s other mines — consisting of Bald Mountain, Round Mountain, Ruby Hill, Golden Sunlight, Hemlo, Cowal, and KCGM — contributed 1.16 million ounces of gold at average all-in sustaining costs of $931 per ounce in 2015. Barrick divested the Cowal mine in 2015 and completed the sale of Bald Mountain and Round Mountain in January 2016. The sale of these assets has had a negligible net impact on the overall all-in sustaining costs and free cash flow generation of the company. Production from Barrick’s remaining portfolio of other mines (Golden Sunlight, Hemlo, and KCGM) in 2016 is expected to be 580,000-630,000 ounces of gold at average all-in sustaining costs of $740-$780 per ounce.

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