BARRICK GOLD CORPORATION

Consolidated Financial Statements
and
Management’s Discussion and Analysis of Financial and Operating Results

For the year ended December 31, 2002

In accordance with Canadian Generally Accepted Accounting Principles

BARRICK GOLD CORPORATION

INDEX

Management Responsibility for Financial Statements	2
Auditors’ Report to the Shareholders	2
Consolidated Statements of Income for the years ended December 31, 2002, 2001 and 2000	3
Consolidated Statements of Cash Flow for the years ended December 31, 2002, 2001 and 2000	4
Consolidated Balance Sheets as at December 31, 2002, and 2001	5
Consolidated Statements of Shareholders’ Equity for the years ended December 31, 2002, 2001 and 2000	6
Notes to Consolidated Financial Statements	7
Management’s Discussion and Analysis of Financial And Operating Results	33

1

MANAGEMENT RESPONSIBILITY FOR FINANCIAL STATEMENTS

The accompanying consolidated financial statements have been prepared by and are the responsibility of the Board of Directors and Management of the Company. The consolidated financial statements have been prepared in accordance with the accounting principles generally accepted in Canada and reflect Management’s best estimates and judgements based on currently available information. The Company has developed and maintains a system of internal accounting controls in order to ensure, on a reasonable and cost effective basis, the reliability of its financial information.

The consolidated financial statements have been audited by PricewaterhouseCoopers LLP, Chartered Accountants. Their report outlines the scope of their examination and opinion on the financial statements.

Jamie C. Sokalsky
Senior Vice President and Chief Financial Officer
Toronto, Canada
February 5, 2003

AUDITORS’ REPORT TO THE SHAREHOLDERS
OF BARRICK GOLD CORPORATION

We have audited the consolidated balance sheets of Barrick Gold Corporation as at December 31, 2002 and 2001, the consolidated statements of income, cash flow and shareholders’ equity for each of the three years in the period ended December 31, 2002. These financial statements are the responsibility of the Company’s Management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing standards in Canada. Those standards require that we plan and perform an audit to obtain reasonable assurance whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.

In our opinion, these consolidated financial statements present fairly, in all material respects, the financial position of the Company as at December 31, 2002 and 2001 and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2002, in accordance with accounting principles generally accepted in Canada.

Chartered Accountants
Toronto, Canada
February 5, 2003

2

CONSOLIDATED STATEMENTS OF INCOME

Barrick Gold Corporation

For the years ended December 31, 2002, 2001 and 2000
(in millions of United States dollars, except per share data, CANADIAN GAAP Basis)

		2002			2001			2000
					(note 2B)			(note 2B)
Gold Sales (note 24)		$	1,947		$	1,324		$	1,307
Costs and expenses
Operating (notes 4 and 24 )			1,073			633			533
Amortization – property, plant and equipment			450			343			332
Amortization – intangible assets			33			—			—
Administration			64			46			35
Exploration and business development			52			40			41
Provision for mining assets (note 5)			—			—			1,330
			1,672			1,062			2,271
Interest and other income (note 6)			42			11			10
Interest expense (note 15)			(57	)		(14	)		(6	)
Non-hedge derivative gains (losses) (note 22)			(32	)		27			17
Income (loss) before income taxes			228			286			(943	)
Income taxes (note 7)			1			(15	)		175
Net income (loss) for the year		$	229		$	271		$	(768	)
Earnings per share data (note 8):
Net income (loss)
	Basic and diluted	$	0.42		$	0.68		$	(1.94	)

The accompanying notes are an integral part of these consolidated financial statements.

3

CONSOLIDATED STATEMENTS OF CASH FLOWS

Barrick Gold Corporation

For the years ended December 31, 2002, 2001 and 2000
(in millions of United States dollars, CANADIAN GAAP Basis)

		2002			2001			2000
					(note 2B)			(note 2B)
OPERATING ACTIVITIES
Net income (loss) for the year		$	229		$	271		$	(768	)
Amortization			483			343			332
Changes in capitalized mining costs			29			17			39
Provision for mining assets (note 5)			—			—			1,330
Future income taxes (note 7)			(60	)		(9	)		(232	)
Other items (note 27)			(29	)		57			171
Net cash provided by operating activities			652			679			872
INVESTING ACTIVITIES
Property, plant and equipment			(291	)		(549	)		(698	)
Short-term investments			159			(157	)		—
Business combinations and property acquisitions (note 3)			—			18			(115	)
Other			11			(9	)		23
Net cash used in investing activities			(121	)		(697	)		(790	)
FINANCING ACTIVITIES
Proceeds from stock options exercised			83			7			6
Long term debt
	Proceeds		—			49			137
	Repayments		(25	)		—			(15	)
Dividends			(119	)		(87	)		(87	)
Net cash (used in) provided by financing activities			(61	)		(31	)		41
Net increase (decrease) in cash and equivalents			470			(49	)		123
Cash and equivalents at beginning of year (note 26)			574			623			500
Cash and equivalents at end of year (note 26)		$	1,044		$	574		$	623

The accompanying notes are an integral part of these consolidated financial statements.

4

CONSOLIDATED BALANCE SHEETS

Barrick Gold Corporation

At December 31, 2002 and 2001
(in millions of United States dollars, CANADIAN GAAP Basis)

		2002			2001
ASSETS
Current assets
	Cash and equivalents (note 26)	$	1,044		$	574
	Short-term investments (note 9)		36			209
	Accounts receivable (note 10)		72			56
	Inventories and other current assets (note 11)		176			214
			1,328			1,053
	Property, plant and equipment (note 12)		3,881			4,812
	Capitalized mining costs (note 2B)		272			301
	Intangible assets (note 3)		724			—
	Goodwill (note 3)		1,247			1,347
	Other assets (note 13)		252			175
Total assets		$	7,704		$	7,688
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities
	Accounts payable	$	164		$	155
	Other current liabilities (note 14)		282			308
			446			463
	Long-term debt (note 15)		757			793
	Other long-term obligations (note 16)		353			379
	Future income taxes (note 17)		552			632
Total liabilities			2,108			2,267
Shareholders’ equity
	Capital stock (note 18)		5,040			4,954
	Retained earnings		577			467
	Cumulative foreign currency translation adjustments		(21	)		—
Total shareholders’ equity			5,596			5,421
Commitments and contingencies (note 21)
Total liabilities and shareholders’ equity		$	7,704		$	7,688

The accompanying notes are an integral part of these consolidated financial statements.

5

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

Barrick Gold Corporation

For the years ended December 31, 2002, 2001 and 2000
(in millions of United States dollars, CANADIAN GAAP Basis)

	2002			2001			2000
Common shares (number in millions)
At January 1		536			396			396
Issued for cash/on exercise of stock options		6			—			—
In full consideration for all outstanding shares of
Homestake Mining Company (note 3A)		—			140			—
At December 31		542			536			396
Common shares (amount in millions)
At January 1	$	4,954		$	2,715		$	2,709
Issued for cash/on exercise of stock options		86			7			6
In full consideration for all outstanding shares of
Homestake Mining Company (note 3A)		—			2,232			—
At December 31	$	5,040		$	4,954		$	2,715
Retained earnings
At January 1	$	467		$	283		$	1,445
Change in accounting policy for revenue recognition (note 2B)		—			—			(23	)
Change in accounting policy for income taxes (note 2B)		—			—			(284	)
Net income (loss)		229			271			(768	)
Dividends		(119	)		(87	)		(87	)
At December 31	$	577		$	467		$	283
Cumulative foreign currency translation adjustments	$	(21	)	$	—		$	—
Total shareholders’ equity at December 31	$	5,596		$	5,421		$	2,998

The accompanying notes are an integral part of these consolidated financial statements.

6

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Barrick Gold Corporation

Tabular dollar amounts in millions of United States dollars, unless otherwise shown. References to C$ and A$ are to Canadian and Australian dollars, respectively.

1	NATURE OF OPERATIONS
	Barrick Gold Corporation (“Barrick” or the “Company”) engages in the production and sale of gold, including related mining activities such as exploration, development, mining and processing. We also use derivative instruments in a risk management program that seeks to mitigate the effect of volatility in commodity prices, interest rates and foreign currency exchange rates on our business (note 22). Our operations are mainly located in the United States, Canada, Australia, Peru, Tanzania, Chile and Argentina. They require specialized facilities and technology, and we rely on those facilities to support our production levels. The market price of gold, gold production levels, cash operating costs, interest rates and the level of exploration expenditures are some of the things that affect our operating cash flow and profitability. Due to the global nature of our operations, we are also affected by such things as fluctuations in foreign currency exchange rates, political risk and varying levels of taxation. We seek to mitigate the risks associated with our business, but many of the factors affecting these risks are beyond our control.
2	SIGNIFICANT ACCOUNTING POLICIES
A	Basis of presentation
	The United States dollar is the principal currency of our operations. We prepare and file our primary consolidated financial statements in United States dollars and under United States generally accepted accounting principles (“US GAAP”). We include consolidated financial statements prepared under Canadian GAAP (in United States dollars) in our Proxy Statement that we file with various Canadian regulatory authorities. Summarized below are the accounting policies under Canadian GAAP that we consider particularly significant to us. References to the Company in these financial statements relate to Barrick and its consolidated subsidiaries. We have reclassified certain prior-year amounts to conform with the current year presentation.
	The preparation of financial statements under Canadian GAAP requires us to make estimates and assumptions that affect:

• the reported amounts of assets and liabilities;

• disclosures of contingent assets and liabilities; and

• revenues and expenses recorded in each reporting period.

          The most significant estimates and assumptions that affect our financial position and results of operations are those that use estimates of proven and probable gold reserves and non-reserve material expected to be converted into proven and probable reserves, and/or assumptions of future gold prices. Such estimates and assumptions affect:

• the values of assets and liabilities acquired in business combinations, as well as allocations of goodwill to reporting units;

• the value of inventories (which are stated at the lower of average cost and net realizable value);

• decisions as to when exploration and mine development costs should be capitalized or expensed;

• whether property, plant and equipment, capitalized mining costs, intangible assets and goodwill may be impaired;

• our ability to realize income tax benefits recorded as future income tax assets; and

• the rate at which we charge amortization to earnings.

          We also estimate:

• costs associated with reclamation and closure of mining properties;

• remediation costs for inactive properties;

• the fair values of derivative instruments; and

• the likelihood and amounts associated with contingencies.

          We regularly review the estimates and assumptions that affect our financial statements, however, what actually happens could differ from those estimates and assumptions.

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B	Accounting changes
	Deferred stripping costs
	Historically, we classified deferred stripping costs as part of Property, plant and equipment on our Consolidated Balance Sheet. In 2002 we began classifying these costs as a separate line item, Capitalized mining costs. Total capitalized mining costs at December 31, 2002 were $272 million. The comparative amount at December 31, 2001 of $301 million, has also been reclassified.
	Also, we historically classified expenditures for stripping costs as part of Purchases of property, plant and equipment in Investing activities in our Consolidated Statement of Cash Flows. In 2002, we began classifying these expenditures as part of Changes in capitalized mining costs, in Operating activities. Expenditures for stripping costs for the year ended December 31, 2002 were $121 million. We also reclassified the comparative amounts for 2001 of $133 million and 2000 of $98 million. We made these changes to reflect the operating nature of stripping activities. The changes had no effect on earnings.
	Revenue recognition
	Effective January 1, 2002, we changed our accounting policy for revenue recognition. Previously, revenue from the sale of gold and by-products was recognized when the product was in saleable form; a sales agreement had been entered into that established quantities and price; and collectibility was reasonably assured. Under our amended revenue recognition policy, which is consistent with our accounting policy under United States generally accepted accounting principles, revenue is recognized when persuasive evidence of an arrangement exists, delivery has occurred in accordance with the terms of the arrangement, the price is fixed or determinable and collectibility is reasonably assured. For gold bullion sold under spot deferred contracts or in the spot market, revenue is recognized on transfer of title to the gold to counterparties. For gold concentrate, revenue is recognized on transfer of legal title to the concentrate to third party smelters based on the estimated gold and silver content of the concentrate at market spot prices. Adjustments to accounts receivable between the date of recognition and the settlement date, caused by changes in the market prices for gold and silver, are reflected in the statement of income when they occur. This accounting change has been applied retroactively with restatement of all prior periods presented. The effect of the change was an increase in net income of $12 million or $0.02 per share in 2002; an increase in net income of $13 million or $0.03 per share in 2001; an increase in net loss of $2 million or $0.01 per share in 2000 net of income tax effects of $5 million, $5 million and $3 million, respectively as well as a cumulative reduction of retained earnings at January 1, 2000 of $23 million.
	Goodwill and other intangible assets
	On January 1, 2002, we changed our accounting policy for goodwill and other intangible assets as required by CICA Handbook section 3062, Goodwill and Other Intangible Assets (“CICA 3062”). Under this new standard, goodwill and intangible assets with an indefinite life are no longer amortized to income over time, but tested for impairment on adoption of the standard and at least annually thereafter to ensure that the fair value remains greater than, or equal to, book value. Any excess of book value over fair value would be charged to income in the period in which the impairment is determined. In accordance with the requirements of CICA 3062, we have adopted this new accounting standard prospectively, and amounts presented for prior periods have not been restated.
	Stock-based compensation
	Effective January 1, 2002, we adopted the new recommendations for accounting for stock-based compensation as required by CICA Handbook section 3870, Stock-based Compensation and Other Stock-based Payments (“CICA 3870”). CICA 3870 establishes standards for the recognition, measurement and disclosure of stock-based compensation and other stock-based payments made in exchange for goods and services. It applies to transactions, including non-reciprocal transactions, in which an enterprise grants shares of common stock, stock options, or other equity instruments, or incurs liabilities based on the price of common stock or other equity instruments. The recommendations of CICA 3870 are generally applied prospectively to awards granted on or after the date of adoption except that retroactive application, without restatement, is required for outstanding awards at January 1, 2002 where the awards call for settlement in cash or other assets, or for stock appreciation rights that call for settlement by the issuance of equity instruments.
	As permitted by CICA 3870, we have elected not to apply fair value accounting and to measure compensation cost using the intrinsic value method for awards of stock options awarded to employees under our stock-based compensation plan. Accordingly, no compensation cost is recognized for our stock options when the exercise price is equal to the market price on the date of grant. Entities that do not apply the fair value based method of accounting are required to disclose for each period, for which an income statement is provided, the pro forma net income and net income per share, as if the fair value based accounting method had been used to account for stock-based compensation cost. Details of pro forma net income and net income per share are set out in note 19A.

8

	Under CICA 3870, awards under our Restricted Stock Unit plan (the “RSU plan”) are required to be accounted for based on their fair value, which is consistent with our existing accounting policy for these awards.
	Income taxes
	We adopted CICA Handbook section 3465, “Income Taxes” in 2000. In accordance with CICA Emerging Issues Committee Abstract No. 108, we chose not to restate prior period comparative carrying amounts of assets acquired whose tax bases, at acquisition date, differed from the assigned values for accounting purposes. Initial implementation of the new provisions had the effect of: increasing property, plant and equipment by $69 million; increasing future income tax liabilities by $353 million; and reducing retained earnings by $284 million. The adoption of the new standards had no effect on net income for fiscal 2000.
C	Basis of consolidation
	These consolidated financial statements include the accounts of Barrick and its subsidiaries. Intercompany transactions and balances are eliminated upon consolidation. We control our subsidiaries through existing majority voting interests. We present our proportionate interest in the assets, liabilities, revenues, expenses and cash flows of unincorporated joint ventures in our financial statements.
D	Foreign currency translation
	The functional currency of all our operations, except for our Argentinean operations where it is the Argentinean peso, is the United States dollar (“the US dollar”). Except for our Argentinean operations, we remeasure balances into US dollars as follows:

• non-monetary assets and liabilities using historical rates;

• monetary assets and liabilities using period-end exchange rates; and

• income and expenses using average exchange rates, except for expenses related to assets and liabilities remeasured at historical exchange rates.

	Gains and losses arising from remeasurement of foreign currency financial statements into US dollars, and from foreign currency transactions, are included in earnings.
	For our Argentinean operations, we translate assets and liabilities into US dollars using period-end exchange rates; and revenues and expenses using average rates. We record the resulting translation adjustments in a cumulative translation adjustments account, a part of shareholders’ equity.
E	Other significant accounting policies
	Other aspects of our financial statements including our other significant accounting policies, and the note and page where they can be found are:

	Note		Page
Business combinations and property acquisitions		3		10
Operating costs		4		12
Provision for mining assets		5		12
Interest and other income		6		13
Income taxes		7		13
Earnings per share		8		13
Short-term investments		9		14
Accounts receivable and revenue recognition		10		14
Inventories and other current assets		11		14
Property, plant and equipment		12		15
Other assets		13		16
Other current liabilities		14		16
Long-term debt		15		16
Other long-term obligations		16		17
Other post-retirement benefits		16		17
Future income taxes		17		18
Capital stock		18		19
Employee stock-based compensation		19		20
Pension plans		20		21
Commitments and contingencies		21		23
Derivative instruments		22		25
Fair value of financial instruments		23		29
Segment information		24		30
Joint ventures		25		32
Cash and equivalents		26		32
Supplemental cash flow information		27		32

9

3	BUSINESS COMBINATIONS AND PROPERTY ACQUISITIONS
A	Homestake Mining Company
	On December 14, 2001, a wholly-owned subsidiary of Barrick acquired Homestake Mining Company (“Homestake”). Homestake was a global gold mining company with its primary operations in the United States, Australia, Canada and Argentina. Under the terms of the agreement, approximately 140 million shares of Barrick common stock were issued in exchange for all of the outstanding shares of Homestake common shares based upon an exchange ratio of 0.53:1. The acquisition has been accounted for as a purchase for Canadian GAAP purposes, with the results of Homestake’s operations included in the consolidated financial statements effective December 31, 2001. For US GAAP purposes, the acquisition has been accounted for as a pooling-of-interests. Under Canadian GAAP, the method of accounting used for business combinations depends upon whether or not one of the combining companies can be identified as an acquirer. In the Barrick/Homestake combination, where voting shares were exchanged to effect the combination, factors relating to control over the resultant combined company must be considered. A company whose shareholders (as a group) hold more than 50% of the voting shares of the combined company will normally be identified as the acquirer. In this case, the Barrick shareholders (as a group) held in excess of 70% of the voting shares of the combined company and Barrick was therefore identified as the acquirer. Accordingly, the combination has been accounted for as a purchase for Canadian GAAP purposes.
	The aggregate purchase price was $2,250 million comprising common stock of $2,220 million and the fair value of stock options issued to Homestake employees of $30 million. In addition, we incurred $18 million in share issue costs, which have been offset against capital stock. The value of the 140 million common shares issued was determined based on the average market price of our common shares over the five-day period before and after the terms of the acquisition were agreed to and announced.
	The following table summarizes the estimated fair values of the assets acquired and liabilities assumed at the date of acquisition. Current assets include cash and equivalents of $36 million. Accounts payable and accrued liabilities include termination and restructuring costs of $65 million.

Current assets		$	205
Property, plant and equipment			687
Other long term assets			144
Intangible assets			757
Goodwill			1,247
	Total assets acquired		3,040
Current liabilities			(202	)
Long-term debt			(74	)
Future income taxes			(215	)
Other long term obligations			(299	)
	Total liabilities assumed		(790	)
Net assets acquired		$	2,250

During 2002 we finalized the valuations of tangible and intangible assets acquired, as well as the allocation of goodwill to reporting units.

          The major adjustments during 2002 to the provisional purchase price allocation at the end of 2001 were: a decrease in property, plant and equipment of $753 million reflecting the final valuations of these assets and reclassification of the fair value of rights to mine reserves and resources of $757 million under intangible assets; an increase in intangible assets by $757 million reflecting the fair values of acquired mining rights for mineral reserves and resources; a decrease in future income tax liabilities by $50 million and a decrease in goodwill acquired by $100 million reflecting the net effect of the changes in fair values of acquired tangible and intangible assets and liabilities.

10

We allocated goodwill to reporting units by preparing estimates of the fair value of the entire reporting unit and comparing this amount to the fair value of assets and liabilities (including intangibles) in the reporting unit. The difference represents the amount of goodwill allocated to each reporting unit. Details of allocations of goodwill to operating segments are as follows:

Kalgoorlie	$	262
Pascua-Lama		251
Veladero		154
Cowal		186
Hemlo		109
Plutonic		130
Eskay Creek		27
Round Mountain		25
Other		103
	$	1,247

We test goodwill for impairment annually in the fourth quarter of our fiscal year. This impairment assessment involves estimating the fair value of each reporting unit that includes goodwill. We compare this fair value to the total carrying amount of the reporting unit (including goodwill). If the fair value exceeds this carrying amount, we consider that goodwill is not impaired. If the fair value is less than this carrying amount, then we estimate the fair values of all assets and liabilities in the reporting unit, and compare the net amount of assets less liabilities to the estimated fair value of the entire reporting unit. The difference represents the fair value of goodwill, and if necessary, we reduce the carrying amount to this fair value. No provisions were required in 2002 to reflect the impairment of goodwill. We do not expect any of the acquired goodwill to be deductible for income tax purposes.

Details of acquired intangible assets are as follows:

	As at December 31, 2002				As at December 31, 2001
	Gross Carrying		Accumulated		Gross Carrying		Accumulated
	Amount		Amortization		Amount		Amortization
Mining rights for proven and probable reserves	$	533	$	33	$	—	$	—
Mining rights for mineralized material		224		—		—		—
Total	$	757	$	33	$	—	$	—

	Amortization of intangible assets
	We amortize the carrying amounts of mining rights for proven and probable reserves as gold is produced and sold using the units of production method based on the estimated recoverable ounces in proven and probable reserves. Amortization of the carrying amounts of mining rights for mineralized material will commence when the mineralized material is converted into proven and probable reserves.
	Impairment assessments for intangible assets
	We review and test the carrying amounts of intangible assets for impairment in accordance with the policy described in note 12C for property, plant and equipment.
B	Pangea Goldfields Inc.
	On July 27, 2000, we acquired Pangea Goldfields Inc., an exploration company, for cash of $131 million. We accounted for the acquisition as a purchase, and assigned values of $140 million to total assets acquired, including $16 million in cash, and $9 million to liabilities assumed.

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4 OPERATING COSTS

For the years ended December 31	2002			2001			2000
Cost of goods sold	$	985		$	478		$	384
Amortization of capitalized mining costs		150			150			137
By-product revenues		(119	)		(40	)		(37	)
Royalty expenses		37			25			31
Production taxes		5			3			5
Reclamation and closure costs		15			17			13
	$	1,073		$	633		$	533

Amortization of capitalized mining costs

We charge most mine operating costs to inventory as incurred. However, we defer and amortize certain mining costs associated with open-pit deposits that have diverse ore grades and waste-to-ore ton ratios over the mine life. These mining costs arise from the removal of waste rock at our open-pit mines, and we commonly refer to them as “deferred stripping costs.” We record amortization of amounts deferred based on a “stripping ratio” using the units-of-production method. This accounting method results in the smoothing of these costs over the life of mine, rather than expensing them as incurred. Some mining companies expense these costs as incurred, which may result in the reporting of greater volatility in period to period results of operations. The application of our deferred stripping accounting policy in 2002 resulted in an increase in operating costs by $29 million compared to actual costs incurred (2001 — $17 million increase, 2000 — $39 million increase).

          Capitalized mining costs represent the excess of costs capitalized over amortization recorded, although it is possible that a liability could arise if cumulative amortization exceeds costs capitalized. The carrying amount of capitalized mining costs is included with related mining property, plant and equipment for impairment testing purposes.

Average stripping ratios ⁽¹⁾

For the years ended December 31	2002		2001		2000
Betze-Post (Goldstrike)		112:1		98:1		98:1
Pierina		48:1		21:1		19:1

(1) The stripping ratio is calculated as the ratio of total tons (ore and waste) of material to be moved compared to total recoverable proven and probable gold reserves.

	The average remaining life of the above open-pit mine operations for which we capitalize mining costs is 9 years. The full amount of stripping costs incurred will be expensed by the end of the mine lives.
	Royalties
	Most of our properties are subject to royalty obligations based on mineral production at the properties, under various methods of calculation. The most significant royalties are at Goldstrike, Bulyanhulu and Pascua-Lama. Most Goldstrike production is subject to a net smelter return (NSR) or net profits interest (NPI) royalty payable on the value of mineral production. The highest Goldstrike royalties are a 5% NSR and a 6% NPI. Bulyanhulu is subject to an NSR-type royalty of 3%. A part of Pascua-Lama gold production will be subject to a gross proceeds sliding scale royalty, ranging from 1.5% to 10%, and a 2% NSR royalty on copper production. Another part of Pascua-Lama is subject to a 3% NSR royalty on extraction of all gold, silver, and other ores.
5	PROVISION FOR MINING ASSETS
	In 2000, we completed a review of our property, plant and equipment that was mainly triggered by the level of gold prices at the time, using the policy described in note 12C. As a result, we reduced the carrying values of various assets. The review was triggered by a number of events, including our long-term view of the price of gold at the time of the review. We recorded a $1.1 billion non-cash provision, net of income taxes of $230 million to write down various assets, including the Pascua-Lama Project in Chile and Argentina; the Pierina property in Peru and certain exploration properties; low-grade stockpile inventories and the carrying amounts of our SJ royalty claims at the Betze-Post Mine in the United States; and the Bousquet Mine in Canada.

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6 INTEREST AND OTHER INCOME

For the years ended December 31	2002		2001			2000
Interest income	$	28	$	26		$	27
Foreign currency translation gains (losses)		2		(8	)		—
Other		12		(7	)		(17	)
	$	42	$	11		$	10

7 INCOME TAXES

For the years ended December 31		2002			2001			2000
Current
	Canada	$	(44	)	$	(4	)	$	(3	)
	Foreign		(15	)		(20	)		(54	)
			(59	)		(24	)		(57	)
Future (note 17)
	Canada		58			33			49
	Foreign		2			(24	)		183
			60			9			232
Income tax credit (expense)		$	1		$	(15	)	$	175

Because we operate in a specialized industry and in several tax jurisdictions, our income is subject to varying rates of taxation. Major items causing our income tax rate to differ from the Canadian federal statutory rate of 38% are:

For the years ended December 31		2002			2001			2000
Income tax (expense) credit based on statutory rate		$	(87	)	$	(102	)	$	358
(Increase) decrease resulting from:
	Resource and depletion allowances		12			4			28
	Earnings in foreign jurisdictions at different tax rates		67			97			76
	Provision for mining assets		—			—			(276	)
	Non-deductible expenses		(9	)		(18	)		(4	)
	Change in valuation allowance		(3	)		(37	)		(25	)
	Outcome of income tax uncertainties		22			—			—
	Other		(1	)		41			18
Income tax credit (expense)		$	1		$	(15	)	$	175
The main temporary differences and their tax effects are:
	Amortization	$	23		$	(20	)	$	(2	)
	Reclamation costs		(4	)		(6	)		(1	)
	Net operating losses		22			35			2
	Provision for mining assets		—			—			230
	Other		19			—			3
		$	60		$	9		$	232

8	EARNINGS PER SHARE
	We compute basic earnings per share by dividing net income or loss (the numerator) by the weighted-average number of outstanding common shares for the period (the denominator). In computing diluted earnings per share, an adjustment is made for the dilutive effect of the exercise of stock options. In periods where a net loss is reported, such as in 2000, basic and diluted loss per share are the same because the effect of exercise of stock options would be anti-dilutive.
	The weighted average number of common shares outstanding for the year was 541 million shares (2001 — 396 million shares, 2000 — 396 million shares). The number of shares for the diluted net income per share calculation was 541 million shares (2001 — 397 million shares, 2000 — 396 million shares).

13

9	SHORT-TERM INVESTMENTS
	Debt and equity securities

Carrying amount at December 31	2002		2001
Commercial paper and term deposits(1)	$	—	$	159
Fixed-income securities(2)		7		14
Total debt securities		7		173
Equity securities(2)		29		36
	$	36	$	209

(1)	As part of our cash management program, we invest in commercial paper and term deposits with initial maturities in excess of three months, but less than one year.
(2)	Under a deferred compensation plan for certain former Homestake executives we hold a portfolio of marketable fixed-income and equity securities. Declines in market value judged to be other than temporary are recognized in determining net income. The fair value of the investments at December 31, 2002 are reflected in note 23.

10 ACCOUNTS RECEIVABLE AND REVENUE RECOGNITION

At December 31	2002		2001
Amounts due from customers	$	30	$	38
Taxes recoverable		12		11
Other		30		7
	$	72	$	56

Amounts due from customers

We recognize revenue from the sale of gold and by-products when the following conditions are met:

• persuasive evidence of an arrangement exists;

• delivery has occurred under the terms of the arrangement;

• the price is fixed or determinable; and

• collectibility is reasonably assured.

For gold bullion sold under forward sales contracts or in the spot market, we recognize revenue on transfer of title to the gold to counterparties. For gold concentrate, we recognize revenue from the measurable quantities of gold and silver on transfer of legal title to the concentrate to third-party smelters. Revenue from the sale of by-products such as silver and copper is credited against operating costs.

11

INVENTORIES AND OTHER CURRENT ASSETS

At December 31	2002		2001
Gold in process and ore in stockpiles	$	105	$	134
Mine operating supplies		59		57
Derivative assets		—		8
Prepaid expenses		12		15
	$	176	$	214

Gold in process and ore in stockpiles

We record gold in process, ore in stockpiles and mine operating supplies at the lower of average cost and net realizable value. For gold in process and ore in stockpiles, cost includes materials and labor as well as an allocation of amortization of property, plant and equipment.

          Gold in process and ore in stockpiles excludes $61 million (2001 — $46 million) of stockpiled ore that we do not expect to process in the next 12 months. This amount is included in other assets. We process ore in stockpiles under a life of mine plan that is intended to optimize use of our known mineral reserves, present plant capacity and pit design. Historically, the market price of gold has not significantly affected the timing of processing of ore in stockpiles.

          Our Goldstrike property is the only one that has significant stockpiled ore. The stockpiles consist of two ore types: ore that will require autoclaving; and ore that will require roasting. Processing of roaster ore commenced on start-up of the roaster facility in 2000. We are now processing ore from both the autoclave and roaster stockpiles. We expect to fully process the autoclave stockpile by 2009 and the roaster stockpile by 2016.

14

12 PROPERTY, PLANT AND EQUIPMENT

At December 31	2002			2001
Property acquisition and mine development costs	$	4,096		$	4,636
Buildings, plant and equipment		1,460			2,041
		5,556			6,677
Accumulated amortization		(1,675	)		(1,865	)
	$	3,881		$	4,812

A	Property acquisition and mine development costs
	We capitalize payments for the acquisition of land and mineral rights. After acquisition, a number of things affect the recoverability of the cost of land and mineral rights, and in particular the results of exploration drilling. The length of time between the acquisition of land and mineral rights and the time when we undertake exploration work varies based on the prioritization of our exploration projects and the size of our exploration budget.
	We capitalize mine development costs on our properties after proven and probable reserves have been found. We also capitalize costs for certain material that does not meet all the criteria required for classification as proven or probable reserves. Management’s determination as to whether the existence of non-reserve material should result in the capitalization of costs or the material should be included in the amortization and recoverability calculations is based on the existence of various factors, including, but not limited to: the existence and nature of known mineralization; the location of the property (for example, whether the presence of existing mines and ore bodies in the immediate vicinity increases the likelihood of development of a mine on the property); the existence of proven and probable reserves on the property; whether the ore body is an extension of an existing producing ore body on an adjacent property; the results of recent drilling on the property; and the existence of a feasibility study or other analysis to demonstrate that the ore is commercially recoverable.
	We start amortizing capitalized costs when production begins. Amortization is calculated using the units-of-production method based on the estimated recoverable ounces of gold in proven and probable reserves and non-reserve material expected to be converted into proven and probable reserves.
	We capitalize financing costs, including interest, relating to mine development costs while development or construction activities at the properties are in progress. Capitalization occurs without restriction to specific borrowings. We stop capitalizing financing costs when the asset or mine is substantially complete and ready for its intended use.
B	Buildings, plant and equipment
	We record buildings, plant and equipment at cost and amortize them net of their residual value, using the straight-line method over their estimated useful lives. The longest estimated useful life for buildings and mill equipment is 25 years; and for mine equipment is 15 years.
	We expense repairs and maintenance expenditures as incurred. We capitalize major improvements and replacements that increase productive capacity or extend the useful life of an asset, and amortize them over the remaining estimated useful life of the related asset.
C	Property evaluations
	We review and test the carrying amounts of our mineral properties and related buildings, plant and equipment when events or changes in circumstances suggest that the carrying amount may not be recoverable. If we have reason to suspect an impairment may exist, we prepare estimates of future net cash flows that we expect to generate for the related asset or group of assets. The cash flow estimates are based on:

• estimated recoverable ounces of gold (considering proven and probable mineral reserves and non-reserve material expected to be converted into mineral reserves);

• estimated future commodity prices (considering historical and current prices, price trends and related factors); and

• expected future operating costs, capital expenditures and reclamation expenditures.

          We record a reduction of the assets or group of assets to their estimated net recoverable amount as a charge to earnings, if the estimated undiscounted future net cash flows are less than the carrying amount.

15

13 OTHER ASSETS

At December 31	2002		2001
Ore in stockpiles (note 11)	$	61	$	46
Taxes recoverable		35		36
Derivative assets		16		16
Future income tax assets (note 17)		45		—
Note receivable		14		17
Restricted cash		8		12
Debt issue costs		11		11
Deferred stock compensation (note 20A)		5		8
Prepaid pension asset (note 20)		7		5
Other		50		24
	$	252	$	175

14 OTHER CURRENT LIABILITIES

At December 31	2002		2001
Current part of reclamation and closure obligations (note 16)	$	34	$	80
Merger and related costs(1)		3		65
Litigation (note 21)		58		56
Derivative liabilities		32		—
Income taxes payable		52		43
Pension benefits (note 20)		9		1
Current part of long-term debt (note 15)		20		9
Deferred revenue(2)		35		30
Other		39		24
	$	282	$	308

(1)	In 2002, cash payments of merger and related costs totaled $50 million. Other amounts totaling $10 million were settled through pension plan benefit enhancements.
(2)	Deferred revenue will be recorded in earnings in: 2003 — $17 million; 2004 — $7 million; 2005 — $4 million; 2010 — $7 million.

15 LONG-TERM DEBT

At December 31	2002			2001
Debentures	$	500		$	500
Project financing – Bulyanhulu		194			200
Variable rate bonds		80			80
Capital leases		3			22
		777			802
Current part		(20	)		(9	)
	$	757		$	793

Interest expense

For the years ended December 31	2002			2001			2000
Interest incurred	$	59		$	56		$	50
Less: capitalized		(2	)		(42	)		(44	)
Interest expense	$	57		$	14		$	6

A

Debentures

On April 22, 1997, we issued $500 million of redeemable, non-convertible debentures. The debentures bear interest at 7.5% per annum, payable semi-annually, and mature on May 1, 2007. In 2002, we entered into interest-rate swap contracts as a fair value hedge of our interest rate risk exposure on $250 million of the debentures, effectively converting them to floating-rate debt instruments (note 22). Under the swaps, we receive fixed-rate interest receipts at 7.5% in exchange for floating-rate interest payments of LIBOR plus a credit spread of 4.0%, which resulted in an effective rate of 5.7%.

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B	Project financing – Bulyanhulu
	One of our wholly-owned subsidiaries, Kahama Mining Corporation Ltd. in Tanzania, has a limited recourse amortizing loan for $194 million. We have guaranteed the loan until completion, which occurred in March 2003. After completion, the loan became non-recourse. The loan is insured for political risks equally by branches of the Canadian government and the World Bank. The interest rate, inclusive of political risk insurance premiums, is LIBOR plus 2.6% before completion, and increases after completion to about LIBOR plus 3.6%. The effective interest rate for 2002, including amortization of debt-issue costs and political risk insurance, was 7.2% (2001 — 7.3%, 2000 — 9.2%). Interest includes payments made under a receive-floating, pay-fixed interest-rate swap which matches the loan principal over the term to repayment and has a fixed rate of 4.4%.
	Scheduled repayments for each of the next five years are: 2003 — $20 million, 2004 — $24 million, 2005 — $31 million, 2006 — $34 million, 2007 — $34 million, 2008 and thereafter — $51 million.
C	Variable rate bonds
	Certain of our wholly-owned subsidiaries have issued variable rate, tax-exempt bonds of $17 million (due 2004), $25 million (due 2029) and $38 million (due 2032) for a total of $80 million. We pay interest monthly on the bonds based on variable short-term, tax-exempt obligation rates. The average interest rate for 2002 was 1.4% (2001 — 1.9%). No principal repayments are due until cancellation, redemption or maturity.
D	Credit facilities
	We have a credit and guarantee agreement (“Credit Agreement”) with a group of banks, which requires the group to make available to us a credit facility of up to $1 billion or the equivalent amount in Canadian currency. The Credit Agreement, which is unsecured, matures in April 2007 and has an interest rate of LIBOR plus 0.27% to 0.35 % when used, and an annual fee of 0.08%. We have not drawn any amounts under the Credit Agreement.
16	OTHER LONG-TERM OBLIGATIONS

At December 31	2002		2001
Reclamation and closure costs	$	247	$	273
Pension benefits (note 20C)		48		57
Other post-retirement benefits		28		32
Restricted stock units (note 19B)		7		8
Other		23		9
	$	353	$	379

Reclamation and closure costs

We accrue estimates of future reclamation and closure costs at active mines over the life of the mines as revenue is recognized. Each period we expense an amount calculated using the units-of-production method based on the latest estimates of future reclamation and closure costs and recoverable ounces of gold contained in proven and probable reserves. After closure we record changes in estimates of reclamation and closure costs in earnings at the time of revision. At December 31, 2002 accrued costs at inactive mines totaled $169 million (2001 — $250 million).

          Estimates of reclamation and closure costs reflect:

• work that is required under applicable laws and regulations;

• obligations under existing permits; and

• where applicable, government mandated assumptions and methodologies.

          We estimate that future reclamation and closure costs under present environmental regulations are $461 million. The major parts of this $461 million estimate are for: tailing and heap leach pad closure/rehabilitation — $83 million; demolition of buildings/mine facilities — $121 million; ongoing water treatment — $67 million; ongoing monitoring and care and maintenance — $129 million; and other costs — $61 million. At December 31, 2002 we had accrued a total of $281 million, (2001 — $353 million), including the current part of $34 million (2001 — $80 million).

Other post-retirement benefits

We provide post-retirement medical, dental, and life insurance benefits to certain employees. We use the corridor approach in the accounting for post-retirement benefits, under which all actuarial gains and losses resulting from variances between actual results and economic estimates or actuarial assumptions are deferred. We amortize the deferred

17

	amounts when the net gains or losses exceed 10% of the accumulated post-retirement benefit obligation at the beginning of the year. The amortization period is the average remaining life expectancy of participants. For 2002, we recorded a benefit expense of $nil.
	We have assumed a health care cost increases of 7% in 2002, 7.5% in 2001 and 8% in 2000, decreasing ratability to 5% increases in 2006 and thereafter. The assumed health care cost trend had a minimal effect on the amounts reported. A one percentage point change in the assumed health care cost trend rate at December 31, 2002 would have increased or decreased the post-retirement benefit obligation by $2 million and would have had no effect on the benefit expense.
17	FUTURE INCOME TAXES
	Net future income tax liabilities

At December 31		2002			2001
Assets
	Operating loss carryforwards	$	389		$	312
	Reclamation and closure costs		75			81
	Property, plant and equipment		93			32
	Post-retirement benefit plan obligations		46			48
	Alternative minimum tax credit carryforwards		110			111
	Other		56			61
	Gross future tax assets		769			645
	Valuation allowances		(436	)		(433	)
Net future income tax assets		$	333		$	212
Liabilities
	Property, plant and equipment		(824	)		(785	)
	Other		(16	)		(59	)
Future income tax liabilities		$	(840	)	$	(844	)
Net future income tax liabilities		$	(507	)	$	(632	)
Net future income tax liabilities consist of:
	Future income tax assets – non-current	$	45		$	—
	Future income tax liabilities – non-current		(552	)		(632	)
		$	(507	)	$	(632	)

Recognition and measurement

We recognize future income tax assets and liabilities for the future tax consequences of temporary differences between the carrying amounts of assets and liabilities in our balance sheet and their tax bases. We measure future income tax assets and liabilities using substantively enacted rates that apply to the years when we expect to recover or settle the temporary differences. Our income tax expense or recovery includes the effects of changes in our future income tax assets and liabilities. We reduce future income tax assets by a valuation allowance, if we decide it is more likely than not that some or all of the assets will not be realized.

          We measure and recognize future income tax assets and liabilities based on: our interpretation of relevant tax legislation; our tax planning strategies; estimates of the tax bases of individual assets and liabilities; and the deductibility of expenditures for income tax purposes. We recognize the effects of changes in our assessment of these estimates and factors when they occur.

          We have not recorded future income taxes relating to undistributed earnings of foreign subsidiaries that are indefinitely invested. Such undistributed earnings amounted to about $1,251 million at December 31, 2002 and $1,499 million at December 31, 2001. If the undistributed earnings of those foreign subsidiaries were not indefinitely invested, a future income tax liability of $63 million at December 31, 2002, and $75 million at December 31, 2001, would be recorded.

          Operating loss carryforwards amount to $1,456 million, of which $1,032 million do not expire and $424 million expire at various times over the next 20 years. Alternative minimum tax credit carryforwards amount to $110 million and do not expire.

          Our income tax returns for the major jurisdictions where we operate have been fully examined through the following years: Canada — 1997, United States — 1998 and Peru — 2000. Other than the matter described in Note 21C relating to interest and penalties associated with a Peruvian tax assessment, we are not aware of any tax matters

18

outstanding in any country in which we operate that could potentially have material adverse effect on our financial position or results of operations.

Valuation allowances

Because we operate in multiple tax jurisdictions, we consider the need for a valuation allowance on a country-by-country basis, taking into account the effects of local tax law. When a valuation allowance is not recorded, we believe that there is sufficient positive evidence to support this conclusion.

          When facts or circumstances change, we record an adjustment to a valuation allowance to reflect the economic effects of the change. The main factors that affect the amount of a valuation allowance are:

• expected levels of future taxable income;

• opportunities to implement tax plans that affect whether tax assets can be realized; and

• the nature and amount of taxable temporary differences.

	Levels of taxable income are affected by, among other things, prevailing gold prices; cash operating costs; changes in proven and probable gold reserves; and changes in interest rates and foreign currency exchange rates. It is reasonably possible that circumstances could occur resulting in a material change in the valuation allowances.
18	CAPITAL STOCK
A	Authorized capital
	Our authorized capital stock includes an unlimited number of common shares, 9,764,929 First preferred shares, Series A (issued nil); 9,047,619 Series B (issued nil); 1 Series C special voting share (issued 1); and 14,726,854 Second preferred shares Series A (issued nil).
B	Homestake Canada Inc. (“HCI”) Exchangeable shares
	In connection with a 1998 acquisition, HCI issued 11.1 million HCI exchangeable shares. Each HCI exchangeable share is exchangeable for 0.53 of a Barrick common share at any time at the option of the holder and has essentially the same voting, dividend (payable in Canadian dollars), and other rights as 0.53 of a Barrick common share. At December 31, 2002, 1.6 million (2001 — 3 million) HCI exchangeable shares were outstanding, which are equivalent to 0.8 million Barrick common shares (2001 — 1.6 million common shares). The equivalent common share amounts are reflected in the number of common shares outstanding.
	At any time on or after December 31, 2008, or when fewer than 1.4 million HCI exchangeable shares are outstanding, we have the right to require the exchange of each outstanding HCI exchangeable share for 0.53 of a Barrick common share for each HCI exchangeable share.
	Summarized financial information for HCI

For the year ended December 31	2002
Total revenues and other income	$	203
Less: costs and expenses		191
Income before taxes	$	12
Net loss	$	(1	)

At December 31	2002			2001
Current assets	$	91		$	43
Non-current assets		236			345
Total assets		327			388
Current liabilities		75			76
Notes payable		407			416
Other long-term liabilities		18			12
Future income taxes		122			121
Shareholders’ equity		(295	)		(237	)
Liabilities and shareholders’ equity	$	327		$	388

19

C	Dividends
	In 2002, we declared and paid dividends in US dollars totaling $0.22 per share (2001 — $0.22 per share, 2000 — $0.22 per share).
19	EMPLOYEE STOCK-BASED COMPENSATION
A	Common stock options
	At December 31, 2002, 22 million common stock options were outstanding, expiring at various dates to December 2, 2012. The exercise price of the options is set at our closing share price on the day before the grant date. They vest over four years at a rate of one quarter each year, beginning in the year after granting, and are exercisable over 10 years. At December 31, 2002, 5 million (2001 — 9 million, 2000 — 6 million) common shares, in addition to those currently outstanding, were available for granting options.
	Stock option activity (shares in millions)

					Average					Average
		Shares			Price		Shares			Price
		(number)			(C$)		(number)			(US$)
At December 31, 1999			21					—
	Granted		5		$	24.24		—
	Exercised		—		$	22.95		—
	Cancelled or expired		(4	)	$	32.77		—
At December 31, 2000			22					—
	Granted		1		$	24.32		—
	Assumed in connection with the acquisition of Homestake		—					6		$	16.67
	Exercised		—		$	22.77		—
	Cancelled or expired		(4	)	$	29.66		—
At December 31, 2001			19					6
	Granted		6		$	24.71		—			—
	Exercised		(4	)	$	24.79		(2	)	$	11.99
	Cancelled or expired		(2	)	$	33.99		(1	)	$	25.10
At December 31, 2002			19					3

Stock options outstanding (shares in millions)

	Outstanding						Exercisable
	Shares		Average		Average		Shares		Average
Range of exercise prices	(number)		Price		Life (years)		(number)		Price
C$ options
C$22.55 – C$31.05		17	$	25.43		8		7	$	26.73
C$31.25 – C$44.25		2	$	39.46		4		2	$	39.84
Total		19				8		9
US$ options
US$8.96 – US$17.68		2	$	12.24		5		1	$	13.62
US$17.75 – US$40.66		1	$	25.22		2		1	$	25.47
Total		3				4		2

Besides the above common stock options, we are obliged to issue about 0.5 million common shares (2001 — 0.7 million common shares) in connection with outstanding stock options assumed as part of an acquisition. The options have an average exercise price of C$19.68 (2001 — C$19.34) and an average remaining term of three years (2001 — four years).

          CICA 3870 encourages, but does not require, companies to record compensation cost for stock-based employee compensation plans based on the fair value of options granted. We have elected to continue to account for stock-based compensation using the intrinsic value method prescribed in CICA 3870 and to provide disclosures of the pro forma effects of adoption had we recorded compensation expense under the fair value method.

20

          Under CICA 3870, we recognize compensation cost for stock options in earnings based on the excess, if any, of the quoted market price of the stock at the grant date of the award over the option exercise price. Generally, the exercise price for stock options granted to employees equals the fair market value of our common stock at the date of grant, resulting in no compensation cost.

Option value information

For the years ended December 31 (per share and option amounts in dollars)		2002			2001			2000
Fair value per option		$	6.40		$	6.80		$	5.80
Valuation assumptions:
	Expected option term (years)		6			10			6
	Expected volatility		40	%		30	%		30	%
	Expected dividend yield		1.4	%		1.4	%		1.4	%
	Risk-free interest rate		5.0	%		5.5	%		6.0	%
Pro forma effects
Net income (loss), as reported		$	229		$	271		$	(768	)
Stock option expense			(21	)		(25	)		(26	)
Pro forma net income (loss)		$	208		$	246		$	(794	)
Net income (loss) per share:
	As reported
	Basic and diluted	$	0.42		$	0.68		$	(1.94	)
	Pro-forma
	Basic and diluted	$	0.38		$	0.62		$	(2.01	)

B	Restricted stock units
	In 2001, we put in place a restricted stock unit incentive plan (RSU Plan). Under the RSU Plan, a participant is granted a number of RSU’s, where each unit has a value equal to one Barrick common share at the time of grant. Each RSU, which vests and is paid out on the third anniversary of the date of grant, has a value equivalent to the market price of a Barrick common share. RSU’s are recorded at their fair value on the grant date, with a corresponding amount recorded as deferred compensation that is amortized on a straight-line basis over the vesting period. Changes in the value of the units during the vesting period are recorded, with a corresponding adjustment to the carrying amount of deferred compensation. Compensation expense for the year ended December 31, 2002 was $3 million (2001 — $ nil). At December 31, 2002, the weighted average contractual life of outstanding RSUs was two years. At December 31, 2002 the value of outstanding RSU’s was $7 million, and is included in other long-term obligations.
	RSU activity

					Fair value
		RSU's			per unit
		(in thousands)			(in dollars)
At December 31, 2000			—		$	—
	Granted		495			15.49
At December 31, 2001			495		$	15.95
	Cancelled		(30	)		19.74
At December 31, 2002			465		$	15.41

20	PENSION PLANS
A	Defined benefit pension plans
	We have various qualified defined benefit pension plans that cover certain of our United States employees and provide benefits based on employees’ years of service. Our policy for these plans is to fund, at a minimum, the amounts necessary on an actuarial basis to provide enough assets to meet the benefits payable to plan members under the Employee Retirement Income Security Act of 1974. Independent trustees administer assets of the plans, which are invested mainly in fixed income securities and equity securities.
	As well as the qualified plans, we have nonqualified defined benefit pension plans covering certain employees and a director of the Company. An irrevocable trust (“rabbi trust”) was set up to fund these plans. The diversified assets held in this trust, which include cash of $1 million and short-term investments of $30 million, are recorded in our consolidated balance sheet and accounted for under our accounting policies for such assets. At December 31, 2002, the fair value of assets held in the trust was $31 million (2001 — $47 million).

21

     Our pension expense includes the cost of employee benefits earned in the year, interest expense on the accrued benefit obligation, the expected return on the market value of plan assets, and amortization of deferred actuarial gains and losses.

     Actuarial gains and losses arise when the actual return on plan assets for a period differs from the expected return on plan assets for that period, and when actual experience causes the expected and actuarial accrued benefit obligations to differ at the end of the year. We amortize actuarial gains and losses over the average remaining life expectancy of participants.

Pension expense

For the year ended December 31	2002
Expected return on plan assets	$	(17	)
Service cost for benefits earned		3
Interest cost on benefit obligation		16
Actuarial gains		(1	)
Effect of curtailments/settlements		1
Total cost	$	2

B	Defined contribution pension plans
	Certain employees take part in defined contribution employee benefit plans. We also have a retirement plan for certain officers of the Company, under which we contribute 15% of the officer’s annual salary and bonus. Our share of contributions to these plans was $12 million in 2002 and $12 million in 2001.
C	Defined benefit pension plan actuarial information

	2002
Accumulated benefit obligation (ABO)
Balance at January 1	$	279
Service cost for benefits earned		3
Interest cost on benefit obligation		16
Actuarial gains		(1	)
Benefits paid		(70	)
Balance at December 31	$	227
Fair value of plan assets
Balance at January 1	$	235
Actual return on plan assets		(2	)
Company contributions		7
Benefits paid		(70	)
Balance at December 31	$	170
Funded status	$	(57	)
Unrecognized net actuarial losses		9
Net liability recognized	$	(48	)

Pension plans where ABO exceeds the fair value of plan assets

At December 31	2002		2001
Projected benefit obligation	$	193	$	238
ABO	$	193	$	236
Fair value of plan assets	$	132	$	184

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Benefit asset (liability)

At December 31	2002			2001
Prepaid pension asset	$	7		$	5
Accrued benefit plan liability — current		(7	)		(1	)
Accrued benefit plan liability — non-current		(48	)		(57	)
	$	(48	)	$	(53	)

Actuarial assumptions

For the years ended December 31	2002			2001
Discount rate		6.50	%		6.75	%
Expected return on plan assets		8.50	%		8.50	%
Compensation increases		5.00	%		5.00	%

Sensitivity analysis of actuarial assumptions⁽¹⁾

	Effect on ABO		Effect on earnings
Expected return on plan assets	$	—	$	1
Discount rate	$	18	$	3

(1) Effect of a one-percent change

21	COMMITMENTS AND CONTINGENCIES
A	Contingencies
	Certain conditions may exist as of the date the financial statements are issued, which may result in a loss to the Company but which will only be resolved when one or more future events occur or fail to occur. Management and, where appropriate, legal counsel, assess such contingent liabilities, which inherently involves an exercise of judgement.
	In assessing loss contingencies related to legal proceedings that are pending against us or unasserted claims that may result in such proceedings, the Company and its legal counsel evaluate the perceived merits of any legal proceedings or unasserted claims as well as the perceived merits of the amount of relief sought or expected to be sought.
	If the assessment of a contingency suggests that it is likely that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability is accrued in the financial statements. If the assessment suggests that a potentially material loss contingency is not likely but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent loss, together with an estimate of the range of possible loss, if determinable, is disclosed. Loss contingencies considered remote are generally not disclosed unless they involve guarantees, in which case we disclose the nature of the guarantee.
B	Environmental
	Our mining and exploration activities are subject to various federal, provincial and state laws and regulations governing the protection of the environment. These laws and regulations are continually changing and generally becoming more restrictive. We conduct our operations so as to protect public health and the environment, and we believe that our operations are materially in compliance with all applicable laws and regulations. We have made, and expect to make in the future, expenditures to meet such laws and regulations.
	The Comprehensive Environmental Response, Compensation and Liability Act imposes heavy liabilities on persons who discharge hazardous substances. The Environmental Protection Agency publishes a National Priorities List (“NPL”) of known or threatened releases of such substances. Homestake’s former uranium millsite near Grants, New Mexico is listed on the NPL.
C	Litigation and claims
	Inmet litigation
	In October 1997, Homestake Canada Inc. (“HCI”), a wholly-owned subsidiary of Barrick, entered into an agreement with Inmet Mining Corporation (“Inmet”) to purchase the Troilus mine in Quebec for $110 million plus working capital. In December 1997, HCI terminated the agreement after deciding that, on the basis of due diligence studies, conditions to closing the arrangement would not be satisfied.

23

     On February 23, 1998, Inmet filed suit against HCI in the British Columbia Supreme Court, disputing the termination of the agreement and alleging that HCI had breached the agreement. On January 15, 2002, the Supreme Court of British Columbia released its decision in the matter and found in favour of Inmet and against HCI. Specifically, the Court held that Inmet should be awarded equitable damages in the amount of C$88.2 million (US $59 million), which was accrued at December 31, 2001. The Court did not award Inmet pre-judgement interest. Inmet requested the Court to re-open the trial to let Inmet make submissions on its claim for pre-judgement interest from the date of the breach by HCI. The request to re-open was denied by the Court on May 17, 2002.

     On February 7, 2002, HCI filed a Notice of Appeal of the decision with the British Columbia Court of Appeal. Inmet filed a Cross Appeal of the decision regarding pre-judgement interest. A letter of credit of about C$95 million was posted on August 20, 2002 by HCI with the British Columbia Court of Appeal, pending a decision on the appeal.

Bre-X Minerals

On April 30, 1998, we were added as a defendant in a class action lawsuit initiated against Bre-X Minerals Ltd., certain of its directors and officers or former directors and officers and others in the United States District Court for the Eastern District of Texas, Texarkana Division. The class action alleges, among other things, that statements made by us in connection with our efforts to secure the right to develop and operate the Busang gold deposit in East Kalimantan, Indonesia were materially false and misleading and omitted to state material facts relating to the preliminary due diligence investigation undertaken by us in late 1996.

     On July 13, 1999, the Court dismissed the claims against us and several other defendants on the grounds that the plaintiffs had failed to state a claim under United States securities laws. On August 19, 1999, the plaintiffs filed an amended complaint restating their claims against us and certain other defendants and on June 14, 2000 filed a further amended complaint, the Fourth Amended Complaint.

     On March 31, 2001, the Court granted in part and denied in part our Motion to Dismiss the Fourth Amended Complaint. As a result, we remain a defendant in the case. We believe that the remaining claims against us are without merit. We filed our formal answer to the Fourth Amended Complaint on April 27, 2001 denying all relevant allegations of the plaintiffs against us. Discovery in the case has been stayed by the Court pending the Court’s decision on whether or not to certify the case as a class action. The amount of potential loss, if any, which we may incur arising out of the plaintiffs’ claims is not presently determinable.

Blanchard complaint

On January 7, 2003, we were served with a Complaint for Injunctive Relief by Blanchard and Company, Inc. (“Blanchard”), and Herbert Davies (“Davies”). The complaint, which is pending in the U. S. District Court for the Eastern District of Louisiana, also names J. P. Morgan Chase & Company (“J.P. Morgan”) as the defendant, along with an unspecified number of additional defendants to be named later. The complaint alleges that we and bullion banks with which we entered into spot deferred contracts have manipulated the price of gold, in violation of U.S. antitrust laws and the Louisiana Unfair Trade Practices and Consumer Protection Law. Blanchard alleges that it has been injured as a seller of gold due to reduced interest in gold as an investment. Davies, a customer of Blanchard, alleges injury due to the reduced value of his gold investments. The complaint does not seek damages, but seeks an injunction terminating certain of our trading agreements with J. P. Morgan and other bullion banks. We intend to defend the action vigorously.

Peruvian tax assessment

On December 27, 2002, one of our Peruvian subsidiaries received an income tax assessment of $41 million, excluding interest and penalties, from the Peruvian tax authority SUNAT. The tax assessment relates to a recently completed tax audit of our Pierina Mine for the 1999-2000 fiscal years. The assessment mainly relates to the revaluation of the Pierina mining concession and associated tax basis. Under the valuation proposed by SUNAT, the tax basis of Pierina assets would change from what we have previously assumed with a resulting increase in current and deferred income taxes. While we believe the tax assessment is incorrect and we will appeal the decision, the full life of mine effect on our current and deferred income tax liabilities of $141 million is recorded at December 31, 2002, as well as other payments of about $21 million due for periods through 2002.

     We intend to pursue all available administrative and judicial appeals. If we are successful on appeal and our original asset valuation is confirmed as the appropriate tax basis of assets, we would benefit from a $141 million reduction in tax liabilities recorded at December 31, 2002. The effect of this contingent gain, if any, will be recorded in the period the contingency is resolved.

24

	Under Peruvian law, we are not required to make payment pending the outcome of the appeal process, which routinely takes several years.
	We have not provided for $51 million of potential interest and penalties assessed in the audit. Even if the tax assessment is upheld, we believe that we will prevail on the interest and penalties part, because the assessment runs counter to applicable law and previous Peruvian tax audits. The potential amount of interest and penalties, will increase over time while we contest the tax assessment. A liability for interest and penalties will only be recorded should it become probable that SUNAT’s position on interest and penalties will be upheld, or if we exhaust our appeals.
	Other
	From time to time, we are involved in various claims, legal proceedings and complaints arising in the ordinary course of business. We are also subject to reassessment for income and mining taxes for certain years. We do not believe that adverse decisions in any pending or threatened proceedings related to any potential tax assessments or other matters, or any amount which we may be required to pay by reason thereof, will have a material adverse effect on our financial condition or future results of operations.
D	Commitments
	We have entered into various commitments in the ordinary course of business, including commitments to perform assessment work and other obligations necessary to maintain or protect our interests in mining properties, financing and other obligations to joint ventures and partners under venture and partnership agreements, and commitments under federal and state environmental, health and safety permits.
22	DERIVATIVE INSTRUMENTS
A	Use of derivative instruments
	We use derivative financial instruments to reduce or eliminate the inherent risks of certain identifiable transactions and balances that occur in the normal course of our business. The inherent risks in these transactions and balances arise from changes in: commodity prices (gold and silver), interest rates and foreign currency exchange rates. The purpose of our derivative program is to ensure that disadvantageous changes in the values or cash flows from these transactions and balances are offset by changes in the values of the derivatives. We do not hold derivatives for the purpose of speculation; our derivative program is designed to enable us to plan our operations on the basis of secure assumptions that will not be jeopardized by future movements of gold and silver prices, interest rates and currency exchange rates.
	In the normal course of our business, the main types of derivatives we hold and/or issue are:
	Spot deferred and variable price sales contracts: These contracts provide for the sale of future gold production in fixed quantities with delivery dates at our discretion over a period of up to 15 years.
	Interest rate swaps: These instruments are used to counteract the volatility of variable short-term interest rates by substituting fixed interest rates over longer terms on cash and short term investments.
	Foreign currency contracts: These instruments are used for the cash flows at our operating mines from forecasted expenditures denominated in Canadian and Australian dollars, to insulate them from currency fluctuations.
	Gold lease rate swap contracts: These contracts are used to manage gold lease rate exposure.
	In the most significant of these programs – the spot deferred and variable-price sales contracts – the contracts set a price for future gold and silver sales with significant flexibility to capture gold price upside in periods of higher prices. This effect is achieved as a result of our strong balance sheet, large reserves and diversified operations.
	We mainly use over-the-counter (“OTC”) derivative contracts. These privately negotiated agreements, which provide superior terms compared to exchange-traded contracts, allow us to obtain favourable credit, tenor and flexibility terms. We do not enter into derivative instruments which we would consider leveraged.
B	Accounting for derivative instruments and hedging activities
	Our spot deferred and variable price sales contracts are accounted for as executory sales contracts, as such we apply our normal revenue recognition principles to these contracts, which results in recognition of proceeds from the contracts as revenue at the date of physical delivery.
	On the date we enter into a derivative contract, we designate it as either:

• a fair value hedge of a recognized asset or liability;

• a cash flow hedge of either a forecasted transaction or the variability of cash flows associated with a recognized asset or liability;

• a foreign currency cash flow hedge of forecasted transactions; or

• an instrument that is held for non-hedging purposes.

25

Fair-value hedges of recognized assets or liabilities: we record in earnings the net interest income/expense accrued on an interest rate derivative as an adjustment to the yield of the item being hedged over the term of the derivative.

Derivatives that qualify as cash-flow hedges: we record the fair value of the derivative in earnings at the same time as the forecasted transaction.

Interest-rate swaps designated as hedges of future interest receipts arising on our cash and short-term investments: gains and losses on the derivatives are recorded when the related interest receipts are recorded in earnings.

Foreign-currency contracts for Canadian or Australian capital and operating expenditures at our operating mines: gains and losses on the derivatives are recorded in earnings when these costs are recorded in earnings.

Non-hedge derivatives: Changes in the fair value are recorded in earnings as they occur.

All cash flows relating to derivative instruments are included under operating cash flows.

     We formally document all relationships between derivative instruments and the items they are hedging, as well as the risk-management goals and strategy for entering into hedge transactions. This documentation includes linking all derivatives designated as fair-value, cash flow, or foreign-currency hedges to either specific assets and liabilities on the balance sheet or specific firm commitments or forecasted transactions.

     For these documented relationships, we formally assess (both at the start of the hedge and on an ongoing basis) whether the derivatives used in hedging transactions are highly effective in offsetting changes in the fair value or cash flows of hedged items, and whether those derivatives are expected to remain highly effective in the future.

     If it is clear that a derivative is not highly effective as a hedge, we stop hedge accounting prospectively. Other circumstances under which we stop hedge accounting prospectively include:

• a derivative expires or is sold, terminated, or exercised;

• it is no longer probable that the forecasted transaction will occur; or

• if we decide to remove the designation as a hedge from a derivative.

	If it is clear that a forecasted transaction will not occur by the originally specified time, or within a further two-month period, gains and losses are recognized at once in earnings.
	In all situations in which hedge accounting stops and a derivative remains outstanding, future changes in its fair value are recognized in earnings as they occur.
C	Gold and silver contracts outstanding at December 31, 2002

Maturity/Scheduled for delivery in		2003		2004		2005		2006		2007		2008+		Total
Gold contracts
Spot deferred contracts
	Ounces (thousands)		2,800		1,350		1,550		1,540		1,500		7,200		15,940
	Average price per ounce	$	340	$	345	$	335	$	338	$	340	$	343	$	341
Variable price gold sales and option contracts
With “caps”
	Ounces (thousands)		250		300		300		250		—		900		2,000
	Average price per ounce at cap expiry date	$	344	$	310	$	317	$	332		—	$	369	$	345
With “caps” and “floors”
	Ounces (thousands)		150		—		—		—		—		—		150
	Cap price per ounce	$	310		—		—		—		—		—	$	310
	Floor price per ounce	$	280		—		—		—		—		—	$	280
Total gold ounces (thousands)			3,200		1,650		1,850		1,790		1,500		8,100		18,090
Average price per ounce		$	339	$	339	$	332	$	337	$	340	$	346	$	341
Silver contracts
Spot deferred contracts
	Ounces (thousands)		11,000		9,000		9,000		3,300		3,000		—		35,300
	Average price per ounce	$	4.95	$	5.14	$	5.14	$	5.19	$	5.19		—	$	5.09
Written silver call options
	Ounces (thousands)		3,750		5,000		2,000		—		—		—		10,750
	Average exercise price per ounce	$	5.27	$	5.28	$	5.00		—		—		—	$	5.22
Total silver ounces (thousands)			14,750		14,000		11,000		3,300		3,000		—		46,050
Average price per ounce		$	5.03	$	5.19	$	5.11	$	5.19	$	5.19		—	$	5.12

26

     We also have off-take contracts for the sale of 1.7 million ounces of gold spread over 10 years, at then prevailing spot prices.

     The largest single counterparty as of December 31, 2002 made up 13% of outstanding gold sales commitments.

Spot deferred gold sales contracts

We have entered into spot deferred gold sales contracts, with various counterparties, that fix selling prices at interim delivery dates for future gold production, and which act as an economic hedge against possible price fluctuations in gold. The contracts have a final delivery date of up to 15 years from the start date, but we have the right to set a delivery date for any time during this period. At the time an interim delivery date is rescheduled, the contract price is adjusted based on the difference between the prevailing forward gold market price and the original contract price.

     The average price of the spot deferred gold sales contracts in the table above reflects fixed prices at interim delivery dates and expected future price assumptions for periods where expected delivery dates differ from interim delivery dates. The large majority of contracts are fixed through 2006. The expected contract prices are determined based on estimated gold forward market prices. Forward gold market prices are principally influenced by the spot price of gold, gold lease rates and US dollar interest rates. In estimating these forward prices, we have incorporated an average gold lease rate assumption of 1.5% and assumptions of U.S. dollar interest rates consistent with market quotations for such rates. Variations between the gold lease rate and interest rate assumptions and the actual gold lease rates and interest rates will affect the final realized selling prices. Gold lease rate exposure is accounted for separately from our spot deferred gold sales contracts, and the economic impact flows through our earnings as part of “non-hedge derivative gains (losses)”. This gold lease rate exposure is 6.4 million ounces spread from 2004 to 2012, mainly for contracts with expected delivery dates beyond 2006.

Variable price gold sales contracts

Variable price gold sales contracts are contracts to deliver a specified quantity of gold on a future date determined by us. The contracts have a final delivery date of up to 15 years from the start date, but we have the right to set a delivery date at any time during this 15-year period. All of the variable price gold sales contracts have expected delivery dates beyond 2007. The contract price equals the gold spot price on the interim delivery date subject to a specified maximum (“cap”) based on market conditions in the years shown in the table above, plus a fixed premium payable to us. The contract price will be adjusted in the same manner as price adjustments to spot deferred contracts for the period from these interim delivery dates to the expected delivery date beyond 2007. Certain of these contracts also have a specified minimum (“floor”) price.

Spot deferred silver sales contracts and written silver call options

Spot deferred silver sales contracts have the same delivery terms and pricing mechanism as spot deferred gold sales contracts. A group of these contracts totaling 14.3 million ounces of silver are accounted for as executory contracts, as we physically deliver silver production into the contracts. For a separate group of contracts totaling 21 million ounces, we intend to financially settle these contracts. These contracts were marked to market until November 8, 2002 when we designated them as cash flow hedges.

     Changes in fair value of our written silver call options are recorded in earnings as they occur.

27

D Other derivative instruments outstanding as at December 31, 2002

Maturity		2003		2004			2005			2006			2007			2008+			Total
Interest rate contracts
Receive fixed — swaps and swaptions
Notional amount (millions)			—	$	250		$	75		$	100		$	475			—		$	900
Fixed rate (%)			—		3.5	%		2.7	%		3.0	%		5.6	%		—			4.5	%
Pay fixed — swaps and swaptions
Notional amount (millions)			—		—			—			—			—		$	(344	)	$	(344	)
Fixed rate (%)			—		—			—			—			—			5.6	%		5.6	%
Net notional position			—	$	250		$	75		$	100		$	475		$	(344	)	$	556
Total return swaps
	Notional amount (millions)		—		—		$	17			—			—			—		$	17
Foreign currency contracts
Canadian Dollar Forwards
	C$ (millions)	$	101	$	118		$	91			—			—			—		$	310
	Average Price (US$)		0.65		0.64			0.63			—			—			—			0.64
Canadian Dollar Min-Max Contracts
	C$ (millions)	$	173		—			—			—			—			—		$	173
	Average Cap Price (US$)		0.65		—			—			—			—			—			0.65
	Average Floor Price (US$)		0.63		—			—			—			—			—			0.63
Australian Dollar Forwards
	A$ (millions)	$	175	$	311		$	283		$	10			—			—		$	779
	Average Price (US$)		0.51		0.51			0.51			0.52			—			—			0.51
Australian Dollar Min-Max Contracts
	A$ (millions)	$	339	$	10		$	10		$	10			—			—		$	369
	Average Cap Price (US$)		0.55		0.52			0.52			0.52			—			—			0.55
	Average Floor Price (US$)		0.52		0.51			0.51			0.51			—			—			0.52
Fuel contracts
Barrels WTI (thousands)			240		—			—			—			—			—			240
Cap		$	30		—			—			—			—			—		$	30
Floor		$	18		—			—			—			—			—		$	18

Our interest rate and foreign currency contracts are recorded at fair value on our balance sheet, with changes in fair value recorded in earnings as they occur, with the following exceptions:

• we have elected cash flow hedge accounting treatment for Canadian dollar foreign currency contracts with a total notional amount of C$483 million, and Australian dollar foreign currency contracts with a total notional amount of A$1,148 million;

• we have elected receive fixed interest rate swaps with a total notional amount of $650 million to be accounted for as cash flow hedges of expected future interest receipts arising on our cash and short-term investments (note 26); and we have elected receive fixed interest rate swaps with a total notional amount of $250 million to be accounted for a fair value hedge of fixed-rate debentures (refer note 15A).

• we have elected an amortizing pay fixed interest rate swap with a total notional amount of $194 million as at December 31, 2002 to be accounted as a cash flow hedge of future interest payments relating to the project financing for Bulyanhulu (refer note 15B).

28

E Non-hedge derivative gains (losses)

For the years ended December 31	2002			2001
Interest and lease rate contracts	$	(30	)	$	(9	)
Commodity contracts		(2	)		51
Currency contracts		—			(15	)
	$	(32	)	$	27

F	Credit and market risks
	By using derivative instruments, we expose ourselves to credit and market risk. Market risk is the risk that the value of a financial instrument might be adversely affected by a change in commodity prices, interest rates, gold lease rates, or currency exchange rates. We manage the market risk associated with commodity prices, interest rate, gold lease rate, and foreign currency contracts by establishing and monitoring parameters that limit the types and degree of market risk that may be undertaken.
	Credit risk is the risk that a counterparty might fail to fulfill its performance obligations under the terms of a derivative contract, or in the case of total return swaps, the risk that a deterioration in credit quality of the underlying reference asset, or a credit default event, will give rise to a loss under the derivative instrument. If a counterparty fails to fulfill its performance obligations under a derivative contract, our credit risk will equal the fair-value gain in a derivative. For our total return swaps, the maximum amount of credit risk is limited to the notional amount of the contract, plus or minus unrealized gains or losses. When the fair value of a derivative contract is positive, this indicates that the counterparty owes us, thus creating a repayment risk for us. When the fair value of a derivative contract is negative, we owe the counterparty and, therefore, we assume no repayment risk. We minimize our credit (or repayment) risk in derivative instruments by:

• entering into transactions with high-quality counterparties whose credit ratings are generally “AA” or higher;

• limiting the amount of exposure to each counterparty;

• monitoring the financial condition of counterparties; and

• by ensuring that the reference assets in total return swaps are highly diversified such that concentrations of credit risk do not arise.

When we have more than one outstanding derivative transaction with the same counterparty and we also have a legally enforceable master netting agreement with that counterparty, the “net” credit exposure represents the net of the positive and negative exposures with that counterparty. When there is a net negative exposure, we regard our credit exposure to the counterparty as being zero. The net mark-to-market position with a particular counterparty represents a reasonable measure of credit risk when there is a legally enforceable master netting agreement (i.e., a legal right of a setoff of receivable and payable derivative contracts) between ourselves and that counterparty. Our policy is to use master netting agreements with all counterparties.

23

FAIR VALUE OF FINANCIAL INSTRUMENTS

     Fair value is defined as the value at which positions could be closed out or sold in a transaction with a willing and knowledgeable counterparty over a period of time consistent with our risk management or investment strategy.

          The accounting for an asset or liability may differ based on the type of instrument and/or its use in a risk management or investing strategy. The measurement approaches used in financial statements include the following:

• recorded at fair value on the balance sheet with changes in fair value recorded each period in earnings;

• recorded at cost (less other-than-temporary impairments) with changes in fair value not recorded in the financial statements but disclosed in the notes thereto; or

• recorded at the lower of cost or market.

     Fair value is based on quoted market prices, where available. If listed prices or quotes are not available, fair value is based on internally developed models that primarily use market-based or independent information as inputs. These methods may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values.

29

Fair value information

At December 31	2002				2001
	Carrying amount		Estimated fair value		Carrying amount		Estimated fair value
Financial assets
Cash and equivalents(1)	$	1,044	$	1,044	$	574	$	574
Accounts receivable(1)		72		72		56		56
Investments(2)		36		30		209		205
Derivative assets(3)		—		—		24		57
	$	1,152	$	1,146	$	863	$	892
Financial liabilities
Accounts payable(1)	$	164	$	164	$	155	$	155
Long-term debt(4)		777		858		802		853
Derivative liabilities(3)		—		43		—		73
	$	941	$	1,065	$	957	$	1,081

(1)	Fair values of cash and deposits with banks, accounts receivable and accounts payable approximate their carrying amounts due to their short-term nature and the expectation of negligible credit losses.
(2)	Our investments in debt and equity securities are recorded at their estimated fair value. Quoted market prices, when available, are used to determine fair value. If quoted market prices are not available, then fair values are estimated by using quoted prices of instruments with similar characteristics or discounted cash flows.
(3)	The fair value of derivative instruments is determined based on liquid market pricing as evidenced by exchange traded prices, broker-dealer quotations or related input factors which assume all counterparties have the same credit rating.
(4)	The fair value of long-term debt is based on current market interest rates, adjusted for our credit quality.

24	SEGMENT INFORMATION
	We operate in the gold mining industry and our operations are managed on a district basis. The Goldstrike District includes the Betze-Post and Meikle Mines in the United States. Our “other” segment includes mainly operations which have been, or are being, closed.
	Income statement information

	Gold Sales						Operating costs						Segment income before income taxes
For the years ended December 31	2002		2001		2000		2002		2001		2000		2002		2001		2000
Goldstrike	$	669	$	806	$	850	$	440	$	473	$	401	$	114	$	195	$	321
Pierina		300		320		295		96		45		41		52		100		78
Bulyanhulu		132		85		—		78		35		—		8		33		—
Kalgoorlie		123		—		—		86		—		—		21		—		—
Eskay Creek		120		—		—		21		—		—		58		—		—
Hemlo		96		—		—		63		—		—		21		—		—
Plutonic		104		—		—		60		—		—		29		—		—
Round Mountain		131		—		—		85		—		—		22		—		—
Other		272		113		162		144		80		91		66		20		43
	$	1,947	$	1,324	$	1,307	$	1,073	$	633	$	533	$	391	$	348	$	442

30

Asset information

	Segment assets				Amortization						Segment capital expenditures
For the years ended December 31	2002		2001		2002		2001		2000		2002		2001		2000
Goldstrike	$	1,689	$	1,765	$	115	$	138	$	128	$	46	$	257	$	284
Pierina		512		642		152		175		176		5		12		49
Bulyanhulu		849		877		46		17		—		56		153		203
Pascua-Lama		626		475		—		—		—		11		83		149
Kalgoorlie		544		393		16		—		—		14		—		—
Eskay Creek		276		378		41		—		—		8		—		—
Hemlo		214		181		12		—		—		6		—		—
Plutonic		302		136		15		—		—		20		—		—
Round Mountain		136		157		24		—		—		8		—		—
Other		1,152		333		62		13		28		117		44		13
	$	6,300	$	5,337	$	483	$	343	$	332	$	291	$	549	$	698
Cash and short-term investments		1,080		783
Goodwill(1)		—		1,347
Other		324		221
Enterprise total	$	7,704	$	7,688

(1) In 2002, following the allocation of goodwill to reporting units, segment assets include goodwill. In 2001, allocations of goodwill had not been finalized and therefore goodwill was presented separately from segment assets.

Segment income before income taxes

For the years ended December 31		2002			2001			2000
Segment total		$	391		$	348		$	442
Provision for mining assets
	Pascua-Lama		—			—			(883	)
	Goldstrike		—			—			(170	)
	Pierina		—			—			(184	)
	Other		—			—			(93	)
Exploration and business development			(52	)		(40	)		(41	)
Corporate expenses, net			(111	)		(22	)		(14	)
Income taxes			1			(15	)		175
Net income (loss)		$	229		$	271		$	(768	)

Geographic information

	Assets				Gold sales
For the years ended December 31	2002		2001		2002		2001		2000
United States	$	2,209	$	2,108	$	895	$	806	$	850
Peru		728		647		300		320		295
Australia		1,466		845		314		—		—
Canada		606		748		296		83		80
Tanzania		904		884		132		85		—
Chile/Argentina		1,019		513		10		30		82
Goodwill		—		1,347		—		—		—
Other		772		596		—		—		—
	$	7,704	$	7,688	$	1,947	$	1,324	$	1,307

31

25	JOINT VENTURES
	Our major interests in joint ventures are our 50% interest in the Kalgoorlie Mine in Australia; our 50% interest in the Round Mountain Mine in the United States; and our 50% interest in the Hemlo Property in Canada. We acquired interests in the joint ventures in our merger with Homestake.
	Summary financial information for joint ventures (100%)

For the years ended December 31	2002
Income statement information
Revenues	$	647
Costs and expenses		577
Net income	$	70
Cash flow information
Net cash provided by operating activities	$	175
Net cash used in investing activities	$	(54	)
Net cash used in financing activities	$	—

At December 31	2002		2001
Balance sheet information
Inventories	$	51	$	88
Property, plant and equipment		574		658
Intangible assets		103		—
Other assets		81		48
Goodwill		396		—
Total assets	$	1,205	$	794
Current liabilities		116		124
Long-term obligations		45		78
Total liabilities	$	161	$	202

26	CASH AND EQUIVALENTS
	Cash and equivalents include cash, term deposits and treasury bills, with original maturities of less than 90 days. We anticipate having substantial cash balances for an extended period of time. As a result, we have entered into received fixed interest rate swaps with a total notional amount of $650 million that have been designated, and are effective, as cash flow hedges of expected future floating rate interest receipts. These swaps mature at various times from 2004 — 2007 (note 22).
27	SUPPLEMENTAL CASH FLOW INFORMATION

For the years ended December 31		2002			2001			2000
Components of other net operating activities
Reclamation costs		$	15		$	17		$	13
Non-cash charges (credits):
	Foreign currency translation adjustments (note 6)		(2	)		8			—
	Losses on short-term investments (note 9)		4			—			—
	(Gains) losses on sale of property, plant and equipment		(4	)		4			(1	)
	Amortization of deferred stock compensation (note 20A)		3			—			—
Changes in operating assets and liabilities:
	Accounts receivable		(16	)		(14	)		20
	Inventories and other current assets		45			34			(7	)
	Accounts payable and other current liabilities		(7	)		117			50
	Payments of merger and related costs		(50	)		(13	)		—
	Derivative instruments		24			20			(21	)
	Payments of reclamation and closure costs		(70	)		(35	)		(9	)
	Other items		29			(81	)		126
Other net operating activities		$	(29	)	$	57		$	171
Cash payments included in operating activities:
Interest, net of amounts capitalized		$	57		$	12		$	4
Income taxes		$	46		$	7		$	21

32

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL AND OPERATING RESULTS

The Company prepares its primary consolidated financial statements and related notes under United States GAAP, which are included in the Company’s annual report. The accompanying consolidated financial statements and related notes are presented in accordance with Canadian generally accepted accounting principles (“Canadian GAAP”) and are expressed in US dollars. These statements, together with the following discussion and analysis, are intended to provide investors with a reasonable basis for assessing our operational and financial performance as well as certain forward looking information relating to potential future performance.

STRATEGIC PERSPECTIVES

Barrick Gold Corporation is among the world’s largest gold producers in terms of market capitalization, production and reserves, with operating properties and development projects on four continents. With 2003 marking Barrick’s 20th year in the gold business, we believe that we are positioned to benefit from the opportunities presented by a favorable gold price environment.

Since its founding, Barrick has been run in accordance with clear and concise business principles, focusing on profitability and financial performance rather than sheer size. We know that the key drivers of performance in our business are spot gold prices, production, reserves and costs per ounce.

In 2002, our financial results were below our expectations, primarily due to higher costs at our operations. As we move into 2003, we intend to focus on optimizing our operating mines and setting achievable targets based on each mine’s stage of operation. Overall, we have a solid portfolio of operating - albeit mature — properties. Even as the average ore grade mined at each of our operations declines toward reserve grade, these mines remain long-life, low-cost operations compared to the industry. The key feature of these properties is their ability to generate significant free cash flow, which we plan to use in part to fund our exploration and development programs.

In addition to our operating mines, we have the largest portfolio of development projects in the industry, and the financial and development strengths to build them. For the last five years, as the lower gold price environment reduced exploration spending across the industry, we invested extensively in our exploration program. This investment paid dividends in 2002 with a major gold discovery — Alto Chicama in Peru. By early 2003, our work at Alto Chicama allowed us to add 6.5 million ounces to reserves, bringing our total reserves to 86.9 million ounces, one of the largest gold asset bases in the industry.

Coupled with the development projects obtained through our Homestake merger in 2001, we now have a four mine, $2-billion development program that we expect to contribute to production, earnings and cash flows beginning in 2005. At full production, we expect this group of projects to add 2 million ounces of low-cost gold production annually to our portfolio for their first decade of operation. With such a sizeable development program underway, our strategic focus for the immediate future will be to continue our exploration efforts in ways that further enhance our operating mines and development projects. While our strategy does not make us dependent on acquisitions, we will consider transactions that we believe are capable of increasing earnings and cash flows.

We have the financial resources to move ahead with our exploration and development programs without diluting our shareholders because of our solid balance sheet, strong free cash flows from our existing operations and the support of our forward sales program.

HIGHLIGHTS

We completed the merger with Homestake on December 14, 2001. The merger has been accounted for as a purchase under Canadian GAAP, with the results of Homestake’s operations included in our consolidated financial statements effective December 31, 2001. Consequently, the statements of income and cash flows for 2002 include the following principal Homestake mines: Round Mountain; Eskay Creek; Hemlo; Plutonic; Darlot; Lawlers and Kalgoorlie. We have not provided comparative financial information and statistics for these mines and instead we focused our analysis on any known trends or factors that will affect their future performance compared to fiscal 2002.

33

For 2002, our net income was $229 million ($0.42 per share) compared to $271 million ($0.68 per share) in 2001, while operating cash flow was $652 million ($1.20 per share) for 2002 versus $679 million ($1.71 per share) for 2001.

For the year, we produced 5.7 million ounces of gold at total cash costs of $177 per ounce compared to 3.7 million ounces of gold at $159 per ounce in 2001. Higher 2002 production was largely due to the inclusion of production from the Homestake mines acquired at the end of 2001.

Overall, we met our production target for the year as solid contributions from our Pierina mine in Peru and two of our North American operations offset lower production from four of our seven underground mines. The lower production and the resulting higher cash costs at the four underground mines were due largely to difficulties in accessing higher-grade ores. The four mines spent 2002 improving mine planning and increasing development to provide better production flexibility in 2003 and beyond.

The $18 per ounce increase in total cash costs in 2002 over 2001 was mainly due to our ongoing operations processing more ore at lower grades at marginally higher unit costs.

Our 2002 earnings were also affected by an increase in our exploration and development expense by $12 million to $52 million.

We generated solid cash flows from our operating mines and as a result of our lowest capital expenditures in 14 years, our free cash flows reached $361 million⁽¹⁾, the highest in Company history. Our forward sales program also contributed, generating $148 million in additional revenue in 2002. As a result, we ended the year with more than $1 billion in cash, and no net debt.

Our forward sales program provides us the flexibility to deliver at our forward price or the spot gold price — whichever is higher. For the first time in 15 years, in the first quarter of 2003 spot gold prices increased above our current year forward price, allowing us to defer delivery of our forward contracts and sell at the higher spot gold price. Our forward sales program has performed as it was designed, providing a higher floor price during periods of low gold prices and the flexibility to sell all of our mine production at higher spot prices.

We believe that our forward sales program’s flexibility is one of the significant strengths of this Company. At a time when spot gold prices rose by more than $100 per ounce and our unrealized mark-to-market loss increased, our program remained solid. What makes gold hedging unique — in sharp contrast to derivative instruments in general — is the fact that our program is supported by gold in the ground which can be delivered in the normal course of our business. Every ounce hedged represents a product we own — and we only have about one in five ounces sold forward under our program.

While the program has worked well for us in the past and remains an important asset, changing circumstances make adjustments necessary. Given the present environment of low interest rates and concerns over complex financial transactions, we intend to make our forward selling program both smaller and simpler. Accordingly, over the course of 2002 we reduced the size of our program and focused on “plain vanilla” spot deferred forward sales contracts.

Global — Results

For the year ended December 31 (Canadian GAAP Basis)	2002		2001		% Change
Gold production — ounces (thousands)		5,695		3,739		52
Revenue per ounce	$	336	$	341		(1	)
Cash operating costs per ounce		170		152		12
Royalties		6		6
Production taxes		1		1
Total cash costs per ounce		177		159		11
Amortization and reclamation		82		94		(13	)
Total production costs per ounce	$	259	$	253		2
Capital expenditures (millions)	$	291	$	549		(47	)
Mineral reserves (millions of ounces)		86.9		82.3		6

(1) See non-GAAP measures page 63.

34

OUTLOOK

While no company can predict future performance with certainty, we have a solid portfolio of assets capable of generating significant free cash flows. Our pipeline of development projects gives us the flexibility to add to our production profile without the necessity of acquisitions. While we believe that consolidation and rationalization of the gold industry will continue, our primary focus is on optimizing our existing mines and the development of our new mines.

For 2003, we expect to produce between 5.4 and 5.5 million ounces at a cash cost of $180 to $190 per ounce. Including amortization, total production costs for the year are expected to be between $270 and $280 per ounce. Our forward sales program provides us with the ability to sell our production at a minimum selling price of $340 per ounce for 2003; however, as our objective is to maximize the value of every ounce we produce, we plan to sell our production at the higher of the spot price or our forward price.

We expect administration costs to be approximately $70 million, with exploration and business development of about $70 million. Interest expense is expected to be about $50 million. Based on $350 per ounce gold, our tax rate is expected to be between 15% and 20%; at $400 per ounce gold, our tax rate would increase to 25% to 30%.

We plan to begin implementing our development program in 2003, increasing capital expenditures to approximately $430 million compared to $291 million last year, with the increase aimed at starting construction at the Veladero and Cowal projects. In addition to the steady stream of free cash flow generated by our existing operations, we bring the strength of our balance sheet — with $1 billion in cash and low levels of debt — to provide the financial base to proceed with these projects.

The forward looking statements included in this discussion and analysis involve risks and uncertainties and are based upon assumptions, which we believe are reasonable, but which could prove incorrect. Factors which could cause actual results to differ from those implied in the forward looking statements include: changes in the price of gold and certain other commodities; currency fluctuations; regulatory, political or economic developments in the areas in which we carry on business; and changes in mining or processing rates. With a large proportion of our reserve base undeveloped, the timing of commencement of production, as well as capital cost, production and cash costs of our development projects will have a significant impact on future financial performance in 2005 and beyond. For a more detailed discussion of risks relevant to Barrick, see our Form 40-F/Annual Information Form on file with securities regulatory authorities.

INCOME STATEMENT

Gold Sales

Revenue for 2002 totaled $1,947 million on gold sales of 5.8 million ounces, compared with $1,324 million on gold sales of 3.9 million ounces in 2001. In 2002, gold sales were 1.9 million ounces higher than 2001, reflecting the contributions of mines acquired in the Homestake merger at the end of 2001. With the exception of one mine closure in 2004, our existing operations should continue to produce at similar levels for the next several years.

The higher 2002 revenue compared to the prior year resulted from a 49% increase in gold sales due to the inclusion of the Homestake operations, partially offset by a $5 per ounce, or 1% decrease in the average realized price.

In 2002, gold prices rose to their highest level since 1997, averaging $310 per ounce, compared to 2001, when gold averaged $271 per ounce. Higher spot gold prices, combined with deliveries into our forward sales program, allowed us to realize an average price of $336 per ounce compared to an average realized price of $341 per ounce in 2001. The forward sales program generated $148 million in additional revenue in 2002 and $276 million in additional revenue in 2001. The decline in additional revenue generated through our forward sales program in 2002 was due to higher spot gold prices, reducing the amount of the premium over the spot price from $83 per ounce in 2001 to $37 per ounce in 2002.

35

As we saw in 2002 when spot gold prices rise toward our higher forward sale price, the additional revenue earned through the program decreases. When spot gold prices rise above our forward sale price, as occurred in early 2003, we can sell all of our gold production at the higher spot price and defer delivery of our forward sales contracts to a future date. While the value of our reserves and cash flows increase as spot gold prices rise, the unrealized mark-to-market loss on our program also rises. The mark-to-market value declined from an unrealized gain of $356 million at the end of 2001 to an unrealized loss of $639 million at the end of 2002. The decline in the mark-to-market value is primarily due to increasing spot gold prices (year end spot gold prices, 2002 — $347 compared to 2001 — $279) and the realization of $148 million of additional contract revenue during 2002, partially offset by unrealized gains on changes in forward gold price differentials (or contango), which are influenced principally by changes in interest and gold lease rates and premiums (US interest rates less gold lease rates) earned during the year. For additional detail see Off-Balance Sheet Arrangements — Significance of mark-to-market gains and losses page 61.

Future gold production committed under our forward sales program totaled 18.1 million ounces at December 31, 2002. This represents approximately 21% of proven and probable reserves, deliverable over the next 10 to 15 years at an average estimated future price of $341 per ounce at the scheduled delivery dates. For 2003, we have the ability to sell our production into the forward sales program at an average price of $340 per ounce. In early 2003, the delivery dates on those contracts have been extended pursuant to their terms, as we elected to sell our production at the higher spot price of approximately $360 per ounce. This is the first time in 15 years that gold prices have risen above our current year forward sales price, leading us to defer scheduled deliveries under those contracts and sell our production at the higher spot price.

Gold deliveries into these forward sales contracts can be deferred for up to 10 to 15 years; as they are deferred, the delivery price under these contracts increases over time. The increase in the delivery price of these deferred contracts is based on the present spot-forward gold price differential, primarily influenced by US dollar interest rates. In a high US dollar interest rate environment, the delivery price rises quickly, while in the present low interest rate environment, the delivery price rises at a slower rate.

In an effort to make our program smaller and simpler, we delivered production against forward sales contracts without replacing those contracts, and we reduced our variable price sales commitments by approximately two-thirds. These steps allowed us to close the year at 18.1 million ounces committed under our forward sales program, leaving approximately 80% of our reserves unhedged. With our positive outlook for the gold price, interest rates at 40-year lows (leading to lower forward sales premiums), and our strong financial position, we intend to continue to manage the program down to a lower portion of overall reserves.

36

OPERATIONS REVIEW BY GEOGRAPHIC AREA

North America
South America
Africa
Australia

As noted in the Highlights, 2002 production increased to 5.7 million ounces from 3.7 million ounces in 2001. Total operating costs, including reclamation, increased to $1,073 million in 2002 from $633 million in 2001 mainly due to the increase in gold sales volumes. On a per ounce basis, total cash costs for the year increased to $177, from $159 in 2001. Higher cash costs were attributable to three main factors:

• Mining and processing more lower-grade tons during the year;

• Increased amortization of deferred mining costs; and

• Increased royalty and mining tax payments due to higher gold prices.

One of the operational facts inherent in our industry is that as operations mature, grades decline and it becomes more difficult to add reserves at these operations. The lower grades lead to less production flexibility as the operations have fewer choices of which areas to mine. Most of our operations have reduced controllable unit mining, processing and administrative costs through productivity improvements, resulting in higher mining and processing rates. However, comparatively small changes in tons and grades processed and recovery rates have a more pronounced impact on production, cash costs and earnings than before.

A variety of unrelated operating difficulties accessing higher-grade ores in 2002 at Bulyanhulu, Hemlo, Plutonic and Meikle led to lower production and higher costs per ounce, overshadowing strong contributions from Round Mountain, Pierina, and Eskay Creek. We responded to the operational issues by enhancing mine planning, scheduling and budgeting to ensure better information and providing greater production flexibility, giving us greater ability to optimize the value of our underground mines. In addition, we have reviewed our operating systems and procedures to improve controls to facilitate timely updating of forecast information at our mines. Our efforts centered on improving the accuracy of periodic forecasting by the General Managers and putting a stronger emphasis on achievability through the corporate office review process.

In addition, planned increases in expensing of deferred mining costs at Betze-Post and Pierina resulted in higher cash costs at those operations as mining moved into lower-grade areas of the open pits.

With the closure of five mines in 2002 and our new projects not expected to begin to contribute to production until 2005, we anticipate lower production in 2003 and 2004. Production for 2003 is expected to be between 5.4 and 5.5 million ounces, at a cash cost of between $180 and $190 per ounce. Following is a summary of each of our mines and development projects. For a more detailed discussion of our operations and development projects see the most current Annual Information Form (AIF — on file with the securities regulatory authorities in Canada and the U.S.).

NORTH AMERICA

• Largest producing region, accounting for 62% of the Company’s total production.

• Region represents 50% of our developed reserve base at 26.2 million ounces.

• Long-life asset base.

• Fully developed operations generating the majority of the Company’s free cash flow, which will be used to fund exploration and to build our new generation of mines.

NORTH AMERICAN PROPERTIES

Goldstrike, Nevada
     Betze-Post
     Meikle
Round Mountain, Nevada
Eskay Creek, British Columbia
Hemlo, Ontario
Holt-McDermott, Ontario

37

Goldstrike Property (Nevada)

For the year ended December 31,	2002		2001		% Change
OPERATIONAL STATISTICS
Tons Mined (000’s)		144,533		155,606		(7	)
Tons Processed (000’s)		11,960		10,562		13
Grade Processed (ounces per ton)		0.20		0.25		(20	)
Gold Production (000’s of ounces)		2,050		2,263		(9	)
Mineral Reserves (000’s of ounces)		19,939		20,379		(2	)
FINANCIAL STATISTICS
Cash cost per ounce
Cash operating costs	$	209	$	183		14
Royalties and production taxes		9		10		(10	)
Total cash costs	$	218	$	193		13

The Goldstrike Property remains the Company’s single largest producer and has just completed its eighth straight year producing more than 2 million ounces. Cash costs have increased over the past five years as the Property has moved from mining and processing high-grade material to near reserve grade material in both the open pit and underground. As well, electric power and fuel cost increases have pressured costs higher. Power costs increased in the Western United States in 2001, causing our supplier to increase our rates substantially (4.3 cents per kwh to over 7 cents per kwh). We are looking at alternative power suppliers to lower our power costs.

While the Property has matured, it replaced 80% of production in 2002 through reserve expansion in both the open pit (1.3 million ounces) and the underground (642,000 ounces), its best showing since 1999. Overall, the Property is expected to continue to produce at the 2 million ounce level for at least the next four years. Cash costs are expected to remain relatively constant. With the large capital program completed, the Property contributes the majority of the free cash flow from our existing operations — free cash flow that will play a key role in funding our exploration program and developing our new generation of mines.

In 2002, production declined 9% compared to 2001, while total cash costs increased to $218 per ounce, up from $193 a year earlier. The lower production and higher cash costs were largely due to processing more tons (up 13%) at lower grade (down 20%). In addition, higher power costs (up $6 per ounce) and expensing of deferred stripping costs at Betze-Post (up $14 per ounce) led to higher costs.

In 2003, the Property is expected to produce 2,115,000 ounces of gold (3% higher than 2002) at cash costs of $225 per ounce. The increase in cash costs is largely due to higher royalties and production taxes resulting from higher gold prices.

Betze-Post Mine

For the year ended December 31,	2002		2001		% Change
OPERATIONAL STATISTICS
Tons Mined (000’s)		142,898		154,233		(7	)
Tons Processed (000’s)		10,322		9,187		12
Grade Processed (ounces per ton)		0.16		0.20		(20	)
Gold Production (000’s of ounces)		1,410		1,550		(9	)
Mineral Reserves (000’s of ounces)		16,051		16,433		(2	)
FINANCIAL STATISTICS
Cash cost per ounce
Cash operating costs	$	221	$	207		7
Royalties and production taxes		7		8		(14	)
Total cash costs	$	228	$	215		6

38

Betze-Post production declined 9% from the previous year. The lower production was due to lower grades processed (down 20%), partially offset by higher throughput (up 12%). To maximize investment returns, the mine plan was designed to process higher-grade ore first and stockpile the lower-grade material in the earlier years of its life. Over the past four years (1999-2002), the average grade processed declined by 41%, while in the past two years the cost of power increased by $19 per ounce. Despite the lower grade, cash costs increased by only $6 per ounce or 3% (excluding power cost increases) over the four-year period because of the mine’s productivity improvements and cost-reduction initiatives.

Proven and probable gold reserves at Betze-Post decreased to 16.1 million ounces from 16.4 million ounces in 2001. The partial reserve replacement in 2002 was due to lower unit mining and processing costs, which allowed the conversion of a small underground reserve into a larger open pit reserve, as well as the discovery of lower-grade material at the pit bottom last year.

For 2003, production is expected to increase to 1,495,000 ounces due to better grades mined and processed (up 6%) and increased tons processed (up 5%). Lower unit mining costs, combined with higher recovery rates and throughput, are expected to more than offset another power cost increase, resulting in a 4% reduction in cash operating costs per ounce before royalties and production taxes. However, higher spot gold prices are expected to result in higher royalties and production taxes, resulting in total cash costs similar to 2002 at $228 per ounce.

Meikle Mine

For the year ended December 31,	2002		2001		% Change
OPERATIONAL STATISTICS
Tons Mined (000’s)		1,635		1,372		19
Tons Processed (000’s)		1,638		1,375		19
Grade Processed (ounces per ton)		0.43		0.56		(23	)
Gold Production (000’s of ounces)		640		713		(10	)
Mineral Reserves (000’s of ounces)		3,888		3,946		(1	)
FINANCIAL STATISTICS
Cash cost per ounce
Cash operating costs	$	184	$	133		38
Royalties and production taxes		14		14		—
Total cash costs	$	198	$	147		35

Meikle production declined 10% from 2001, as total cash costs increased to $198 per ounce from $147 per ounce in 2001. The lower production relates to lower grades processed (down 23%), partially offset by higher mining and processing rates (up 19%), as the Rodeo deposit ramps up to full production. The higher cash costs were due to lower grades mined and processed and higher unit mining costs, particularly in the remnant material of the Main Meikle zone.

In recent years, Meikle has been transitioning from a compact high-grade mining operation to a lower-grade operation spread over a much larger area. Between 1999 and 2002, the average grade mined and processed declined (by 57%) while cash costs per ounce doubled. As the mine has matured, mining in Main Meikle is now focused on secondary stopes where ground conditions are not as competent, leading to production difficulties and higher unit mining costs in 2002. As a result, the mine focused on improving planning and scheduling during the year to ensure a more stable production plan going forward.

Proven and probable reserves at year end 2002 declined marginally to 3.89 million ounces from 3.95 million in 2001, as the mine replaced about 85% of 2002 production. Most of the material added in 2002 had been removed from reserves a year earlier when management determined that more drilling was required to classify the material as reserves. While exploration drilling will continue at depth below Main Meikle and in the Rodeo area, the best potential for reserve additions is likely north of Main Meikle, in an area known as Banshee. Surface drilling is expected to be completed in first quarter 2003; based on the assessment of economic potential, a decision on a Meikle-to-Banshee access drift is expected by mid-2003.

39

Production for 2003 is expected to decline to 620,000 ounces, while total cash costs are expected to rise to $219 per ounce. The lower production is largely due to expected lower recovery rates (down 2%), as lower grades processed (down 7%) are offset by higher mining rates (up 7%). Beginning in 2003, Meikle is mining and processing at the average grade of its remaining reserves; as a result, production and costs should be stable around current levels for the remainder of its mine life.

Round Mountain Mine (Nevada)

For the year ended December 31,	2002
OPERATIONAL STATISTICS
Tons Mined (000’s)		63,146
Tons Processed (000’s)		62,222
Grade Processed (ounces per ton)		0.019
Gold Production (000’s of ounces)		755
Gold Production (Barrick’s share, 000’s of ounces)		378
Mineral Reserves (000’s of ounces)		1,875
FINANCIAL STATISTICS
Cash cost per ounce
Cash operating costs	$	172
Royalties and production taxes		15
Total cash costs	$	187

The Round Mountain joint venture had a strong year, contributing 377,747 ounces of gold to our 50 percent account in 2002. Total cash costs were $187 per ounce. The results were better than plan for both production and costs, as a result of better than anticipated grades processed through the mill as well as to the leach pad.

Proven and probable reserves decreased from 2.2 million to 1.9 million ounces, as only a small portion of production was replaced during the year. This is a solid but mature operation with an expected remaining mine life of four years. Future potential beyond the current deposit resides in an exploration program at the Gold Hill property (located 5 miles from Round Mountain), where follow-up drilling continues to yield encouraging results. The work planned for 2003 will further test the potential economics of this pit and continue to delineate the mineralized zone.

For 2003, the mine is expected to have another solid year. The marginally lower production of 363,000 ounces and higher cash costs of $198 per ounce, are primarily due to lower production from the leach pad, as longer haulage cycles result in fewer tons being placed on the pad.

Eskay Creek Mine (British Columbia)

For the year ended December 31,	2002
OPERATIONAL STATISTICS
Tons Mined (000’s)		254
Tons Processed (000’s)		256
Grade Processed (ounces per ton)		1.50
Grade — Silver (ounces per ton)		72.18
Gold Production (000’s of ounces)		359
Silver Production (000’s of ounces)		17,763
Mineral Reserves (000’s of ounces)		1,430
FINANCIAL STATISTICS
Cash cost per ounce
Cash operating costs	$	36
Royalties and production taxes		4
Total cash costs	$	40

40

Eskay Creek had a good year for production despite lower grades and a strike at one of the mine’s key third-party smelters. The good production and cash costs performance were primarily the result of a 10% increase in tons mined and an increase in silver by-product credits compared to periods prior to the acquisition.

To mitigate the impact of the third-party smelter strike which began in July 2002, the mine optimized its milling capacity, increasing throughput (by 12%), re-sequenced the mining efforts to source higher grade ore, and arranged for increased sales to its other main smelter. Though the labor strike continues, shipments of ore and concentrate in late 2002 and early 2003 were close to pre-strike levels, and we anticipate being able to sustain these rates through the balance of this year, even without a labor strike settlement.

Proven and probable gold reserves at Eskay decreased to 1.4 million from 1.8 million ounces due to production during the year. A development ramp was completed during the year to follow up on encouraging exploration results. Future reserve expansion is most likely to come from this program. In addition, the surface program generated positive results, with follow-up scheduled in 2003.

For 2003, production is expected to increase marginally to 363,000 ounces, as higher mining and processing rates (up 11%) are expected to more than offset the lower grades processed. Cash costs are expected to rise to $64 per ounce, primarily due to lower silver grades significantly reducing by-product credits. Longer term, based on current reserves, production is expected to decline and cash costs are expected to rise as the mining and processing move to the average grade of the reserve.

Hemlo Property (Ontario)

For the year ended December 31,	2002
OPERATIONAL STATISTICS
Tons Mined (000’s)		3,785
Tons Processed (000’s)		3,812
Grade Processed (ounces per ton)		0.149
Gold Production (000’s of ounces)		538
Gold Production (Barrick’s share, 000’s of ounces)		269
Mineral Reserves (000’s of ounces)		2,118
FINANCIAL STATISTICS
Cash cost per ounce
Cash operating costs	$	216
Royalties and production taxes		8
Total cash costs	$	224

Hemlo, of which we own a 50 percent interest, is a joint venture comprised of the David Bell and Williams underground mines and the Williams open pit. Production and cash costs reflect ground control problems that began early in 2002 and resulted in restricted access to some high-grade areas and increased dilution levels. A revised mine sequence, new backfill methods and improved planning should provide the foundation for more secure and predictable results from the underground operation in the future.

Hemlo’s proven and probable reserves at year end 2002 stood at 2.1 million ounces compared to 2.5 million ounces one year earlier. In addition to not replacing 2002 production, mining recovery rates used for reserve estimation purposes were adjusted in those areas affected by the ground control problems, resulting in an additional 115,000 ounces being removed from reserves.

For 2003, production for our account is expected to be 253,000 ounces, resulting in marginally higher cash costs of $231 per ounce. The lower production and higher cash costs are primarily due to lower grades, only partially offset by an increase in mill throughput. Longer term production and costs are expected to be similar to 2003.

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Holt-McDermott Mine (Ontario)

For the year ended December 31,	2002		2001		% Change
OPERATIONAL STATISTICS
Tons Mined (000’s)		520		489		6
Tons Processed (000’s)		520		497		5
Grade Processed (ounces per ton)		0.17		0.18		(4	)
Gold Production (000’s of ounces)		84		84		—
Mineral Reserves (000’s of ounces)		154		293		(47	)
FINANCIAL STATISTICS
Cash cost per ounce
Cash operating costs	$	173	$	163		6
Royalties and production taxes		—		2		(100	)
Total cash costs	$	173	$	165		5

While Holt-McDermott’s 2002 production was the same as the prior year, cash costs were higher (up 5%). Higher costs were a result of an increase in tons mined and processed combined with a 4% decline in grade.

Proven and probable reserves at year end 2002 stood at 154,000 ounces. Based on mining experience, anticipated reserve grades were adjusted down, resulting in a loss of 51,000 ounces net of 2002 production.

For 2003, production is expected to rise 16% to 97,000 ounces as cash costs rise to $218 per ounce. Production will be up as a result of accessing higher-grade ore, while costs will rise primarily due to the expensing of mining costs relating to ongoing development.

SOUTH AMERICA

• Home of Barrick’s second-largest cash flow generator, the Pierina mine.

• Three development projects that make up the majority of our current pipeline:

• Our recently discovered Alto Chicama Property in Peru.

• Our largest development project, the Pascua-Lama and Veladero district, straddling the Chilean and Argentinean border.

• Large grass roots exploration programs in Peru and Argentina.

SOUTH AMERICAN PROPERTIES

Pierina, Peru
Alto Chicama, Peru
Pascua-Lama, Chile and Argentina
Veladero, Argentina

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Pierina Mine (Peru)

For the year ended December 31,	2002		2001		% Change
OPERATIONAL STATISTICS
Tons Mined (000’s)		32,311		30,742		5
Leach — Tons to Pad (000’s)		13,414		10,968		22
Grade Processed (ounces per ton)		0.080		0.097		(18	)
Gold Production (000’s of ounces)		898		911		(1	)
Mineral Reserves (000’s of ounces)		3,602		4,748		(24	)
FINANCIAL STATISTICS
Cash cost per ounce
Cash operating costs	$	80	$	40		100
Royalties and production taxes		—		—		—
Total cash costs	$	80	$	40		100

Pierina production declined marginally (down 1%) compared to the prior year, at cash costs of $80 per ounce compared to $40 per ounce in 2001. Cash costs included an unbudgeted increase of $6 per ounce related to higher operating costs caused by a tax assessment received late in the year. Cash costs doubled over the prior year, largely as a result of deferred mining costs being charged as mining activity moves to lower-grade areas of the pit. Similar to the Goldstrike Property, Pierina’s higher-grade material was mined and processed early in the mine’s life to maximize cash flows and investment returns. To date, the mine has been able to increase mining and processing rates and lower unit costs to offset declining grades.

At year end 2002, proven and probable reserves declined to 3.6 million ounces of gold, as the mine did not replace 2002 production. The 2002 exploration program identified a resource south and southeast of the pit, targets located near surface at the north end of the pit, as well as one adjacent to the final wall of the south end of the pit, all of which are scheduled for follow-up in 2003. Any positive exploration results would likely only extend the mine life marginally past its remaining mine life of five years. In 2003, production and total cash costs are expected to rise marginally to 908,000 ounces at $86 per ounce. Grades mined are expected to decline by 5%, but should be more than offset by a 22% increase in tons mined. Beginning in 2004, the mine is expected to move to lower grades in the open pit, resulting in lower production and marginally higher cash costs.

Alto Chicama Project (Peru)

In April 2002, we announced a significant discovery at our Alto Chicama Property. The initial inferred resource at the time of the announcement was estimated at 3.5 million ounces of gold. As a result of drilling during the course of the year, 6.5 million ounces were brought into probable reserves. In addition, we have 2 million ounces in the measured and indicated resource category and 1 million ounces of inferred resource for a total reserve and resource of 9.5 million ounces of gold (as of January 31, 2003).

We began exploring the Alto Chicama area in the first quarter of 2001, when we acquired the option to explore the Property from the Peruvian state mining company (Centromin). In November 2002, we exercised our rights under the option agreement to acquire the Property by completing a technical evaluation and paying a $2 million advance royalty. We now have a 100% interest in the Property subject to a 2.51% net smelter return royalty to Centromin.

The preliminary feasibility study estimates Alto Chicama will produce 500,000 ounces per year beginning in 2005, at an average cash cost over the first decade of $130 per ounce. Capital costs are projected at $300 to $350 million. As 2002 ended, work focused on infill drilling, mine planning and condemnation drilling. Metallurgical tests indicate the oxide ore is amenable to heap leaching with recoveries in the range of 80%.

For 2003, the focus at Alto Chicama will be to complete the Environmental Impact Statement and a final feasibility study. Subject to Board approval and final permitting, construction is expected to start in late 2003 or early 2004. The timing of construction and production is most dependent on when we receive our permits. Based on the work to date, the construction, geologic, mining and processing risks appear low, as the project is very similar in many respects to our Pierina mine.

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Pascua-Lama and Veladero Projects (Chile/Argentina)

Veladero

The Veladero feasibility study was completed during third quarter 2002. It defines an operation mining ore from two open pits (Filo Federico and Amable), a two-stage crushing circuit and a valley fill heap leach, very similar to our Pierina mine in Peru, at an estimated initial construction cost of $425 million. Veladero is expected to commence production in early 2006, producing 530,000 ounces of gold at a cash cost of $155 per ounce over the first decade of the mine’s operation. The Property’s Environmental Impact Statement was submitted in January 2003.

Definition drilling during the year expanded the reserves for the two pits to 9.4 million ounces, compared to 8.4 million in 2001. Between these two pits is a third mineralized zone, Cuatro Esquinas, which provides future exploration potential.

Veladero’s 2003 field program will focus on the construction of the access road and camp infrastructure. Full construction is expected to commence September 2003, subject to receiving all permits and arranging any project financing. However, this schedule is dependent on our ability to gain comfort with the political and economic uncertainty in Argentina. Based on the work to date, the geologic, mining and processing risks appear manageable, as the project is very similar to our Pierina mine.

Pascua-Lama

In late 2000, a decision was made to postpone construction start-up at Pascua-Lama, based on the then low gold and silver price environment. Now, with the inclusion of nearby Veladero in the portfolio (as a result of our Homestake merger) and the higher gold price environment, Pascua-Lama is expected to commence production in 2008, subject to final permitting, completing optimization of the feasibility study and arranging any project financing. Over the past year, work on Pascua-Lama has been directed at further optimization of the development plan to reduce the capital and operating cost structure. With the completion of the Veladero feasibility study, we are now in a position to evaluate synergies in terms of infrastructure, administrative support and construction activities.

The mine is planned as an open pit, centered at an elevation of 4,600 meters. The majority of the gold is expected to come from oxide ores in the first several years of operation. As deeper sulfide ores are encountered, a flotation circuit is expected to be added to maintain recovery rates. On the processing front, Pascua-Lama’s metallurgy is challenging, but based on the extensive work we have done to date, we believe we can successfully process the various ores Pascua-Lama presents. While the property is located very high in the Andes, the altitude is not dissimilar to our former El Indio/Tambo operations in Chile or several large copper mines.

Proven and probable reserves at year end 2002 were unchanged at 16.9 million ounces of gold and 594 million ounces of silver, as the project did not have any further reserve development activity during the year.

The optimized feasibility study is expected to be completed in 2004, with construction start-up potentially occurring in late 2005. Production is targeted at 800,000 ounces of gold annually at cash costs of $85 per ounce for the first decade. The initial construction cost is currently estimated at $1,175 million.

AFRICA

• Tanzania (East Africa) represents Barrick’s African expansion.

• Bulyanhulu completed its first full year of production in 2002.

• A significant land position in the Lake Victoria goldfields of northern Tanzania with a large and active exploration program.

• Geology in the Lake Victoria area is similar to the gold belts in Northern Ontario and Quebec and Western Australia, two of the most successful gold producing regions of the world.

AFRICAN PROPERTIES

Bulyanhulu
Tulawaka
Kabanga

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Bulyanhulu Mine (Tanzania)

For the year ended December 31,	2002		2001		% Change
OPERATIONAL STATISTICS
Tons Mined (000’s)		944		455		107
Tons Processed (000’s)		1,075		778		38
Grade Processed (ounces per ton)		0.39		0.38		2
Gold Production (000’s of ounces)		356		242		47
Mineral Reserves (000’s of ounces)		11,653		12,009		(3	)
FINANCIAL STATISTICS
Cash cost per ounce
Cash operating costs	$	190	$	186		2
Royalties and production taxes		8		11		(27	)
Total cash costs	$	198	$	197		1

In its first full year of operation, Bulyanhulu produced 356,319 ounces of gold at a cash cost of $198 per ounce. Production was marginally lower than plan (by 2%), while cash costs exceeded our 2002 estimates by $25 per ounce. The slightly lower production and higher costs were due to two main factors. First, we mined and processed more tons at lower than planned grade to produce total ounces similar to plan. Grades were lower as a result of delays in accessing higher-grade stopes and higher than planned dilution. Second, higher concentrate transportation and treatment costs and royalties also pushed costs up. While full-year costs were above plan, the trend within the year shows improvement, as cash costs in fourth quarter 2002 decreased to $185 per ounce as grades increased.

While Bulyanhulu has experienced teething pains ramping up to full production, we see positive signs moving forward. Mining and processing rates are now exceeding feasibility study levels and grades mined continue to improve as the mining team gains experience. The $194 million outstanding under the project loan has become non-recourse to Barrick as the mine met the physical and technical requirements of completion during the first quarter of 2003.

For 2003, production is expected to increase to 415,000 ounces (up 16%) as total cash costs decline to $175 per ounce, reflecting a full year of expected better grades and recovery rates.

The mining and processing rates are expected to rise with both the September 2002 completion of the mine-shaft, allowing ore and waste to be transported faster than the current ramp system and the installation of a second tailings pipeline.

Tanzanian Exploration Update

2003 will mark the beginning of our fourth year of exploration in Tanzania, one of the more prospective areas in the world. The strategy of land acquisition and cost-effective grass roots exploration that succeeded in evaluating a large ground position and generating drill targets, is now nearly complete. Our focus in 2003 will be on fewer properties with higher exploration potential.

During 2002, engineering studies were carried out at Tulawaka. A feasibility study for a small open pit, milling operation is nearing completion. Preparation of an Environmental Impact Statement is progressing on schedule, and a development decision is expected in the first half of 2003 for the operation. Exploration drilling is scheduled for second quarter 2003 on the West Zone as well as on other targets outlined in 2002.

The Kabanga nickel property was part of a 1999 acquisition, which also gave us Bulyanhulu. We have been evaluating the potential of the project over the course of 2002, expanding the resource and completing a scoping study to ascertain the value of the asset.

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AUSTRALIA

• Second-largest-producing region for the Company

• Two key assets:

• Yilgarn District, comprised of three mines (Plutonic, Darlot and Lawlers)

• Kalgoorlie Super Pit, Australia’s largest gold mine — 50 percent interest

• A portfolio of exploration properties, plus the Cowal development project with 2.8 million ounces of proven and probable reserves.

AUSTRALIAN PROPERTIES

Yilgarn District
     Plutonic
     Darlot
     Lawlers
Kalgoorlie
Cowal

Plutonic Mine (Western Australia)

For the year ended December 31,	2002
OPERATIONAL STATISTICS
Open Pits Tons mined (000’s)		13,233
U/G Tons of ore mined (000’s)		1,056
Tons Processed (000’s)		3,532
Grade Processed (ounces per ton)		0.097
Gold Production (000’s of ounces)		307
Mineral Reserves (000’s of ounces)		2,533
FINANCIAL STATISTICS
Cash cost per ounce
Cash operating costs	$	175
Royalties and production taxes		9
Total cash costs	$	184

Plutonic, the largest of the three Yilgarn District mines, consists of both open pit and underground operations. Production and cash costs reflect delays in meeting the timetable for mining the new higher-grade underground Timor zone. To substitute for the lower underground production, the mine accelerated production of higher-cost open pit ore and low-grade stockpiles.

Proven and probable reserves increased net of production by 945,000 ounces (adding three years of production to the mine life) to 2.5 million ounces. This made 2002 the fourth consecutive year the mine more than replaced production — and, more importantly, at better grade than the existing reserves. We view the exploration potential of this mine favorably and will continue with a significant exploration program in the area in 2003.

For 2003, production is expected to decline to 295,000 ounces due to lower throughput and recovery rates, resulting in marginally higher cash costs of $194 per ounce. The lower production and higher cost are primarily due to lower throughput, resulting from lower open pit mining rates and depletion of low-grade stockpiles.

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Darlot Mine (Western Australia)

For the year ended December 31,	2002
OPERATIONAL STATISTICS
Tons Mined (000’s)		840
Tons Processed (000’s)		849
Grade Processed (ounces per ton)		0.176
Gold Production (000’s of ounces)		145
Mineral Reserves (000’s of ounces)		1,269
FINANCIAL STATISTICS
Cash cost per ounce
Cash operating costs	$	160
Royalties and production taxes		8
Total cash costs	$	168

Production at Darlot and total cash costs reflect higher throughput and higher grades than in periods prior to the acquisition. The mine replaced half of its production in 2002, finishing the year with approximately 1.3 million ounces of proven and probable reserves. Based on its current reserve base, the mine has a remaining mine life of about 10 years.

For 2003, Darlot expects to have a similar year in terms of both production at 143,000 ounces and cash costs of $176 per ounce.

Lawlers Mine (Western Australia)

For the year ended December 31,	2002
OPERATIONAL STATISTICS
Open Pits Tons mined (000’s)		4,030
U/G Tons of ore mined (000’s)		716
Tons Processed (000’s)		718
Grade Processed (ounces per ton)		0.162
Gold Production (000’s of ounces)		113
Mineral Reserves (000’s of ounces)		509
FINANCIAL STATISTICS
Cash cost per ounce
Cash operating costs	$	171
Royalties and production taxes		8
Total cash costs	$	179

Production at Lawlers and cash costs reflect an increase in grades processed (15%) compared to periods prior to the acquisition. The mine replaced production in 2002, finishing the year with about 500,000 ounces of proven and probable reserves. Based on its current reserve base, Lawlers has about five years remaining in its mine life. An extensive 2003 exploration program will test deeper extensions to the ore body.

Lawlers expects production similar to 2002 at 111,000 ounces, but at higher cash costs of $213 per ounce, due to lower grades, recovery rates and higher-cost open pit production.

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Kalgoorlie Mine (Western Australia)

For the year ended December 31,	2002
OPERATIONAL STATISTICS
Open Pits Tons mined (000’s)		91,843
U/G Tons of ore mined (000’s)		805
Tons Processed (000’s)		14,101
Grade Processed (ounces per ton)		0.061
Gold Production (000’s of ounces)		720
Gold Production (Barrick’s share, 000’s of ounces)		360
Mineral Reserves (000’s of ounces)		5,551
FINANCIAL STATISTICS
Cash cost per ounce
Cash operating costs	$	215
Royalties and production taxes		7
Total cash costs	$	222

2002 production at the Kalgoorlie joint venture and total cash costs reflect lower grades (down 8%) and recovery rates (off 2%) compared to periods prior to the acquisition. The Mt. Charlotte underground deposit was originally scheduled for closure at the end of 2001, but remained open, contributing 63,200 ounces (Barrick’s share) to total production in 2002. Mt. Charlotte is not budgeted for production in 2003, but is still mining residual ore that may prolong its life by a few months.

Barrick’s share of proven and probable reserves at year end declined to 5.6 million ounces compared to 5.7 million in the prior year. Extensive inpit drilling during the year and remodeling of proven and probable reserves resulted in a reduction of the mineral resource base. The 2003 exploration program will concentrate on testing deep structurally controlled targets under the Super Pit and to the east of Mt. Charlotte. While Kalgoorlie remains one of the longest-life assets, the asset is maturing, and future reserve additions are less likely to be identified.

For 2003, our share of production is expected to be lower at 344,000 ounces (down 4%) and cash costs higher at $237 per ounce (up 7%), with lower throughput after the winding down of the higher-grade underground operation in 2002, partially offset by an increase in open pit tons mined. A technical committee made up of the two joint venture partners was formed last year to explore ways to improve the production and cost profiles at Kalgoorlie. The committee’s recommendations are expected by mid-year.

Cowal Project (New South Wales)

The Cowal project, acquired in 2001, came to us with a completed Environmental Impact Statement and feasibility study. In the latter part of 2001, we began a technical program, including drilling and engineering studies, to optimize the feasibility study, which we anticipate will be completed in 2003.

Cowal’s mine plan and process facilities have been designed to produce approximately 270,000 ounces of gold per year at an average cash cost of $170 per ounce. The main deposit contains proven and probable reserves of 2.8 million ounces. While the total contained ounces remained the same as the year earlier, the grade declined (by 25%) due to additional drilling and more conservative reserve modeling. However, cash costs are expected to be similar because of the optimization work completed during the year.

Construction is expected to commence in 2003, with production expected mid-2005, subject to final permitting and an optimized feasibility study. In 2003, we will continue metallurgical test work aimed at further optimizing the scope and economics of the project. The timing of construction and production is most dependent on the timing of receiving our final permits.

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Our Australian asset base represents solid long-term production. The principal risk to that production is the impact of a stronger Australian dollar that would push cash costs up. To mitigate that risk, we have entered into currency hedge contracts for most of our Australian dollar costs through 2005. For additional detail regarding foreign currency contracts, see note 23D “Other derivative instruments outstanding” to our consolidated financial statements.

OTHER PROPERTIES

Other Properties include five mines (El Indio, Bousquet, McLaughlin, Ruby Hill and Agua de la Falda) that were closed during the year due to the depletion of reserves, as well as the Marigold mine in Nevada, in which we have a 33% interest and which remains in operation. In 2002, our Other Properties produced 374,774 ounces of gold, 7% of our production, at an average total cash cost of $189 per ounce, compared to 239,000 ounces at total cash costs of $241 per ounce in the prior year.

For 2003, Marigold is expected to produce 45,000 ounces at a cash cost of $170 per ounce. The decline in overall production for the Company in 2003, relates to the closure of the five mines over the course of 2002.

For the year ended December 31,	2002		2001		% Change
OPERATIONAL STATISTICS
Gold Production (000’s of ounces)		375		239		57
Mineral Reserves (000’s of ounces)		678		1,100		(38	)
FINANCIAL STATISTICS
Cash cost per ounce
Cash operating costs	$	180	$	238		(24	)
Royalties and production taxes		9		3		200
Total cash costs	$	189	$	241		(22	)

COSTS AND EXPENSES

Exploration and Business Development

Our exploration strategy is to maintain a geographic mix of projects at different stages in the exploration process. Our early stage exploration effort focuses on four major areas where we possess significant infrastructure: Peru, Tanzania, Australia and Chile/Argentina. The increase in expenditures in 2002 mainly reflects amounts spent on properties acquired through the Homestake merger at the end of 2001.

Exploration and Business Development Expense (in millions)	2003E		2002		2001
North America	$	17	$	13	$	10
Australia		11		8		—
Africa		8		6		10
South America		9		8		10
Other/Business Development		24		17		10
	$	69	$	52	$	40

Amortization

Amortization totaled $483 million ($79 per ounce) in 2002, compared to $343 million or $90 per ounce in 2001. The overall increase in amortization expense was mainly caused by the inclusion of the acquired Homestake mines in 2002. The decrease in amortization charges per ounce reflects overall lower charges per ounce at the Homestake mines, partially offset by an increase in amortization per ounce at Meikle.

Higher absolute amortization of $17 million at Meikle reflects the completion of construction of Rodeo in 2001 and the reduction of proven and probable reserves at the beginning of 2002, which raised Meikle’s amortization expense.

For 2003, amortization is expected to increase to about $500 million, or $90 per ounce. A large part of this increase is a function of the changing mix of production and capital additions. Beyond 2003, we expect amortization to be in the $80 to $90 per ounce range, depending on the extent of exploration success at our operating mines. Our new development

49

projects are expected to have amortization rates of between $65 and $80 per ounce, which could bring our overall per ounce amortization charge down over time.

Administration

In 2002, administration costs increased by $18 million to $64 million due to the increase in corporate support functions with the increase in size of the Company following the Homestake merger at the end of 2001 ($9 million); a $3 million compensation expense for our restricted share unit plan, and a $6 million increase in World Gold Council fees. World Gold Council fees totaled $13 million in 2002. For 2003, administration costs are expected to be about $70 million.

In 2002, we recorded a pension benefit expense of $2 million relating to pre-existing Homestake pension plans. We do not expect that our future earnings will be significantly affected by our existing defined benefit pension plans due to the relatively small size of the plans. Also, most members in these plans are no longer actively employed by us, and have therefore ceased earning benefits under the plans.

Through 2002, a significant portion of our defined benefit pension plan assets were invested in fixed income securities, with the remainder invested in equity securities. Because of this mix of investments, the return on plan assets and funding status of our plans were not as adversely affected by the general decline in equity markets compared to plans operated by some other companies. At the end of 2002, we had an unfunded liability of $27 million. As a result, based on current markets, we may be required to make a contribution to more fully fund the plans in the future.

Interest Expense

We incurred $59 million in interest costs and financing charges in 2002, related mainly to our debentures and our Bulyanhulu project financing. Overall, our effective interest rate declined slightly in 2002 to 7.2%, from 7.3% in 2001. In 2002, we expensed interest of $57 million and capitalized $2 million to mine development activities at Cowal. In 2001, we expensed $14 million and capitalized $42 million to development and construction activities at Pascua-Lama, Bulyanhulu and Rodeo.

We use interest rate swaps to manage the effective rates of interest we pay on our long-term debt. On $250 million of our $500 million debentures, we have converted the fixed 7.5% interest rate to a floating rate through 2007, taking advantage of low market interest rates. Through this strategy, we managed to reduce the effective rate on this portion of the debentures to 5.7% in 2002. On our Bulyanhulu financing, we have taken advantage of the present low interest rates to fix the interest rate for the term of the debt at a rate of about 7%. For 2003, we expect to incur a similar amount of interest as in 2002, but interest expense is expected to decline to about $50 million after capitalizing about $9 million at Cowal and Veladero.

Interest and Other Income

Interest and other income increased to $42 million in 2002 from $11 million in 2001. The increase primarily reflects other income earned during 2002 at the Homestake operations and year on year variations in foreign currency translation gains and losses.

In 2002, we earned an effective interest rate on our cash of 3.4% compared to 5.3% in 2001. The decrease in the effective rate in 2002 reflects a general decline in market interest rates from 3.8% to 1.8% over the last two years. Through interest rate swaps we earned a fixed rate of 4.1% for 2002 on $500 million of our cash balances, with the additional cash earning interest at lower market interest rates.

For 2003, we expect interest and other income to decrease further to about $23 million, reflecting a full year’s effect of lower market interest rates. Through the use of interest rate swaps we have locked in a fixed rate of 3.8% on $650 million of our cash balances, with the excess cash earning interest at market interest rates.

Non-Hedge Derivative Gains (Losses)

Non-Hedge Derivative Gains (Losses) (millions)	2002			2001
Commodity contracts	$	(2	)	$	51
Currency contracts		—			(15	)
Interest and lease rate contracts		(30	)		(9	)
	$	(32	)	$	27

Non-hedge derivative gains and losses arise on derivative instruments used in our risk management strategy that do not qualify for hedge accounting treatment. These gains and losses do not include any gains or losses on our gold sales contracts. The gains and losses occur because of changes in commodity prices, currency exchange rates and interest rates.

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Commodity Contracts

In 2001, gains of $51 million on written call options were realized. In 2002, we did not have a significant call option position outstanding and incurred net losses of $2 million.

Currency Contracts

Losses in 2001 were due to the effects of changes in the Canadian dollar. In 2002, all outstanding currency contracts qualified for hedge accounting treatment under Canadian GAAP, and consequently we did not record any non-hedge gains or losses.

Interest and Lease Rate Contracts

Losses on interest and lease rate swaps in 2002 were $30 million (2001 — $9 million loss). The losses were primarily related to our total return swaps and were largely the result of the widening of credit spreads over yields on government securities. During 2002, we closed out substantially all of the total return swaps, so our future results will not be significantly affected by these contracts. At the end of 2002, we held pay-fixed US dollar interest rate swaps with notional amounts of $150 million (2001 — $275 million) and receive fixed gold lease rate swaps with notional amounts of 6.4 million ounces or about $2 billion (2001 — 6.2 million ounces). Both are being marked-to-market through earnings. These gold lease rate swaps represent all of our current gold lease rate exposure.

Income Taxes

In 2002, we recorded a tax credit of $1 million compared to an expense of $15 million in 2001. In fourth quarter 2002, we recorded a tax credit of $22 million, mainly reflecting the resolution of certain tax uncertainties. Excluding the credit recorded in fourth quarter 2002, our relatively low effective tax rate is mainly because a significant portion of our earnings are generated in a low tax-rate jurisdiction. We have also begun to realize the benefit of tax synergies from the Homestake merger through the integration of our North American operations.

Should gold prices remain in the $350 per ounce range, we expect our underlying effective tax rate to rise to about 15 to 20%, because a larger portion of our earnings would come from tax jurisdictions with higher tax rates. At spot gold prices in excess of $400, we estimate that our effective tax rate would be about 25% to 30%.

Our income tax expense is also affected by changes in the level of valuation allowances recorded against future income tax assets. Valuation allowances are recorded where there is substantial uncertainty over the realization of a tax asset. Among other things, a sustained upward trend in gold prices may result in a decrease in valuation allowances with corresponding tax credits recorded in earnings.

LIQUIDITY & CAPITAL RESOURCES

Liquidity

Liquidity can be described as the ability of an enterprise to generate adequate amounts of cash to meet its needs. In recent history, the main sources of liquidity for us have been our net cash inflow from operating activities, our large cash position, and our various debt-financing facilities. Currently, our debt facilities include our debentures, our Bulyanhulu project financing, and our $1 billion revolving credit facility with a syndicate of global banks.

In the last three years we have generated substantial levels of operating cash flow, and we believe this to be one of our fundamental financial strengths. We expect capital needs of about $2 billion over the next five years to build our four development projects, as well as between $100 and $200 million per year for sustaining capital at our existing operations. Our alternatives for sourcing this capital include our $1 billion cash position, our future operating cash flows and project financings. We are evaluating these alternatives to determine the optimal mix of capital resources for the projects. We expect that present levels of liquidity in these sources of financing will be adequate to meet our expected capital needs.

While a deterioration in our credit rating would not adversely affect our existing debt obligations or gold sales contracts, it could impact the cost of borrowing for any new financings. There are a number of factors that are important to our “A” credit rating, including: our market capitalization; the strength of our balance sheet, including the amount of net debt and our debt-to-equity ratio; our cash generating ability, including cash generated by operating activities and expected capital expenditure requirements; the quantity of our gold reserves; and our relatively low geo-political risk profile due to the location of our mines.

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Like most financial contracts, our revolving credit facility and our gold sales contracts require us to comply with certain financial covenants. These covenants, which are based on our US GAAP financial statements, include:

(a)	Maintaining a minimum consolidated tangible net worth of over $2.0 billion (our consolidated net worth as at December 31, 2002 was over $3.3 billion); and
(b)	Maintaining a maximum long-term debt to consolidated net worth ratio below 1.5:1 (the ratio as at December 31, 2002 was under 0.25:1). The calculation of net worth excludes the unrealized mark-to-market gain or loss on our derivative instruments and gold sales contracts.

In the unlikely event that we breach these covenants, we would be in default of our gold sales contracts, which could result in the counterparties requiring settlement of these contracts; and also the syndicate of banks in our credit facility could require repayment of amounts outstanding at that time.

In this discussion of financial resources and liquidity, we address our Consolidated Statements of Cash Flows, our Consolidated Balance Sheets and our Consolidated Statements of Shareholders’ Equity.

Statements of Cash Flows

Our consolidated cash and equivalents totaled $1,044 million at the end of 2002, up from $574 million at the end of 2001. The main reasons for the increase in 2002 were the maturity of term deposits totaling $159 million, and free cash flow generated in the year of $361 million⁽¹⁾ (2001 — $130 million; 2000 — $174 million). The increase in free cash flow is mainly due to lower capital expenditures in 2002 compared with prior years. Our free cash flow will be reduced by capital expenditures relating to our development plan over the next few years.

Operating Activities

Our operating cash flow is significantly affected by the volume of gold sales, as well as realized gold prices and cash operating costs. In 2002, our average realized gold price per ounce sold decreased by $5, and total cash operating costs increased by $18. Overall, our operating cash flow remained similar to 2001, due to the combined effect of a variety of factors, including: increased sales volumes ($364 million), offset by: lower cash margins in 2002 ($134 million) (defined as gold sales less cash operating costs); payments of merger related costs of about $50 million; payments related to non-hedge derivative instruments of about $60 million; a decrease in interest capitalized by about $40 million; and an increase in cash payments for reclamation and closure costs by about $35 million, mainly at inactive mines.

For 2003, we expect our operating cash flow to remain at similar levels to 2002, assuming an average realized gold price of $350, as higher gold prices are offset by higher cash operating costs and lower gold sales volumes.

Investing Activities

Our most significant ongoing investing activities are for capital expenditures at our mines. Annually, we invest in sustaining capital at our mines, including expenditures relating to underground development activities. We also incur significant capital expenditures in the development and construction phases of new mines, although the yearly level varies depending on the status of our development projects.

Capital expenditures decreased by $258 million in 2002 to $291 million. In 2002, expenditures were mainly for sustaining capital and underground development. Higher expenditures in the previous two years were mainly due to: underground development at Meikle and Rodeo (2001 — $90 million; 2000 - $80 million); construction of the Bulyanhulu Mine (2001 — $153 million; 2000 — $203 million); and higher levels of development activity at Pascua-Lama (2001 — $69 million; 2000 — $107 million).

For 2003, we expect to spend a total of $430 million, including $218 million for sustaining capital, which is similar to 2002, and $212 million on our development plan ($136 million at Veladero, $34 million at Cowal, $42 million at Alto Chicama).

We sometimes invest excess cash in term deposits with initial maturities greater than 90 days, which are excluded from cash and equivalents and included in short-term investments. At the end of 2001, we held cash of $159 million in the form of term deposits that were included under short-term investments. As the term deposits matured in 2002, the cash received was reflected as an inflow under investing activities and is included in cash and equivalents.

(1) See non-GAAP measures page 63.

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Financing Activities

Our most significant ongoing financing activities are repayments/drawdowns of debt obligations, dividend payments, and proceeds from issuing capital stock.

The most significant financing cash flows in 2002 were $83 million received on the exercise of employee stock options and dividend payments totaling $119 million, which were $32 million higher than in 2001. We also made scheduled payments under our long-term debt obligations totaling $25 million in 2002.

For 2003, we will be required to make scheduled long-term debt repayments of $20 million. The amount of any dividends will be determined by the Board of Directors.

Consolidated Balance Sheet

Working Capital

Our non-cash working capital position was largely unchanged from 2001. Inventories declined by $29 million as gold sales exceeded production in 2002, which was partially offset by an increase in accounts receivable by $16 million.

Capitalized Mining Costs

Amounts decreased in 2002 primarily due to mining in areas of the Betze-Post pit where the actual ounces to total ore and waste ratio was lower than the life-of-mine ratio. As a result, amortization exceeded incurred cash expenditures.

Other Assets

The increase resulted from the inclusion of future income tax assets totaling $45 million in 2002.

Statement of Shareholders’ Equity

Shareholders’ equity increased by $175 million in 2002. The increase is mainly attributable to net income of $229 million and an increase in capital stock by $86 million (from the exercise of employee stock options), offset by dividends totaling $119 million.

FINANCIAL RISK MANAGEMENT

In the normal course of business, the main financial risks that affect us arise from changes in commodity prices, interest rates, foreign currency exchange rates and energy prices. We use privately negotiated contracts (rather than exchange-traded contracts) with a group of 19 leading international counterparties to manage our risk exposures. Because of the long-life, low-cost nature of our mines, as well as our financial strength, we have been able to secure trading lines and terms that we believe are the most favorable offered to companies in our industry.

These contracts are valued using pricing inputs that are readily available from independent sources. Changes in the value of the contracts are mainly affected by, among other things, changes in commodity prices, interest rates, gold lease rates and currency exchange rates.

Our use of these contracts is based on established practices and parameters, which are subject to the oversight of the Finance Committee of the Board of Directors. We also maintain a separate compliance function to independently monitor our hedging and financial risk management activities and segregate the duties of personnel responsible for entering into transactions from those responsible for recording transactions.

Gold and Silver Price Risk

We manage our exposure to volatility in gold prices through our forward sales contracts. A detailed discussion of the nature of these contracts, how we use them in our business, and the historic benefits we have derived from them is included on page 60.

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Certain of our mines, and in particular Eskay Creek, produce significant quantities of silver as a by-product. The quantities of silver present in the ore processed, as well as prices realized for silver production, significantly impact our cash operating costs per ounce at these mines because by-product revenue is deducted from operating costs. We use spot deferred silver contracts as a means to sell silver production and to act as an economic hedge of our exposure to changes in silver prices. Substantially all of our silver production in 2003 is protected by these contracts, at an average price of about $4.95 per ounce.

Interest Rate Risk

Our interest rate risk exposure mainly relates to future contango returns in our spot deferred contracts, the fair value and ongoing payments under lease rate and US dollar interest-rate swaps, and interest receipts on our cash balances. We are more adversely affected by lower interest rates than higher rates, because the net amount of assets less liabilities affected by interest rates is an asset and also because the forward price of gold is significantly affected by US dollar interest rates. In higher interest rate environments, we realize higher prices under our spot deferred sales contracts because the premium on the forward gold price over spot prices is greater, and we receive higher interest income on our cash balances.

Most of our $774 million of outstanding long-term debt obligations are at fixed interest rates. The exceptions are $250 million of our debentures where we have converted the interest rate from fixed to floating rates, and our $80 million of variable-rate bonds. For $650 million of our cash balances, we have fixed the interest return we are earning through 2006 — 2007, with the excess generating interest income at variable US dollar interest rates.

The excess of interest-bearing assets over liabilities recognized on our balance sheet, which are subject to variable interest rates, was $64 million at December 31, 2002 (representing cash of $394 million, less the floating-rate portion of debentures of $250 million, and our $80 million of variable-rate bonds).

Like all fixed price sales contracts with future fixed cash flows, the mark-to-market value of our existing gold sales contracts is affected by changes in the forward price of gold, which in turn is affected by market US dollar interest rates and gold lease rates. As we explain on page 61, the mark-to-market value is not recorded on our balance sheet, and it does not affect the level of our future earnings or cash flows.

For new gold sales contracts, the level of market US dollar interest rates and gold lease rates at that time will influence forward gold prices and will therefore affect the realized gold prices under these contracts.

As disclosed in note 22 to our financial statements, we enter into gold lease rate swaps as part of our overall gold price optimization strategy. Because these gold lease rate swaps include fixed US dollar cash flows, changes in the fair value of these swaps (which flow through earnings each period) are affected by changes in US dollar interest rates. Changes in US dollar interest rates affect only the mark-to-market value of these gold lease rate swaps, and do not impact the actual cash flows arising on the swaps.

Foreign Currency Exchange Risk

Although we operate on four continents, we do not view currency fluctuations as a significant risk in the next few years at most of our operations because all our revenues and most of our cash expenditures are denominated in US dollars, and we have hedged most of our non-US dollar operating costs. Nearly half of our production comes from our United States mines, while most of our Peruvian and Tanzanian operating and capital expenditures — such as diesel fuel, reagents and equipment — are denominated in United States dollars.

Our main foreign currency exposures relate to cash expenditures at our Canadian and Australian mines that are denominated in local currencies. We use foreign currency contracts to economically hedge our exposure to changes in the Canadian and Australian dollar against the US dollar. With the recent strengthening of the Canadian dollar and Australian dollar against the US dollar, unhedged producers with operations in these countries could be facing significantly higher US dollar operating costs.

In 2002, substantially all of our Canadian dollar expenditures were hedged at $0.65 and substantially all of our Australian dollar expenditures were hedged at $0.54. For 2003, we have hedged about 90% of our Canadian dollar expenditures at $0.65 and substantially all of our Australian dollar expenditures at $0.53. Beyond 2003, we have contracts in place to reduce our currency risk exposure on about 60 — 70% of our Australian and Canadian dollar exposures through 2005. Consequently, we do not expect fluctuations in these currencies to significantly affect our near term earnings or operating cash flows.

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Energy Price Risk

Our operating costs reflect the quantities of electricity and diesel fuel consumed, at prices that are mainly based on the market prices of these commodities. These costs represent approximately 16% of our total cash costs per ounce for 2002.

	Electricity	Diesel
Quantity consumed in 2002	1.9 billion kilowatt hours	1.3 million barrels
Cost (dollars)	$0.06 per kilowatt hour	$38 per barrel(1)
Impact on total cash costs per ounce (dollars)	$20	$9

(1) Includes transportation and refining charges

The table above illustrates our actual consumption of these commodities, the average purchase cost and the impact on our average total cash costs per ounce.

Substantially all of our costs arising from consumption of these items is subject to variations in market prices, except that we have hedged about 20% of diesel fuel requirements for 2003. We are evaluating ways in which to mitigate these risk exposures, and we may take steps to hedge these costs in the future or utilize alternative sources of supply to lower costs.

Derivatives Risk

The derivative contracts we enter into are an integral part of our financial risk management strategy. The contracts act as economic hedges of our underlying exposures that arise in the normal course of our business and are not held for speculative purposes. Because we produce gold and silver, incur costs in foreign currencies and invest and borrow in US dollars and are therefore subject to US interest rates, all of our derivative contracts cover natural underlying asset or liability positions. By using derivative instruments, we have various financial risks, which we manage in the following manner.

Credit risk is the risk that one or more counterparties will fail to perform on an obligation to us. We mitigate credit risk by dealing with high quality counterparties, by spreading our credit risk exposure over a number of counterparties, by limiting our exposure to individual counterparties, and by using master netting arrangements such that our credit risk exposure is limited to the net positive fair value of contracts with individual counterparties.

Market liquidity risk is the risk that a derivative position cannot be eliminated quickly, by either liquidating derivative instruments or by establishing an offsetting position. Under the terms of our trading agreements with counterparties, the counterparties cannot require us to immediately settle outstanding contracts, unless we breach any financial covenants. We mitigate market liquidity risk by spreading out the maturity of our derivative instruments over time. This ensures that the size of positions maturing is such that for commodity contracts we are able to physically deliver gold and silver against the contracts, and for other contracts the relevant markets for currencies and interest rates will be able to absorb the contracts.

Mark-to-market risk is the risk that an adverse change in market prices for commodities, currencies or interest rates will affect our financial condition. We have mitigated this risk by establishing trading agreements with counterparties under which we are not required to post any collateral or make any margin calls on our derivative instruments. Also, the counterparties cannot require settlement of a derivative solely because of an adverse change in the mark-to-market value. We enter into derivative instruments to act as economic hedges of underlying exposure to commodity prices, foreign currency exchange rates and interest rates that arise in the normal course of our business. Consequently, for most of the derivative instruments we use, changes in the mark-to-market value do not affect earnings.

CRITICAL ACCOUNTING ESTIMATES

What follows is a discussion of our application of critical accounting policies that require us to make assumptions about matters that are highly uncertain at the time the accounting estimate is made, and where different estimates that we reasonably could have used in the current period — or changes in the accounting estimate that are reasonably likely to occur from period to period — would have a material impact on our financial statements. We have identified the following accounting estimates as critical:

• impairment assessments of goodwill;

• amortization of property, plant and equipment and intangible assets;

• impairment assessments of long-lived assets (including intangible assets);

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• mine reclamation and closure costs;

• the measurement and recognition of valuation allowances against future income tax assets; and

• contingencies.

We also have certain accounting policies that we consider to be important — such as our policies for revenue recognition, exploration costs and derivative instruments — that do not meet the definition of critical accounting estimates as they do not require us to make estimates or judgements that are subjective or highly uncertain.

Management has discussed the development and selection of our critical accounting estimates with the Audit Committee of the Board of Directors, and the Audit Committee has reviewed the disclosure relating to such estimates in this Management’s Discussion and Analysis.

Impairment Assessments of Goodwill

In accounting for the Homestake merger, we determined that goodwill of $1,247 million existed at the date of acquisition. The allocation of goodwill to reporting units was based on estimates of the individual fair values of those reporting units acquired or benefiting from synergies arising directly from the merger. Subsequent to the acquisition, we are required to test this goodwill annually for impairment. This impairment assessment is fundamentally based on updated estimates of the fair values of those reporting units, which could be affected by, among other things, changes in quantities of gold mineral reserves and resources; changes in the price of gold; changes in expected future operating costs; and changes in expected future capital expenditures and mine closure costs. An adverse change in any one or a number of these factors could cause us to recognize an impairment charge relating to goodwill. In particular if we were unable to replace or increase gold mineral reserves and resources at the mines where we have allocated goodwill, then we would expect the value of goodwill to be depleted over time as we approach the end of the mine life.

Amortization of property, plant and equipment and intangible assets

Property, plant and equipment and capitalized mining costs, which totaled $4.2 billion at December 31, 2002, represent a significant portion of our assets (54%). Due to the large size of these assets, the application of our accounting policies for these assets has a material impact on our reported earnings.

In accordance with our accounting policy for property, plant and equipment, we capitalize costs incurred on properties when proven and probable reserves exist, or when sufficient objective evidence exists to support a conclusion that it is probable non-reserve material will be produced. Upon commencement of gold production, we amortize capitalized property acquisition and mine development costs under the units of production method.

The process of estimating quantities of gold reserves is complex, requiring significant decisions in the evaluation of all available geological, geophysical, engineering and economic data. The data for a given ore body may also change substantially over time as a result of numerous factors, including, but not limited to, additional development activity, evolving production history and the continual reassessment of the viability of production under various economic conditions. A material revision (upward or downward) to existing reserve estimates could occur because of, among other things: revisions to geological data or assumptions; a change in the assumed gold prices; and the results of drilling and exploration activities. We make every effort to ensure that reported reserve estimates represent the most accurate assessment possible. However, because of the subjective decisions we have to make, as well as variances in available data for each ore body, these estimates are generally uncertain.

Changes in reserve quantities, including changes resulting from gold and silver price assumptions, would cause corresponding changes in amortization expense in periods subsequent to the revision, and could result in impairment of the carrying amount of property, plant and equipment, intangible assets and capitalized mining costs.

For the past three years, we estimated reserves assuming a $300 per ounce gold price. At December 31, 2002 a $25 per ounce reduction (8%) in gold price would reduce our reserves by about 4 million contained ounces (6%), relating primarily to our Kalgoorlie and Bulyanhulu operating mines and the Pascua-Lama development project. Such a decrease in reserves would increase annual amortization by about $20 million and decrease net income by about $15 million ($0.03 per share). Conversely, a $25 per ounce increase in gold price would increase our reserves by about 2 million contained ounces (3%), relating primarily to Kalgoorlie, Goldstrike and Pascua-Lama. Such an increase in reserves would decrease annual amortization by about $15 million and increase net income by about $10 million ($0.02 per share).

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In addition to changes in gold prices, reserve quantities can also change for other reasons, including but not limited to, new drilling results, changes in production costs and changes in geological assumptions. The mines where amortization charges would be most significantly affected by changes in reserve estimates are Pierina, Meikle, Eskay Creek and Bulyanhulu. These mines generally have the largest amounts of property, plant and equipment and intangible assets subject to amortization using the units of production method and the highest per ounce amortization charges. The effect of a 10% change in reserves at these mines on amortization would be as follows:

	Impact of a 10% change in gold		Impact on earnings, based on
	reserves on amortization (per ounce)		Ounces sold in 2002 (millions)
Pierina	$	17	$	15
Meikle		12		8
Eskay Creek		14		5
Bulyanhulu		11		4

Impairment assessments of long-lived assets (including intangible assets)

We believe that our estimates are critical for these assets because they are susceptible to change from period to period and the potentially material effect that recognizing an impairment could have on the assets reported on our balance sheet and on our reported earnings.

     They are based on estimates of future cash flows, which include estimates of:

• the quantity of gold reserves at our mines;

• future gold and silver prices; and

• future operating and capital costs to mine and process our reserves over extended periods of time (5 to 25 years).

In 2000 we recorded a $1.3 billion provision to reduce the carrying values of various assets. With the recent rise in spot gold prices, the current likelihood of a significant impairment at our operating mines has diminished. Based on a long-term gold price of $300 per ounce and our gold mineral reserves at December 31, 2002, we have completed a sensitivity analysis that indicates that a 10% decrease in net cash flows resulting from a combination of a lower spot gold price and an increase in operating and capital costs at each of our properties would not result in the recognition of a provision for impairment.

Reclamation and closure costs

Our mining, exploration and development activities are subject to various levels of federal, provincial and state laws and regulations relating to the protection of the environment, including requirements for closure and reclamation of mining properties. In general, these laws and regulations are continually changing and, over time, becoming more restrictive.

We estimate that future site reclamation and closure obligations will be $169 million at our closed mines and $292 million at our operating mines. At December 31, 2002, we had fully accrued for the future costs at our closed mines ($169 million), and we had accrued $112 million for our current operating mines. Based on our existing accounting policy, the remaining $180 million for our operating mines will be accrued over their estimated lives, based on the units of production method as gold is produced and sold. Changes in estimated costs are recognized prospectively as a revision to future cost accruals.

Our operating mines and approximately 50 closed mines are located in the United States, Canada, Australia, Chile, Peru and Tanzania. We expect to spend about $135 to $160 million over the next five years on reclamation and closure activities, with about 85% of these amounts at our closed mines. Our current operating mines have estimated productive lives, based on reserves at December 31, 2002, ranging from 2 to 25 years.

Significant management judgements and estimates are made when estimating reclamation and closure costs, which will be incurred, in some cases, many years from the date of estimate. A 10% change in the current overall estimate of reclamation and closure costs for our closed mines would increase or decrease net income by about $12 million or $0.02 per share. A 10% change at each of our operating mines may not have a significant effect on net income in a period because the effect of the change would be accrued over the estimated remaining life of each mine.

Valuation allowances against future income tax assets

For each future income tax asset, we evaluate the likelihood of whether some portion or all of the asset will not be realized. This evaluation is based on, among other things, expected levels of future taxable income. If, based on the

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weight of available evidence, we determine that it is more likely than not (a likelihood of more than 50 percent) that all or some portion of a future income tax asset will not be realized, then we record a valuation allowance against it. As of December 31, 2002, we have recorded a valuation allowance of $436 million on a portion of our net future income tax assets totaling $497 million.

Our most significant valuation allowances, and the related tax jurisdictions are:

(millions)	Valuation allowance
United States	$	166
Chile/Argentina		113
Tanzania		83
Canada		67
Other		7
	$	436

In the United States, Chile and Argentina, valuation allowances relate to tax assets in subsidiaries that do not have any present sources of income against which to utilize the assets. In the event these subsidiaries have sources of income in the future, we may be able to reduce the level of valuation allowances recorded.

In Canada, substantially all of the valuation allowances relate to capital losses that will only be utilized if we realize any capital gains in the future.

In Australia, the valuation allowances relate to operating losses in subsidiaries that have had a history of losses over the last three years. In the event there is a sustained upward movement in the price of gold or other factors occur that increase the profitability of these subsidiaries over the next few years, we may reduce the level of valuation allowances against these assets.

In Tanzania, the tax legislation provides for a compounding of unused tax depreciation which results in an additional deduction for tax purposes for amounts spent on property, plant and equipment. After considering the effect of this compounding, and the expected levels of future taxable income at the Bulyanhulu Mine, we recorded a valuation allowance against the portion of the future income tax assets that we believe will more than likely not be realized. In the event that levels of future taxable income at Bulyanhulu are higher than we presently expect, which could be because of a number of factors, including a sustained upward movement in gold prices, operating efficiencies or the discovery of additional reserves, we may reduce the level of valuation allowances against these assets.

In future years, levels of taxable income will be affected by, among other things, changes in gold prices, cash operating costs, proven and probable gold reserves, interest rates and foreign currency exchange rates. Significant changes in these and other factors could have a material impact on the amount of valuation allowances recorded and on income tax expense.

Contingencies

We account for contingencies in accordance with CICA Handbook Section 3290, Contingencies (“Section 3290”). Section 3290 requires that we record an estimated loss from a loss contingency when information available prior to issuance of our financial statements indicates that it is likely that a future event will confirm that an asset has been impaired or a liability has been incurred at the date of the financial statements, and the amount of the loss can be reasonably estimated. By their nature, contingencies will only be resolved when one or more future events occur or fail to occur — and typically those events will occur a number of years in the future. We assess such contingent liabilities, which inherently involves the exercise of significant management judgement and estimates of the outcome of future events.

Income tax contingencies

We record liabilities for known tax contingencies when, in our judgement, it is likely that a liability has been incurred. It is reasonably possible that actual amounts payable resulting from audits by tax authorities could be materially different from the liabilities we have recorded, due to the complex nature of the tax legislation that affects us.

As described in note 21 to our financial statements, we have recorded current and future income tax liabilities of $141 million for the cost arising from the denial by the Peruvian tax authorities (SUNAT) of our right to revalue the Pierina mining concession. This reduction on the Pierina cost base for tax purposes results in a temporary difference between income for tax and accounting purposes, and the recognition of liabilities for income taxes under our accounting policy

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for income taxes. We have appealed this decision, a process that we expect to take several years. Until the appeal is resolved, we will not be required to make any payments of this incremental tax liability. However, if at the end of the appeal process we are unsuccessful, we will be required to pay SUNAT the additional taxes owing at that time. Through the end of 2002, the impact on current income taxes payable amounts to $41 million, and this current part will continue to increase each year up to the full $141 million over the remaining life of the mine.

We have not recorded any potential interest and penalties, currently estimated at $51 million based on the SUNAT assessment, because we believe that it is not likely that these amounts are payable to SUNAT. A liability for interest and penalties will only be recorded should it become likely that SUNAT’s position on interest and penalties will be upheld or settled. In the event that we are unsuccessful in our appeal of the assessment of interest and penalties in Peru, based on the amounts potentially payable at the end of 2002, we would recognize a charge of about $51 million ($0.09 per share).

Legal contingencies

As described in note 21 to our financial statements, we are involved in claims and legal proceedings, the resolution of which could have a material effect on our financial condition or future results of operations. In assessing these contingencies, we evaluated the perceived merits of the legal proceedings or unasserted claims, as well as the perceived merits of the amount of relief sought or that we expect to seek.

Inmet Litigation

As disclosed in note 21 to our financial statements, we have accrued the amount of judgement awarded to Inmet, and in August 2002 we posted a letter of credit for C$95 million pending a decision on our appeal. We expect to receive a decision on our appeal in 2004, at which time, if we are unsuccessful, we will be required to satisfy the judgement.

In the event that the income tax and Inmet contingencies described above and that we have recorded in our financial statements are resolved in our favor, we would recognize in income gains of about $182 million ($0.34 per share), net of tax, in aggregate.

OFF-BALANCE SHEET ARRANGEMENTS

We do not enter into off-balance sheet arrangements with special purpose entities in the normal course of our business, nor do we have any unconsolidated affiliates. In the case of joint ventures, our proportionate interest for consolidation purpose is equivalent to the economic returns to which we are entitled as a joint venture partner. Our only significant off-balance sheet arrangements are our gold sales contracts.

GOLD SALES CONTRACTS

Overview

We have entered into gold sales contracts with high quality banking counterparties. The banking counterparties with whom we enter into these contracts engage in derivative transactions with numerous third parties in addition to us. We do not have any relationships with special purpose entities whose sole business purpose is to enter into derivative transactions with us.

We use gold sales contracts to protect our earnings and cash flow from declining gold prices, while permitting us to sell our gold production in the gold spot market in a rising gold price environment, as we have done in early 2003. At the end of 2002, our gold sales commitments under these contracts totaled 18.1 million ounces.

We account for these agreements as executory sales contracts with the proceeds under the contract recorded as revenue at the date we physically deliver gold to the counterparties.

Under these contracts:

1.	We can deliver gold to meet our commitments at any time we choose over periods of up to 10 or 15 years. We have the flexibility over this period to sell our production in either the spot gold market or through these contracts. Generally, our strategy is to sell our gold production in the spot market if the market price exceeds the price under our sales agreements.
2.	We are not subject to any margin calls, regardless of the price of gold.
3.	There are no credit downgrade provisions in these contracts.

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4.	We carefully manage credit exposure to our counterparties under these contracts. Generally, the counterparties have credit ratings of “AA”, and any credit exposure is spread over the 19 counterparties.
5.	We regularly review our gold sales commitments to ensure that we have the gold mineral reserves and future gold production that substantially exceed our contract commitments.

Through the use of these contracts over the last three years, we have realized higher revenues than if we had sold our gold production in the spot gold market at average spot gold prices. The benefits of using these contracts can be illustrated as follows:

Revenue from Forward Sales Contracts

	2002		2001		2000
Total revenues from contract sales (millions)	$	1,381	$	1,179	$	1,220
Average contract selling price ($/oz)	$	347	$	354	$	363
Average spot price ($/oz)	$	310	$	271	$	279
Incremental revenues from contracts in excess of average spot gold prices (millions)	$	148	$	276	$	299

The terms of our gold sales contracts provide flexibility and benefits that we believe are unique to us and unavailable to any other gold producer. We are able to realize benefits from the contracts mainly because we are able to choose a suitable delivery date at any time over the 10 to 15 year term of the contract. Over this period, we can sell our gold at the spot price, but if the spot price is lower than the contract price, our production is protected because we are able to sell at the contract price. These advantageous terms reflect, among other things, our strong credit rating and our high quality, long-life, low-cost asset base. We believe that the benefits we derive from these contracts give us a substantial economic and financial advantage over other companies in the gold mining industry.

The main factors that affect our future ability to derive benefits from these agreements are two financial covenants, which are based on our financial statements prepared under US GAAP: maintain a consolidated net worth of at least $2 billion (2002 — $3.3 billion) and our debt to equity ratio must not exceed 1.5:1 (2002 — less than 0.25:1).

Key Contract terms and conditions
Spot deferred sales contracts

A spot deferred sales contract is an agreement that we will sell a fixed number of ounces of gold to the contract counterparty on a delivery date in the future at an agreed price. We have the flexibility to choose the delivery date at any time over a 10 to 15 year period from the start of the contract. Our rights and obligations under these contracts are defined by Master Trading Agreements (“MTA’s”) that we have executed with our counterparties.

The selling price under the contract is based on the forward price of gold at the future delivery date, which is essentially a function of the spot gold price on the date the contract is entered into plus a premium (commonly referred to as “contango”) through the future delivery date. The amount of contango is often quoted as a percentage return that reflects the spread between market LIBOR interest rates (i.e., US dollar interest rates) and gold lease rates. Generally, US dollar interest rates are higher than the gold lease rate, which means that the future price is higher than the current price under the contract. The longer the period of time until delivery, the greater the amount of the forward premium or contango and — so long as US dollar interest rates are higher than gold lease rates — the greater the contract price compared to the spot price at the start of the contract.

Over the past five years, three-month US dollar interest rates have averaged 4.6% and gold lease rates have averaged 1.2%, resulting in an average contango rate of 3.4%. With the recent decline in interest rates, three-month US dollar interest rates have been about 1.8% and gold lease rates have been about 0.4%, resulting in a contango rate of 1.4%. The level of contango rates is one of the most significant factors that affect the price we realize from these contracts. At the end of 2002, the average rate of contango implied in our gold spot deferred contracts was 3.2%. The selling prices under our spot deferred contracts are fixed over an average future period of two years.

Beyond the dates that contango is presently fixed, future premiums earned under the spot deferred contracts will be based on market contango rates at that time, for those future periods until the actual delivery date. In the event gold lease rates are higher than US dollar interest rates, the “premium” becomes negative (known as “backwardation”). Over the past five years, backwardation has occurred only once, and only for a period of two days.

Since we have the flexibility to deliver gold under our sales contracts at any time over the next 10 to 15 years, we can sell our gold at the higher of the spot price or the contract price well into the future. In the event spot prices consistently

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exceed the contract price for the next 10 to 15 years, and assuming that we choose to deliver our gold at spot prices over this period, we would eventually deliver gold at a price of about $500 per ounce under our existing contracts (assuming typical historical long-term contango rates of 4%); however, if today’s low interest rate environment persists, the forward price of the contract would rise to about $400 per ounce. By choosing to deliver gold at higher spot gold prices, we are able to take advantage of those higher prices, but it remains probable that we will physically deliver gold over the term of the contract, and we will not be required to cash settle the contracts. In most cases, under the terms of our MTA’s, the period over which we are required to deliver gold is extended annually by one year, or kept “evergreen,” regardless of our intended delivery dates, unless otherwise notified by the counterparty. This means that, with each year that passes, the Termination Date is extended into the future by one year.

Variable price sales contracts

A variable price sales contract is a version of our spot deferred sales contract, the difference being that the price of gold is variable within certain limits. While most of our spot deferred contracts are to sell gold at a fixed price in the future, the “variable price” sales contracts have a variable price for gold, typically either i) within a range, or ii) capped to a maximum level based on the spot price at an agreed future date.

The variable price sales contracts enjoy all the same benefits and flexibility as our spot deferred sales contracts: we can deliver gold against our variable price sales contracts at any time up to 10 to 15 years in the future; most contracts have the “evergreen” clause; and they are not subject to margin calls.

Significance of mark-to-market gains and losses

Mark-to-market gains and losses represent unrealized changes in the fair value of our gold sales contracts. For example, if we had a contract to sell gold currently at $340 an ounce and the spot price of gold was $375 an ounce, then the mark-to-market value of the contract is about negative $35 per ounce. This has no impact on the selling price under the contract, which remains intact at $340 per ounce.

The mark-to-market value represents a calculation of the fair value of the contracts at a point in time, based on market conditions at that time. Because we intend to physically deliver future production against our sales contracts, we do not expect to ever have to financially settle this gain or loss and record it in our income statement. On delivery of gold under the contract, we receive cash equivalent to the selling price in the contract and we record this amount under gold sales in our income statement. Therefore, we do not expect a significant increase in the price of gold and an adverse change in the mark-to-market value of these contracts to result in the mark-to-market value being recorded in our earnings and cash flow.

A short-term spike in gold lease rates would not have a material negative impact on us because we are not exposed under our gold sales contracts to short-term gold lease rate variations. A prolonged rise in gold lease rates could result in lower contango (or negative contango i.e. “backwardation”) and therefore a smaller forward premium (or backwardation) under the contract. However, because of the large amount of Central Bank gold available for lending relative to demand, gold lease rates tend to be low and any spikes short-lived.

The estimated fair value of the gold contracts at December 31, 2002 was approximately negative $639 million, and the fair value of silver contracts was $7 million positive. The most significant factors affecting this mark-to-market value are spot gold prices and market contango rates. The mark-to-market value of our gold sales contracts would approach zero (breakeven) at a spot gold price of approximately $310 per ounce, assuming all other variables are constant.

The fair value of our foreign currency contracts at December 31, 2002 was $25 million positive. The value of gold contracts is based on the net present value of cash flows under the contracts, based on a gold spot price of $347 per ounce and market rates for Libor and gold lease rates. The year-to-date change in the fair value of our gold contracts is detailed as follows:

Continuity Schedule of the Change in the Mark-to-Market

Value of our Gold Sales Contract Position (millions)
Fair value as at December 31, 2001 — Gain	$	356
Impact of realized gains in the year		(168	)
Impact of change in spot price (from $279 per ounce to $347 per ounce)		(1,353	)
Contango earned in the year		182
Impact of change in valuation inputs other than spot metal prices (e.g., interest rates, lease rates, and volatility)		344
Fair value as at December 31, 2002 — Loss	$	(639	)

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CONTRACTUAL OBLIGATIONS AND COMMITMENTS

	Payments due in
(millions)	2003		2004-2005		2006-2007		2008+		Total
Contractual obligations
Long-term debt	$	20	$	72	$	568	$	114	$	774
Reclamation and closure costs		45		51		50		357		503
Capital leases		—		3		—		—		3
Operating leases		6		7		5		10		28
Purchase obligations:
Supplies inventory and consumables		50		21		4		—		75
Power contracts		18		24		44		—		86
Capital expenditures		20		—		—		—		20
Other		57		20		18		19		114
Total	$	216	$	198	$	689	$	500	$	1,603

Long-term debt

Our debt obligations do not include any subjective acceleration clauses or other clauses that enable the holder of the debt to call for early repayment, except in the event that we breach any of the terms and conditions of the debt. We are not required to post any collateral under any debt obligations, and the terms of the obligations would not be affected by a deterioration in our credit rating.

Reclamation and closure costs

The amounts included in the table for reclamation and closure costs represent our present legal obligations for costs at all our existing operating mines and mines in various stages of closure. For those mining operations where our interest is in a joint venture arrangement, the table reflects our proportionate share of the liability for reclamation and closure costs.

Under our present accounting policy, we accrue these costs on an undiscounted basis, using the units of production method over the life of each mine. After closure, changes to future cost estimates are recorded in earnings as they occur. The liability recorded on our balance sheet under this accounting policy represents the difference between costs accrued to date and actual payments made.

The most significant contingent liability relating to reclamation and closure activities, which is not recorded on our balance sheet, relates to potential obligations to monitor water quality and treat ground water on an ongoing basis. We record a liability for these activities if environmental laws and regulations require us to conduct these activities.

Power Purchase Agreements

We enter into contracts to purchase power at each of our operating mines. The contracts provide for fixed prices, which in certain circumstances are adjusted for inflation. Some agreements obligate us to purchase fixed quantities per hour, seven days a week, while others are based on a percentage of actual consumption. These contracts extend through various dates in 2004 to 2007.

In addition to the purchase obligations set out in the table, we purchase about 0.9 billion kilowatt-hours annually at market rates that were about 7 cents per kilowatt-hour in 2002. Under the terms of one contract, we purchase power based on actual consumption, which has an exit fee of $12 million should we decide to switch to an alternate power supplier.

COMMITMENTS

Royalties

Virtually all of our royalty commitments only give rise to obligations at the time we produce gold. In the event that we do not produce gold at our mining properties, we have no obligation to the royalty holders. The amounts that we expect to pay in the future are: 2003 — $37 million; 2004 to 2005 — $92 million; 2006 to 2007 — $89 million; and 2008 and beyond — $297 million. These amounts are estimated based on our expected gold production from proven and probable reserves for the periods indicated, assuming a $300 gold price. The most significant royalty arrangements are disclosed in note 4 to our financial statements.

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Payments to maintain land tenure and mineral property rights

In the normal course of business, we are committed to make annual payments to maintain title to certain of our properties and to maintain our rights to mine gold at certain of our properties. In the event we choose to abandon a property or discontinue mining operations, the payments relating to that property can be suspended, resulting in our rights to the property lapsing.

NON GAAP MEASURES

We have included cash costs per ounce data because we understand that certain investors use this information to assess our performance and also determine our ability to generate cash flow for use in investing and other activities. The inclusion of cash costs per ounce statistics enables investors to better understand year-on-year changes in production costs, which in turn affect our profitability and cash flow. We also make reference to the term “free cash flow,” which we define as cash flow from operations less cash used in the purchase of property, plant and equipment. This cash is available to reinvest in our business or to return to shareholders, either through dividends or share repurchases. Because we operate in a capital-intensive industry, the illustration of free cash flow enables investors to appreciate the year-on-year performance of our mines in generating cash for other purposes. This data is intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with GAAP. The measures are not necessarily indicative of operating costs or cash flow measures presented under GAAP.

Reconciliation of Cash Costs per Ounce

(in millions of US dollars except per ounce amounts)	2002			2001			2000
Operating costs per financial statements	$	1,073		$	633		$	533
Reclamation, closure and other costs(1)		(45	)(1)		(17	)		(13	)
Operating costs for per ounce calculation	$	1,028		$	616		$	520
Ounces sold (thousands)		5,805			3,879			3,614
Total cash costs per ounce	$	177		$	159		$	144

(1) In 2002, includes costs totaling $15 million in connection with the Peruvian tax assessment. Total cash costs per ounce data is calculated in accordance with The Gold Institute Production Cost Standard (the “Standard”). Adoption of the Standard is voluntary, and the data presented may not be comparable to data presented by other gold producers. Cash costs per ounce are derived from amounts included in the Statements of Income and include mine site operating costs such as mining, processing, administration, royalties and production taxes, but exclude amortization, reclamation costs, financing costs, and capital, development and exploration.

Reconciliation of Free Cash Flow (in millions)

	2002		2001		2000
Free cash flow	$	361	$	130	$	174
Capital expenditures and mine development costs		291		549		698
Operating cash flow	$	652	$	679	$	872

QUARTERLY INFORMATION (in millions, except per share data)

		March				June				September				December
(Canadian GAAP basis)		2002		2001		2002		2001		2002		2001		2002		2001
Gold sales		$	475	$	340	$	483	$	338	$	468	$	306	$	521	$	340
Net income		$	28	$	77	$	52	$	66	$	38	$	63	$	111	$	65
Net income per share
	Basic and diluted	$	0.05	$	0.19	$	0.10	$	0.17	$	0.07	$	0.16	$	0.20	$	0.16

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