African Barrick Gold BMO Global Metals & Mining Conference February 2013
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Introduction Strong production base in Tanzania and a long life, high grade reserve base Total Reserves and Resources in excess of 32 million ounces Strong balance sheet with a cash position of approximately US$400 million as at 31 December 2012 Disciplined allocation of capital while maintaining commitment to returning capital to shareholders Full year dividend of US16.3 cents, current dividend yield of over 3% Exciting pipeline of growth projects, enhanced by recent Kenyan acquisition 2
2012 Highlights Operational Gold production of 626,212 ounces and cash costs of US$949 per ounce sold, within recent guidance Revenue of US$1,087 million, EBITDA of US$331 million, and adjusted EPS of US$25.7 cents (headline EPS of US$14.5 cents) Corrective actions implemented at Bulyanhulu, growth projects remain on track Higher grades accessed at North Mara, social licence to operate and land access remain key Step up in mining and milling rates at Buzwagi Decision not to further extend Tulawaka s mine life Corporate Renewal of the North Mara Special Mining Licences Acquisition of highly prospective exploration properties in Kenya Offer process with China National Gold Operational Review initiated to drive improved returns and free cash flow generation Dividend payout maintained, representing a yield of over 3% Financial flexibility maintained, US$401 million of cash on balance sheet 3
2013 Outlook Outlook Production of 540,000 to 600,000 ounces of gold Total cash costs of US$925 US$975 per ounce sold including royalties Incorporates a US$120 per ounce reduction resulting from the adoption of the new accounting standard for deferred stripping (IFRIC 20) Will move to an all-in cost measure once defined by the World Gold Council Sustaining Capital Sustaining Capital, including land, of US$100 million Capitalised Development / Stripping of US$210 million (including US$70 million due to IFRIC 20) Expansionary Capital: CIL Expansion US$105 million (fully debt financed) Bulyanhulu Upper East US$10 million pre Board approval Other projects amounting to US$15 million 4
Operational Review What have we achieved? What is our current focus? Over last 3 years, we have generated substantial free cash flow whilst prioritising capital returns and long term investment Returned in excess of US$150 million to shareholders (1) Invested over US$750 million in the asset base Acquired two early stage projects with potential to deliver long-term value US$401 million on the balance sheet Undertaking a full review of the business from the mining face through to corporate offices Designed to address an evolving operating environment and ensure the business is sustainable, competitive and free cash flow generating Continuous development of the asset base Key focus is on ensuring value accretive production that drives returns to all of our stakeholders Own one of the highest quality portfolio of assets in Africa with over 32Moz of reserves and resources in Tanzania Fully replaced reserves and resources in 2012 Progressed social licence to operate at North Mara (1) Including the 2012 Final Dividend of US$50 million 5
Guiding Principles of the Operating Review Cost and organisational structure appropriate to the scale of the business Focus on value accretive production in order to drive returns Organic growth capital driven and prioritised by returns Asset review based on cash flow generation not scale Social licence to operate a pre-requisite for all assets Commitment to delivering capital distributions to shareholders Improving returns and driving free cash flow generation Continuing disciplined approach to targeting gold assets across Africa 6
Key Initiatives Operating cost Reduction Continue to review alternatives to reduce reliance on diesel self generation Optimisation of management operating systems and supply chain practices Capital Discipline Reduced 2013 sustaining capital expenditure by over US$50 million against 2012 Long-term capital discipline to be core element of planning process Organisational Structure Review Simplify corporate structure to improve responsiveness of the organisation Zero based review to assess the appropriate number and mix of employees and contractors Corporate Overhead Cost Reductions Recalibrate the corporate support / service model to match the business model Key opportunities to revise support function model Mine Planning Deliverability Review and optimise the LOMs at each mine to prioritise driving returns and cashflow Productivity gains through improved organisational structure and training 7
Capital Discipline Maintained a disciplined approach to capital expenditure over the past three years Invested over US$750 million into the business in order to stabilise our asset base Provides well invested, modern mines, such that we should be able to substantially lower our capital budget going forward 2013 capital expenditure guidance of US$100 million of sustaining capital Initial reduction of over US$50 million from the 2012 sustaining capital expenditure Reassessing all of our future capital expenditure to identify further opportunities to cut capital expenditure further into 2014 and beyond 8
2013 Asset Key Focus Areas Bulyanhulu Resolve paste fill plant issues Increase availability of higher grade stopes Stabilise and rebuild Tanzanian workforce Progress CIL Expansion and Upper East projects Buzwagi Continue to operate at nameplate capacity in the process plant Sustain increased level of mining rates Optimise the power mix for the mine Minimise additional capital investment North Mara Maintain Q4 s increased mining rates into 2013 Continue to deliver improved recoveries Progress land acquisitions and relocations Finalise lifting of EPO Continue to improve social licence to operate Tulawaka Harvest high grade pillars and close/divest operation Implement closure plan in conjunction with the Tanzanian government Redeploy employees within the portfolio 9
us$ million Opportunities to Reduce Direct Mining Costs Aim to reverse cost increases since 2011 800 700 600 500 400 300 200 106 94 98 80 138 105 72 91 99 90 Enhanced freight procedures and supply chain efficiencies Improved tracking and process Maintenance $98m Consumables $106m 2012 Labour $178m Zero based budgeting process and localisation 100 0-100 -200 169 178 2011-108 2012-119 Alternative energy and power optimisation technology Energy $138m G&A $91m Contract services $90m Revised support model Improved supplier contracts Labour Contract services G&A Energy Maintenance Consumables Capitalised Mining Labour Related Activity Related 10
Next Steps Review Process Review led by CEO, with CFO, COO and VP Org Effectiveness having direct responsibility for outcomes Multi-functional teams will focus on cost reduction in key cost areas Will draw on consultants where appropriate to expedite outcome Projects ranked based on execution criteria: Speed to benefit Materiality of benefit Assessment of impact on business Execute with targets, timelines and accountabilities Market Updates Process will be largely complete in six months Will release updates to the market with our periodic results releases Initial timescale for each initiative: Corporate Overhead Cost Reduction: ~3 months Operating Cost Reduction: ~6 months Mine Planning Deliverability: ~6 months Organisational Structure Review: ~6 months Capital Discipline (ongoing) Comprehensive overview of final review outcomes during Q3 2013 exit rate intended to be sustainable for 2014 11
Exploration and Growth Projects West Kenya JV Project Bulyanhulu CIL Expansion Project execution underway EPC contract and project financing agreed Production of ~40Kozpa starting in 2014 20 walk up drill targets Extensive review of prospects in H1 2013 Gokona Expansion ~1Moz of additional resource delineated around current open pit Bulyanhulu Upper East Ordered certain long lead items Studies underway to mine Reef 2 in parallel with Reef 1 Targeting 90Kozpa once in full production Nyabirama Expansion Positive drilling to date Expanded drill programme to be undertaken Golden Ridge Looking at alternatives to develop deposit, including trucking to Bulyanhulu Nyanzaga Declared 4.6Moz in-pit resource Moved into pre-feasibility in H2 2012 Ongoing property wide exploration Project Execution Feasibility Study Scoping/Pre- feasibility Study Grassroots / Target Delineation 12
Investment Proposition Strong production base in Tanzania and a long life, high grade reserve base Total Reserves and Resources in excess of 32 million ounces Strong balance sheet with a cash position of approximately US$400 million as at 31 December 2012 Disciplined allocation of capital while maintaining commitment to returning capital to shareholders Full year dividend of US16.3 cents, current dividend yield of over 3% Exciting pipeline of growth projects, enhanced by recent Kenyan acquisition 13