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Financial Review

Graham Shuttleworth

Annual Report 2021

Financial Review

Graham Shuttleworth
Senior Executive Vice-President, Chief Financial Officer

Our solid performance in 2021 was built on three platforms: the strength and resilience of our asset base; the increasing contribution from our copper business; and the first fruits of our systems investments in the future. 

The quality of our asset base and the agility of our management were demonstrated by our ability to deliver on full-year production guidance, despite the major mill failure at one of the Carlin processing facilities in the second quarter. With the gold price maintaining its elevated level, delivery of our production and total cash costs Please see page 138 of the annual report for corresponding endnotes. within guidance was critical to maintaining our profitability and net cash position, and underwrote our ability to return a record $1.4 billion to shareholders in the form of dividends and return of capital. At the same time as delivering the strong results in 2021, we have positioned our business to be profitable in years to come, with anticipated growth in production and a declining cost profile.

We have begun to see the impact of inflation. Our agile operating model shields us from some of these headwinds, particularly around our supply chain and labour costs.

This is also supported by our strong financial results with operating cash flow of $4.4 billion in 2021 and free cash flow of $1.9 billion Please see page 138 of the annual report for corresponding endnotes.. For the second consecutive year, we have ended the year in a net cash position, despite the record returns to shareholders, and given that we do not have any material short- or medium-term debt commitments, the company’s balance sheet is in a very sound position, providing us with the ability to invest in our future growth and continue to deliver returns to our shareholders. We have increased our base dividend and introduced a performance dividend while at the same time approving a $1 billion share buyback program starting in 2022. The performance dividend will ensure that our shareholders participate in the upside of higher commodity prices while at the same time giving us the capacity to fund our future growth. Our dividend, on an annual basis, has increased for the last five years in a row.

Barrick 5-Year Gold Outlook (1) All metrics are exclusive of Porgera. (2) Royalty expenses included in the per ounce cost metrics are based on a gold price assumption of $1,700/oz for 2022 onwards. Our realized gold price in 2021 was $1,790/oz. (3) Gold Equivalent Ounces (GEO) are calculated using reserve prices – $1,200/oz for gold and $2.75/lb for copper. (i) Please see page 138 of the annual report for corresponding endnotes.

Barrick 5-Year Gold Outlook

 
Barrick 5-Year Copper Outlook (1) Royalty expenses included in the per pound cost metrics are based on a copper price assumption of $4.00/lb for 2022 onwards. Our realized copper price in 2021 was $4.32/lbi.(i) Please see page 138 of the annual report for corresponding endnotes.

Barrick 5-Year Copper Outlook

During 2021, the operating leverage Barrick has to the copper price and our ability to participate in the global decarbonization imperative became clearer. Our copper business contributed around 20% of Barrick’s bottom line during the year, and we expect to see that grow in the future as we develop this portfolio.

We are very near the end of our systems transformation journey that started almost two and half years ago. We have completed the implementation of SAP and OneStream at all our operations throughout the Americas and Africa. This has progressively allowed us to simplify our systems landscape by decommissioning several legacy and outdated enterprise resource planning and reporting platforms. That simplification has also been supported by further portfolio rationalization through disposals of non-core assets, including the Lone Tree and South Arturo asset swap and Lagunas Norte divestiture. 

We are now starting to realise the benefits of simplifying the group structure in the form of lower costs, higher operating efficiencies and enhanced transparency through the ability to benchmark our operations. We have adapted our supply chain model to minimize exposure to the biggest cost drivers while at the same time fully leveraging our buying power across the group, aided by our new SAP supply chain and planned maintenance implementations.

Identifying and effectively dealing with risk is key to a safe and sustainable business and is an integral part of how we protect and create value. Our risk management process is designed to enable us to identify, evaluate, plan and manage risks, including new and emerging risks that could have an impact on our business. During the year, we carried out a robust assessment of these risks, uncertainties and emerging risks facing the group. We also proactively analyzed the impact of these risks through scenarios linked to the interplay between geopolitics, societal expectations and technology advancement. 

While the previous two years have been largely focused on business transformation and building our geological understanding and 10-year plan in 2021, we started delivering on our foundational purpose. We continue to be excited by the additional value that is within our grasp and we are pursuing the capture of this upside to achieve our goal of becoming the world’s most valued gold and copper mining company.

Graham Shuttleworth
Senior Executive Vice-President, Chief Financial Officer

Annual Report 2021

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