Download FORM F-9 and FORM F-3

As filed with the Securities and Exchange Commission on May 30, 2008
Registration No. 333-
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM F-9 and FORM F-3
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
Form F-9
Form F-3
Barrick Gold Corporation
Barrick North America Finance LLC
Barrick Gold Financeco LLC
(Exact Name of Registrant as Specified in its Charter)
Ontario
Delaware
Delaware
(Province or Other Jurisdiction of Incorporation or Organization)
1040
Not Applicable
(Primary Standard Industrial Classification Code Number)
Not Applicable
26-2663280
26-2663197
(I.R.S. Employee Identification No.)
Brookfield Place, TD Canada
Trust Tower
Suite 3700
161 Bay Street, P.O. Box 212
Toronto, Ontario
Canada M5J 2S1
(800) 720-7415
136 East South Temple
Suite 1800
Salt Lake City
Utah 84111-1134
United States
(801) 990-3900
(Address, including postal code, and telephone number, including area code, of Registrant’s principal executive offices)
CT Corporation System
111 Eighth Avenue
New York, New York 10011
(212) 894-8700
Barrick North America
Finance LLC
Barrick Gold Financeco LLC
136 East South Temple
Suite 1800
Salt Lake City
Utah 84111-1134
(801) 990-3900
(Name, Address (Including Zip Code) and Telephone Number (Including Area Code) of Agent for Service in the United States)
Copies to:
Sybil E. Veenman
Christopher J. Cummings
Kevin Thomson
Barrick Gold Corporation
Shearman & Sterling LLP
Davies Ward Phillips & Vineberg LLP
Brookfield Place, TD Canada
Commerce Court West
P.O. Box 63, 44th Floor
Trust Tower
Suite 4405, P.O. Box 247
1 First Canadian Place
Suite 3700
Toronto, Ontario M5L 1E8
Toronto, Ontario M5X 1B1
161 Bay Street, P.O. Box 212
(416) 360-8484
(416) 863-5530
Toronto, Ontario M5J 2S1
(800) 720-7415
Approximate date of commencement of proposed sale of the securities to the public: From time to time after the effective date of this
Registration Statement.
Form F-9
Form F-3
Province of Ontario
(Principal Jurisdiction Regulating this Form F-9 Offering)
It is proposed that this filing shall become effective (check appropriate
box):
A.  upon filing with the Commission, pursuant to Rule 467(a) (if in
connection with an offering being made contemporaneously in the
United States and Canada).
B.  at some future date (check appropriate box below):
1.  Pursuant to Rule 467(b) on ( ) at (
sooner than seven calendar days after filing).
) (designate a time not
2.  Pursuant to Rule 467(b) on ( ) at ( ) (designate a time
seven calendar days or sooner after filing) because the securities
regulatory authority in the review jurisdiction has issued a receipt or
notification of clearance on ( ).
3.  Pursuant to Rule 467(b) as soon as practicable after
notification of the Commission by the registrant or the Canadian
securities regulatory authority of the review jurisdiction that a receipt or
notification of clearance has been issued with respect hereto.
If the only securities being registered on this Form are being
offered pursuant to dividend or interest reinvestment plans, please
check the following box. 
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415
under the Securities Act of 1933, please check the following box.

If this Form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act, please
check the following box and list the Securities Act registration
statement number of the earlier effective registration statement for
the same offering. 
If this Form is a post-effective amendment filed pursuant to
Rule 462(c) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. 
4.  After the filing of the next amendment to this form (if
preliminary material is being filed).
If this Form is a registration statement pursuant to General
Instruction I.C. or a post-effective amendment thereto that shall
become effective upon filing with the Commission pursuant to
Rule 462(e) under the Securities Act, check the following box. 
If any of the securities being registered on this Form F-9 are to be
offered on a delayed or continuous basis pursuant to the home
jurisdiction’s shelf prospectus offering procedures, check the following
box. 
If this Form is a post-effective amendment to a registration
statement filed pursuant to General Instruction I.C. filed to register
additional securities or additional classes of securities pursuant to
Rule 413(b) under the Securities Act, check the following box. 
CALCULATION OF REGISTRATION FEE
Title of Each Class
of Securities to be Registered
Debt Securities (2)
Guarantees of Debt Securities (4)
Amount to be
Registered
$
2,000,000,000 (3)
(4)
Proposed
Maximum
Offering
Price
Per
Unit (1)
100 %
(4)
Proposed
Maximum
Aggregate
Offering
Price (1)
$
2,000,000,000 (3)
(4)
Amount of
Registration
Fee (2)
$
78,600 (5)
None
(1)
(2)
(3)
(4)
(5)
Estimated solely for the purpose of determining the registration fee.
Debt Securities of Barrick Gold Corporation, Barrick North America Finance LLC and Barrick Gold Financeco LLC being registered on
Form F-9 and Form F-3 hereunder.
In U.S. dollars or the equivalent thereof in foreign denominated currencies or currency units or if any Debt Securities are issued at an
original issue discount, such greater amount as shall result in an aggregate offering price of $2,000,000,000.
Guarantees by Barrick Gold Corporation being registered on Form F-9 hereunder are to be sold without separate consideration.
$126,700 was previously paid in connection with a registration statement on Form F-9 (File No. 333-120133) filed by Barrick Gold
Corporation, Barrick Gold Inc. and Barrick Gold Finance Company on November 1, 2004, including $31,675 paid in relation to
securities remaining unsold in the offering contemplated by such registration statement, which unsold securities are hereby deregistered.
Pursuant to Rule 457(p) under the Securities Act of 1933, as amended, $31,675 is being offset against the filing fee due in connection
with this registration statement. Accordingly, $46,925 is being paid at the time of filing this registration statement.
The Registrants hereby amend this registration statement on such date or dates as may be necessary to delay its effective date until the
registration statement shall becomes effective as provided in Rule 467 under the Securities Act of 1933 or on such date as the Commission,
acting pursuant to Section 8(a) of the Act, may determine.
PART I
INFORMATION REQUIRED TO BE DELIVERED
TO OFFEREES OR PURCHASERS
PRELIMINARY SHORT FORM BASE SHELF PROSPECTUS
New Issue
May 30, 2008
Barrick Gold Corporation
Barrick North America Finance LLC
Barrick Gold Financeco LLC
US $2,000,000,000
Debt Securities
Barrick, BNAF or BGF may offer and issue from time to time their debt securities consisting of debentures, notes, bonds and/or other
similar evidences of indebtedness (collectively, the “Debt Securities”) up to an aggregate principal amount of $2,000,000,000 or the equivalent
thereof in one or more foreign currencies or composite currencies. Any Debt Securities issued by BNAF or BGF will be unconditionally and
irrevocably guaranteed by Barrick. Debt Securities may be offered, separately or together, in separate series, in amounts, at prices and on terms
to be determined at the time of sale. The issuer of the Debt Securities, the specific designation, aggregate principal amount, currency,
denomination, maturity, rate (which may be fixed or variable) and time of payment of interest, if any, any terms for redemption at the option of
the issuer or the holders, any terms for sinking fund payments, the initial offering price (or the manner of determination thereof if offered on a
non-fixed price basis) any listing on a securities exchange and any other terms in connection with the offering and sale of any series of Debt
Securities in respect of which this prospectus is being delivered will be set forth in the accompanying prospectus supplement relating thereto.
The net proceeds to the applicable issuer from such sale will be set forth in a prospectus supplement.
The Debt Securities have not been approved or disapproved by the Ontario Securities Commission, the Securities and Exchange
Commission or any state securities regulator, nor has the Ontario Securities Commission, the Securities and Exchange Commission or
any state securities regulator, passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a
criminal offense.
We are permitted to prepare this prospectus in accordance with Canadian disclosure requirements, which are different from
those of the United States.
Owning the Debt Securities may subject you to tax consequences both in the United States and Canada. You should read the tax
discussion in any applicable prospectus supplement. This prospectus or any applicable prospectus supplement may not describe these
tax consequences fully.
Your ability to enforce civil liabilities under United States federal securities laws may be affected adversely because Barrick is
incorporated under the laws of the Province of Ontario, Canada, some of the officers and directors of Barrick, BNAF and BGF, and
some of the experts named in this prospectus are Canadian residents, and a majority of Barrick’s assets and the assets of those officers,
directors and experts are located outside of the United States.
BNAF and BGF are incorporated under the laws of Delaware, a foreign jurisdiction, and reside in, and have assets located in, the
United States. Although each of BNAF and BGF has appointed Barrick as its agent for service of process for certain securities law
purposes in Ontario, it may not be possible for investors to collect from BNAF or BGF judgments obtained in Ontario courts
predicated on the civil liability provisions of securities legislation. Judgments against BNAF or BGF may therefore have to be enforced
in the United States and may be subject to additional defences as a result.
TABLE OF CONTENTS
ABOUT THIS PROSPECTUS
3
WHERE YOU CAN FIND MORE INFORMATION
3
SPECIAL NOTE REGARDING FORWARD-LOOKING INFORMATION
5
BARRICK
6
BNAF AND BGF
6
USE OF PROCEEDS
7
EARNINGS COVERAGE
7
DESCRIPTION OF DEBT SECURITIES AND THE GUARANTEES
7
CERTAIN INCOME TAX CONSIDERATIONS
21
TRADING PRICE AND VOLUME OF COMMON SHARES
22
PLAN OF DISTRIBUTION
22
NON-GAAP PERFORMANCE MEASURES
24
LEGAL MATTERS
26
DOCUMENTS FILED AS PART OF THE REGISTRATION STATEMENT
26
EXPERTS
26
AUDITORS’ CONSENT
27
SCHEDULE “A” ANNUAL FINANCIAL STATEMENTS OF BARRICK GOLD CORPORATION FOR THE YEAR ENDED
DECEMBER 31, 2007
A-1
SCHEDULE “B” INTERIM FINANCIAL STATEMENTS OF BARRICK GOLD CORPORATION FOR THE THREE MONTHS
ENDED MARCH 31, 2008
B-1
2
ABOUT THIS PROSPECTUS
References to “$” in this prospectus are to U.S. dollars, unless otherwise indicated.
In this prospectus, Barrick Gold Corporation will be referred to as either “Barrick” or the “Guarantor”, Barrick North America Finance
LLC will be referred to as “BNAF” and Barrick Gold Financeco LLC will be referred to as “BGF”. Unless the context requires otherwise,
“we”, “us” and “our” refer to Barrick and its subsidiaries, including BNAF and BGF.
This prospectus has been filed with the Securities and Exchange Commission, or the SEC, as part of a registration statement on Form F-9
and Form F-3 relating to the Debt Securities and the guarantees (the “Guarantees”) by Barrick of any Debt Securities issued by BNAF or BGF
and with the Ontario Securities Commission, or the OSC, in each case using a “shelf” registration process. Under this shelf process we may sell
any combination of the Debt Securities described in this prospectus in one or more offerings up to a total aggregate principal amount of
$2,000,000,000. This prospectus provides you with a general description of the Debt Securities we may offer. Each time we sell Debt Securities
we will provide a supplement to this prospectus that will contain specific information about the terms of that offering. The prospectus
supplement may also add, update or change information about the terms of the offering or of the Debt Securities to be issued. You should read
both this prospectus and any prospectus supplement together with additional information described under the heading “Where You Can Find
More Information” below. This prospectus does not contain all of the information set forth in the registration statement, certain parts of which
are omitted in accordance with the rules and regulations of the SEC. You may refer to the registration statement and the exhibits to the
registration statement for further information with respect to us and the Debt Securities.
WHERE YOU CAN FIND MORE INFORMATION
Barrick files certain reports with and furnishes other information to each of the SEC and the OSC. Our SEC file number is 1-9059. Under
a multijurisdictional disclosure system adopted by the United States, such reports and other information may be prepared in accordance with
the disclosure requirements of Canada, which requirements are different from those of the United States. Barrick’s reports and other
information filed with the SEC since June 2002 are available, and Barrick’s reports and other information filed in the future with the SEC will
be available, from the SEC’s Electronic Document Gathering and Retrieval System (http://www.sec.gov), which is commonly known by the
acronym “EDGAR”, as well as from commercial document retrieval services. You may also read (and by paying a fee, copy) any document
Barrick files with the SEC at the SEC’s public reference room in Washington, D.C. (100 F Street N.E., Washington, D.C. 20549). Please call
the SEC at 1-800-SEC-0330 for more information on the public reference room. You may also inspect Barrick’s SEC filings at the New York
Stock Exchange, 20 Broad Street, New York, New York 10005. Barrick’s OSC filings are available over the Internet at http://www.sedar.com.
The SEC and the OSC allow Barrick to “incorporate by reference” into this prospectus the information filed with them, which means that
Barrick can disclose important information to you by referring you to these documents. Information has been incorporated by reference in
this prospectus from documents filed with the SEC and the OSC. We will provide to each person to whom a prospectus is delivered,
including any beneficial owner of Debt Securities, without charge, upon oral or written request to the secretary of Barrick at Brookfield Place,
Canada Trust Tower, Suite 3700, 161 Bay Street, P.O. Box 212, Toronto, Ontario, Canada M5J 2S1, (416) 861-9911, copies of the documents
incorporated herein by reference.
This prospectus incorporates by reference the documents listed below:
•
the comparative audited consolidated financial statements of Barrick and the notes thereto for the year ended December 31, 2007
prepared in accordance with United States generally accepted accounting principles, or U.S. GAAP, together with the report of the
auditors thereon and management’s discussion and analysis of financial and operating results for the year ended December 31,
2007, found on pages 25 through 76 of Barrick’s 2007 annual report (the “Consolidated Financial Statements”);
3
•
the comparative unaudited interim consolidated financial statements of Barrick and the notes thereto for the three months ended
March 31, 2008 prepared in accordance with U.S. GAAP, together with management’s discussion and analysis of financial and
operating results for the three months ended March 31, 2008 found on pages 8 through 28 of Barrick’s first quarter report;
•
the annual information form of Barrick dated March 27, 2008 for the year ended December 31, 2007;
•
the management information circular of Barrick dated March 27, 2008 prepared for the annual and special meeting of Barrick
shareholders held on May 6, 2008, other than the sections entitled “Report on Executive Compensation” and “Performance
Graph”;
•
the material change report of Barrick dated March 3, 2008 regarding Barrick’s agreement with Kennecott Explorations (Australia)
Ltd., a subsidiary of Rio Tinto PLC, to purchase its 40% interest in the Cortez Joint Venture in Nevada; and
•
the material change report of Barrick dated April 2, 2008 regarding Barrick’s Chief Executive Officer taking a leave of absence.
After the date of this prospectus and prior to the termination of the distribution of the Debt Securities, any material change reports
(excluding any confidential material change reports), annual financial statements (including the auditors’ report thereon), interim financial
statements and information circulars (other than those sections, if any, in respect of the downward repricing of options, the composition of the
compensation committee of the Barrick board of directors and its report on executive compensation, and the yearly percentage change in
Barrick’s cumulative total shareholders return on publicly traded securities compared with the cumulative total return of the S&P/TSX Gold
Index, the S&P/TSX Composite Index or any other broad equity market index or a published industry or line-of-business index) that Barrick
files with the OSC will be incorporated by reference in this prospectus and will automatically update and supersede information incorporated
by reference in this prospectus. In addition, any report filed or furnished by Barrick, BNAF or BGF with the SEC pursuant to Section 13(a) or
15(d) of the U.S. Securities Exchange Act of 1934, as amended (the “Exchange Act”) or submitted to the SEC pursuant to Rule 12g3-2(b)
under the Exchange Act, after the date of this prospectus shall be deemed to be incorporated by reference into this prospectus and the
registration statement of which this prospectus forms a part, if and to the extent expressly provided in such report.
Barrick, BNAF and BGF have obtained relief from the OSC (the “OSC Order”) which exempts each of BNAF and BGF from: (i) the
requirements of National Instrument 51-102—Continuous Disclosure Obligations; (ii) the requirements of Multilateral Instrument
52-109—Certification of Disclosure in Issuers’ Annual and Interim Filings; (iii) the requirements under applicable securities law relating to
audit committees; (iv) the requirements of National Instrument 58-101—Disclosure of Corporate Governance Practices; and (v) the
requirement under Form 44-101F1 promulgated under National Instrument 44-101—Short Form Prospectus Distributions to: (A) include in
this Prospectus and any prospectus supplement for any future offering of Notes earnings coverage ratios required under Section 6.1 of Form
44-101F1; and (B) incorporate by reference in this Prospectus and any prospectus supplement for any future offering of Notes any of the
documents specified under paragraphs 1 through 4, 6 and 7 of Section 11.1(1) of Form 44-101F1, provided, in each case that, among other
things: (X) BNAF, BGF and the Guarantor continue to satisfy all of the conditions set forth in subsection 13.4(2) of NI 51-102, other than
paragraph 13.4(2)(g); (Y) the Guarantor discloses in each of its interim financial statements and annual financial statements filed with the OSC
and the SEC any significant restrictions on the ability of the Guarantor to obtain funds from its subsidiaries by dividend or loan; and (Z) if
certain “restricted net asset” tests that are described in greater detail in the OSC Order are met, the Guarantor provides additional disclosure in
each of its interim financial statements and annual financial statements filed with the OSC and the SEC concerning: (i) the nature of any
restrictions on the ability of consolidated subsidiaries and unconsolidated subsidiaries of the Guarantor to transfer funds to the Guarantor in the
form of cash dividends, loans or advances and (ii) the amount of “restricted net assets”. In compliance with the requirements of the SEC,
attached hereto as Schedule “A” and Schedule “B”, respectively, are the annual financial statements of the Guarantor for the year ended
December 31, 2007 and the interim financial statements of the Guarantor for the three months ended
4
March 31, 2008, in each case revised to include an additional note relating to BNAF and BGF. From and after May 9, 2008, being the date of
formation of BNAF and BGF, the financial results of BNAF and BGF will be included in the consolidated financial results of Barrick. A copy
of the OSC Order can be obtained from the OSC website at www.osc.gov.on.ca.
All information omitted from this prospectus which is permitted to be omitted under applicable securities laws will be contained in one or
more supplements that will be delivered to purchasers of the Debt Securities together with this prospectus. Any such supplement to this
prospectus will be incorporated by reference into this prospectus as of the date of the supplement, but only for the purposes of the offering of
Debt Securities to which the supplement relates.
The documents listed above, including the Gurantor’s annual financial statements for the year ended December 31, 2007 and the
Guarantor’s interim financial statements for the three months ended March 31, 2008, each of which was filed on SEDAR and would otherwise
be deemed to be incorporated in this prospectus after the date of this prospectus, are not incorporated by reference to the extent that their
contents are modified or superseded by any statement contained in this prospectus (including the revised financial statements attached as
Schedule “A” and Schedule “B”), any amendment or supplement to this prospectus or any subsequently filed document that is also
incorporated by reference in this prospectus.
You should rely only on the information contained in or incorporated by reference in this prospectus or any applicable prospectus
supplement and on the other information included in the registration statement of which this prospectus forms a part. We have not authorized
anyone to provide you with different or additional information. We are not making an offer of these Debt Securities in any jurisdiction where
the offer is not permitted by law. You should not assume that the information contained or incorporated by reference in this prospectus or any
applicable prospectus supplement is accurate as of any date other than the date on the front of any applicable prospectus supplement.
SPECIAL NOTE REGARDING
FORWARD-LOOKING INFORMATION
Certain information contained or incorporated by reference in this Preliminary Short Form Base Shelf Prospectus, including any
information as to our strategy, plans or future financial or operating performance, constitutes “forward-looking statements”. All statements,
other than statements of historical fact, are forward-looking statements. The words “believe”, “expect”, “anticipate”, “contemplate”, “target”,
“plan”, “intends”, “continue”, “budget”, “estimate”, “may”, “will”, “schedule” and similar expressions identify forward-looking statements.
Forward-looking statements are necessarily based upon a number of estimates and assumptions that, while considered reasonable by us, are
inherently subject to significant business, economic and competitive uncertainties and contingencies. Known and unknown factors could cause
actual results to differ materially from those projected in the forward-looking statements. Such factors include, but are not limited to:
fluctuations in the currency markets (such as the Canadian and Australian dollars versus the U.S. dollar); fluctuations in the spot and forward
price of gold, copper or certain other commodities (such as silver, diesel fuel and electricity); changes in U.S. dollar interest rates or gold lease
rates that could impact the mark-to-market value of outstanding derivative instruments and ongoing payments/receipts under interest rate swaps
and variable rate debt obligations; risks arising from holding derivative instruments (such as credit risk, market liquidity risk and
mark-to-market risk); changes in national and local government legislation, taxation, controls, regulations and political or economic
developments in Canada, the United States, Dominican Republic, Australia, Papua New Guinea, Chile, Peru, Argentina, Tanzania, South
Africa, Pakistan, Russia or Barbados or other countries in which we do or may carry on business in the future; business opportunities that may
be presented to, or pursued by, us; our ability to successfully integrate acquisitions; operating or technical difficulties in connection with
mining or development activities; employee relations; availability and increasing costs associated with mining inputs and labor; the speculative
nature of mineral exploration and development, including the risks of obtaining necessary licenses and permits; diminishing quantities or
grades of reserves; adverse changes in our credit rating; and
5
contests over title to properties, particularly title to undeveloped properties. In addition, there are risks and hazards associated with the business
of mineral exploration, development and mining, including environmental hazards, industrial accidents, unusual or unexpected formations,
pressures, cave-ins, flooding and gold bullion losses (and the risk of inadequate insurance, or inability to obtain insurance, to cover these risks).
Many of these uncertainties and contingencies can affect our actual results and could cause actual results to differ materially from those
expressed or implied in any forward-looking statements made by, or on behalf of, us. Readers are cautioned that forward-looking statements
are not guarantees of future performance. All of the forward-looking statements made in this Preliminary Short Form Base Shelf Prospectus are
qualified by these cautionary statements. Specific reference is made to “Narrative Description of the Business—Mineral Reserves and Mineral
Resources” and “Risk Factors” in the annual information form of Barrick dated March 27, 2008 for the year ended December 31, 2007 and to
the “Management’s Discussion and Analysis of Financial and Operating Results for the year ended December 31, 2007” incorporated by
reference herein for a discussion of some of the factors underlying forward-looking statements.
We disclaim any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future
events or otherwise, except as required by applicable law.
BARRICK
Barrick is a leading international gold company. Barrick entered the gold mining industry in 1983 and is now the largest gold mining
company in the world in terms of production, reserves and market capitalization. Barrick has operating mines and projects in Canada, the
United States, Dominican Republic, Australia, Papua New Guinea, Peru, Chile, Argentina, Pakistan, Russia, South Africa and Tanzania.
Barrick’s principal products and sources of earnings are gold and copper.
In 2007, Barrick’s mines produced approximately 8.06 million ounces of gold and 402 million pounds of copper at total cash costs of
$350 per ounce and $0.83 per pound, respectively. Barrick expects to produce between 7.6 and 8.1 million ounces of gold in 2008 at expected
average total cash costs of $390 to $415 per ounce. 2008 copper production is targeted at approximately 380 to 400 million pounds at expected
total cash costs of approximately $1.15 to $1.25 per pound. “Total cash costs per ounce” and “Total cash cost per pound” are non-GAAP
performance measures. For an explanation of Barrick’s use of these measures, including a reconciliation of “total cash costs per ounce” and
“total cash cost per pound” to total cash production costs, see the discussion under the heading “Non-GAAP Performance Measures” on pages
24 to 26 of this prospectus.
Barrick is a corporation governed by the Business Corporations Act (Ontario) resulting from the amalgamation, effective July 14, 1984
under the laws of the Province of Ontario, of Camflo Mines Limited, Bob-Clare Investments Limited and the former Barrick Resources
Corporation. By articles of amendment effective December 9, 1985, the Company changed its name to American Barrick Resources
Corporation. Effective January 1, 1995, as a result of an amalgamation with a wholly-owned subsidiary, the Company changed its name from
American Barrick Resources Corporation to Barrick Gold Corporation. In connection with its acquisition of Placer Dome Inc., Barrick
amalgamated with Placer Dome Inc. pursuant to articles of amalgamation dated May 9, 2006. Barrick’s head and registered office is located at
Brookfield Place, TD Canada Trust Tower, 161 Bay Street, Suite 3700, Toronto, Ontario, M5J 2S1.
BNAF AND BGF
BNAF and BGF are Delaware limited liability companies which were formed in May 2008 and are wholly-owned indirect subsidiaries of
Barrick. Their primary purpose is the financing of other subsidiaries or affiliates of Barrick. BNAF and BGF do not plan to have other
operations and they have no assets, operations, revenues or cash flows other than those which are related to the issuance, administration and
repayment of the Debt Securities guaranteed by Barrick. Neither BNAF nor BGF intends to make available publicly or to its securityholders
annual or other reports or other separate continuous disclosure information.
6
USE OF PROCEEDS
We intend to use the net proceeds from the sale of the Debt Securities:
•
to repay indebtedness outstanding from time to time;
•
to make equity investments in and advances to subsidiaries of Barrick;
•
for capital expenditures and investment programs; and
•
for other general corporate purposes.
We may invest funds that we do not immediately require in short-term marketable securities. Specific information about the use of proceeds
from the sale of any Debt Securities will be included in the applicable supplement to this prospectus.
EARNINGS COVERAGE
This earnings coverage information for the 12 months ended December 31, 2007 and the 12 months ended March 31, 2008 is prepared in
accordance with Canadian disclosure requirements. The coverages have been calculated using financial information prepared in accordance
with U.S. GAAP. These coverages do not reflect any offering of Debt Securities but do reflect any required adjustments for issuances and
repayments of long-term debt since December 31, 2007 and servicing costs incurred in relation thereto. Specifically, Barrick’s pro forma
earnings coverage calculations for the 12 months ended December 31, 2007 reflect actual interest incurred during such period, adjusted for the
effect of the $990 million drawdown to partially fund the acquisition of the 40% interest in Cortez (which occurred in the first quarter of 2008)
as if such drawdown had occurred on January 1, 2007.
Barrick’s earnings before interest and income taxes for the 12 months ended December 31, 2007 were $1,573 million. These earnings
were 5.8 times Barrick’s pro forma interest requirements for the period of $272 million (including amounts capitalized during the period).
Barrick’s actual interest requirements for the 12 months ended December 31, 2007 were $237 million (including amounts capitalized during the
period), and Barrick’s earnings before interest and income taxes for this period were 6.6 times Barrick’s actual interest requirements for the
period.
Barrick’s earnings before interest and income taxes for the 12 months ended March 31, 2008 were $2,322 million. These earnings were
11.2 times Barrick’s pro forma interest requirements for the period of $221 million (including amounts capitalized during the period). Barrick’s
actual interest requirements for the 12 months ended March 31, 2008 were $221 million (including amounts capitalized during the period), and
Barrick’s earnings before interest and income taxes for this period were 11.2 times Barrick’s actual interest requirements for the period.
DESCRIPTION OF DEBT SECURITIES AND THE GUARANTEES
In this section only, the term “Barrick” refers only to Barrick Gold Corporation without any of its subsidiaries, the term “BNAF” refers
only to Barrick North America Finance LLC without any of its subsidiaries and the term “BGF” refers only to Barrick Gold Financeco LLC
without any of its subsidiaries. In addition, in this section only, each of the terms “we”, “us”, or “our” refers only to Barrick in the case of Debt
Securities and Guarantees issued by Barrick, and only to BNAF or BGF in the case of Debt Securities issued by BNAF or BGF, as applicable,
and the term “issuer” refers only to Barrick, BNAF or BGF in the case of Securities issued by Barrick, BNAF or BGF, as applicable. This
description sets forth certain general terms and provisions of the
7
Debt Securities and, if issued by BNAF or BGF, the Guarantees of Barrick as Guarantor. We will provide particular terms and provisions of a
series of Debt Securities, and a description of how the general terms and provisions described below may apply to that series, in a supplement
to this prospectus.
The Debt Securities and Guarantees will be issued under an Indenture to be entered into between Barrick as Issuer and Guarantor, BNAF
and BGF as Issuers, and The Bank of New York as trustee (the “Trustee”). The Indenture is subject to and governed by the U.S. Trust
Indenture Act of 1939, as amended. A copy of the form of the Indenture has been filed as an exhibit to our registration statement filed with the
SEC and with the prospectus filed with the OSC. The following summary highlights some of the provisions of the Indenture, and may not
contain all of the information that is important to you. Wherever we refer to particular provisions or defined terms of the Indenture, such
provisions or defined terms are incorporated in this prospectus by reference as part of the statement made, and the statement is qualified by
such reference. The term “Securities” as used under this caption, refers to all securities (other than Guarantees) issued under the Indenture,
including the Debt Securities.
Barrick, BNAF and BGF may issue Debt Securities and incur additional indebtedness otherwise than through the offering of Debt
Securities pursuant to this prospectus.
General
The Indenture does not limit the amount of Securities which we may issue under the Indenture, and we may issue Securities in one or
more series. Securities may be denominated and payable in any currency. We may offer no more than $2,000,000,000 (or the equivalent in
other currencies) aggregate principal amount of Securities pursuant to this prospectus. Unless otherwise indicated in the applicable prospectus
supplement, the Indenture permits us, without the consent of the holders of any Securities, to increase the principal amount of any series of
Securities we previously have issued under the Indenture and to issue such increased principal amount.
The applicable prospectus supplement will set forth the following terms relating to the Securities offered by such prospectus supplement
(the “Offered Securities”):
•
whether the Offered Securities are Debt Securities issued by Barrick or guaranteed Debt Securities issued by BNAF or BGF;
•
the specific designation of the Offered Securities; any limit on the aggregate principal amount of the Offered Securities; the date or
dates, if any, on which the Offered Securities will mature and the portion (if less than all of the principal amount) of the Offered
Securities to be payable upon declaration of acceleration of maturity;
•
the rate or rates at which the Offered Securities will bear interest, if any, the date or dates from which any such interest will accrue
and on which any such interest will be payable and the record dates for any interest payable on the Offered Securities which are in
registered form;
•
the terms and conditions under which we may be obligated to redeem, repay or purchase the Offered Securities pursuant to any
sinking fund or analogous provisions or otherwise;
•
the terms and conditions upon which we may redeem the Offered Securities, in whole or in part, at our option;
•
whether the Offered Securities will be issuable in registered form or bearer form or both, and, if issuable in bearer form, the
restrictions as to the offer, sale and delivery of the Offered Securities which are in bearer form and as to exchanges between
registered form and bearer form;
•
whether the Offered Securities will be issuable in the form of registered global securities (“Global Securities”), and, if so, the
identity of the depositary for such registered Global Securities;
•
the denominations in which registered Offered Securities will be issuable, if other than denominations of $1,000 and any multiple
thereof, and the denominations in which bearer Offered Securities will be issuable, if other than $5,000;
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•
each office or agency where payments on the Offered Securities will be made (if other than the offices or agencies described under
“Payment” below) and each office or agency where the Offered Securities may be presented for registration of transfer or
exchange;
•
if other than U.S. dollars, the currency in which the Offered Securities are denominated or the currency in which we will make
payments on the Offered Securities;
•
any index, formula or other method used to determine the amount of payments of principal of (and premium, if any) or interest, if
any, on the Offered Securities; and
•
any other terms of the Offered Securities which apply solely to the Offered Securities, or terms generally applicable to the
Securities which are not to apply to the Offered Securities.
Unless otherwise indicated in the applicable prospectus supplement:
•
holders may not tender Securities to us for repurchase; and
•
the rate or rates of interest on the Securities will not increase if we become involved in a highly leveraged transaction or we are
acquired by another entity.
We may issue Securities under the Indenture bearing no interest or interest at a rate below the prevailing market rate at the time of
issuance and, in such circumstances, we will offer and sell those Securities at a discount below their stated principal amount. We will describe
in the applicable prospectus supplement any Canadian and U.S. federal income tax consequences and other special considerations applicable to
any discounted Securities or other Securities offered and sold at par which are treated as having been issued at a discount for Canadian and/or
U.S. federal income tax purposes.
Debt Securities issued by Barrick and the Guarantees will be direct, unconditional and unsecured obligations of Barrick and will rank
equally among themselves and with all of Barrick’s other unsecured, unsubordinated obligations, except to the extent prescribed by law. Debt
Securities issued by BNAF or BGF will be direct, unconditional and unsecured obligations of BNAF or BGF, as the case may be, and will rank
equally among themselves and with all of BNAF’s or BGF’s other unsecured, unsubordinated obligations, except to the extent prescribed by
law. BNAF’s and BGF’s, as the case may be, obligations under its Debt Securities will be unconditionally guaranteed by Barrick as more fully
described below under “Guarantees”. Debt Securities issued by Barrick and the Guarantees will be structurally subordinated to all existing and
future liabilities, including trade payables and other indebtedness, of Barrick’s subsidiaries.
Barrick has agreed to provide to the Trustee (i) annual reports containing audited financial statements and (ii) quarterly reports for the
first three quarters of each fiscal year containing unaudited financial information.
Form, Denomination, Exchange and Transfer
Unless otherwise indicated in the applicable prospectus supplement, we will issue Securities only in fully registered form without
coupons, and in denominations of $1,000 and multiples of $1,000. Securities may be presented for exchange and registered Securities may be
presented for registration of transfer in the manner set forth in the Indenture and in the applicable prospectus supplement, without service
charges. We may, however, require payment sufficient to cover any taxes or other governmental charges due in connection with the exchange
or transfer. We have appointed the Trustee as security registrar. Bearer Securities and the coupons applicable to bearer Securities thereto will
be transferable by delivery.
Payment
Unless otherwise indicated in the applicable prospectus supplement, we will make payments on registered Securities (other than Global
Securities) at the office or agency of the Trustee, 101 Barclay Street—4E, New York, New York 10286 or, in the case of holders in Ontario,
BNY Trust Company of Canada, Suite 1101, 4 King Street West, Toronto, Ontario, M5H 1B6, except that we may choose to pay interest (a) by
check mailed to the
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address of the person entitled to such payment as specified in the security register or (b) by wire transfer to an account maintained by the
person entitled to such payment as specified in the security register. Unless otherwise indicated in the applicable prospectus supplement, we
will pay any interest due on registered Securities to the persons in whose name such registered Securities are registered on the day or days
specified by us.
Registered Global Securities
Registered Debt Securities of a series may be issued in whole or in part in global form that will be deposited with, or on behalf of, a
depositary identified in the prospectus supplement. Global Securities will be registered in the name of a financial institution we select, and the
Debt Securities included in the Global Securities may not be transferred to the name of any other direct holder unless the special circumstances
described below occur. The financial institution that acts as the sole direct holder of the Global Securities is called the “Depositary”. Any
person wishing to own Debt Securities issued in the form of Global Securities must do so indirectly by virtue of an account with a broker, bank
or other financial institution that, in turn, has an account with the Depositary.
Special Investor Considerations for Global Securities
Our obligations, as well as the obligations of the Trustee and those of any third parties employed by us or the Trustee, run only to persons
who are registered as holders of Debt Securities. For example, once we make payment to the registered holder, we have no further
responsibility for the payment even if that holder is legally required to pass the payment along to you but does not do so. As an indirect holder,
an investor’s rights relating to a Global Security will be governed by the account rules of the investor’s financial institution and of the
Depositary, as well as general laws relating to debt securities transfers.
An investor should be aware that when Debt Securities are issued in the form of Global Securities:
•
the investor cannot have Debt Securities registered in his or her own name;
•
the investor cannot receive physical certificates for his or her interest in the Debt Securities;
•
the investor must look to his or her own bank or brokerage firm for payments on the Debt Securities and protection of his or her
legal rights relating to the Debt Securities;
•
the investor may not be able to sell interests in the Debt Securities to some insurance companies and other institutions that are
required by law to hold the physical certificates of Debt Securities that they own;
•
the Depositary’s policies will govern payments, transfers, exchange and other matters relating to the investor’s interest in the
Global Security. We and the Trustee have no responsibility for any aspect of the Depositary’s actions or for its records of
ownership interest in the Global Security. We and the Trustee also do not supervise the Depositary in any way; and
•
the Depositary will usually require that interests in a Global Security be purchased or sold within its system using same-day funds.
Special Situations When Global Security Will be Terminated
In a few special situations described below, a Global Security will terminate and interests in it will be exchanged for physical certificates
representing Debt Securities. After that exchange, an investor may choose whether to hold Debt Securities directly or indirectly through an
account at its bank or brokerage firm. Investors must consult their own banks or brokers to find out how to have their interests in Debt
Securities transferred into their own names, so that they will be direct holders.
The special situations for termination of a Global Security are:
•
when the Depositary notifies us that it is unwilling, unable or no longer qualified to continue as Depositary (unless a replacement
Depositary is named); and
•
when and if we decide to terminate a Global Security.
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The prospectus supplement may list situations for terminating a Global Security that would apply only to the particular series of Debt
Securities covered by the prospectus supplement. When a Global Security terminates, the Depositary (and not Barrick, BNAF, BGF or the
Trustee) is responsible for deciding the names of the institutions that will be the initial direct holders.
Guarantees
Barrick will guarantee the payment of the principal of, premium, if any, and interest on Debt Securities issued by BNAF or BGF and any
Additional Amounts payable with respect to such Securities when they become due and payable, whether at the stated maturity thereof, by
declaration of acceleration or otherwise.
Certain Covenants
Limitation on Liens
Barrick will not, and will not permit any Restricted Subsidiary to, create, incur or assume any Lien (except for Permitted Liens) on any
Principal Assets securing payment of Indebtedness of Barrick or any of its Subsidiaries unless the Securities (together with, at Barrick’s option,
any other obligations that are not subordinate in right of payment to the Securities) are secured equally and ratably with (or prior to) any and all
obligations secured or to be secured by any such Lien and for so long as such obligations are so secured. For greater certainty, the following do
not constitute Liens securing payment of Indebtedness:
•
all rights reserved to or vested in any Governmental Authority by the terms of any lease, license, franchise, grant or permit held by
Barrick or any Restricted Subsidiary, or by any statutory provision, to terminate any such lease, license, franchise, grant or permit,
or to require annual or other periodic payments as a condition of the continuance thereof or to distrain against or to obtain a charge
on any property or assets of Barrick or any Restricted Subsidiary in the event of failure to make any such annual or other periodic
payment;
•
any Lien upon any Principal Asset in favor of any party to a joint development or operating agreement or any similar person
paying all or part of the expenses of developing or conducting operations for the recovery, storage, treatment, transportation or sale
of the mineral resources of the Principal Asset (or property or assets with which it is united) that secures the payment to such
person of Barrick’s or any Restricted Subsidiary’s proportionate part of such development or operating expenses;
•
any acquisition by Barrick or by any Restricted Subsidiary of any Principal Asset subject to any reservation or exception under the
terms of which any vendor, lessor or assignor creates, reserves or excepts or has created, reserved or excepted an interest in
precious metals or any other mineral or timber in place or the proceeds thereof; and
•
any conveyance or assignment whereby Barrick or any Restricted Subsidiary conveys or assigns to any Person or Persons an
interest in precious metals or any other mineral or timber in place or the proceeds thereof.
This covenant applies to Barrick and its Restricted Subsidiaries, which term does not include Subsidiaries of Barrick that maintain a
substantial portion of their fixed assets outside of Canada or the United States.
Consolidation, Amalgamation and Merger
None of Barrick, BNAF or BGF may consolidate or amalgamate with or merge into any other Person or convey, transfer or lease its
properties and assets substantially as an entirety to any other Person unless:
•
in a transaction in which Barrick, BNAF or BGF does not survive or continue in existence or in which Barrick, BNAF or BGF
transfers or leases its properties and assets substantially as an entirety to any other Person, the successor entity is a corporation,
partnership or trust organized under the laws of
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Canada or any province or territory of Canada or the United States, any state thereof or the District of Columbia or, if such
transaction would not impair (as determined by the Board of Directors of Barrick by resolution) the rights of the holders of the
Securities or the Guarantees, in any other country, provided that if such successor entity is organized under the laws of a
jurisdiction other than Canada or any province or territory of Canada, or the United States, any state thereof or the District of
Columbia, the successor entity assumes by a supplemental indenture the obligations of Barrick, BNAF or BGF, as the case may be,
under the Securities, the Guarantee and the Indenture to pay Additional Amounts, adding the name of such successor jurisdiction in
addition to Canada in each place that Canada appears in “- Payment of Additional Amounts” below and adding references to the
provinces, territories, states or other applicable political subdivisions of such successor jurisdiction in addition to references to the
provinces and territories of Canada appearing in “—Payment of Additional Amounts”;
•
the surviving entity shall expressly assume by a supplemental indenture the obligations of Barrick, BNAF or BGF, as the case may
be, in respect of the Securities, and in the case of Barrick, the Guarantees and the performance and observance of every covenant
of the Indenture to be performed or observed by Barrick, BNAF or BGF, as the case may be;
•
immediately before and after giving effect to any such transaction, no Event of Default or event that after notice or passage of time
or both would be an Event of Default shall have occurred and be continuing; and
•
if, as a result of any such transaction, any Principal Assets would become subject to a Lien, then, unless such Lien could be created
pursuant to the Indenture provisions described under “ Limitation on Liens ” above without equally securing the Securities,
Barrick, prior to or simultaneously with such transaction, shall have caused the Securities to be secured equally with or prior to the
indebtedness secured by such Lien.
Certain Definitions Applicable to Covenants
“ Consolidated Net Tangible Assets ” means, at a particular date, the aggregate amount of assets (less applicable reserves and other
properly deductible items) shown on the most recent consolidated financial statements of Barrick filed with or furnished to the SEC by Barrick
(or, in the event that Barrick is not required by law or pursuant to the Indenture to file reports with the SEC, as set forth on the most recent
consolidated financial statements provided to the Trustee) less (a) all current liabilities (excluding any portion constituting Funded Debt);
(b) all goodwill, trade names, trademarks, patents, unamortized debt discount and expense and other like intangibles (excluding from
intangibles, for greater certainty, mineral rights, interests in mineral properties, deferred mining, acquisition, exploration and stripping costs
and deferred charges relating to hedging agreements); and (c) appropriate adjustments on account of minority interests of other persons holding
shares of any of the Subsidiaries, all as set forth on the most recent balance sheet of Barrick and its consolidated Subsidiaries filed with or
furnished to the SEC by Barrick (or, in the event that Barrick is not required by law or pursuant to the Indenture to file reports with the SEC, as
set forth on the most recent consolidated financial statements provided to the Trustee) (but in any event, as of a date within 150 days of the date
of determination) and computed in accordance with the accounting principles used in Barrick’s annual financial statements contained in
Barrick’s annual report delivered to its shareholders in respect of the fiscal year immediately prior to the date of such computation; which, on
the date of this prospectus, were U.S. GAAP; provided that in no event shall any amount be deducted in respect of unrealized mark-to-market
adjustments (whether positive or negative and whether or not reflected in Barrick’s consolidated financial statements) relating to hedging and
other financial risk management activities of Barrick or any of its Subsidiaries (including, without limitation, commodity, interest rate and
foreign exchange trading and sales agreements).
“ Financial Instrument Obligations ” means obligations arising under:
•
interest rate swap agreements, forward rate agreements, floor, cap or collar agreements, futures or options, insurance or other
similar agreements or arrangements, or any combination thereof, entered into by a Person relating to interest rates or pursuant to
which the price, value or amount payable
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thereunder is dependent or based upon interest rates in effect from time to time or fluctuations in interest rates occurring from time
to time;
•
currency swap agreements, cross-currency agreements, forward agreements, floor, cap or collar agreements, futures or options,
insurance or other similar agreements or arrangements, or any combination thereof, entered into by a Person relating to currency
exchange rates or pursuant to which the price, value or amount payable thereunder is dependent or based upon currency exchange
rates in effect from time to time or fluctuations in currency exchange rates occurring from time to time; and
•
commodity swap, hedging or sales agreements, floor, cap or collar agreements, commodity futures or options or other similar
agreements or arrangements, or any combination thereof, entered into by a Person relating to one or more commodities or pursuant
to which the price, value or amount payable thereunder is dependent or based upon the price of one or more commodities in effect
from time to time or fluctuations in the price of one or more commodities occurring from time to time.
“ Funded Debt ” as applied to any Person, means all indebtedness of such Person maturing after, or renewable or extendable at the
option of such Person beyond, 12 months from the date of determination.
“ Governmental Authority ” means any nation or government, any state, province, territory or other political subdivision thereof and
any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government.
“ Indebtedness ” means obligations for money borrowed whether or not evidenced by notes, bonds, debentures or other similar evidences
of indebtedness.
“ Lien ” means any mortgage, lien, pledge, charge, security interest or encumbrance of any kind created, incurred or assumed in order to
secure payment of Indebtedness.
“ Non-Recourse Debt ” means Indebtedness to finance the creation, development, construction or acquisition of properties or assets and
any increases in or extensions, renewals or refinancings of such Indebtedness, provided that the recourse of the lender thereof (including any
agent, trustee, receiver or other Person acting on behalf of such entity) in respect of such Indebtedness is limited in all circumstances to the
properties or assets created, developed, constructed or acquired in respect of which such Indebtedness has been incurred, to the capital stock
and debt securities of the Restricted Subsidiary that acquires or owns such properties or assets and to the receivables, inventory, equipment,
chattels, contracts, intangibles and other assets, rights or collateral connected with the properties or assets created, developed, constructed or
acquired and to which such lender has recourse.
“ North American Subsidiary ” means any Subsidiary that maintains a substantial portion of its fixed assets within Canada or the United
States.
“ Permitted Liens ” means:
•
Liens existing on the date of the Indenture, or arising thereafter pursuant to contractual commitments entered into prior to such
date;
•
Liens securing the Securities;
•
Liens incidental to the conduct of the business of Barrick or any Restricted Subsidiary or the ownership of their assets that, in the
aggregate, do not materially impair the operation of the business of Barrick and its Subsidiaries taken as a whole, including,
without limitation, any such Liens created pursuant to joint development agreements and leases, subleases, royalties or other
similar rights granted to or reserved by others;
•
Purchase Money Mortgages;
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•
any Lien on any Principal Asset existing at the time Barrick or any Restricted Subsidiary acquires the Principal Asset (or any
business entity then owning the Principal Asset) whether or not assumed by Barrick or such Restricted Subsidiary and whether or
not such Lien was given to secure the payment of the purchase price of the Principal Asset (or any entity then owning the Principal
Asset), provided that no such Lien shall extend to any other Principal Asset;
•
any Lien to secure Indebtedness owing to Barrick or to another Subsidiary;
•
Liens on the assets of a corporation existing at the time the corporation is liquidated or merged into, or amalgamated or
consolidated with, Barrick or any Restricted Subsidiary or at the time of the sale, lease or other disposition to Barrick or any
Restricted Subsidiary of the properties of such corporation as, or substantially as, an entirety;
•
any attachment or judgment Lien provided that (i) the execution or enforcement of the judgment it secures is effectively stayed and
the judgment is being contested in good faith, (ii) the judgment it secures is discharged within 60 days after the later of the entering
of such judgment or the expiration of any applicable stay, or (iii) the payment of the judgment secured is covered in full (subject to
a customary deductible) by insurance;
•
any Lien in connection with Indebtedness which by its terms is Non-Recourse Debt;
•
any Lien for taxes, assessments or governmental charges or levies (a) that are not yet due and delinquent or (b) the validity of
which is being contested in good faith;
•
any Lien of materialmen, mechanics, carriers, workmen, repairmen, landlords or other similar Liens, or deposits to obtain the
release of these Liens;
•
any Lien (a) to secure public or statutory obligations (including reclamation and closure bonds and similar obligations), (b) to
secure payment of workmen’s compensation, employment insurance or other forms of governmental insurance or benefits, (c) to
secure performance in connection with tenders, leases of real property, environmental, land use or other governmental or
regulatory permits, bids or contracts or (d) to secure (or in lieu of) surety or appeal bonds, and Liens made in the ordinary course of
business for similar purposes;
•
any Lien granted in the ordinary course of business in connection with Financial Instrument Obligations;
•
any Lien created for the sole purpose of renewing or refunding any of the Liens described in the list above, provided that the
Indebtedness secured thereby shall not exceed the principal amount of Indebtedness so secured at the time of such renewal or
refunding, and that such renewal or refunding Lien shall be limited to all or any part of the same property which secured the Lien
renewed or refunded; and
•
any Lien not otherwise permitted under the list above, provided that the aggregate principal amount of Indebtedness secured by all
such Liens would not then exceed 10% of Consolidated Net Tangible Assets.
“ Person ” means an individual, partnership, corporation, business trust, trust, unincorporated association, joint venture, Governmental
Authority or other entity of whatever nature.
“ Principal Asset ” means (i) any real property interest (all such interests forming an integral part of a single development or operation
being considered as one interest), including any mining claims and leases, and any plants, buildings or other improvements thereon, and any
part thereof, located in Canada or the United States that is held by Barrick or any Restricted Subsidiary and has a net book value, on the date as
of which the determination is being made, exceeding 5% of Consolidated Net Tangible Assets (other than any such interest that the Board of
Directors of Barrick determines by resolution is not material to the business of Barrick and its Subsidiaries taken as a whole) or (ii) any of the
capital stock or debt securities issued by any Restricted Subsidiary.
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“ Purchase Money Mortgage ” means any Lien on any Principal Asset (or the capital stock or debt securities of any Restricted
Subsidiary that acquires or owns any Principal Asset) incurred in connection with the acquisition of that Principal Asset or the construction or
repair of any fixed improvements on that Principal Asset (or in connection with financing the costs of acquisition of that Principal Asset or the
construction or repair of improvements on that Principal Asset) provided that the principal amount of Indebtedness secured by any such Lien
shall at no time exceed 100% of the original cost to Barrick or any Restricted Subsidiary of the Principal Asset or such construction or repairs.
“ Restricted Subsidiary ” means any North American Subsidiary that owns or leases a Principal Asset referred to in clause (i) of the
definition of “Principal Asset” or is engaged primarily in the business of owning or holding capital stock of one or more Restricted
Subsidiaries. “Restricted Subsidiary”, however, does not include (1) any Subsidiary whose primary business consists of (A) financing
operations in connection with leasing and conditional sale transactions on behalf of Barrick and its Subsidiaries, (B) purchasing accounts
receivable or making loans secured by accounts receivable or inventory or (C) being a finance company or (2) any Subsidiary which the Board
of Directors of Barrick has determined by resolution does not maintain a substantial portion of its fixed assets within Canada or the United
States.
“ Subsidiary ” means (i) a corporation more than 50% of the outstanding Voting Stock of which at the time of determination is owned,
directly or indirectly, by Barrick or by one or more Subsidiaries of Barrick and the votes carried by such Voting Stock are sufficient, if
exercised, to elect a majority of the board of directors of the corporation or (ii) any other Person (other than a corporation) in which at the time
of determination Barrick or one or more Subsidiaries of Barrick, directly or indirectly, has or have at least a majority ownership and power to
direct the policies, management and affairs of the Person.
“ Voting Stock ” means securities or other ownership interests of a corporation, partnership or other entity having by the terms thereof
ordinary voting power to vote in the election of the board of directors or other persons performing similar functions of such corporation,
partnership or other entity (without regard to the occurrence of any contingency).
Payment of Additional Amounts
Unless otherwise specified in the applicable prospectus supplement, all payments made by or on behalf of Barrick, BNAF or BGF under
or with respect to the Securities or the Guarantees will be made free and clear of and without withholding or deduction for or on account of any
present or future tax, duty, levy, impost, assessment or other governmental charge (including penalties, interest and other liabilities related
thereto) imposed or levied by or on behalf of the Government of Canada or any province or territory thereof or by any authority or agency
therein or thereof having power to tax (hereafter “Canadian Taxes”), unless Barrick, BNAF or BGF, as the case may be, is required to withhold
or deduct Canadian Taxes by law or by the interpretation or administration thereof. If Barrick, BNAF or BGF is so required to withhold or
deduct any amount for or on account of Canadian Taxes from any payment made under or with respect to the Securities or the Guarantees,
Barrick, BNAF or BGF, as the case may be, will pay to each holder of such Securities as additional interest such additional amounts
(“Additional Amounts”) as may be necessary so that the net amount received by each such holder after such withholding or deduction (and
after deducting any Canadian Taxes on such Additional Amounts) will not be less than the amount such holder would have received if such
Canadian Taxes had not been withheld or deducted, except as described below. However, no Additional Amounts will be payable with respect
to a payment made to a Securities holder (such holder, an “Excluded Holder”) in respect of the beneficial owner thereof:
•
with which Barrick, BNAF or BGF, as the case may be, does not deal at arm’s length (for the purposes of the Income Tax Act
(Canada)) at the time of the making of such payment;
•
which is subject to such Canadian Taxes by reason of the Securities holder being a resident, domiciliary or national of, engaged in
business or maintaining a permanent establishment or other
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physical presence in or otherwise having some connection with Canada or any province or territory thereof otherwise than by the
mere holding of the Securities or the receipt of payments thereunder;
•
which is subject to such Canadian Taxes by reason of the Securities holder’s failure to comply with any certification, identification,
documentation or other reporting requirements if compliance is required by law, regulation, administrative practice or an
applicable treaty as a precondition to exemption from, or a reduction in the rate of deduction or withholding of, such Canadian
Taxes (provided that Barrick, BNAF or BGF advises the Trustee and the holders of the Securities then outstanding of any change
in such requirements); or
•
which is a fiduciary or partnership or Person other than the sole beneficial owner of such payment to the extent that the Canadian
Taxes would not have been imposed on such payment had such holder been the sole beneficial owner of such Securities.
Barrick, BNAF or BGF, as the case may be, will also:
•
make such withholding or deduction; and
•
remit the full amount deducted or withheld to the relevant authority in accordance with applicable law.
Barrick, BNAF or BGF, as the case may be, will furnish to the holders of the Securities, within 60 days after the date the payment of any
Canadian Taxes is due pursuant to applicable law, certified copies of tax receipts or other documents evidencing such payment by such person.
Barrick, BNAF or BGF, as the case may be, will indemnify and hold harmless each holder of Securities (other than an Excluded Holder)
from and against, and upon written request reimburse each such holder for the amount (excluding any Additional Amounts that have previously
been paid by Barrick, BNAF or BGF with respect thereto) of:
•
any Canadian Taxes so levied or imposed and paid by such holder as a result of payments made under or with respect to the
Securities or the Guarantees;
•
any liability (including penalties, interest and expenses) arising therefrom or with respect thereto; and
•
any Canadian Taxes imposed with respect to any reimbursement under the preceding two bullet points, but excluding any such
Canadian Taxes on such holder’s net income.
In any event, no Additional Amounts or indemnity amounts will be payable under the provisions described above in respect of any
Security in excess of the Additional Amounts and the indemnity amounts which would be required if, at all relevant times, the holder of such
Security were a resident of the United States for purposes of the Canada-U.S. Income Tax Convention (1980), as amended, including any
protocols thereto. As a result of the limitation on the payment of Additional Amounts and indemnity amounts discussed in the preceding
sentence, the Additional Amounts or indemnity amounts received by certain holders of Securities will be less than the amount of Canadian
Taxes withheld or deducted or the amount of Canadian Taxes (and related amounts) levied or imposed giving rise to the obligation to pay the
indemnity amounts, as the case may be, and, accordingly, the net amount received by such holders of Securities will be less than the amount
such holders would have received had there been no such withholding or deduction in respect of Canadian Taxes or had such Canadian Taxes
(and related amounts) not been levied or imposed.
Wherever in the Indenture there is mentioned, in any context, the payment of principal, premium, if any, interest, if any, or any other
amount payable under or with respect to a Security or a Guarantee, such mention shall be deemed to include mention of the payment of
Additional Amounts to the extent that, in such context, Additional Amounts are, were or would be payable in respect thereof.
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Tax Redemption
Unless otherwise specified in the applicable prospectus supplement, the applicable issuer may redeem the Securities of any series at any
time, in whole but not in part, at a redemption price equal to the principal amount thereof together with accrued and unpaid interest to the date
fixed for redemption, upon the giving of a notice as described below, if:
•
as a result of any change (including any announced prospective change) in or amendment to the laws (or any regulations or rulings
promulgated thereunder) of Canada (or the jurisdiction of organization of the successor to the applicable issuer or, if the Securities
of such series are guaranteed by Barrick, of Barrick) or of any political subdivision or taxing authority thereof or therein affecting
taxation, or any change in official position regarding the application or interpretation of such laws, regulations or rulings (including
a holding by a court of competent jurisdiction), which change or amendment is announced or becomes effective on or after the date
specified in the applicable prospectus supplement, and which in a written opinion to the applicable issuer or Barrick of legal
counsel of recognized standing has resulted or will result (assuming, in the case of any announced prospective change, that such
announced change will become effective as of the date specified in such announcement and in the form announced) in such issuer,
or in the case of guaranteed Securities, Barrick becoming obligated to pay, on the next succeeding date on which interest is due,
Additional Amounts with respect to any Security of such series as described under “—Payment of Additional Amounts”; or
•
on or after the date specified in the applicable prospectus supplement, any action has been taken by any taxing authority of, or any
decision has been rendered by a court of competent jurisdiction in, Canada (or the jurisdiction of organization of the successor to
the applicable issuer or, if the Securities of such series are guaranteed by Barrick, of Barrick) or any political subdivision or taxing
authority thereof or therein, including any of those actions specified in the paragraph immediately above, whether or not such
action was taken or decision was rendered with respect to the applicable issuer or Barrick, or any change, amendment, application
or interpretation shall be officially proposed, which, in any such case, in the written opinion to the applicable issuer or Barrick of
legal counsel of recognized standing, will result (assuming, in the case of any announced prospective change, that such announced
change will become effective as of the date specified in such announcement and in the form announced) in such issuer, or in the
case of guaranteed Securities, Barrick becoming obligated to pay, on the next succeeding date on which interest is due, Additional
Amounts with respect to any Security of such series;
and, in any such case, the applicable issuer or, in the case of guaranteed Securities, Barrick (or its successor), in its business judgment,
determines that such obligation cannot be avoided by the use of reasonable measures available to it (or its successor).
In the event that Barrick, BNAF or BGF elects to redeem the Securities of any series pursuant to the provisions set forth in the preceding
paragraph, it shall deliver to the Trustee a certificate, signed by an authorized officer, stating that it is entitled to redeem such Debt Securities
pursuant to their terms.
Notice of intention to redeem such Debt Securities will be given not more than 60 nor less than 30 days prior to the date fixed for
redemption and will specify the date fixed for redemption.
Events of Default
The term “Event of Default” with respect to Securities of any series means any of the following:
(a) default in the payment of the principal of (or any premium on) any Security of that series at its Maturity;
(b) default in the payment of any interest on any Security of that series when it becomes due and payable, and continuance of such
default for a period of 30 days;
17
(c) default in the deposit of any sinking fund payment when the same becomes due by the terms of the Securities of that series;
(d) default in the performance, or breach, of any other covenant or agreement of the applicable issuer or, in the case of guaranteed
Securities, Barrick in the Indenture in respect of the Securities of that series (other than a covenant or agreement for which default or
breach is specifically dealt with elsewhere in the Indenture), where such default or breach continues for a period of 90 days after written
notice to the issuer of such Securities and, in the case of guaranteed Securities, Barrick by the Trustee or the holders of at least 25% in
principal amount of all outstanding Securities affected thereby;
(e) failure to pay when due, after the expiration of any applicable grace period, any portion of the principal of, or involuntary
acceleration of the maturity (which acceleration is not rescinded or annulled within 10 days) of, Indebtedness of the applicable issuer or
(in the case of guaranteed Securities) Barrick having an aggregate principal amount outstanding in excess of the greater of
(i) $150,000,000 and (ii) 5% of Consolidated Net Tangible Assets;
(f) certain events of bankruptcy, insolvency or reorganization; or
(g) any other Events of Default provided with respect to the Securities of that series.
If an Event of Default described in clause (a), (b) or (c) above occurs and is continuing with respect to Securities of any series, then the
Trustee or the holders of not less than 25% in principal amount of the outstanding Securities of that series may require the principal amount (or,
if the Securities of that series are Original Issue Discount Securities or Indexed Securities, such portion of the principal amount as may be
specified in the terms of that series) of all the outstanding Securities of that series and any accrued but unpaid interest on such Securities be
paid immediately. If an Event of Default described in clause (d) or (g) above occurs and is continuing with respect to Securities of one or more
series, then the Trustee or the holders of not less than 25% in principal amount of the outstanding Securities of all series affected thereby (as
one class) may require the principal amount (or, if any of the Securities of such affected series are Original Issue Discount Securities or
Indexed Securities, such portion of the principal amount as may be specified in the terms of such affected series) of all the outstanding
Securities of such affected series and any accrued but unpaid interest on such Securities be paid immediately. If an Event of Default described
in clause (e) or (f) above occurs and is continuing, then the Trustee or the holders of not less than 25% in principal amount of all outstanding
Securities (as a class) may require the principal amount (or, if the Securities or any series are Original Issue Discount Securities or Indexed
Securities, such portion of the principal amount as may be specified in the terms of that series) of all the outstanding Securities and any accrued
but unpaid interest on such Securities be paid immediately. However, at any time after a declaration of acceleration with respect to Securities of
any series (or of all series, as the case may be) has been made and before a judgment or decree for payment of the money due has been
obtained, the holders of a majority in principal amount of the outstanding Securities of such series (or of all series, as the case may be), by
written notice to Barrick, BNAF or BGF, as applicable, and the Trustee, may, under certain circumstances, rescind and annul such acceleration.
The applicable prospectus supplement will contain provisions relating to acceleration of the maturity of a portion of the principal amount of
Original Issue Discount Securities or Indexed Securities upon the occurrence of any Event of Default and the continuation thereof.
Except during default, the Trustee is not obligated to exercise any of its rights and powers under the Indenture at the request or direction
of any of the holders, unless the holders have offered to the Trustee reasonable indemnity. If the holders provide reasonable indemnity, the
holders of a majority in principal amount of the outstanding Securities of all series affected by an Event of Default may, subject to certain
limitations, direct the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or
power conferred on the Trustee, with respect to the Securities of all series affected by such Event of Default.
No holder of a Security of any series will have any right to institute any proceedings, unless:
•
such holder has previously given to the Trustee written notice of a continuing Event of Default with respect to the Securities of that
series;
18
•
the holders of at least 25% in principal amount of the outstanding Securities of all series affected by such Event of Default have
made written request and have offered reasonable indemnity to the Trustee to institute such proceedings as trustee; and
•
the Trustee has failed to institute such proceeding, and has not received from the holders of a majority in the aggregate principal
amount of outstanding Securities of all series affected by such Event of Default a direction inconsistent with such request, within
60 days after such notice, request and offer.
However, these limitations do not apply to a suit instituted by the holder of a Security for the enforcement of payment of principal of or interest
on such Security on or after the applicable due date of such payment.
We will be required to furnish to the Trustee annually an officers’ certificate as to the performance of certain of our obligations under the
Indenture and as to any default in such performance.
Defeasance
When we use the term “defeasance”, we mean discharge from some or all of our obligations under the Indenture with respect to Securities
of a particular series. If Barrick, BNAF or BGF deposits with the Trustee sufficient cash or government securities to pay the principal, interest,
any premium and any other sums due to the stated maturity or a redemption date of the Securities of a particular series, then at its option:
•
the applicable issuer and, in the case of guaranteed Securities, Barrick will each be discharged from its obligations with respect to
the Securities of such series with certain exceptions, such as the obligation to pay Additional Amounts, and the holders of the
Securities of the affected series will not be entitled to the benefits of the Indenture except for registration of transfer and exchange
of Securities and replacement of lost, stolen or mutilated Securities and certain other limited rights. Such holders may look only to
such deposited funds or obligations for payment; or
•
the applicable issuer and, in the case of guaranteed Securities, Barrick will no longer be under any obligation to comply with the
“Limitation on Liens” covenant, the “Consolidation, Amalgamation and Merger” covenant and certain other covenants under the
Indenture, and certain Events of Default will no longer apply to them.
To exercise defeasance Barrick, BNAF or BGF also must deliver to the Trustee:
•
an opinion of U.S. counsel to the effect that the deposit and related defeasance would not cause the holders of the Securities of the
applicable series to recognize income, gain or loss for U.S. federal income tax purposes and that holders of the Securities of that
series will be subject to U.S. federal income tax on the same amounts, in the same manner and at the same times as would have
been the case if such defeasance had not occurred; and
•
an opinion of Canadian counsel or a ruling from Canada Revenue Agency that there would be no such recognition of income, gain
or loss for Canadian federal or provincial tax purposes and that holders of the Securities of such series will be subject to Canadian
federal and provincial income tax on the same amounts, in the same manner and at the same times as would have been the case if
such defeasance had not occurred.
In addition, no Event of Default with respect to the Securities of the applicable series can have occurred, Barrick cannot be an insolvent person
under the Bankruptcy and Insolvency Act (Canada) and neither BNAF nor BGF can be an “insolvent person” under the relevant legislation
applicable to them. In order for U.S. counsel to deliver the opinion that would allow the applicable issuer and, in the case of guaranteed
Securities, Barrick to be discharged from all of its obligations under the Securities of any series, the applicable issuer or, in the case of
guaranteed Securities, Barrick must have received from, or there must have been published by, the Internal Revenue Service a ruling, or there
must have been a change in law so that the deposit and defeasance would not cause holders of the Securities of such series to recognize income,
gain or loss for U.S. federal income tax
19
purposes and so that such holders would be subject to U.S. federal income tax on the same amounts, in the same manner and at the same time
as would have been the case if such defeasance had not occurred.
Modifications and Waivers
We may modify or amend the Indenture with the consent of the holders of a majority in aggregate principal amount of the outstanding
Securities of all series affected by such modification or amendment; provided, however, that we must receive consent from the holder of each
outstanding Security of such affected series to:
•
change the stated maturity of the principal of, or interest on, such outstanding Security;
•
reduce the principal amount of or interest on such outstanding Security;
•
reduce the amount of the principal payable upon the acceleration of the maturity of an outstanding Original Issue Discount
Security;
•
change the place or currency of payments on such outstanding Security;
•
impair the right to institute suit for the enforcement of any payment on or with respect to such outstanding Security;
•
reduce the percentage in principal amount of outstanding Securities of such series, from which the consent of holders is required to
modify or amend the Indenture or waive compliance with certain provisions of the Indenture or waive certain defaults; or
•
modify any provisions of the Indenture relating to modifying or amending the Indenture or waiving past defaults or covenants
except as otherwise specified.
The holders of a majority in principal amount of Securities of any series may waive our compliance with certain restrictive provisions of
the Indenture with respect to such series. The holders of a majority in principal amount of outstanding Securities of all series with respect to
which an Event of Default has occurred may waive any past default under the Indenture, except a default in the payment of the principal of or
interest on any Security or in respect of any item listed above.
The Indenture or the Securities may be amended or supplemented, without the consent of any holder of such Securities, in order to,
among other things, cure any ambiguity or inconsistency or to make any change, in any case, that does not have a materially adverse effect on
the rights of any holder of such Securities.
Consent to Jurisdiction and Service
Under the Indenture, Barrick has irrevocably appointed CT Corporation System, 111 Eighth Avenue, 13 Floor, New York, New York,
10011 as its agent for service of process in any suit, action or proceeding arising out of or relating to the Indenture, the Securities and the
Guarantees and for actions brought under federal or state securities laws brought in any federal or state court located in The City of New York,
and has submitted to such non-exclusive jurisdiction.
th
Governing Law
The Indenture, the Securities and the Guarantees will be governed by and construed in accordance with the laws of the State of New
York.
Enforceability of Judgments
Since many of Barrick’s assets are outside the United States, any judgment obtained in the United States against Barrick, including
judgments with respect to payments under the Guarantees, may not be collectible within the United States.
20
Barrick has been informed by its Canadian counsel, Davies Ward Phillips & Vineberg LLP, that a court of competent jurisdiction in the
Province of Ontario (an “Ontario Court”) would give a judgment in Canadian dollars at an exchange rate determined in accordance with the
Courts of Justice Act (Ontario) based upon a final and conclusive in personam judgment of a U.S. federal or New York state court located in
the State of New York (“New York Court”) for a sum certain obtained against Barrick with respect to a claim pursuant to the Indenture,
without reconsideration of the merits, if:
•
the New York Court rendering such judgment had jurisdiction over Barrick, as recognized by the courts of the Province of Ontario
for purposes of enforcement of foreign judgments (and submission by Barrick in the Indenture to the non-exclusive jurisdiction of
the New York Court will be sufficient for the purpose);
•
such judgment was: (a) not obtained by fraud or in any manner contrary to the principles of natural justice; (b) not for a claim
based on any laws of the United States or the State of New York or any other jurisdiction other than the Province of Ontario which
an Ontario Court would characterize under the laws of the Province of Ontario as revenue, expropriatory, penal or other public
laws; (c) not contrary to public policy, as such term is interpreted under the laws of the Province of Ontario or contrary to any
order made by the Attorney General of Canada under the Foreign Extraterritorial Measures Act (Canada) or by the Competition
Tribunal under the Competition Act (Canada) in respect of certain judgments referred to therein; and (d) subsisting and unsatisfied
and not impeachable as void or voidable under New York law;
•
an action to enforce the judgment is commenced in the Ontario Court within any applicable limitation period; and
provided that:
•
such Ontario Court has discretion to stay or decline to hear an action on such judgment if the judgment is under appeal, or there is
another subsisting judgment in Ontario, New York or any other jurisdiction relating to the same cause of action as such judgment;
and
•
an action in Ontario on such judgment may be affected by bankruptcy, insolvency or other similar laws affecting the enforcement
of creditors’ rights generally.
Barrick has been advised by its Canadian counsel that there is some doubt as to the enforceability in Canada, against Barrick, or against
any of their respective directors, officers and experts who are not residents of the United States, by a court in original actions or in actions to
enforce judgments of United States courts, of civil liabilities predicated solely upon the United States federal securities laws.
The Trustee
The Trustee under the Indenture is The Bank of New York.
CERTAIN INCOME TAX CONSIDERATIONS
The applicable prospectus supplement will describe certain Canadian federal income tax consequences to investors described therein of
acquiring Debt Securities, including, in the case of an investor who is not a resident of Canada (for purposes of the Income Tax Act (Canada)),
if applicable, whether payment of principal, premium, if any, and interest will be subject to Canadian non-resident withholding tax.
The applicable prospectus supplement will also describe certain U.S. federal income tax consequences of the acquisition, ownership and
disposition of Debt Securities by an initial investor who is a U.S. person (within the meaning of the U.S. Internal Revenue Code), if applicable,
including, to the extent applicable, any such consequences relating to Debt Securities payable in a currency other than the U.S. dollar, issued at
an original issue discount for U.S. federal income tax purposes or containing early redemption provisions or other special terms.
21
TRADING PRICE AND VOLUME OF COMMON SHARES
The common shares of Barrick are listed and traded on the New York Stock Exchange (“NYSE”) and the Toronto Stock Exchange (the
“TSX”). As a result, Barrick is required to disclose certain information herein regarding the price range and trading volume of its common
shares. The data set forth herein with respect to the trading of Barrick’s common shares is not, and should not be regarded as, a representation
with respect to the manner in which the Debt Securities may be traded on the secondary market in the future or that the Debt Securities, when
offered and issued, will be listed and posted for trading on the NYSE or the TSX.
The following table presents the high and low closing prices for the common shares of Barrick and the average daily trading volume, on a
monthly basis on the NYSE and TSX, for the twelve-month period prior to the date hereof.
NYSE
TSX
Month
High
Low
Average
Daily
Trading
Volume
2007
May
June
July
August
September
October
November
December
31.17
29.75
34.55
34.29
40.94
44.13
46.98
42.88
27.99
28.17
29.60
30.10
33.40
39.25
38.92
37.39
6,109,037
6,308,963
6,931,185
6,111,206
8,270,291
7,659,328
8,179,933
5,862,333
2008
January
February
March
April
May (to May 29)
53.57
53.33
53.55
46.04
42.69
46.02
47.54
41.94
37.50
37.36
15,677,076
9,800,512
10,287,516
8,768,611
9,680,315
High
(Cdn$)
Low
(Cdn$)
Average
Daily
Trading
Volume
Month
2007
May
June
July
August
September
October
November
December
34.43
31.80
36.20
36.03
40.92
42.03
43.30
42.03
30.62
29.97
31.54
32.39
35.04
39.19
38.27
37.40
2,368,684
2,560,622
2,433,972
2,902,192
4,244,890
3,410,267
3,231,000
2,397,071
2008
January
February
March
April
May (to May 29)
53.77
52.00
52.92
46.12
42.08
45.65
47.50
42.77
37.95
37.96
5,760,544
3,543,763
4,209,308
3,719,966
3,589,050
PLAN OF DISTRIBUTION
We may sell Debt Securities for cash or other consideration:
•
through agents;
•
through underwriters or dealers; or
•
directly to purchasers.
We will describe in a prospectus supplement the specific plan of distribution for a particular series of Debt Securities, including the name
or names of any underwriters or agents, the purchase price or prices of the Offered Securities, the form of consideration accepted for the
Offered Securities, the proceeds to Barrick, BNAF or BGF, as the case may be, from the sale of the Offered Securities, any initial public
offering price, any underwriting discount or commission and any discounts, concessions or commissions allowed or reallowed or paid by any
underwriter to other dealers. Any initial public offering price and any discounts, concessions or commissions allowed or reallowed or paid to
dealers may be changed from time to time.
We may distribute Debt Securities from time to time in one or more transactions:
•
at a fixed price or prices, which may change;
22
•
at market prices prevailing at the time of sale;
•
at prices related to such prevailing market prices; or
•
at prices to be negotiated with purchasers.
Debt Securities may be sold through agents designated by us. The agents may solicit offers by institutions to purchase the offered Debt
Securities directly from Barrick, BNAF or BGF, as the case may be, pursuant to contracts providing for payment and delivery on a future date.
The applicable prospectus supplement will set forth the commission we will pay to the agents and any conditions to any such contracts.
In connection with the sale of Debt Securities, Barrick, BNAF or BGF, or purchasers of Debt Securities for whom the underwriters may
act as agents may compensate the underwriters in the form of discounts, concessions or commissions. Underwriters, dealers, and agents that
participate in the distribution of Debt Securities may be deemed to be underwriters and any fees or commissions received by them from
Barrick, BNAF or BGF, and any profit on the resale of Debt Securities by them, may be deemed to be underwriting commissions under the
U.S. Securities Act of 1933, as amended. The applicable prospectus supplement will identify any underwriters with respect to the Offered
Securities.
Without limiting the generality of the foregoing, we also may issue some or all of the Debt Securities offered by this prospectus in
exchange for property, including securities or assets of ours or other companies we may acquire in the future.
We may enter into agreements to indemnify underwriters, dealers and agents who participate in the distribution of Debt Securities against
certain liabilities, including liabilities under the Securities Act of 1933, as amended. The underwriters, dealers and agents with whom we enter
into agreements may be customers of, engage in transactions with, or perform services for us in the ordinary course of business.
This prospectus may qualify the distribution of the Debt Securities under the securities laws of the Province of Ontario to purchasers
resident outside of the Province of Ontario, if a prospectus supplement specifically states that it is intended to do so. This prospectus may also
qualify the distribution of the Debt Securities under the securities laws of the Province of Ontario to purchasers resident in the Province of
Ontario, if a prospectus supplement specifically states that it is intended to do so. The Debt Securities may only be offered and sold in Canada :
(A) in the Province of Ontario pursuant to this prospectus (if the applicable supplement so provides); or (B) pursuant to an exemption from the
prospectus requirements of Ontario securities laws, or an exemption from the prospectus requirements of the securities laws of any other
province or territory in which the Debt Securities are offered or sold. In addition, the Debt Securities may only be offered and sold in any
province or territory of Canada by a securities dealer appropriately registered under the securities laws of that jurisdiction, or pursuant to an
exemption from the registered dealer requirements of those securities laws. Each underwriter and each dealer participating in the distribution of
the Offered Securities will agree, unless the applicable prospectus supplement indicates otherwise, that it will only offer or sell the Offered
Securities in Canada: (A) to purchasers resident in the Province of Ontario pursuant to this prospectus (if the applicable supplement so
provides), or to purchasers resident in any province or territory of Canada pursuant to an exemption from the prospectus requirements of those
securities laws; and (B) in accordance with the dealer registration requirements of applicable securities laws, or pursuant to an exemption from
those requirements. Except in the case of purchasers in Ontario acquiring Debt Securities pursuant to this prospectus (if the applicable
supplement so provides), any Debt Securities acquired by a purchaser in Canada may be subject to resale restrictions under Canadian securities
laws, which may in some cases apply to resales made to persons outside of Canada.
23
NON-GAAP PERFORMANCE MEASURES
Total cash costs per ounce/pound are non-GAAP financial measures. Total cash costs per ounce/pound include all costs absorbed into
inventory, as well as royalties, by-product credits, production taxes and accretion expense, and exclude inventory purchase accounting
adjustments and amortization. The presentation of these statistics in this manner allows Barrick to monitor and manage those factors that
impact production costs on a monthly basis. Barrick calculates total cash costs based on its equity interest in production from its mines. Total
cash costs per ounce/pound are calculated by dividing the aggregate of these costs by gold ounces, copper pounds sold or ore tons mined. Total
cash costs and total cash costs per ounce/pound are calculated on a consistent basis for the periods presented. In Barrick’s income statement,
amortization is presented separately from cost of sales. Some companies include amortization in cost of sales, which results in a different
measurement of cost of sales in the income statement. Barrick has provided the reconciliations set out below to illustrate the impact of
excluding amortization and inventory purchase accounting adjustments from total cash costs per ounce/pound statistics. Under purchase
accounting rules, Barrick recorded the fair value of acquired work in progress and finished goods inventories as at the date of its acquisition of
Placer Dome Inc. As the acquired inventory is sold, any purchase accounting adjustments reflected in the carrying amount of inventory at
acquisition, impacts cost of sales. The method of valuing these inventories is based on estimated selling prices less costs to complete and a
reasonable profit margin. Consequently, the fair values do not necessarily reflect costs to produce consistent with ore mined and processed into
gold and copper after the acquisition.
Management believes that using an equity interest presentation is a fairer, more accurate way to measure economic performance than
using a consolidated basis. For mines where Barrick holds less than a 100% share in the production, it excludes the economic share of gold
production that flows to its partners who hold a non-controlling interest. Consequently, for the Tulawaka mine, although Barrick fully
consolidated this mine in its Consolidated Financial Statements (which are incorporated in this prospectus by reference), its production and
total cash cost statistics only reflect its equity share of the production.
In managing its mining operations, Barrick disaggregates cost of sales between amortization and the other components of cost of sales.
Barrick uses total cash costs per ounce/pound statistics as a key performance measure internally to monitor the performance of its regional
business units. Management uses these statistics to assess how well the Company’s regional business units are performing against internal
plans, and also to assess the overall effectiveness and efficiency of the Company’s mining operations. Management also use amortization costs
per ounce/pound statistics to monitor business performance. By disaggregating cost of sales into these two components and separately
monitoring them, management is better able to identify and address key performance trends. Management believes that the presentation of
these statistics in this manner enhances the ability of investors to assess the Company’s performance. These statistics also enable investors to
better understand year-over-year changes in cash production costs, which in turn affect Barrick’s profitability and ability to generate cash flow.
The principal limitation associated with total cash costs per ounce/pound statistics is that they do not reflect the total costs to produce
gold/copper, which in turn impacts the earnings of Barrick. Management believes that it has compensated for this limitation by highlighting the
fact that total cash costs exclude amortization and inventory purchase accounting adjustments as well as providing details of the financial
effect. Management believes that the benefits of providing disaggregated information outweigh the limitation in the method of presentation of
total cash costs per ounce/pound statistics.
Total cash costs per ounce/pound statistics are intended to provide additional information, do not have any standardized meaning
prescribed by U.S. GAAP and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with
U.S. GAAP. The measures are not necessarily indicative of operating profit or cash flow from operations as determined under U.S. GAAP.
Other companies may calculate these measures differently.
24
Illustration of Impact of Excluding Certain Costs from Total Cash Costs per Ounce/Pound
For the years ended December 31
Gold
($ millions, except per ounce/pound information in dollars)
2007
Cost of sales
Cost of sales at Deep South included in discontinued operations
Cost of sales attributable to non-controlling interests
Inventory purchase accounting adjustments included in cost of sales
2
3
4
Cost of sales—equity basis
Amortization at producing mines—consolidated
Amortization at South Deep included in discontinued operations
Amortization at producing mines attributable to non-controlling interests
2005
2007
$ 2,348
101
(63 )
(11 )
$ 1,214
—
(8 )
—
2,827
865
—
(6 )
2,375
648
18
(16 )
1,206
409
—
(5 )
333
119
—
—
296
68
—
—
859
—
650
11
404
—
119
9
68
97
$ 3,686
$ 3,036
$ 1,610
$ 461
$ 461
3
4
Total cash costs per ounce/pound
(per ounce/pound information in dollars)
$ 342
—
—
(9 )
2006
$ 2,842
—
(15 )
—
Amortization at producing mines—equity basis
Inventory purchase accounting adjustments
Cost of sales including amortization and inventory purchase accounting
adjustments—equity basis
2006
Copper 1
$ 393
—
—
(97 )
For the years ended December 31
Gold
Copper 1
2006
2005
2007
2006
2007
Ounces/pounds sold—consolidated (thousands/millions)
Sales attributable to non-controlling interests
8,108
(53 )
8,566
(176 )
5,333
(13 )
401
—
376
—
Ounces/pounds sold—equity basis
8,055
8,390
5,320
401
376
227
76
—
$ 0.83
0.30
0.02
$ 0.79
0.17
0.26
3
Total cash costs per ounce/pound—equity basis
Amortization per ounce/pound—equity basis
Inventory purchase accounting adjustments per ounce/pound
Cost of sales and amortization per ounce/pound attributable to
non-controlling interests
$
Total costs per ounce/pound —consolidated basis
$
5
2.
3.
4.
5.
$
1
3
1.
350
104
—
455
283
81
1
$
9
$
374
8
$
311
—
$ 1.15
—
$ 1.22
The 2005 comparative periods for copper have been omitted as Barrick did not produce any significant amounts of copper prior to the
production from the copper mines acquired with Placer Dome Inc.
The aggregate amount of cost of sales for gold and copper is as per Barrick’s Consolidated Financial Statements.
Relates to a 70% interest in Tulawaka and a 50% interest in South Deep prior to 2007.
Based on Barrick’s equity interest.
Includes amotization, amounts attributable to non-controlling interests and inventory purchase accounting adjustments.
25
LEGAL MATTERS
General
Certain legal matters will be passed upon by:
•
Shearman & Sterling LLP, our United States counsel, on matters of United States law; and
•
Davies Ward Phillips & Vineberg LLP, our Canadian counsel, on matters of Ontario law and the federal laws of Canada applicable
in Ontario.
Davies Ward Phillips & Vineberg LLP may rely on Shearman & Sterling LLP in issuing opinions about the validity of the Securities
being sold. If different lawyers are relied on at the time of an offering of Securities, this will be included in the prospectus supplement.
On the date of this prospectus, the partners and associates of Davies Ward Phillips & Vineberg LLP and Shearman & Sterling LLP,
respectively, own beneficially, directly or indirectly, less than 1% of the securities of Barrick.
DOCUMENTS FILED AS PART OF THE REGISTRATION STATEMENT
The following documents have been filed with the SEC as part of the registration statement of which this prospectus is a part:
•
the documents listed as being incorporated by reference in this prospectus under the heading “Where You Can Find More
Information” in this prospectus;
•
consents of accountants and counsel;
•
powers of attorney;
•
form of the trust indenture relating to the Debt Securities and the Guarantees; and
•
statement of eligibility of the Trustee on Form T-1.
EXPERTS
The comparative audited consolidated financial statements incorporated by reference in this prospectus have been so incorporated in
reliance on the report of PricewaterhouseCoopers LLP, Chartered Accountants, given on the authority of that firm as experts in auditing and
accounting. The address of PricewaterhouseCoopers LLP is Suite 3000, P.O. Box 82, Royal Trust Tower, Toronto-Dominion Centre, Toronto,
Ontario, M5K 1G8.
26
May 30, 2008
Auditors’ Consent
We have read the short form base shelf prospectus of Barrick Gold Corporation (Barrick), Barrick North America Finance LLC (BNAF)
and Barrick Gold Financeco LLC (BGF) dated May 30, 2008 relating to the issue and sale of debt securities of Barrick, BNAF and BGF. We
have complied with Canadian generally accepted standards for an auditor’s involvement with offering documents.
We consent to the incorporation by reference in the above-mentioned prospectus of our report to the shareholders of Barrick on the
consolidated balance sheets of Barrick as at December 31, 2007 and December 31, 2006 and the consolidated statements of income, cash flows,
shareholders’ equity and comprehensive income for each of the years in the three-year period ended December 31, 2007. Our report is dated
February 20, 2008.
We also consent to the use in the above-mentioned prospectus of our report to the directors of Barrick on the consolidated balance sheets
of Barrick as at December 31, 2007 and December 31, 2006 and the consolidated statements of income, cash flows, shareholders’ equity and
comprehensive income for each of the years in the three-year period ended December 31, 2007. Our report is dated February 20, 2008 (except
as to note 29 which is as of May 30, 2008).
/s/ PricewaterhouseCoopers LLC
Chartered Accountants
Toronto, Ontario
27
SCHEDULE “A”
ANNUAL FINANCIAL STATEMENTS OF BARRICK GOLD CORPORATION
FOR THE YEAR ENDED DECEMBER 31, 2007
PricewaterhouseCoopers LLP
Chartered Accountants
PO Box 82
Royal Trust Tower, Suite 3000
Toronto Dominion Centre
Toronto, Ontario
Canada M5K 1G8
Telephone +1 416 863 1133
Facsimile +1 416 365 8215
Independent Auditors’ Report
To the Directors of
Barrick Gold Corporation
We have audited the accompanying consolidated balance sheets of Barrick Gold Corporation as at December 31, 2007 and December 31,
2006, and the related consolidated statements of income, cash flow, shareholders’ equity and comprehensive income for each of the years in the
three year period ended December 31, 2007. 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 of the Company’s financial statements as at December 31, 2007 and December 31, 2006 and for each of the
years then ended in accordance with Canadian generally accepted auditing standards and the standards of the Public Company Accounting
Oversight Board (United States). We conducted our audit of the Company’s financial statements for the year ended December 31, 2005 in
accordance with Canadian generally accepted auditing standards. Those standards require that we plan and perform an audit to obtain
reasonable assurance about whether the financial statements are free of material misstatement. An audit of financial statements includes
examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. A financial statement audit also
includes assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the
Company as at December 31, 2007 and December 31, 2006 and the results of its operations and its cash flows for each of the years in the three
year period ended December 31, 2007 in accordance with accounting principles generally accepted in the United States of America.
/s/ PricewaterhouseCoopers LLP
Chartered Accountants, Licensed Public Accountants
Toronto, Canada
February 20, 2008
except for note 29 which is as of May 30, 2008.
PricewaterhouseCoopers refers to the Canadian firm of PricewaterhouseCoopers LLP and the other member firms of PricewaterhouseCoopers International Limited, each of which is a
separate and independent legal entity.
A-1
Comments by Auditors for U.S. Readers on Canada-U.S. Reporting Differences
In the United States, reporting standards for auditors require the addition of an explanatory paragraph (following the opinion paragraph)
when there is a change in accounting principles that has a material effect on the comparability of the Company’s financial statements, such as
the changes described in Note 2e to these consolidated financial statements. Our report to the directors dated February 20, 2008 (except note 29
which is as of May 30, 2008) is expressed in accordance with Canadian reporting standards which do not require a reference to such a change
in accounting principles in the Auditors’ report when the change is properly accounted for and adequately disclosed in the financial statements.
/s/ PricewaterhouseCoopers LLP
Chartered Accountants, Licensed Public Accountants
Toronto, Canada
February 20, 2008
except for note 29 which is as of May 30, 2008
A-2
Consolidated Statements of Income
Barrick Gold Corporation
For the years ended December 31 (in millions of United States Dollars, Except Per Share Data)
2007
2006
2005
$ 6,332
$ 5,630
$ 2,348
Costs and expenses
Cost of sales (note 6)
Amortization (note 4)
Corporate administration
Exploration (notes 4 and 7)
Project development expense (note 7)
Other expense (note 8A)
Impairment charges (note 8B)
3,184
1,004
155
179
188
208
65
2,741
735
142
171
119
216
23
1,198
427
71
109
32
114
16
Interest income
Interest expense (note 20B)
Other income (note 8C)
4,983
141
(113 )
103
4,147
110
126 )
93
1,967
38
(3 )
46
Sales (notes 4 and 5)
1
77
131
81
Income from continuing operations before income taxes and other items
Income tax expense (note 9)
Non-controlling interests (note 2C)
Equity in investees (note 12)
1,480
(341 )
14
(43 )
1,560
(348 )
1
(4 )
462
(60 )
(1 )
(6 )
Income from continuing operations
Income from discontinued operations (note 3H)
1,110
9
1,209
297
395
—
Income before cumulative effect of changes in accounting principles
Cumulative effect of changes in accounting principles
1,119
—
1,506
—
395
6
$ 1,119
$ 1,506
$
401
$
$
1.28
1.27
$
$
1.44
1.42
$
$
0.74
0.73
$
$
1.29
1.28
$
$
1.79
1.77
$
$
0.75
0.75
Net income for the year
Earnings per share data (note 10)
Income from continuing operations
Basic
Diluted
Net income
Basic
Diluted
1 Exclusive of amortization (note 6).
The accompanying notes are an integral part of these consolidated financial statements.
A-3
Consolidated Statements of Cash Flow
Barrick Gold Corporation
For the years ended December 31 (in millions of United States dollars)
2007
OPERATING ACTIVITIES
Net income
Amortization (note 4)
Income tax expense (notes 9 and 23)
Gains on sale of investments (note 8C)
Revisions to AROs at closed mines (notes 8A and 21)
Income taxes paid
Income from discontinued operations (note 3H)
Other items (note 11A)
$
Net cash provided by operating activities
INVESTING ACTIVITIES
Property, plant and equipment
Capital expenditures (note 4)
Sales proceeds
Acquisitions, net of cash acquired of $13 million (2006: $1,108 million) (note 3)
Investments (note 12)
Purchases
Sales
Reclassifications (note 12)
Other investing activities (note 11B)
Net cash used in investing activities
2006
1,119
1,004
341
(71 )
6
(585 )
(9 )
(73 )
$
2005
1,506
735
348
(6 )
53
(280 )
(297 )
63
$
401
427
60
(17 )
15
(80 )
—
(80 )
1,732
2,122
726
(1,046 )
100
(1,122 )
(1,087 )
8
(208 )
(1,104 )
8
—
(11 )
625
(66 )
(42 )
(369 )
46
—
17
(89 )
10
—
(5 )
(1,562 )
(1,593 )
(1,180 )
FINANCING ACTIVITIES
Capital stock
Proceeds on exercise of stock options
Dividends (note 24A)
Long-term debt (note 20B)
Proceeds
Repayments
Settlement of derivative instruments acquired with Placer Dome
Other financing activities
142
(261 )
74
(191 )
92
(118 )
408
(1,128 )
(197 )
—
2,189
(1,581 )
(1,840 )
2
179
(59 )
—
(1 )
Net cash (used in) provided by financing activities
(1,036 )
(1,347 )
93
CASH FLOWS OF DISCONTINUED OPERATIONS
Operating activities
Investing activities
Financing activities
Effect of exchange rate changes on cash and equivalents
21
—
—
29
2,788
11
—
—
—
21
2,828
—
Net increase (decrease) in cash and equivalents
Cash and equivalents at beginning of year (note 20A)
2,006
1,037
(836 )
3,043
Cash and equivalents at end of year (note 20A)
$
The accompanying notes are an integral part of these consolidated financial statements.
A-4
2,207
—
(4 )
9
$
3,043
(361 )
1,398
$
1,037
Consolidated Balance Sheets
Barrick Gold Corporation
At December 31 (in millions of United States dollars)
2007
ASSETS
Current assets
Cash and equivalents (note 20A)
Accounts receivable (note 14)
Inventories (note 13)
Other current assets (note 14)
$
Non-current assets
Investments (note 12)
Equity method investments (note 12)
Property, plant and equipment (note 15)
Intangible assets (note 16)
Goodwill (note 17)
Other assets (note 18)
Total assets
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities
Accounts payable
Short-term debt (note 20B)
Other current liabilities (note 19)
2006
2,207
256
1,118
707
$
3,043
234
931
588
4,288
4,796
142
1,074
8,596
68
5,847
1,936
646
327
8,390
75
5,855
1,421
$ 21,951
$ 21,510
808
233
255
$
686
863
303
1,296
1,852
Non-current liabilities
Long-term debt (note 20B)
Asset retirement obligations (note 21)
Deferred income tax liabilities (note 23)
Other liabilities (note 22)
3,153
892
841
431
3,244
843
798
518
Total liabilities
6,613
7,255
82
56
Shareholders’ equity
Capital stock (note 24)
Retained earnings
Accumulated other comprehensive income (note 25)
13,273
1,832
151
13,106
974
119
Total shareholders’ equity
15,256
14,199
$ 21,951
$ 21,510
Non-controlling interests
Contingencies and commitments (notes 15 and 28)
Total liabilities and shareholders’ equity
The accompanying notes are an integral part of these consolidated financial statements.
A-5
Consolidated Statements of Shareholders’ Equity
Barrick Gold Corporation
For the years ended December 31 (in millions of United States dollars)
2007
2006
2005
Common shares (number in millions)
At January 1
Issued on exercise of stock options (note 26A)
Issued on acquisition of Placer Dome
864
6
—
538
3
323
534
4
—
At December 31
870
864
538
4,222
74
8,761
22
27
$ 4,129
93
—
—
—
13,106
4,222
Common shares
At January 1
Issued on exercise of stock options (note 26A)
Issued on acquisition of Placer Dome (note 3G)
Options issued on acquisition of Placer Dome (note 3G)
Recognition of stock option expense (note 26A)
$ 13,106
142
—
—
25
At December 31
13,273
$
Retained earnings (deficit)
At January 1
Net income
Dividends (note 24A)
974
1,119
(261 )
(341 )
1,506
(191 )
(624 )
401
(118 )
At December 31
1,832
974
(341 )
151
119
(31 )
$ 15,256
$ 14,199
Accumulated other comprehensive income (loss) (note 25)
Total shareholders’ equity at December 31
$ 3,850
Consolidated Statements of Comprehensive Income
Barrick Gold Corporation
For the years ended December 31 (in millions of United States dollars)
2007
2006
Net income
Other comprehensive income (loss), net of tax (note 25)
$ 1,119
32
$ 1,506
150
$ 401
(100 )
Comprehensive income
$ 1,151
$ 1,656
$ 301
The accompanying notes are an integral part of these consolidated financial statements.
A-6
2005
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Barrick Gold Corporation . Tabular dollar amounts in millions of United States dollars, unless otherwise shown. References to C$, A$,
ZAR, EUR, CLP, ARS, PGK and TZS are to Canadian dollars, Australian dollars, South African Rands, Euros, Chilean Pesos, Argentinean
Pesos, Papua New Guinea Kina and Tanzanian Schillings respectively.
1 > NATURE OF OPERATIONS
Barrick Gold Corporation (“Barrick” or the “Company”) principally engages in the production and sale of gold, as well as related
activities such as exploration and mine development. We also produce some copper and hold interests in a platinum group metals development
project and a nickel development project, both located in Africa, and a platinum group metals project located in Russia. Our mining operations
are concentrated in our four regional business units: North America, South America, Africa and Australia Pacific. We sell our gold production
into the world market and we sell our copper production into the world market and to private customers.
2 > SIGNIFICANT ACCOUNTING POLICIES
A
Basis of Preparation
These consolidated financial statements have been prepared under United States generally accepted accounting principles (“US GAAP”).
In 2007, we amended the income statement classification of certain income and expense items, including non-hedge derivative gains and losses
(see note 2E), to provide enhanced disclosure of significant business activities and reflect the increasing significance of amounts spent on those
activities. To ensure comparability of financial information, prior year amounts have been reclassified to reflect changes in the financial
statement presentation.
B
Principles of Consolidation
These consolidated financial statements include the accounts of Barrick Gold Corporation and those entities we have the ability to control
either through voting rights or means other than voting rights. FIN 46R provides guidance on the identification and reporting of entities
controlled through means other than voting rights and defines such entities as variable interest entities (“VIEs”). We apply this guidance to all
entities, including those in the development stage, except for unincorporated joint ventures, which are outside the scope of FIN 46R. For VIEs
where we are the primary beneficiary, we consolidate the entity and record a non-controlling interest, measured initially at its estimated fair
value, for the interest held by other entity owners. For VIEs where we are not the primary beneficiary we use the equity method of accounting.
For incorporated joint ventures (“JVs”) where we have the ability to exercise control, subject in some cases to protective rights held by
our JV partners, we consolidate the JV and record a non-controlling interest for the interest held by our JV partner. For incorporated JVs where
we do not have the ability to exercise control, we account for our investment using the equity method of accounting. For unincorporated JVs
under which we hold an undivided interest in the assets and liabilities of the joint venture, we include our pro rata share of the assets and
liabilities in our financial statements.
A-7
The following table illustrates our policy used to account for significant entities where we hold less than a 100% economic interest. We
consolidate all other wholly owned entities.
Consolidation Method at December 31, 2007
Entity type at Dec 31, 2007
North America
Round Mountain Mine
Hemlo Property Mine
Marigold Mine
Cortez Mine
Turquoise Ridge Mine
Pueblo Viejo Project
Donlin Creek Project
South America
Cerro Casale Project
Australia
Kalgoorlie Mine
Porgera Mine
Reko Diq Project
Africa
Tulawaka Mine
Kabanga Project
Sedibelo Project
Russia
Fedorova Project
1
2
3
4
5
6
7
1
2
3
4
5
6
7
Economic Interest
Method
Unincorporated JV
Unincorporated JV
Unincorporated JV
Unincorporated JV
Unincorporated JV
VIE
VIE
50 %
50 %
33 %
60 %
75 %
60 %
50 %
Pro Rata
Pro Rata
Pro Rata
Pro Rata
Pro Rata
Consolidation
Equity Method
VIE
51 %
Equity Method
50 %
95 %
37.5 %
Pro Rata
Pro Rata
Equity Method
Corporate Joint Venture
VIE
Not Applicable
70 %
50 %
50 %
Consolidation
Equity Method
Consolidation
VIE
50 %
Consolidation
Unincorporated JV
Unincorporated JV
VIE
Including Cortez Hills Project.
For the period from January 2006 until November 2007, we recorded our proportionate 70% share of project expenditures in project
development expense based on the previous joint venture agreement. Effective in November 2007, a new agreement was reached with
our partner which caused us to classify our interest as an equity method investment on a prospective basis (note 12).
We hold an undivided interest in our share of assets and liabilities at the Porgera mine. In August 2007, we increased our ownership
interest from 75% to 95% (note 3E).
We hold a 50% interest in Atacama Copper, which has a 75% interest in the Reko Diq project. We use the equity method to account for
our interest in Atacama Copper (note 12).
In accordance with an agreement with our partner, in 2007 and 2006 our partner was responsible for funding 100% of exploration and
project expenditures and we did not record any amounts for our economic interest in this period. After our partner has funded $145
million of exploration and project expenditures we will be responsible for funding our share of future expenditures. At December 31,
2007 our partner had spent $103 million of this funding commitment.
Until completion of a bankable feasibility study (“BFS”), we are responsible for funding 100% of project expenditures at the Sedibelo
project. In the year ended December 31, 2007, we recorded project development expenses totaling $22 million (2006: $10 million). On
completion of a BFS, as part of our earn-in agreement, we are entitled to earn a 50% economic interest in the entity that owns the
Sedibelo project and to recoup from our partner their 50% share of the costs to complete the BFS.
In accordance with our agreement with minority shareholders, we have an earn-in option for an additional 29% interest in the entity that
owns the rights to the Fedorova project (for a total 79% interest), provided that we deliver a BFS by January 1, 2009. We are responsible
for funding 100% of project expenditures until the BFS is finalized, and therefore a non-controlling interest has not been recorded
through December 31, 2007.
BARRICK YEAR-END 2008
A-8
NOTES TO FINANCIAL STATEMENTS
Entities Consolidated using the Pro Rata Method Income Statement and Cash Flow Information (100%)
For the years ended Dec.31
2007
Revenues
Costs and expenses
$
Net income
Operating activities
Investing activities
Financing activities
1
1
1
2
1,2
2006
2,076
(1,665 )
$
2005
1,776
(1,457 )
$ 1,009
(796 )
$
411
$
319
$
213
$
$
$
147
(139 )
81
$
$
$
473
(284 )
(185 )
$
$
$
318
(75 )
(237 )
Net cash inflow (outflow).
Includes cash flows between the joint ventures and joint venture partners.
Balance Sheet Information (100%)
At December 31
2007
Assets
Inventories
Property, plant and equipment
Other assets
$
Liabilities
Current liabilities
Long-term obligations
Deferred tax
2006
430
2,620
462
$
365
2,468
126
$ 3,512
$ 2,959
$
216
267
47
$
205
202
42
$
530
$
449
Non-controlling Interests—Income Statement
For the years ended December 31
2007
Pueblo Viejo project
Tulawaka mine
Other
C
2006
$ 30
(16 )
—
$
9
(8 )
—
$ 14
$
1
2005
$—
(2 )
1
$
(1 )
Foreign Currency Translation
The functional currency of all our operations is the US dollar. We translate non-US dollar balances into US dollars as follows:
•
Property, plant and equipment, intangible assets and equity method investments using historical rates;
•
Available for sale securities using closing rates with translation gains and losses recorded in other comprehensive income;
•
Asset retirement obligations using historical rates;
•
Long-term debt using closing rates;
•
Deferred tax assets and liabilities using closing rates with translation gains and losses recorded in income tax expense;
BARRICK YEAR-END 2008
A-9
NOTES TO FINANCIAL STATEMENTS
D
•
Other assets and liabilities using closing rates with translation gains and losses recorded in other income/expense; and
•
Income and expenses using average exchange rates, except for expenses that relate to non-monetary assets and liabilities measured
at historical rates, which are translated using the same historical rate as the associated non-monetary assets and liabilities.
Use of Estimates
The preparation of these financial statements requires us to make estimates and assumptions. The most significant ones are: quantities of
proven and probable mineral reserves; fair values of acquired assets and liabilities under business combinations, including the value of
mineralized material beyond proven and probable mineral reserves; future costs and expenses to produce proven and probable mineral reserves;
future commodity prices for gold, copper, silver and other products; the future cost of asset retirement obligations; amounts and likelihood of
contingencies; the fair values of reporting units that include goodwill; and uncertain tax positions. Using these and other estimates and
assumptions, we make various decisions in preparing the financial statements including:
•
The treatment of expenditures at mineral properties prior to when production begins as either an asset or an expense (note 15);
•
Whether tangible and intangible long-lived assets are impaired, and if so, estimates of the fair value of those assets and any
corresponding impairment charge (note 15);
•
Our ability to realize deferred income tax assets and amounts recorded for any corresponding valuation allowances (note 23);
•
The useful lives of tangible and intangible long-lived assets and the measurement of amortization (note 15);
•
The fair value of asset retirement obligations (note 21);
•
Whether to record a liability for loss contingencies and the amount of any liability (notes 15 and 28);
•
Whether investments are other than temporarily impaired (note 12);
•
The amount of income tax expense (note 9);
•
Allocations of the purchase price in business combinations to assets and liabilities acquired, including goodwill (notes 3 and 17);
•
Whether any impairments of goodwill have occurred and if so the amounts of impairment charges (note 17);
•
Transfers of value beyond proven and probable reserves to amortized assets (note 15);
•
Amounts recorded for uncertain tax positions (note 23), and
•
The timing and amounts recorded of proceeds for insurable losses under insurance claims (note 15).
As the estimation process is inherently uncertain, actual future outcomes could differ from present estimates and assumptions, potentially
having material future effects on our financial statements.
BARRICK YEAR-END 2008
A-10
NOTES TO FINANCIAL STATEMENTS
E
Accounting Changes
Accounting Changes Implemented in 2007
FSP AUG AIR—1—Accounting for Planned Major Maintenance Activities (FSP AIR-1)
On January 1, 2007, we adopted FSP AIR-1 which amends guidance from the AICPA Industry Audit Guide, Audits of Airlines (“Airline
Guide”) with respect to planned major maintenance activities and makes this guidance applicable to entities in all industries. Of the three
methods of accounting for planned major maintenance allowed by FSP AIR-1, we adopted the built-in overhaul method. The built-in overhaul
method is based on segregation of plant and equipment costs into those that should be depreciated over the useful life of the asset and those that
require overhaul at periodic intervals. The estimated cost of the overhaul component included in the purchase price of an asset is set up
separately from the cost of the asset and is amortized to the expected date of the initial overhaul. The cost of the initial overhaul is then
capitalized and amortized to the next overhaul, at which time the process is repeated. We adopted FSP AIR-1 on January 1, 2007. The
implementation of this standard did not have a material impact on our Financial Statements.
FASB Interpretation No. 48—Accounting for Uncertainty in Income Taxes, an interpretation of FASB Statement No. 109 (Accounting
for Income Taxes) (FIN 48)
In June 2006, the Financial Accounting Standards Board (FASB) issued FIN 48 to create a single model to address accounting for
uncertainty in tax positions. FIN 48 clarifies the accounting for income taxes, by prescribing a minimum recognition threshold a tax position is
required to meet before being recognized in the financial statements. FIN 48 also provides guidance on de-recognition, measurement,
classification, interest and penalties, accounting in interim periods, disclosure and transition. FIN 48 is effective for fiscal years beginning after
December 15, 2006.
We adopted the provisions of FIN 48, Accounting for Uncertainty in Income Taxes, on January 1, 2007. As a result of the
implementation of FIN 48, no adjustment was required to the liability for unrecognized tax benefits.
Change in Financial Statement Presentation—Derivative Gains and Losses
In 2007, we made a change in the financial statement classification of changes in the fair value of derivative instruments that do not
qualify for hedge accounting under FAS 133 (non-hedge derivatives), which was retroactively applied. Prior to this change, we recorded the
change in fair value of all non-hedge derivative gains and losses as a component of other income, with the exception of changes in the fair
value of embedded derivatives implicit in concentrate sales contracts, which were recorded as a component of revenue.
Beginning in 2007, we record changes in the fair value of non-hedge derivatives in a manner consistent with the intended purpose of the
instrument as follows: gold and copper derivative instruments are recorded in revenue; silver and fuel derivative contracts are recorded in cost
of sales; interest rate swaps are recorded in interest income or interest expense, depending on the intended purpose of the swap; and share
purchase warrants are recorded in other income.
The impact of this change in accounting policy for prior periods was as follows:
Increase
(decrease)
For the years ended December 31
2006
Gold revenue
Copper revenue
Cost of sales
Other expense
Interest income
Interest expense
Other income
BARRICK YEAR-END 2008
$
A-11
8
(14 )
5
—
9
—
2
2005
$
(2 )
—
(16 )
20
—
(4 )
2
NOTES TO FINANCIAL STATEMENTS
Accounting Changes Implemented in 2006
FAS 123R, Accounting for Stock—Based Compensation
On January 1, 2006, we adopted FAS 123R. Prior to this date we applied FAS 123 and accounted for stock options under the intrinsic
value method, recording compensation cost for stock options as the excess of the market price of the stock at the grant date of an award over
the exercise price. Historically, the exercise price of stock options equaled the market price of the stock at the grant date resulting in no
recorded compensation cost. We provided pro forma disclosure of the effect of expensing the fair value of stock options.
We adopted FAS 123R using the modified prospective method, which meant that financial statements for periods prior to adoption were
not restated. From January 1, 2006 we recorded compensation expense for all new stock option grants based on the grant date fair value,
amortized on a straight-line basis over the vesting period. We also recorded compensation expense for the unvested portion of stock option
grants occurring prior to January 1, 2006, based on the grant date fair value that was previously estimated and used to provide for pro forma
disclosures for financial statement periods prior to 2006, amortized on a straight-line basis over the remaining vesting period for those unvested
stock options. Details of stock-based compensation expense are included in note 26.
The application of FAS 123R to Restricted Share Units (RSUs) and Deferred Share Units (DSUs) did not result in any significant change
in the method of accounting for RSUs or DSUs.
FAS 151, Inventory Costs
FAS 151 specifies the general principles applicable to the pricing and allocation of certain costs to inventory. Under FAS 151, abnormal
amounts of idle facility expense, freight, handling costs and wasted materials are recognized as current period charges rather than capitalized to
inventory. FAS 151 also requires that the allocation of fixed production overhead to the cost of inventory be based on the normal capacity of
production facilities.
FAS 151 was applicable prospectively from January 1, 2006 and we modified our inventory accounting policy consistent with its
requirements. Under our modified accounting policy for inventory, production-type costs that are considered abnormal are excluded from
inventory and charged directly to the cost of sales. Interruptions to normal activity levels at a mine could occur for a variety of reasons
including equipment failures and major maintenance activities, strikes, power supply interruptions and adverse weather conditions. When such
interruptions occur we evaluate the impact on the cost of inventory produced in the period, and to the extent the actual cost exceeds the cost
based on normal capacity we expense any excess directly to cost of sales. The adoption of FAS 151 did not have any significant effect on our
financial statements.
FAS 158, Employers’ Accounting for Defined Benefit Pension and Other Post-retirement Plans
In September 2006, the FASB issued FAS 158 that requires employers to fully recognize the obligations associated with single-employer
defined benefit pension, retiree health care and other post-retirement plans in their financial statements. FAS 158 was developed to respond to
concerns that past accounting standards needed to be revisited to improve the transparency and usefulness of the information reported. Under
past accounting standards, the funded status of an employer’s post-retirement benefit plan (i.e., the difference between the plan assets and
obligations) was not completely reported in the balance sheet. Employers reported an asset or liability that differed from the plan’s funded
status because previous accounting standards allowed employers to delay recognition of certain changes in plan assets and obligations that
affected the costs of providing such benefits. Past standards only required an employer to disclose the funded status of its plans in the notes to
the financial statements.
FAS 158 requires recognition of the funded status of a benefit plan on the balance sheet—measured as the difference between plan assets
at fair value (with limited exceptions) and the benefit obligation, as at the fiscal
BARRICK YEAR-END 2008
A-12
NOTES TO FINANCIAL STATEMENTS
year-end. For a pension plan, the benefit obligation is the projected benefit obligation; for any other post- retirement benefit plan, such as a
retiree health care plan, the benefit obligation is the accumulated post-retirement benefit obligation. FAS 158 also requires recognition, as a
component of other comprehensive income, net of tax, of the gains or losses and prior service costs or credits that arise during the period but
are not recorded as components of net periodic benefit cost. Amounts recorded in accumulated other comprehensive income are adjusted as
they are subsequently recorded as components of net periodic cost. FAS 158 requires disclosure of information about certain effects of net
periodic benefit cost for the next fiscal year that arise from delayed recognition of the gains or losses, prior service costs or credits, and
transition asset or obligation.
We adopted the provisions of FAS 158 in 2006, as required, except for the requirement to measure the plan assets and benefit obligations
at the fiscal year-end, which is effective in fiscal years ending after December 15, 2008. The adoption of FAS 158 did not significantly impact
our financial statements.
SEC Staff Accounting Bulletin No. 108—Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in
Current Year Financial Statements (SAB 108)
In September 2006, the SEC issued SAB 108, which was effective in fourth quarter 2006 for Barrick. SAB 108 addresses the multiple
methods used to quantify financial statement misstatements and evaluate the accumulation of misstatements on the balance sheet. SAB 108
requires registrants to evaluate prior period misstatements using both a balance sheet approach (“the iron curtain method”) and an income
statement approach (“the rollover method”). Barrick historically used the rollover method in quantifying potential financial statement
misstatements. As required by SAB 108, we re-evaluated prior period immaterial errors using the iron curtain method. Based upon the result of
our evaluation, we did not identify any material errors or misstatements that were previously deemed not material under the rollover approach.
Accounting Changes Implemented in 2005
EITF 04-6 Accounting for Stripping Costs Incurred During Production in the Mining Industry
In 2005, we adopted EITF 04-6 and changed our accounting policy for stripping costs incurred in the production phase. Prior to adopting
EITF 04-6, we capitalized stripping costs incurred in the production phase, and we recorded amortization of the capitalized costs as a
component of the cost of inventory produced each period. Under EITF 04-6, stripping costs are recorded directly as a component of the cost of
inventory produced each period. Using an effective date of adoption of January 1, 2005, we recorded a decrease in capitalized mining costs of
$226 million; an increase in the cost of inventory of $232 million; and a $6 million credit to earnings for the cumulative effect of this change.
For 2005, the effect of adopting EITF 04-6 compared to the prior policy was an increase in net income of $44 million ($0.08 per share),
excluding the cumulative effect on prior periods.
F
Accounting Developments
FAS 157, Fair Value Measurements (FAS 157)
In September 2006, the FASB issued FAS 157 that provides enhanced guidance for using fair value to measure assets and liabilities. FAS
157 is meant to ensure that the measurement of fair value is more comparable and consistent, and improve disclosure about fair value measures.
As a result of FAS 157, there is now a common definition of fair value to be used throughout US GAAP. FAS 157 applies whenever US GAAP
requires (or permits) measurement of assets or liabilities at fair value. FAS 157 does not address when the use of fair value measurements is
required.
In December 2007 the FASB issued FSP FAS 157-b, which provided a one year deferral until January 1, 2009 for the implementation of
FAS 157 for non-financial assets and liabilities. The deferral is intended to provide the FASB additional time to consider the effects of various
implementation issues that have arisen, or that may arise, from the application of FAS 157. Barrick is required to implement FAS 157 for
financial assets
BARRICK YEAR-END 2008
A-13
NOTES TO FINANCIAL STATEMENTS
and liabilities that are carried at fair value effective January 1, 2008. We do not expect the adoption of FAS 157 to have any significant impact
on valuations of investments or derivative instruments.
FAS 159—The Fair Value Option for Financial Assets and Financial Liabilities (FAS 159)
In February 2007 the FASB issued FAS 159, which allows an irrevocable option, Fair Value Option (FVO), to carry eligible financial
assets and liabilities at fair value, with the election made on an instrument-by-instrument basis. Changes in fair value for these instruments
would be recorded in earnings. The objective of FAS 159 is to improve financial reporting by providing entities with the opportunity to
mitigate volatility in reported earnings caused by measuring related assets and liabilities differently without having to apply complex hedge
accounting provisions.
Under FAS 159 an entity must elect whether to use the FVO on the date an item is initially recognized, with limited exceptions. Since the
FVO is an instrument-by-instrument election, companies may record identical financial assets and liabilities either at fair value or on another
measurement basis permitted by US GAAP, such as amortized cost. One exception to the instrument-by-instrument guidance is that for
investments that would otherwise fall under equity method accounting, the election must be made for all of the investor’s financial interests
(equity and debt, including guarantees) in the same entity.
FAS 159 will be effective for Barrick beginning in first quarter 2008 and must be applied prospectively. Barrick will not adopt the FVO
on its eligible financial instruments, which include available-for-sale securities, equity method investments and long-term debt, existing as at
January 1, 2008.
FAS 141(R), Business Combinations (FAS 141(R))
In December 2007 the FASB issued FAS 141(R), which will replace FAS 141 prospectively for business combinations consummated
after the effective date of December 15, 2008. Early adoption is not permitted. Under FAS 141(R), business acquisitions will be accounted for
under the “acquisition method”, compared to the “purchase method” mandated by FAS 141.
The more significant changes that will result from applying the acquisition method include: (i) the definition of a business is broadened to
include development stage entities, and therefore more acquisitions will be accounted for as business combinations rather than asset
acquisitions; (ii) the measurement date for equity interests issued by the acquirer is the acquisition date instead of a few days before and after
terms are agreed to and announced, which may significantly change the amount recorded for the acquired business if share prices differ from
the agreement and announcement date to the acquisition date; (iii) all future adjustments to income tax estimates will be recorded to income tax
expense, whereas under FAS 141 certain changes in income tax estimates were recorded to goodwill; (iv) acquisition-related costs of the
acquirer, including investment banking fees, legal fees, accounting fees, valuation fees, and other professional or consulting fees will be
expensed as incurred, whereas under FAS 141 these costs are capitalized as part of the cost of the business combination; (v) the assets acquired
and liabilities assumed are recorded at 100% of fair value even if less than 100% is obtained, whereas under FAS 141 only the controlling
interest’s portion is recorded at fair value; and (vi) the non-controlling interest will be recorded at its share of fair value of net assets acquired,
including its share of goodwill, whereas under FAS 141 the non-controlling interest is recorded at its share of carrying value of net assets
acquired with no goodwill being allocated.
FAS 160, Non-controlling Interests in Consolidated Financial Statements (FAS 160)
In December 2007 the FASB issued FAS 160, which is effective for fiscal years beginning after December 15, 2008. Under FAS 160,
non-controlling interests will be measured at 100% of the fair value of assets acquired and liabilities assumed. Under current standards, the
non-controlling interest is measured at book value. For presentation and disclosure purposes, non-controlling interests will be classified as a
separate component of shareholders’ equity. In addition, FAS 160 will change the manner in which increases/decreases in
BARRICK YEAR-END 2008
A-14
NOTES TO FINANCIAL STATEMENTS
ownership percentages are accounted for. Changes in ownership percentages will be recorded as equity transactions and no gain or loss will be
recognized as long as the parent retains control of the subsidiary. When a parent company deconsolidates a subsidiary but retains a
non-controlling interest, the non-controlling interest is re-measured at fair value on the date control is lost and a gain or loss is recognized at
that time. Under FAS 160, accumulated losses attributable to the non-controlling interests are no longer limited to the original carrying amount,
and therefore non-controlling interests could have a negative carrying balance. The provisions of FAS 160 are to be applied prospectively with
the exception of the presentation and disclosure provisions, which are to be applied for all prior periods presented in the financial statements.
Early adoption is not permitted.
G
Other Notes to the Financial Statements
Note
Page
Significant acquisitions and divestitures
3
A-16
Segment information
4
A-22
Revenue and gold sales contracts
5
A-24
Cost of sales
6
A-26
Exploration and project development expense
7
A-28
Other (income) expense
8
A-29
Income tax expense
9
A-30
Earnings per share
10
A-32
Cash flow—other items
11
A-33
Investments
12
A-34
Inventories
13
A-38
Accounts receivable and other current assets
14
A-40
Property, plant and equipment
15
A-40
Intangible assets
16
A-44
Goodwill
17
A-44
Other assets
18
A-46
Other current liabilities
19
A-46
Financial instruments
20
A-46
Asset retirement obligations
21
A-59
Other non-current liabilities
22
A-60
Deferred income taxes
23
A-60
Capital stock
24
A-64
Other comprehensive income (loss)
25
A-66
Stock-based compensation
26
A-66
Post-retirement benefits
27
A-70
Litigation and claims
28
A-75
Finance Subsidiaries
29
A-77
BARRICK YEAR-END 2008
A-15
NOTES TO FINANCIAL STATEMENTS
3 > SIGNIFICANT ACQUISITIONS AND DIVESTITURES
For the years ended December 31
2007
Cash paid on acquisition
Arizona Star
Porgera (additional 20% interest)
Kainantu
Pioneer Metals
Placer Dome
2006
2005
1
Cash proceeds on sale
Celtic
Paddington Mill
Grace Claim
722
259
135
6
—
$
—
—
—
48
160
$—
—
—
—
—
$ 1,122
$
208
$—
$
1
21
30
54
2
3
3
Cash proceeds on sale of discontinued operations
South Deep mine
Operations sold to Goldcorp
1
2
3
A
—
—
—
—
—
—
—
$—
$
105
$
$
—
—
$ 1,209
1,619
$—
—
$
—
$ 2,828
$—
All amounts are presented net of cash acquired/divested. Potential deferred tax adjustments may arise from these acquisitions.
Included within investment sales in the Consolidated Statement of Cash Flow
Included within Property, Plant and Equipment sales in the Consolidated Statement of Cash flow
Acquisition of 40% Interest in Cortez
In February 2008, our subsidiary, Barrick Gold Finance Inc., entered into a definitive purchase agreement with Kennecott Explorations
(Australia) Ltd., a subsidiary of Rio Tinto plc (“Rio Tinto”) to acquire its 40% interest in the Cortez property for $1.695 billion in cash
consideration, due on closing, with a further $50 million payable if and when we add an additional 12 million ounces of contained gold
resources to our December 31, 2007 reserve statement for Cortez. A sliding scale royalty is payable to Rio Tinto on 40% of all production in
excess of 15 million ounces on and after January 1, 2008. The acquisition will consolidate 100% ownership for Barrick of the existing Cortez
mine and the Cortez Hills development project plus any future potential from the property. We expect to fund the purchase price through a
combination of our existing cash balances and by drawing down our line of credit. The agreement is subject to the normal and customary
closing conditions and is expected to close in the first quarter of 2008.
B
Acquisition of Arizona Star Resources Corporation (“Arizona Star”)
On December 19, 2007, we paid $722 million which reflects the purchase price net of cash acquired of $8 million, for 40.7 million
common shares of Arizona Star. These shares represent 94% of the outstanding common shares of Arizona Star on a fully-diluted basis. It is
our intention to acquire the remaining outstanding Arizona Star common shares by way of a compulsory acquisition. The Offer price for
Arizona Star’s common shares was CDN$18.00. Arizona Star owns a 51% interest in the Cerro Casale deposit in the Maricunga district of
Region III in Chile. The acquisition of Arizona Star has been accounted for as an asset purchase. The purchase price allocation will be finalized
in 2008 with the determination of the deferred tax portion, if any.
BARRICK YEAR-END 2008
A-16
NOTES TO FINANCIAL STATEMENTS
Purchase Cost
Purchase cost per agreement
Purchase price adjustments and transaction costs
Less: cash acquired
$ 728
2
(8 )
$ 722
Preliminary Purchase Price Allocation
Equity investment in Cerro Casale project
$ 732
Total assets
732
Accounts payable
Non-controlling interest
8
2
Total liabilities
10
Net assets acquired
C
$ 722
Kainantu Acquisition
On December 12, 2007 we completed the acquisition of the Kainantu mineral property and various exploration licenses in Papua New
Guinea from Highlands Pacific Limited for $135 million in cash, which reflects the purchase price, net of $7 million withheld pending certain
permit renewals. The acquisition has been accounted for as a purchase of assets. The purchase price allocation will be finalized in 2008.
D
Sale of Paddington Mill
In 2007, we completed the sale of the Paddington mill and associated land tenements in Australia to Norton Goldfields Limited and the
sale of certain land tenements to Apex Minerals for total proceeds of $32 million, $30 million in cash and $2 million in Apex Minerals NL
shares, respectively. We recorded a gain of $8 million in other income on closing.
E
Porgera Mine Acquisition
In 2007, we completed the acquisition of an additional 20% interest in the Porgera mine in Papua New Guinea from Emperor Mines
Limited, for cash consideration of $259 million. The acquisition has been accounted for as a business combination. Following this transaction
our interest in the Porgera mine increased from 75% to 95%. The Government of Papua New Guinea holds the remaining 5% undivided
interest in Porgera. We have entered into a call option deed regarding the possible sale of up to a 5% interest to the Government of Papua New
Guinea, for the proportionate acquisition cost paid by Barrick.
Purchase Cost
Purchase cost per agreement with Emperor Mines Limited
Purchase price adjustments and transaction costs
Less: cash acquired
$ 250
14
(5 )
$ 259
BARRICK YEAR-END 2008
A-17
NOTES TO FINANCIAL STATEMENTS
Summary Purchase Price Allocation
Inventories
Other current assets
Property, plant and equipment
Non-current ore in stockpiles
Deferred tax assets
Goodwill
$ 17
2
145
60
20
34
Total assets
278
Current liabilities
Asset retirement obligations
11
8
Total liabilities
19
Net assets acquired
F
$ 259
Acquisition of Pioneer Metals Inc. (“Pioneer”)
In 2006, we acquired control of Pioneer through the acquisition of 59.2 million shares, representing approximately 91% of the
outstanding shares of Pioneer, for cash consideration of $54 million. Pioneer had a portfolio of exploration properties and interests, including
the Grace property which is adjacent to NovaGold Resources Inc.’s (“NovaGold”) Galore Creek project. In 2007, we acquired all of the
remaining outstanding shares of Pioneer for cash consideration of $6 million and recorded purchase price adjustments totaling $3 million.
Purchase Cost
Purchase cost
Less: cash acquired
$ 63
(9 )
$ 54
The acquisition has been accounted for as a purchase of assets. The purchase price allocation was as follows:
Summary Purchase Price Allocation
Property, plant and equipment
69
Total assets
69
—
15
Current liabilities
Deferred tax liabilities
Total liabilities
15
Net assets acquired
$ 54
In third quarter 2007 we sold the Grace property to NovaGold for cash proceeds of $54 million. There was no after-tax gain or loss
arising on closing.
BARRICK YEAR-END 2008
A-18
NOTES TO FINANCIAL STATEMENTS
G
Acquisition of Placer Dome Inc. (“Placer Dome”)
In first quarter 2006 we acquired 100% of the outstanding common shares of Placer Dome. Placer Dome was one of the world’s largest
gold mining companies. It had 12 mining operations based in North America, South America, Africa and Australia/Papua New Guinea, as well
as four projects that are in various stages of exploration/development. Its most significant mines were Cortez in the United States, Zaldívar in
Chile, Porgera in Papua New Guinea, North Mara in Tanzania and South Deep in South Africa. The most significant projects are Cortez Hills
and Donlin Creek LLC (“Donlin Creek”) in the United States, and Pueblo Viejo in the Dominican Republic. The business combination between
ourselves and Placer Dome was an opportunity to create a Canadian-based leader in the global gold mining industry, which strengthens our
competitive position, including in respect of gold reserves, gold production, growth opportunities, and balance sheet strength.
Accounting for the Placer Dome Acquisition
The Placer Dome acquisition has been accounted for as a purchase business combination, with Barrick as the accounting acquirer. We
acquired Placer Dome on January 20, 2006, with the results of operations of Placer Dome consolidated from January 20, 2006 onwards. The
purchase cost was $10 billion and was funded through a combination of common shares issued, the drawdown of a $1 billion credit facility,
and cash resources.
Value of 322.8 million Barrick common shares issued at $27.14 per share
Value of 2.7 million fully vested stock options
Cash
Transaction costs
1
$
8,761
22
1,239
32
$ 10,054
1
The measurement of the common share component of the purchase consideration represents the average closing price on the New York
Stock Exchange for the two days prior to and two days after the public announcement on December 22, 2005 of our final offer for Placer
Dome.
In accordance with the purchase method of accounting, the purchase cost was allocated to the underlying assets acquired and liabilities
assumed based primarily upon their estimated fair values at the date of acquisition. The estimated fair values were based on a combination of
independent appraisals and internal estimates. The excess of purchase cost over the net identifiable tangible and intangible assets acquired
represents goodwill. Goodwill arising on the acquisition of Placer Dome principally represents the ability for the company to continue as a
going concern by finding new mineral reserves as well as the value of synergies that we expect to realize as a direct consequence of the
acquisition of Placer Dome. Details of the allocation of goodwill arising on acquisition are included in note 17.
On the acquisition of Placer Dome in first quarter 2006, we completed a preliminary purchase price allocation for assets and liabilities
acquired. Amortization expense for the first three quarters of 2006 was based on this preliminary purchase price allocation. In fourth quarter
2006, we completed final purchase price allocations and updated our calculations of amortization expense prospectively. The effect of the final
purchase price allocation on the amount of amortization expense recorded in 2007 compared to amounts recorded in 2006 based on the
preliminary allocation, was an increase of $189 million.
BARRICK YEAR-END 2008
A-19
NOTES TO FINANCIAL STATEMENTS
The principal valuation methods for major classes of assets and liabilities were:
Inventory
Finished goods and work in process valued at estimated selling
prices less disposal costs, costs to complete and a reasonable profit
allowance for the completing and selling effort.
Building and equipment
Reproduction and/or replacement cost or market value for current
function and service potential, adjusted for physical, functional and
economic obsolescence.
Proven and probable reserves and value beyond proven and probable
reserves at producing mines
Multi-period excess earnings approach considering the prospective
level of cash flows and fair value of other assets at each mine.
Development projects
Discounted future cash flows considering the prospective level of
cash flows from future operations and necessary capital cost
expenditures.
Exploration properties
Appraised values considering costs incurred, earn-in agreements
and comparable market transactions, where applicable.
Long-term debt and derivative instruments
Estimated fair values consistent with the methods disclosed in note
20C.
Asset retirement obligations
Estimated fair values consistent with the methods disclosed in note
21.
Final Summary Purchase Price Allocation
Cash
Inventories
Other current assets
Property, plant and equipment
Buildings, plant and equipment
Proven and probable reserves
Value beyond proven and probable reserves
Intangible assets
Assets of discontinued operations
Deferred tax assets
Other assets
Goodwill
$
2,946
1,571
419
85
1,744
93
254
6,506
1
Total assets
Current liabilities
Liabilities of discontinued operations
Derivative instrument liabilities
Long-term debt
Asset retirement obligations
Deferred income tax liabilities
15,346
669
107
1,729
1,252
387
686
1
Total liabilities
4,830
Non-controlling interests
462
Net assets acquired
1
1,102
428
198
$ 10,054
Includes operations that were sold to Goldcorp Inc.
BARRICK YEAR-END 2008
A-20
NOTES TO FINANCIAL STATEMENTS
At acquisition we recorded liabilities totaling $48 million that primarily relate to employee severance at Placer Dome offices that were
closed during the year. All amounts were settled by the end of 2007.
H
Discontinued Operations
Results of Discontinued Operations
For the years ended Dec.31
Gold sales
South Deep operations
Operations sold to Goldcorp
2007
2006
2005
$—
—
$ 158
83
$—
—
$—
$ 241
$—
8
288
1
—
$ 297
$—
Income before tax
South Deep
Gain on sale of South Deep
Operations sold to Goldcorp
9
—
—
$
9
—
South Deep
On December 1, 2006, we sold our 50% interest in the South Deep mine in South Africa to Gold Fields Limited (“Gold Fields”). The
consideration on closing was $1,517 million, of which $1,209 million was received in cash and $308 million in Gold Fields shares. On closing
we recorded a gain of $288 million, representing the consideration received less transaction costs and the carrying amount of net assets of
South Deep, including goodwill relating to South Deep of $651 million.
The results of the operations of South Deep in 2006 are presented under “discontinued operations” in the income statement and cash flow
statement. As required by accounting rules applicable to discontinued operations, amortization of property, plant and equipment at South Deep
ceased on September 1, 2006, the date when they were classified as held for sale, and we allocated interest expense of $2 million to these
discontinued operations.
In second quarter 2006, a loaded skip and 6.7 kilometers of rope fell 1.6 kilometers down the South Deep mine’s Twin Shaft complex
during routine maintenance, causing extensive damage but no injuries. Repair costs for assets that were damaged were expensed as incurred.
We were insured for property damage and a portion of business interruption losses. In fourth quarter 2006 we recorded a receivable for
insurance recoveries of $12 million related to this incident. In second quarter 2007, a final settlement was reached with Gold Fields on the
allocation of insurance proceeds and, as a result, we recorded further proceeds of $9 million within income from discontinued operations.
During the third quarter, $21 million was received in cash and has been classified under Cash Flows of Discontinued Operations in our
Consolidated Statement of Cash Flows.
Operations Sold to Goldcorp
In second quarter 2006, we sold all of Placer Dome’s Canadian properties and operations (other than Placer Dome’s office in Vancouver),
including all mining, reclamation and exploration properties, Placer Dome’s interest in the La Coipa mine in Chile, 40% of Placer Dome’s
interest in the Pueblo Viejo project in the Dominican Republic, certain related assets and, our share in Agua de la Falda S.A., which included
our interest in the Jeronimo project, to Goldcorp Inc. (“Goldcorp”) (collectively, the “Operations sold to Goldcorp”). Goldcorp is responsible
for all liabilities relating solely to these properties and operations, including employment commitments and environmental, closure and
reclamation liabilities.
BARRICK YEAR-END 2008
A-21
NOTES TO FINANCIAL STATEMENTS
The sales proceeds for the operations sold to Goldcorp were $1,641 million. The aggregate net amount of assets and liabilities of these
operations were recorded in the purchase price allocation at $1,641 million based on the terms of the sale agreement with Goldcorp that was in
place at the time we acquired Placer Dome. The results of the operations sold to Goldcorp were included under “discontinued operations” in the
income statement and cash flow statement until closing. Interest expense of $21 million was allocated to the results from the operations sold to
Goldcorp. No gain or loss arose on closing of the sale.
4 > SEGMENT INFORMATION
Income Statement Information
For the years ended December 31
Gold
North America
South America
Australia Pacific
Africa
Copper
South America
Australia Pacific
1
2007
Sales
2006
$ 2,001
1,306
1,292
428
$ 1,791
1,131
1,144
427
1,065
240
955
182
$ 6,332
$ 5,630
2005
$ 1,247
506
411
184
Segment cost of sales
2007
2006
$ 1,194
408
945
295
$ 1,052
311
757
228
233
109
283
110
$ 3,184
$ 2,741
—
—
$ 2,348
Segment income 1
2007
2006
2005
$
693
137
260
108
492
693
201
111
$ 341
268
105
27
752
92
621
55
—
—
$ 2,164
$ 2,173
$
—
—
$ 1,198
493
664
108
55
$
2005
$ 741
Segment income represents segment sales, less cost of sales and amortization.
Income Statement Information (cont’d)
Exploration 1
2007
2006
For the years ended December 31
North America
South America
Australia Pacific
Africa
Other expenses outside reportable segments
1
2005
Regional business unit
costs 1
2007
2006
2005
$ 70
40
46
15
8
$ 64
22
44
22
19
$ 34
19
13
34
9
$ 27
23
38
11
—
$ 32
19
38
1
—
$ 16
6
16
—
—
$ 179
$ 171
$ 109
$ 99
$ 90
$ 38
Exploration and regional business unit costs are excluded from the measure of segment income but are reported separately by operating
segment to the Chief Operating Decision Maker.
BARRICK YEAR-END 2008
A-22
NOTES TO FINANCIAL STATEMENTS
Geographic Information
For the years ended Dec.31
2007
North America
United States
Canada
Dominican Republic
South America
Peru
Chile
Argentina
Australia Pacific
Australia
Papua New Guinea
Africa
Tanzania
Other
1
2
Long-lived assets 1
2006
Sales 2
2006
2005
2007
2,518
976
78
$ 1,431
313
—
$ 1,882
119
—
$ 1,702
89
—
$ 1,068
179
—
392
1,764
1,048
492
1,599
1,014
540
269
843
1,033
1,065
273
878
955
253
506
—
—
1,724
702
2,142
438
815
—
1,250
282
1,116
210
411
—
1,336
477
993
534
669
301
428
—
427
—
184
—
$ 11,748
$ 10,784
$ 5,181
$ 6,332
$ 5,630
$ 2,348
$
2,638
1,528
139
$
2005
Long-lived assets include property, plant and equipment and other tangible non-current assets.
Presented based on the location in which the sale originated.
Reconciliation of Segment Income to Income from Continuing Operations Before Income Taxes and Other Items
For the years ended Dec.31
2007
Segment income
Amortization of corporate assets
Exploration
Project development expense
Corporate administration
Other expenses
Impairment charges
Interest income
Interest expense
Other income
Income from continuing operations before income taxes and other items
1
1
2006
2005
$ 2,164
(20 )
(179 )
(188 )
(155 )
(208 )
(65 )
141
(113 )
103
$ 2,173
(19 )
(171 )
(119 )
(142 )
(216 )
(23 )
110
(126 )
93
$ 741
(18 )
(109 )
(32 )
(71 )
(114 )
(16 )
38
(3 )
46
$ 1,480
$ 1,560
$ 462
In 2007, impairment charges include $42 million of goodwill impairments in the North America region.
BARRICK YEAR-END 2008
A-23
NOTES TO FINANCIAL STATEMENTS
Asset Information
Segment long-lived assets
2007
2006
2005
For the years ended Dec.31
Gold
North America
South America
Australia Pacific
Africa
Copper
South America
Australia Pacific
$
Segment total
Cash and equivalents
Other current assets
Intangible assets
Goodwill
Other items not allocated to segments
Enterprise total
1
4,305
1,922
2,310
1,336
$
3,572
1,829
2,434
993
$ 1,744
1,652
815
669
Amortization
2007
2006
$
314
234
239
78
$ 247
127
186
88
2005
$ 213
101
46
49
1,282
116
1,276
146
—
—
80
39
51
17
—
—
11,271
2,207
2,081
68
5,847
10,250
3,043
1,753
75
5,855
4,880
1,037
711
—
—
984
—
—
—
—
716
—
—
—
—
477
534
301
20
$ 21,951
$ 21,510
$ 6,929
$ 1,004
Segment capital
expenditures 1
2006
2007
$
236
343
208
240
$
226
343
313
93
2005
$
218
525
308
45
—
—
27
11
17
22
409
—
—
—
—
1,065
—
—
—
—
1,014
—
—
—
—
1,096
—
—
—
—
19
18
25
17
8
$ 735
$ 427
$ 1,090
$ 1,031
$ 1,104
Segment capital expenditures are presented on an accrual basis. Capital expenditures in the Consolidated Statements of Cash Flows are
presented on a cash basis. In 2007, cash expenditures were $1,046 million (2006: $1,087 million; 2005: $1,104 million) and the increase
in accrued expenditures were $44 million (2006: $(56) million; 2005: nil).
5 > REVENUE AND GOLD SALES CONTRACTS
For the years ended Dec.31
Gold bullion sales
Spot market sales
Gold sales contracts
2007
2006
2005
$ 3,823
1,026
$ 3,957
369
$ 1,938
300
4,849
178
4,326
167
2,238
110
$ 5,027
$ 4,493
$ 2,348
$ 1,063
242
$
937
200
$
—
—
$ 1,305
$ 1,137
$
—
1
Concentrate sales
2
Copper sales
Copper cathode sales
Concentrate sales
1 ,3
1
2
3
Revenues include amounts transferred from OCI to earnings for commodity cash flow hedges (see note 20C and 25).
Gold sales include gains and losses on gold derivative contracts which have been economically offset, but not yet settled, and on
embedded derivatives in smelting contracts: 2007: $4 million loss (2006: $4 million gain; 2005: $3 million gain).
Copper sales include gains and losses on economic copper hedges that do not qualify for hedge accounting treatment and on embedded
derivatives in copper smelting contracts: 2007: $53 million gain (2006: $14 million loss; 2005: $nil).
BARRICK YEAR-END 2008
A-24
NOTES TO FINANCIAL STATEMENTS
Principal Products
All of our gold mining operations produce gold in doré form, except Eskay Creek, which produces gold concentrate and gold doré;
Bulyanhulu which produces both gold doré and gold concentrate; and Osborne which produces a concentrate that contains both gold and
copper. Gold doré is unrefined gold bullion bars usually consisting of 90% gold that is refined to pure gold bullion prior to sale to our
customers. Gold concentrate is a processing product containing the valuable ore mineral (gold) from which most of the waste mineral has been
eliminated, that undergoes a smelting process to convert it into gold bullion. Gold bullion is sold primarily in the London spot market or under
gold sales contracts. Gold concentrate is sold to third-party smelters. At our Zaldívar mine we produce pure copper cathode, which consists of
99.9% copper, a form that is deliverable for sale in world metals exchanges.
Revenue Recognition
We record revenue when the following conditions are met: persuasive evidence of an arrangement exists; delivery and transfer of title
(gold revenue only) have occurred under the terms of the arrangement; the price is fixed or determinable; and collectability is reasonably
assured. Revenue in 2007 is presented net of direct sales taxes of $15 million (2006: $16 million; 2005: $nil).
Gold Bullion Sales
We record revenue from gold and silver bullion sales at the time of physical delivery, which is also the date that title to the gold or silver
passes. The sales price is fixed at the delivery date based on either the terms of gold sales contracts or the gold spot price. Incidental revenues
from the sale of by-products such as silver are classified within cost of sales.
Gold Sales Contracts
At December 31, 2006, we had 2.5 million ounces of Corporate Gold Sales Contracts. We delivered 2.5 million ounces into the Corporate
Gold Sales Contracts at an average price of $404 per ounce in the first half of 2007. At December 31, 2007, there were no remaining Corporate
Gold Sales Contracts. At December 31, 2007, we had Project Gold Sales Contracts with various customers for a total of 9.5 million ounces of
future gold production of which 1.7 million ounces are at floating spot prices.
The terms of gold sales contracts are governed by master trading agreements (MTAs) that we have in place with customers. The contracts
have final delivery dates primarily over the next 10 years, but we have the right to settle these contracts at any time over this period. Contract
prices are established at inception through to an interim date. If we do not deliver at this interim date, a new interim date is set. The price for
the new interim date is determined in accordance with the MTAs which have contractually agreed price adjustment mechanisms based on the
market gold price. The MTAs have both fixed and floating price mechanisms. The fixed-price mechanism represents the market price at the
start date (or previous interim date) of the contract plus a premium based on the difference between the forward price of gold and the current
market price. If at an interim date we opt for a floating price, the floating price represents the spot market price at the time of delivery of gold
adjusted based on the difference between the previously fixed price and the market gold price at that interim date. The final realized selling
price under a contract primarily depends upon the timing of the actual future delivery date, the market price of gold at the start of the contract
and the actual amount of the premium of the forward price of gold over the spot price of gold for the periods that fixed selling prices are set.
Mark-to-Market Value
Total
ounces in
millions
$ millions
Project Gold Sales Contracts
1
9.5
At Dec.31,
2007
value 1
$
(4,626 )
At a spot gold price of $834 per ounce.
BARRICK YEAR-END 2008
A-25
NOTES TO FINANCIAL STATEMENTS
Concentrate Sales
Under the terms of concentrate sales contracts with independent smelting companies, gold and copper sales prices are set on a specified
future date after shipment based on market prices. We record revenues under these contracts at the time of shipment, which is also when title
passes to the smelting companies, using forward market gold and copper prices on the expected date that final sales prices will be fixed.
Variations between the price recorded at the shipment date and the actual final price set under the smelting contracts are caused by changes in
market gold and copper prices, and result in an embedded derivative in the accounts receivable. The embedded derivative is recorded at fair
value each period until final settlement occurs, with changes in fair value classified as a component of revenue. The notional amount
outstanding in accounts receivable is typically between ten and fifteen thousand ounces of gold and four and seven million pounds of copper.
Copper Cathode Sales
Under the terms of copper cathode sales contracts, copper sales prices are set on a specified future date based upon market commodity
prices plus certain price adjustments. Revenue is recognized at the time of shipment when risk of loss passes to the customer, and collectability
is reasonably assured. Revenue is measured using forward market prices on the expected date that final selling prices will be fixed. Variations
occur between the price recorded on the date of revenue recognition and the actual final price under the terms of the contracts due to changes in
market copper prices, which result in the existence of an embedded derivative in the accounts receivable. This embedded derivative is recorded
at fair value each period until final settlement occurs, with changes in fair value classified as a component of revenue. The notional amount
outstanding in accounts receivable is between twenty and thirty million pounds of copper.
6 > COST OF SALES
For the years ended Dec.31
2007
Cost of goods sold
By-product revenues
Royalty expense
Mining production taxes
1
2,3
1
2
3
Gold
2006
2005
2007
Copper
2006
2005
$ 2,757
(105 )
161
29
$ 2,294
(123 )
150
27
$ 1,249
(132 )
63
18
$ 337
(2 )
7
—
$ 390
(1 )
4
—
$—
—
—
—
$ 2,842
$ 2,348
$ 1,198
$ 342
$ 393
$—
Cost of goods sold includes accretion expense at producing mines of $40 million (2006: $31 million; 2005: $11 million). Cost of goods
sold includes charges to reduce the cost of inventory to net realizable value as follows: $13 million in 2007; $28 million in 2006 and $15
million in 2005. The cost of inventory sold in the period reflects all components capitalized to inventory, except that, for presentation
purposes, the component of inventory cost relating to amortization of property, plant and equipment is classified in the income statement
under “amortization”. Some companies present this amount under “cost of sales”. The amount presented in amortization rather than cost
of sales was $984 million in 2007; $716 million in 2006 and $409 million in 2005.
We use silver sales contracts to sell a portion of silver produced as a by-product. Silver sales contracts have similar delivery terms and
pricing mechanisms as gold sales contracts. At December 31, 2007, we had sales contract commitments to deliver 18.2 million ounces of
silver over periods up to 10 years. The mark-to-market on silver sales contracts at December 31, 2007 was negative $111 million (2006:
negative $100 million; 2005: $52 million).
By-product credits include gains and losses on economic silver hedges that do not qualify for hedge accounting treatment: 2007: $nil
(2006: $5 million loss; 2005: $nil).
BARRICK YEAR-END 2008
A-26
NOTES TO FINANCIAL STATEMENTS
Royalties
Certain of our properties are subject to royalty arrangements based on mineral production at the properties. The most significant royalties
are at the Goldstrike, Bulyanhulu and Veladero mines and the Pascua-Lama project. The primary type of royalty is a net smelter return (NSR)
royalty. Under this type of royalty we pay the holder an amount calculated as the royalty percentage multiplied by the value of gold production
at market gold prices less third-party smelting, refining and transportation costs. Other types of royalties include:
•
Net profits interest (NPI) royalty,
•
Net smelter return sliding scale (NSRSS) royalty,
•
Gross proceeds sliding scale (GPSS) royalty,
•
Gross smelter return (GSR) royalty,
•
Net value (NV) royalty, and a
•
Land tenement (LT) royalty
Royalty expense is recorded at the time of sale of gold production, measured using the applicable royalty percentage for NSR royalties or
estimates of NPI amounts.
Producing mines
Type of royalty
North America
Goldstrike
Eskay Creek
Williams
David Bell
Round Mountain
Bald Mountain
Ruby Hill
Cortez
Cortez—Pipeline/South Pipeline deposit
Cortez—portion of Pipeline/South Pipeline deposit
South America
Veladero
Lagunas Norte
Australia
Porgera
Queensland and Western Australia production
Africa
Bulyanhulu
North Mara
North Mara—Gokona pit
BARRICK YEAR-END 2008
0%-5% NSR, 0%-6% NPI
1% NSR
1.5% NSR, 0.5% NV, 1% NV
3% NSR
3.53%-6.35% NSRSS
3.5%-4% NSR
3% modified NSR
1.5% GSR
0.4%-5% GSR
5% NV
3.75% modified NSR
2.51% NSR
2% NSR
2.5%-2.7% of gold revenue
3% NSR
3% NSR
3% NSR, 1.1% LT
A-27
NOTES TO FINANCIAL STATEMENTS
7 > EXPLORATION AND PROJECT DEVELOPMENT EXPENSE
For the years ended Dec. 31
Exploration:
Minesite exploration
Projects
Project development expense:
Pueblo Viejo
Donlin Creek
Sedibelo
Fedorova
Buzwagi
Pascua-Lama
Cowal
Other
1
2
3
1
2
3
2007
2006
2005
$ 63
116
$ 54
117
$ 27
82
$ 179
$ 171
$ 109
67
32
22
18
5
12
—
32
25
37
10
—
12
8
1
26
$ 188
$ 119
—
—
—
—
5
7
9
11
$ 32
Represents 100% of project expenditures. We record a non-controlling interest credit for our partner’s share of expenditures within
“non-controlling interests” in the income statement.
Amounts for 2007 include a recovery of $64 million of cumulative project costs from our partner. See note 12 for further details.
The Cowal mine began production in second quarter 2006.
Accounting Policy
We capitalize costs incurred at projects that meet the definition of an asset after mineralization is classified as proven and probable gold
reserves (as defined by United States reporting standards). Before classifying mineralization as proven and probable reserves, costs incurred at
projects are considered project development expenses that are expensed as incurred. Project costs include: drilling costs; costs to prepare
engineering scoping and feasibility studies; metallurgical testing; permitting; and sample mining. The cost of start-up activities at mines and
projects such as recruiting and training are also expensed as incurred within project development expense. Drilling costs incurred at our
operating mines are expensed as incurred as mine site exploration expense, unless we can conclude with a high degree of confidence, prior to
the commencement of a drilling program, that the drilling costs will result in the conversion of a mineral resource into a proven and probable
reserve. Our assessment of confidence is based on the following factors: results from previous drill programs; results from geological models;
results from a mine scoping study confirming economic viability of the resource; and preliminary estimates of mine inventory, ore grade, cash
flow and mine life. The costs of a drilling program that meets our highly confident threshold are capitalized as mine development costs.
The Pueblo Viejo, Donlin Creek, Sedibelo, and Fedorova projects are in various stages and none of the projects had met the criteria for
cost capitalization at December 31, 2007. The Reko Diq project is owned through an equity investee and project expenses are included in
“equity investees” in the income statement (see note 12).
Effective May 1, 2007, we determined that mineralization at Buzwagi met the definition of proven and probable reserves for United
States reporting purposes. Following this determination, we began capitalizing costs that meet the definition of an asset at Buzwagi.
Funding of our partner’s share of ongoing project expenses for Donlin Creek, which is recoverable from the other partner, is shown under
loans issued to joint venture partners under investing activities in the cash flow statement.
BARRICK YEAR-END 2008
A-28
NOTES TO FINANCIAL STATEMENTS
8 > OTHER EXPENSE
A
Other Expenses
For the years ended Dec.31
Regional business unit costs
Community development costs
Environmental costs
World Gold Council fees
Changes in estimate of AROs at closed mines
Accretion expense at closed mines (note 21)
Non-hedge derivative losses (note 20C)
Currency translation losses
Pension and other post-retirement benefit expense (notes 27B and 27E)
Other items
1
2
3
1
2
3
4
4
2007
2006
2005
$ 99
28
15
12
6
10
8
1
5
24
$ 90
15
11
13
53
8
—
—
3
23
$ 38
—
17
10
15
10
12
—
8
4
$ 208
$ 216
$ 114
Relates to costs incurred at regional business unit offices.
In 2007, amounts relate to community programs in Peru, Tanzania and Papua New Guinea. In 2006, amounts related to community
programs in Peru and Tanzania.
In 2006, amount relates to change in estimate of the ARO at the Nickel Plate property In British Columbia, Canada.
For the year ended December 31, 2007, $nil million of pension credit that relates to active employees at producing mines is included in
cost of sales (2006: $4 million; 2005: $nil), and $nil million is included in corporate administration (2006: $2 million; 2005: $nil).
Environmental Costs
During the production phases of a mine, we incur and expense the cost of various activities connected with environmental aspects of
normal operations, including compliance with and monitoring of environmental regulations; disposal of hazardous waste produced from normal
operations; and operation of equipment designed to reduce or eliminate environmental effects. In limited circumstances, costs to acquire and
install plant and equipment are capitalized during the production phase of a mine if the costs are expected to mitigate risk or prevent future
environmental contamination from normal operations.
When a contingent loss arises from the improper use of an asset, a loss accrual is recorded if the loss is probable and reasonably
estimable. Amounts recorded are measured on an undiscounted basis, and adjusted as further information develops or if circumstances change.
Recoveries of environmental remediation costs from other parties are recorded as assets when receipt is deemed probable.
B
Impairment Charges
For the years ended Dec.31
Impairment of goodwill (note 17)
Impairment charges on investments (note 12)
Impairment of long-lived assets
1
2
3
1
2007
2006
2005
$ 42
23
—
$—
6
17
$—
16
—
$ 65
$ 23
$ 16
In 2007, the carrying amounts of Eskay Creek and Golden Sunlight were tested for impairment as part of the annual goodwill impairment
test. Impairment charges of $7 million and $35 million respectively, were recorded to reduce the carrying amount for goodwill to its
implied fair value.
BARRICK YEAR-END 2008
A-29
NOTES TO FINANCIAL STATEMENTS
2
3
C
In 2007, we recorded an impairment charge on Asset Backed Commercial Paper of $20 million.
In 2006, the carrying amount of Cuerpo Sur, an extension of Pierina, was tested for impairment on completion of the annual life of mine
planning process. An impairment charge of $17 million was recorded to reduce the carrying amount to the estimated fair value.
Other Income
For the years ended Dec.31
Non-hedge derivative gains (note 20C)
Currency translation gains
Gains on sale of assets
Gains on sale of investments (note 12)
Gain on vend-in to Highland Gold (note 12)
Royalty income
Sale of water rights
Other
2007
2006
2005
$—
—
$—
2
71
—
17
5
8
$ 2
2
9
6
51
10
5
8
$ 103
$ 93
$ 46
1
1
3
5
17
—
6
—
15
In 2007, we sold certain properties in South America and Australia, including an $8 million gain on the sale of the Paddington Mill. In
2006, we sold certain properties in Canada and Chile. In 2005, we sold some land positions in Australia.
9 > INCOME TAX EXPENSE
For the years ended Dec.31
2007
Current
Canada
International
$
Deferred
Canada
International
(3 )
518
2006
$
13
444
2005
$
(3 )
93
$ 515
$ 457
$ 90
$
19
(25 )
$ (131 )
46
$
$
(6 )
$
(85 )
$ (14 )
(6 )
(8 )
Income tax expense before elements below
Net currency translation gains on deferred tax balances
Canadian tax rate changes
Change in tax status in Australia
Release of end of year valuation allowances—Tanzania
$ 509
(76 )
64
—
(156 )
$ 372
(5 )
12
(31 )
—
$ 76
(11 )
—
(5 )
—
Total expense
$ 341
$ 348
$ 60
Currency Translation
Deferred tax balances are subject to remeasurement for changes in currency exchange rates each period. The most significant balances are
Canadian deferred tax assets with a carrying amount of approximately $439 million and Australian deferred tax liabilities with a carrying
amount of approximately $95 million. In 2007, the appreciation of the Canadian and Australian dollar against the US dollar resulted in net
translation gains arising totaling $76 million. These gains are included within deferred tax expense/recovery.
BARRICK YEAR-END 2008
A-30
NOTES TO FINANCIAL STATEMENTS
Canadian Tax Rate Changes
In the second and fourth quarters of 2007 and the second quarter of 2006, federal rate changes were enacted in Canada that lowered the
applicable tax rate. The impact of this tax rate change was to reduce net deferred tax assets in Canada by $64 million in 2007 and $35 million in
2006 that was recorded as a component of deferred income tax expense. Also in second quarter 2006, on change of tax status of a Canadian
subsidiary, we recorded a deferred income tax credit of $23 million to reflect the impact on the measurement of deferred income tax assets and
liabilities.
Change in Tax Status in Australia
In first quarter 2006, an interpretative decision (“ID”) was issued by the Australia Tax Office that clarified the tax treatment of currency
gains and losses on foreign denominated liabilities. Under certain conditions, for taxpayers who have made the functional currency election,
and in respect of debt that existed at the time the election was made, the ID provided clarification that unrealized foreign exchange gains that
currently exist on intercompany debt will not crystallize upon repayment of the debt. The effect of the ID was recorded as a $31 million
reduction of deferred tax liabilities.
Release of Tanzanian Valuation Allowances
In 2007, we released $156 million of end of year deferred tax valuation allowances in Tanzania due to the impact of higher market gold
prices.
Reconciliation to Canadian Statutory Rate
For the years ended Dec.31
2007
2006
2005
At 36.12% (2006 36.12% and 2005: 38%) statutory rate
Increase (decrease) due to:
Allowances and special tax deductions
Impact of foreign tax rates
Expenses not tax-deductible
Net currency translation gains on deferred tax balances
Release of end of year valuation allowances—Tanzania
Release of valuation allowances—Other
Valuation allowances set up against current year tax losses
Impact of changes in tax status in Australia
Canadian tax rate changes
Withholding taxes
Mining taxes
Other items
$ 535
$ 563
$ 176
Income tax expense
$ 341
(99 )
38
63
(76 )
(156 )
(88 )
5
—
64
17
19
19
1
2
1
2
(55 )
(131 )
20
(5 )
—
(53 )
7
(31 )
12
19
9
(7 )
$ 348
(92 )
(54 )
9
(11 )
—
(32 )
59
(5 )
—
8
1
1
$ 60
We are able to claim certain allowances and tax deductions unique to extractive industries that result in a lower effective tax rate.
We operate in multiple foreign tax jurisdictions that have tax rates different than the Canadian statutory rate. Additionally, we have
reinvested earnings and cash flow generated by the Zaldívar mine in Chile to fund a portion of the construction cost of Pascua-Lama. The
reinvestment of these earnings and cash flow resulted in a lower tax rate applied for the period. Amounts in 2007 included the impact of
losses realized on deliveries into corporate gold sales contracts in a low tax jurisdiction.
BARRICK YEAR-END 2008
A-31
NOTES TO FINANCIAL STATEMENTS
10 > EARNINGS PER SHARE
For the years ended Dec.31
($ millions, except shares in millions and per share amounts in
dollars)
2007
2006
2005
Basic
Diluted
Basic
Diluted
Basic
$ 1,110
—
$ 1,110
2
$ 1,209
—
$ 1,209
4
$ 395
—
Income available to common shareholders and after assumed conversions
Income from discontinued operations
1,110
9
1,112
9
1,209
297
1,213
297
395
—
395
—
Income before cumulative effect of changes in accounting principles
Cumulative effect of changes in accounting principles
1,119
—
1,121
—
1,506
—
1,510
—
395
6
395
6
$ 1,119
$ 1,121
$ 1,506
$ 1,510
$ 401
867
867
842
842
536
536
—
—
—
855
536
538
1.42
1.77
1.77
$ 0.74
$ 0.74
$ 0.75
$ 0.73
$ 0.73
$ 0.75
Income from continuing operations
Plus: interest on convertible debentures
Net income
Weighted average shares outstanding
Effect of dilutive securities
Stock options
Convertible debentures
—
—
867
Earnings per share
Income from continuing operations
Income before cumulative effect of changes in accounting principles
Net income
$
$
$
1.28
1.29
1.29
—
—
3
9
842
879
$
$
$
1.27
1.28
1.28
4
9
$
$
$
1.44
1.79
1.79
$
$
$
Diluted
$
$
395
—
401
2
Earnings per share is computed by dividing net income available to common shareholders by the weighted average number of common
shares outstanding for the period. Diluted earnings per share reflect the potential dilution that could occur if additional common shares are
assumed to be issued under securities that entitle their holders to obtain common shares in the future. For stock options, the number of
additional shares for inclusion in diluted earnings per share calculations is determined using the treasury stock method. Under this method,
stock options, whose exercise price is less than the average market price of our common shares, are assumed to be exercised and the proceeds
are used to repurchase common shares at the average market price for the period. The incremental number of common shares issued under
stock options and repurchased from proceeds is included in the calculation of diluted earnings per share. For convertible debentures, the
number of additional shares for inclusion in diluted earnings per share calculations is determined using the as if converted method. The
incremental number of common shares issued is included in the number of weighted average shares outstanding and interest on the convertible
debentures is excluded from the calculation of income.
BARRICK YEAR-END 2008
A-32
NOTES TO FINANCIAL STATEMENTS
11 > CASH FLOW—OTHER ITEMS
A
Operating Cash Flows—Other Items
For the years ended Dec.31
2007
Adjustments for non-cash income statement items:
Currency translation (gains) losses (note 8A and 8C)
Accretion expense (note 21)
Cumulative accounting changes
Amortization of discount/premium on debt securities (note 20B)
Amortization of debt issue costs (note 20B)
Stock option expense (note 26)
Non-hedge derivative gold options
Hedge losses on acquired gold hedge position
Gain on Highland vend-in (note 8C)
Gain on Kabanga transaction (note 8C)
Equity in investees (note 12)
Gain on sale of long-lived assets (note 8C)
Impairment charges (note 8B and 12)
Losses on write-down of inventory (note 13)
Non-controlling interests (note 2B)
ARO reduction
Net changes in operating assets and liabilities
Settlement of AROs (note 21)
$
Operating cash flow includes payments for:
Pension plan contributions (note 27A)
Interest (net of amounts capitalized)
$ 49
$ 236
(73 )
$
63
$ 36
$ 211
(3 )
21
(6 )
—
2
—
—
—
—
(15 )
6
(5 )
16
15
1
—
(82 )
(30 )
$ (80 )
$ 20
$ 108
Investing Cash Flows—Other Items
For the years ended Dec.31
2007
2006
Loans to joint venture partners
Non-hedge derivative copper options
Decrease in restricted cash (note 14)
Other
$ (47 )
(23 )
19
9
—
—
—
17
Other net investing activities
$ (42 )
$ 17
C
2005
(2 )
39
—
(12 )
12
27
14
165
(51 )
—
4
(9 )
23
28
(1 )
—
(142 )
(32 )
1
50
—
(3 )
9
25
30
2
—
—
43
(2 )
65
13
(14 )
(15 )
(244 )
(33 )
Other net operating activities
B
2006
2005
—
—
—
(5 )
$
(5 )
Non-Cash Investing and Financing Activities
Donlin Creek
In 2007, we formed a limited liability company with NovaGold to advance the Donlin Creek project. We determined that we share joint
control with NovaGold and we use the equity method of accounting for our investment in Donlin Creek. The initial cost of our investment is
$64 million.
Placer Dome Acquisition
We purchased all of the common shares of Placer Dome in 2006 for $10,054 million (see note 3G). In conjunction with the acquisition,
liabilities were assumed as follows:
Fair value of assets acquired
Consideration paid
Liabilities assumed
BARRICK YEAR-END 2008
$ 15,346
10,054
1
$
2
A-33
4,830
NOTES TO FINANCIAL STATEMENTS
1
2
Includes cash of $1,102 million.
Includes debt obligations of $1,252 million (note 20B).
Vend-in of Assets to Highland Gold (“Highland”)
In 2006, we exchanged various interests in mineral properties for 34.3 million Highland shares with a value of $95 million at the time of
closing of the transaction (see note 12).
Sale of South Deep
In 2006 we sold the South Deep mine to Gold Fields Limited (“Gold Fields”) for $1,517 million. The proceeds included 18.7 million
Gold Fields common shares with a value of $308 million (see note 3H).
12 > INVESTMENTS
At Dec.31
2007
Fair
value
Available-for-sale Securities in an unrealized gain position
Benefit plans:
Fixed-income securities
Equity securities
Other investments:
NovaGold
Gold Fields
Other equity securities
2006
Gains
(losses)
in OCI
Gains
(losses)
in OCI
Fair
value
1
$
Securities in an unrealized loss position
Other equity securities
2
—
—
73
—
—
41
231
314
77
13
6
33
91
42
643
54
5
(1 )
2
$
41
—
46
$ 142
1
$
$
$
41
$
—
5
16
$ 96
Held-to-maturity securities
Asset-Backed Commercial Paper
—
1
4
14
2
3
$ 646
(1 )
$
—
$ 646
53
—
$
53
Under various benefit plans for certain former Homestake executives, a portfolio of marketable fixed-income and equity securities are
held in a rabbi trust that is used to fund obligations under the plans.
Other equity securities in a loss position consist of investments in various junior mining companies.
Accounting Policy for Available-for-Sale Securities
Available-for-sale securities are recorded at fair value with unrealized gains and losses recorded in other comprehensive income (“OCI”).
Realized gains and losses are recorded in earnings when investments mature or on sale, calculated using the average cost of securities sold.
Investments in debt securities that we intend to hold to maturity are classified as held-to-maturity. Held-to-maturity investments are recorded at
amortized cost. If the fair value of an investment declines below its carrying amount, we undertake an assessment of whether the impairment is
other-than-temporary. We consider all relevant facts and circumstances in this assessment, particularly: the length of time and extent to which
fair value has been less than the carrying amount; the financial condition and near-term prospects of the investee, including any specific events
that have impacted its
BARRICK YEAR-END 2008
A-34
NOTES TO FINANCIAL STATEMENTS
fair value; both positive and negative evidence that the carrying amount is recoverable within a reasonable period of time; and our ability and
intent to hold the investment for a reasonable period of time sufficient for an expected recovery of the fair value up to or beyond the carrying
amount. We record in earnings any unrealized declines in fair value judged to be other than temporary.
Available-for-Sale Securities Continuity
Goldfields
January 1, 2005
Purchases
Sales proceeds
Mark to market adjustments
$
January 1, 2006
Purchases
Received in consideration for sale of South Deep (note 3H)
Sales proceeds
Mark to market adjustments
January 1, 2007
Purchases
Sales proceeds
Mark to market adjustments
December 31, 2007
$
—
—
—
—
NovaGold
$
—
—
—
—
Other
$ 61
31
(10 )
(20 )
Total
$
61
31
(10 )
(20 )
—
—
308
—
6
—
218
—
—
13
62
27
—
(46 )
58
62
245
308
(46 )
77
314
—
(356 )
42
231
—
(221 )
(10 )
101
11
(48 )
32
646
11
(625 )
64
—
$
—
$ 96
$
96
Gold Fields Limited (“Gold Fields”)
The investment in Gold Fields was acquired on December 1, 2006, as partial consideration for the sale of our interest in South Deep and
was recorded net of an initial liquidity discount of $48 million to reflect a 120-day restriction on our ability to trade the shares. During 2007,
we sold our entire position of 18.7 million shares for proceeds of $356 million and recorded a gain of $48 million.
NovaGold Resources Inc. (“NovaGold”)
During 2007, we sold our entire investment in NovaGold for proceeds of $221 million and we recorded a gain of $3 million on the sale.
Asset-Backed Commercial Paper (“ABCP”)
As at December 31, 2007, we held $66 million of Asset-Backed Commercial Paper (“ABCP”) which has matured, but for which no
payment has been received. On August 16, 2007, it was announced that a group representing banks, asset providers and major investors had
agreed to a standstill with regard to all non-bank sponsored ABCP (the “Montreal Proposal ABCP”).
On December 23, 2007, a tentative deal was reached between investors and banks to restructure the majority of the Montreal Proposal
ABCP. It has been determined that our ABCP investments are ineligible for inclusion in the proposed Master Asset Partnerships. As with other
ineligible Montreal Proposal ABCP, our investments will be restructured on an individual basis and will not be pooled with other Montreal
Proposal ABCP assets. Our investments will maintain exposure to the existing underlying ineligible assets. New floating rate notes will be
issued with maturities and interest rates based on the respective maturities and amounts available from the underlying investments. We have
assessed the fair value of the ABCP considering the best available data regarding market conditions for such investments at December 31,
2007. We recorded an impairment of $20 million in 2007 on the ABCP investments.
BARRICK YEAR-END 2008
A-35
NOTES TO FINANCIAL STATEMENTS
Our ownership of ABCP investments is comprised of trust units which have underlying investments in various securities. The underlying
investments are further represented by residential mortgage-backed securities, commercial mortgage-backed securities, other asset-backed
securities and collateralized debt obligations. We have based the 30% impairment on our assessment of the inherent risks associated with the
underlying investments. The 30% impairment is comprised of reductions for credit, liquidity and market risk of 5%, 20% and 5%, respectively.
The impairment is further supported by an indicative value obtained from a third party. We believe that our valuation approximates fair value.
The impairment of our ABCP investments has no effect on our investment strategy or covenant compliance.
There is currently no certainty regarding the outcome of the ABCP investments and therefore there is uncertainty in estimating the
amount and timing of cash flows associated. This ABCP was classified under Other Investments at December 31, 2007, and as an investing
activity in the Consolidated Statement of Cash Flow.
Equity Method Investment Continuity
At January 1, 2005
Purchases
Equity pick-up
Highland
Atacama
$
$
86
50
(5 )
—
—
—
Cerro
Casale
Donlin
Creek
$ —
—
—
$ —
—
—
Other
$—
Total
$
86
58
(6 )
8
(1 )
At January 1, 2006
Purchases
Vend-in
Equity pick-up
Impairment charges
131
—
71
(3 )
—
—
123
—
—
—
—
—
—
—
—
—
—
—
—
—
—
(1 )
(2 )
138
124
71
(4 )
(2 )
At January 1, 2007
Acquired under Arizona Star acquisition
Reclassifications
Equity pick-up
Impairment charges
199
—
—
(30 )
—
123
—
—
(14 )
—
—
732
—
—
—
—
—
64
—
—
5
—
(4 )
1
(2 )
327
732
60
(43 )
(2 )
At December 31, 2007
$
169
$
109
$ 732
$
64
7
1
$—
$ 1,074
Accounting Policy for Equity Method Investments
Under the equity method, we record our equity share of the income or loss of equity investees each period. On acquisition of an equity
investment, the underlying identifiable assets and liabilities of an equity investee are recorded at fair value and the income or loss of equity
investees is based on these fair values. For an investment in a company that represents a business, if the cost of any equity investment exceeds
the total amount of the fair value of identifiable assets and liabilities, any excess is accounted for in a manner similar to goodwill, with the
exception that an annual goodwill impairment test is not required. Additional funding into an investee is recorded as an increase in the carrying
value of the investment. The carrying amount of each investment in an equity investee is evaluated for impairment using the same method as an
available-for-sale security.
Highland Gold Mining Ltd. (“Highland”)
We acquired 11 million common shares for cash of $50 million in 2005; and 34.3 million common shares as part of a vend-in transaction
in 2006.
On November 17, 2006, we entered into an agreement with Highland to transfer ownership of certain companies holding Russian and
Kyrgyz licenses in return for 34.3 million Highland common shares increasing our ownership of Highland from 20% to 34%. In effect, we
contributed our 50% interest in the Taseevskoye
BARRICK YEAR-END 2008
A-36
NOTES TO FINANCIAL STATEMENTS
deposit, as well as other exploration properties in Russia and Central Asia, to Highland, thereby consolidating ownership of these properties
under one company. As part of the transaction, we seconded several of our employees to Highland, and received two additional Board seats.
Completion of the transaction occurred on December 15, 2006. On closing, the fair value of Highland common shares exceeded the carrying
amount of assets exchanged by $76 million. We recorded this difference as a gain of $51 million in other income to the extent of the ownership
in Highland held by independent third parties, and the balance of $25 million as a reduction in the carrying amount of our investment in
Highland. The Fedorova PGM deposit was not included in this transaction.
The difference between the cost of our investment in Highland and the underlying historic cost of net assets was $111 million at June 30,
2007.
During 2007, Highland announced the issue of 130.1 million new shares for $400 million. The equity was purchased by Millhouse LLC
(“Millhouse”) in two tranches. The first tranche of 65 million shares was completed on December 11, 2007 giving Millhouse a 25% interest in
Highland and reducing our position to 25.4%. The second tranche of 65 million shares was completed on January 16, 2008 giving Millhouse a
40% interest in Highland and further reducing our interest to 20.3%.
On completion of the first tranche, Millhouse is entitled to appoint 3 of 9 Directors to the Board. On completion of the second tranche,
Millhouse is entitled to appoint the CEO of Highland who will not serve on the Board. Our ability to appoint Directors has been reduced from 3
to 2. We continue to account for the investment in Highland under the equity method of accounting.
Donlin Creek
In January 2006, as part of the acquisition of Placer Dome, we acquired an interest in the Donlin Creek project. Under a pre-existing joint
venture agreement we held the right to earn a 70% interest in the project subject to meeting certain conditions under the agreement. In
December 2007, we restructured our agreement with our joint venture partner and formed a limited liability company, Donlin Creek LLC, to
advance the Donlin Creek project. Donlin Creek has a board of four directors, with two nominees selected by each company. All significant
decisions related to Donlin Creek require the approval of both companies. We own 50% of the limited liability company.
We determined that Donlin Creek LLC is a VIE and consequently used the principles of FIN 46R to determine how to account for our
ownership interest. We concluded that neither ourselves nor NovaGold are a primary beneficiary and neither ourselves nor NovaGold have the
right to control Donlin Creek under the limited liability company agreement. We determined that we share joint control with NovaGold, and
because Donlin Creek is a corporate joint venture, we use the equity method of accounting for our investment in Donlin Creek. The initial cost
of our investment in Donlin Creek is $64 million and represents the cost basis of assets transferred into the limited liability company. Our
maximum exposure to loss in this entity is limited to the carrying amount of our investment in Donlin Creek, which totaled $64 million and
accounts receivable from our partner totaling a further $64 million that are collateralized against NovaGold’s interest in the value of Donlin
Creek as of December 31, 2007.
Atacama Copper Pty Limited (“Atacama Copper”)
In September 2006, we acquired a 50% interest in Atacama Copper. The other 50% interest in Atacama Copper is owned by Antofagasta
plc. Atacama Copper is responsible for advancing the Reko Diq project. The Reko Diq project is located in Pakistan and comprises a variety of
exploration licenses, an interest in some of which has been retained by the government of Balochistan.
We determined that Atacama Copper is a VIE and consequently we have used the principles of FIN 46R to determine how to account for
our ownership interest. We concluded that neither ourselves nor Antofagasta are a primary beneficiary and consequently we evaluated whether
either ourselves or Antofagasta have the right to
BARRICK YEAR-END 2008
A-37
NOTES TO FINANCIAL STATEMENTS
control Atacama under the joint venture agreement. We determined that we share joint control with Antofagasta and because Atacama is a
corporate joint venture we use the equity method of accounting for our investment. Our maximum exposure to loss in this entity is limited to
our investment in Atacama, which totaled $109 million as of December 31, 2007, and amounts we will prospectively fund for Atacama’s
interim exploration program.
Companía Minera Casale (“Cerro Casale”)
In December 2007, we acquired 94% of the common shares of Arizona Star. We have determined that Arizona Star’s interest in the entity
that holds the Cerro Casale deposit is a VIE and consequently we have used the principles of FIN 46R to determine how to account for this
ownership interest. We evaluated whether either ourselves or Kinross have the right to control Cerro Casale under the joint venture agreement
and we determined that we share joint control with Kinross. Therefore, neither ourselves nor Kinross are a primary beneficiary and because
Cerro Casale is a corporate joint venture, we use the equity method of accounting for Arizona Star’s investment in Cerro Casale. Our maximum
exposure to loss in this entity is limited to our investment in Cerro Casale, which totaled $732 million as of December 31, 2007.
13 > INVENTORIES
At Dec.31
Gold
Copper
2007
Raw materials
Ore in stockpiles
Ore on leach pads
Mine operating supplies
Work in process
Finished products
Gold doré/bullion
Copper cathode
Copper concentrate
Gold concentrate
Non-current ore in stockpiles
$
1
2007
2006
485
104
284
89
$ 63
81
20
5
$ 51
76
16
25
87
—
—
40
98
—
—
54
—
9
16
—
—
12
5
—
1,434
(414 )
1,114
(298 )
194
(96 )
185
(70 )
698
149
351
109
$ 1,020
1
2006
$
$
816
$ 98
$ 115
Ore that we do not expect to process in the next 12 months.
Accounting Policy for Inventory
Material extracted from our mines is classified as either ore or waste. Ore represents material that we expect to be processed into a
saleable form, and sold at a profit. Ore is recorded as an asset that is classified within inventory at the point it is extracted from the mine. Ore is
accumulated in stockpiles that are subsequently processed into gold/copper in a saleable form under a mine plan that takes into consideration
optimal scheduling of production of our reserves, present plant capacity, and the market price of gold/copper. Gold/copper in process represents
gold/copper in the processing circuit that has not completed the production process, and is not yet in a saleable form.
Gold ore stockpiles are measured by estimating the number of tons added and removed from the stockpile, the number of contained
ounces (based on assay data) and the estimated metallurgical recovery rates (based on the expected processing method). Copper ore stockpiles
are measured estimating the number of tons added and removed from the stockpile. Stockpile ore tonnages are verified by periodic surveys.
Costs are allocated to a stockpile based on relative values of material stockpiled and processed using current mining costs incurred up to the
point of stockpiling the ore, including applicable overhead, depreciation, depletion and amortization relating to mining operations, and removed
at each stockpile’s average cost per recoverable unit.
BARRICK YEAR-END 2008
A-38
NOTES TO FINANCIAL STATEMENTS
We record gold in process, gold doré and gold in concentrate form at average cost, less provisions required to reduce inventory to market
value. Average cost is calculated based on the cost of inventory at the beginning of a period, plus the cost of inventory produced in a period.
Costs capitalized to inventory include direct and indirect materials and consumables; direct labor; repairs and maintenance; utilities;
amortization of property, plant and equipment; waste stripping costs; and local mine administrative expenses. Costs are removed from
inventory and recorded in cost of sales and amortization expense based on the average cost per ounce of gold in inventory. Mine operating
supplies are recorded at purchase cost.
We record provisions to reduce inventory to net realizable value, to reflect changes in economic factors that impact inventory value or to
reflect present intentions for the use of slow moving and obsolete supplies inventory.
For the years ended Dec.31
2007
2006
2005
Inventory impairment charges
$ 13
$ 28
$ 15
Heap Leach Inventory
The recovery of gold and copper from certain oxide ores is achieved through the heap leaching process. Our Pierina, Lagunas Norte,
Veladero, Cortez, Bald Mountain, Round Mountain, Ruby Hill and Marigold mines all use a heap leaching process for gold and our Zaldívar
mine uses a heap leaching process for copper. Under this method, ore is placed on leach pads where it is treated with a chemical solution,
which dissolves the gold or copper contained in the ore. The resulting “pregnant” solution is further processed in a plant where the gold or
copper is recovered. For accounting purposes, costs are added to ore on leach pads based on current mining and leaching costs, including
applicable depreciation, depletion and amortization relating to mining operations. Costs are removed from ore on leach pads as ounces or
pounds are recovered based on the average cost per recoverable ounce of gold or pound of copper on the leach pad.
Estimates of recoverable gold or copper on the leach pads are calculated from the quantities of ore placed on the leach pads (measured
tons added to the leach pads), the grade of ore placed on the leach pads (based on assay data) and a recovery percentage (based on ore type). In
general, leach pads recover between 35% and 95% of the ounces or pounds placed on the pads.
Although the quantities of recoverable gold or copper placed on the leach pads are reconciled by comparing the grades of ore placed on
pads to the quantities of gold or copper actually recovered (metallurgical balancing), the nature of the leaching process inherently limits the
ability to precisely monitor inventory levels. As a result, the metallurgical balancing process is constantly monitored and estimates are refined
based on actual results over time. Historically, our operating results have not been materially impacted by variations between the estimated and
actual recoverable quantities of gold or copper on our leach pads. At December 31, 2007, the weighted average cost per recoverable ounce of
gold and recoverable pound of copper on leach pads was $287 per ounce and $0.39 per pound, respectively (2006: $180 per ounce of gold and
$0.45 per pound of copper). Variations between actual and estimated quantities resulting from changes in assumptions and estimates that do not
result in write-downs to net realizable value are accounted for on a prospective basis.
The ultimate recovery of gold or copper from a leach pad will not be known until the leaching process is concluded. Based on current
mine plans, we expect to place the last ton of ore on our current leach pads at dates for gold ranging from 2013 to 2020 and for copper ranging
from 2024 to 2029. Including the estimated time required for residual leaching, rinsing and reclamation activities, we expect that our leaching
operations will terminate within a period of up to six years following the date that the last ton of ore is placed on the leach pad.
BARRICK YEAR-END 2008
A-39
NOTES TO FINANCIAL STATEMENTS
The current portion of ore inventory on leach pads is determined based on estimates of the quantities of gold or copper at each balance
sheet date that we expect to recover during the next 12 months.
Ore in Stockpiles
At Dec.31
Gold
Goldstrike
Ore that requires roasting
Ore that requires autoclaving
Kalgoorlie
Porgera
Cowal
Veladero
Cortez
Turquoise Ridge
Golden Sunlight
Other
Copper
Zaldívar
2007
2006
$ 320
67
75
88
36
23
19
15
15
40
$ 239
84
58
17
9
9
3
15
1
50
63
51
$ 761
$ 536
At Goldstrike, we expect to fully process the ore in stockpiles by 2031. At Kalgoorlie, we expect to fully process the stockpile by 2018.
At Porgera, we expect to fully process the stockpile by 2021. At Zaldívar, we expect to fully process the stockpile by 2029.
14 > ACCOUNTS RECEIVABLE AND OTHER CURRENT ASSETS
At Dec.31
Accounts receivable
Amounts due from concentrate sales
Amounts due from copper cathode sales
Other receivables
Other current assets
Derivative assets (note 20C)
Goods and services taxes recoverable
Restricted cash
Prepaid expenses
Other
2007
2006
$ 19
89
148
$ 24
83
127
$ 256
$ 234
$ 334
161
131
40
41
$ 201
137
150
32
68
$ 707
$ 588
15 > PROPERTY, PLANT AND EQUIPMENT
At Dec.31
2007
Assets not subject to amortization
Acquired mineral properties and capitalized mine development costs
Assets subject to amortization
Capitalized mineral property acquisition and mine development costs
Buildings, plant and equipment
1,4
$
4,5
2,5
Accumulated amortization
3
$
BARRICK YEAR-END 2008
A-40
2,010
2006
$
1,856
6,297
8,192
6,436
7,017
16,499
(7,903 )
15,309
(6,919 )
8,596
$
8,390
NOTES TO FINANCIAL STATEMENTS
1
2
3
4
5
A
Assets in the exploration or development stages that are not subject to amortization.
Includes $146 million (2006: $131 million) of assets under capital leases.
Includes $66 million (2006: $41 million) of accumulated amortization for assets under capital leases.
Includes a $176 million reclassification from amortized assets to assets not subject to amortization for Cortez Hills. This reclassification
has no impact on total property, plant & equipment and no impact on amortization expense.
Includes a $108 million reclassification in 2006 from Buildings, plant and equipment to Capitalized mine development costs. This
classification has no impact on total property, plant and equipment and no impact on amortization expense.
Unamortized Assets
Acquired Mineral Properties and Capitalized Mine Development Costs
Carrying
amount at
Dec.31, 2007
Exploration projects and other land positions
Value beyond proven and probable reserves at producing mines
Projects
Ruby Hill
Pascua-Lama
Cortez Hills
Pueblo Viejo
Sedibelo
Donlin Creek
Buzwagi
Punta Colorada Wind Farm
Kainantu and PNG exploration licenses
$
2
$
2
$
—
609
361
157
81
—
224
35
135
1
1
109
299
Carrying
amount at
Dec.31, 2006
2,010
287
353
49
459
306
152
76
66
108
—
—
$
1,856
$176 million and $48 million have been classified from acquired mineral properties and capitalized mine development costs and value
beyond proven and probable reserves of producing mines, respectively, to the Cortez Hills development stage project for 2007 and 2006.
This reclassification has no effect on the total property, plant and equipment balance and no effect on net income in either year.
See note 12 for further details.
Value beyond proven and probable reserves (“VBPP”)
At the end of each fiscal year, as part of our annual business cycle, we prepare estimates of proven and probable gold and copper mineral
reserves for each mineral property. An amount is transferred out of VBPP into amortizable assets based on the quantity of resources converted
into reserves. In 2007, we transferred $54 million from VBPP to amortizable assets (2006 and 2005: $nil).
Acquisitions
We capitalize the cost of acquisition of land and mineral rights. On acquiring a mineral property, we estimate the fair value of proven and
probable reserves as well as the value beyond proven and probable reserves and we record these amounts as assets at the date of acquisition. At
the time mineralized material is converted into proven and probable reserves, we classify the capitalized acquisition cost associated with those
reserves as a component of acquired mineral properties, which are subject to amortization. When production begins, capitalized acquisition
costs that are subject to amortization are amortized to operations using the units-of-production method.
BARRICK YEAR-END 2008
A-41
NOTES TO FINANCIAL STATEMENTS
In 2007, amortization of property, plant and equipment began at our Ruby Hill mine after it moved from construction into the production
phase. (2006: Cowal mine; 2005: Tulawaka, Lagunas Norte and Veladero mines). Amortization also began in 2005 at the Western 102 power
plant in Nevada that was built to supply power for the Goldstrike mine as it moved from construction into the production phase.
Gold and Copper Mineral Reserves
At the end of each fiscal year, as part of our annual business cycle, we prepare estimates of proven and probable gold and copper mineral
reserves for each mineral property, including the transfer of the values beyond proven and probable (“VBPP”) reserves to assets subject to
amortization. We prospectively revise calculations of amortization of property, plant and equipment. The effect of changes in reserve estimates
and transfers of VBPP reserves to assets subject to amortization on amortization expense for 2007 was an increase of $31 million (2006: $75
million decrease; 2005: $28 million decrease).
Interest Costs
Interest cost is considered an element of the historical cost of an asset when a period of time is necessary to prepare it for its intended use.
We capitalize interest costs to assets under development or construction while activities are in progress. We also capitalize interest costs on the
value assigned to projects acquired from third parties. We also capitalize interest costs on the carrying amount of eligible equity method
investments.
B
Assets Subject to Amortization
Capitalized Mineral Property Acquisition and Mine Development Costs
We start amortizing capitalized mineral property acquisition and mine development costs when production begins. Amortization is
calculated using the “units-of-production” method, where the numerator is the number of ounces produced and the denominator is the estimated
recoverable ounces of gold contained in proven and probable reserves.
During production at underground mines, we incur development costs to build new shafts, drifts and ramps that will enable us to
physically access ore underground. The time over which we will continue to incur these costs depends on the mine life, and in some cases
could be up to 25 years. These underground development costs are capitalized as incurred. Costs incurred and capitalized to enable access to
specific ore blocks or areas of the mine, and which only provide an economic benefit over the period of mining that ore block or area, are
attributed to earnings using the units-of-production method where the denominator is estimated recoverable ounces of gold contained in proven
and probable reserves within that ore block or area. If capitalized underground development costs provide an economic benefit over the entire
mine life, the costs are attributed to earnings using the units-of-production method, where the denominator is the estimated recoverable ounces
of gold contained in total accessible proven and probable reserves. At our Open Pit mining operations, costs of moving overburden waste
materials are capitalized until the production stage has commenced.
Buildings, Plant and Equipment
We record buildings, plant and equipment at cost. We capitalize costs that extend the productive capacity or useful economic life of an
asset. Costs incurred that do not extend the productive capacity or useful economic life of an asset are considered repairs and maintenance and
expensed as incurred. We amortize the capitalized cost of assets less any estimated residual value, using the straight-line method over the
estimated useful economic life of the asset based on their expected use in our business. The longest estimated useful economic life for buildings
and equipment at ore processing facilities is 25 years and for mining equipment is 15 years.
BARRICK YEAR-END 2008
A-42
NOTES TO FINANCIAL STATEMENTS
In the normal course of our business, we have entered into certain leasing arrangements whose conditions meet the criteria for the leases
to be classified as capital leases. For capital leases, we record an asset and an obligation at an amount equal to the present value at the
beginning of the lease term of minimum lease payments over the lease term. In the case of our capital leasing arrangements, there is transfer of
ownership of the leased assets to us at the end of the lease term and therefore we amortize these assets on a basis consistent with our other
owned assets.
C
Impairment Evaluations
Producing Mines and Development Projects
We review and test the carrying amounts of assets when events or changes in circumstances suggest that the carrying amount may not be
recoverable. We group assets at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and
liabilities. For operating mines and development projects, all assets related to a mine or project are included in one group. If there are
indications that an impairment may have occurred at a particular mine site, we compare the sum of the undiscounted cash flows expected to be
generated from that mine to its carrying amount. If the sum of undiscounted cash flows is less than the carrying amount, an impairment charge
is recognized if the carrying amounts of the individual long-lived assets within the group exceed their fair values.
Long-lived assets subject to potential impairment at operating mines and development projects include buildings, plant and equipment,
and capitalized mineral property acquisition and mine development costs. For impairment assessment purposes, the estimated fair value of
buildings, plant and equipment is based on a combination of current depreciated replacement cost and current market value. The estimated fair
value of capitalized mineral property acquisition and mine development costs is based on a discounted cash flow model.
Exploration Projects
After acquisition, various factors can affect the recoverability of the capitalized cost of land and mineral rights, particularly the results of
exploration drilling. The length of time between the acquisition of land and mineral rights and when we undertake exploration work varies
based on the prioritization of our exploration projects and the size of our exploration budget. If we conclude that an impairment may exist, we
compare the carrying amount to its fair value. The fair value for exploration projects is based on a discounted cash flow model. For projects
that do not have reliable cash flow projections, a market approach is applied. In the event land and mineral rights are impaired, we reduce the
carrying amount to estimated fair value and an impairment charge is recorded.
D
Capital Commitments
In addition to entering into various operational commitments in the normal course of business, we had commitments of approximately
$159 million at December 31, 2007 for construction activities at our development projects.
E
Insurance
We purchase insurance coverage for certain insurable losses, subject to varying deductibles, at our mineral properties including losses
such as property damage and business interruption. We record losses relating to insurable events as they occur. Proceeds receivable from
insurance coverage are recorded at such time as receipt is probable and the amount receivable is fixed or determinable.
BARRICK YEAR-END 2008
A-43
NOTES TO FINANCIAL STATEMENTS
Insurance Proceeds
Cost of sales
Discontinued operations
2007
2006
2005
$ 16
21
$—
12
$—
—
$ 37
$ 12
$—
16 > INTANGIBLE ASSETS
For the years ended Dec.31
2007
Gross
carrying
amount
Water rights
Technology
Supply contracts
Royalties
$
1
2
3
4
$
Aggregate period amortization expense
For the years ended December 31
$
Accumulated
amortization
—
—
15
2
$
$
17
$
$
28
17
23
17
$
85
—
Estimated aggregate amortization expense
1
2006
Net
carrying
amount
Gross
carrying
amount
28
17
8
15
$
$
68
7
2008
$
5
$
Net
carrying
amount
Accumulated
amortization
28
17
23
17
$
$
85
$
—
2009
$
—
2010
3
$
1
—
—
$
28
17
14
16
10
$
75
$
10
2011
$
—
2012
$
1
$
1
9
1
The water rights at Zaldívar are subject to annual impairment testing and will be amortized when we use them in the future. The
acquired technology will be used at the Pueblo Viejo project. The amount will be amortized using the units-of-production method over
the estimated proven and probable reserves of the mine, with no assumed residual value. Supply contracts are being amortized over the
weighted average contract lives of 4-8 years, with no assumed residual value. Royalties are being amortized using the
units-of-production method over the total ounces subject to royalty payments under the agreement.
2
3
4
Supply Agreement with Yokohama Rubber Co. Ltd. (“Yokohama”)
In December 2007, we signed an agreement with Yokohama to secure the supply of tires. Under the agreement, in January 2008, we
advanced Yokahama $35 million to fund expansion of their production facility and secure supply of tires for a 10-year period.
17 > GOODWILL
Gold
North
America
4
1
Total
—
441
—
$
—
1,024
(651 )
$
—
64
—
$
—
743
—
$
$ 2,423
—
(42 )
$
1,811
34
—
$
441
—
—
$
373
—
—
$
64
—
—
$
743
—
—
$ 5,855
34
(42 )
$ 2,381
$
1,845
$
441
$
373
$
64
$
743
$ 5,847
Closing balance, December 31, 2007
3
Australia
$
Closing balance, December 31, 2006
Additions
Impairments
2
Africa
—
1,811
—
$
1
Australia
Copper
South
America
$
Opening balance, January 1, 2006
Additions
Disposals
—
2,423
—
South
America
—
6,506
(651 )
Represents goodwill acquired as a result of the acquisition of Placer Dome Inc. No portion of this goodwill is expected to be deductible
for income tax purposes. Represents goodwill associated with the sale of our 50% interest in the South Deep mine to Gold Fields Ltd.
Represents goodwill acquired as a result of the
2
BARRICK YEAR-END 2008
A-44
3
NOTES TO FINANCIAL STATEMENTS
acquisition of an additional 20% interest in Porgera. This goodwill is expected to be deductible for income tax purposes (note 3E).
Impairment charges recorded in the fourth quarter related to the Golden Sunlight ($35 million) and Eskay Creek ($7 million) mines, as a
result of our annual goodwill impairment test. The goodwill impairment charges are primarily due to the short remaining lives of these
mines.
4
Accounting Policy for Goodwill and Goodwill Impairment
Under the purchase method, the cost of business acquisitions is allocated to the assets acquired and liabilities assumed based on the
estimated fair value at the date of acquisition. The excess of purchase cost over the net fair value of identified tangible and intangible assets and
liabilities acquired represents goodwill that is allocated to reporting units. We believe that goodwill arises principally because of the following
factors: (1) The going concern value implicit in our ability to sustain and/or grow our business by increasing reserves and resources through
new discoveries; and (2) The ability to capture unique synergies that can be realized from managing a portfolio of both acquired and existing
mines and mineral properties in our regional business units.
In 2006, we determined that goodwill should be allocated to reporting units that would either represent components (individual mineral
properties) or aggregations of components up to a regional business unit level. As at December 31, 2006, the process of determining the
appropriate level to allocate goodwill was ongoing. In fourth quarter 2006, we completed impairment tests of goodwill assuming both no
aggregation of mineral properties, and aggregation of mineral properties up to the regional business unit level and determined that there were
no impairments at that date under either methodology. In second quarter 2007, we determined that an individual mineral property that is an
operating mine is a reporting unit for the purposes of allocating goodwill. On this basis, we allocated goodwill arising from the Placer Dome
acquisition to both acquired and existing mineral properties.
Allocations for goodwill arising on the acquisition of Placer Dome were calculated by first comparing the fair value of acquired reporting
units to the fair value of net identified assets allocated to the reporting units. Secondly, the fair value of estimated synergies arising on the
combination between Barrick and Placer Dome was used to allocate goodwill both to reporting units acquired and existing Barrick reporting
units expected to benefit from the combination.
On an annual basis in the fourth quarter of our fiscal year, we evaluate the carrying amount of goodwill assigned to reporting units for
potential impairment. 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 each reporting unit (including goodwill). If the carrying amount exceeds this fair value, then we
estimate the fair values of all identifiable assets and liabilities in the reporting unit, and compare this net fair value of assets less liabilities to the
estimated fair value of the entire reporting unit. The difference represents the implied fair value of the reporting unit’s goodwill, which is
compared to its carrying amount. Any excess of the carrying value over the fair value is charged to earnings.
Gold mining companies typically trade at a market capitalization that is based on a multiple of net asset value (“NAV”), whereby NAV
represents a discounted cash flow valuation based on projected future cash flows. For goodwill impairment testing purposes, we estimate the
fair value of a gold property by applying a multiple to the reporting units NAV. For a copper property, the estimated fair value is based on its
NAV and no multiple is applied. The process for determining fair value is subjective and requires us to make numerous assumptions including,
but not limited to, projected future revenues based on estimated production, long-term metal prices, operating expenses, capital expenditures,
discount rates and NAV multiples. In particular, our assumptions with respect to long-term gold prices and the appropriate NAV multiple to
apply have a significant impact on our estimate of fair value. In our 2007 annual goodwill impairment test we used a long-term gold price of
$800 per ounce and NAV multiples ranging from 1.0 to 2.0, depending on each property’s geographic location and estimated remaining
economic life. On completion of this test, we recorded a goodwill impairment charge of $35 million at our Golden Sunlight mine and $7
million at our Eskay Creek mine. The goodwill impairment charges at these mines are primarily a result of their short remaining lives.
BARRICK YEAR-END 2008
A-45
NOTES TO FINANCIAL STATEMENTS
18 > OTHER ASSETS
At Dec.31
2007
Non-current ore in stockpiles (note 13)
Derivative assets (note 20C)
Goods and services taxes recoverable
Deferred income tax assets (note 23)
Debt issue costs
Deferred share-based compensation (note 26B)
Notes receivable
Deposits receivable
Other
$
2006
510
220
54
722
27
75
97
147
84
$ 1,936
$
368
209
48
528
36
36
65
82
49
$ 1,421
Debt Issue Costs
In 2007, no new debt financings were put into place and there were no additions to debt issue costs. Amortization of debt issue costs is
calculated using the interest method over the term of each debt obligation, and classified as a component of interest cost (see note 20B).
19 > OTHER CURRENT LIABILITIES
At Dec.31
Asset retirement obligations (note 21)
Derivative liabilities (note 20C)
Post-retirement benefits (note 27)
Deferred revenue
Income taxes payable (note 9)
Other
2007
2006
$ 74
100
11
23
38
9
$ 50
82
11
—
159
1
$ 255
$ 303
20 > FINANCIAL INSTRUMENTS
Financial instruments include cash; evidence of ownership in an entity; or a contract that imposes an obligation on one party and conveys
a right to a second entity to deliver/receive cash or another financial instrument. Information on certain types of financial instruments is
included elsewhere in these financial statements as follows: accounts receivable—note 14; investments—note 12; restricted share units—note
26B.
A
Cash and Equivalents
Cash and equivalents include cash, term deposits and treasury bills with original maturities of less than 90 days. Cash and equivalents
include $480 million (2006: $605 million) held in Argentinean and Chilean subsidiaries that have been designated for use in funding
construction costs at our Pascua-Lama project.
BARRICK YEAR-END 2008
A-46
NOTES TO FINANCIAL STATEMENTS
B
Long-Term Debt
6
2007
At
Dec.31
7.50% debentures
5.80%/4.875% notes
Veladero financing
Bulyanhulu financing
Other debt
Copper-linked notes
US dollar notes
Senior convertible
debentures
Capital leases
Series B Preferred
Securities
First credit facility
$
1
2
3
Less: current portion
—
745
163
51
923
515
480
$
2
3
—
—
—
—
—
—
—
—
— $
—
13
—
50
995
87
— $
—
30
34
—
87
—
—
—
—
—
296
94
—
—
7
—
16
—
—
—
—
—
—
—
—
—
—
—
—
1,000
77
1,000
—
3,255
(102 )
408
—
1,109
—
—
3,957
(713 )
2,152
—
1,244
—
12
—
408 $
1,109 $
131
$
—
19
—
$
19 $
3
3
3 $ 3,244
—
—
—
$
$ 2,152 $
—
37
150
—
$
150
$
37 $
Assumed
on
acquisition
of Placer
Dome
Amortization 5
—
24
—
—
498
745
220
85
1,024
908
87
Repayments
—
15
—
—
$
Proceeds
293
85
$
$
At
Dec.31
Amortization 5
—
393
131
—
4
1
$
Repayments
2005
500 $
—
57
34
101
393
—
$ 3,153
Short-term debt Demand
financing facility
Second credit facility
Proceeds
2006
1,244 $
$
6
—
—
4
2
—
337
—
—
337 $
—
— $
—
—
—
867
—
—
490
745
237
119
113
—
—
300
6
79
—
1,252
—
12 $
$
At
Dec.31
Proceeds
Repayments
Amortization 5
— $
—
39
—
50
—
—
— $
—
—
31
—
—
—
—
—
—
—
—
—
—
—
97
—
90
—
28
—
—
—
—
—
—
—
—
—
—
1,801
(80 )
179
—
59
—
—
—
1,252 $ 1,721
150
300
—
—
450 $
—
$
$
179 $
—
—
$
—
59 $
—
—
$
—
—
—
—
$
—
During second quarter 2007, we repaid the $500 million 7.5% debentures from existing cash balances and proceeds from the sale of
investments.
The debt has an aggregate principal amount of $923 million, of which $163 million is subject to floating interest rates and $760 million is
subject to fixed interest rates ranging from 6.37% to 7.75%. The notes mature at various times between 2009 and 2035.
We have a credit and guarantee agreement with a group of banks (the “Lenders”), which requires the Lenders to make available to us a
credit facility of up to $1.5 billion or the equivalent amount in Canadian currency. The credit facility, which is unsecured, has an interest
rate of Libor plus 0.25% to
BARRICK YEAR-END 2008
A-47
NOTES TO FINANCIAL STATEMENTS
4
5
6
0.35% on drawn down amounts, and a commitment rate of 0.07% to 0.08% on undrawn amounts. We increased the limit of this facility
from $1 billion in August 2006. The facility currently matures in 2011.
During third quarter 2006, we terminated a second credit facility which consisted of unused bank lines of credit of $850 million with an
international consortium of banks.
Amortization of debt discount/premium.
The agreements which govern our long-term debt each contain various provisions which are not summarized herein. In certain cases,
these provisions allow Barrick to, at its option, redeem indebtedness prior to maturity at specified prices and also may permit redemption
of debt by Barrick upon the occurrence of certain specified changes in tax legislation.
Veladero Financing
One of our wholly owned subsidiaries, Minera Argentina Gold S.A. in Argentina, has a limited recourse amortizing loan facility for $250
million, the majority of which has a variable interest rate. We have guaranteed the loan until completion occurs, after which it will become
non-recourse to the parent company. As at December 31, 2007, completion as defined in the loan agreement has not occurred. The loan is
insured for political risks by branches of the Canadian and German governments.
Copper-Linked Notes/US Dollar Notes
In October 2006, we issued $1,000 million of Copper-Linked Notes. During the first three years, the full $1,000 million obligation of
these notes is to be repaid through the delivery of (the US dollar equivalent of) 324 million pounds of copper. At December 31, 2007,
156 million pounds of copper remained to be delivered (2008—103 million pounds; 2009—53 million pounds). Coincident with the repayment
of (the US dollar equivalent of) 324 million pounds of copper, we will reborrow $1,000 million. Over the next two years, the total amount
outstanding under these notes will continue to be $1,000 million, with a portion repayable in a copper-linked equivalent and a portion repayable
in a fixed amount of US dollars at the maturity of the notes (2016 and 2036). As the copper-linked equivalent is repaid, the fixed US dollar
obligation will increase. After 2009, only the fixed US dollar obligation will remain. The accounting principles applicable to these
Copper-Linked Notes require separate accounting for the future delivery of copper (a fixed-price forward sales contract that meets the
definition of a derivative that must be separately accounted for) and for the underlying bond (see note 20C).
Senior Convertible Debentures
The convertible senior debentures (the “Securities”) mature in 2023 and had an aggregate principal amount of $293 million outstanding
as at the end of 2007. Holders of the Securities may, upon the occurrence of certain circumstances and within specified time periods, convert
their Securities into common shares of Barrick. These circumstances are: if the closing price of our common shares exceeds 120% of the
conversion price for at least 20 trading days in the 30 consecutive trading days ending on the last trading day of the immediately preceding
fiscal quarter; if certain credit ratings assigned to the Securities fall below specified levels or if the Securities cease to be rated by specified
rating agencies or such ratings are suspended or withdrawn; if for each of five consecutive trading days, the trading price per $1,000 principal
amount of the Securities was less than 98% of the product of the closing price of our common shares and the then current conversion rate; if the
Securities have been called for redemption provided that only such Securities called for redemption may be converted and upon the occurrence
of specified corporate transactions. On December 31, 2007 the conversion rate per each $1,000 principal amount of Securities was 39.99
common shares and the effective conversion price was $25.01 per common share. The conversion rate is subject to adjustment in certain
circumstances. As such, the effective conversion price may also change.
The Securities were convertible from October 1, 2007 through December 31, 2007. No holder of Securities converted during this
period. However, had all the Securities been converted and settlement occurred on December 31, 2007, we would have issued approximately
9.2 million common shares with an aggregate fair
BARRICK YEAR-END 2008
A-48
NOTES TO FINANCIAL STATEMENTS
value of approximately $386.7 million based on our closing share price on December 31, 2007. The Securities are also convertible from
January 1, 2008 through March 31, 2008.
We may redeem the Securities at any time on or after October 20, 2010 and prior to maturity, in whole or in part, at a prescribed
redemption price that varies depending upon the date of redemption from 100.825% to 100% of the principal amount, plus accrued and unpaid
interest. The maximum amount we could be required to pay to redeem the securities is $232 million plus accrued interest. Holders of the
Securities can require the repurchase of the Securities for 100% of their principal amount, plus accrued and unpaid interest, on October 15,
2013 and October 15, 2018. In addition, if specified designated events occur prior to maturity of the Securities, we will be required to offer to
purchase all outstanding Securities at a repurchase price equal to 100% of the principal amount, plus accrued and unpaid interest. For
accounting purposes the Securities are classified as a “conventional convertible debenture” and the conversion feature has not been bifurcated
from the host instrument.
Series B Preferred Securities
On December 18, 2006, we redeemed all of the outstanding 8.5% Series B Preferred Securities due December 31, 2045 for total cash of
$80 million. The redemption price was comprised of the outstanding principal amount of $77 million plus accrued and unpaid interest to
December 17, 2006 of $3 million.
Demand Financing Facility
We have a demand financing facility that permits borrowings of up to $150 million. The terms of the facility require us to maintain cash
on deposit with the lender as a compensating balance equal to the amount outstanding under the facility, which is restricted as to use. The net
effective interest rate is 0.4% per annum. At December 31, 2007, $131 million had been drawn on the facility and an equal amount had been
placed on deposit that is included in restricted cash (see note 14).
BARRICK YEAR-END 2008
A-49
NOTES TO FINANCIAL STATEMENTS
Interest
2007
Interest
cost
7.50% debentures
5.80%/4.875% notes
Veladero financing
Bulyanhulu financing
Other debt
Copper-linked notes/US dollar notes
Senior convertible debentures
Capital leases
Series B Preferred Securities
Demand financing facility
First credit facility
Second credit facility
Other interest
$
Effective
rate 1
16
41
21
5
60
63
2
6
—
13
1
—
9
9.9 %
5.6 %
10.2 %
6.2 %
6.1 %
6.2 %
0.8 %
7.7 %
—
8.9 %
—
—
For the years ended Dec.31
2006
Interest
Effective
cost
rate 1
$
9.8 %
5.5 %
10.2 %
5.5 %
5.4 %
5.8 %
2.0 %
6.7 %
4.4 %
8.8 %
7.4 %
5.0 %
$
251
(23 )
(102 )
237
—
(124 )
Less: interest allocated to discontinued operations
Less: interest capitalized
49
41
25
6
53
13
6
6
3
12
29
6
2
2005
Interest
cost
Effective
rate 1
41
42
20
10
3
—
—
6
—
—
—
—
(1 )
121
—
(118 )
$
113
$
126
$
3
Cash interest paid
Amortization of debt issue costs
Amortization of premium
Losses on interest rate hedges
Increase (decrease) in interest accruals
$
236
9
(3 )
4
(9 )
$
211
12
(12 )
12
28
$
108
2
—
5
6
Interest cost
$
237
$
251
$
121
1
8.21 %
5.6 %
8.6 %
7.5 %
4.1 %
—
—
6.2 %
—
—
—
—
The effective rate includes the stated interest rate under the debt agreement, amortization of debt issue costs and debt discount/premium
and the impact of interest rate contracts designated in a hedging relationship with long–term debt.
Scheduled Debt Repayments
5.80%/4.875% notes
Veladero financing
Bulyanhulu financing
Copper-linked notes/US dollar notes
Other debt
Senior convertible debentures
1
Minimum annual payments under capital leases
1
2012 and
thereafter
2008
2009
2010
2011
$—
48
34
—
—
—
$—
53
17
—
16
—
$—
30
—
—
—
—
$—
10
—
—
—
—
$
750
22
—
1,000
844
230
$ 82
$ 86
$ 30
$ 10
$
2,846
$ 21
$ 24
$ 20
$
$
6
8
The Copper-linked notes/US dollar notes have scheduled repayments through the delivery of pre-determined amounts of copper (see
Copper-Linked Notes/US Dollar Notes).
BARRICK YEAR-END 2008
A-50
NOTES TO FINANCIAL STATEMENTS
C
Use of Derivative Instruments (“Derivatives”) in Risk Management
In the normal course of business, our assets, liabilities and forecasted transactions are impacted by various market risks including:
Item
• Sales
•
Impacted by
• Prices of gold and copper
Cost of sales
•
Consumption of diesel fuel and propane
•
Prices of diesel fuel, propane and natural gas
•
Local currency denominated expenditures
•
Currency exchange rates—US dollar versus A$, C$,
CLP, ARS, PGK and TZS
•
By-product credits
•
Prices of silver and copper
•
Administration, exploration and business development costs in
local currencies
•
Currency exchange rates—US dollar versus A$, ZAR,
CLP, ARS, PGK and C$
•
Capital expenditures in local currencies
•
Currency exchange rates—US dollar versus A$, C$,
CLP, ARS, PGK and EUR
•
Interest earned on cash
•
US dollar interest rates
•
Fair value of fixed–rate debt
•
US dollar interest rates
Under our risk management policy, we seek to mitigate the impact of these market risks to provide certainty for a portion of our revenues
and to control costs and enable us to plan our business with greater certainty. The timeframe and manner in which we manage these risks varies
for each item based upon our assessment of the risk and available alternatives for mitigating risk. For these particular risks, we believe that
derivatives are an effective means of managing risk.
The primary objective of the hedging elements of our derivative positions is that changes in the values of hedged items are offset by
changes in the values of derivatives. Most of the derivatives we use meet the FAS 133 hedge effectiveness criteria and are designated in a
hedge accounting relationship. Some of the derivative positions are effective in achieving our risk management objectives but they do not meet
the strict FAS 133 hedge effectiveness criteria, and they are classified as “non–hedge derivatives”. The change in fair value of these non-hedge
derivatives is recorded in earnings, in a manner consistent with the derivative positions’ intended use.
Non-Hedge Derivative Gains/Losses
Income statement classification
Gold contracts
Copper contracts
Silver contracts
Fuel contracts
Currency contracts
Interest rate swaps
Share purchase warrants
BARRICK YEAR-END 2008
Revenue
Revenue
Cost of sales
Cost of sales
Other expense
Interest income/expense
Other income
A-51
NOTES TO FINANCIAL STATEMENTS
Summary of Derivatives at Dec.31, 2007
1
Accounting Classification by Notional
Amount
Cash flow
Fair value
hedge
hedge
Non-Hedge
Notional Amount by Term to Maturity
Within 1
year
US dollar interest rate
contracts
Receive-fixed swaps
(millions)
Pay-fixed swaps (millions)
Net swap position
Currency contracts
C$:US$ contracts (C$
millions)
A$:US$ contracts (A$
millions)
EUR:US$ contracts (€
millions)
CLP:US$ contracts (CLP
billions)
Over 5 years
Total
$
—
—
$
50
(125 )
$
—
—
$
50
(125 )
$
—
—
$
—
—
$
50
(125 )
$
—
$
(75 )
$
—
$
(75 )
$
—
$
—
$
(75 )
$ (10 )
100
$ 31
93
210
3
—
C
$
A
$
€
Commodity contracts
Copper call option spread
contracts (millions of
pounds)
Copper sold forward
contracts (millions of
pounds)
Copper collar contracts
(millions of pounds)
Diesel forward contracts
(thousands of barrels)
2
1
2
2 to 5 years
Fair
value
331
1,379
4
CLP
42
C
$
A
$
3,232
C
$
A
$
€
—
€
219
CLP—
—
C
$
A
$
4,611
C
$
A
$
—
€
4
€
—
550
CLP—
CLP42
450
4,518
1
CLP
42
C
$
A
$
€
—
C
$
A
$
—
€
—
CLP—
CLP—
$
1
(11 )
—
103
53
—
156
—
—
156
$ 25
100
72
—
172
172
—
—
—
—
—
299
272
—
27
49
2,910
440
5,218
4,505
—
713
84
299
1,868
Excludes gold sales contracts (see note 5), gold lease rate swaps (see note 5),
Diesel commodity contracts represent a combination of WTI, WTB, MOPS and JET hedge contracts and diesel price contracts based on
the price of WTI, WTB, MOPS, and JET, respectively, plus a spread. WTI represents West Texas intermediate, WTB represents Water
Borne, MOPS represents Mean of Platts Singapore, JET represents Jet Fuel.
US Dollar Interest Rate Contracts
Receive-fixed swaps totaling $300 million were closed out in third quarter 2007. They had been designated against the Copper-linked
notes/US dollar notes, included in long-term debt, as a hedge of the variability in the fair value of the debentures caused by changes in LIBOR.
For these hedges, prospective hedge effectiveness was assessed by comparing the effects of theoretical shifts in forward interest rates on the
fair value of both the debt and the swaps. The retrospective assessment involved comparing the effect of changes in the underlying interest rate
(i.e., LIBOR) on both the debt and the swaps.
In the second quarter, receive-fixed swaps totaling $500 million expired. These swaps were set up as fair value hedges of the $500
million 7.5% debentures which matured on May 1, 2007. Changes in fair value of the
BARRICK YEAR-END 2008
A-52
NOTES TO FINANCIAL STATEMENTS
swaps, together with changes in fair value of the debentures caused by changes in LIBOR, were recorded in earnings each period. Also, as
interest payments on the debentures are recorded in earnings, an amount equal to the net of the fixed-rate interest receivable and the
variable-rate interest payable is recorded in earnings as a component of interest costs.
Currency Contracts
Cash Flow Hedges
Currency contracts totaling C$450 million, A$4,518 million, €1 million and CLP 42 billion have been designated against forecasted local
currency denominated expenditures as a hedge of the variability of the US dollar amount of those expenditures caused by changes in currency
exchange rates over the next four years. Hedged items are identified as the first stated quantity of dollars of forecasted expenditures in a future
month. For a C$450 million, A$4,452 million, €1 million and CLP 42 billion portion of the contracts, we have concluded that the hedges are
100% effective under FAS 133 because the critical terms (including notional amount and maturity date) of the hedged items and currency
contracts are the same. For the remaining A$66 million, prospective and retrospective hedge effectiveness is assessed using the hypothetical
derivative method under FAS 133. The prospective test involves comparing the effect of a theoretical shift in forward exchange rates on the fair
value of both the actual and hypothetical derivative. The retrospective test involves comparing the effect of historic changes in exchange rates
each period on the fair value of both the actual and hypothetical derivative using a dollar offset approach. The effective portion of changes in
fair value of the currency contracts is recorded in OCI until the forecasted expenditure impacts earnings. For expenditures capitalized to the
cost of inventory, this is upon sale of inventory, and for capital expenditures, this is when amortization of the capital assets is recorded in
earnings.
Non-hedge Contracts
On December 31, 2007 we had non-hedge Canadian currency contracts of $100M. We entered these contracts to hedge the purchase price
of Arizona Star. The contracts qualified for hedge accounting treatment from the designation date to the acquisition date of December 20, 2007.
After December 20, 2007, the contracts were no longer considered hedges under FAS 133, and all changes in fair value subsequent to that date
were recorded in current period earnings. These non-hedge contracts matured at the end of January 2008.
During 2007, we entered into a series of A$ contracts as identified above. A$93 million contracts were not designated as hedges and are
outstanding as of December 31, 2007.
Commodity Contracts
Cash Flow Hedges
Commodity contracts totaling 4,505 thousand barrels of diesel fuel have been designated against forecasted purchases of the commodities
for expected consumption at our mining operations. The contracts act as a hedge of the impact of variability in market prices on the cost of
future commodity purchases over the next seven years. Hedged items are identified as the first stated quantity in millions of barrels/gallons of
forecasted purchases in a future month. Prospective and retrospective hedge effectiveness is assessed using the hypothetical derivative method
under FAS 133. The prospective test is based on regression analysis of the month–on–month change in fair value of both the actual derivative
and a hypothetical derivative caused by actual historic changes in commodity prices over the last three years. The retrospective test involves
comparing the effect of historic changes in commodity prices each period on the fair value of both the actual and hypothetical derivative using
a dollar offset approach. The effective portion of changes in fair value of the commodity contracts is recorded in OCI until the forecasted
transaction impacts earnings. The cost of commodity consumption is capitalized to the cost of inventory, and therefore this is upon the sale of
inventory.
The terms of a series of copper-linked notes resulted in an embedded fixed-price forward copper sales contract for 324 million pounds
that meets the definition of a derivative and must be separately accounted for. At December 31, 2007, embedded fixed-price forward copper
sales contracts for 156 million pounds were
BARRICK YEAR-END 2008
A-53
NOTES TO FINANCIAL STATEMENTS
outstanding due to deliveries of copper totaling 168 million pounds. The resulting copper derivative has been designated against future copper
cathode at the Zaldívar mine as a cash flow hedge of the variability in market prices of those future sales. Hedged items are identified as the
first stated quantity of pounds of forecasted sales in a future month. Prospective hedge effectiveness is assessed on these hedges using a dollar
offset method. The dollar offset assessment involves comparing the effect of theoretical shifts in forward copper prices on the fair value of both
the actual hedging derivative and a hypothetical hedging derivative. The retrospective assessment involves comparing the effect of historic
changes in copper prices each period on the fair value of both the actual and hypothetical derivative using a dollar offset approach. The
effective portion of changes in fair value of the copper contracts is recorded in OCI until the forecasted copper sale impacts earnings.
During 2007 we added 392 million pounds of copper collar contracts which provide a floor price and a cap price for copper sales.
315 million pounds of the collars were designated against copper cathode sales at our Zaldívar mine and 77 million pounds are designated
against copper concentrate sales at our Osborne mine. At December 31, 2007 we had 207 million pounds of copper collar contracts remaining
at Zaldívar and 65 million pounds at Osborne.
For collars designated against copper cathode production, the hedged items are identified as the first stated quantity of pounds of
forecasted sales in a future month. Prospective hedge effectiveness is assessed on these hedges using a dollar offset method. The dollar offset
assessment involves comparing the effect of theoretical shifts in forward copper prices on the fair value of both the actual hedging derivative
and a hypothetical hedging derivative. The retrospective assessment involves comparing the effect of historic changes in copper prices each
period on the fair value of both the actual and hypothetical derivative using a dollar offset approach. The effective portion of changes in fair
value of the copper contracts is recorded in OCI until the forecasted copper sale impacts earnings.
Concentrate sales at our Osborne mine contain both gold and copper, and as a result, are exposed to price changes of both commodities.
Prospective hedge effectiveness is assessed using a regression method. The regression method involves comparing month-by-month changes in
fair value of both the actual hedging derivative and a hypothetical derivative (derived from the price of concentrate) caused by actual historical
changes in commodity prices over the last three years. The retrospective assessment involves comparing the effect of historic changes in copper
prices each period on the fair value of both the actual and hypothetical derivative using a dollar offset approach. The effective portion of
changes in fair value of the copper contracts is recorded in OCI until the forecasted copper sale impacts earnings. During 2007, we recorded
ineffectiveness of $5 million on these hedges. The ineffectiveness was caused by changes in the price of gold impacting the hypothetical
derivative, but not the hedging derivative. Prospective effectiveness tests indicate that these hedges are expected to be highly effective in the
future.
Non–hedge Contracts
Non–hedge fuel contracts are used to mitigate the risk of oil price changes on other fuel consumption. On completion of regression
analysis, we concluded that the contracts do not meet the “highly effective” criterion in FAS 133 due to currency and basis differences between
contract prices and the prices charged to the mines by oil suppliers. Despite not qualifying as an accounting hedge, the contracts protect the
Company to a significant extent from the effects of oil price changes. Changes in fair value of non-hedge fuel contracts are recorded in current
period cost of sales.
In first quarter 2007, we purchased and sold call options on 274 million pounds of copper over the next 2 1/2 years. These options, when
combined with the aforementioned fixed-price forward copper sales contracts, economically lock in copper sales prices between $3.08/lb and
$3.58/lb over a period of 2 1/2 years. At December 31, 2007, the notional amount of options outstanding had decreased to 156 million pounds
due to expiry of options totaling 118 million pounds in 2007. These contracts do not meet the “highly effective”
BARRICK YEAR-END 2008
A-54
NOTES TO FINANCIAL STATEMENTS
criterion for hedge accounting in FAS 133. We paid net option premiums of $23 million for these positions that were included under investing
activities in the cash flow statement. Changes in fair value of these copper options are recorded in current period revenue.
During 2007, we entered into a series of copper collar contracts for 27 million pounds of copper that were not designated as hedges and
were outstanding as of December 31, 2007.
Non-hedge Derivative Gains (Losses)
For the years ended
Commodity contracts
Copper
Gold
Silver
Fuel
Currency contracts
Interest rate contracts
Share purchase warrants
2007
$ 48
(8 )
—
7
(7 )
(2 )
(1 )
37
Hedge ineffectiveness
Ongoing hedge inefficiency
Due to changes in timing of hedged items
2006
$ (14 )
7
(5 )
1
—
8
—
$ 41
$—
(4 )
—
8
3
2
(5 )
(3 )
4
3
—
1
1
$—
6
4
—
Income statement classification
2005
Revenue
Revenue
Cost of sales
Cost of sales
Other income/expense
Interest income/expense
Other income/expense
Various
Various
Derivative Assets and Liabilities
2007
1
2006
At Jan.1
Acquired with Placer Dome
Derivatives cash (inflow) outflow
Operating activities
Financing activities
Investing activities
Change in fair value of:
Non-hedge derivatives
Cash flow hedges Effective portion
Ineffective portion
Share purchase warrants
Fair value hedges
$ 178
—
$
204
(1,707 )
At Dec.31
$ 389
$
178
Classification:
Other current assets
Other assets
Other current liabilities
Other long–term obligations
$ 334
220
(100 )
(65 )
$
201
209
(82 )
(150 )
$ 389
$
178
(309 )
197
23
(184 )
1,840
—
33
257
9
(1 )
2
(3 )
17
3
—
8
Derivative assets and liabilities are presented net by offsetting related amounts due to/from counterparties if the conditions of FIN
No. 39, Offsetting of Amounts Related to Certain Contracts, are met. Amounts receivable from counterparties netted against derivative
liabilities totaled $5 million at December 31, 2007.
BARRICK YEAR-END 2008
A-55
NOTES TO FINANCIAL STATEMENTS
Cash Flow Hedge Gains (Losses) in OCI
Commodity price
hedges
Gold/
Silver
Copper
Interest rate
hedges
LongCash
term
balances
debt
Currency hedges
Operating
costs
Fuel
Administration
costs
Capital
expenditures
Total
At Dec.31, 2004
Effective portion of change in
fair value of hedging
instruments
Transfers to earnings:
On recording hedged
items in earnings
Hedge ineffectiveness
due to changes in
timing of hedged
items
—
—
2
240
33
48
3
(25 )
301
—
—
46
(38 )
13
(4 )
1
5
23
—
—
(10 )
(100 )
(16 )
(4 )
(6 )
2
(134 )
—
—
—
—
(1
At Dec.31, 2005
Effective portion of change in
fair value of hedging
instruments
Transfers to earnings:
On recording hedged
items in earnings
—
—
—
$
39
(2 )
(18 )
(2 )
—
(1 )
137
(2 )
4
165
28
(16 )
(84 )
(14 )
(4
Gold
sales
Hedge gains/losses classified within
Portion of hedge gain (loss)
expected to affect 2008
earnings
2
1
2
D
$
14
Copper
sales
2
$
24
(1 )
30
29
$
—
102
(148 )
15
—
1
38
At Dec.31, 2006
$ 17 $ 57 $ 21 $
Effective portion of change in
fair value of hedging
instruments
—
(75 )
87
Transfers to earnings:
On recording hedged
items in earnings
(2 )
32
(29 )
At Dec.31, 2007
)
$ 79
$
Cost
of
sales
$ 27
155
$
$
39
$
32
(35 )
(166 )
(19 )
(5
238
$
27
Administration
141
$
18
$
—
(3 ) $
)
—
Interest
income
$
—
$
77
(17 ) $ 283
(1 )
257
1
(185 )
3
1
17
1
—
(1 ) $
Amortization
$
1
1
249
Cost of
sales
$
14
)
189
(17 ) $ 355
Interest
expense
$
(1 ) $ 211
On determining that certain forecasted capital expenditures were no longer likely to occur within two months of the originally specified
time frame.
Based on the fair value of hedge contracts at December 31, 2007.
Fair Value of Financial Instruments
Fair value is the value at which a financial instrument 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. Fair value is based on quoted market prices,
where available. If market quotes are not available, fair value is based on internally developed models that use market-based or independent
information as inputs. These models could produce a fair value that may not be reflective of future fair value.
BARRICK YEAR-END 2008
A-56
NOTES TO FINANCIAL STATEMENTS
Fair Value Information
At Dec.31
2007
Carrying
amount
Financial assets
Cash and equivalents
Accounts receivable
Available-for-sale securities
Equity-method investments
Derivative assets
Held-to-maturity securities
1
1
2
3
4
5
Financial liabilities
Accounts payable
Long-term debt
Derivative liabilities
Restricted share units
Deferred share units
1
6
4
7
7
1
2
3
4
5
6
7
E
2006
Estimated
fair value
Carrying
amount
Estimated
fair value
$ 2,207
256
96
1,074
554
46
$
2,207
256
96
1,113
554
46
$ 3,043
234
646
204
410
—
$
3,043
234
646
212
410
—
$ 4,233
$
4,272
$ 4,537
$
4,545
$
808
3,255
165
100
4
$
808
3,151
165
100
4
$
686
3,957
232
42
2
$
686
3,897
232
42
2
$ 4,332
$
4,228
$ 4,919
$
4,859
Recorded at cost. Fair value approximates the carrying amounts due to the short-term nature and generally negligible credit losses.
Recorded at fair value. Quoted market prices are used to determine fair value.
Recorded at cost, adjusted for our share of income/loss and dividends of equity investees. Excludes the investment in Atacama Pty for
which there is no readily determinable fair value.
Recorded at fair value based on internal valuation models that reflect forward market commodity prices, currency exchange rates and
interest rates, and a discount factor that is based on market US dollar interest rates. If a forward market does not exist, we obtain
broker-dealer quotations. Valuations assume all counterparties have an AA credit rating.
Includes ABCP.
Long-term debt is generally recorded at cost except for obligations that are designated in a fair-value hedge relationship, which are
recorded at fair value in periods where a hedge relationship exists. The fair value of long-term debt is calculated by discounting the future
cash flows under a debt obligation by a discount factor that is based on US dollar market interest rates adjusted for our credit quality.
Recorded at fair value based on our period end closing market share price.
Credit Risk
Credit risk is the risk that a third party might fail to fulfill its performance obligations under the terms of a financial instrument. For cash
and equivalents and accounts receivable, credit risk represents the carrying amount on the balance sheet, net of any overdraft positions.
For derivatives, when the fair value is positive, this creates credit risk. When the fair value of a derivative is negative, we assume no
credit risk. In cases where we have a legally enforceable master netting agreement with a counterparty, credit risk exposure represents the net
amount of the positive and negative fair values for similar types of derivatives. For a net negative amount, we regard credit risk as being zero.
A net positive amount for a counterparty is a reasonable measure of credit risk when there is a legally enforceable master netting agreement.
We mitigate credit risk by:
•
entering into derivatives with high credit-quality counterparties;
•
limiting the amount of exposure to each counterparty; and
BARRICK YEAR-END 2008
A-57
NOTES TO FINANCIAL STATEMENTS
•
monitoring the financial condition of counterparties.
Location of credit risk is determined by physical location of the bank branch, customer or counterparty.
Credit Quality of Financial Assets
At Dec.31, 2007
AA– or
higher
Cash and equivalents
Derivatives
Accounts receivable
Other non-current assets
1
2
3
S&P Credit rating
A– or
B to
higher
BBB
Total
$ 2,225
405
—
42
$
30
—
—
3
$—
—
256
1
$ 2,255
405
256
46
$ 2,672
$
33
$ 257
$ 2,962
Number of counterparties
22
Largest counterparty (%)
31 %
3
96 %
Concentrations of Credit Risk
At Dec.31, 2007
Cash and equivalents
Derivatives
Accounts receivable
Other non-current assets
1
2
1
2
3
F
3
United
States
Canada
Other
International
$ 1,831
151
191
46
$ 103
139
46
—
$
321
115
19
—
$ 2,255
405
256
46
$ 2,219
$ 288
$
455
$ 2,962
Total
The amounts presented reflect the outstanding bank balance held with institutions as at December 31, 2007.
The amounts presented reflect the net credit exposure after considering the effect of master netting agreements.
Other non-current assets include ABCP.
Risks Relating to the Use of Derivatives
By using derivatives, in addition to credit risk, we are affected by market risk and market liquidity risk. Market risk is the risk that the fair
value of a derivative might be adversely affected by a change in commodity prices, interest rates, gold lease rates, or currency exchange rates,
and that this in turn affects our financial condition. We manage market risk by establishing and monitoring parameters that limit the types and
degree of market risk that may be undertaken. We mitigate 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 derivatives. Our counterparties cannot require settlement solely because of
an adverse change in the fair value of a derivative.
Market liquidity risk is the risk that a derivative cannot be eliminated quickly, by either liquidating it or by establishing an offsetting
position. Under the terms of our trading agreements, counterparties cannot require us to immediately settle outstanding derivatives, except upon
the occurrence of customary events of default such as covenant breaches, including financial covenants, insolvency or bankruptcy. We
generally mitigate market liquidity risk by spreading out the maturity of our derivatives over time.
BARRICK YEAR-END 2008
A-58
NOTES TO FINANCIAL STATEMENTS
21 > ASSET RETIREMENT OBLIGATIONS
Asset Retirement Obligations (AROs)
At January 1
AROs acquired with Placer Dome
AROs arising in the period
Impact of revisions to expected cash flows
Revisions to carrying amount of assets
Recorded in earnings
Settlements
Cash payments
Settlement gains
AROs reclassified under “Liabilities of discontinued operations”
Accretion
2007
2006
$ 893
—
53
$ 446
387
27
—
1
At Dec.31
Current portion
6
(7 )
53
(33 )
(3 )
—
50
(32 )
(4 )
(16 )
39
966
(74 )
893
(50 )
$ 892
1
$ 843
In 2006, we recognized an increase of $37 million for a change in estimate of the ARO at the Nickel Plate property in British Columbia,
Canada. The adjustment was made on receipt of an environmental study that indicated a requirement to treat ground water for an
extended period of time. The increase was recorded as a component of other expense (note 8A).
Each period we assess cost estimates and other assumptions used in the valuation of AROs at each of our mineral properties to reflect
events, changes in circumstances and new information available. Changes in these cost estimates and assumptions have a corresponding impact
on the fair value of the ARO. For closed mines, any change in the fair value of AROs results in a corresponding charge or credit within other
expense, whereas at operating mines the charge is recorded as an adjustment to the carrying amount of the corresponding asset. In 2007, we
recorded adjustments of $53 million for changes in estimates of the AROs at our Hemlo, Cowal, Bulyanhulu, Lagunas Norte and Veladero
operating mines. In 2007, charges of $6 million were recorded for changes in cost estimates for AROs at closed mines (2006: $53 million;
2005: $15 million expense).
AROs arise from the acquisition, development, construction and normal operation of mining property, plant and equipment, due to
government controls and regulations that protect the environment on the closure and reclamation of mining properties. The major parts of the
carrying amount of AROs relate to tailings and heap leach pad closure/rehabilitation; demolition of buildings/mine facilities; ongoing water
treatment; and ongoing care and maintenance of closed mines. The fair values of AROs are measured by discounting the expected cash flows
using a discount factor that reflects the credit-adjusted risk–free rate of interest. We prepare estimates of the timing and amount of expected
cash flows when an ARO is incurred. We update expected cash flows to reflect changes in facts and circumstances. The principal factors that
can cause expected cash flows to change are: the construction of new processing facilities; changes in the quantities of material in reserves and
a corresponding change in the life of mine plan; changing ore characteristics that impact required environmental protection measures and
related costs; changes in water quality that impact the extent of water treatment required; and changes in laws and regulations governing the
protection of the environment. When expected cash flows increase, the revised cash flows are discounted using a current discount factor
whereas when expected cash flows decrease the reduced cash flows are discounted using a historic discount factor, and then in both cases any
change in the fair value of the ARO is recorded. We record the fair value of an ARO when it is incurred. At producing mines AROs incurred
and changes in the fair value of AROs are recorded as an adjustment to the corresponding asset carrying amounts. At closed mines, any
adjustment to the fair value of an ARO is charged directly to earnings. AROs are adjusted to reflect the passage of time (accretion) calculated
by applying the
BARRICK YEAR-END 2008
A-59
NOTES TO FINANCIAL STATEMENTS
discount factor implicit in the initial fair-value measurement to the beginning-of-period carrying amount of the AROs. For producing mines,
accretion is recorded in the cost of goods sold each period. For development projects and closed mines, accretion is recorded in other expense.
Upon settlement of an ARO, we record a gain or loss if the actual cost differs from the carrying amount of the ARO. Settlement gains/losses
are recorded in other (income) expense. Other environmental remediation costs that are not AROs as defined by FAS 143 are expensed as
incurred (see note 8A).
22 > OTHER NON-CURRENT LIABILITIES
At Dec.31
Pension benefits (note 27)
Other post-retirement benefits (note 27)
Derivative liabilities (note 20C)
Restricted share units (note 26B)
Deferred revenue
Other
2007
2006
$ 87
27
65
94
88
70
$ 85
33
150
42
136
72
$ 431
$ 518
23 > DEFERRED INCOME TAXES
Recognition and Measurement
We record deferred income tax assets and liabilities where temporary differences exist between the carrying amounts of assets and
liabilities in our balance sheet and their tax bases. The measurement and recognition of deferred income tax assets and liabilities takes into
account: enacted rates that will apply when temporary differences reverse; interpretations of relevant tax legislation; tax planning strategies;
estimates of the tax bases of assets and liabilities; and the deductibility of expenditures for income tax purposes. We recognize the effect of
changes in our assessment of these estimates and factors when they occur. Changes in deferred income tax assets, liabilities and valuation
allowances are allocated between net income and other comprehensive income based on the source of the change.
Deferred income taxes have not been provided on the undistributed earnings of foreign subsidiaries, which are considered to be
reinvested indefinitely outside Canada. The determination of the unrecorded deferred income tax liability is not considered practicable.
BARRICK YEAR-END 2008
A-60
NOTES TO FINANCIAL STATEMENTS
Sources of Deferred Income Tax Assets and Liabilities
At Dec.31
2007
Deferred tax assets
Tax loss carry forwards
Capital tax loss carry forwards
Alternative minimum tax (“AMT”) credits
Asset retirement obligations
Property, plant and equipment
Inventory
Post-retirement benefit obligations
Other
$
Classification:
Non-current assets (note 18)
Non-current liabilities
$
729
—
247
342
331
—
23
3
798
30
198
303
333
95
40
3
1,675
(419 )
1,800
(658 )
1,256
1,142
(1,243 )
(122 )
(10 )
(1,377 )
(9 )
(26 )
Valuation allowances
Deferred tax liabilities
Property, plant and equipment
Derivative instruments
Other
2006
$
(119 )
$
(270 )
$
722
(841 )
$
528
(798 )
$
(119 )
$
(270 )
Expiry Dates of Tax Losses and AMT Credits
‘08
Tax losses
Canada
Australia
Barbados
Chile
Tanzania
U.S.
Other
‘09
No
expiry
date
‘10
‘11
‘12+
$—
—
—
—
—
—
$ 1,583
—
1,056
—
—
67
—
$
2
$—
—
—
—
—
—
—
—
150
—
679
242
—
—
$ 1,591
150
1,056
679
242
67
2
2
$—
$ 2,706
$ 1,071
$ 3,787
$
$
Total
1
$
3
1
2
3
—
2
5
—
—
—
—
—
—
$
AMT credits
$
—
—
—
—
—
—
$
5
—
$
—
—
—
247
247
Represents the gross amount of tax loss carry forwards translated at closing exchange rates at December 31, 2007.
Represents the amounts deductible against future taxes payable in years when taxes payable exceed “minimum tax” as defined by United
States tax legislation.
BARRICK YEAR-END 2008
A-61
NOTES TO FINANCIAL STATEMENTS
Net Deferred Tax Assets
2007
Gross deferred tax assets
Canada
Chile
Tanzania
United States
Other
$
494
117
197
225
108
2006
$
1,186
1,141
Valuation allowances
Canada
Chile
Tanzania
United States
Other
(59 )
(110 )
(217 )
(211 )
(61 )
(55 )
(105 )
(30 )
(190 )
(39 )
Non-current assets
487
113
217
247
122
$
(419 )
$
(658 )
$
722
$
528
Valuation Allowances
We consider the need to record a valuation allowance against deferred tax assets, taking into account the effects of local tax law. A
valuation allowance is not recorded when we conclude that sufficient positive evidence exists to demonstrate that it is more likely than not that
a deferred tax asset will be realized. The main factors considered are:
•
Historic and expected future levels of taxable income;
•
Tax plans that affect whether tax assets can be realized; and
•
The nature, amount and expected timing of reversal of taxable temporary differences.
Levels of future taxable income are mainly affected by: market gold and silver prices; forecasted future costs and expenses to produce
gold reserves; quantities of proven and probable gold reserves; market interest rates and foreign currency exchange rates. If these factors or
other circumstances change, we record an adjustment to valuation allowances to reflect our latest assessment of the amount of deferred tax
assets that will more likely than not be realized.
A deferred income tax asset totaling $439 million has been recorded in Canada. This deferred tax asset primarily arose due to
mark-to-market losses realized for acquired Placer Dome derivative instruments. Projections of various sources of income support the
conclusion that the realizability of this deferred tax asset is more likely than not, and consequently no valuation allowance has been set up for
this deferred tax asset.
A deferred tax asset of $167 million has been recorded in Tanzania following the release of tax valuation allowances totaling $189
million in 2007. The release of tax valuation allowances resulted from the impact of rising market gold prices on expectations of future taxable
income and the ability to realize these tax assets.
A partial valuation allowance of $190 million has been set up against deferred tax assets in the United States at December 31, 2007. The
majority of this valuation allowance relates to AMT credits in periods when partly due to low market gold prices, Barrick was an AMT
taxpayer in the United States. If market gold prices continue to rise, it is reasonably possible that some or all of these valuation allowances
could be released in future periods.
BARRICK YEAR-END 2008
A-62
NOTES TO FINANCIAL STATEMENTS
A valuation allowance of $105 million exists as at December 31, 2007 against tax loss carry forwards in Chile that exist in entities that
have no present sources of income.
Source of Changes in Deferred Tax Balances
For the years ended Dec.31
2007
Temporary differences
Property, plant and equipment
Asset retirement obligations
Tax loss carry forwards
Derivatives
Other
1
Intraperiod allocation to:
Income from continuing operations before income taxes
Placer Dome acquisition (note 3G)
Porgera mine acquisition (note 3E)
OCI (note 25)
Other
1
2005
$ (1,111 )
128
546
52
(17 )
$ 30
(69 )
38
(34 )
(3 )
$ (110 )
76
(64 )
—
156
88
$
(402 )
5
(12 )
31
—
53
$ (38 )
11
—
(5 )
—
(32 )
$ 146
$
(325 )
$ (64 )
$ 174
—
20
(48 )
5
$
109
(432 )
—
(2 )
28
$ (30 )
—
—
(34 )
(5 )
$ 151
$
(297 )
$ (69 )
$
Net currency translation gains on deferred tax balances
Canadian tax rate changes
Adjustment to deferred tax balances due to change in tax status
Release of end of year Tanzanian valuation allowances
Release of other valuation allowances
2006
24
39
(69 )
(113 )
9
Relates to changes in tax status in Australia (note 9).
Unrecognized Tax Benefits
Balance at January 1, 2007
Additions based on tax positions related to the current year
Additions for tax positions of prior years
Reductions for tax positions of prior years
Settlements
Balance at December 31, 2007
1
2
20
1
—
(2 )
(4 )
15
1,2
If recognized, the total amount of $15 million would be recognized as a benefit to income taxes on the income statement, and therefore
would impact the reported effective tax rate.
Includes interest and penalties of $1 million.
We expect the amount of unrecognized tax benefits to decrease within 12 months of the reporting date by approximately $2 to $3 million,
related primarily to the expected settlement of Canadian income and mining tax assessments.
BARRICK YEAR-END 2008
A-63
NOTES TO FINANCIAL STATEMENTS
Tax Years Still Under Examination
Canada
United States
2003-2007
2003-2007
Peru
2004-2007
Chile
2004-2007
Argentina
2002-2007
Australia
all years open
Papua New Guinea
2002-2007
Tanzania
all years open
Peruvian Tax Assessment
On September 30, 2004, the Tax Court of Peru issued a decision in our favor in the matter of our appeal of a 2002 income tax assessment
for an amount of $32 million, excluding interest and penalties. The assessment mainly related to the validity of a revaluation of the Pierina
mining concession, which affected its tax basis for the years 1999 and 2000. The full life-of-mine effect on current and deferred income tax
liabilities totaling $141 million was fully recorded at December 31, 2002, as well as other related costs of about $21 million.
In January 2005, we received written confirmation that there would be no appeal of the September 30, 2004 Tax Court of Peru decision.
In December 2004, we recorded a $141 million reduction in current and deferred income tax liabilities and a $21 million reduction in other
accrued costs. The confirmation concluded the administrative and judicial appeals process with resolution in Barrick’s favor.
Notwithstanding the favorable Tax Court decision we received in 2004 on the 1999 to 2000 revaluation matter, on an audit concluded in
2005, SUNAT has reassessed us on the same issue for tax years 2001 to 2003. On October 19, 2007, SUNAT confirmed their reassessment.
The tax assessment is for $49 million of tax, plus interest and penalties of $116 million. We filed an appeal to the Tax Court of Peru within the
statutory period. We believe that the audit reassessment has no merit, that we will prevail in court again, and accordingly no liability has been
recorded for this reassessment.
24 > CAPITAL STOCK
A
Common Shares
Our authorized capital stock includes an unlimited number of common shares (issued 869,886,631 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).
In 2007, we declared and paid dividends in US dollars totaling $0.30 per share ($261 million) (2006: $0.22 per share, $191 million; 2005:
$0.22 per share, $118 million).
B
Exchangeable Shares
In connection with a 1998 acquisition, Barrick Gold Inc. (“BGI”), issued 11.1 million BGI exchangeable shares, which are each
exchangeable for 0.53 of a Barrick common share at any time at the option of the holder, and have essentially the same voting, dividend
(payable in Canadian dollars), and other rights as 0.53 of a Barrick common share. BGI is a subsidiary that holds our interest in the Hemlo and
Eskay Creek Mines.
BARRICK YEAR-END 2008
A-64
NOTES TO FINANCIAL STATEMENTS
At December 31, 2007, 1.4 million (2006 – 1.4 million) BGI exchangeable shares were outstanding, which are equivalent to 0.7 million
Barrick common shares (2006 – 0.7 million common shares), and are reflected in the number of common shares outstanding. We have the right
to require the exchange of each outstanding BGI exchangeable share for 0.53 of a Barrick common share. While there are exchangeable shares
outstanding, we are required to present summary consolidated financial information relating to BGI.
Summarized Financial Information for BGI
For the years ended Dec.31
2007
2006
2005
Total revenues and other income
Less: costs and expenses
$ 213
202
$ 233
215
$ 181
186
Income (loss) before taxes
$ 11
$ 18
$
Net income
$ 22
$ 33
$ 21
1
At Dec.31
Assets
Current assets
Non-current assets
Liabilities and shareholders’ equity
Liabilities
Other current liabilities
Intercompany notes payable
Other long-term liabilities
Shareholders’ equity
2007
2006
$ 123
47
$ 127
50
$ 170
$ 177
22
409
109
(370 )
$ 170
1
(5 )
25
387
80
(315 )
$ 177
2006 includes a $37 million increase in the ARO at the Nickel Plate property (see note 21).
BARRICK YEAR-END 2008
A-65
NOTES TO FINANCIAL STATEMENTS
25 > OTHER COMPREHENSIVE INCOME (LOSS) (“OCI”)
2007
Accumulated OCI at Jan.1
Cash flow hedge gains, net of tax of $60, $61, $95
Investments, net of tax of $7, $nil, $nil
Currency translation adjustments, net of tax of $nil, $nil, $nil
Pension plans and other post-retirement benefits, net of tax of $4, $nil, $nil
$ 128
12
(143 )
(28 )
$ 206
21
(146 )
(12 )
$ 119
$
$
$
(31 )
69
257
58
—
17
43
—
23
(8 )
3
—
15
(16 )
—
19
1
13
(9 )
(2 )
—
—
—
(185 )
—
Other comprehensive income (loss), before tax
Income tax recovery (expense) related to OCI
Accumulated OCI at Dec.31
Cash flow hedge gains, net of tax of $105, $60, $61
Investments, net of tax of $4, $7, $nil
Currency translation adjustments, net of tax of $nil, $nil, $nil
Pension plans and other post-retirement benefits, net of tax of $2, $4, $nil
2005
$ 223
46
(143 )
(7 )
Other comprehensive income (loss) for the period:
Changes in fair value of cash flow hedges
Changes in fair value of investments
Currency translation adjustments
Pension plans and other post-retirement benefits:
Adjustments to minimum pension liability prior to adoption of FAS 158
FAS 158 adjustments (note 27C):
Elimination of minimum pension liability
Net actuarial gain (loss)
Transition obligation
Less: reclassification adjustments for gains/losses recorded in earnings:
Transfers of cash flow hedge (gains) losses to earnings:
On recording hedged items in earnings
Hedge ineffectiveness due to changes in timing of hedged items
Investments:
Other than temporary impairment charges
Gains realized on sale
Other comprehensive income (loss), net of tax
2006
77
—
(134 )
(1 )
1
(71 )
4
(6 )
16
(17 )
80
(48 )
152
(2 )
(134 )
34
32
250
37
(143 )
7
$ 151
$ 150
$ (100 )
223
46
(143 )
(7 )
$ 119
128
12
(143 )
(28 )
$
(31 )
26 > STOCK-BASED COMPENSATION
A
Stock Options
In September 2006, the SEC released a letter on accounting for stock options. The letter addresses the determination of the grant date and
measurement date for stock option awards. For Barrick, the stock option grant date is the date when the details of the award, including the
number of options granted by individual and the exercise price, are approved. The application of the principles in the letter issued by the SEC
did not change the date that has been historically determined as the measurement date for stock option grants.
Under Barrick’s stock option plan certain officers and key employees of the Corporation may purchase common shares at an exercise
price that is equal to the closing share price on the day before the grant of the option. Stock options vest evenly over four years, beginning in
the year after granting. Options granted in July 2004 and prior are exercisable over 10 years, whereas options granted since December 2004 are
exercisable over 7 years. At December 31, 2007, 10 million (2006: 13 million; 2005: 12 million) common shares, in addition to
BARRICK YEAR-END 2008
A-66
NOTES TO FINANCIAL STATEMENTS
those currently outstanding, were available for granting options. Stock options when exercised result in an increase to the number of common
shares issued by Barrick.
Compensation expense for stock options was $25 million in 2007 (2006: $27 million; 2005: $nil), and is presented as a component of cost
of sales, corporate administration and other expense, consistent with the classification of other elements of compensation expense for those
employees who had stock options. The recognition of compensation expense for stock options reduced earnings per share for 2007 by $0.03 per
share (2006: $0.03 per share).
Total intrinsic value relating to options exercised in 2007 was $58 million (2006: $27 million; 2005: $22 million).
Employee Stock Option Activity (Number of Shares in Millions)
2007
Shares
C$ options
At Jan.1
Granted
Issued on acquisition of Placer Dome
Exercised
Forfeited
Cancelled/expired
At Dec.31
US$ options
At Jan.1
Granted
Issued on acquisition of Placer Dome
Exercised
Forfeited
Cancelled/expired
At Dec.31
2006
Average
price
Shares
2005
Average
price
Average
price
Shares
11.9
—
—
(3.9 )
(0.1 )
(0.8 )
$
$
$
$
$
$
28
—
—
28
29
35
14.7
—
1.7
(2.4 )
(0.2 )
(1.9 )
$
$
$
$
$
$
28
—
34
26
27
40
19.4
—
—
(3.8 )
(0.8 )
(0.1 )
$
$
$
$
$
$
28
—
—
25
27
40
7.1
$
27
11.9
$
28
14.7
$
28
7.7
1.4
—
(1.7 )
(0.3 )
(0.1 )
$
$
$
$
$
$
25
40
—
23
25
22
6.9
1.1
1.0
(0.9 )
(0.4 )
—
$
$
$
$
$
$
24
30
19
21
24
25
5.9
2.1
—
(0.3 )
(0.4 )
(0.4 )
$
$
$
$
$
$
22
25
—
15
28
26
7.0
$
28
7.7
$
25
6.9
$
24
Stock Options Outstanding (Number of Shares in Millions)
Outstanding
Range of exercise prices
C$ options
$ 22 - $ 27
$ 28 - $ 31
$ 32 - $ 43
US$ options
$ 9 - $ 19
$ 20 - $ 27
$ 28 - $ 41
1
Shares
Average
price
Exercisable
Intrinsic
Value 1
($
millions)
Average
life
(years)
Shares
Intrinsic
Value 1
($
millions)
Average
price
3.2
3.8
0.1
$
$
$
24
29
32
4
4
4
$
$
$
57
47
1
3.2
3.7
0.1
$
$
$
24
29
32
$
$
$
57
46
1
7.1
$
27
4
$
105
7.0
$
27
$
104
0.2
4.3
2.5
$
$
$
13
24
35
5
4
8
$
$
$
5
77
16
0.2
2.8
0.3
$
$
$
13
24
30
$
$
$
5
51
4
7.0
$
28
6
$
98
3.3
$
24
$
60
Based on the closing market share price on Dec.31, 2007 of C$41.78 and US$42.05.
BARRICK YEAR-END 2008
A-67
NOTES TO FINANCIAL STATEMENTS
Option Information
For the years ended Dec.31
(per share and per option amounts in dollars)
2007
Valuation assumptions
Expected term (years)
Expected volatility
Weighted average expected volatility
Expected dividend yield
Risk-free interest rate
Options granted (in millions)
Weighted average fair value per option
2
2
3
1
2
3
2
2006
2005
Lattice 1,2
Lattice 1,2
BlackScholes 1
4.5-5
30%-38%
36.6%
0.7%-0.9%
3.2%-5.1%
1.4
$
12.91
4.5-5
30%-38%
31.6%
0.7%-0.9%
4.3%-5.1%
1.1
$
9.42
5
23%-30%
n/a
0.8%-1.0%
3.8%-4.0%
1.1
$
7.30
Lattice 2
5
31%-38%
33.3%
0.9%
4.3%-4.5%
1.0
$
8.13
Different assumptions were used for the multiple stock option grants during the year.
Stock option grants issued after September 30, 2005 were valued using the Lattice valuation model. The volatility and risk-free interest
rate assumption varied over the expected term of these stock option grants.
Excludes 2.7 million fully vested options issued on the acquisition of Placer Dome.
We changed the model used to value stock option grants from the Black-Scholes model to the Lattice valuation model for stock options
granted after September 30, 2005. We believe the Lattice valuation model provides a more representative fair value because it incorporates
more attributes of stock options such as employee turnover and voluntary exercise patterns of option holders. For options granted before
September 30, 2005, fair value was determined using the Black-Scholes method. The expected volatility assumptions have been developed
taking into consideration both historical and implied volatility of our US dollar share price. The risk-free rate for periods within the contractual
life of the option is based on the US Treasury yield curve in effect at the time of the grant.
We use the straight-line method for attributing stock option expense over the vesting period. Stock option expense incorporates an
expected forfeiture rate. The expected forfeiture rate is estimated based on historical forfeiture rates and expectations of future forfeitures rates.
We make adjustments if the actual forfeiture rate differs from the expected rate.
Under the Black-Scholes model the expected term assumption takes into consideration assumed rates of employee turnover and
represents the estimated average length of time stock options remain outstanding before they are either exercised or forfeited. Under the Lattice
valuation model, the expected term assumption is derived from the option valuation model and is in part based on historical data regarding the
exercise behavior of option holders based on multiple share-price paths. The Lattice model also takes into consideration employee turnover and
voluntary exercise patterns of option holders.
As at December 31, 2007, there was $33 million (2006: $39 million; 2005: $56 million) of total unrecognized compensation cost relating
to unvested stock options. We expect to recognize this cost over a weighted average period of 2 years (2006: 2 years; 2005: 2 years).
BARRICK YEAR-END 2008
A-68
NOTES TO FINANCIAL STATEMENTS
For years prior to 2006, we utilized the intrinsic value method of accounting for stock options, which resulted in no compensation
expense. If compensation expense had been determined in accordance with the fair value provisions of SFAS No. 123 pro-forma net income
and net income per share would have been as follows:
Stock Option Expense
For the years ended Dec.31
($ millions, except per share amounts in dollars)
2005
Pro forma effects
Net income, as reported
Stock option expense
401
(26 )
Pro forma net income
375
Net income per share:
As reported—basic
As reported—diluted
$ 0.75
$ 0.75
Pro forma
$ 0.70
1
B
1
Basic and diluted.
Restricted Share Units (RSUs) and Deferred Share Units (DSUs)
Under our RSU plan, selected employees are granted RSUs where each RSU has a value equal to one Barrick common share. RSUs vest
at the end of a three year period and are settled in cash on the third anniversary of the grant date. Additional RSUs are credited to reflect
dividends paid on Barrick common shares over the vesting period.
A liability for RSUs is recorded at fair value on the grant date, with a corresponding amount recorded as a deferred compensation asset
that is amortized on a straight-line basis over the vesting period. Changes in the fair value of the RSU liability are recorded each period, with a
corresponding adjustment to the deferred compensation asset. Compensation expense for RSUs incorporates an expected forfeiture rate. The
expected forfeiture rate is estimated based on historical forfeiture rates and expectations of future forfeiture rates. We make adjustments if the
actual forfeiture rate differs from the expected rate. At December 31, 2007, the weighted average remaining contractual life of RSUs was 2.5
years.
Compensation expense for RSUs was $16 million in 2007 (2006: $6 million; 2005: $2 million) and is presented as a component of cost of
sales, corporate administration and other expense, consistent with the classification of other elements of compensation expense for those
employees who had RSUs. As at December 31, 2007 there was $75 million of total unamortized compensation cost relating to unvested RSUs
(2006: $36 million; 2005: $11 million).
Under our DSU plan, Directors must receive a specified portion of their basic annual retainer in the form of DSUs, with the option to
elect to receive 100% of such retainer in DSUs. Each DSU has the same value as one Barrick common share. DSUs must be retained until the
Director leaves the Board, at which time the cash value of the DSUs will be paid out. Additional DSUs are credited to reflect dividends paid on
Barrick common shares. DSUs are recorded at fair value on the grant date and are adjusted for changes in fair value. The fair value of amounts
granted each period together with changes in fair value are expensed.
BARRICK YEAR-END 2008
A-69
NOTES TO FINANCIAL STATEMENTS
DSU and RSU Activity
DSUs
(thousands)
Fair value
(millions)
RSUs
(thousands)
Fair value
(millions)
At Dec.31, 2004
Settled for cash
Forfeited
Granted
Converted to stock options
Credits for dividends
Change in value
31
(3 )
–
19
—
—
—
$
0.7
(0.1 )
–
0.5
—
–
0.3
235
—
(38 )
415
(3 )
2
—
$
5.6
—
(0.9 )
11.1
(0.1 )
0.1
0.6
At Dec.31, 2005
Settled for cash
Forfeited
Granted
Converted to stock options
Credits for dividends
Change in value
47
—
—
22
—
—
$
1.4
—
—
0.7
—
—
—
611
(82 )
(58 )
893
(18 )
8
—
$
16.4
(2.5 )
(1.6 )
27
(0.5 )
0.2
2.6
At Dec.31, 2006
Settled for cash
Forfeited
Granted
Credits for dividends
Change in value
69
(11 )
—
42
—
—
$
2.1
(0.3 )
—
1.4
—
0.9
1,354
(119 )
(38 )
1,174
12
—
$
41.6
(4.9 )
(1.4 )
47.5
0.4
17.0
At Dec.31, 2007
100
$
4.1
2,383
$
1
1
C
1
100.2
In January 2006, under our RSU plan, 18,112 restricted share units were converted to 72,448 stock options.
Employee Share Purchase Plan
During the first quarter of 2008, Barrick is expected to launch an Employee Share Purchase Plan. This plan will enable Barrick
employees to purchase Company shares through payroll deduction. Each year, employees may contribute 1%-6% of their combined base salary
and annual bonus, and Barrick will match 50% of the contribution, up to a maximum of $5,000 per year.
27 > POST-RETIREMENT BENEFITS
A
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, which is
expensed in the year it is earned by the employee, was $49 million in 2007, $36 million in 2006 and $20 million in 2005.
B
Defined Benefit Pension Plans
We have qualified defined benefit pension plans that cover certain of our United States, Canadian and Australian employees and provide
benefits based on employees’ years of service. Through the acquisition of Placer Dome, we acquired pension plans in the United States, Canada
and Australia. Our policy is to fund the amounts necessary on an actuarial basis to provide enough assets to meet the benefits payable to plan
members. Independent trustees administer assets of the plans, which are invested mainly in fixed-income and equity securities. On June 30,
2007, one of our qualified defined benefit plans in Canada was wound-up. No curtailment gain or loss resulted and the obligations of the plans
are expected to be settled at the end of 2008. On
BARRICK YEAR-END 2008
A-70
NOTES TO FINANCIAL STATEMENTS
November 30, 2007, one of our defined benefit plans in Australia was wound-up and on December 31, 2007, the other defined benefit plan in
Australia was wound-up. No curtailment gain or loss resulted for either plan. In 2006, actuarial assumptions were amended for one of our
qualified defined benefit plans in Canada and on June 30, 2006, one of our other plans in Canada was partially wound-up; no curtailment gain
or loss resulted for either plan. Also in 2006, one of our qualified defined benefit plans was amended to freeze benefits in the United States
accruals for all employees, resulting in a curtailment gain of $8 million.
As well as the qualified plans, we have non-qualified defined benefit pension plans covering certain employees and former directors of
the Company. An irrevocable trust (“rabbi trust”) was set up to fund these plans. The fair value of assets held in this trust was $19 million in
2007 (2006: $21 million), and is recorded in our consolidated balance sheet under available-for-sale securities.
Actuarial gains and losses arise when the actual return on plan assets differs from the expected return on plan assets for a period, or when
the expected and actuarial accrued benefit obligations differ at the end of the year. We amortize actuarial gains and losses over the average
remaining life expectancy of plan participants, in excess of a 10% corridor.
Pension Expense (Credit)
For the years ended Dec.31
2007
Expected return on plan assets
Service cost
Interest cost
Actuarial losses
Curtailment gains
C
2006
2005
$ (21 )
2
21
1
—
$ (20 )
4
22
1
(8 )
$ (11 )
—
12
—
—
$
$
$
3
(1 )
1
Pension Plan Information
Fair Value of Plan Assets
For the years ended Dec.31
2007
Balance at Jan.1
Increase for plans assumed on acquisition of Placer Dome
Actual return on plan assets
Company contributions
Settlements
$ 301
—
31
10
(14 )
Benefits paid
(35 )
Balance at Dec.31
$ 293
At Dec.31
Target
Composition of plan assets:
Equity securities
Debt securities
Fixed income securities
Real estate
Other
BARRICK YEAR-END 2008
60 %
40 %
A-71
2007
Actual
2006
2005
$ 166
127
35
10
—
$ 170
—
10
10
—
(37 )
$ 301
(24 )
$ 166
Actual
2006
Actual
45 %
42 %
12 %
—
2%
$ 130
123
35
—
5
$ 180
106
—
9
6
100 %
$ 293
$ 301
NOTES TO FINANCIAL STATEMENTS
Projected Benefit Obligation (PBO)
For the years ended Dec.31
2007
2006
Balance at Jan.1
Increase for plans assumed on acquisition of Placer Dome
Service cost
Interest cost
Actuarial (gains) losses
Benefits paid
Curtailments
$ 389
—
2
21
1
(35 )
(14 )
$ 224
191
4
22
(7 )
(37 )
(8 )
Balance at Dec.31
$ 364
$ 389
Funded status
$ (71 )
$ (88 )
$ 254
$ 386
ABO
1
2
3
1
2,3
Represents the fair value of plan assets less projected benefit obligations. Plan assets exclude investments held in a rabbi trust that are
recorded separately on our balance sheet under Investments (fair value $19 million at December 31, 2007). In the year ending
December 31, 2008, we do not expect to make any further contributions.
For 2007, we used a measurement date of December 31, 2007 to calculate accumulated benefit obligations.
Represents the accumulated benefit obligation (“ABO”) for all plans. The ABO for plans where the PBO exceeds the fair value of plan
assets was $254 million (2006: $110 million).
Pension Plan Assets/Liabilities
For the years ended Dec.31
Non-current assets
Current liabilities
Non-current liabilities
Other comprehensive income
1
2007
1
2006
$ 25
(8 )
(87 )
(8 )
$
5
(8 )
(85 )
6
$ (78 )
$ (82 )
Amounts represent actuarial (gains) losses.
The projected benefit obligation and fair value of plan assets for pension plans with a projected benefit obligation in excess of plan assets
at December 31, 2007 and 2006 were as follows:
For the years ended Dec.31
Projected benefit obligation, end of year
Fair value of plan assets, end of year
2007
2006
$ 329
$ 258
$ 111
$ 62
The projected benefit obligation and fair value of plan assets for pension plans with an accumulated benefit obligation in excess of plan
assets at December 31, 2007 and 2006 were as follows:
For the years ended Dec.31
Projected benefit obligation, end of year
Accumulated benefit obligation, end of year
Fair value of plan assets, end of year
BARRICK YEAR-END 2008
A-72
2007
2006
$ 329
$ 330
$ 258
$ 111
$ 110
$ 62
NOTES TO FINANCIAL STATEMENTS
Expected Future Benefit Payments
For the years ending Dec.31
2008
2009
2010
2011
2012
2013 – 2017
D
$ 61
24
31
24
24
$ 117
Actuarial Assumptions
For the years ended Dec.31
2007
Discount rate
Benefit obligation
Pension cost
Return on plan assets
Wage increases
2006
2005
1
4.50-6.30 %
4.50-5.81 %
4.50-7.25 %
3.50-5.00 %
1
1
4.40-5.90 %
4.40-5.90 %
7.00-7.25 %
3.5-5.00 %
5.50 %
5.50 %
7.00 %
5.00 %
Effect of a one-percent change: Discount rate: $25 million decrease in ABO and $1 million increase in pension cost; Return on plan
assets: $3 million decrease in pension cost.
Pension plan assets, which consist primarily of fixed-income and equity securities, are valued using current market quotations. Plan
obligations and the annual pension expense are determined on an actuarial basis and are affected by numerous assumptions and estimates
including the market value of plan assets, estimates of the expected return on plan assets, discount rates, future wage increases and other
assumptions. The discount rate, assumed rate of return on plan assets and wage increases are the assumptions that generally have the most
significant impact on our pension cost and obligation.
The discount rate for benefit obligation and pension cost purposes is the rate at which the pension obligation could be effectively settled.
This rate was developed by matching the cash flows underlying the pension obligation with a spot rate curve based on the actual returns
available on high-grade (Moody’s Aa) US corporate bonds. Bonds included in this analysis were restricted to those with a minimum
outstanding balance of $50 million. Only non-callable bonds, or bonds with a make-whole provision, were included. Finally, outlying bonds
(highest and lowest 10%) were discarded as being non-representative and likely to be subject to a change in investment grade. The resulting
discount rate from this analysis was rounded to the nearest 25 basis points. The procedure was applied separately for pension and
post-retirement plan purposes, and produced the same rate in each case.
The assumed rate of return on assets for pension cost purposes is the weighted average of expected long-term asset return assumptions. In
estimating the long-term rate of return for plan assets, historical markets are studied and long-term historical returns on equities and
fixed-income investments reflect the widely accepted capital market principle that assets with higher volatility generate a greater return over
the long run. Current market factors such as inflation and interest rates are evaluated before long-term capital market assumptions are finalized.
Wage increases reflect the best estimate of merit increases to be provided, consistent with assumed inflation rates.
E
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. Actuarial gains and losses resulting from variances between actual results and economic estimates or
actuarial assumptions are deferred and amortized
BARRICK YEAR-END 2008
A-73
NOTES TO FINANCIAL STATEMENTS
over the average remaining life expectancy of participants when the net gains or losses exceed 10% of the accumulated post-retirement benefit
obligation.
Other Post-retirement Benefits Expense
For the years ended Dec.31
2007
Interest cost
Other
$
2006
$
2
—
$ 2
5
2
$
2
$ 7
—
$
2005
2
Fair Value of Plan Assets
For the years ended Dec.31
2007
2006
2005
Balance at Jan.1
Contributions
Benefits paid
$—
$—
$—
Balance at Dec.31
$—
3
(3 )
2
(2 )
$—
4
(4 )
$—
Accumulated Post-retirement Benefit Obligation (APBO)
For the years ended Dec.31
2007
2006
2005
Balance at Jan. 1
Interest cost
Actuarial losses
Benefits paid
$ 37
2
(7 )
(2 )
$ 39
2
(1 )
(3 )
$ 29
2
11
(3 )
Balance at Dec. 31
$ 30
$ 37
$ 39
Funded status
Unrecognized net transition obligation
Unrecognized actuarial losses
(30 )
n/a
n/a
(37 )
n/a
n/a
Net benefit liability recorded
n/a
n/a
(38 )
1
6
$ (31 )
Other Post-retirement Assets/Liabilities
For the year ended Dec.31
2007
Current liability
Non-current liability
Accumulated other comprehensive income
$
(3 )
(27 )
(1 )
$ (31 )
Amounts recognized in accumulated other comprehensive income consist of:
2006
$
(3 )
(33 )
5
$ (31 )
1
For the year ended Dec.31
2007
2006
Net actuarial loss (gain)
Transition obligation (asset)
$ (2 )
1
$ 3
2
$ (1 )
$ 5
1 The estimated amounts that will be amortized into net periodic benefit cost in 2008.
BARRICK YEAR-END 2008
A-74
NOTES TO FINANCIAL STATEMENTS
We have assumed a health care cost trend of 9% in 2008, decreasing ratability to 5% in 2010 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,
2007 would have had no significant effect on the post-retirement obligation and would have had no significant effect on the benefit expense
for 2007.
Expected Future Benefit Payments
For the years ending Dec.31
2008
2009
2010
2011
2012
2013 – 2017
$ 3
3
3
3
3
$ 11
28 > LITIGATION AND CLAIMS
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. 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 a loss is probable, and the amount can be reliably estimated, then a loss is recorded. When a
contingent loss is not probable but is reasonably possible, or is probable but the amount of loss cannot be reliably estimated, then details of the
contingent loss are disclosed. Loss contingencies considered remote are generally not disclosed unless they involve guarantees, in which case
we disclose the nature of the guarantee. Legal fees incurred in connection with pending legal proceedings are expensed as incurred.
Wagner Complaint
On June 12, 2003, a complaint was filed against Barrick and several of its current or former officers in the U.S. District Court for the
Southern District of New York. The complaint is on behalf of Barrick shareholders who purchased Barrick shares between February 14, 2002
and September 26, 2002. It alleges that Barrick and the individual defendants violated U.S. securities laws by making false and misleading
statements concerning Barrick’s projected operating results and earnings in 2002. The complaint seeks an unspecified amount of damages.
Other parties filed several other complaints, making the same basic allegations against the same defendants. In September 2003, the cases were
consolidated into a single action in the Southern District of New York. The plaintiffs filed a Third Amended Complaint on January 6, 2005. On
May 23, 2005, Barrick filed a motion to dismiss part of the Third Amended Complaint. On January 31, 2006, the Court issued an order
granting in part and denying in part Barrick’s motion to dismiss. Both parties moved for reconsideration of a portion of the Court’s January 31,
2006 Order. On December 12, 2006, the Court issued its order denying both parties’ motions for reconsideration. On February 15, 2008, the
Court issued an order granting the plaintiffs’ motion for class certification. Discovery is ongoing. We intend to defend the action vigorously.
No amounts have been accrued for any potential loss under this complaint.
Marinduque Complaint
Placer Dome has been named the sole defendant in a Complaint filed on October 4, 2005, by the Provincial Government of Marinduque,
an island province of the Philippines (“Province”), with the District Court in Clark County, Nevada. The action was removed to the Nevada
Federal District Court on motion of Placer Dome. The
BARRICK YEAR-END 2008
A-75
NOTES TO FINANCIAL STATEMENTS
Complaint asserts that Placer Dome is responsible for alleged environmental degradation with consequent economic damages and impacts to
the environment in the vicinity of the Marcopper mine that was owned and operated by Marcopper Mining Corporation (“Marcopper”). Placer
Dome indirectly owned a minority shareholding of 39.9% in Marcopper until the divestiture of its shareholding in 1997. The Province seeks “to
recover damages for injuries to the natural, ecological and wildlife resources within its territory”, but “does not seek to recover damages for
individual injuries sustained by its citizens either to their persons or their property”. In addition to damages for injury to natural resources, the
Province seeks compensation for the costs of restoring the environment, an order directing Placer Dome to undertake and complete “the
remediation, environmental cleanup, and balancing of the ecology of the affected areas,” and payment of the costs of environmental
monitoring. The Complaint addresses the discharge of mine tailings into Calancan Bay, the 1993 Maguila-guila dam breach, the 1996 Boac
river tailings spill, and alleged past and continuing damage from acid rock drainage.
At the time of the amalgamation of Placer Dome and Barrick Gold Corporation, a variety of motions were pending before the District
Court, including motions to dismiss the action for lack of personal jurisdiction and for forum non conveniens (improper choice of forum).
However, on June 29, 2006, the Province filed a Motion to join Barrick Gold Corporation as an additional named Defendant and for leave to
file a Third Amended Complaint. The Court granted that motion on March 2, 2007. On March 6, 2007, the Court issued an order setting a
briefing schedule on the Company’s motion to dismiss on grounds of forum non conveniens. Briefing was completed on May 21, 2007, and on
June 7, 2007, the Court issued an order granting the Company’s motion to dismiss. On June 25, 2007, the Province filed a motion requesting
the Court to reconsider its Order dismissing the action. The Company opposed the motion for reconsideration. On July 6, 2007, the Province
filed a Notice of Appeal to the Ninth Circuit from the Order on the motion to dismiss. On August 8, 2007, the Ninth Circuit issued an order
holding the appeal in abeyance pending the district court’s resolution of the motion for reconsideration. On January 16, 2008, the district court
issued an order denying the Province’s motion for reconsideration. Following the district court order, the Province has filed an amended Notice
of Appeal. We will challenge the claims of the Province on various grounds and otherwise vigorously defend the action. No amounts have been
accrued for any potential loss under this complaint.
Calancan Bay (Philippines) Complaint
On July 23, 2004, a complaint was filed against Marcopper and Placer Dome Inc. (“PDI”) in the Regional Trial Court of Boac, on the
Philippine island of Marinduque, on behalf of a putative class of fishermen who reside in the communities around Calancan Bay, in northern
Marinduque. The complaint alleges injuries to health and economic damages to the local fisheries resulting from the disposal of mine tailings
from the Marcopper mine. The total amount of damages claimed is approximately US$900 million.
On October 16, 2006, the court granted the plaintiffs’ application for indigent status, allowing the case to proceed without payment of
filing fees. On January 17, 2007, the Court issued a summons to Marcopper and PDI. To date, we are unaware of any attempts to serve the
summons on PDI, nor do we believe that PDI is properly amenable to service in the Philippines. If service is attempted, the Company intends to
defend the action vigorously. No amounts have been accrued for any potential loss under this complaint.
Pakistani Constitutional Litigation
On November 28, 2006, a Constitutional Petition was filed in the High Court of Balochistan by three Pakistan citizens against: Barrick,
the governments of Balochistan and Pakistan, the Balochistan Development Authority (“BDA”), Tethyan Copper Company (“TCC”),
Antofagasta Plc (“Antofagasta”), Muslim Lakhani and BHP (Pakistan) Pvt Limited (“BHP”).
The Petition alleged, among other things, that the entry by the BDA into the 1993 Joint Venture Agreement (“JVA”) with BHP to
facilitate the exploration of the Reko Diq area and the grant of related exploration licenses were illegal and that the subsequent transfer of the
interests of BHP in the JVA and the licenses to TCC was also illegal and should therefore be set aside. Barrick currently indirectly holds 50%
of the shares of TCC, with Antofagasta indirectly holding the other 50%.
BARRICK YEAR-END 2008
A-76
NOTES TO FINANCIAL STATEMENTS
On June 26, 2007, the High Court of Balochistan dismissed the Petition against Barrick and the other respondents in its entirety. On
August 23, 2007, the petitioners filed a Civil Petition for Leave to Appeal in the Supreme Court of Pakistan. The Supreme Court of Pakistan
has not yet considered the Civil Petition for Leave to Appeal. Barrick intends to defend this action vigorously. No amounts have been accrued
for any potential loss under this complaint.
NovaGold Litigation
On August 24, 2006, during the pendency of Barrick’s unsolicited bid for NovaGold Resources Inc., NovaGold filed a complaint against
Barrick in the United States District Court for the District of Alaska. The complaint was amended on several occasions with the most recent
amendment having been filed in January 2007. The complaint, as amended, sought a declaration that Barrick will be unable to satisfy the
requirements of the Mining Venture Agreement between NovaGold and Barrick which would allow Barrick to increase its interest in the
Donlin Creek joint venture from 30% to 70%. NovaGold also asserted that Barrick breached its fiduciary and contractual duties to NovaGold,
including its duty of good faith and fair dealing, by misusing confidential information of NovaGold regarding NovaGold’s Galore Creek
project in British Columbia. NovaGold sought declaratory relief, an injunction and an unspecified amount of damages. Barrick’s Motion to
Dismiss NovaGold’s amended complaint was heard on February 9, 2007.On July 17, 2007 the Court issued its order granting the Motion to
Dismiss with respect to all claims. On August 28, 2007, NovaGold filed a notice of appeal as to a portion of the district court’s order granting
Barrick’s motion to dismiss.
On August 11, 2006, NovaGold filed a complaint against Barrick in the Supreme Court of British Columbia. The complaint asserted that
in the course of discussions with NovaGold of a potential joint venture for the development of the Galore Creek project, Barrick misused
confidential information of NovaGold regarding that project to, among other things, wrongfully acquire Pioneer Metals, a company that holds
mining claims adjacent to NovaGold’s project. NovaGold asserted that Barrick breached fiduciary duties owed to NovaGold, intentionally and
wrongfully interfered with NovaGold’s interests and has been unjustly enriched. NovaGold sought a constructive trust over the shares in
Pioneer acquired by Barrick and an accounting for any profits of Barrick’s conduct, as well as an unspecified amount of damages.
On December 3, 2007 Barrick and NovaGold announced that a global settlement of all disputes between them had been reached. As a
result of this settlement, all pending legal actions between Barrick and NovaGold have been dismissed.
29 > FINANCE SUBSIDIARIES
On May 9, 2008, we incorporated two wholly-owned finance subsidiaries, Barrick North America Finance LLC and Barrick Gold
Financeco LLC, the sole purpose of which is to issue debt securities. On May 30, 2008, we filed a preliminary short form base shelf prospectus
and registration statement in respect of the future offer and issuance of debt securities up to an aggregate principal amount of $2 billion by
Barrick and the finance subsidiaries. Barrick will fully and unconditionally guarantee any debt securities issued by the finance subsidiaries.
BARRICK YEAR-END 2008
A-77
NOTES TO FINANCIAL STATEMENTS
SCHEDULE “B”
INTERIM FINANCIAL STATEMENTS OF BARRICK GOLD CORPORATION FOR THE THREE
MONTHS ENDED MARCH 31, 2008
Consolidated Statements of Income
Barrick Gold Corporation
(in millions of United States dollars, except per share data) (Unaudited)
Three months ended
March 31,
2008
2007
Sales (notes 4 and 5)
$
Costs and expenses
Cost of sales (notes 4 and 6)
Amortization and accretion (notes 4 and 14)
Corporate administration
Exploration (note 9)
Project development expense (note 9)
Other expense (note 7A)
Impairment charges (note 7B)
1
Interest income
Interest expense (note 15B)
Other income (note 7C)
Income before income taxes and other items
Income tax expense (note 8)
Non-controlling interests
Income (loss) from equity investees (note 12)
1,958
$
1,089
775
241
33
43
46
54
41
740
220
33
30
37
38
—
1,233
17
(6 )
32
1,098
39
(36 )
18
43
21
768
(253 )
(3 )
2
12
(147 )
(3 )
(21 )
Net income (loss) for the period
$
514
$
(159 )
Earnings (loss) per share data (note 10):
Net income (loss)
Basic
Diluted
$
$
0.59
0.58
$
$
(0.18 )
(0.18 )
1
Exclusive of amortization (note 4).
The accompanying notes are an integral part of these unaudited interim consolidated financial statements
B-1
Consolidated Statements of Cash Flow
Barrick Gold Corporation
(in millions of United States dollars) (Unaudited)
Three months ended
March 31,
2008
2007
OPERATING ACTIVITIES
Net income (loss) for the period
Amortization and accretion (notes 4 and 14)
Income tax expense (note 8)
Income taxes paid
Impairment charges (note 7B)
Increase in inventory (note 13)
Other items (note 11)
$
Net cash provided by operating activities
514
241
253
(127 )
41
(133 )
(61 )
728
INVESTING ACTIVITIES
Property, plant and equipment
Capital expenditures (note 4)
Sales proceeds
Acquisitions, net of cash acquired of $21 (note 3)
Available-for-sale securities
Purchases
Sales proceeds
Long-term supply contract (note 12)
Other investing activities
Net cash used in investing activities
FINANCING ACTIVITIES
Capital stock
Proceeds on exercise of stock options
Debt
Proceeds
Repayments
Net cash provided by financing activities
Cash and equivalents at end of period
$
(15 )
2
(35 )
(35 )
(4 )
3
—
(27 )
(2,066 )
(270 )
70
31
990
(5 )
—
(9 )
1,055
22
7
1
(84 )
2,207
3,043
1,931
$ 2,959
The accompanying notes are an integral part of these unaudited interim consolidated financial statements
B-2
163
(248 )
6
—
(276 )
Cash and equivalents at beginning of period
(159 )
220
147
(129 )
—
(20 )
104
(265 )
4
(1,722 )
Effect of exchange rate changes on cash and equivalents
Net decrease in cash and equivalents
$
Consolidated Balance Sheets
Barrick Gold Corporation
(in millions of United States dollars) (Unaudited)
As at March 31,
2008
ASSETS
Current assets
Cash and equivalents
Accounts receivable
Inventories (note 13)
Other current assets
$
Non-current assets
Investments (note 12)
Equity method investments (note 12)
Property, plant and equipment (note 14)
Goodwill
Intangible assets
Other assets
1,931
291
1,246
774
As at December 31,
2007
$
2,207
256
1,129
707
4,242
4,299
123
1,147
10,339
5,865
75
2,102
142
1,074
8,596
5,847
68
1,925
Total assets
$
23,893
$
21,951
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities
Accounts payable
Short term debt (note 15)
Other current liabilities
$
874
234
472
$
808
233
255
1,580
1,296
Non-current liabilities
Long-term debt (note 15)
Asset retirement obligations
Deferred income tax liabilities
Other liabilities
4,137
932
858
582
3,153
892
841
431
Total liabilities
8,089
6,613
93
82
13,348
2,346
17
15,711
13,273
1,832
151
15,256
Non-controlling interests
Shareholders’ equity
Capital stock (note 17)
Retained earnings
Accumulated other comprehensive income (note 18)
Total shareholders’ equity
Contingencies and commitments (notes 14 and 20)
Total liabilities and shareholders’ equity
$
23,893
$
The accompanying notes are an integral part of these unaudited interim consolidated financial statements.
B-3
21,951
Consolidated Statements of Shareholders’ Equity
Barrick Gold Corporation
For the three months ended March 31 (in millions of United States dollars) (Unaudited)
2008
2007
Common shares (number in millions)
At January 1
Issued on exercise of stock options
870
2
864
1
At March 31
872
865
Common shares (dollars in millions)
At January 1
Issued on exercise of stock options
Recognition of stock option expense
$ 13,273
70
5
$ 13,106
31
5
At March 31
$ 13,348
$ 13,142
Retained earnings
At January 1
Net income (loss)
$
1,832
514
$
974
(159 )
At March 31
$
2,346
$
815
Accumulated other comprehensive income (note 18)
$
17
$
126
Total shareholders’ equity at March 31
$ 15,711
$ 14,083
Consolidated Statements of Comprehensive Income
Barrick Gold Corporation
(in millions of United States dollars) (Unaudited)
Three months ended
March 31
2008
2007
Net income (loss)
Other comprehensive income (loss) net of tax (note 18)
$
514
(134 )
$
(159 )
7
Comprehensive income (loss)
$
380
$
(152 )
The accompanying notes are an integral part of these unaudited interim consolidated financial statements.
B-4
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
Barrick Gold Corporation . Tabular dollar amounts in millions of United States dollars, unless otherwise shown. References to C$, A$,
ZAR, CLP, PGK, TZS, ARS and EUR are to Canadian dollars, Australian dollars, South African rands, Chilean pesos, Papua New Guinea
kina, Tanzanian schillings, Argentinean pesos and Euros respectively.
1 > NATURE OF OPERATIONS
Barrick Gold Corporation (“Barrick” or the “Company”) principally engages in the production and sale of gold, as well as related
activities such as exploration and mine development. We also produce copper and hold interests in a platinum group metals development
project and a nickel development project, both located in Africa, and a platinum group metals project located in Russia. Our mining operations
are concentrated in our four regional business units: North America, South America, Africa and Australia Pacific. We sell our gold production
into the world market and we sell our copper production into the world market and to private customers.
2 > SIGNIFICANT ACCOUNTING POLICIES
A
Basis of Preparation
These consolidated financial statements have been prepared under United States generally accepted accounting principles (“US GAAP”).
In first quarter 2008, we amended the income statement classification of accretion expense. To ensure comparability of financial information,
prior year amounts have been reclassified to reflect changes in the financial statement presentation.
B
Use of Estimates
The preparation of these financial statements requires us to make estimates and assumptions. The most significant ones are: quantities of
proven and probable mineral reserves; fair values of acquired assets and liabilities under business combinations, including the value of
mineralized material beyond proven and probable mineral reserves; future costs and expenses to produce proven and probable mineral reserves;
future commodity prices for gold, copper, silver and other products; the future cost of asset retirement obligations; amounts and likelihood of
contingencies; the fair values of reporting units that include goodwill; and uncertain tax positions. Using these and other estimates and
assumptions, we make various decisions in preparing the financial statements including:
•
The treatment of expenditures at mineral properties prior to when production begins as either an asset or an expense;
•
Whether tangible and intangible long-lived assets are impaired, and if so, estimates of the fair value of those assets and any
corresponding impairment charge;
•
Our ability to realize deferred income tax assets and amounts recorded for any corresponding valuation allowances;
•
The useful lives of tangible and intangible long-lived assets and the measurement of amortization;
•
The fair value of asset retirement obligations;
•
Whether to record a liability for loss contingencies and the amount of any liability;
•
Whether investments are other than temporarily impaired;
•
The amount of income tax expense;
BARRICK FIRST QUARTER 2008
B-5
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
•
Allocations of the purchase price in business combinations to assets and liabilities acquired, including goodwill;
•
Whether any impairments of goodwill have occurred and if so the amounts of impairment charges;
•
Transfers of value beyond proven and probable reserves to amortized assets;
•
Amounts recorded for uncertain tax positions, and
•
The timing and amounts recorded of proceeds for insurable losses under insurance claims.
As the estimation process is inherently uncertain, actual future outcomes could differ from present estimates and assumptions, potentially
having material future effects on our financial statements.
Significant Changes in Estimates
Gold and Copper Mineral Reserves
At the end of each fiscal year, as part of our annual business cycle, we prepare estimates of proven and probable gold and copper mineral
reserves for each mineral property, and we record a transfer of value beyond proven and probable reserves (“VBPP”) to assets subject to
amortization. We prospectively revise calculations of amortization of property, plant and equipment based on the latest reserve estimates. The
effect of changes in reserve estimates including the effect of transfers of VBPP to assets subject to amortization, on amortization expense for
the three months ended March 31, 2008 was a decrease of $13 million (2007: $15 million decrease).
Asset Retirement Obligations (AROs)
Each quarter we update cost estimates, and other assumptions used in the valuation of AROs at each of our mineral properties to reflect
new events, changes in circumstances and any new information that is available. Changes in these cost estimates and assumptions have a
corresponding impact on the fair value of the ARO. During first quarter 2008, we recorded an adjustment of $20 million for changes in
estimates of the AROs at our Buzwagi, Tulawaka and Veladero properties. These adjustments were recorded with a corresponding adjustment
to property, plant and equipment. During first quarter 2007, we recorded an increase in AROs of $29 million for a change in estimate of the
ARO at our Hemlo property following receipt of an updated closure study for the property. This adjustment was recorded with a corresponding
adjustment to property, plant and equipment.
C
Accounting Changes
FAS 159, The Fair Value Option for Financial Assets and Financial Liabilities (FAS 159)
In February 2007, the FASB issued FAS 159, which allows an irrevocable option, the Fair Value Option (FVO), to carry eligible financial
assets and liabilities at fair value, with the election made on an instrument-by-instrument basis. Changes in fair value for these instruments
would be recorded in earnings. The objective of FAS 159 is to improve financial reporting by providing entities with the opportunity to
mitigate volatility in reported earnings caused by measuring related assets and liabilities differently without having to apply complex hedge
accounting provisions.
FAS 159 was effective for Barrick beginning in first quarter 2008 and was applied prospectively. Barrick has not adopted the FVO for
any of its eligible financial instruments, which primarily include available-for-sale securities, equity-method investments and long-term debt.
FAS 157, Fair Value Measurements (FAS 157)
In September 2006, the FASB issued FAS 157 that defines fair value, establishes a framework for measuring fair value in US GAAP, and
expands disclosure about fair value measurements. FAS 157 applies under other US GAAP pronouncements that require (or permit) fair value
measurements where fair value is the relevant measurement attribute.
BARRICK FIRST QUARTER 2008
B-6
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
In February 2008 the FASB issued FSP FAS 157-2. FSP FAS 157-2 delays the effective date of FAS 157 to fiscal years beginning after
November 15, 2008 for non-financial assets and liabilities, except for items that are recognized or disclosed at fair value in the financial
statements on a recurring basis. Therefore, we will apply the requirements of FAS 157 to fair value measurements used in accounting for
property, plant and equipment, intangible assets, goodwill and asset retirement obligations beginning in 2009.
In the first quarter of 2008, we implemented FAS 157 subject to the delay specified in FSP FAS 157-2 for non-financial assets and
liabilities. Refer to note 16 for details of the adoption of FAS 157 and related disclosures.
Changes in Financial Statement Presentation—Accretion expense
In first quarter 2008, we made a change to our accounting policy regarding the financial statement classification of accretion expense.
Prior to this change, we recorded accretion expense at producing mines as a component of cost of sales and accretion expense at closed mines
as a component of other expense.
Beginning in first quarter 2008, we recorded accretion expense at producing mines and accretion expense at closed mines in amortization
and accretion on our Consolidated Statements of Income.
D
Accounting Developments
FAS 161, Disclosures about Derivative Instruments and Hedging Activities (FAS 161)
In March 2008, the FASB issued FAS 161, which will require entities to provide enhanced disclosures about (a) how and why an entity
uses derivative instruments, (b) how derivative instruments and related hedged items are accounted for under FAS 133 and its related
interpretations, and (c) how derivative instruments and related hedged items affect an entity’s financial position, financial performance and
cash flows. FAS 161 is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008, with
early application encouraged. We are currently evaluating the impact of adopting FAS 161 on our note disclosures related to derivative
instruments and hedging activities.
FAS 141(R), Business Combinations (FAS 141(R))
In December 2007 the FASB issued FAS 141(R), which replaces FAS 141 prospectively for business combinations consummated after
the effective date of December 15, 2008. Early adoption is not permitted. Under FAS 141(R), business acquisitions are accounted for under the
“acquisition method”, compared to the “purchase method” mandated by FAS 141.
The more significant changes that will result from applying the acquisition method include: (i) the definition of a business is broadened to
include development stage entities, and therefore more acquisitions will be accounted for as business combinations rather than asset
acquisitions; (ii) the measurement date for equity interests issued by the acquirer is the acquisition date instead of a few days before and after
terms are agreed to and announced, which may significantly change the amount recorded for the acquired business if share prices differ from
the agreement and announcement date to the acquisition date; (iii) all future adjustments to income tax estimates are recorded to income tax
expense, whereas under FAS 141 certain changes in income tax estimates were recorded to goodwill; (iv) acquisition-related costs of the
acquirer, including investment banking fees, legal fees, accounting fees, valuation fees, and other professional or consulting fees are expensed
as incurred, whereas under FAS 141 these costs are capitalized as part of the cost of the business combination; (v) the assets acquired and
liabilities assumed are recorded at 100% of fair value even if less than 100% is obtained, whereas under FAS 141 only the controlling interest’s
portion is recorded at fair value; and (vi) the non-controlling interest is recorded at its share of fair value of net assets acquired, including its
share of goodwill, whereas under FAS 141 the non-controlling interest is recorded at its share of carrying value of net assets acquired with no
goodwill being allocated.
BARRICK FIRST QUARTER 2008
B-7
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
FAS 160, Non-controlling Interests in Consolidated Financial Statements (FAS 160)
In December 2007 the FASB issued FAS 160, which is effective for fiscal years beginning after December 15, 2008. Under FAS 160,
non-controlling interests are measured at 100% of the fair value of assets acquired and liabilities assumed. Under current standards, the
non-controlling interest is measured at book value. For presentation and disclosure purposes, non-controlling interests are classified as a
separate component of shareholders’ equity. In addition, FAS 160 changes the manner in which increases/decreases in ownership percentages
are accounted for. Changes in ownership percentages are recorded as equity transactions and no gain or loss is recognized as long as the parent
retains control of the subsidiary. When a parent company deconsolidates a subsidiary but retains a non-controlling interest, the non-controlling
interest is re-measured at fair value on the date control is lost and a gain or loss is recognized at that time. Under FAS 160, accumulated losses
attributable to the non-controlling interests are no longer limited to the original carrying amount, and therefore non-controlling interests could
have a negative carrying balance. The provisions of FAS 160 are to be applied prospectively with the exception of the presentation and
disclosure provisions, which are to be applied for all prior periods presented in the financial statements. Early adoption is not permitted.
3 > ACQUISITIONS AND DIVESTITURES
For the three months ended March 31
Cash paid on acquisition
Arizona Star
Cortez
1
B
2008
2007
1
41
1,681
$—
—
$ 1,722
$—
$
All amounts are presented net of cash acquired/divested. Potential deferred tax adjustments may arise from these acquisitions.
Acquisition of Arizona Star Resources Corporation (“Arizona Star”)
On March 12, 2008, we acquired all of the remaining common shares of Arizona Star pursuant to its statutory right of compulsory
acquisition for $41 million. Arizona Star owns a 51% interest in the Cerro Casale deposit in the Maricunga district of Region III in Chile. The
acquisition of Arizona Star has been accounted for as an asset purchase. The tables below represent the purchase cost and preliminary purchase
price allocation for the acquisition of 100% of the common shares of Arizona Star, 94% of the common shares were acquired in the fourth
quarter of 2007. The principal area outstanding is the determination of deferred tax effects of the purchase price allocation, which will be
finalized in 2008.
Purchase Cost
Purchase cost per agreement
Purchase price adjustments and transaction costs
Less: cash acquired
$ 769
1
(7 )
$ 763
Preliminary Purchase Price Allocation
Other current assets
Equity investment in Cerro Casale project
$
Total Assets
1
770
771
Current liabilities
8
Total liabilities
8
Net assets acquired
BARRICK FIRST QUARTER 2008
$ 763
B-8
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
C
Acquisition of 40% Interest in Cortez
On March 5, 2008, we completed our acquisition of an additional 40% interest in the Cortez property from Kennecott Explorations
(Australia) Ltd. (“Kennecott”), a subsidiary of Rio Tinto plc, for a total cash consideration of $1.695 billion. A further $50 million will be
payable if and when we add an additional 12 million ounces of contained gold resources beyond our December 31, 2007 reserve statement for
Cortez. A sliding scale royalty is payable to Kennecott on 40% of all production in excess of 15 million ounces on and after January 1, 2008.
Both of these contingent payments will be recognized as an additional cost of the acquisition only if the resource/production targets are met and
the amounts become payable as a result.
The acquisition consolidates 100% ownership for Barrick of the existing Cortez mine and the Cortez Hills expansion plus any future
potential from the property. We have determined that the transaction represents a business combination. The allocation of the purchase price is
based upon our preliminary estimates with respect to the fair value of the assets acquired. The actual fair values of the assets acquired may
differ materially from the amounts disclosed below. We expect that the purchase price allocation will be completed in 2008. The terms of the
acquisition are effective March 1, 2008 and the revenues and expenses attributable to the 40% interest have been included in our consolidated
statements of income from that date onwards.
Purchase Cost
Purchase cost per agreement
Less: cash acquired
$ 1,695
(14 )
$ 1,681
Preliminary Purchase Price Allocation
Inventories
Other current assets
Non-current ore in stockpiles
Property, plant and equipment
Building, plant and equipment
Capitalized mineral property acquisition and mine development costs
Value beyond proven and probable reserves
Goodwill
Total Assets
47
1
17
184
1,063
388
18
1,718
Current liabilities
Asset Retirement Obligations
23
14
Total liabilities
37
Net assets acquired
D
$
$ 1,681
Kainantu Acquisition
On December 12, 2007 we completed the acquisition of the Kainantu mineral property and various exploration licenses in Papua New
Guinea from Highlands Pacific Limited for $135 million in cash, which reflects the purchase price, net of $7 million withheld pending certain
permit renewals. The acquisition has been accounted for as a purchase of assets. The purchase price allocation will be finalized in 2008.
4 > SEGMENT INFORMATION
In first quarter 2008, we formed a dedicated Capital Projects group, distinct from our existing regional business units to focus on
managing development projects and building new mines. This specialized group manages all project development activities up to and including
the commissioning of new mines, at which point
BARRICK FIRST QUARTER 2008
B-9
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
responsibility for mine operations will be handed over to the regional business units. We have revised the format of information provided to the
Chief Operating Decision Maker in order to make resource allocation decisions and assess the operating performance of this group.
Accordingly, we have revised our operating segment disclosure to be consistent with the internal management structure and reporting
changes, with restatement of comparative information to conform to the current period presentation.
Income Statement Information
Sales
For the three months ended March 31
2008
2007
Segment cost
of sales
2008
2007
Segment
income (loss) 1
2008
2007
Gold
North America
South America
Australia Pacific
Africa
Copper
South America
Australia Pacific
Capital Projects
1
312
212
210
92
$ 320
100
184
80
$ 277
79
224
78
274
76
—
216
47
—
58
33
—
56
26
—
$ 1,958
$ 1,089
$ 775
$ 740
$
594
471
393
150
$
$ 196
327
149
51
$ 907
$ 102
Segment income (loss) represents segment sales, less cost of sales, less amortization and accretion. For the three months ended March 31,
2008, accretion expense was $13 million (2007: $12 million), see note 14B for further details. Segment income (loss) for the Capital
Projects segment includes Project Development expense., see note 9 for further details.
Regional business
unit costs 1,2
2008
2007
For the three months ended March 31
North America
South America
Australia Pacific
Africa
Capital Projects
Other expense outside reportable segments
$ 16
10
11
3
1
2
$ 11
5
8
2
2
2
$
$ 43
$ 30
$
2
142
13
(33 )
196
28
(40 )
Exploration 1
2008
2007
1
$ (34 )
84
(60 )
(10 )
10
7
10
4
—
—
$
31
$
6
6
9
1
—
—
22
Exploration and regional business unit costs are excluded from the measure of segment income but are reported separately by operating
segment to the Chief Operating Decision Maker.
All amounts related to the Capital Projects segment are included within Project Development Expense.
BARRICK FIRST QUARTER 2008
B-10
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
Reconciliation of Segment Income
For the three months ended March 31
2008
2007
Segment income
Amortization of corporate assets
Exploration
Other project expenses
Corporate administration
Other expense
Impairment charges
Interest income
Interest expense
Other income
$ 907
(5 )
(43 )
(6 )
(33 )
(54 )
(41 )
17
(6 )
32
$ 102
(6 )
(30 )
(4 )
(33 )
(38 )
—
39
(36 )
18
Income before income taxes and other items
$ 768
$ 12
Asset Information
For the three months ended Mar.31
Amortization
Segment capital
expenditures
2008
2008
1
2007
2007
Gold
North America
South America
Australia Pacific
Africa
Copper
South America
Australia Pacific
Capital Projects
$
Segment total
Other items not allocated to segments
Enterprise total
1
71
42
57
18
$
62
47
43
24
$
54
23
44
14
$
34
54
60
25
20
15
—
18
8
—
11
7
123
3
1
58
223
5
202
6
276
17
235
3
$ 228
$ 208
$
293
$
238
Segment capital expenditures are presented on an accrual basis. Capital expenditures in the Consolidated Statements of Cash Flows are
presented on a cash basis. For the three months ended March 31, 2008, cash expenditures were $265 million (2007: $248 million) and the
increase in accrued expenditures were $28 million (2007: ($10) million).
5 > REVENUE AND GOLD SALES CONTRACTS
For the three months ended Mar.31
Gold bullion sales
Spot market sales
Gold sales contracts
2008
2007
$ 1,560
—
$ 58
710
1,560
48
768
58
$ 1,608
$ 826
$
269
81
$ 218
45
$
350
$ 263
1
Concentrate sales
2
Copper sales
Copper cathode sales
Concentrate sales
1, 3
1
Revenues include amounts transferred from OCI to earnings for commodity cash flow hedges (see note 15C and 18).
BARRICK FIRST QUARTER 2008
B-11
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
2
3
Gold sales include gains and losses on gold derivative contracts which have been economically offset, but not yet settled and on
embedded derivatives in smelting contracts: first quarter 2008: $2 million loss (2007: $1 million loss).
Copper sales include gains and losses on economic copper hedges that do not qualify for hedge accounting treatment and on embedded
derivatives in copper smelting contracts: first quarter 2008: $12 million gain (2007: $10 million gain).
Revenue is presented net of direct sales taxes of $8 million (2007: $5 million).
Gold Sales Contracts
At March 31, 2008, we had Project Gold Sales Contracts with various customers for a total of 9.5 million ounces of future gold
production, of which 2.8 million ounces are at floating spot prices.
Mark-to-Market Value
Total
ounces in
millions
$ millions
Project Gold Sales Contracts
1
At Mar.31,
2008 1
9.5
$
(5,285 )
At a spot gold price of $934 per ounce. Refer to note 16 for further information on fair value measurements.
6 > COST OF SALES
Gold
For the three months ended Mar.31
2008
Cost of goods sold
By-product revenues
Royalty expense
Mining production taxes
1
2,3
1
2
Copper
2007
2008
2007
$ 663
(35 )
48
8
$ 640
(30 )
40
9
$ 91
(1 )
1
—
$ 80
—
1
—
$ 684
$ 659
$ 91
$ 81
Cost of goods sold includes charges to reduce the cost of inventory to net realizable value as follows: $7 million for the three months
ended March 31, 2008 (2007: $1 million). The cost of inventory sold in the period reflects all components capitalized to inventory,
except that, for presentation purposes, the component of inventory cost relating to amortization of property, plant and equipment is
classified in the income statement under “amortization”. Some companies present this amount under “cost of sales”. The amount
presented in amortization rather than cost of sales was $223 million in the three months ended March 31, 2008 (2007: $202 million).
We use silver sales contracts to sell a portion of silver produced as a by-product. Silver sales contracts have similar delivery terms and
pricing mechanisms as gold sales contracts. At March 31, 2008, we had fixed-price commitments to deliver 12 million ounces of silver at
an average price of $8.11 per ounce and floating spot price silver sales contracts for 6 million ounces over periods primarily of up to 10
years. The mark-to-market on silver sales contracts at March 31, 2008 was negative $146 million (Dec 31, 2007: negative $103 million).
Refer to note 16 for further information on fair value measurements.
BARRICK FIRST QUARTER 2008
B-12
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
7 > OTHER EXPENSE
A
Other Expense
For the three months ended Mar.31
Regional business unit costs
Community development costs
Environmental remediation costs
World Gold Council fees
Pension and other post-retirement benefit expense
Other
1
2
1
2
Relates to costs incurred at regional business unit offices.
Amounts relate to community programs in Peru, Tanzania and Papua New Guinea.
B
Impairment Charges
For the three months ended Mar.31
Impairment charges on investments
Other
1
2008
2007
$ 31
11
6
3
1
2
$ 22
6
5
3
2
—
$ 54
$ 38
2008
2007
$ 39
2
$—
—
$ 41
$—
1
In the first quarter of 2008, we recorded an impairment charge on Asset-Backed Commercial Paper of $39 million. Refer to note 12 for
further details.
C
Other Income
For the three months ended Mar.31
2008
Gain on sale of assets
Gain on sale of investments
Currency translation gains
Royalty income
Interest income
Other
$ 4
1
15
6
3
3
$
$ 32
$ 18
2007
6
2
—
3
—
7
8 > INCOME TAX EXPENSE
For the three months ended Mar.31
2008
Current
Deferred
Actual effective tax rate
Impact of deliveries into Corporate Gold Sales contracts
$
119
28
$ 253
$
147
33 %
—
Net currency translation losses on deferred tax balances
)
(3 %
Estimated effective tax rate on ordinary income
BARRICK FIRST QUARTER 2008
30 %
B-13
2007
$ 210
43
1225 %
)
(1198 %
—
27 %
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
The primary reasons why our effective income tax rate on ordinary income differs from the 33.5% Canadian statutory rate are mainly due
to certain allowances and special deductions unique to extractive industries, and also because we operate in multiple tax jurisdictions, some of
which have lower tax rates than the applicable Canadian federal and provincial rates.
Peruvian Tax Assessment
On September 30, 2004, the Tax Court of Peru issued a decision in our favor in the matter of our appeal of a 2002 income tax assessment
for an amount of $32 million, excluding interest and penalties. The assessment mainly related to the validity of a revaluation of the Pierina
mining concession, which affected its tax basis for the years 1999 and 2000. The full life-of-mine effect on current and deferred income tax
liabilities totaling $141 million was fully recorded at December 31, 2002, as well as other related costs of about $21 million.
In January 2005, we received written confirmation that there would be no appeal of the September 30, 2004 Tax Court of Peru decision.
In December 2004, we recorded a $141 million reduction in current and deferred income tax liabilities and a $21 million reduction in other
accrued costs. The confirmation concluded the administrative and judicial appeals process with resolution in Barrick’s favor.
Notwithstanding the favorable Tax Court decision we received in 2004 on the 1999 to 2000 revaluation matter, on an audit concluded in
2005, SUNAT has reassessed us on the same issue for tax years 2001 to 2003. On October 19, 2007, SUNAT confirmed their reassessment.
The tax assessment is for $49 million of tax, plus interest and penalties of $116 million. We filed an appeal to the Tax Court of Peru within the
statutory period. We believe that the audit reassessment has no merit, that we will prevail in court again, and accordingly no liability has been
recorded for this reassessment.
9 > EXPLORATION AND PROJECT DEVELOPMENT EXPENSE
For the three months ended March 31
Exploration:
Minesite exploration
Projects
Project development expense:
Capital projects
Pueblo Viejo
Donlin Creek
Sedibelo
Fedorova
Buzwagi
Pascua-Lama
Kainantu
Other
2007
$ 26
17
$ 10
20
$ 43
$ 30
17
—
5
4
1
2
6
5
1
Other project expenses
1
2008
$
6
14
4
2
4
2
—
1
40
33
6
4
$ 46
$ 37
Represents 100% of project expenditures. We record a non-controlling interest credit for our partner’s share of expenditures within
“non-controlling interests” in the income statement.
BARRICK FIRST QUARTER 2008
B-14
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
10 > EARNINGS (LOSS) PER SHARE
Three month period
ended March 31
2008
Basic
Diluted
($ millions, except shares in millions and per share amounts in dollars)
Three month period
ended March 31
2007
Basic
Diluted
Income (loss) from continuing operations
Plus: interest on convertible debentures
$
514
—
$
514
1
$
(159 )
—
$
(159 )
—
Net income (loss)
$
514
$
515
$
(159 )
$
(159 )
Weighted average shares outstanding
Effect of dilutive securities
Stock options
Convertible debentures
872
872
—
—
4
9
872
Earnings (loss) per share
Net income (loss)
$
0.59
885
$
0.58
865
865
—
—
—
—
865
865
$ (0.18 )
$ (0.18 )
11 > OPERATING CASH FLOW—OTHER ITEMS
For the three months ended Mar.31
2008
2007
Adjustments for non-cash income statement items:
Currency translation gains (note 7C)
Amortization of discount/premium on debt securities
Stock option expense
(Income) loss from equity investees (note 12)
Non-controlling interests
Gain on sale of investments (note 7C)
Gain on sale of long-lived assets (note 7C)
Net changes in operating assets and liabilities (excluding inventory)
Settlement of AROs
$ (15 )
(2 )
5
(2 )
3
(1 )
(4 )
(38 )
(7 )
$—
(3 )
5
21
3
(2 )
(6 )
93
(7 )
Other net operating activities
$ (61 )
$ 104
Operating cash flow includes payments for:
Interest costs
$ 17
$
BARRICK FIRST QUARTER 2008
B-15
8
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
12 > INVESTMENTS
At Mar.31 2008
Gains
Fair 1
(losses)
value
in OCI
Available-for-sale Securities
Securities in an unrealized gain position
Benefit plans:
Fixed-income securities
Equity securities
Other investments:
Diamondex
Other equity securities
At Dec.31 2007
Gains
Fair
(losses)
value
in OCI
4
2
$
3
$
—
Securities in an unrealized loss position
Benefit plans:
Equity securities
Other equity securities
—
—
$
4
14
$
—
1
4
58
—
26
—
73
—
41
65
26
91
42
11
13
(1 )
(3 )
5
(1 )
2
3
$ 89
Held-to-maturity securities
Asset-Backed Commercial Paper
Other investments
Long-term loan receivable from Yokohama Rubber Co. Ltd.
3
4
5
22
7
—
27
—
$ 96
$
41
—
46
—
—
5
$ 123
1
2
$
$
22
$ 142
$
41
Refer to note 16 for further information on the measurement of fair value.
Under various benefit plans for certain former Homestake executives, a portfolio of marketable fixed-income and equity securities are
held in a rabbi trust that is used to fund obligations under the plans.
Other equity securities in a loss position consist of investments in various junior mining companies.
Available-for-sale securities are recorded at fair value with unrealized gains and losses recorded in other comprehensive income (“OCI”).
Realized gains and losses are recorded in earnings when investments mature or on sale, calculated using the average cost of securities
sold. We record in earnings any unrealized declines in fair value judged to be other than temporary.
The long-term loan receivable is measured at amortized cost.
Gains on Investments Recorded in Earnings
For the three months ended Mar.31
2008
2007
Gains realized on sales
Cash proceeds from sales
$ 1
$ 2
$ 2
$ 3
BARRICK FIRST QUARTER 2008
B-16
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
Equity Method Investments
Highland
Atacama (Reko Diq)
Cerro Casale
Donlin Creek
2
2
2
At Mar.31
2008
Fair
Carrying
value 1
amount
At Dec.31
2007
Fair
Carrying
value 1
amount
$ 278
n/a
n/a
n/a
$ 208
n/a
n/a
n/a
$
177
124
771
75
169
109
732
64
$ 1,074
$ 1,147
1
2
$
Refer to note 16 for further information fair value measurement.
As our Investments are not publicly traded companies, there are no quoted prices to determine fair values. For impairment purposes we
utilized an expected present value technique to determine the fair value of underlying assets and liabilities.
Equity Method Investment Continuity
Cerro
Casale
Donlin
Creek
109
(5 )
20
—
—
$ 732
—
—
41
(2 )
$
64
—
11
—
—
$ 1,074
2
31
42
(2 )
124
$ 771
$
75
$ 1,147
Highland
Atacama
At January 1, 2008
Equity pick-up
Funding
Purchases
Elimination of non-controlling interest
$
169
7
—
1
—
$
At March 31, 2008
$
177
$
Total
Highland Gold Mining Ltd. (“Highland”)
During 2007, Highland announced the issue of 130.1 million new shares for $400 million. The equity was purchased by Millhouse LLC
(“Millhouse”) in two tranches. The first tranche of 65 million shares was completed on December 11, 2007 giving Millhouse a 25% interest in
Highland and reducing our position to 25.4%. The second tranche of 65 million shares was completed on January 16, 2008 giving Millhouse a
40% interest in Highland and further reducing our interest to 20.3%.
On completion of the first tranche, Millhouse was entitled to appoint 3 of 9 Directors to the Board. On completion of the second tranche,
Millhouse was entitled to appoint the CEO of Highland who will not serve on the Board. Our ability to appoint Directors has been reduced
from 3 to 2. We continue to account for the investment in Highland using the equity method of accounting.
Asset-Backed Commercial Paper (“ABCP”)
As at March 31, 2008, we held $66 million of Ironstone Trust, Series B Asset-Backed Commercial Paper (“ABCP”) which has matured,
but for which no payment has been received. On August 16, 2007, it was announced that a group representing banks, asset providers and major
investors had agreed to a standstill with regard to all non-bank sponsored ABCP (the “Montreal Accord”).
On March 17, 2008, all affected ABCP was placed under CCAA protection. It has been determined that our ABCP investments will
restructured on an individual basis and will not be pooled with other Montreal Accord ABCP assets. Our investments will maintain exposure to
the existing underlying assets. New floating rate notes
BARRICK FIRST QUARTER 2008
B-17
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
are expected to be issued with maturities and interest rates based on the respective maturities and amounts available from the underlying
investments. The new notes are expected to mature in 2021 and 2027.
We have assessed the fair value of the ABCP considering the available data regarding market conditions for such investments at
March 31, 2008. As a result of current market conditions, we recorded an impairment of $39 million in the first quarter of 2008 on the ABCP
investments, resulting in a total impairment to date of $59 million.
Our ownership of ABCP investments is comprised of trust units which have underlying investments in various asset backed securities.
The underlying investments are further represented by residential mortgage-backed securities, commercial mortgage-backed securities, other
asset-backed securities and collateralized debt obligations. We have based the 90% impairment on our assessment of the inherent risks
associated with the underlying investments. The impairment is further supported by an indicative value obtained from a third party, which was
facilitated by the Pan-Canadian Investors Committee. The impairment of our ABCP investments has no effect on our investment strategy or
covenant compliance.
There is currently no certainty regarding the outcome of the ABCP investments and therefore there is uncertainty in estimating the
amount and timing of the associated cash flows. This ABCP is classified under Other Investments at March 31, 2008.
Agreement with Yokohama Rubber Co. Ltd. (“Yokohama”)
In January 2008, we advanced $35 million (“the loan”) to Yokohama to fund expansion of their production facility and secure a
guaranteed supply of OTR tires. Interest on the loan is calculated at a lower than market rate, due to the benefit of the supply agreement, and is
compounded annually. The principal amount and accrued interest is to be repaid in full no later than 7 years from the initial date of the loan. In
the event that Barrick does not satisfy certain minimum monthly purchase commitments, Yokohama has the right to apply the dollar value of
the purchase shortfall against the principal balance of the loan.
The loan was initially recorded at its fair value, based on an estimated market borrowing rate for a comparable loan without the related
tire supply agreement. After initial recognition, the loan is recorded at amortized cost and interest income is recognized at an effective rate of
6%. We determined that the supply contract component of the agreement is an intangible asset with an initial fair value of $8 million. The
intangible asset is amortized on a straight line basis over its useful life.
13 > INVENTORIES
Gold
At
Mar.31
2008
Raw materials
Ore in stockpiles
Ore on leach pads
Mine operating supplies
Work in process
Finished products
Gold doré/bullion
Copper cathode
Copper concentrate
Gold concentrate
Non-current ore in stockpiles
$
1
790
167
385
152
$
698
149
351
109
102
—
—
27
87
—
—
40
1,623
(494 )
1,434
(414 )
$ 1,129
1
At
Dec.31
2007
$ 1,020
Copper
At
At
Mar.31
Dec.31
2008
2007
$
32
127
22
5
$
63
81
20
5
—
—
5
11
—
9
16
—
202
(85 )
194
(85 )
$ 117
$ 109
Ore that we do not expect to process in the next 12 months is classified within Other Assets.
BARRICK FIRST QUARTER 2008
B-18
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
For the three months ended Mar.31
2008
2007
Inventory impairment charges
$ 7
$ 1
14 > PROPERTY, PLANT AND EQUIPMENT
A
Unamortized Assets
Acquired Mineral Properties and Capitalized Mine Development Costs
Carrying
amount at
Mar.31,
2008
Exploration projects and other land positions
Value beyond proven and probable reserves at producing mines
Projects
Pascua-Lama
Pueblo Viejo
Sedibelo
Buzwagi
Punta Colorado Wind Farm
Kainantu
$
122
641
Carrying
amount at
Dec.31,
2007
$
109
322
1
$
1
609
157
81
224
35
135
645
165
82
287
38
137
2,117
$
1,672
Excludes Cerro Casale, Reko Diq and Donlin Creek that are held through equity investees and Cortez Hills which is included as a
component of the acquired mineral property and capitalized mine development costs attributable to the Cortez mine.
Value beyond proven and probable reserves (“VBPP”)
On acquiring a mineral property, we estimate the VBPP and record these amounts as assets. At the end of each fiscal year, as part of our
annual business cycle, we prepare estimates of proven and probable gold and copper mineral reserves for each mineral property. The change in
reserves, net of production, is used to determine the amount to be converted from VBPP to amortized assets. For the three months ended
March 31, 2008, we transferred $69 million of VBPP to amortized assets (2007: $189 million). We added $388 million to VBPP on acquiring
the additional 40% of Cortez, based on the preliminary purchase price allocation.
B
Amortization and Accretion
For the three months ended Mar.31
Amortization
Accretion
C
2008
2007
$ 228
13
$ 208
12
$ 241
$ 220
Capital Commitments
In addition to entering into various operational commitments in the normal course of business, we had commitments of approximately
$173 million at March 31, 2008 mainly at our various projects.
BARRICK FIRST QUARTER 2008
B-19
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
15 > FINANCIAL INSTRUMENTS
A
Cash and Equivalents
Cash and equivalents include cash, term deposits and treasury bills with original maturities of less than 90 days. Cash and equivalents
include $1,160 million (December 31, 2007: $480 million) held by Argentinean and Chilean subsidiaries that have been designated for use in
funding construction costs at our Pascua-Lama project and other capital projects.
B
Long-Term Debt
Interest Costs
For the three months ended Mar.31
2008
2007
Incurred
Capitalized
$ 50
(44 )
$ 66
(30 )
Interest expensed
$
$ 36
6
For the three months ended March 31, 2008, Cortez Hills, Pascua-Lama, Buzwagi, Pueblo Viejo, Donlin Creek, Sedibelo, Reko Diq,
Kainantu, Cerro Casale and Punta Colorado Wind farm qualified for interest capitalization.
Proceeds
In first quarter 2008, we drew down $990 million to partially fund our acquisition of the 40% interest in Cortez. The amounts were drawn
down using our existing $1.5 billion credit facility. The credit facility, which is unsecured, has an interest rate of Libor plus 0.25% to 0.35% on
the outstanding loan amount, and a commitment rate of 0.07% to 0.08% on any undrawn amounts. For the amounts drawn down at March 31,
2008, $200 million matures on April 29, 2012 and the balance matures on April 29, 2013.
C
Use of Derivative Instruments (“Derivatives”) in Risk Management
In the normal course of business, our assets, liabilities and forecasted transactions are impacted by various market risks including, but not
limited to:
Item
Impacted by
•
Sales
•
Cost of sales
•
Prices of gold and copper
•
Consumption of diesel fuel, propane and natural gas
•
Prices of diesel fuel, propane and natural gas
•
Non-US dollar expenditures
•
Currency exchange rates—US dollar versus A$, C$, CLP,
ARS, PGK and TZS
•
By-product credits
•
Prices of silver and copper
•
Corporate administration, exploration and business development
costs
•
Currency exchange rates—US dollar versus A$, ZAR, CLP,
ARS, PGK and C$
•
Non-US dollar capital expenditures
•
Currency exchange rates—US dollar versus A$, C$, CLP,
ARS, PGK and EUR
•
Interest earned on cash
•
US dollar interest rates
•
Fair value of fixed–rate debt
•
US dollar interest rates
BARRICK FIRST QUARTER 2008
B-20
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
Under our risk management policy, we seek to mitigate the impact of these risks to provide certainty for a portion of our revenues and to
control costs and enable us to plan our business with greater certainty. The timeframe and manner in which we manage these risks varies for
each item based upon our assessment of the risk and available alternatives for mitigating risk. For these particular risks, we believe that
derivatives are an appropriate way of managing the risk.
The primary objective of the hedging elements of our derivative instrument positions is that changes in the values of hedged items are
offset by changes in the values of derivatives. Many of the derivatives we use meet the FAS 133 hedge effectiveness criteria and are designated
in a hedge accounting relationship. Some of the derivative instruments are effective in achieving our risk management objectives, but they do
not meet the strict FAS 133 hedge effectiveness criteria, and they are classified as “economic hedges”. The change in fair value of these
economic hedges is recorded in current period earnings, classified with the income statement line item that is consistent with the derivative
instruments’ intended risk objective.
Summary of Derivatives at Mar. 31, 2008
1
Notional Amount by Term to
Maturity
Within 1
year
US dollar interest rate
contracts
Receive-fixed swaps
(millions)
Pay-fixed swaps (millions)
Net swap position
Currency contracts
C$:US$ contracts
(C$ millions)
A$:US$ contracts
(A$ millions)
EUR:US$ contracts
(€ millions)
TZS:US$ contracts
(TZS millions)
CLP:US$ contracts
(CLP millions)
Commodity contracts
Copper call option spread
contracts (millions of
pounds)
Copper sold forward
contracts (millions of
pounds)
Copper collar contracts
(millions of pounds)
Diesel forward contracts
(thousands of barrels)
Natural Gas (thousands of
btus)
2
1
2
—
—
$
$
—
C$
$
Over 5
years
2 to 5 years
50
(125 )
$
$
(75 )
$
—
238
C$
220
C$
A$
1,414
A$
3,064
€
TZ
S
CL
P
3
€
TZ
S
CL
P
—
7,212
31,719
—
—
Accounting Classification by
Notional Amount
Fair
Cash flow
value
Economic
hedge
hedge
Hedge
Total
$
$
—
—
$
50
(125 )
$
2
(14 )
—
$
—
$
(75 )
$
12 )
C$
455
C$
—
C$
3
$
24
4,478
A$
4,408
A$
—
A$
70
295
3
€
TZ
S
CL
P
—
€
TZ
S
CL
P
—
€
TZ
S
CL
P
3
—
50
(125 )
$
$
(75 )
$
—
C$
458
A$
—
A$
€
TZ
S
CL
P
—
€
TZ
S
CL
P
—
—
—
Fair
value
7,212
1,719
—
7,212
31,719
—
—
—
—
—
9
98
33
—
131
—
—
131
115
69
—
184
184
—
—
277
252
—
529
490
—
39
(114 )
2,017
3,153
320
5,490
4,776
—
714
129
—
—
910
605
—
305
1
910
$
39
(122 )
Excludes gold and silver sales contracts (see notes 5 and 6), refer to note 16 for further information on fair value measurements.
Diesel commodity contracts represent a combination of WTI, WTB, MOPS and JET hedge contracts and diesel price contracts based on
the price of WTI, WTB, MOPS, and JET, respectively, plus a spread. WTI represents West Texas Intermediate, WTB represents
Waterborne, MOPS represents Mean of Platts Singapore, JET represents Jet Fuel.
BARRICK FIRST QUARTER 2008
B-21
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
US Dollar Interest Rate Contracts
Non-hedge Contracts
We have a net $75 million US dollar pay-fixed interest-rate swap position outstanding that was used to economically hedge the US dollar
interest-rate risk implicit in a prior gold lease rate swap position. Changes in the fair value of these interest rate swaps are recognized in current
period earnings through interest expense.
Currency Contracts
Cash Flow Hedges
Currency contracts totaling C$455 million, A$4,408 million, 7,212 million TZS and CLP 31,719 million have been designated against
forecasted non-US dollar denominated expenditures as a hedge of the variability of the US dollar amount of those expenditures caused by
changes in currency exchange rates over the next four years. Hedged items are identified as the first stated quantity of dollars of forecasted
expenditures in a future month. For C$371 million, A$4,230 million, 7,212 million TZS and CLP 31,719 million portions of the contracts, we
have concluded that the hedges are 100% effective under FAS 133 because the critical terms (including notional amount and maturity date) of
the hedged items and currency contracts are the same. For the remaining C$84 million and A$178 million, prospective and retrospective hedge
effectiveness is assessed using the hypothetical derivative method under FAS 133. For details of how we apply the hypothetical derivative
method refer to note 20C of our 2007 Year End Financial Statements.
Economic Hedge Contracts
We have C$3 million, A$70 million and €3 million contracts that were not designated as hedges were outstanding as of March 31, 2008.
Changes in the fair value of economic hedge currency contracts were recorded in cost of sales, corporate administration or interest
income/expense.
Commodity Contracts
Cash Flow Hedges
Diesel Fuel
Commodity contracts totaling 4,776 thousand barrels of diesel fuel have been designated against forecasted purchases of the commodities
for expected consumption at our mining operations. The contracts act as a hedge of the impact of variability in market prices on the cost of
future commodity purchases over the next six years. Hedged items are identified as the first stated quantity in thousands of barrels of forecasted
purchases in a future month. Prospective and retrospective hedge effectiveness is assessed using the hypothetical derivative method under FAS
133. For details of how we apply the hypothetical method refer to note 20C of our 2007 Year End Financial Statements.
Copper
The terms of a series of copper-linked notes resulted in an embedded fixed-price forward copper sales contract (for 324 million pounds)
that met the definition of a derivative and must be separately accounted for. At March 31, 2008, embedded fixed-price forward copper sales
contracts for 131 million pounds were outstanding after deliveries of copper totaling 193 million pounds. The resulting copper derivative has
been designated against future copper cathode at the Zaldívar mine as a cash flow hedge of the variability in market prices of those future sales.
Hedged items are identified as the first stated quantity of pounds of forecasted sales in a future month. Prospective hedge effectiveness is
assessed on these hedges using a dollar offset method. For details of how we apply the dollar offset method refer to note 20C of our 2007 Year
End Financial Statements.
BARRICK FIRST QUARTER 2008
B-22
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
During first quarter 2008 we added 338 million pounds of copper collar contracts which provide a floor price and a cap price for copper
sales. 257 million pounds of the collars were designated against copper cathode sales at our Zaldívar mine and 66 million pounds are
designated against copper concentrate sales at our Osborne mine. At March 31, 2008 we had 372 million pounds of copper collar contracts
remaining at Zaldívar and 117 million pounds at Osborne.
For collars designated against copper cathode production, the hedged items are identified as the first stated quantity of pounds of
forecasted sales in a future month. Prospective hedge effectiveness is assessed on these hedges using a dollar offset method. For details of how
we apply the dollar offset method refer to note 20C of our 2007 Year End Financial Statements.
Concentrate sales at our Osborne mine contain both gold and copper, and as a result, are exposed to price changes of both commodities.
Prospective hedge effectiveness is assessed using a regression method. For details of how we apply the regression method refer to note 20C of
our 2007 Year End Financial Statements. During first quarter 2008, we recorded ineffectiveness of $5 million on these hedges. The
ineffectiveness was caused by changes in the price of gold impacting the hypothetical derivative, but not the hedging derivative. Prospective
effectiveness tests indicate that these hedges are expected to be highly effective in the future.
Economic hedge Contracts
Diesel Fuel
Economic hedge fuel contracts are used to mitigate the risk of oil price changes on fuel consumption at various mines. On completion of
regression analysis, we concluded that contracts totaling 714 thousand barrels do not meet the “highly effective” criterion in FAS 133 due to
currency and basis differences between derivative contract prices and the prices charged to the mines by oil suppliers. Although not qualifying
as an accounting hedge, the contracts protect the Company to a significant extent from the effects of oil price changes. Changes in the fair value
of economic hedge fuel contracts are recorded in current period cost of sales.
Copper
In first quarter 2007, we purchased and sold call options on 274 million pounds of copper over the next 2 1/2 years. These options, when
combined with the aforementioned fixed-price forward copper sales contracts, economically lock in copper sales prices between $3.08/lb and
$3.58/lb over a period of 2 1/2 years. At March 31, 2008, the notional amount of options outstanding had decreased to 131 million pounds due
to expiry of options totaling 25 million pounds in first quarter 2008. These contracts do not meet the “highly effective” criterion for hedge
accounting under FAS 133. We paid option premiums of $23 million at the inception of these contracts in first quarter 2007 that was included
under investing activities in the cash flow statement in first quarter 2007. Changes in the fair value of these copper options are recorded in
current period revenue.
We entered into a series of copper collar contracts for a notional 39 million pounds of copper that were not designated as hedges and were
outstanding as of March 31, 2008.
BARRICK FIRST QUARTER 2008
B-23
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
Economic Hedge Gains (Losses)
For the three months ended Mar.31
2008
Commodity contracts
Copper
Gold
Fuel
Currency contracts
$ 12
3
5
Interest rate contracts
11
(3 )
Hedge ineffectiveness
28
(4 )
$ 24
2007
$ 10
(3 )
1
(1 )
1
Income statement classification
Revenue
Revenue
Cost of sales
Cost of sales/corporate administration/other
income/expense
Interest income/expense
8
—
$
Various
8
Cash Flow Hedge Gains (Losses) in OCI
Commodity price hedges
Gold
At Dec.31, 2007
Effective portion of change
in fair value of hedging
instruments
Transfers to earnings:
On recording hedged
items in earnings
$ 15
At Mar.31, 2008
$ 14
Hedge gains/losses
classified within
—
Portion of hedge gain (loss)
expected to affect
earnings over the next 12
months
$
1
1
14
2
$
79
Operating
costs
$
238
Corporate
Administration
$
27
Interest rate hedges
LongCash
term
balances
debt
Capital
expenditures
$
(1 )
$
—
(269 )
51
116
(11 )
1
—
28
(8 )
(43 )
(3 )
1
—
(1 )
Gold
sales
Diesel
Fuel
Copper
$
Currency hedges
$ (227 )
Copper
sales
$ (155 )
$
122
$
Cost of
sales
$
41
311
$
Cost of
sales
$
170
13
Corporate
Administration
$
11
$
1
Amortization
$
—
$
—
Interest
income
$
—
$
(17 )
Total
$ 355
—
(112 )
1
$
(16 )
(25 )
$ 218
Interest
expense
$
(1 )
$
68
Based on the fair value of hedge contracts at March 31, 2008.
16 > FAIR VALUE MEASUREMENTS
In first quarter 2008, we adopted FAS 157 for financial assets and liabilities that are measured at fair value on a recurring basis. FAS 157
defines fair value, establishes a framework for measuring fair value under US GAAP, and requires expanded disclosures about fair value
measurements. The primary assets and liabilities affected were available-for-sale securities and derivative instruments. The adoption of FAS
157 did not change the valuation techniques that we use to value these assets and liabilities. We have also begun to provide the fair value
information that is required to be disclosed under FAS 107, Disclosures about Fair Value of Financial Instruments, for our normal gold and
silver sales contracts in this note. We have elected to present information for derivative instruments on a net basis. Beginning in 2009, we will
also apply FAS 157 to non-financial assets and liabilities that we periodically measure at fair value under US GAAP. The principal assets and
liabilities that will be affected are impaired long-lived tangible assets, impaired intangible assets, goodwill and asset retirement obligations.
BARRICK FIRST QUARTER 2008
B-24
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
The fair value hierarchy established by FAS 157 establishes three levels to classify the inputs to valuation techniques used to measure fair
value. Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2 inputs are quoted prices in
markets that are not active, quoted prices for similar assets or liabilities in active markets, inputs other than quoted prices that are observable
for the asset or liability(for example, interest rate and yield curves observable at commonly quoted intervals, forward pricing curves used to
value currency and commodity contracts and volatility measurements used to value option contracts), or inputs that are derived principally from
or corroborated by observable market data or other means. Level 3 inputs are unobservable (supported by little or no market activity). The fair
value hierarchy gives the highest priority to Level 1 inputs and the lowest priority to Level 3 inputs.
Fair Value Measurements at March 31, 2008
Quoted
Prices in
Active
Markets
for
Identical
Assets
(Level 1)
Available-for-sale securities
Held-to-maturity securities
Derivative Instruments
$
$
Significant
Other
Observable
Inputs
(Level 2)
89
—
—
$
89
$
Significant
Unobservable
Inputs
(Level 3)
—
—
244
$
244
$
Aggregate
Fair Value
—
$
89
7
244
$
340
7
—
7
Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
Held-to-maturity
securities
For the three months ended Mar.31
At January 1, 2008
Total gains or losses (realized/ unrealized)
Recorded in earnings
Recorded in OCI
Purchases, issuances and settlements
$
At March 31, 2008
$
(39 )
—
—
1
1
46
7
The total loss of $39 million included in earnings for the period is reported in Impairment Charges on the Consolidated Statement of
Income.
Valuation Techniques
Available-for-sale securities
The fair value of available-for-sale securities is determined based on a market approach reflecting the closing price of each particular
security at the balance sheet date. The closing price is a quoted market price obtained from the exchange that is the principal active market for
the particular security, and therefore available-for-sale securities are classified within Level 1 of the fair value hierarchy established by FAS
157.
Derivative Instruments
The fair value of derivative instruments is determined using either present value techniques or option pricing models that utilize a variety
of inputs that are a combination of quoted prices and market-corroborated inputs. The fair value of US dollar interest rate and currency swap
contracts is determined by discounting contracted cash flows using a discount rate derived from observed LIBOR and swap rate curves for
comparable
BARRICK FIRST QUARTER 2008
B-25
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
assets and liabilities. In the case of currency contracts, we convert non-US dollar cash flows into US dollars using an exchange rate derived
from currency swap curves for comparable assets and liabilities. The fair value of commodity forward contracts is determined by discounting
contractual cash flows using a discount rate derived from observed LIBOR and swap rate curves. Contractual cash flows are calculated using a
forward pricing curve derived from observed forward prices for each commodity. The fair value of commodity options is determined using
option-pricing models that utilize a combination of inputs including quoted market prices and market corroborated inputs. Derivative
instruments are classified within Level 2 of the fair value hierarchy.
Held-to-maturity-investments
The fair value of our held-to-maturity investments (ABCP) is determined by our assessment of the risks associated with the underlying
investments. Our assessment allocated an estimated impairment percentage to the various underlying asset classes within the ABCP using
unobservable inputs. The impairment value was applied sequentially to the various tranches within the ABCP, resulting in an estimated fair
value for each investment class. This value was supported by an indicative value obtained from a third party, which was facilitated by the
Pan-Canadian Investors Committee for Third-Party Structured Asset-Backed Commercial Paper.
The indicative value was released publicly on March 14, 2008 as part of the “Report on Restructuring.” The indicative value from this
report is consistent with the fair value calculated by Barrick. ABCP is classified within Level 3 of the fair value hierarchy, because there is
currently no active market for these securities.
Normal gold and silver sales contracts
The fair value of normal gold and silver sales contracts is calculated by discounting expected cash flows using discount rates based on
gold and silver contango rate curves. Gold and silver contango rates are market observable inputs, and therefore our normal gold and silver
sales contracts would be classified within Level 2 of the fair value hierarchy.
17 > CAPITAL STOCK
Exchangeable Shares
In connection with a 1998 acquisition, Barrick Gold Inc. (“BGI”), issued 11.1 million BGI exchangeable shares, which are each
exchangeable for 0.53 of a Barrick common share at any time at the option of the holder, and have essentially the same voting, dividend
(payable in Canadian dollars), and other rights as 0.53 of a Barrick common share. BGI is a subsidiary that holds our interest in the Hemlo and
Eskay Creek Mines.
At March 31, 2008, 1.3 million BGI exchangeable shares were outstanding, which are equivalent to 0.7 million Barrick common shares
(2007 – 0.7 million common shares), and are reflected in the number of common shares outstanding. We have the right to require the exchange
of each outstanding BGI exchangeable share for 0.53 of a Barrick common share. While there are exchangeable shares outstanding, we are
required to present summary consolidated financial information relating to BGI.
BARRICK FIRST QUARTER 2008
B-26
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
Summarized Financial Information for BGI
For the three months ended Mar.31
2008
Total revenues and other income
Less: costs and expenses
$
Loss before taxes
Net Loss
2007
46
(51 )
$
43
(47 )
$
(5 )
$
(4 )
$
(5 )
$
(3 )
At Mar.31
2008
Assets
Current assets
Non-current assets
At Dec.31
2007
$
135
46
$
123
47
$
181
$
170
Liabilities and shareholders’ equity
Liabilities
Other current liabilities
Intercompany notes payable
Other long-term liabilities
Shareholders’ equity
22
409
109
(370 )
29
368
109
(325 )
$
$
181
170
18 > OTHER COMPREHENSIVE INCOME (LOSS) (“OCI”)
For the three months ended Mar.31
2008
Accumulated OCI at Jan.1
Cash flow hedge gains, net of tax of $105, $60
Investments, net of tax of $4, $7
Currency translation adjustments, net of tax of $nil, $nil
Pension plans and other post-retirement benefits, net of tax of $2, $4
$ 250
37
(143 )
7
$ 223
46
(143 )
(7 )
$ 151
$ 119
Other comprehensive income (loss) for the period:
Changes in fair value of cash flow hedges
Changes in fair value of investments
Less: reclassification adjustments for gains/losses recorded in earnings:
Transfers of cash flow hedge gains to earnings:
On recording hedged items in earnings
Investments:
Gains realized on sale
(112 )
(18 )
24
36
(25 )
(43 )
(1 )
2
Other comprehensive income, before tax
Income tax expense related to OCI
(156 )
22
Other comprehensive income, net of tax
$ (134 )
Accumulated OCI at Mar.31
Cash flow hedge gains, net of tax of $84, $66
Investments, net of tax of $3, $13
Currency translation adjustments, net of tax of $nil, $nil
Pension plans and other post-retirement benefits, net of tax of $2, $4
134
19
(143 )
7
$
BARRICK FIRST QUARTER 2008
B-27
2007
17
19
(12 )
$
7
198
78
(143 )
(7 )
$ 126
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
19 > STOCK-BASED COMPENSATION
Employee Share Purchase Plan
On April 1, 2008, Barrick launched an Employee Share Purchase Plan. This plan enables Barrick employees to purchase Company shares
through payroll deduction. Each year, employees may contribute 1%-6% of their combined base salary and annual bonus, and Barrick will
match 50% of the contribution, up to a maximum of $5,000 per year.
20 > LITIGATION AND CLAIMS
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. 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 a loss is probable, and the amount can be reliably estimated, then a loss is recorded.
When a contingent loss is not probable but is reasonably possible, or is probable but the amount of loss cannot be reliably estimated, then
details of the contingent loss are disclosed. Loss contingencies considered remote are generally not disclosed unless they involve guarantees, in
which case we disclose the nature of the guarantee. Legal fees incurred in connection with pending legal proceedings are expensed as incurred.
Wagner Complaint
On June 12, 2003, a complaint was filed against Barrick and several of its current or former officers in the U.S. District Court for the
Southern District of New York. The complaint is on behalf of Barrick shareholders who purchased Barrick shares between February 14, 2002
and September 26, 2002. It alleges that Barrick and the individual defendants violated U.S. securities laws by making false and misleading
statements concerning Barrick’s projected operating results and earnings in 2002. The complaint seeks an unspecified amount of damages.
Other parties filed several other complaints, making the same basic allegations against the same defendants. In September 2003, the cases were
consolidated into a single action in the Southern District of New York. The plaintiffs filed a Third Amended Complaint on January 6, 2005. On
May 23, 2005, Barrick filed a motion to dismiss part of the Third Amended Complaint. On January 31, 2006, the Court issued an order
granting in part and denying in part Barrick’s motion to dismiss. Both parties moved for reconsideration of a portion of the Court’s January 31,
2006 Order. On December 12, 2006, the Court issued its order denying both parties’ motions for reconsideration. On February 15, 2008, the
Court issued an order granting the plaintiffs’ motion for class certification. Discovery is ongoing. We intend to defend the action vigorously.
No amounts have been accrued for any potential loss under this complaint.
Marinduque Complaint
Placer Dome has been named the sole defendant in a Complaint filed on October 4, 2005, by the Provincial Government of Marinduque,
an island province of the Philippines (“Province”), with the District Court in Clark County, Nevada. The action was removed to the Nevada
Federal District Court on motion of Placer Dome. The Complaint asserts that Placer Dome is responsible for alleged environmental degradation
with consequent economic damages and impacts to the environment in the vicinity of the Marcopper mine that was owned and operated by
Marcopper Mining Corporation (“Marcopper”). Placer Dome indirectly owned a minority shareholding of 39.9% in Marcopper until the
divestiture of its shareholding in 1997. The Province seeks “to recover damages for injuries to the natural, ecological and wildlife resources
within its territory”, but “does not seek to recover damages for individual injuries sustained by its citizens either to their persons or their
property”. In addition to damages for injury to natural resources, the Province seeks compensation for the costs of restoring
BARRICK FIRST QUARTER 2008
B-28
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
the environment, an order directing Placer Dome to undertake and complete “the remediation, environmental cleanup, and balancing of the
ecology of the affected areas,” and payment of the costs of environmental monitoring. The Complaint addresses the discharge of mine tailings
into Calancan Bay, the 1993 Maguila-guila dam breach, the 1996 Boac river tailings spill, and alleged past and continuing damage from acid
rock drainage.
At the time of the amalgamation of Placer Dome and Barrick Gold Corporation, a variety of motions were pending before the District
Court, including motions to dismiss the action for lack of personal jurisdiction and for forum non conveniens (improper choice of forum). On
June 29, 2006, the Province filed a Motion to join Barrick Gold Corporation as an additional named Defendant and for leave to file a Third
Amended Complaint which the Court granted on March 2, 2007. On March 6, 2007, the Court issued an order setting a briefing schedule on the
Company’s motion to dismiss on grounds of forum non conveniens. On June 7, 2007, the Court issued an order granting the Company’s motion
to dismiss. On June 25, 2007, the Province filed a motion requesting the Court to reconsider its Order dismissing the action. On January 16,
2008, the district court issued an order denying the Province’s motion for reconsideration. Following the district court’s order, the Province
filed Notice of Appeal to U.S. Court of Appeals for the Ninth Circuit. On March 19, 2008, the Court of Appeals issued a schedule for briefing
of the appeal. We will challenge the claims of the Province on various grounds and otherwise vigorously defend the action. No amounts have
been accrued for any potential loss under this complaint.
Calancan Bay (Philippines) Complaint
On July 23, 2004, a complaint was filed against Marcopper and Placer Dome Inc. (“PDI”) in the Regional Trial Court of Boac, on the
Philippine island of Marinduque, on behalf of a putative class of fishermen who reside in the communities around Calancan Bay, in northern
Marinduque. The complaint alleges injuries to health and economic damages to the local fisheries resulting from the disposal of mine tailings
from the Marcopper mine. The total amount of damages claimed is approximately US$900 million.
On October 16, 2006, the court granted the plaintiffs’ application for indigent status, allowing the case to proceed without payment of
filing fees. On January 17, 2007, the Court issued a summons to Marcopper and PDI. On March 25, 2008, an attempt was made to serve PDI
by serving the summons and complaint on Placer Dome Technical Services (Philippines) Inc. (“PDTS”). PDTS has returned the summons and
complaint with a manifestation stating that PDTS is not an agent of PDI for any purpose and is not authorized to accept service or to take any
other action on behalf of PDI. On April 3, 2008, PDI made a special appearance by counsel to move to dismiss the complaint for lack of
personal jurisdiction and on other grounds.
The Company intends to defend the action vigorously. No amounts have been accrued for any potential loss under this complaint.
Pakistani Constitutional Litigation
On November 28, 2006, a Constitutional Petition was filed in the High Court of Balochistan by three Pakistan citizens against: Barrick,
the governments of Balochistan and Pakistan, the Balochistan Development Authority (“BDA”), Tethyan Copper Company (“TCC”),
Antofagasta Plc (“Antofagasta”), Muslim Lakhani and BHP (Pakistan) Pvt Limited (“BHP”).
The Petition alleged, among other things, that the entry by the BDA into the 1993 Joint Venture Agreement (“JVA”) with BHP to
facilitate the exploration of the Reko Diq area and the grant of related exploration licenses were illegal and that the subsequent transfer of the
interests of BHP in the JVA and the licenses to TCC was also illegal and should therefore be set aside. Barrick currently indirectly holds 50%
of the shares of TCC, with Antofagasta indirectly holding the other 50%.
On June 26, 2007, the High Court of Balochistan dismissed the Petition against Barrick and the other respondents in its entirety. On
August 23, 2007, the petitioners filed a Civil Petition for Leave to Appeal in the
BARRICK FIRST QUARTER 2008
B-29
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
Supreme Court of Pakistan. The Supreme Court of Pakistan has not yet considered the Civil Petition for Leave to Appeal. Barrick intends to
defend this action vigorously. No amounts have been accrued for any potential loss under this complaint.
21 > FINANCE SUBSIDIARIES
On May 9, 2008, we incorporated two wholly-owned finance subsidiaries, Barrick North America Finance LLC and Barrick Gold
Financeco LLC, the sole purpose of which is to issue debt securities. On May 30, 2008, we filed a preliminary short form base shelf prospectus
and registration statement in respect of the future offer and issuance of debt securities up to an aggregate principal amount of $2 billion by
Barrick and the finance subsidiaries. Barrick will fully and unconditionally guarantee any debt securities issued by the finance subsidiaries.
BARRICK FIRST QUARTER 2008
B-30
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
FORM F-9
PART II
INFORMATION NOT REQUIRED TO BE DELIVERED TO
OFFEREES OR PURCHASERS
Indemnification
Under the Business Corporations Act (Ontario) (the “OBCA”), Barrick Gold Corporation (the “Form F-9 Registrant” or the
“Corporation”) may indemnify a director or officer of the Corporation, a former director or officer of the Corporation or another individual who
acts or acted at the Corporation’s request as a director or officer, or an individual acting in a similar capacity, of another entity:
(a)
against all costs, charges and expenses, including an amount paid to settle an action or satisfy a judgment, reasonably incurred by the
individual in respect of any civil, criminal, administrative, investigative or other proceeding in which the individual is involved because
of the association with the Corporation or other entity; and
(b)
with court approval, against all costs, charges and expenses reasonably incurred by the individual in connection with an action by or on
behalf of the Corporation or another entity to obtain a judgment in its favor, to which the individual is made a party because of the
individual’s association with the Corporation or other entity;
provided that , (i) in each case, such individual acted honestly and in good faith with a view to the best interests of the Corporation or, as the
case may be, to the best interests of the other entity for which the individual acted as a director or officer or in a similar capacity at the
Corporation’s request, and (ii) in the case of (a) above, if the matter is a criminal or administrative action or proceeding that is enforced by a
monetary penalty, such individual had reasonable grounds for believing that the individual’s conduct was lawful.
In addition, the Corporation may advance money to a director, officer or other individual for the costs, charges and expenses of a
proceeding referred to in (a) above but the individual is required to repay the money to the Corporation if the individual did not act honestly
and in good faith with a view to the best interests of the Corporation or, as the case may be, to the best interests of the other entity for which the
individual acted as a director or officer or in a similar capacity at the Corporation’s request.
Notwithstanding the foregoing, a director or officer of the Corporation, a former director or officer of the Corporation or another
individual who acts or acted at the Corporation’s request as a director or officer, or an individual acting in a similar capacity, of another entity
is entitled to be indemnified by the Corporation against all costs, charges and expenses reasonably incurred by the individual in connection with
the defence of any civil, criminal, administrative, investigative or other proceeding in which the individual is involved because of the
individual’s association with the Corporation or other entity if the individual seeking the indemnity (i) was not judged by a court or other
competent authority to have committed any fault or omitted to do anything that the individual ought to have done, and (ii) acted honestly and in
good faith with a view to the best interests of the Corporation or, as the case may be, to the best interests of the other entity for which the
individual acted as a director or officer or in a similar capacity at the Corporation’s request, and (iii) in the case of a criminal or administrative
action or proceeding that is enforced by a monetary penalty, had reasonable grounds for believing that the individual’s conduct was lawful.
Subject to the limitations contained in the OBCA, the by-law of the Corporation provides that the Corporation shall indemnify a
director or officer of the Corporation, a former director or officer of the Corporation or an individual who acts or acted at the Corporation’s
request as a director or officer, or individual acting in a similar capacity, of another entity against all costs, charges and expenses, including an
amount paid to settle an action or satisfy a judgment, reasonably incurred by the individual in respect of any civil, criminal, administrative,
investigative or other proceeding in which the individual is involved because of that association with the
F-9, II-1
Corporation or other entity if the individual acted honestly and in good faith with a view to the best interests of the Corporation or, as the case
may be, to the best interests of the other entity for which the individual acted as a director or officer or in a similar capacity at the Corporation’s
request.
Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers or persons
controlling the Form F-9 Registrant pursuant to the foregoing provisions, the Form F-9 Registrant has been informed that in the opinion of the
U.S. Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is therefore unenforceable.
F-9, II-2
EXHIBITS TO FORM F-9
The exhibits to this registration statement are listed in the exhibit index, which appears elsewhere herein.
F-9, II-3
FORM F-9
PART III
UNDERTAKING AND CONSENT TO SERVICE OF PROCESS
Item 1.
Undertaking.
The Form F-9 Registrant undertakes to make available, in person or by telephone, representatives to respond to inquiries made by the
Commission staff, and to furnish promptly, when requested to do so by the Commission staff, information relating to the securities registered
pursuant to this Form F-9 or to transactions in said securities.
Item 2.
Consent to Service of Process.
Concurrently with the filing of this Registration Statement, the Form F-9 Registrant is filing with the Commission a written irrevocable
consent and power of attorney on Form F-X.
Any change to the name or address of the agent for service of the Form F-9 Registrant shall be communicated promptly to the
Commission by amendment to the applicable Form F-X referencing the file number of the relevant registration statement.
F-9, III-1
FORM F-9
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Form F-9 Registrant certifies that it has reasonable grounds to believe that
it meets all of the requirements for filing on Form F-9 and that it has reasonable grounds to believe that the Debt Securities will be rated
“investment grade” by the time of sale of such Debt Securities pursuant to this registration statement, and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Toronto, Province of Ontario, Canada, on this
30 day of May, 2008.
th
BARRICK GOLD CORPORATION
(the Form F-9 Registrant)
By:
Name:
Title:
F-9, III-2
Sybil E. Veenman
Sybil E. Veenman
Vice President, Assistant General
Counsel and Secretary
POWERS OF ATTORNEY
Each person whose signature appears below constitutes and appoints each of Sybil E. Veenman, James W. Mavor and Jamie C. Sokalsky
as his or her true and lawful attorney-in-fact and agent, each acting alone, with full power of substitution and resubstitution, for him or her and
in his or her name, place and stead, in any and all capacities, to sign any or all amendments (including post-effective amendments) to this
registration statement, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorneys-in-fact and agents, each acting alone, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he or she might or could
do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, each acting alone, or his or her substitute or substitutes,
may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act, this registration statement has been signed by the following persons in the capacities
and on the dates indicated.
Signature
/s/ Peter Munk
Peter Munk
Title with Form F-9 Registrant
Date
Chairman and Director, Acting Chief Executive Officer
(Principal Executive Officer)
May 30, 2008
Executive Vice President and Chief Financial Officer
(Principal Financial Officer)
May 30, 2008
Vice President and Controller
(Principal Accounting Officer)
May 30, 2008
Vice Chairman and Director
May 30, 2008
/s/ Howard L. Beck
Howard L. Beck
Director
May 30, 2008
/s/ Donald J. Carty
Donald J. Carty
Director
May 30, 2008
/s/ Gustavo Cisneros
Gustavo Cisneros
Director
May 30, 2008
/s/ Marshall A. Cohen
Marshall A. Cohen
Director
May 30, 2008
/s/ Peter A. Crossgrove
Peter A. Crossgrove
Director
May 30, 2008
/s/ Jamie C. Sokalsky
Jamie C. Sokalsky
/s/ Richard Ball
Richard Ball
/s/ C. William D. Birchall
C. William D. Birchall
F-9, III-3
/s/ Robert M. Franklin
Robert M. Franklin
Director
May 30, 2008
/s/ Peter C. Godsoe
Peter C. Godsoe
Director
May 30, 2008
/s/ J. Brett Harvey
J. Brett Harvey
Director
May 30, 2008
/s/ Brian Mulroney
The Right Honourable Brian Mulroney
Director
May 30, 2008
/s/ Anthony Munk
Anthony Munk
Director
May 30, 2008
/s/ Steven J. Shapiro
Steven J. Shapiro
Director
May 30, 2008
/s/ Gregory C. Wilkins
Gregory C. Wilkins
Director
May 30, 2008
F-9, III-4
AUTHORIZED REPRESENTATIVE
Pursuant to the requirements of Section 6(a) of the Securities Act of 1933, the undersigned has signed this registration statement, solely in
the capacity of the duly authorized representative of Barrick Gold Corporation in the United States, in the City of Toronto, Province of Ontario,
Canada on this 30 day of May, 2008.
th
BARRICK GOLDSTRIKE MINES INC.
By:
Name:
Title:
F-9, III-5
/s/ Sybil E. Veenman
Sybil E. Veenman
Secretary
FORM F-3
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 8.
Indemnification of Directors and Officers
Pursuant to the limited liability company agreement of each of Barrick North America Finance LLC and Barrick Gold Financeco LLC
(collectively, the “Form F-3 Registrants” and each, a “Form F-3 Registrant”), each Form F-3 Registrant shall indemnify a member manager,
director, officer, employee or agent of the Form F-3 Registrant and certain other persons serving at the request of the Form F-3 Registrant in
related capacities against amounts paid and expenses incurred in connection with an action or proceeding to which he or she is, or is threatened
to be made, a party by reason of such position, if such person shall have acted in good faith and in a manner he or she reasonably believed to be
in or not opposed to the best interests of the Form F-3 Registrant, and, in any criminal proceedings, if such person had no reasonable cause to
believe his or her conduct was unlawful; provided that, in the case of actions brought by or in the right of the Form F-3 Registrant, no
indemnification shall be made with respect to any matter as to which such person shall have been adjudged to be liable to the Form F-3
Registrant unless and only to the extent that the adjudicating court determines that such indemnification is proper under the circumstances.
The directors and officers of the Form F-3 Registrants are insured under policies maintained by the Form F-9 Registrant, within the limits
and subject to the limitations of the policies, against certain liabilities incurred by them in their capacities as such, including, among other
things, certain liabilities under the Securities Act of 1933.
Item 9.
Exhibits
The exhibits to this registration statement are listed in the exhibit index, which appears elsewhere herein.
Item 10.
Undertakings
Each of the undersigned Form F-3 Registrants hereby undertakes:
(a)(1) To file, during any period in which offers or sales of the registered securities are being made, a post-effective amendment to this
Registration Statement:
(i) to include any prospectus required by Section 10(a)(3) of the Securities Act of 1933;
(ii) to reflect in the prospectus any facts or events arising after the effective date of the Registration Statement (or the most recent
post-effective amendment thereof) that, individually or in the aggregate, represent a fundamental change in the information set forth in the
Registration Statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering
range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume
and price represent no more than a 20 percent change in the maximum aggregate offering price set forth in the “Calculation of Registration
Fee” table in the effective Registration Statement; and
(iii) to include any material information with respect to the plan of distribution not previously disclosed in the Registration
Statement or any material change to such information in the Registration Statement;
Provided, however , that:
F-3, II-1
Paragraphs (a)(1)(i), (a)(1)(ii) and (a)(1)(iii) of this section do not apply if the information required to be included in a
post-effective amendment by those paragraphs is contained in reports filed with or furnished to the Commission by the Form F-3 Registrant or
the Form F-9 Registrant pursuant to Section 13 or 15(d) of the Exchange Act that are incorporated by reference in the Registration Statement or
is contained in a form of prospectus filed pursuant to Rule 424(b) that is part of the Registration Statement.
(2) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the
termination of the offering.
(4) That, for the purpose of determining liability under the Securities Act of 1933 to any purchaser:
(A) Each prospectus filed by the Form F-3 Registrant pursuant to Rule 424(b)(3) shall be deemed to be part of the Registration
Statement as of the date the filed prospectus was deemed part of and included in the Registration Statement; and
(B) Each prospectus required to be filed pursuant to Rule 424(b)(2), (b)(5), or (b)(7) as part of a registration statement in reliance on
Rule 430B relating to an offering made pursuant to Rule 415(a)(1)(i), (vii), or (x) for the purpose of providing the information required by
section 10(a) of the Securities Act of 1933 shall be deemed to be part of and included in the Registration Statement as of the earlier of the date
such form of prospectus is first used after effectiveness or the date of the first contract of sale of securities in the offering described in the
prospectus. As provided in Rule 430B, for liability purposes of the issuer and any person that is at that date an underwriter, such date shall be
deemed to be a new effective date of the Registration Statement relating to the securities in the Registration Statement to which that prospectus
relates, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. Provided , however , that no
statement made in a registration statement or prospectus that is part of the Registration Statement or made in a document incorporated or
deemed incorporated by reference into the Registration Statement or prospectus that is part of the Registration Statement will, as to a purchaser
with a time of contract of sale prior to such effective date, supersede or modify any statement that was made in the Registration Statement or
prospectus that was part of the Registration Statement or made in any such document immediately prior to such effective date; or
(5) That, for the purpose of determining liability of the Form F-3 Registrant under the Securities Act of 1933 to any purchaser in the
initial distribution of the securities, in a primary offering of securities of the Form F-3 Registrant pursuant to this Registration Statement,
regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by
means of any of the following communications, the Form F-3 Registrant will be a seller to the purchaser and will be considered to offer or sell
such securities to such purchaser:
(i) Any preliminary prospectus or prospectus of the Form F-3 Registrant relating to the offering required to be filed pursuant to Rule
424;
(ii) Any free writing prospectus relating to the offering prepared by or on behalf of the Form F-3 Registrant or used or referred to by
the Form F-3 Registrant:
(iii) The portion of any other free writing prospectus relating to the offering containing material information about the Form F-3
Registrant or its securities provided by or on behalf of the Form F-3 Registrant; and
(iv) Any other communication that is an offer in the offering made by the Form F-3 Registrant to the purchaser.
F-3, II-2
(b) That, for purposes of determining any liability under the Securities Act of 1933, each filing of the Form F-3 Registrant’s or the Form
F-9 Registrant’s annual report pursuant to Section 13(a) or Section 15(d) of the Exchange Act that is incorporated by reference in the
Registration Statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling
persons of a Form F-3 Registrant pursuant to the foregoing provisions set forth in Item 8 above, or otherwise, such Registrant has been advised
that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act
of 1933 and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by such
Registrant of expenses incurred or paid by a director, officer or controlling person of such Registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, such Registrant
will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as expressed in the Securities Act of 1933 and will be governed by the final
adjudication of such issue.
F-3, II-3
Form F-3
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, each of the Form F-3 Registrants certifies that it has reasonable grounds to
believe that it meets all of the requirements for filing on this Form F-3 and that it has reasonable grounds to believe that the Debt Securities will
be rated “investment grade” by the time of sale of such Debt Securities pursuant to this registration statement, and has duly caused this
registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Toronto, Province of Ontario,
Canada, on this 30 day of May, 2008.
th
BARRICK NORTH AMERICA FINANCE LLC
(Form F-3 Registrant)
By:
Name:
Title:
/s/ Gregory A. Lang
Gregory A. Lang
Chief Executive Officer, President and
Director
BARRICK GOLD FINANCECO LLC
(Form F-3 Registrant)
By:
Name:
Title:
F-3, II-4
/s/ Blake L. Meason
Blake L. Meason
Chief Financial Officer
SIGNATURES WITH RESPECT TO BARRICK NORTH AMERICA FINANCE LLC
POWERS OF ATTORNEY
Each person whose signature appears below constitutes and appoints each of Sybil E. Veenman, James W. Mavor and Jamie C. Sokalsky
as his or her true and lawful attorney-in-fact and agent, each acting alone, with full power of substitution and resubstitution, for him or her and
in his or her name, place and stead, in any and all capacities, to sign any or all amendments (including post-effective amendments) to this
registration statement, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorneys-in-fact and agents, each acting alone, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he or she might or could
do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, each acting alone, or his or her substitute or substitutes,
may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act, this registration statement has been signed by the following persons in the capacities
and on the dates indicated.
Signature
/s/ Gregory Anthony Lang
Gregory Anthony Lang
Title with Form F-3 Registrant
Date
Chief Executive Officer, President and Director
(Principal Executive Officer)
May 30, 2008
Chief Financial Officer and Director
(Principal Financial and Accounting Officer)
May 30, 2008
/s/ Paul Judd
Paul Judd
Director
May 30, 2008
/s/ Jamie Calvin Sokalsky
Jamie Calvin Sokalsky
Director
May 30, 2008
/s/ Blake Lawrence Measom
Blake Lawrence Measom
F-3, II-5
SIGNATURES WITH RESPECT TO BARRICK GOLD FINANCECO LLC
POWERS OF ATTORNEY
Each person whose signature appears below constitutes and appoints each of Sybil E. Veenman, James W. Mavor and Jamie C. Sokalsky
as his or her true and lawful attorney-in-fact and agent, each acting alone, with full power of substitution and resubstitution, for him or her and
in his or her name, place and stead, in any and all capacities, to sign any or all amendments (including post-effective amendments) to this
registration statement, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorneys-in-fact and agents, each acting alone, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he or she might or could
do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, each acting alone, or his or her substitute or substitutes,
may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act, this registration statement has been signed by the following persons in the capacities
indicated.
Signature
/s/ Gregory Anthony Lang
Gregory Anthony Lang
Title with Form F-3 Registrant
Date
Chief Executive Officer, President and Director
(Principal Executive Officer)
May 30, 2008
Chief Financial Officer and Director
(Principal Financial and Accounting Officer)
May 30, 2008
/s/ Paul Judd
Paul Judd
Director
May 30, 2008
/s/ Jamie Calvin Sokalsky
Jamie Calvin Sokalsky
Director
May 30, 2008
/s/ Blake Lawrence Measom
Blake Lawrence Measom
F-3, II-6
INDEX TO EXHIBITS
Exhibits to Form F-9
Exhibit No.
4.1
The annual information form of Barrick Gold Corporation dated March 27, 2008 for the year ended December 31, 2007
(incorporated by reference to Exhibit 99.1 to Barrick Gold Corporation’s Form 40-F, (Commission File No. 1-9059) filed
with the Commission on March 28, 2008 (the “Form 40-F”)).
4.2
The comparative audited consolidated financial statements of Barrick Gold Corporation and the notes thereto for the year
ended December 31, 2007 prepared in accordance with U.S. GAAP, together with the report of the auditors thereon
(incorporated by reference to Exhibit 99.3 to Barrick Gold Corporation’s Form 40-F (Commission File No. 1-9059) filed
with the Commission on March 28, 2008) and Management’s Discussion and Analysis for the year ended December 31,
2007 (incorporated by reference to Exhibit 99.4 to Barrick Gold Corporation’s Form 40-F (Commission File No. 1-9059)
filed with the Commission on March 28, 2008), found on pages 25 through 76 of Barrick Gold Corporation’s 2007 annual
report.
4.3
The comparative unaudited interim consolidated financial statements of Barrick Gold Corporation and the notes thereto for
the three months ended March 31, 2008 prepared in accordance with U.S. GAAP, together with Management’s Discussion
and Analysis of financial and operating results for the three months ended March 31, 2008 (incorporated by reference to
Exhibit 99.1 to Barrick Gold Corporation’s Form 6-K (Commission File No. 1-9059) furnished to the Commission on May
9, 2008), found on pages 8 through 28 of Barrick Gold Corporation’s first quarter report.
4.4
The management information circular of Barrick Gold Corporation dated March 27, 2008 prepared for the annual and
special meeting of Barrick Gold Corporation’s shareholders held on May 6, 2008, other than the sections entitled “Report on
Executive Compensation” and “Performance Graph” (incorporated by reference to Exhibit 99.1 to Barrick Gold
Corporation’s Form 6-K (Commission File No. 1-9059), excluding such sections, furnished to the Commission on April 8,
2008).
4.5
The material change report of Barrick Gold Corporation dated March 3, 2008 regarding Barrick Gold Corporation’s
agreement with Kennecott Explorations (Australia) Ltd., a subsidiary of Rio Tinto PLC, to purchase its 40% interest in the
Cortez Joint Venture in Nevada (incorporated by reference to Exhibit 99.1 to Barrick Gold Corporation’s Form 6-K
(Commission File No. 1-9059) furnished to the Commission on March 4, 2008).
4.6
The material change report of Barrick Gold Corporation dated April 2, 2008 regarding Barrick Gold Corporation’s Chief
Executive Officer taking a leave of absence (incorporated by reference to Exhibit 99.1 to Barrick Gold Corporation’s Form
6-K (Commission File No. 1-9059) furnished to the Commission on April 2, 2008).
5.1
Consent of PricewaterhouseCoopers LLP.
5.2
Consent of Davies Ward Phillips & Vineberg LLP.
6.1
Powers of Attorney (included on the signature pages of this Registration Statement on Form F-9).
7.1
Form of Indenture.
7.2
Statement of Eligibility of the Trustee on Form T-1.
Exhibits to Form F-3
Exhibit No.
1.1±
Form of Underwriting Agreement.
4.1
Form of Indenture (included as Exhibit 7.1 of Exhibits to Form F-9).
4.2
Form of Security (included as Exhibit A to Exhibit 4.1 of Exhibits to Form F-3).
5.3
Opinion and consent of Shearman & Sterling LLP.
23.1
Consent of Shearman & Sterling LLP (included in Exhibit 5.3 of Exhibits to Form F-3).
23.2
Consent of PricewaterhouseCoopers LLP (included as Exhibit 5.1 of Exhibits to Form F-9).
23.3
Consent of Davies Ward Phillips & Vineberg LLP (included as Exhibit 5.2 of Exhibits to Form F-9).
24.1
Powers of Attorney (included on the signature pages to this Registration Statement on Form F-3).
25.1
Form T-1 Statement of Eligibility of Trustee.
25.2
Form T-1 Statement of Eligibility of Trustee.
±
To be filed as an exhibit to a report pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934.
Exhibit 5.1
Consent of Independent Accountants
We make reference to the Registration Statement on Forms F-3 and F-9 to be filed with the United States Securities and Exchange Commission
on May 30, 2008. We hereby consent to the incorporation by reference therein of our report dated February 20, 2008 on the consolidated
balance sheets of Barrick Gold Corporation as at December 31, 2007 and 2006 and the consolidated statements of income, cash flows,
shareholders’ equity and comprehensive income for each of the years in the three year period ended December 31, 2007 prepared in accordance
with US generally accepted accounting principles which appear in Barrick Gold Corporation’s 2007 Annual Report. We also consent to the
reference to us under the heading “Experts” in such Registration Statement.
We also hereby consent to the inclusion of our report to the directors dated February 20, 2008 except for Note 29 which is as of May 30, 2008
on the consolidated balance sheets of Barrick Gold Corporation as at December 31, 2007 and 2006 and the consolidated statements of income,
cash flows, shareholders’ equity and comprehensive income for each of the years in the three year period ended December 31, 2007 prepared in
accordance with US generally accepted accounting principles
/s/ PricewaterhouseCoopers LLP
Chartered Accountants
Toronto, Ontario
May 30, 2008
Exhibit 5.2
44th Floor
1 First Canadian Place
Toronto Canada M5X 1B1
Tel 416 863 0900
Fax 416 863 0871
www.dwpv.com
May 30, 2008
Barrick Gold Corporation
Brookfield Place, Canada Trust Tower
161 Bay Street, Suite 3700
Toronto, Ontario
M5J 2S1
Barrick North America Finance LLC/
Barrick Gold Financeco LLC
136 East South Temple
Suite 1800
Salt Lake City
Utah 84111-1135
Dear Sirs/Mesdames:
Re:
Registration Statement on Form F-9 and Form F-3 for Barrick Gold Corporation/
Barrick North America Finance LLC/Barrick Gold Financeco LLC
We have acted as Canadian counsel to Barrick Gold Corporation, Barrick North America Finance LLC and Barrick Gold Financeco LLC (the
“Registrants”) in connection with the registration statement on Form F-9 and Form F-3 (the “Registration Statement”) being filed today by the
Registrants with the Securities and Exchange Commission under the United States Securities Act of 1933, as amended.
We acknowledge that we are referred to under the headings “Description of Debt Securities and The Guarantees—Enforceability of
Judgments” and “Legal Matters” in the prospectus forming a part of the Registration Statement and we hereby consent to such use of our name
in the Registration Statement.
Yours very truly,
/s/
Davies Ward Phillips & Vineberg LLP
Exhibit 5.3
May 30, 2008
Barrick Gold Corporation
Brookfield Place, TD Canada Trust Tower
Suite 3700
161 Bay Street, P.O. Box 212
Toronto, Ontario M5J 2S1
Barrick North America Finance LLC
Barrick Gold Financeco LLC
136 East South Temple
Suite 1800
Salt Lake City, Utah 84111-1134
Ladies and Gentlemen:
We have acted as United States counsel to Barrick North America Finance LLC and Barrick Gold Financeco LLC , each a Delaware limited
liability company (collectively, the “ Finance Subsidiaries ” and individually, each a “ Finance Subsidiary ”) and Barrick Gold Corporation, a
corporation organized under the laws of the Province of Ontario (“ BGC ”), in connection with the preparation and filing with the Securities
and Exchange Commission (the “ Commission ”) under the Securities Act of 1933, as amended (the “ Act ”), of a combined registration
statement on Form F-9 and Form F-3 (the “ Registration Statement ”) relating to the offering, from time to time, by the Finance Subsidiaries
and BGC of debt securities (the “ Debt Securities ”) in an aggregate principal amount of up to US$2,000,000,000 (or the equivalent in other
currencies or currency units), as set forth in the prospectus contained in the Registration Statement (the “ Prospectus ”). Debt Securities offered
by the Finance Subsidiaries will be fully and unconditionally guaranteed by BGC (the “ Guarantees ”).
The Debt Securities will be issued in one or more series pursuant to an indenture in substantially the form of Exhibit 4.1 to the Registration
Statement on Form F-3 (the “ Indenture ”) to be entered into among the Finance Subsidiaries, BGC and the trustee party thereto, as Trustee (the
“ Trustee ”).
In that connection, we have reviewed the originals, or copies identified to our satisfaction, of the following documents:
(a) The Registration Statement.
(b) The Prospectus.
(c) The form of Indenture.
(d) The form of security filed as Exhibit 4.2 to the Registration Statement on Form F-3.
(e) Such corporate records, certificates of public officials, officers and other persons, and other documents, agreements and instruments,
as we have deemed necessary as a basis for the opinions expressed below.
In our review of the documents, we have assumed:
(a) The genuineness of all signatures.
(b) The authenticity of the originals of the documents submitted to us.
(c) The conformity to authentic originals of any documents submitted to us as copies.
(d) As to matters of fact, the truthfulness of the representations made in certificates of public officials and officers of the Finance
Subsidiaries and BGC.
We have not independently established the validity of the foregoing assumptions.
Our opinion set forth below is limited to the law of the State of New York and the federal laws of the United States, and we express no opinion
herein concerning any other law.
Based upon the foregoing, and upon such other investigation as we have deemed necessary and subject to the qualifications set forth below, we
are of the opinion that:
When (i) the Indenture has been duly authorized, executed and delivered by the parties thereto and qualified under the United States Trust
Indenture Act of 1939, as amended, (ii) the Debt Securities and the Guarantees have been duly authorized, executed and delivered by
BGC and the Finance Subsidiaries, as applicable, and (iii) the Debt Securities have been duly authenticated by the Trustee, the Indenture,
the Debt Securities and the Guarantees, as applicable, will be the legal, valid and binding obligations of BGC and the Finance
Subsidiaries party thereto, enforceable against such parties in accordance with their terms and entitled to the benefits of the Indenture.
The opinion set forth above is subject to the following qualifications:
(a) Our opinion is subject to the effect of any applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
creditors’ rights generally (including without limitation all laws relating to fraudulent transfers).
(b) Our opinion is subject to the effect of general principles of equity, including without limitation, concepts of materiality,
reasonableness, good faith and fair dealing (regardless of whether considered in a proceeding in equity or at law).
(c) With respect to Debt Securities denominated in a currency other than United States dollars, if any, we express no opinion as to
whether a court would award a judgment in a currency other than United States dollars.
We understand that this opinion is to be used in connection with the Registration Statement. We hereby consent to the filing of this opinion as
an exhibit to the Registration Statement and to the use of our name in the Prospectus under the caption “Legal Matters.” In giving this consent,
we do not hereby admit that we are in the category of persons whose consent is required under Section 7 of the Securities Act or the rules and
regulations of the Commission promulgated thereunder.
Very truly yours,
/s/ SHEARMAN & STERLING LLP
Exhibit 7.1
BARRICK GOLD CORPORATION
BARRICK GOLD FINANCECO LLC
AND
BARRICK NORTH AMERICA FINANCE LLC
as Issuers
BARRICK GOLD CORPORATION
as Guarantor
AND
THE BANK OF NEW YORK
as Trustee
Indenture
Dated as of
, 2008
BARRICK GOLD CORPORATION
BARRICK GOLD FINANCECO LLC
BARRICK NORTH AMERICA FINANCE LLC
Reconciliation and tie between Trust Indenture Act
of 1939 and Indenture, dated as of
, 2008
Trust Indenture
Act Section
§ 310(a)(1)
(a)(2)
(b)
§ 312(c)
§ 314(a)
(a)(4)
(c)(1)
(c)(2)
(e)
§ 315(b)
§ 316(a)(last sentence)
(a)(1)(A)
(a)(1)(B)
(b)
(c)
§ 317(a)(1)
(a)(2)
(b)
§ 318(a)
Indenture Section
607
607
608
701
703
1004
102
102
102
601
101 (“Outstanding”)
502, 512
513
508
104(e)
503
504
1003
111
TABLE OF CONTENTS
*
Page
PARTIES
RECITALS
1
1
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
SECTION 101. Definitions
“Act”
“Additional Amounts”
“Affiliate”
“Authenticating Agent”
“Authorized Newspaper”
“Bankruptcy Law”
“Bankruptcy Order”
“Bearer Security”
“Board of Directors”
“Board Resolution”
“Business Day”
“calculation period”
“Canadian Taxes”
“Clearstream”
“Commission”
“Common Depositary”
“Company”
“Company Securities”
“Component Currency”
“Consolidated Net Tangible Assets”
“Conversion Date”
“Conversion Event”
“Corporate Trust Office”
“corporation”
“covenant defeasance”
“coupon”
“Currency”
“Custodian”
“Default”
“Defaulted Interest”
“defeasance”
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Note: This table of contents shall not, for any purpose, be deemed to be a part of the Indenture.
i
“Depositary”
“Dollar” or “$”
“Dollar Equivalent of the Currency Unit”
“Dollar Equivalent of the Foreign Currency”
“Election Date”
“Euro”
“Euroclear”
“Event of Default”
“Exchange Date”
“Exchange Rate Agent”
“Exchange Rate Officer’s Certificate”
“Excluded Holder”
“Extension Notice”
“Extension Period”
“Federal Bankruptcy Code”
“Final Maturity”
“Financial Instrument Obligations”
“First Currency”
“Foreign Currency”
“Funded Debt”
“Governmental Authority”
“Government Obligations”
“Guarantee”
“Guaranteed Securities”
“Guarantor”
“Holder”
“Indebtedness”
“Indenture”
“Indexed Security”
“interest”
“Interest Payment Date”
“Issuer”
“Issuer Request” or “Issuer Order”
“Judgment Currency”
“Lien”
“mandatory sinking fund payment”
“Market Exchange Rate”
“Maturity”
“Non-Recourse Debt”
“North American Subsidiary”
“Officers’ Certificate”
“Opinion of Counsel”
“Optional Reset Date”
“optional sinking fund payment”
“Original Issue Discount Security”
“Original Stated Maturity”
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ii
“Other Currency”
“Outstanding”
“Paying Agent”
“Permitted Liens”
“Person”
“Place of Payment”
“Predecessor Security”
“Principal Asset”
“Purchase Money Mortgage”
“rate(s) of exchange”
“Redemption Date”
“Redemption Price”
“Registered Security”
“Regular Record Date”
“Repayment Date”
“Repayment Price”
“Required Currency”
“Reset Notice”
“Responsible Officer”
“Restricted Subsidiary”
“Securities”
“Security Register”
“Security Registrar”
“Specified Amount”
“Special Record Date”
“Stated Maturity”
“Subsidiary”
“Subsidiary Issuer”
“Subsequent Interest Period”
“Trust Indenture Act”
“Trustee”
“United States”
“U.S. GAAP”
“Valuation Date”
“Vice President”
“Voting Stock”
“Yield to Maturity”
SECTION 102. Compliance Certificates and Opinions
SECTION 103. Form of Documents Delivered to Trustee
SECTION 104. Acts of Holders
SECTION 105. Notices, etc. to Trustee, Company, Subsidiary Issuers and Guarantor
SECTION 106. Notice to Holders; Waiver
SECTION 107. Effect of Headings and Table of Contents
SECTION 108. Successors and Assigns
SECTION 109. Separability Clause
SECTION 110. Benefits of Indenture
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SECTION 111. Governing Law
SECTION 112. Legal Holidays
SECTION 113. Agent for Service; Submission to Jurisdiction; Waiver of Immunities
SECTION 114. Conversion of Currency
SECTION 115. Currency Equivalent
SECTION 116. No Recourse Against Others
SECTION 117. Multiple Originals
SECTION 118. Conflict with Trust Indenture Act
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ARTICLE TWO
SECURITY FORMS
SECTION 201. Forms Generally
SECTION 202. Form of Trustee’s Certificate of Authentication
SECTION 203. Securities Issuable in Global Form
SECTION 204. Guarantee by Guarantor; Form of Guarantee
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24
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25
ARTICLE THREE
THE SECURITIES
SECTION 301. Amount Unlimited; Issuable in Series
SECTION 302. Denominations
SECTION 303. Execution, Authentication, Delivery and Dating
SECTION 304. Temporary Securities
SECTION 305. Registration, Registration of Transfer and Exchange
SECTION 306. Mutilated, Destroyed, Lost and Stolen Securities
SECTION 307. Payment of Principal and Interest; Interest Rights Preserved; Optional Interest Reset
SECTION 308. Optional Extension of Stated Maturity
SECTION 309. Persons Deemed Owners
SECTION 310. Cancellation
SECTION 311. Computation of Interest
SECTION 312. Currency and Manner of Payments in Respect of Securities
SECTION 313. Appointment and Resignation of Successor Exchange Rate Agent
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34
37
41
42
45
45
46
47
47
50
ARTICLE FOUR
SATISFACTION AND DISCHARGE
SECTION 401. Satisfaction and Discharge of Indenture
SECTION 402. Application of Trust Money
51
52
ARTICLE FIVE
REMEDIES
SECTION 501. Events of Default
SECTION 502. Acceleration of Maturity; Rescission and Annulment
SECTION 503. Collection of Indebtedness and Suits for Enforcement by Trustee
SECTION 504. Trustee May File Proofs of Claim
SECTION 505. Trustee May Enforce Claims Without Possession of Securities
iv
52
54
56
57
57
SECTION 506. Application of Money Collected
SECTION 507. Limitation on Suits
SECTION 508. Unconditional Right of Holders to Receive Principal, Premium and Interest
SECTION 509. Restoration of Rights and Remedies
SECTION 510. Rights and Remedies Cumulative
SECTION 511. Delay or Omission Not Waiver
SECTION 512. Control by Holders
SECTION 513. Waiver of Past Defaults
SECTION 514. Waiver of Stay or Extension Laws
SECTION 515. Undertaking for Costs
58
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59
60
60
60
61
61
ARTICLE SIX
THE TRUSTEE
SECTION 601. Notice of Defaults
SECTION 602. Certain Rights of Trustee
SECTION 603. Trustee Not Responsible for Recitals or Issuance of Securities
SECTION 604. May Hold Securities
SECTION 605. Money Held in Trust
SECTION 606. Compensation and Reimbursement
SECTION 607. Corporate Trustee Required; Eligibility; Conflicting Interests
SECTION 608. Resignation and Removal; Appointment of Successor
SECTION 609. Acceptance of Appointment by Successor
SECTION 610. Merger, Conversion, Consolidation or Succession to Business
SECTION 611. Appointment of Authenticating Agent
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66
67
68
ARTICLE SEVEN
HOLDERS’ LISTS AND REPORTS BY TRUSTEE, ISSUERS AND GUARANTOR
SECTION 701. Disclosure of Names and Addresses of Holders
SECTION 702. Reports by Trustee
SECTION 703. Reports by the Company
SECTION 704. The Company to Furnish Trustee Names and Addresses of Holders
69
69
70
71
ARTICLE EIGHT
CONSOLIDATION, AMALGAMATION, MERGER, CONVEYANCE,
TRANSFER OR LEASE
SECTION 801. Issuers and Guarantor May Amalgamate or Consolidate, etc., Only on Certain Terms
SECTION 802. Successor Person Substituted
SECTION 803. Securities to Be Secured in Certain Events
71
73
73
ARTICLE NINE
SUPPLEMENTAL INDENTURES
SECTION 901. Supplemental Indentures Without Consent of Holders
SECTION 902. Supplemental Indentures with Consent of Holders
v
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75
SECTION 903. Execution of Supplemental Indentures
SECTION 904. Effect of Supplemental Indentures
SECTION 905. Conformity with Trust Indenture Act
SECTION 906. Reference in Securities to Supplemental Indentures
SECTION 907. Notice of Supplemental Indentures
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ARTICLE TEN
COVENANTS
SECTION 1001. Payment of Principal, Premium, if any, and Interest
SECTION 1002. Maintenance of Office or Agency
SECTION 1003. Money for Securities Payments to Be Held in Trust
SECTION 1004. Statement as to Compliance
SECTION 1005. Additional Amounts
SECTION 1006. Payment of Taxes and Other Claims
SECTION 1007. Maintenance of Properties
SECTION 1008. Corporate Existence
SECTION 1009. Limitation on Liens
SECTION 1010. Waiver of Certain Covenants
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ARTICLE ELEVEN
REDEMPTION OF SECURITIES
SECTION 1101. Applicability of Article
SECTION 1102. Election to Redeem; Notice to Trustee
SECTION 1103. Selection by Trustee of Securities to Be Redeemed
SECTION 1104. Notice of Redemption
SECTION 1105. Deposit of Redemption Price
SECTION 1106. Securities Payable on Redemption Date
SECTION 1107. Securities Redeemed in Part
SECTION 1108. Tax Redemption
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88
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ARTICLE TWELVE
SINKING FUNDS
SECTION 1201. Applicability of Article
SECTION 1202. Satisfaction of Sinking Fund Payments with Securities
SECTION 1203. Redemption of Securities for Sinking Fund
89
90
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ARTICLE THIRTEEN
REPAYMENT AT OPTION OF HOLDERS
SECTION 1301. Applicability of Article
SECTION 1302. Repayment of Securities
SECTION 1303. Exercise of Option
SECTION 1304. When Securities Presented for Repayment Become Due and Payable
SECTION 1305. Securities Repaid in Part
vi
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ARTICLE FOURTEEN
DEFEASANCE AND COVENANT DEFEASANCE
SECTION 1401. Option to Effect Defeasance or Covenant Defeasance
SECTION 1402. Defeasance and Discharge
SECTION 1403. Covenant Defeasance
SECTION 1404. Conditions to Defeasance or Covenant Defeasance
SECTION 1405. Deposited Money and Government Obligations to Be Held in Trust; Other Miscellaneous Provisions
SECTION 1406. Reinstatement
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ARTICLE FIFTEEN
GUARANTEE OF GUARANTEED SECURITIES
SECTION 1501. Guarantee
SECTION 1502. Execution and Delivery of Guarantees
SECTION 1503. Notice to Trustee
SECTION 1504. This Article Not to Prevent Events of Default
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100
100
ARTICLE SIXTEEN
MEETINGS OF HOLDERS OF SECURITIES
SECTION 1601. Purposes for Which Meetings May Be Called
SECTION 1602. Call, Notice and Place of Meetings
SECTION 1603. Persons Entitled to Vote at Meetings
SECTION 1604. Quorum; Action
SECTION 1605. Determination of Voting Rights; Conduct and Adjournment of Meetings
SECTION 1606. Counting Votes and Recording Action of Meetings
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101
101
102
103
TESTIMONIUM
104
SIGNATURES
104
FORM OF SECURITY
A-3
FORMS OF CERTIFICATION
B-1
vii
INDENTURE, dated as of
, 2008, between BARRICK GOLD CORPORATION, a corporation duly organized and
existing under the laws of the Province of Ontario (herein called the “Company”), having its principal office at Brookfield Place, Canada Trust
Tower, Suite 3700, 161 Bay Street, Toronto, Ontario, Canada M5J 2S1, BARRICK GOLD FINANCECO LLC, a limited liability company
duly organized and existing under the laws of the State of Delaware, BARRICK NORTH AMERICA FINANCE LLC, a limited liability
company duly organized and existing under the laws of the State of Delaware (Barrick Gold Financeco LLC and Barrick North America
Finance LLC herein each called a “Subsidiary Issuer” and collectively the “Subsidiary Issuers”, and together with the Company in its capacity
as an Issuer of Securities, the “Issuers” and each an “Issuer”), having their principal offices at 136 East South Temple, Suite 1800, Salt Lake
City, Utah 84111-1135, BARRICK GOLD CORPORATION, in its capacity as guarantor of Securities issued by the applicable Subsidiary
Issuer (the “Guarantor”) and THE BANK OF NEW YORK, a New York banking corporation, as trustee (herein called the “Trustee”).
RECITALS
Each of the Issuers has duly authorized the execution and delivery of this Indenture to provide for the issuance from time to time of
its unsecured debentures, notes or other evidences of indebtedness (herein called the “Securities”), which may be convertible into or
exchangeable for any securities of any Person (including the Issuers and the Guarantor), to be issued in one or more series as in this Indenture
provided.
The Guarantor has duly authorized the execution and delivery of this Indenture, and the making of the Guarantees pursuant to this
Indenture (the “Guarantees”).
This Indenture is subject to the provisions of the Trust Indenture Act of 1939, as amended, that are required to be part of this
Indenture and shall, to the extent applicable, be governed by such provisions.
All things necessary to make this Indenture a valid agreement of the Issuers and the Guarantor, in accordance with its terms, have
been done.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the Securities by the Holders thereof, it is mutually covenanted and
agreed, for the equal and proportionate benefit of all Holders of the Securities or of series thereof, as follows:
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
SECTION 101. Definitions .
For all purposes of this Indenture, except as otherwise expressly provided or unless the context otherwise requires:
(1) the terms defined in this Article have the meanings assigned to them in this Article and include the plural as well as the singular;
1
(2) all other terms used herein which are defined in the Trust Indenture Act, either directly or by reference therein, have the
meanings assigned to them therein, and the terms “cash transaction” and “self-liquidating paper”, as used in TIA Section 311, shall have
the meanings assigned to them in the rules of the Commission adopted under the Trust Indenture Act;
(3) all accounting terms not otherwise defined herein have the meanings assigned to them in accordance with generally accepted
accounting principles, and, except as otherwise herein expressly provided, the term “generally accepted accounting principles” with
respect to any computation required or permitted hereunder shall mean such accounting principles used in the Company’s annual
financial statements contained in the Company’s annual report delivered to its shareholders in respect of the fiscal year immediately prior
to the date of such computation; and
(4) the words “herein”, “hereof” and “hereunder” and other words of similar import refer to this Indenture as a whole and not to any
particular Article, Section or other subdivision.
Certain terms, used principally in Article Three, are defined in that Article.
“Act”, when used with respect to any Holder, has the meaning specified in Section 104.
“Additional Amounts” has the meaning specified in Section 1005.
“Affiliate” of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or
indirect common control with such specified Person. For the purposes of this definition, “control” when used with respect to any specified
Person means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the terms “controlling” and “controlled” have meanings correlative to the foregoing.
“Authenticating Agent” means any Person appointed by the Trustee to act on behalf of the Trustee pursuant to Section 611 to
authenticate Securities.
“Authorized Newspaper” means a newspaper, in the English language or in an official language of the country of publication,
customarily published on each Business Day, whether or not published on Saturdays, Sundays or holidays, and of general circulation in each
place in connection with which the term is used or in the financial community of each such place. Where successive publications are required
to be made in Authorized Newspapers, the successive publications may be made in the same or in different newspapers in the same city
meeting the foregoing requirements and in each case on any Business Day.
“Bankruptcy Law” has the meaning specified in Section 501.
2
“Bankruptcy Order” has the meaning specified in Section 501.
“Bearer Security” means any Security except a Registered Security.
“Board of Directors” means the board of directors of an Issuer or the Guarantor, as the case may be, or any duly authorized
committee of such board.
“Board Resolution” means a copy of a resolution certified by the Secretary or an Assistant Secretary of an Issuer or the Guarantor,
as the case may be, to have been duly adopted by the Board of Directors and to be in full force and effect on the date of such certification, and
delivered to the Trustee.
“Business Day”, when used with respect to any Place of Payment or any other particular location referred to in this Indenture or in
the Securities, means, unless otherwise specified with respect to any Securities pursuant to Section 301, each Monday, Tuesday, Wednesday,
Thursday and Friday which is not a day on which banking institutions in that Place of Payment or other location are authorized or obligated by
law or executive order to close.
“calculation period” has the meaning specified in Section 311.
“Canadian Taxes” has the meaning specified in Section 1005.
“Clearstream” means Clearstream Banking, société anonyme, or its successor.
“Commission” means the U.S. Securities and Exchange Commission, as from time to time constituted, created under the Securities
Exchange Act of 1934, or, if at any time after the execution of this Indenture such Commission is not existing and performing the duties now
assigned to it under the Trust Indenture Act, then the body performing such duties at such time.
“Common Depositary” has the meaning specified in Section 304.
“Company” means the Person named as the “Company” in the first paragraph of this Indenture until a successor Person shall have
become such pursuant to the applicable provisions of this Indenture, and thereafter “Company” shall mean such successor Person. For purposes
of clarity, it is hereby understood and agreed that the Company is, where appropriate in the context, sometimes referred to herein as an
“Issuer”.
“Company Securities” means Securities issued by the Company and authenticated and delivered under this Indenture.
“Component Currency” has the meaning specified in Section 312.
“Consolidated Net Tangible Assets” means, at a particular date, the aggregate amount of assets (less applicable reserves and other
properly deductible items) shown on the most recent consolidated financial statements of the Company filed with or furnished to the
Commission by the Company (or, in the event that the Company is not required by law or pursuant to this Indenture to file reports with the
Commission, as set forth on the most recent
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consolidated financial statements provided to the Trustee) less (i) all current liabilities (excluding any portion constituting Funded Debt); (ii) all
goodwill, trade names, trademarks, patents, unamortized debt discount and expense and other like intangibles (excluding from intangibles, for
greater certainty, mineral rights, interests in mineral properties, deferred mining, acquisition, exploration and stripping costs and deferred
charges relating to hedging agreements); and (iii) appropriate adjustments on account of minority interests of other Persons holding shares of
any of the Subsidiaries, all as set forth on the most recent balance sheet of the Company and its consolidated Subsidiaries filed with or
furnished to the Commission by the Company (or, in the event that the Company is not required by law or pursuant to this Indenture to file
reports with the Commission, as set forth on the most recent consolidated financial statements provided to the Trustee) (but, in any event, as of
a date within 150 days of the date of determination) and computed in accordance with the accounting principles used in the Company’s annual
financial statements contained in the Company’s annual report delivered to its shareholders in respect of the fiscal year immediately prior to the
date of such computation which, on the date of this Indenture, is U.S. GAAP; provided that in no event shall any amount be deducted in respect
of unrealized mark-to-market adjustments (whether positive or negative and whether or not reflected in the Company’s consolidated financial
statements) relating to hedging and other financial risk management activities of the Company or any of its Subsidiaries (including, without
limitation, commodity, interest rate and foreign exchange trading and sales agreements).
“Conversion Date” has the meaning specified in Section 312(d).
“Conversion Event” means the cessation of use of (i) a Foreign Currency (other than the Euro or other currency unit) both by the
government of the country which issued such Currency and by a central bank or other public institution of or within the international banking
community for the settlement of transactions, (ii) the Euro or (iii) any currency unit (or composite currency) other than the Euro for the
purposes for which it was established.
“Corporate Trust Office” means the principal corporate trust office of the Trustee in the Borough of Manhattan, The City of New
York, at which at any particular time its corporate trust business may be administered, which office on the date of execution of this Indenture is
located at 101 Barclay Street – 4E, New York, New York 10286 or, in the case of Holders in Ontario, BNY Trust Company of Canada, Suite
1101, 4 King Street West, Toronto, Ontario M5H 1B6.
“corporation” includes corporations, associations, companies and business trusts, except that the term “corporation”, as used in the
definition of “Subsidiary”, shall only include corporations.
“covenant defeasance” has the meaning specified in Section 1403.
“coupon” means any interest coupon appertaining to a Bearer Security.
“Currency” means any currency or currencies, composite currency or currency unit or currency units, including, without limitation,
the Euro, issued by the government of one or more countries or by any recognized confederation or association of such governments.
“Custodian” has the meaning specified in Section 501.
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“Default” means any event which is, or after notice or passage of time or both would be, an Event of Default.
“Defaulted Interest” has the meaning specified in Section 307.
“defeasance” has the meaning specified in Section 1402.
“Depositary” means, with respect to the Securities of any series, The Depository Trust Company, or any successor thereto, or any
other Person designated pursuant to Section 301 with respect to the Securities of such series.
“Dollar” or “$” means a dollar or other equivalent unit in such coin or currency of the United States of America as at the time shall
be legal tender for the payment of public and private debts.
“Dollar Equivalent of the Currency Unit” has the meaning specified in Section 312(g).
“Dollar Equivalent of the Foreign Currency” has the meaning specified in Section 312(f).
“Election Date” has the meaning specified in Section 312(h).
“Euro” means the single currency of the participating member states from time to time of the European Union described in
legislation of the European Counsel for the operation of a single unified European currency (whether known as the Euro or otherwise).
“Euroclear” means Morgan Guaranty Trust Company of New York, Brussels Office, or its successor, as operator of the Euroclear
System.
“Event of Default” has the meaning specified in Section 501.
“Exchange Date” has the meaning specified in Section 304.
“Exchange Rate Agent” means, with respect to Securities of or within any series, unless otherwise specified with respect to any
Securities pursuant to Section 301, a New York Clearing House bank, designated pursuant to Section 313.
“Exchange Rate Officer’s Certificate” means a tested telex or a certificate setting forth (i) the applicable Market Exchange Rate and
(ii) the Dollar or Foreign Currency amounts of principal (and premium, if any) and interest, if any (on an aggregate basis and on the basis of a
Security having the lowest denomination principal amount determined in accordance with Section 302 in the relevant Currency), payable with
respect to a Security of any series on the basis of such Market Exchange Rate, sent (in the case of a telex) or signed (in the case of a certificate)
by the Treasurer, any Vice President or any Assistant Treasurer of the applicable Issuer.
“Excluded Holder” has the meaning specified in Section 1005.
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“Extension Notice” has the meaning specified in Section 308.
“Extension Period” has the meaning specified in Section 308.
“Federal Bankruptcy Code” means the Bankruptcy Act of Title 11 of the United States Code, as amended from time to time.
“Final Maturity” has the meaning specified in Section 308.
“Financial Instrument Obligations” means obligations arising under:
(i) interest rate swap agreements, forward rate agreements, floor, cap or collar agreements, futures or options, insurance or other
similar agreements or arrangements, or any combination thereof, entered into by a Person relating to interest rates or pursuant to which
the price, value or amount payable thereunder is dependent or based upon interest rates in effect from time to time or fluctuations in
interest rates occurring from time to time;
(ii) currency swap agreements, cross-currency agreements, forward agreements, floor, cap or collar agreements, futures or options,
insurance or other similar agreements or arrangements, or any combination thereof, entered into by a Person relating to currency
exchange rates or pursuant to which the price, value or amount payable thereunder is dependent or based upon currency exchange rates in
effect from time to time or fluctuations in currency exchange rates occurring from time to time; and
(iii) commodity swap, hedging or sales agreements, floor, cap or collar agreements, commodity futures or options or other similar
agreements or arrangements, or any combination thereof, entered into by a Person relating to one or more commodities or pursuant to
which the price, value or amount payable thereunder is dependent or based upon the price of one or more commodities in effect from time
to time or fluctuations in the price of one or more commodities occurring from time to time.
“First Currency” has the meaning specified in Section 115.
“Foreign Currency” means any Currency other than Currency of the United States of America.
“Funded Debt” as applied to any Person, means all indebtedness of such Person maturing after, or renewable or extendable at the
option of such Person beyond, twelve months from the date of determination.
“Governmental Authority” means any nation or government, any state, province, territory or other political subdivision thereof and
any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government.
“Government Obligations” means, unless otherwise specified with respect to any series of Securities pursuant to Section 301,
securities which are (a) direct obligations of the government which issued the Currency in which the Securities of a particular series are payable
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or (b) obligations of a Person controlled or supervised by and acting as an agency or instrumentality of the government which issued the
Currency in which the Securities of such series are payable, the payment of which is unconditionally guaranteed by such government, which, in
either case, are full faith and credit obligations of such government payable in such Currency and are not callable or redeemable at the option of
the issuer thereof and shall also include a depository receipt issued by a bank or trust company as custodian with respect to any such
Government Obligation or a specific payment of interest on or principal of any such Government Obligation held by such custodian for the
account of a holder of a depositary receipt, provided that (except as required by law) such custodian is not authorized to make any deduction
from the amount payable to the holder of such depository receipt from any amount received by the custodian in respect of the Government
Obligation or the specific payment of interest or principal of the Government Obligation evidenced by such depository receipt.
“Guarantee” means any guarantee of the Guarantor as endorsed on a Security authenticated and delivered pursuant to this Indenture
and shall include the Guarantee set forth in Section 1501 of this Indenture and all other obligations and covenants of the Guarantor contained in
this Indenture and any Guaranteed Securities.
“Guaranteed Securities” means Securities issued by the applicable Subsidiary Issuer and guaranteed by the Guarantor and
authenticated and delivered under this Indenture.
“Guarantor” means the Person named as “Guarantor” in the first paragraph of this Indenture until a successor Person shall have
become such pursuant to the applicable provisions of this Indenture, and thereafter “Guarantor” shall mean such successor Person.
“Holder” means, in the case of a Registered Security, the Person in whose name a Security is registered in the Security Register
and, in the case of a Bearer Security, the bearer thereof and, when used with respect to any coupon, shall mean the bearer thereof.
“Indebtedness” means obligations for money borrowed whether or not evidenced by notes, bonds, debentures or other similar
evidences of indebtedness.
“Indenture” means this instrument as originally executed and as it may from time to time be supplemented or amended by one or
more indentures supplemental hereto entered into pursuant to the applicable provisions hereof, and shall include the terms of particular series of
Securities established as contemplated by Section 301; provided , however , that, if at any time more than one Person is acting as Trustee under
this instrument, “Indenture” shall mean, with respect to any one or more series of Securities for which such Person is Trustee, this instrument as
originally executed or as it may from time to time be supplemented or amended by one or more indentures supplemental hereto entered into
pursuant to the applicable provisions hereof and shall include the terms of particular series of Securities for which such Person is Trustee
established as contemplated by Section 301, exclusive, however, of any provisions or terms which relate solely to other series of Securities for
which such Person is not Trustee, regardless of when such terms or provisions were adopted, and exclusive of any provisions or terms adopted
by means of one or more indentures supplemental hereto executed and delivered after such Person had become such Trustee but to which such
Person, as such Trustee, was not a party.
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“Indexed Security” means a Security the terms of which provide that the principal amount thereof payable at Stated Maturity may
be more or less than the principal face amount thereof at original issuance.
“interest”, when used with respect to an Original Issue Discount Security, shall be deemed to mean interest payable after Maturity at
the rate prescribed in such Original Issue Discount Security.
“Interest Payment Date”, when used with respect to any Security, means the Stated Maturity of an installment of interest on such
Security.
“Issuer” means any of the Persons named as “Issuer” in the first paragraph of this Indenture until a successor Person shall have
become such pursuant to the applicable provisions of this Indenture, and thereafter “Issuer” shall refer to such successor Person.
“Issuer Request” or “Issuer Order” means a written request or order signed in the name of the applicable Issuer by the Chairman,
the President or a Vice President, and by the Treasurer, an Assistant Treasurer, the Secretary or an Assistant Secretary, of such Issuer, and
delivered to the Trustee.
“Judgment Currency” has the meaning specified in Section 114.
“Lien” means any mortgage, lien, pledge, charge, security interest or encumbrance of any kind created, incurred or assumed in
order to secure payment of Indebtedness.
“mandatory sinking fund payment” has the meaning specified in Section 1201.
“Market Exchange Rate” means, unless otherwise specified with respect to any Securities pursuant to Section 301, (i) for any
conversion involving a currency unit on the one hand and Dollars or any Foreign Currency on the other, the exchange rate between the relevant
currency unit and Dollars or such Foreign Currency calculated by the method specified pursuant to Section 301 for the Securities of the
relevant series, (ii) for any conversion of Dollars into any Foreign Currency, the noon (New York City time) buying rate for such Foreign
Currency for cable transfers quoted in New York City as certified for customs purposes by the Federal Reserve Bank of New York and (iii) for
any conversion of one Foreign Currency into Dollars or another Foreign Currency, the spot rate at noon local time in the relevant market at
which, in accordance with normal banking procedures, the Dollars or Foreign Currency into which conversion is being made could be
purchased with the Foreign Currency from which conversion is being made from major banks located in either New York City, London or any
other principal market for Dollars or such purchased Foreign Currency, in each case determined by the Exchange Rate Agent. Unless otherwise
specified with respect to any Securities pursuant to Section 301, in the event of the unavailability of any of the exchange rates provided for in
the foregoing clauses (i), (ii) and (iii), the Exchange Rate Agent shall use, in its sole discretion and without liability on its part, such quotation
of the Federal Reserve Bank of New York as of the most recent available date, or quotations from one or more major banks in New York City,
London or another principal market for the Currency in question, or such other quotations as the Exchange Rate Agent shall deem appropriate.
Unless otherwise specified by the Exchange Rate
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Agent, if there is more than one market for dealing in any Currency by reason of foreign exchange regulations or otherwise, the market to be
used in respect of such Currency shall be that upon which a non-resident issuer of securities designated in such Currency would purchase such
Currency in order to make payments in respect of such Securities.
“Maturity”, when used with respect to any Security, means the date on which the principal of such Security or an installment of
principal becomes due and payable as therein or herein provided, whether at the Stated Maturity or by declaration of acceleration, notice of
redemption, notice of option to elect repayment or otherwise.
“Non-Recourse Debt” means Indebtedness to finance the creation, development, construction or acquisition of properties or assets
and any increases in or extensions, renewals or refinancings of such Indebtedness, provided that the recourse of the lender thereof (including
any agent, trustee, receiver or other Person acting on behalf of such entity) in respect of such Indebtedness is limited in all circumstances to the
properties or assets created, developed, constructed or acquired in respect of which such Indebtedness has been incurred, to the capital stock
and debt securities of the Restricted Subsidiary that acquires or owns such properties or assets and to the receivables, inventory, equipment,
chattels, contracts, intangibles and other assets, rights or collateral connected with the properties or assets created, developed, constructed or
acquired and to which such lender has recourse.
“North American Subsidiary” means any Subsidiary that maintains a substantial portion of its fixed assets within Canada or the
United States.
“Officers’ Certificate” means a certificate signed by the Chairman, the Chief Executive Officer, the President or a Vice President,
and by the Treasurer, an Assistant Treasurer, the Secretary or an Assistant Secretary of the applicable Issuer or the Guarantor, as the case may
be, and delivered to the Trustee.
“Opinion of Counsel” means a written opinion of counsel, who may be counsel for the applicable Issuer or the Guarantor, including
an employee of the applicable Issuer or the Guarantor, and who shall be acceptable to the Trustee.
“Optional Reset Date” has the meaning specified in Section 307.
“optional sinking fund payment” has the meaning specified in Section 1201.
“Original Issue Discount Security” means any Security which provides for an amount less than the principal amount thereof to be
due and payable upon a declaration of acceleration of the Maturity thereof pursuant to Section 502.
“Original Stated Maturity” has the meaning specified in Section 308.
“Other Currency” has the meaning specified in Section 115.
“Outstanding”, when used with respect to Securities, means, as of the date of determination, all Securities theretofore authenticated
and delivered under this Indenture, except :
(i) Securities theretofore cancelled by the Trustee or delivered to the Trustee for cancellation;
9
(ii) Securities, or portions thereof, for whose payment or redemption or repayment at the option of the Holder money in the
necessary amount has been theretofore deposited with the Trustee or any Paying Agent (other than the applicable Issuer or the Guarantor)
in trust or set aside and segregated in trust by the applicable Issuer or the Guarantor (if such Issuer or the Guarantor shall act as its own
Paying Agent) for the Holders of such Securities and any coupons appertaining thereto; provided that, if such Securities are to be
redeemed, notice of such redemption has been duly given pursuant to this Indenture or provision therefor satisfactory to the Trustee has
been made;
(iii) Securities, except to the extent provided in Sections 1402 and 1403, with respect to which the applicable Issuer has effected
defeasance and/or covenant defeasance as provided in Article Fourteen; and
(iv) Securities which have been paid pursuant to Section 306 or in exchange for or in lieu of which other Securities have been
authenticated and delivered pursuant to this Indenture, other than any such Securities in respect of which there shall have been presented
to the Trustee proof satisfactory to it that such Securities are held by a bona fide purchaser in whose hands such Securities are valid
obligations of the applicable Issuer;
provided , however , that in determining whether the Holders of the requisite principal amount of the Outstanding Securities have given any
request, demand, authorization, direction, notice, consent or waiver hereunder or are present at a meeting of Holders for quorum purposes, and
for the purpose of making the calculations required by TIA Section 313, (i) the principal amount of an Original Issue Discount Security that
may be counted in making such determination or calculation and that shall be deemed to be Outstanding for such purpose shall be equal to the
amount of principal thereof that would be (or shall have been declared to be) due and payable, at the time of such determination, upon a
declaration of acceleration of the maturity thereof pursuant to Section 502, (ii) the principal amount of any Security denominated in a Foreign
Currency that may be counted in making such determination or calculation and that shall be deemed Outstanding for such purpose shall be
equal to the Dollar equivalent, determined as of the date such Security is originally issued by the applicable Issuer as set forth in an Exchange
Rate Officer’s Certificate delivered to the Trustee, of the principal amount (or, in the case of an Original Issue Discount Security, the Dollar
equivalent as of such date of original issuance of the amount determined as provided in clause (i) above) of such Security, (iii) the principal
amount of any Indexed Security that may be counted in making such determination or calculation and that shall be deemed outstanding for such
purpose shall be equal to the principal face amount of such Indexed Security at original issuance, unless otherwise provided with respect to
such Security pursuant to Section 301, and (iv) Securities owned by the applicable Issuer, the Guarantor or any other obligor upon the
Securities or any Affiliate of the applicable Issuer, the Guarantor or of such other obligor shall be disregarded and deemed not to be
Outstanding, except that, in determining whether the Trustee shall be protected in making such calculation or in relying upon any such request,
demand, authorization, direction, notice, consent or waiver, only Securities which the Trustee knows to be so owned shall be so disregarded.
Securities so owned which
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have been pledged in good faith may be regarded as Outstanding if the pledgee certifies to the Trustee the pledgee’s right so to act with respect
to such Securities and that the pledgee is not the applicable Issuer, the Guarantor or any other obligor upon the Securities or any Affiliate of the
applicable Issuer, the Guarantor or such other obligor.
“Paying Agent” means any Person (including the applicable Issuer acting as Paying Agent) authorized by the applicable Issuer to
pay the principal of (or premium, if any) or interest, if any, on any Securities on behalf of such Issuer.
“Permitted Liens” means:
(i) Liens existing on the date of this Indenture, or arising thereafter pursuant to contractual commitments entered into prior to such
date;
(ii) Liens securing the Securities;
(iii) Liens incidental to the conduct of the business of the Company or any Restricted Subsidiary or the ownership of their assets
that, in the aggregate, do not materially impair the operation of the business of the Company and its Subsidiaries taken as a whole,
including, without limitation, any such Liens created pursuant to joint development agreements and leases, subleases, royalties or other
similar rights granted to or reserved by others;
(iv) Purchase Money Mortgages;
(v) Any Lien on any Principal Asset existing at the time the Company or any Restricted Subsidiary acquires the Principal Asset (or
any business entity then owning the Principal Asset) whether or not assumed by the Company or such Restricted Subsidiary and whether
or not such Lien was given to secure the payment of the purchase price of the Principal Asset (or any entity then owning the Principal
Asset), provided that no such Lien shall extend to any other Principal Asset;
(vi) any Lien to secure Indebtedness owing to the Company or to another Subsidiary;
(vii) Liens on the assets of a corporation existing at the time the corporation is liquidated or merged into, or amalgamated or
consolidated with, the Company or any Restricted Subsidiary or at the time of the sale, lease or other disposition to the Company or any
Restricted Subsidiary of the properties of such corporation as, or substantially as, an entirety;
(viii) any attachment or judgment Lien provided that (a) the execution or enforcement of the judgment it secures is effectively
stayed and the judgment is being contested in good faith, (b) the judgment it secures is discharged within 60 days after the later of the
entering of such judgment and the expiration of any applicable stay or (c) the payment of the judgment secured is covered in full (subject
to a customary deductible) by insurance;
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(ix) any Lien in connection with Indebtedness which by its terms is Non-Recourse Debt;
(x) any Lien for taxes, assessments or governmental charges or levies (a) that are not yet due and delinquent or (b) the validity of
which is being contested in good faith;
(xi) any Lien of materialmen, mechanics, carriers, workmen, repairmen, landlords or other similar Liens, or deposits to obtain the
release of these Liens;
(xii) any Lien (a) to secure public or statutory obligations (including reclamation and closure bonds and similar obligations), (b) to
secure payment of workmen’s compensation, employment insurance or other forms of governmental insurance or benefits, (c) to secure
performance in connection with tenders, leases of real property, environmental, land use or other governmental or regulatory permits,
bids or contracts or (d) to secure (or in lieu of) surety or appeal bonds, and Liens made in the ordinary course of business for similar
purposes;
(xiii) any Lien granted in the ordinary course of business in connection with Financial Instrument Obligations;
(xiv) any Lien created for the sole purpose of renewing or refunding any of the Liens described in clauses (i) through (xiii) above,
provided that the Indebtedness secured thereby shall not exceed the principal amount of Indebtedness so secured at the time of such
renewal or refunding, and that such renewal or refunding Lien shall be limited to all or any part of the same property which secured the
Lien renewed or refunded; and
(xv) any Lien not otherwise permitted under clauses (i) through (xiv) above, provided that the aggregate principal amount of
Indebtedness secured by all such Liens would not then exceed 10% of Consolidated Net Tangible Assets.
“Person” means an individual, partnership, corporation, business trust, trust, unincorporated association, joint venture,
Governmental Authority or other entity of whatever nature.
“Place of Payment” means, when used with respect to the Securities of or within any series, the place or places where the principal
of (and premium, if any) and interest, if any, on such Securities are payable as specified as contemplated by Sections 301 and 1002.
“Predecessor Security” of any particular Security means every previous Security evidencing all or a portion of the same debt as that
evidenced by such particular Security; and any Security authenticated and delivered under Section 306 in exchange for or in lieu of a mutilated,
destroyed, lost or stolen Security or a Security to which a mutilated, destroyed, lost or stolen coupon appertains shall be deemed to evidence the
same debt as the mutilated, destroyed, lost or stolen Security or the Security to which the mutilated, destroyed, lost or stolen coupon appertains,
as the case may be.
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“Principal Asset” means (i) any real property interest (all such interests forming an integral part of a single development or
operation being considered as one interest), including any mining claims and leases, and any plants, buildings or other improvements thereon,
and any part thereof, located in Canada or the United States that is held by the Company or any Restricted Subsidiary and has a net book value,
on the date as of which the determination is being made, exceeding 5% of Consolidated Net Tangible Assets (other than any such interest that
the Board of Directors of the Company determines by resolution is not material to the business of the Company and its Subsidiaries taken as a
whole) or (ii) any of the capital stock or debt securities issued by any Restricted Subsidiary.
“Purchase Money Mortgage” means any Lien on any Principal Asset (or the capital stock or debt securities of any Restricted
Subsidiary that acquires or owns any Principal Asset) incurred in connection with the acquisition of that Principal Asset or the construction or
repair of any fixed improvements on that Principal Asset (or in connection with financing the costs of acquisition of that Principal Asset or the
construction or repair of improvements on that Principal Asset) provided that the principal amount of Indebtedness secured by any such Lien
shall at no time exceed 100% of the original cost to the Company or any Restricted Subsidiary of the Principal Asset or such construction or
repairs.
“rate(s) of exchange” has the meaning specified in Section 114.
“Redemption Date”, when used with respect to any Security to be redeemed, in whole or in part, means the date fixed for such
redemption by or pursuant to this Indenture.
“Redemption Price”, when used with respect to any Security to be redeemed, means the price at which it is to be redeemed pursuant
to this Indenture.
“Registered Security” means any Security registered in the Security Register.
“Regular Record Date” for the interest payable on any Interest Payment Date on the Registered Securities of or within any series
means the date specified for that purpose as contemplated by Section 301.
“Repayment Date” means, when used with respect to any Security to be repaid at the option of the Holder, the date fixed for such
repayment pursuant to this Indenture.
“Repayment Price” means, when used with respect to any Security to be repaid at the option of the Holder, the price at which it is to
be repaid pursuant to this Indenture.
“Required Currency” has the meaning specified in Section 114.
“Reset Notice” has the meaning specified in Section 307.
“Responsible Officer”, when used with respect to the Trustee, means any officer assigned to the Corporate Trust Office of the
Trustee having direct responsibility for the administration of this Indenture, and also means, with respect to a particular corporate trust matter,
any other officer to whom such matter is referred because of his knowledge of and familiarity with the particular subject.
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“Restricted Subsidiary” means any North American Subsidiary that owns or leases a Principal Asset referred to in clause (i) of the
definition of “Principal Asset” or is engaged primarily in the business of owning or holding capital stock of one or more Restricted
Subsidiaries. “Restricted Subsidiary”, however, does not include (1) any Subsidiary whose primary business consists of (a) financing
operations in connection with leasing and conditional sale transactions on behalf of the Company and its Subsidiaries, (b) purchasing accounts
receivable or making loans secured by accounts receivable or inventory or (c) being a finance company or (2) any Subsidiary which the Board
of Directors of the Company has determined by resolution does not maintain a substantial portion of its fixed assets within Canada or the
United States.
“Securities” has the meaning stated in the first recital of this Indenture and more particularly means any Securities authenticated and
delivered under this Indenture; provided , however , that if at any time there is more than one Person acting as Trustee under this Indenture,
“Securities” with respect to the Indenture as to which such Person is Trustee shall have the meaning stated in the first recital of this Indenture
and shall more particularly mean Securities authenticated and delivered under this Indenture, exclusive, however, of Securities of any series as
to which such Person is not Trustee.
“Security Register” and “Security Registrar” have the respective meanings specified in Section 305.
“Specified Amount” has the meaning specified in Section 312.
“Special Record Date” for the payment of any Defaulted Interest on the Registered Securities of or within any series means a date
fixed by the Trustee pursuant to Section 307.
“Stated Maturity”, when used with respect to any Security or any installment of principal thereof or interest thereon, means the date
specified in such Security or a coupon representing such installment of interest as the fixed date on which the principal of such Security or such
installment of principal or interest is due and payable, as such date may be extended pursuant to the provisions of Section 308 (if applicable).
“Subsidiary” means (i) a corporation more than 50% of the outstanding Voting Stock of which at the time of determination is
owned, directly or indirectly, by the Company or by one or more Subsidiaries of the Company or by the Company and one or more Subsidiaries
of the Company and the votes carried by such Voting Stock are sufficient, if exercised, to elect a majority of the board of directors of the
corporation or (ii) any other Person (other than a corporation) in which at the time of determination the Company or one or more Subsidiaries
of the Company or the Company and one or more Subsidiaries of the Company, directly or indirectly, has or have at least a majority ownership
and power to direct the policies, management and affairs of the Person.
“Subsidiary Issuer” means the applicable Person named as a “Subsidiary Issuer” in the first paragraph of this Indenture until a
successor Person shall have become such pursuant to the applicable provisions of this Indenture, and thereafter a “Subsidiary Issuer” shall
mean such successor Person.
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“Subsequent Interest Period” has the meaning specified in Section 307.
“Trust Indenture Act” or “TIA” means the Trust Indenture Act of 1939, as amended and as in force at the date as of which this
Indenture was executed except as provided in Section 905.
“Trustee” means the Person named as the “Trustee” in the first paragraph of this Indenture until a successor Trustee shall have
become such pursuant to the applicable provisions of this Indenture, and thereafter “Trustee” shall mean or include each Person who is then a
Trustee hereunder; provided , however , that if at any time there is more than one such Person, “Trustee” as used with respect to the Securities
of any series shall mean only the Trustee with respect to Securities of that series.
“United States” means, unless otherwise specified with respect to any Securities pursuant to Section 301, the United States of
America (including the states and the District of Columbia), its territories, its possessions and other areas subject to its jurisdiction.
“U.S. GAAP” means generally accepted accounting principles that are in effect from time to time in the United States of America.
“Valuation Date” has the meaning specified in Section 312(c).
“Vice President”, when used with respect to an Issuer, the Guarantor or the Trustee, means any vice president, whether or not
designated by a number or a word or words added before or after the title “vice president”.
“Voting Stock” means securities or other ownership interests of a corporation, partnership or other entity having by the terms
thereof ordinary voting power to vote in the election of the board of directors or other persons performing similar functions of such corporation,
partnership or other entity (without regard to the occurrence of any contingency).
“Yield to Maturity” means the yield to maturity, computed at the time of issuance of a Security (or, if applicable, at the most recent
redetermination of interest on such Security) and as set forth in such Security in accordance with generally accepted United States bond yield
computation principles.
SECTION 102. Compliance Certificates and Opinions .
Upon any application or request by an Issuer or the Guarantor to the Trustee to take any action under any provision of this
Indenture, such Issuer or the Guarantor shall furnish to the Trustee, an Officers’ Certificate stating that all conditions precedent, if any,
provided for in this Indenture (including any covenant compliance with which constitutes a condition precedent) relating to the proposed action
have been complied with and an Opinion of Counsel stating that in the opinion of such counsel all such conditions precedent, if any, have been
complied with, except that in the case of any such application or request as to which the furnishing of such documents is specifically required
by any provision of this Indenture relating to such particular application or request, no additional certificate or opinion need be furnished.
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Every certificate or opinion with respect to compliance with a covenant or condition provided for in this Indenture (other than
pursuant to Section 1004) shall include:
(1) a statement that each individual signing such certificate or opinion has read such covenant or condition and the definitions
herein relating thereto;
(2) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained
in such certificate or opinion are based;
(3) a statement that, in the opinion of each such individual, he has made such examination or investigation as is necessary to enable
him to express an informed opinion as to whether or not such covenant or condition has been complied with; and
(4) a statement as to whether, in the opinion of each such individual, such covenant or condition has been complied with.
SECTION 103. Form of Documents Delivered to Trustee .
In any case where several matters are required to be certified by, or covered by an opinion of, any specified Person, it is not
necessary that all such matters be certified by, or covered by the opinion of, only one such Person, or that they be so certified or covered by
only one document, but one such Person may certify or give an opinion with respect to some matters and one or more other such Persons as to
other matters, and any such Person may certify or give an opinion as to such matters in one or several documents.
Any certificate or opinion of an officer of an Issuer or the Guarantor may be based, insofar as it relates to legal matters, upon a
certificate or opinion of, or representations by, counsel, unless such officer knows, or in the exercise of reasonable care should know, that the
certificate or opinion or representations with respect to the matters upon which his certificate or opinion is based are erroneous. Any such
certificate or Opinion of Counsel may be based, insofar as it relates to factual matters, upon a certificate or opinion of, or representations by, an
officer or officers of such Issuer or the Guarantor, as the case may be, stating that the information with respect to such factual matters is in the
possession of such Issuer or the Guarantor unless such counsel knows, or in the exercise of reasonable care should know, that the certificate or
opinion or representations with respect to such matters are erroneous.
Any certificate or opinion of an officer of an Issuer or the Guarantor or of counsel may be based, insofar as it relates to accounting
matters, upon a certificate or opinion of, or representations by, an accountant or firm of accountants in the employ of an Issuer or the
Guarantor, unless such officer or counsel, as the case may be, knows, or in the exercise of reasonable care should know, that the certificate or
opinion or representations with respect to the accounting matters upon which such certificate or opinion may be based are erroneous. Any
certificate or opinion of any independent firm of public accountants filed with the Trustee shall contain a statement that such firm is
independent.
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Where any Person is required to make, give or execute two or more applications, requests, consents, certificates, statements,
opinions or other instruments under this Indenture, they may, but need not, be consolidated and form one instrument.
SECTION 104. Acts of Holders .
(a) Any request, demand, authorization, direction, notice, consent, waiver or other action provided by this Indenture to be given or
taken by Holders of the Outstanding Securities of all series or one or more series, as the case may be, may be embodied in and evidenced by
one or more instruments of substantially similar tenor signed by such Holders in person or by agents duly appointed in writing. If Securities of
a series are issuable as Bearer Securities, any request, demand, authorization, direction, notice, consent, waiver or other action provided by this
Indenture to be given or taken by Holders of such series may, alternatively, be embodied in and evidenced by the record of Holders of
Securities of such series voting in favor thereof, either in person or by proxies duly appointed in writing, at any meeting of Holders of
Securities of such series duly called and held in accordance with the provisions of Article Sixteen, or a combination of such instruments and
any such record. Except as herein otherwise expressly provided, such action shall become effective when such instrument or instruments or
record or both are delivered to the Trustee and, where it is hereby expressly required, to the applicable Issuer and the Guarantor (in the case of
Guaranteed Securities). Such instrument or instruments and any such record (and the action embodied therein and evidenced thereby) are
herein sometimes referred to as the “Act” of the Holders signing such instrument or instruments or so voting at any such meeting. Proof of
execution of any such instrument or of a writing appointing any such agent, or of the holding by any Person of a Security, shall be sufficient for
any purpose of this Indenture and conclusive in favor of the Trustee, the applicable Issuer and the Guarantor, if made in the manner provided in
this Section. The record of any meeting of Holders of Securities shall be proved in the manner provided in Section 1606.
(b) The fact and date of the execution by any Person of any such instrument or writing may be proved in any reasonable manner
which the Trustee deems sufficient.
(c) The principal amount and serial numbers of Registered Securities held by any Person, and the date of holding the same, shall be
proved by the Security Register.
(d) The principal amount and serial numbers of Bearer Securities held by any Person, and the date of holding the same, may be
proved by the production of such Bearer Securities or by a certificate executed, as depositary, by any trust company, bank, banker or other
depositary, wherever situated, if such certificate shall be deemed by the Trustee to be satisfactory, showing that at the date therein mentioned
such Person had on deposit with such depositary, or exhibited to it, the Bearer Securities therein described; or such facts may be proved by the
certificate or affidavit of the Person holding such Bearer Securities, if such certificate or affidavit is deemed by the Trustee to be satisfactory.
The Trustee and the applicable Issuer may assume that such ownership of any Bearer Security continues until (1) another certificate or affidavit
bearing a later date issued in respect of the same Bearer
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Security is produced, or (2) such Bearer Security is produced to the Trustee by some other Person, or (3) such Bearer Security is surrendered in
exchange for a Registered Security, or (4) such Bearer Security is no longer Outstanding. The principal amount and serial numbers of Bearer
Securities held by any Person, and the date of holding the same, may also be proved in any other manner that the Trustee deems sufficient.
(e) If an Issuer or the Guarantor shall solicit from the Holders of Registered Securities any request, demand, authorization,
direction, notice, consent, waiver or other Act, such Issuer or the Guarantor, as the case may be, may, at its option, by or pursuant to a Board
Resolution, fix in advance a record date for the determination of Holders entitled to give such request, demand, authorization, direction, notice,
consent, waiver or other Act, but such Issuer or the Guarantor, as the case may be, shall have no obligation to do so. Notwithstanding TIA
Section 316(c), such record date shall be the record date specified in or pursuant to such Board Resolution, which shall be a date not earlier
than the date 30 days prior to the first solicitation of Holders generally in connection therewith and not later than the date such solicitation is
completed. If such a record date is fixed, such request, demand, authorization, direction, notice, consent, waiver or other Act may be given
before or after such record date, but only the Holders of record at the close of business on such record date shall be deemed to be Holders for
the purposes of determining whether Holders of the requisite proportion of Outstanding Securities have authorized or agreed or consented to
such request, demand, authorization, direction, notice, consent, waiver or other Act, and for that purpose the Outstanding Securities shall be
computed as of such record date; provided that no such authorization, agreement or consent by the Holders on such record date shall be deemed
effective unless it shall become effective pursuant to the provisions of this Indenture not later than eleven months after the record date.
(f) Any request, demand, authorization, direction, notice, consent, waiver or other Act of the Holder of any Security shall bind every
future Holder of the same Security and the Holder of every Security issued upon the registration of transfer thereof or in exchange therefor or in
lieu thereof in respect of anything done, omitted or suffered to be done by the Trustee, the applicable Issuer or the Guarantor in reliance
thereon, whether or not notation of such action is made upon such Security.
SECTION 105. Notices, etc. to Trustee, Company, Subsidiary Issuers and Guarantor .
Any request, demand, authorization, direction, notice, consent, waiver or Act of Holders or other documents provided or permitted
by this Indenture to be made upon, given or furnished to, or filed with,
(1) the Trustee by any Holder or by an Issuer or the Guarantor shall be sufficient for every purpose hereunder if made, given,
furnished or filed in writing or sent by facsimile to the Trustee at its Corporate Trust Office, 101 Barclay Street – 4E, New York, New
York 10286, Attention: Arlene Thelwell, or
(2) an Issuer or the Guarantor by the Trustee or by any Holder shall be sufficient for every purpose hereunder (unless otherwise
herein expressly provided) if in writing and mailed, first-class postage prepaid, or sent by overnight courier to such
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Issuer or the Guarantor, as the case may be, addressed to it at Brookfield Place, Canada Trust Tower, Suite 3700, 161 Bay Street,
Toronto, Ontario, Canada M5J 2S1, Attention: [•] , or at any other address previously furnished in writing to the Trustee by such Issuer or
the Guarantor, as the case may be.
SECTION 106. Notice to Holders; Waiver .
Where this Indenture provides for notice of any event to Holders of Registered Securities by an Issuer, the Guarantor or the Trustee,
such notice shall be sufficiently given (unless otherwise herein expressly provided) if in writing and mailed, first-class postage prepaid, to each
such Holder affected by such event, at his address as it appears in the Security Register, not later than the latest date, and not earlier than the
earliest date, prescribed for the giving of such notice. In any case where notice to Holders of Registered Securities is given by mail, neither the
failure to mail such notice, nor any defect in any notice so mailed, to any particular Holder shall affect the sufficiency of such notice with
respect to other Holders of Registered Securities or the sufficiency of any notice to Holders of Bearer Securities given as provided. Any notice
mailed to a Holder in the manner herein prescribed shall be conclusively deemed to have been received by such Holder, whether or not such
Holder actually receives such notice.
In case, by reason of the suspension of or irregularities in regular mail service or by reason of any other cause, it shall be impractical
to mail notice of any event to Holders of Registered Securities when such notice is required to be given pursuant to any provision of this
Indenture, then any manner of giving such notice as shall be directed by the applicable Issuer shall be deemed to be sufficient giving of such
notice for every purpose hereunder.
Except as otherwise expressly provided herein or otherwise specified with respect to any Securities pursuant to Section 301, where
this Indenture provides for notice to Holders of Bearer Securities of any event, such notice shall be sufficiently given to Holders of Bearer
Securities if published in an Authorized Newspaper in The City of New York and in such other city or cities as may be specified in such
Securities on a Business Day at least twice, the first such publication to be not earlier than the earliest date, and not later than the latest date,
prescribed for the giving of such notice. Any such notice shall be deemed to have been given on the date of the first such publication.
In case, by reason of the suspension of publication of any Authorized Newspaper or Authorized Newspapers or by reason of any
other cause, it shall be impracticable to publish any notice to Holders of Bearer Securities as provided above, then such notification to Holders
of Bearer Securities as shall be given as directed by the applicable Issuer shall constitute sufficient notice to such Holders for every purpose
hereunder. Neither the failure to give notice by publication to Holders of Bearer Securities as provided above, nor any defect in any notice so
published, shall affect the sufficiency of such notice with respect to other Holders of Bearer Securities or the sufficiency of any notice to
Holders of Registered Securities given as provided herein.
Any request, demand, authorization, direction, notice, consent or waiver required or permitted under this Indenture shall be in the
English language, except that any published notice may be in an official language of the country of publication.
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Where this Indenture provides for notice in any manner, such notice may be waived in writing by the Person entitled to receive such
notice, either before or after the event, and such waiver shall be the equivalent of such notice. Waivers of notice by Holders shall be filed with
the Trustee, but such filing shall not be a condition precedent to the validity of any action taken in reliance upon such waiver.
SECTION 107. Effect of Headings and Table of Contents .
The Article and Section headings herein and the Table of Contents are for convenience only and shall not affect the construction
hereof.
SECTION 108. Successors and Assigns .
All covenants and agreements in this Indenture by each of the Issuers and the Guarantor shall bind its successors and assigns,
whether so expressed or not.
SECTION 109. Separability Clause .
In case any provision in this Indenture or in any Security or coupon shall be invalid, illegal or unenforceable, the validity, legality
and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.
SECTION 110. Benefits of Indenture .
Nothing in this Indenture or in the Securities or coupons, express or implied, shall give to any Person, other than the parties hereto,
any Authenticating Agent, any Paying Agent, any Securities Registrar and their successors hereunder and the Holders of Securities or coupons,
any benefit or any legal or equitable right, remedy or claim under this Indenture.
SECTION 111. Governing Law .
This Indenture, the Guarantees and the Securities and coupons shall be governed by and construed in accordance with the law of the
State of New York. This Indenture is subject to the provisions of the Trust Indenture Act that are required to be part of this Indenture and shall,
to the extent applicable, be governed by such provisions.
SECTION 112. Legal Holidays .
In any case where any Interest Payment Date, Redemption Date, sinking fund payment date or Stated Maturity or Maturity of any
Security shall not be a Business Day at any Place of Payment, then (notwithstanding any other provision of this Indenture or of any Security or
coupon other than a provision in the Securities of any series which specifically states that such provision shall apply in lieu of this Section),
payment of principal (or premium, if any) or interest, if any, need not be made at such Place of Payment on such date, but may be made on the
next succeeding Business Day at such Place of Payment with the same force and effect as if made on the Interest Payment Date or Redemption
Date or sinking fund payment date, or at the Stated Maturity or Maturity; provided that no interest shall accrue for the period from and after
such Interest Payment Date, Redemption Date, sinking fund payment date, Stated Maturity or Maturity, as the case may be.
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SECTION 113. Agent for Service; Submission to Jurisdiction; Waiver of Immunities .
By the execution and delivery of this Indenture, the Company (i) irrevocably designates and appoints, and acknowledges that it has
irrevocably designated and appointed, CT Corporation System, 111 8 Avenue, 13 Floor, New York, New York 10011 as its authorized agent
upon which process may be served in any suit, action or proceeding arising out of or relating to the Securities, the Guarantees or this Indenture
that may be instituted in any United States federal or New York state court in The City of New York or brought under federal or state securities
laws or brought by the Trustee (whether in its individual capacity or in its capacity as Trustee hereunder) or, subject to Section 507, any Holder
of Securities or Guarantees in any United States federal or New York state court in The City of New York, (ii) submits to the non-exclusive
jurisdiction of any such court in any such suit, action or proceeding, and (iii) agrees that service of process upon CT Corporation System and
written notice of said service to the Company (mailed or delivered to its Secretary at its principal office specified in the first paragraph of this
Indenture and in the manner specified in Section 105 hereof), shall be deemed in every respect effective service of process upon the Company
in any such suit, action or proceeding. The Company further agrees to take any and all action, including the execution and filing of any and all
such documents and instruments, as may be necessary to continue such designation and appointment of CT Corporation System in full force
and effect so long as any of the Securities shall be Outstanding or any amounts shall be payable in respect of any Securities or coupons.
th
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Each of the Issuers and the Guarantors irrevocably and unconditionally waives, to the fullest extent permitted by law, any objection
that it may now or hereafter have to the laying of venue of any such action, suit or proceeding in any such court or any appellate court with
respect thereto and irrevocably waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of any
such action, suit or proceeding in any such court.
To the extent that any Issuer or the Guarantor has or hereafter may acquire any immunity from jurisdiction of any court or from any
legal process (whether through service of notice, attachment prior to judgment, attachment in aid of execution, execution or otherwise) with
respect to itself or its property, each of them hereby irrevocably waives such immunity in respect of its obligations under this Indenture, the
Guarantees and the Securities, to the extent permitted by law.
SECTION 114. Conversion of Currency .
Each Issuer and the Guarantor covenant and agree that the following provisions shall apply to conversion of Currency in the case of
the Securities, the Guarantees and this Indenture to the fullest extent permitted by applicable law:
(a) (i) If for the purposes of obtaining judgment in, or enforcing the judgment of, any court in any country, it becomes necessary to
convert into a currency (the
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“Judgment Currency”) an amount due or contingently due under the Securities of any series or this Indenture in any other currency (the
“Required Currency”), then the conversion shall be made at the rate of exchange prevailing on the Business Day before the day on which
the judgment is given or the order of enforcement is made, as the case may be (unless a court shall otherwise determine).
(ii) If there is a change in the rate of exchange prevailing between the Business Day before the day on which the judgment is given
or an order of enforcement is made, as the case may be (or such other date as a court shall determine), and the date of receipt of the
amount due, the applicable Issuer or, in the case of Guaranteed Securities, the Guarantor, as the case may be, shall pay such additional
(or, as the case may be, such lesser) amount, if any, as may be necessary so that the amount paid in the Judgment Currency when
converted at the rate of exchange prevailing on the date of receipt will produce the amount in the Required Currency originally due.
(b) In the event of the winding-up of an Issuer or the Guarantor at any time while any amount or damages owing under the
Securities, the Guarantees and this Indenture, or any judgment or order rendered in respect thereof, shall remain unpaid or outstanding, such
Issuer or, in the case of Guaranteed Securities, the Guarantor, as the case may be, shall indemnify and hold the Holders and the Trustee
harmless against any deficiency arising or resulting from any variation in rates of exchange between (1) the date as of which the equivalent of
the amount in the Required Currency (other than under this Subsection (b)) is calculated for the purposes of such winding-up and (2) the final
date for the filing of proofs of claim in such winding-up. For the purpose of this Subsection (b) the final date for the filing of proofs of claim in
the winding-up of an Issuer or the Guarantor, as the case may be, shall be the date fixed by the liquidator or otherwise in accordance with the
relevant provisions of applicable law as being the latest practicable date as at which liabilities of such Issuer or the Guarantor, as the case may
be, may be ascertained for such winding-up prior to payment by the liquidator or otherwise in respect thereto.
(c) The obligations contained in Subsections (a)(ii) and (b) of this Section shall constitute separate and independent obligations of
the applicable Issuer or the Guarantor, as the case may be, from its other obligations under the Securities, the Guarantees and this Indenture,
shall give rise to separate and independent causes of action against such Issuer and the Guarantor, shall apply irrespective of any waiver or
extension granted by any Holder or Trustee from time to time and shall continue in full force and effect notwithstanding any judgment or order
or the filing of any proof of claim in the winding-up of such Issuer or the Guarantor for a liquidated sum in respect of amounts due hereunder
(other than under Subsection (b) above) or under any such judgment or order. Any such deficiency as aforesaid shall be deemed to constitute a
loss suffered by the Holders or the Trustee, as the case may be, and no proof or evidence of any actual loss shall be required by the applicable
Issuer, the Guarantor or the applicable liquidator. In the case of Subsection (b) above, the amount of such deficiency shall not be deemed to be
reduced by any variation in rates of exchange occurring between the said final date and the date of any liquidating distribution.
(d) The term “rate(s) of exchange” shall mean the Bank of Canada noon rate for purchases on the relevant date of the Required
Currency with the Judgment Currency, as
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reported by Telerate on screen 3194 (or such other means of reporting the Bank of Canada noon rate as may be agreed upon by each of the
parties to this Indenture) and includes any premiums and costs of exchange payable.
SECTION 115. Currency Equivalent .
Except as otherwise provided in this Indenture, for purposes of the construction of the terms of this Indenture or of the Securities, in
the event that any amount is stated herein in the Currency of one nation (the “First Currency”), as of any date such amount shall also be deemed
to represent the amount in the Currency of any other relevant nation (the “Other Currency”) which is required to purchase such amount in the
First Currency at the Bank of Canada noon rate as reported by Telerate on screen 3194 (or such other means of reporting the Bank of Canada
noon rate as may be agreed upon by each of the parties to this Indenture) on the date of determination.
SECTION 116. No Recourse Against Others .
A director, officer, employee or shareholder, as such, of an Issuer or the Guarantor shall not have any liability for any obligations of
such Issuer or the Guarantor under the Securities, the Guarantees or this Indenture or for any claim based on, in respect of or by reason of such
obligations or their creation. By accepting a Security, each Holder shall waive and release all such liability. Such waiver and release shall be
part of the consideration for the issue of the Securities.
SECTION 117. Multiple Originals .
The parties may sign any number of copies of this Indenture. Each signed copy shall be an original, but all of them together
represent the same agreement. One signed copy is enough to prove this Indenture.
SECTION 118. Conflict with Trust Indenture Act .
If and to the extent that any provision hereof limits, qualifies or conflicts with another provision that is required or deemed to be
included in this Indenture by any of the provisions of the Trust Indenture Act, such required or deemed provision shall control.
ARTICLE TWO
SECURITY FORMS
SECTION 201. Forms Generally .
The Registered Securities, if any, of each series and the Bearer Securities, if any, of each series and related coupons shall be in
substantially the forms as shall be established by or pursuant to a Board Resolution of the applicable Issuer or in one or more indentures
supplemental hereto, in each case with such appropriate insertions, omissions, substitutions and other variations as are required or permitted by
this Indenture, and may have such letters, numbers or other marks of identification and such legends or endorsements placed thereon as may be
required to comply with the rules of any securities exchange or as may, consistently
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herewith, be determined by the applicable Issuer. If the forms of Securities or coupons of any series are established by action taken pursuant to
a Board Resolution, a copy of an appropriate record of such action shall be certified by the Secretary or an Assistant Secretary of the applicable
Issuer and delivered to the Trustee at or prior to the delivery of the Issuer Order contemplated by Section 303 for the authentication and
delivery of such Securities or coupons. Any portion of the text of any Security may be set forth on the reverse thereof, with an appropriate
reference thereto on the face of the Security.
Unless otherwise specified as contemplated by Section 301, Securities in bearer form shall have interest coupons attached.
The Trustee’s certificate of authentication on all Securities shall be in substantially the form set forth in this Article.
The definitive Securities, coupons and Guarantees shall be printed, lithographed or engraved on steel-engraved borders or may be
produced in any other manner, all as determined by the officers executing such Securities, as evidenced by their execution of such Securities or
coupons. A Security (including any Guarantee endorsed thereon) may be in substantially the form attached as Exhibit A hereto, or a Security
(including any Guarantee endorsed thereon) may be in any form established by or pursuant to authority granted by one or more Board
Resolutions and set forth in an Officers’ Certificate or supplemental indenture pursuant to Section 301.
SECTION 202. Form of Trustee’s Certificate of Authentication .
Subject to Section 611, the Trustee’s certificate of authentication shall be in substantially the following form:
TRUSTEE’S CERTIFICATE OF AUTHENTICATION
Dated:
This is one of the Securities of the series designated therein referred to in the within-mentioned Indenture.
THE BANK OF NEW YORK,
as Trustee
By
Authorized Officer
SECTION 203. Securities Issuable in Global Form .
If Securities of or within a series are issuable in global form, as specified as contemplated by Section 301, then, notwithstanding
clause (9) of Section 301, any such Security shall represent such of the Outstanding Securities of such series as shall be specified therein and
may provide that it shall represent the aggregate amount of Outstanding Securities of such series
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from time to time endorsed thereon and that the aggregate amount of Outstanding Securities of such series represented thereby may from time
to time be increased or decreased to reflect exchanges. Any endorsement of a Security in global form to reflect the amount, or any increase or
decrease in the amount, of Outstanding Securities represented thereby shall be made by the Trustee in such manner and upon instructions given
by such Person or Persons as shall be specified therein or in the Issuer Order to be delivered to the Trustee pursuant to Section 303 or
Section 304. Subject to the provisions of Section 303 and, if applicable, Section 304, the Trustee shall deliver and redeliver any Security in
permanent global form in the manner and upon instructions given by the Person or Persons specified therein or in the applicable Issuer Order. If
an Issuer Order pursuant to Section 303 or Section 304 has been, or simultaneously is, delivered, any instructions by such Issuer with respect to
endorsement or delivery or redelivery of a Security in global form shall be in writing but need not comply with Section 102 and need not be
accompanied by an Opinion of Counsel.
The provisions of the last sentence of Section 303 shall apply to any Security represented by a Security in global form if such
Security was never issued and sold by the applicable Issuer and such Issuer delivers to the Trustee the Security in global form together with
written instructions (which need not comply with Section 102 and need not be accompanied by an Opinion of Counsel) with regard to the
reduction in the principal amount of Securities represented thereby, together with the written statement contemplated by the last sentence of
Section 303.
Notwithstanding the provisions of Section 307, unless otherwise specified as contemplated by Section 301, payment of principal of
(and premium, if any) and interest, if any, on any Security in permanent global form shall be made to the Person or Persons specified therein.
Notwithstanding the provisions of Section 309 and except as provided in the preceding paragraph, the applicable Issuer, the
Guarantor, the Trustee and any agent of the applicable Issuer, the Guarantor or the Trustee shall treat as the Holder of such principal amount of
Outstanding Securities represented by a permanent global Security (i) in the case of a permanent global Security in registered form, the Holder
of such permanent global Security in registered form, or (ii) in the case of a permanent global Security in bearer form, Euroclear or
Clearstream.
SECTION 204. Guarantee by Guarantor; Form of Guarantee .
The Guarantor by its execution of this Indenture hereby agrees with each Holder of a Guaranteed Security of each series
authenticated and delivered by the Trustee and with the Trustee on behalf of each such Holder, to be unconditionally and irrevocably bound by
the terms and provisions of the Guarantee set forth below and authorizes the Trustee to confirm such Guarantees to the Holder of each such
Guaranteed Security by its delivery of each such Guaranteed Security, with such Guarantees endorsed thereon, authenticated and delivered by
the Trustee.
Guarantees to be endorsed on the Guaranteed Securities shall, subject to Section 201, be in substantially the form set forth below or
in any other form established by or pursuant to authority granted by one or more Board Resolutions and set forth in an Officers’ Certificate or
supplemental indenture pursuant to Section 301:
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GUARANTEE
OF
BARRICK GOLD CORPORATION
For value received, Barrick Gold Corporation, a corporation incorporated under the laws of the Province of Ontario, having its
principal executive offices at Brookfield Place, Canada Trust Tower, Suite 3700, 161 Bay Street, Toronto, Ontario, Canada M5J 2S1 (herein
called the “Guarantor”, which term includes any successor Person under the Indenture referred to in the Security upon which this Guarantee is
endorsed), hereby unconditionally and irrevocably guarantees to the Holder of the Security upon which this Guarantee is endorsed and to the
Trustee on behalf of each such Holder the due and punctual payment of the principal of, premium, if any, and interest on such Security, the due
and punctual payment of any Additional Amounts that may be payable with respect to such Security, and the due and punctual payment of the
sinking fund or analogous payments referred to therein, if any, when and as the same shall become due and payable, whether on the Stated
Maturity, by declaration of acceleration, call for redemption or otherwise, according to the terms thereof and of the Indenture referred to
therein. In case of the failure of Barrick Gold Financeco LLC, a limited liability company formed under the laws of the State of Delaware or
Barrick North America Finance LLC, a limited liability company formed under the laws of the State of Delaware, as applicable (each herein
called a “Subsidiary Issuer”, which term includes any successor Person under such Indenture), punctually to make any such payment of
principal, premium, if any, or interest, or any Additional Amounts that may be payable with respect to such Security or any such sinking fund
or analogous payment, the Guarantor hereby agrees to cause any such payment to be made punctually when and as the same shall become due
and payable, whether on the Stated Maturity or by declaration of acceleration, call for redemption or otherwise, and as if such payment were
made by the Subsidiary Issuer.
The Guarantor hereby agrees that its obligations hereunder shall be as if it were principal debtor and not merely surety, and shall be
absolute and unconditional, irrespective of, and shall be unaffected by, any invalidity, irregularity or unenforceability of such Security or such
Indenture, any failure to enforce the provisions of such Security or such Indenture, or any waiver, modification or indulgence granted to the
Subsidiary Issuer with respect thereto, by the Holder of such Security or the Trustee or any other circumstance which may otherwise constitute
a legal or equitable discharge of a surety or guarantor; provided , however , that, notwithstanding the foregoing, no such waiver, modification
or indulgence shall, without the consent of the Guarantor, increase the principal amount of such Security, or increase the interest rate thereon,
or increase any premium payable upon redemption thereof, or alter the Stated Maturity thereof, or increase the principal amount of any Original
Issue Discount Security that would be due and payable upon a declaration of acceleration of the maturity thereof pursuant to Article Five of
such Indenture. The Guarantor hereby waives diligence, presentment, demand of payment, filing of claims with a court in the event of merger
or bankruptcy of the Subsidiary Issuer, any right to require a proceeding first against the Subsidiary Issuer, protest or notice with respect to
such Security or the indebtedness evidenced thereby or with respect to any Additional Amounts that may be payable with respect to such
Security or any sinking fund or analogous payment required
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under such Security and all demands whatsoever, and covenants that its obligations under this Guarantee will not be discharged except by
payment in full of the principal of, premium, if any, and interest and any Additional Amounts that may be payable with respect to such
Security.
The Guarantor shall be subrogated to all rights of the Holder of such Security and the Trustee against the Subsidiary Issuer in
respect of any amounts paid to such Holder by the Guarantor pursuant to the provisions of this Guarantee; provided , however , that the
Guarantor shall not be entitled to enforce or to receive any payments arising out of or based upon such right of subrogation until the principal
of, premium, if any, and interest on all Securities of the same series issued under such Indenture and any Additional Amounts that may be
payable with respect to such Securities shall have been paid in full.
No reference herein to such Indenture and no provision of this Guarantee or of such Indenture shall alter or impair the guarantees of
the Guarantor, which are absolute and unconditional, of the due and punctual payment of the principal of, premium, if any, and interest on, and
any Additional Amounts that may be payable with respect to, and any sinking fund or analogous payments with respect to, the Security upon
which this Guarantee is endorsed.
This Guarantee shall not be valid or obligatory for any purpose until the certificate of authentication of such Security shall have
been manually executed by or on behalf of the Trustee under such Indenture.
All terms used in this Guarantee which are defined in such Indenture shall have the meanings assigned to them in such Indenture.
This Guarantee shall be governed by and construed in accordance with the laws of the State of New York.
Executed and dated the date on the face hereof.
BARRICK GOLD CORPORATION
By
Name:
Title:
By
Name:
Title:
Reference is made to Article Fifteen for further provisions with respect to the Guarantees.
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ARTICLE THREE
THE SECURITIES
SECTION 301. Amount Unlimited; Issuable in Series .
The aggregate principal amount of Securities which may be authenticated and delivered under this Indenture is unlimited.
The Securities may be issued in one or more series. Except as otherwise provided herein, and except to the extent prescribed by law,
(i) each series of Company Securities and the Guarantees (in the case of Guaranteed Securities) shall be direct, unconditional and unsecured
obligations of the Company and shall rank pari passu and ratably without preference among themselves and pari passu with all other unsecured
and unsubordinated obligations of the Company and (ii) each series of Guaranteed Securities shall be direct, unconditional and unsecured
obligations of the applicable Subsidiary Issuer and shall rank pari passu and ratably without preference among themselves and pari passu with
all other unsecured and unsubordinated obligations of the applicable Subsidiary Issuer. There shall be established in one or more Board
Resolutions of the applicable Issuer or pursuant to authority granted by one or more Board Resolutions of the applicable Issuer and, subject to
Section 303, set forth in, or determined in the manner provided in, an Officers’ Certificate of the applicable Issuer, or established in one or
more indentures supplemental hereto, prior to the issuance of Securities of any series, any or all of the following, as applicable (each of which
(except for the matters set forth in clauses (1), (2), (3) and (17) below), if so provided, may be determined from time to time by the applicable
Issuer with respect to unissued Securities of the series and set forth in such Securities of the series when issued from time to time):
(1) whether such Securities are Company Securities or Guaranteed Securities and if such Securities are Guaranteed Securities,
which of the Subsidiary Issuers shall issue the Guaranteed Securities;
(2) the title of the Securities of the series (which shall distinguish the Securities of the series from all other series of Securities);
(3) any limit upon the aggregate principal amount of the Securities of the series that may be authenticated and delivered under this
Indenture (except for Securities authenticated and delivered upon registration of transfer of, or in exchange for, or in lieu of, other
Securities of the series pursuant to Section 304, 305, 306, 906, 1107 or 1305) and, in the event that no limit upon the aggregate principal
amount of the Securities of that series is specified, the applicable Issuer shall have the right, subject to any terms, conditions or other
provisions specified pursuant to this Section 301 with respect to the Securities of such series, to re-open such series for the issuance of
additional Securities of such series from time to time;
(4) the date or dates, or the method by which such date or dates will be determined or extended, on which the principal of the
Securities of the series is payable;
(5) the rate or rates at which the Securities of the series shall bear interest, if any, or the method by which such rate or rates shall be
determined, the date or dates from which such interest shall accrue, or the method by which such date or dates shall be determined, the
Interest Payment Dates on which such interest shall be payable and the Regular Record Date, if any, for the interest payable on any
Registered
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Security on any Interest Payment Date, or the method by which such date or dates shall be determined, and the basis upon which interest
shall be calculated if other than on the basis of a 360-day year of twelve 30-day months;
(6) the place or places, if any, other than the Corporate Trust Office, where the principal of (and premium, if any) and interest, if
any, on Securities of the series shall be payable, where any Registered Securities of the series may be surrendered for registration of
transfer, where Securities of the series may be surrendered for exchange, where Securities of the series that are convertible or
exchangeable may be surrendered for conversion or exchange, as applicable, and, if different than the location specified in Section 105,
the place or places where notices or demands to or upon the applicable Issuer in respect of the Securities of the series and this Indenture
may be served; and the extent to which, or the manner in which, any interest payment or Additional Amounts due on a global Security of
that series on an Interest Payment Date will be paid (if different than for other Securities of such series);
(7) the period or periods within which, the price or prices at which, the Currency (if other than Dollars) in which, and other terms
and conditions upon which Securities of the series may be redeemed, in whole or in part, at the option of the applicable Issuer, if such
Issuer is to have that option;
(8) the obligation, if any, of the applicable Issuer to redeem, repay or purchase Securities of the series pursuant to any sinking fund
or analogous provision or at the option of a Holder thereof, and the period or periods within which, the price or prices at which, the
Currency (if other than Dollars) in which, and other terms and conditions upon which Securities of the series shall be redeemed, repaid or
purchased, in whole or in part, pursuant to such obligation;
(9) if other than denominations of $1,000 and any integral multiple thereof, the denomination or denominations in which any
Registered Securities of the series shall be issuable and, if other than denominations of $5,000, the denomination or denominations in
which any Bearer Securities of the series shall be issuable;
(10) if other than the Trustee, the identity of each Security Registrar and/or Paying Agent;
(11) if other than the principal amount thereof, the portion of the principal amount of Securities of the series that shall be payable
upon declaration of acceleration of the Maturity thereof pursuant to Section 502 or the method by which such portion shall be determined;
(12) if other than Dollars, the Currency in which payment of the principal of (or premium, if any) or interest, if any, on the
Securities of the series shall be payable or in which the Securities of the series shall be denominated and the particular provisions
applicable thereto in accordance with, in addition to or in lieu of any of the provisions of Section 312;
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(13) whether the amount of payments of principal of (or premium, if any) or interest, if any, on the Securities of the series may be
determined with reference to an index, formula or other method (which index, formula or method may be based, without limitation, on
one or more Currencies, commodities, equity indices or other indices), and the manner in which such amounts shall be determined;
(14) whether the principal of (or premium, if any) or interest, if any, on the Securities of the series are to be payable, at the election
of the applicable Issuer or a Holder thereof, in a Currency other than that in which such Securities are denominated or stated to be
payable, the period or periods within which (including the Election Date), and the terms and conditions upon which, such election may be
made, and the time and manner of determining the exchange rate between the Currency in which such Securities are denominated or
stated to be payable and the Currency in which such Securities are to be so payable, in each case in accordance with, in addition to or in
lieu of any of the provisions of Section 312;
(15) the designation of the initial Exchange Rate Agent, if any;
(16) the applicability, if any, of Sections 1402 and/or 1403 to the Securities of the series and any provisions in modification of, in
addition to or in lieu of any of the provisions of Article Fourteen that shall be applicable to the Securities of the series;
(17) provisions, if any, granting special rights to the Holders of Securities of the series upon the occurrence of such events as may
be specified;
(18) any deletions from, modifications of or additions to the Events of Default or covenants (including any deletions from,
modifications of or additions to Section 1010) of the Guarantor or the applicable Issuer with respect to Securities of the series, whether or
not such Events of Default or covenants are consistent with the Events of Default or covenants set forth herein;
(19) whether Securities of the series are to be issuable as Registered Securities, Bearer Securities (with or without coupons) or both,
any restrictions applicable to the offer, sale or delivery of Bearer Securities, whether any Securities of the series are to be issuable initially
in temporary global form and whether any Securities of the series are to be issuable in permanent global form with or without coupons
and, if so, whether beneficial owners of interests in any such permanent global Security may exchange such interests for Securities of
such series and of like tenor of any authorized form and denomination and the circumstances under which any such exchanges may occur,
if other than in the manner provided in Section 305, whether Registered Securities of the series may be exchanged for Bearer Securities of
the series (if permitted by applicable laws and regulations), whether Bearer Securities of the series may be exchanged for Registered
Securities of such series, and the circumstances under which and the place or places where any such exchanges may be made and if
Securities of the series are to be issuable in global form, the identity of any initial depository therefor if other than The Depository Trust
Company;
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(20) the date as of which any Bearer Securities of the series and any temporary global Security representing Outstanding Securities
of the series shall be dated if other than the date of original issuance of the first Security of the series to be issued;
(21) the Person to whom any interest on any Registered Security of the series shall be payable, if other than the Person in whose
name that Security (or one or more Predecessor Securities) is registered at the close of business on the Regular Record Date for such
interest, the manner in which, or the Person to whom, any interest on any Bearer Security of the series shall be payable, if otherwise than
upon presentation and surrender of the coupons appertaining thereto as they severally mature, and the extent to which, or the manner in
which, any interest payable on a temporary global Security on an Interest Payment Date will be paid if other than in the manner provided
in Section 304;
(22) if Securities of the series are to be issuable in definitive form (whether upon original issue or upon exchange of a temporary
Security of such series) only upon receipt of certain certificates or other documents or satisfaction of other conditions, the form and/or
terms of such certificates, documents or conditions;
(23) if the Securities of the series are to be issued upon the exercise of warrants, the time, manner and place for such Securities to be
authenticated and delivered;
(24) the date referred to in Section 1108 that shall be applicable with respect to the Securities of such series and any deletions from,
modifications of or additions to Sections 1005 or 1108 with respect to the Securities of such series, or a statement to the effect that either
or both of Sections 1005 or 1108 shall not be applicable with respect to the Securities of such series;
(25) if the Securities of the series are to be convertible into or exchangeable for any securities of any Person (including the
applicable Issuer), the terms and conditions upon which such Securities will be so convertible or exchangeable; and
(26) any other terms, conditions, rights and preferences (or limitations on such rights and preferences) relating to the series (which
terms shall not be inconsistent with the requirements of the Trust Indenture Act but which need not be consistent with the provisions of
this Indenture).
All Securities of any one series and the coupons appertaining to any Bearer Securities of such series shall be substantially identical
except, in the case of Registered Securities, as to denomination and except as may otherwise be provided in or pursuant to such Board
Resolution (subject to Section 303) and set forth in such Officers’ Certificate or in any such indenture supplemental hereto. Not all Securities of
any one series need be issued at the same time, and, unless otherwise provided, a series may be reopened for issuances of additional Securities
of such series.
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If any of the terms of the series are established by action taken pursuant to one or more Board Resolutions, such Board Resolutions
shall be delivered to the Trustee at or prior to the delivery of the Officers’ Certificate setting forth the terms of the series.
SECTION 302. Denominations .
The Securities of each series shall be issuable in such denominations as shall be specified as contemplated by Section 301. With
respect to Securities of any series denominated in Dollars, in the absence of any such provisions, the Registered Securities of such series, other
than Registered Securities issued in global form (which may be of any denomination), shall be issuable in denominations of $1,000 and any
integral multiple thereof and the Bearer Securities of such series, other than the Bearer Securities issued in global form (which may be of any
denomination), shall be issuable in a denomination of $5,000.
SECTION 303. Execution, Authentication, Delivery and Dating .
The Securities and any coupons appertaining thereto shall be executed on behalf of the applicable Issuer by its Chairman, its Chief
Executive Officer, its President or a Vice President together with any one of the Secretary, an Assistant Secretary, the Treasurer or an Assistant
Treasurer of such Issuer. The signature of any of these officers on the Securities or coupons may be the manual or facsimile signatures of the
present or any future such authorized officer and may be imprinted or otherwise reproduced on the Securities.
Securities or coupons bearing the manual or facsimile signatures of individuals who were at any time the proper officers of the
applicable Issuer shall bind such Issuer notwithstanding that such individuals or any of them have ceased to hold such offices prior to the
authentication and delivery of such Securities or did not hold such offices at the date of such Securities or coupons.
At any time and from time to time after the execution and delivery of this Indenture, the applicable Issuer may deliver Securities of
any series together with any coupons appertaining thereto, executed by such Issuer and, in the case of Guaranteed Securities, endorsed by the
Guarantor to the Trustee for authentication, together with an Issuer Order for the authentication and delivery of such Securities, and the Trustee
in accordance with such Issuer Order shall authenticate and deliver such Securities; provided , however , that, in connection with its original
issuance, no Bearer Security shall be mailed or otherwise delivered to any location in the United States or Canada; and provided further that,
unless otherwise specified with respect to any series of Securities pursuant to Section 301, a Bearer Security may be delivered in connection
with its original issuance only if the Person entitled to receive such Bearer Security shall have furnished a certificate in the form set forth in
Exhibit B-1 to this Indenture, dated no earlier than 15 days prior to the earlier of the date on which such Bearer Security is delivered and the
date on which any temporary Security first becomes exchangeable for such Bearer Security in accordance with the terms of such temporary
Security and this Indenture. If any Security shall be represented by a permanent global Bearer Security, then, for purposes of this Section and
Section 304, the notation of a beneficial owner’s interest therein upon original issuance of such Security or upon exchange of a portion of a
temporary global Security shall be deemed to be delivery in connection with its original issuance of such beneficial owner’s interest in such
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permanent global Security. Except as permitted by Section 306, the Trustee shall not authenticate and deliver any Bearer Security unless all
appurtenant coupons for interest then matured have been detached and cancelled. If not all the Securities of any series are to be issued at one
time and if the Board Resolution or supplemental indenture establishing such series shall so permit, such Issuer Order may set forth procedures
acceptable to the Trustee for the issuance of such Securities and determining terms of particular Securities of such series such as interest rate,
stated maturity, date of issuance and date from which interest shall accrue.
In authenticating such Securities, and accepting the additional responsibilities under this Indenture in relation to such Securities, the
Trustee shall be entitled to receive, and (subject to TIA Sections 315(a) through 315(d)) shall be fully protected in relying upon, an Opinion or
Opinions of Counsel of the applicable Issuer and, in the case of Guaranteed Securities, the Guarantor stating:
(a) that the form or forms of such Securities and any coupons and the Guarantees, if any, have been established in conformity with
the provisions of this Indenture;
(b) that the terms of such Securities and any coupons and the Guarantees, if any, have been established in conformity with the
provisions of this Indenture;
(c) that such Securities, together with any coupons appertaining thereto, and, in the case of Guaranteed Securities, the Guarantees,
when completed by appropriate insertions and executed and delivered by the applicable Issuer and the Guarantor (in the case of
Guaranteed Securities) to the Trustee for authentication in accordance with this Indenture, authenticated and delivered by the Trustee in
accordance with this Indenture and issued by the applicable Issuer and the Guarantor (in the case of Guaranteed Securities) in the manner
and subject to any conditions specified in such Opinion of Counsel, will constitute the legal, valid and binding obligations of such Issuer
and the Guarantor (in the case of Guaranteed Securities), respectively, enforceable in accordance with their terms, subject to applicable
bankruptcy, insolvency, reorganization and other similar laws of general applicability relating to or affecting the enforcement of
creditors’ rights, to general equitable principles and to such other qualifications as such counsel shall conclude do not materially affect the
rights of Holders of such Securities and any coupons;
(d) that all laws and requirements in respect of the execution and delivery by the applicable Issuer of such Securities, any coupons,
and of the supplemental indentures, if any, and by the Guarantor of such Guarantees (in the case of Guaranteed Securities) and of the
supplemental indentures, if any, have been complied with and that authentication and delivery of such Securities and any coupons and the
execution and delivery of the supplemental indenture, if any, by the Trustee will not violate the terms of the Indenture;
(e) that each of the applicable Issuer and the Guarantor (in the case of Guaranteed Securities) has the corporate power to issue such
Securities and any coupons and any Guarantees (in the case of Guaranteed Securities), respectively, and has duly taken all necessary
corporate action with respect to such issuance; and
33
(f) that the issuance of such Securities and any coupons and any Guarantees (in the case of Guaranteed Securities) will not
contravene the articles of incorporation or by-laws of the applicable Issuer or the Guarantor (in the case of Guaranteed Securities), or
result in any violation of any of the terms or provisions of any law or regulation.
Notwithstanding the provisions of Section 301 and of the preceding two paragraphs, if not all the Securities of any series are to be
issued at one time, it shall not be necessary to deliver the Officers’ Certificate otherwise required pursuant to Section 301 or the Issuer Order
and Opinion of Counsel otherwise required pursuant to the preceding two paragraphs prior to or at the time of issuance of each Security, but
such documents shall be delivered prior to or at the time of issuance of the first Security of such series.
The Trustee shall not be required to authenticate and deliver any such Securities if the issue of such Securities pursuant to this
Indenture will affect the Trustee’s own rights, duties or immunities under the Securities and this Indenture or otherwise in a manner which is
not reasonably acceptable to the Trustee.
Each Registered Security shall be dated the date of its authentication and each Bearer Security shall be dated as of the date specified
as contemplated by Section 301.
No Security or coupon or Guarantee endorsed thereon shall be entitled to any benefit under this Indenture or be valid or obligatory
for any purpose unless there appears on such Security a certificate of authentication substantially in the form provided for herein duly executed
by the Trustee by manual signature of an authorized officer, and such certificate upon any Security shall be conclusive evidence, and the only
evidence, that such Security has been duly authenticated and delivered hereunder and is entitled, together with the Guarantee endorsed thereon,
if any, to the benefits of this Indenture. Notwithstanding the foregoing, if any Security shall have been authenticated and delivered hereunder
but never issued and sold by the applicable Issuer, and such Issuer shall deliver such Security to the Trustee for cancellation as provided in
Section 310 together with a written statement (which need not comply with Section 102 and need not be accompanied by an Opinion of
Counsel) stating that such Security has never been issued and sold by such Issuer, for all purposes of this Indenture such Security shall be
deemed never to have been authenticated and delivered hereunder and shall never be entitled to the benefits of this Indenture.
SECTION 304. Temporary Securities .
Pending the preparation of definitive Securities of any series, the applicable Issuer may execute, and upon receipt of an Issuer Order
of such Issuer, the Trustee shall authenticate and deliver, temporary Securities which are printed, lithographed, typewritten, mimeographed or
otherwise produced, in any authorized denomination, substantially of the tenor of the definitive Securities in lieu of which they are issued, in
registered form or, if authorized, in bearer form with one or more coupons or without coupons and, in the case of Guaranteed Securities, having
endorsed thereon a Guarantee executed by the Guarantor substantially of the tenor of the
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definitive Guarantee, and in all cases with such appropriate insertions, omissions, substitutions and other variations as the officers of such
Issuer or, if applicable, the Guarantor, executing such Securities and Guarantees, if any, may determine, as conclusively evidenced by their
execution of such Securities and Guarantees, if any. Such temporary Securities may be in global form.
Except in the case of temporary Securities in global form (which shall be exchanged in accordance with the provisions of the
following paragraphs), if temporary Securities of any series are issued, the applicable Issuer will cause definitive Securities of that series to be
prepared without unreasonable delay. After the preparation of definitive Securities of such series, the temporary Securities of such series shall
be exchangeable for definitive Securities of such series upon surrender of the temporary Securities of such series at the office or agency of such
Issuer in a Place of Payment for that series, without charge to the Holder. Upon surrender for cancellation of any one or more temporary
Securities of any series (accompanied by any unmatured coupons appertaining thereto), the applicable Issuer shall execute and the Trustee shall
authenticate and deliver in exchange therefor a like principal amount of definitive Securities of the same series of authorized denominations
and of like tenor and evidencing the same indebtedness and, in the case of Guaranteed Securities, having endorsed thereon a Guarantee
executed by the Guarantor; provided , however , that no definitive Bearer Security shall be delivered in exchange for a temporary Registered
Security; and provided further that a definitive Bearer Security shall be delivered in exchange for a temporary Bearer Security only in
compliance with the conditions set forth in Section 303. Until so exchanged the temporary Securities of any series shall in all respects be
entitled to the same benefits under this Indenture as definitive Securities of such series.
If temporary Securities of any series are issued in global form, any such temporary global Security shall, unless otherwise provided
therein, be delivered to the London, England office of a depositary or common depositary (the “Common Depositary”), for the benefit of
Euroclear and Clearstream, for credit to the respective accounts of the beneficial owners of such Securities (or to such other accounts as they
may direct).
Without unnecessary delay, but in any event not later than the date specified in, or determined pursuant to the terms of, any such
temporary global Security (the “Exchange Date”), the applicable Issuer shall deliver to the Trustee definitive Securities, in aggregate principal
amount equal to the principal amount of such temporary global Security and evidencing the same indebtedness, executed by such Issuer, and, in
the case of Guaranteed Securities, having endorsed thereon a Guarantee executed by the Guarantor. On or after the Exchange Date, such
temporary global Security shall be surrendered by the Common Depositary to the Trustee, as the Issuer’s agent for such purpose, to be
exchanged, in whole or from time to time in part, for definitive Securities without charge, and the Trustee shall authenticate and deliver, in
exchange for each portion of such temporary global Security, an equal aggregate principal amount of definitive Securities of the same series of
authorized denominations and of like tenor and evidencing the same indebtedness as the portion of such temporary global Security to be
exchanged. The definitive Securities to be delivered in exchange for any such temporary global Security shall be in bearer form, registered
form, permanent global bearer form or permanent global registered form, or any combination thereof, as specified as contemplated by
Section 301, and, if any combination thereof is so specified, as requested by the beneficial owner thereof; provided , however , that, unless
otherwise specified in such temporary global Security, upon such
35
presentation by the Common Depositary, such temporary global Security is accompanied by a certificate dated the Exchange Date or a
subsequent date and signed by Euroclear as to the portion of such temporary global Security held for its account then to be exchanged and a
certificate dated the Exchange Date or a subsequent date and signed by Clearstream as to the portion of such temporary global Security held for
its account then to be exchanged, each in the form set forth in Exhibit B-2 to this Indenture (or in such other form as may be established
pursuant to Section 301); and provided further that definitive Bearer Securities shall be delivered in exchange for a portion of a temporary
global Security only in compliance with the requirements of Section 303.
Unless otherwise specified in such temporary global Security, the interest of a beneficial owner of Securities of a series in a
temporary global Security shall be exchanged for definitive Securities of the same series and of like tenor and evidencing the same
indebtedness following the Exchange Date when the account holder instructs Euroclear or Clearstream, as the case may be, to request such
exchange on his behalf and delivers to Euroclear or Clearstream, as the case may be, a certificate in the form set forth in Exhibit B-1 to this
Indenture (or in such other form as may be established pursuant to Section 301), dated no earlier than 15 days prior to the Exchange Date,
copies of which certificate shall be available from the offices of Euroclear and Clearstream, the Trustee, any Authenticating Agent appointed
for such series of Securities and each Paying Agent. Unless otherwise specified in such temporary global Security, any such exchange shall be
made free of charge to the beneficial owners of such temporary global Security, except that a Person receiving definitive Securities must bear
the cost of insurance, postage, transportation and the like in the event that such Person does not take delivery of such definitive Securities in
person at the offices of Euroclear or Clearstream. Definitive Securities in bearer form to be delivered in exchange for any portion of a
temporary global Security shall be delivered only outside the United States and Canada.
Until exchanged in full as hereinabove provided, the temporary Securities of any series shall in all respects be entitled to the same
benefits under this Indenture as definitive Securities of the same series and of like tenor and evidencing the same indebtedness authenticated
and delivered hereunder, except that, unless otherwise specified as contemplated by Section 301, interest payable on a temporary global
Security on an Interest Payment Date for Securities of such series occurring prior to the applicable Exchange Date shall be payable to Euroclear
and Clearstream on such Interest Payment Date upon delivery by Euroclear and Clearstream to the Trustee of a certificate or certificates in the
form set forth in Exhibit B-2 to this Indenture (or in such other form as may be established pursuant to Section 301), for credit without further
interest thereon on or after such Interest Payment Date to the respective accounts of the Persons who are the beneficial owners of such
temporary global Security on such Interest Payment Date and who have each delivered to Euroclear or Clearstream, as the case may be, a
certificate dated no earlier than 15 days prior to the Interest Payment Date occurring prior to such Exchange Date in the form set forth in
Exhibit B-1 to this Indenture (or in such other form as may be established pursuant to Section 301). Notwithstanding anything to the contrary
herein contained, the certifications made pursuant to this paragraph shall satisfy the certification requirements of the preceding two paragraphs
of this Section and of the third paragraph of Section 303 of this Indenture and the interests of the Persons who are the beneficial owners of the
temporary global Security with respect to which such certification was made will be exchanged for definitive Securities of the same series and
of like tenor and evidencing the same
36
indebtedness on the Exchange Date or the date of certification if such date occurs after the Exchange Date, without further act or deed by such
beneficial owners. Except as otherwise provided in this paragraph, no payments of principal (or premium, if any) or interest, if any, owing with
respect to a beneficial interest in a temporary global Security will be made unless and until such interest in such temporary global Security shall
have been exchanged for an interest in a definitive Security. Any interest so received by Euroclear and Clearstream and not paid as herein
provided shall be returned to the Trustee no later than one month prior to the expiration of two years after such Interest Payment Date in order
to be repaid to the applicable Issuer in accordance with Section 1003.
SECTION 305. Registration, Registration of Transfer and Exchange .
Each Issuer shall cause to be kept at the Corporate Trust Office of the Trustee a register for each series of Securities issued by such
Issuer (the registers maintained in the Corporate Trust Office of the Trustee and in any other office or agency of such Issuer in a Place of
Payment being herein sometimes collectively referred to as the “Security Register”) in which, subject to such reasonable regulations as it may
prescribe, such Issuer shall provide for the registration of Registered Securities and of transfers of Registered Securities. The Security Register
shall be in written form or any other form capable of being converted into written form within a reasonable time. At all reasonable times, the
Security Register shall be open to inspection by the Trustee. The Trustee is hereby initially appointed as security registrar (the “Security
Registrar”) for the purpose of registering Registered Securities and transfers of Registered Securities as herein provided. The applicable Issuer
shall have the right to remove and replace from time to time the Security Registrar for any series of Securities; provided , however , that no
such removal or replacement shall be effective until a successor Security Registrar with respect to such series of Registered Securities shall
have been appointed by the applicable Issuer and shall have accepted such appointment by the applicable Issuer. In the event that the Trustee
shall not be or shall cease to be the Security Registrar with respect to a series of Securities, it shall have the right to examine the Security
Register for such series at all reasonable times. There shall be only one Security Register for each series of Securities.
Upon surrender for registration of transfer of any Registered Security of any series at the office or agency in a Place of Payment for
that series, the applicable Issuer shall execute, and the Trustee shall authenticate and deliver, in the name of the designated transferee, one or
more replacement Registered Securities of the same series, of any authorized denominations and of a like aggregate principal amount and tenor
and evidencing the same indebtedness and, in the case of Guaranteed Securities, having endorsed thereon a Guarantee executed by the
Guarantor.
At the option of the Holder, Registered Securities of any series may be exchanged for other replacement Registered Securities of the
same series, of any authorized denomination and of a like aggregate principal amount and tenor and evidencing the same indebtedness, upon
surrender of the Registered Securities to be exchanged at such office or agency. Whenever any Registered Securities are so surrendered for
exchange, the applicable Issuer shall execute, and the Trustee shall authenticate and deliver, the Registered Securities, and, in the case of
Guaranteed Securities, having endorsed thereon a Guarantee executed by the Guarantor, which the Holder making the exchange is entitled to
receive. Unless otherwise specified with respect to any series of Securities as contemplated by Section 301, Bearer Securities may not be issued
in exchange for Registered Securities.
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If (but only if) expressly permitted in or pursuant to the applicable Board Resolution and (subject to Section 303) set forth in the
applicable Officers’ Certificate, or in any indenture supplemental hereto, delivered as contemplated by Section 301, at the option of the Holder,
Bearer Securities of any series may be exchanged for Registered Securities of the same series of any authorized denomination and of a like
aggregate principal amount and tenor, upon surrender of the Bearer Securities to be exchanged at any such office or agency, with all unmatured
coupons and all matured coupons in default thereto appertaining. If the Holder of a Bearer Security is unable to produce any such unmatured
coupon or coupons or matured coupon or coupons in default, any such permitted exchange may be effected if the Bearer Securities are
accompanied by payment in funds acceptable to the applicable Issuer in an amount equal to the face amount of such missing coupon or
coupons, or the surrender of such missing coupon or coupons may be waived by the applicable Issuer and the Trustee if there is furnished to
them such security or indemnity as they may require to save each of them and any Paying Agent harmless. If thereafter the Holder of such
Security shall surrender to any Paying Agent any such missing coupon in respect of which such a payment shall have been made, such Holder
shall be entitled to receive the amount of such payment; provided , however , that, except as otherwise provided in Section 1002, interest
represented by coupons shall be payable only upon presentation and surrender of those coupons at an office or agency located outside the
United States. Notwithstanding the foregoing, in case a Bearer Security of any series is surrendered at any such office or agency in a permitted
exchange for a Registered Security of the same series and like tenor after the close of business at such office or agency on (i) any Regular
Record Date and before the opening of business at such office or agency on the relevant Interest Payment Date, or (ii) any Special Record Date
and before the opening of business at such office or agency on the related proposed date for payment of Defaulted Interest, such Bearer
Security shall be surrendered without the coupon relating to such Interest Payment Date or proposed date for payment, as the case may be, and
interest or Defaulted Interest, as the case may be, will not be payable on such Interest Payment Date or proposed date for payment, as the case
may be, in respect of the Registered Security issued in exchange for such Bearer Security, but will be payable only to the Holder of such
coupon when due in accordance with the provisions of this Indenture.
Whenever any Securities are so surrendered for exchange, the applicable Issuer shall execute, and the Trustee shall authenticate and
deliver, the Securities which the Holder making the exchange is entitled to receive, and, in the case of Guaranteed Securities, having endorsed
thereon a Guarantee executed by the Guarantor.
Notwithstanding the foregoing, except as otherwise specified as contemplated by Section 301, any permanent global Security shall
be exchangeable only as provided in this paragraph and the two following paragraphs. If any beneficial owner of an interest in a permanent
global Security is entitled to exchange such interest for Securities of such series and of like tenor and principal amount of another authorized
form and denomination, as specified as contemplated by Section 301 and provided that any applicable notice provided in the permanent global
Security shall have been given, then without unnecessary delay but in any event not later than the earliest date on which such interest may be so
exchanged, the applicable Issuer shall
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deliver to the Trustee definitive Securities in aggregate principal amount equal to the principal amount of such beneficial owner’s interest in
such permanent global Security, executed by such Issuer and, in the case of Guaranteed Securities, having a Guarantee executed by the
Guarantor endorsed thereon. On or after the earliest date on which such interests may be so exchanged, such permanent global Security shall be
surrendered by the Depositary for such permanent global Security to the Trustee, as such Issuer’s agent for such purpose, to be exchanged, in
whole or from time to time in part, for definitive Securities without charge, and the Trustee shall authenticate and deliver, in exchange for each
portion of such permanent global Security, an equal aggregate principal amount of definitive Securities of the same series of authorized
denominations and of like tenor and evidencing the same indebtedness as the portion of such permanent global Security to be exchanged which,
unless the Securities of the series are not issuable both as Bearer Securities and as Registered Securities, as specified as contemplated by
Section 301, shall be in the form of Bearer Securities or Registered Securities, or any combination thereof, as shall be specified by the
beneficial owner thereof; provided , however , that no Bearer Security delivered in exchange for a portion of a permanent global Security shall
be mailed or otherwise delivered to any location in the United States or Canada. If a Registered Security is issued in exchange for any portion
of a permanent global Security after the close of business at the office or agency where such exchange occurs on (i) any Regular Record Date
and before the opening of business at such office or agency on the relevant Interest Payment Date, or (ii) any Special Record Date and before
the opening of business at such office or agency on the related proposed date for payment of Defaulted Interest, then (in the case of clause (i))
interest or (in the case of clause (ii)) Defaulted Interest, as the case may be, will not be payable on such Interest Payment Date or proposed date
for payment, as the case may be, in respect of such Registered Security, but will be payable on such Interest Payment Date or proposed date for
payment, as the case may be, only to the Person who was the Holder of such permanent global Security at the close of business on the relevant
Regular Record Date or Special Record Date, as the case may be.
If at any time the Depositary for Securities of a series notifies the applicable Issuer that it is unwilling or unable to continue as
Depositary for Securities of such series or if at any time the Depositary for global Securities for such series shall no longer be a clearing agency
registered as such under the Securities Exchange Act of 1934, as amended, the applicable Issuer shall appoint a successor depositary with
respect to the Securities for such series. If a successor to the Depositary for Securities is not appointed by the applicable Issuer within 90 days
after the applicable Issuer receives such notice or becomes aware of such condition, as the case may be, the applicable Issuer’s election
pursuant to Section 301 shall no longer be effective with respect to the Securities for such series and the applicable Issuer will execute, and the
Trustee, upon receipt of an Issuer Order for the authentication and delivery of definitive Securities of such series, will authenticate and deliver
replacement Securities of such series in definitive registered form, in authorized denominations and, in the case of Guaranteed Securities, with
duly executed Guarantees duly endorsed thereon, and in an aggregate principal amount equal to the principal amount of the global Security or
Securities representing such series and evidencing the same indebtedness in exchange for such global Security or Securities. The provisions of
the last sentence of the immediately preceding paragraph shall be applicable to any exchange pursuant to this paragraph.
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The applicable Issuer may at any time and in its sole discretion determine that the Securities of any series issued in the form of one
or more global Securities shall no longer be represented by such global Security or Securities. In such event, the applicable Issuer will execute,
and the Trustee, upon receipt of an Issuer Order for the authentication and delivery of definitive Securities of such series, will authenticate and
deliver replacement Securities of such series in definitive registered form, in authorized denominations and, in the case of Guaranteed
Securities, with duly executed Guarantees duly endorsed thereon, and in an aggregate principal amount equal to the principal amount of the
global Security or Securities representing such series and evidencing the same indebtedness in exchange for such global Security or Securities.
The provisions of the last sentence of the second preceding paragraph shall be applicable to any exchange pursuant to this paragraph.
Upon the exchange of a global Security for Securities in definitive registered form, such global Security shall be cancelled by the
Trustee. Securities issued in exchange for a global Security pursuant to this Section shall be registered in such names and in such authorized
denominations as the Depositary for such global Security, pursuant to instructions from its direct or indirect participants or otherwise, shall
instruct the Trustee in writing. The Trustee shall deliver such Securities to the Persons in whose names such Securities are so registered.
All Securities and Guarantees issued upon any registration of transfer or exchange of Securities shall be the valid obligations of the
applicable Issuer and the Guarantor, respectively, evidencing the same debt, and entitled to the same benefits under this Indenture, as the
Securities and the Guarantees surrendered upon such registration of transfer or exchange.
Every Registered Security presented or surrendered for registration of transfer or for exchange shall (if so required by the applicable
Issuer or the Security Registrar) be duly endorsed, or be accompanied by a written instrument of transfer, in form satisfactory to such Issuer
and the Security Registrar, duly executed by the Holder thereof or his attorney duly authorized in writing.
No service charge shall be made for any registration of transfer or exchange of Securities, but the applicable Issuer may require
payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any registration of transfer
or exchange of Securities, other than exchanges pursuant to Section 304, 906, 1107 or 1305 not involving any transfer.
The applicable Issuer shall not be required (i) to issue, register the transfer of or exchange Securities of any series during a period
beginning at the opening of business 15 days before the day of the selection for redemption of Securities of that series under Section 1103 or
1203 and ending at the close of business on (A) if Securities of the series are issuable only as Registered Securities, the day of the mailing of
the relevant notice of redemption and (B) if Securities of the series are issuable as Bearer Securities, the day of the first publication of the
relevant notice of redemption or, if Securities of the series are also issuable as Registered Securities and there is no publication, the mailing of
the relevant notice of redemption, or (ii) to register the transfer of or exchange any Registered Security so selected for redemption in whole or
in part, except the unredeemed portion of any Security being redeemed in part, or (iii) to exchange any Bearer Security so selected for
redemption except that such a Bearer Security may
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be exchanged for a Registered Security of that series and like tenor; provided that such Registered Security shall be simultaneously surrendered
for redemption, or (iv) to issue, register the transfer of or exchange any Security which has been surrendered for repayment at the option of the
Holder, except the portion, if any, of such Security not to be so repaid.
SECTION 306. Mutilated, Destroyed, Lost and Stolen Securities .
If any mutilated Security or a Security with a mutilated coupon appertaining to it is surrendered to the Trustee, the applicable Issuer
shall execute and the Trustee shall authenticate and deliver in exchange therefor a replacement Security of the same series and of like tenor and
principal amount and evidencing the same indebtedness and, in the case of Guaranteed Securities, having endorsed thereon a Guarantee
executed by the Guarantor and bearing a number not contemporaneously outstanding, with coupons corresponding to the coupons, if any,
appertaining to the surrendered Security; provided, however , that any Bearer Security or any coupon shall be delivered only outside the United
States and Canada; and provided, further , that all Bearer Securities shall be delivered and received in person.
If there shall be delivered to the applicable Issuer and the Trustee (i) evidence to their satisfaction of the destruction, loss or theft of
any Security or coupon and (ii) such security or indemnity as may be required by them to save each of them and any agent of either of them
harmless, then, in the absence of notice to such Issuer or the Trustee that such Security or coupon has been acquired by a bona fide purchaser,
such Issuer shall execute and upon Issuer Order the Trustee shall authenticate and deliver, in lieu of any such destroyed, lost or stolen Security
or in exchange for the Security for which a destroyed, lost or stolen coupon appertains (with all appurtenant coupons not destroyed, lost or
stolen), a replacement Security of the same series and of like tenor and principal amount and evidencing the same indebtedness and, in the case
of Guaranteed Securities, having endorsed thereon a Guarantee executed by the Guarantor and bearing a number not contemporaneously
outstanding, with coupons corresponding to the coupons, if any, appertaining to such destroyed, lost or stolen Security or to the Security to
which such destroyed, lost or stolen coupon appertains; provided, however , that any Bearer Security or any coupon shall be delivered only
outside the United States and Canada; and provided, further , that all Bearer Securities shall be delivered and received in person.
Notwithstanding the provisions of the previous two paragraphs, in case any such mutilated, destroyed, lost or stolen Security or
coupon has become or is about to become due and payable, the applicable Issuer in its discretion may, instead of issuing a replacement
Security, with coupons corresponding to the coupons, if any, appertaining to such mutilated, destroyed, lost or stolen Security or to the Security
to which such mutilated, destroyed, lost or stolen coupon appertains, pay such Security or coupon; provided , however , that payment of
principal of (and premium, if any) and interest, if any, on Bearer Securities shall, except as otherwise provided in Section 1002, be payable only
at an office or agency located outside the United States and Canada and, unless otherwise specified as contemplated by Section 301, any
interest on Bearer Securities shall be payable only upon presentation and surrender of the coupons appertaining thereto.
Upon the issuance of any replacement Security under this Section, the applicable Issuer may require the payment of a sum sufficient
to cover any tax or other governmental charge that may be imposed in relation thereto and any other expenses (including the fees and expenses
of the Trustee) connected therewith.
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Every replacement Security of any series with its coupons, if any, and, in the case of Guaranteed Securities, the Guarantee endorsed
thereon issued pursuant to this Section in lieu of any mutilated, destroyed, lost or stolen Security or in exchange for a Security to which a
mutilated, destroyed, lost or stolen coupon appertains, shall constitute a contractual obligation of the applicable Issuer and, in the case of
Guaranteed Securities, the Guarantor, respectively, whether or not the mutilated, destroyed, lost or stolen Security and its coupons, if any, or
the mutilated, destroyed, lost or stolen coupon shall be at any time enforceable by anyone, and shall be entitled to all the benefits of this
Indenture equally and proportionately with any and all other Securities of that series and their coupons, if any, duly issued hereunder.
The provisions of this Section, as amended or supplemented pursuant to Section 301 of this Indenture with respect to particular
securities or generally, are exclusive and shall preclude (to the extent lawful) all other rights and remedies with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Securities or coupons.
SECTION 307. Payment of Principal and Interest; Interest Rights Preserved; Optional Interest Reset .
(a) Unless otherwise provided as contemplated by Section 301 with respect to any series of Securities, interest, if any, on any
Registered Security which is payable, and is punctually paid or duly provided for, on any Interest Payment Date shall be paid to the Person in
whose name such Security (or one or more Predecessor Securities) is registered at the close of business on the Regular Record Date for such
interest at the office or agency of the applicable Issuer maintained for such purpose pursuant to Section 1002; provided , however , that each
installment of interest, if any, on any Registered Security may at the applicable Issuer’s option be paid by (i) mailing a check for such interest,
payable to or upon the written order of the Person entitled thereto pursuant to Section 309, to the address of such Person as it appears on the
Security Register or (ii) wire transfer to an account located in the United States maintained by the Person entitled to such payment as specified
in the Security Register. Principal paid in relation to any Security at Maturity shall be paid to the Holder of such Security only upon
presentation and surrender of such Security to any office or agency referred to in this Section 307(a).
Unless otherwise provided as contemplated by Section 301 with respect to the Securities of any series, payment of interest, if any,
may be made, in the case of a Bearer Security, by transfer to an account located outside the United States and Canada maintained by the payee,
upon presentation and surrender of the coupons appertaining thereto.
If so provided pursuant to Section 301 with respect to the Securities of any series, every permanent global Security of such series
will provide that interest, if any, payable on any Interest Payment Date will be paid to each of Euroclear and Clearstream with respect to that
portion of such permanent global Security held for its account by the Common Depositary, for the purpose of permitting each of Euroclear and
Clearstream to credit the interest, if any, received by it in respect of such permanent global Security to the accounts of the beneficial owners
thereof.
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Any interest on any Registered Security of any series which is payable, but is not punctually paid or duly provided for, on any
Interest Payment Date shall forthwith cease to be payable to the Holder on the relevant Regular Record Date by virtue of having been such
Holder, and such defaulted interest and, if applicable, interest on such defaulted interest (to the extent lawful) at the rate specified in the
Securities of such series (such defaulted interest and, if applicable, interest thereon herein collectively called “Defaulted Interest”) shall be paid
by the applicable Issuer, at its election in each case, as provided in clause (1) or (2) below:
(1) The applicable Issuer may elect to make payment of any Defaulted Interest to the Persons in whose names the Registered
Securities of such series (or their respective Predecessor Securities) are registered at the close of business on a Special Record Date for
the payment of such Defaulted Interest, which shall be fixed in the following manner. Such Issuer shall notify the Trustee in writing of
the amount of Defaulted Interest proposed to be paid on each Registered Security of such series and the date of the proposed payment,
and at the same time such Issuer shall deposit with the Trustee an amount of money in the Currency in which the Securities of such series
are payable (except as otherwise specified pursuant to Section 301 for the Securities of such series and except, if applicable, as provided
in Sections 312(b), 312(d) and 312(e)) equal to the aggregate amount proposed to be paid in respect of such Defaulted Interest or shall
make arrangements satisfactory to the Trustee for such deposit on or prior to the date of the proposed payment, such money when
deposited to be held in trust for the benefit of the Persons entitled to such Defaulted Interest as in this clause provided. Thereupon the
Trustee shall fix a Special Record Date for the payment of such Defaulted Interest which shall be not more than 15 days and not less than
10 days prior to the date of the proposed payment and not less than 10 days after the receipt by the Trustee of the notice of the proposed
payment. The Trustee shall promptly notify such Issuer of such Special Record Date and, in the name and at the expense of such Issuer,
shall cause notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor to be given in the manner
provided in Section 106, not less than 10 days prior to such Special Record Date. Notice of the proposed payment of such Defaulted
Interest and the Special Record Date therefor having been so given, such Defaulted Interest shall be paid to the Persons in whose name
the Registered Securities of such series (or their respective Predecessor Securities) are registered at the close of business on such Special
Record Date and shall no longer be payable pursuant to the following clause (2).
(2) The applicable Issuer may make payment of any Defaulted Interest on the Registered Securities of any series in any other lawful
manner not inconsistent with the requirements of any securities exchange on which such Securities may be listed, and upon such notice as
may be required by such exchange, if, after notice given by such Issuer to the Trustee of the proposed payment pursuant to this clause,
such manner of payment shall be deemed practicable by the Trustee.
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(b) The provisions of this Section 307(b) may be made applicable to any series of Securities pursuant to Section 301 (with such
modifications, additions or substitutions as may be specified pursuant to such Section 301). The interest rate (or the spread or spread multiplier
used to calculate such interest rate, if applicable) on any Security of such series may be reset by the applicable Issuer on the date or dates
specified on the face of such Security (each an “Optional Reset Date”). The applicable Issuer may exercise such option with respect to such
Security by notifying the Trustee of such exercise at least 50 but not more than 60 days prior to an Optional Reset Date for such Security,
which notice shall specify the information to be included in the Reset Notice (as defined). Not later than 40 days prior to each Optional Reset
Date, the Trustee shall transmit, in the manner provided for in Section 106, to the Holder of any such Security a notice (the “Reset Notice”)
indicating whether the applicable Issuer has elected to reset the interest rate (or the spread or spread multiplier used to calculate such interest
rate, if applicable), and if so (i) such new interest rate (or such new spread or spread multiplier, if applicable) and (ii) the provisions, if any, for
redemption during the period from such Optional Reset Date to the next Optional Reset Date or if there is no such next Optional Reset Date, to
the Stated Maturity of such Security (each such period a “Subsequent Interest Period”), including the date or dates on which or the period or
periods during which and the price or prices at which such redemption may occur during the Subsequent Interest Period.
Notwithstanding the foregoing, not later than 20 days prior to the Optional Reset Date, the applicable Issuer may, at its option,
revoke the interest rate (or the spread or spread multiplier used to calculate such interest rate, if applicable) provided for in the Reset Notice and
establish an interest rate (or a spread or spread multiplier used to calculate such interest rate, if applicable) that is higher than the interest rate
(or the spread or spread multiplier, if applicable) provided for in the Reset Notice, for the Subsequent Interest Period by causing the Trustee to
transmit, in the manner provided for in Section 106, notice of such higher interest rate (or such higher spread or spread multiplier, if applicable)
to the Holder of such Security. Such notice shall be irrevocable. All Securities with respect to which the interest rate (or the spread or spread
multiplier used to calculate such interest rate, if applicable) is reset on an Optional Reset Date, and with respect to which the Holders of such
Securities have not tendered such Securities for repayment (or have validly revoked any such tender) pursuant to the next succeeding
paragraph, will bear such higher interest rate (or such higher spread or spread multiplier, if applicable).
The Holder of any such Security will have the option to elect repayment by the applicable Issuer of the principal of such Security on
each Optional Reset Date at a price equal to the principal amount thereof plus interest accrued to such Optional Reset Date. In order to obtain
repayment on an Optional Reset Date, the Holder must follow the procedures set forth in Article Thirteen for repayment at the option of
Holders except that the period for delivery or notification to the Trustee shall be at least 25 but not more than 35 days prior to such Optional
Reset Date and except that, if the Holder has tendered any Security for repayment pursuant to the Reset Notice, the Holder may, by written
notice to the Trustee, revoke such tender or repayment until the close of business on the tenth day before such Optional Reset Date.
(c) Subject to the foregoing provisions of this Section and Section 305, each Security delivered under this Indenture upon
registration of transfer of or in exchange for or in lieu of any other Security shall carry the rights to interest accrued and unpaid, and to accrue,
which were carried by such other Security.
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SECTION 308. Optional Extension of Stated Maturity .
The provisions of this Section 308 may be made applicable to any series of Securities pursuant to Section 301 (with such
modifications, additions or substitutions as may be specified pursuant to such Section 301). The Stated Maturity of any Security of such series
may be extended at the option of the applicable Issuer for the period or periods specified on the face of such Security (each an “Extension
Period”) up to but not beyond the date (the “Final Maturity”) set forth on the face of such Security. Such Issuer may exercise such option with
respect to any Security by notifying the Trustee of such exercise at least 50 but not more than 60 days prior to the Stated Maturity of such
Security in effect prior to the exercise of such option (the “Original Stated Maturity”). If such Issuer exercises such option, the Trustee shall
transmit, in the manner provided for in Section 106, to the Holder of such Security not later than 40 days prior to the Original Stated Maturity a
notice (the “Extension Notice”) indicating (i) the election of such Issuer to extend the Stated Maturity, (ii) the new Stated Maturity, (iii) the
interest rate, if any, applicable to the Extension Period and (iv) the provisions, if any, for redemption during such Extension Period. Upon the
Trustee’s transmittal of the Extension Notice, the Stated Maturity of such Security shall be extended automatically and, except as modified by
the Extension Notice and as described in the next paragraph, such Security will have the same terms as prior to the transmittal of such
Extension Notice.
Notwithstanding the foregoing, not later than 20 days before the Original Stated Maturity of such Security, the applicable Issuer
may, at its option, revoke the interest rate provided for in the Extension Notice and establish a higher interest rate for the Extension Period by
causing the Trustee to transmit, in the manner provided for in Section 106, notice of such higher interest rate to the Holder of such Security.
Such notice shall be irrevocable. All Securities with respect to which the Stated Maturity is extended will bear such higher interest rate.
If the applicable Issuer extends the Maturity of any Security, the Holder will have the option to elect repayment of such Security by
such Issuer on the Original Stated Maturity at a price equal to the principal amount thereof, plus interest accrued to such date. In order to obtain
repayment on the Original Stated Maturity once such Issuer has extended the Maturity thereof, the Holder must follow the procedures set forth
in Article Thirteen for repayment at the option of Holders, except that the period for delivery or notification to the Trustee shall be at least 25
but not more than 35 days prior to the Original Stated Maturity and except that, if the Holder has tendered any Security for repayment pursuant
to an Extension Notice, the Holder may by written notice to the Trustee revoke such tender for repayment until the close of business on the
tenth day before the Original Stated Maturity.
SECTION 309. Persons Deemed Owners .
Prior to due presentment of a Registered Security for registration of transfer, the applicable Issuer, the Guarantor (in the case of
Guaranteed Securities), the Trustee and any agent of any of the foregoing may treat the Person in whose name such Registered Security is
registered as the owner of such Registered Security for the purpose of receiving payment of principal of (and premium, if any) and (subject to
Sections 305 and 307) interest, if any, on such Security and for all other purposes whatsoever (other than the payment of Additional Amounts,
if any), whether or not such Security be overdue, and none of such Issuer, the Guarantor, the Trustee or any agent of any of the foregoing shall
be affected by notice to the contrary.
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Title to any Bearer Security and any coupons appertaining thereto shall pass by delivery. The applicable Issuer, the Guarantor (in
the case of Guaranteed Securities), the Trustee and any agent of any of the foregoing may treat the bearer of any Bearer Security and the bearer
of any coupon as the absolute owner of such Security or coupon for the purpose of receiving payment thereof or on account thereof and for all
other purposes whatsoever, whether or not such Security or coupons be overdue, and none of such Issuer, the Guarantor, the Trustee or any
agent of any of the foregoing shall be affected by notice to the contrary.
None of the applicable Issuer, the Guarantor (in the case of Guaranteed Securities), the Trustee, any Paying Agent or the Security
Registrar will have any responsibility or liability for any aspect of the records relating to or payments made on account of beneficial ownership
interests of a Security in global form or for maintaining, supervising or reviewing any records relating to such beneficial ownership interests.
Notwithstanding the foregoing, with respect to any global Security, nothing herein shall prevent the applicable Issuer, the Guarantor
(in the case of Guaranteed Securities), the Trustee, or any agent of any of the foregoing from giving effect to any written certification, proxy or
other authorization furnished by any depositary, as a Holder, with respect to such global Security or impair, as between such depositary and
owners of beneficial interests in such global Security, the operation of customary practices governing the exercise of the rights of such
depositary (or its nominee) as Holder of such global Security.
SECTION 310. Cancellation .
All Securities and coupons surrendered for payment, redemption, repayment at the option of the Holder, registration of transfer or
exchange or for credit against any current or future sinking fund payment shall, if surrendered to any Person other than the Trustee, be
delivered to the Trustee. All Securities and coupons so delivered to the Trustee shall be promptly cancelled by it. The applicable Issuer or the
Guarantor (in the case of Guaranteed Securities) may at any time deliver to the Trustee for cancellation any Securities previously authenticated
and delivered hereunder which such Issuer or the Guarantor may have acquired in any manner whatsoever, and may deliver to the Trustee (or
to any other Person for delivery to the Trustee) for cancellation any Securities previously authenticated hereunder which such Issuer has not
issued and sold, and all Securities so delivered shall be promptly cancelled by the Trustee. If the applicable Issuer shall so acquire any of the
Securities, however, such acquisition shall not operate as a redemption or satisfaction of the indebtedness represented by such Securities unless
and until the same are surrendered to the Trustee for cancellation. No Securities shall be authenticated in lieu of or in exchange for any
Securities cancelled as provided in this Section, except as expressly permitted by this Indenture. All cancelled Securities held by the Trustee
shall be disposed of by the Trustee in accordance with its customary procedures and certification of their disposal delivered to the applicable
Issuer unless by Issuer Order such Issuer shall direct that cancelled Securities be returned to it.
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SECTION 311. Computation of Interest .
Except as otherwise specified as contemplated by Section 301 with respect to any Securities, interest, if any, on the Securities of
each series shall be computed on the basis of a 360-day year of twelve 30-day months. For the purposes of disclosure under the Interest Act
(Canada), the yearly rate of interest to which interest calculated under a Security for any period in any calendar year (the “calculation period”)
is equivalent, is the rate payable under a Security in respect of the calculation period multiplied by a fraction the numerator of which is the
actual number of days in such calendar year and the denominator of which is the actual number of days in the calculation period.
SECTION 312. Currency and Manner of Payments in Respect of Securities .
(a) With respect to Registered Securities of any series not permitting the election provided for in paragraph (b) below or the Holders
of which have not made the election provided for in paragraph (b) below, and with respect to Bearer Securities of any series, except as provided
in paragraph (d) below, payment of the principal of (and premium, if any) and interest, if any, on any Registered or Bearer Security of such
series will be made in the Currency in which such Registered Security or Bearer Security, as the case may be, is denominated or stated to be
payable. The provisions of this Section 312 may be modified or superseded with respect to any Securities pursuant to Section 301.
(b) It may be provided pursuant to Section 301 with respect to Registered Securities of any series that Holders shall have the option,
subject to paragraphs (d) and (e) below, to receive payments of principal of (or premium, if any) or interest, if any, on such Registered
Securities in any of the Currencies which may be designated for such election by delivering to the Trustee a written election with signature
guarantees and in the applicable form established pursuant to Section 301, not later than the close of business on the Election Date immediately
preceding the applicable payment date. If a Holder so elects to receive such payments in any such Currency, such election will remain in effect
for such Holder or any transferee of such Holder until changed by such Holder or such transferee by written notice to the Trustee (but any such
change must be made not later than the close of business on the Election Date immediately preceding the next payment date to be effective for
the payment to be made on such payment date and no such change of election may be made with respect to payments to be made on any
Registered Security of such series with respect to which an Event of Default has occurred or with respect to which the applicable Issuer has
deposited funds pursuant to Article Four or Fourteen or with respect to which a notice of redemption has been given by the applicable Issuer or
a notice of option to elect repayment has been sent by such Holder or such transferee). Any Holder of any such Registered Security who shall
not have delivered any such election to the Trustee not later than the close of business on the applicable Election Date will be paid the amount
due on the applicable payment date in the relevant Currency as provided in Section 312(a). The Trustee shall notify the Exchange Rate Agent
as soon as practicable after the Election Date of the aggregate principal amount of Registered Securities for which Holders have made such
written election.
(c) Unless otherwise specified pursuant to Section 301, if the election referred to in paragraph (b) above has been provided for
pursuant to Section 301, then, unless otherwise specified pursuant to Section 301, not later than the fourth Business Day after the Election Date
for each payment date for Registered Securities of any series, the Exchange Rate Agent will
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deliver to the applicable Issuer a written notice specifying, in the Currency in which Registered Securities of such series are payable, the
respective aggregate amounts of principal of (and premium, if any) and interest, if any, on the Registered Securities to be paid on such payment
date, specifying the amounts in such Currency so payable in respect of the Registered Securities as to which the Holders of Registered
Securities of such series shall have elected to be paid in another Currency as provided in paragraph (b) above. If the election referred to in
paragraph (b) above has been provided for pursuant to Section 301 and if at least one Holder has made such election, then, unless otherwise
specified pursuant to Section 301, on the second Business Day preceding such payment date the applicable Issuer will deliver to the Trustee for
such series of Registered Securities an Exchange Rate Officer’s Certificate in respect of the Dollar or Foreign Currency payments to be made
on such payment date. Unless otherwise specified pursuant to Section 301, the Dollar or Foreign Currency amount receivable by Holders of
Registered Securities who have elected payment in a Currency as provided in paragraph (b) above shall be determined by the applicable Issuer
on the basis of the applicable Market Exchange Rate in effect on the third Business Day (the “Valuation Date”) immediately preceding each
payment date, and such determination shall be conclusive and binding for all purposes, absent manifest error.
(d) If a Conversion Event occurs with respect to a Foreign Currency in which any of the Securities are denominated or payable
other than pursuant to an election provided for pursuant to paragraph (b) above, then with respect to each date for the payment of principal of
(and premium, if any) and interest, if any, on the applicable Securities denominated or payable in such Foreign Currency occurring after the last
date on which such Foreign Currency was used (the “Conversion Date”), the Dollar shall be the Currency of payment for use on each such
payment date. Unless otherwise specified pursuant to Section 301, the Dollar amount to be paid by the applicable Issuer to the Trustee and by
the Trustee or any Paying Agent to the Holders of such Securities with respect to such payment date shall be, in the case of a Foreign Currency
other than a currency unit, the Dollar Equivalent of the Foreign Currency or, in the case of a currency unit, the Dollar Equivalent of the
Currency Unit, in each case as determined by the Exchange Rate Agent in the manner provided in paragraph (f) or (g) below.
(e) Unless otherwise specified pursuant to Section 301, if the Holder of a Registered Security denominated in any Currency shall
have elected to be paid in another Currency as provided in paragraph (b) above, and a Conversion Event occurs with respect to such elected
Currency, such Holder shall receive payment in the Currency in which payment would have been made in the absence of such election; and if a
Conversion Event occurs with respect to the Currency in which payment would have been made in the absence of such election, such Holder
shall receive payment in Dollars as provided in paragraph (d) above.
(f) The “Dollar Equivalent of the Foreign Currency” shall be determined by the Exchange Rate Agent and shall be obtained for each
subsequent payment date by converting the specified Foreign Currency into Dollars at the Market Exchange Rate on the Conversion Date.
(g) The “Dollar Equivalent of the Currency Unit” shall be determined by the Exchange Rate Agent and subject to the provisions of
paragraph (h) below shall be the sum of each amount obtained by converting the Specified Amount of each Component Currency into Dollars
at the Market Exchange Rate for such Component Currency on the Valuation Date with respect to each payment.
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(h) For purposes of this Section 312 the following terms shall have the following meanings:
A “Component Currency” shall mean any Currency which, on the Conversion Date, was a component currency of the relevant
currency unit, including, but not limited to, the Euro.
A “Specified Amount” of a Component Currency shall mean the number of units of such Component Currency or fractions thereof
which were represented in the relevant currency unit, including, but not limited to, the Euro, on the Conversion Date. If after the
Conversion Date the official unit of any Component Currency is altered by way of combination or subdivision, the Specified Amount of
such Component Currency shall be divided or multiplied in the same proportion. If after the Conversion Date two or more Component
Currencies are consolidated into a single currency, the respective Specified Amounts of such Component Currencies shall be replaced by
an amount in such single Currency equal to the sum of the respective Specified Amounts of such consolidated Component Currencies
expressed in such single Currency, and such amount shall thereafter be a Specified Amount and such single Currency shall thereafter be a
Component Currency. If after the Conversion Date any Component Currency shall be divided into two or more currencies, the Specified
Amount of such Component Currency shall be replaced by amounts of such two or more currencies, having an aggregate Dollar
Equivalent value at the Market Exchange Rate on the date of such replacement equal to the Dollar Equivalent value of the Specified
Amount of such former Component Currency at the Market Exchange Rate immediately before such division and such amounts shall
thereafter be Specified Amounts and such currencies shall thereafter be Component Currencies. If, after the Conversion Date of the
relevant currency unit, including, but not limited to, the Euro, a Conversion Event (other than any event referred to above in this
definition of “Specified Amount”) occurs with respect to any Component Currency of such currency unit and is continuing on the
applicable Valuation Date, the Specified Amount of such Component Currency shall, for purposes of calculating the Dollar Equivalent of
the Currency Unit, be converted into Dollars at the Market Exchange Rate in effect on the Conversion Date of such Component Currency.
“Election Date” shall mean the date for any series of Registered Securities as specified pursuant to clause (14) of Section 301 by
which the written election referred to in paragraph (b) above may be made.
All decisions and determinations of the Exchange Rate Agent regarding the Dollar Equivalent of the Foreign Currency, the Dollar
Equivalent of the Currency Unit, the Market Exchange Rate and changes in the Specified Amounts as specified above shall be in its sole
discretion and shall, in the absence of manifest error, be conclusive for all purposes and irrevocably binding upon the applicable Issuer, the
Trustee and all Holders of such Securities denominated or payable in the relevant Currency. The Exchange Rate Agent shall promptly give
written notice to the applicable Issuer and the Trustee of any such decision or determination.
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In the event that the applicable Issuer determines in good faith that a Conversion Event has occurred with respect to a Foreign
Currency, such Issuer will immediately give written notice thereof to the Trustee and to the Exchange Rate Agent (and the Trustee will
promptly thereafter give notice in the manner provided for in Section 106 to the affected Holders) specifying the Conversion Date. In the event
the applicable Issuer so determines that a Conversion Event has occurred with respect to the Euro or any other currency unit in which Securities
are denominated or payable, such Issuer will immediately give written notice thereof to the Trustee and to the Exchange Rate Agent (and the
Trustee will promptly thereafter give notice in the manner provided for in Section 106 to the affected Holders) specifying the Conversion Date
and the Specified Amount of each Component Currency on the Conversion Date. In the event the applicable Issuer determines in good faith
that any subsequent change in any Component Currency as set forth in the definition of Specified Amount above has occurred, such Issuer will
similarly give written notice to the Trustee and the Exchange Rate Agent.
The Trustee shall be fully justified and protected in relying and acting upon information received by it from the applicable Issuer
and the Exchange Rate Agent pursuant to this Section 312 and shall not otherwise have any duty or obligation to determine the accuracy or
validity of such information independent of such Issuer or the Exchange Rate Agent.
SECTION 313. Appointment and Resignation of Successor Exchange Rate Agent .
(a) Unless otherwise specified pursuant to Section 301, if and so long as the Securities of any series (i) are denominated in a
Currency other than Dollars or (ii) may be payable in a Currency other than Dollars, or so long as it is required under any other provision of
this Indenture, then the applicable Issuer will maintain with respect to each such series of Securities, or as so required, at least one Exchange
Rate Agent. Such Issuer will cause the Exchange Rate Agent to make the necessary foreign exchange determinations at the time and in the
manner specified pursuant to Section 301 for the purpose of determining the applicable rate of exchange and, if applicable, for the purpose of
converting the issued Currency into the applicable payment Currency for the payment of principal (and premium, if any) and interest, if any,
pursuant to Section 312.
(b) The applicable Issuer shall have the right to remove and replace from time to time the Exchange Rate Agent for any series of
Securities. No resignation of the Exchange Rate Agent and no appointment of a successor Exchange Rate Agent pursuant to this Section shall
become effective until the acceptance of appointment by the successor Exchange Rate Agent as evidenced by a written instrument delivered to
the applicable Issuer and the Trustee.
(c) If the Exchange Rate Agent shall resign, be removed or become incapable of acting, or if a vacancy shall occur in the office of
the Exchange Rate Agent for any cause with respect to the Securities of one or more series, the applicable Issuer, by or pursuant to a Board
Resolution, shall promptly appoint a successor Exchange Rate Agent or Exchange Rate Agents with respect to the Securities of that or those
series (it being understood that any such successor Exchange Rate Agent may be appointed with respect to the Securities of one or more or all
of such series and that, unless otherwise specified pursuant to Section 301, at any time there shall only be one Exchange Rate Agent with
respect to the Securities of any particular series that are originally issued by such Issuer on the same date and that are initially denominated
and/or payable in the same Currency).
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ARTICLE FOUR
SATISFACTION AND DISCHARGE
SECTION 401. Satisfaction and Discharge of Indenture .
This Indenture shall upon Issuer Request of an Issuer cease to be of further effect with respect to any series of Securities issued by
such Issuer specified in such Issuer Request (except as to any surviving rights of registration of transfer or exchange of Securities of such series
expressly provided for herein or pursuant hereto, and the rights of Holders of Outstanding Securities and any related coupons to receive, solely
from the trust fund described in subclause (B) of clause (1) of this Section, payments in respect of the principal of (and premium, if any) and
interest, if any, on such Securities and any related coupons when such payments are due and except as provided in the last paragraph of this
Section 401) and the Trustee, at the expense of such Issuer, shall execute proper instruments acknowledging satisfaction and discharge of this
Indenture as to such series when
(1) either
(A) all Securities of such series theretofore authenticated and delivered and all coupons, if any, appertaining thereto (other
than (i) coupons appertaining to Bearer Securities surrendered for exchange for Registered Securities and maturing after such
exchange, whose surrender is not required or has been waived as provided in Section 305, (ii) Securities and coupons of such series
which have been destroyed, lost or stolen and which have been replaced or paid as provided in Section 306, (iii) coupons
appertaining to Securities called for redemption and maturing after the relevant Redemption Date, whose surrender has been waived
as provided in Section 1106, and (iv) Securities and coupons of such series for whose payment money has theretofore been
deposited in trust with the Trustee or any Paying Agent or segregated and held in trust by such Issuer and thereafter repaid to such
Issuer, as provided in Section 1003) have been delivered to the Trustee for cancellation; or
(B) all Securities of such series and, in the case of (i) or (ii) below, any coupons appertaining thereto not theretofore delivered
to the Trustee for cancellation
(i) have become due and payable, or
(ii) will become due and payable at their Stated Maturity within one year, or
(iii) if redeemable at the option of such Issuer, are to be called for redemption within one year under arrangements
satisfactory to the Trustee for the giving of notice of redemption by the Trustee in the name, and at the expense, of such
Issuer,
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and such Issuer, in the case of (i), (ii) or (iii) above, has irrevocably deposited or caused to be deposited with the Trustee as
trust funds in trust for such purpose an amount in the Currency in which the Securities of such series are payable, sufficient
to pay and discharge the entire indebtedness on such Securities not theretofore delivered to the Trustee for cancellation, for
principal (and premium, if any) and interest, if any, to the date of such deposit (in the case of Securities which have become
due and payable) or to the Stated Maturity or Redemption Date, as the case may be;
(2) such Issuer or, in the case of Guaranteed Securities, the Guarantor has paid or caused to be paid all other sums payable
hereunder by such Issuer or the Guarantor, as the case may be, and
(3) such Issuer has delivered to the Trustee an Officers’ Certificate and an Opinion of Counsel, each stating that all conditions
precedent herein provided for relating to the satisfaction and discharge of this Indenture as to such series have been complied with.
Notwithstanding the satisfaction and discharge of this Indenture, the provisions of Section 1005, the obligations of such Issuer to
the Trustee under Section 606, the obligations of the Trustee to any Authenticating Agent under Section 611 and, if money shall have been
deposited with the Trustee pursuant to subclause (B) of clause (1) of this Section, the provisions of Sections 113, 114, 304, 305, 306, 1002,
1003 and 1108 (and any other applicable provisions of Article Eleven) and the obligations of the Trustee under Section 402 shall survive such
satisfaction and discharge and remain in full force and effect.
SECTION 402. Application of Trust Money .
Subject to the provisions of the last paragraph of Section 1003, all money deposited with the Trustee pursuant to Section 401 shall
be held in trust and applied by it, in accordance with the provisions of the Securities, the coupons and this Indenture, to the payment, either
directly or through any Paying Agent (including the applicable Issuer or, in the case of Guaranteed Securities, the Guarantor acting as its own
Paying Agent) as the Trustee may determine, to the Persons entitled thereto, of the principal (and premium, if any) and interest, if any, for
whose payment such money has been deposited with the Trustee; but such money need not be segregated from other funds except to the extent
required by law.
ARTICLE FIVE
REMEDIES
SECTION 501. Events of Default .
“Event of Default”, wherever used herein with respect to Securities of any series, means any one of the following events (whatever
the reason for such Event of Default and whether it shall be voluntary or involuntary or be effected by operation of law or pursuant to any
judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body), unless such event is
specifically deleted or modified in or pursuant to a supplemental indenture, Board Resolution or Officers’ Certificate establishing the terms of
such series pursuant to Section 301 of this Indenture:
(1) default in the payment of the principal of (or premium, if any, on) any Security of that series at its Maturity; or
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(2) default in the payment of any interest on any Security of that series, or any related coupon, when such interest or coupon
becomes due and payable, and continuance of such default for a period of 30 days; or
(3) default in the deposit of any sinking fund payment, when the same becomes due by the terms of the Securities of that series; or
(4) default in the performance, or breach, of any covenant or agreement of the applicable Issuer or, in the case of Guaranteed
Securities, the Guarantor in this Indenture in respect of the Securities of that series (other than a default in the performance or breach of a
covenant or agreement which is specifically dealt with elsewhere in this Section), and continuance of such default or breach for a period
of 90 days after there has been given, by registered or certified mail, to such Issuer and (in the case of Guaranteed Securities) the
Guarantor by the Trustee or to such Issuer, (in the case of Guaranteed Securities) the Guarantor and the Trustee by the Holders of at least
25% in principal amount of all Outstanding Securities affected thereby, a written notice specifying such default or breach and requiring it
to be remedied and stating that such notice is a “Notice of Default” hereunder; or
(5) failure to pay when due, after the expiration of any applicable grace period, any portion of the principal of, or involuntary
acceleration of the maturity (which acceleration is not rescinded or annulled within 10 days) of, Indebtedness of the applicable Issuer or
(in the case of Guaranteed Securities) the Guarantor having an aggregate principal amount outstanding in excess of the greater of
(i) $150,000,000 and (ii) 5% of Consolidated Net Tangible Assets; or
(6) the applicable Issuer or (in the case of Guaranteed Securities) the Guarantor pursuant to or under or within the meaning of any
Bankruptcy Law:
(i) commences a proceeding or makes an application seeking a Bankruptcy Order;
(ii) consents to the making of a Bankruptcy Order or the commencement of any proceeding or application seeking the making of a
Bankruptcy Order against it;
(iii) consents to the appointment of a Custodian of it or for any substantial part of its property;
(iv) makes a general assignment for the benefit of its creditors or files a proposal or notice of intention to make a proposal or other
scheme of arrangement involving the rescheduling, reorganizing or compromise of its indebtedness;
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(v) files an assignment in bankruptcy; or
(vi) consents to the filing of an assignment in bankruptcy or the appointment of or taking possession by a Custodian;
(7) a court of competent jurisdiction in any involuntary case or proceeding makes a Bankruptcy Order against the applicable Issuer
or (in the case of Guaranteed Securities) the Guarantor, and such Bankruptcy Order remains unstayed and in effect for 90 consecutive
days; or
(8) a Custodian shall be appointed out of court with respect to the applicable Issuer or (in the case of Guaranteed Securities) the
Guarantor, or with respect to all or any substantial part of the property of the applicable Issuer or (in the case of Guaranteed Securities)
the Guarantor and such appointment shall not have been vacated, discharged, or stayed or bonded pending appeal within 90 days, or any
encumbrancer shall take possession of all or any substantial part of the property of the applicable Issuer or (in the case of Guaranteed
Securities) the Guarantor and such possession shall not have reverted to such Issuer or the Guarantor, as applicable, within 90 days; or
(9) any other Event of Default provided with respect to Securities of that series.
“Bankruptcy Law” means the Federal Bankruptcy Code, Bankruptcy and Insolvency Act (Canada), Companies’ Creditors
Arrangement Act (Canada), Winding-Up & Restructuring Act (Canada), or any other Canadian federal or provincial law or the law of any other
jurisdiction relating to bankruptcy, insolvency, winding-up, liquidation, dissolution, reorganization or relief of debtors or any similar law now
or hereafter in effect for the relief from, or otherwise affecting, creditors. “Custodian” means any receiver, interim receiver, receiver and
manager, trustee, assignee, liquidator, sequestrator, monitor, custodian or similar official or agent or any other Person with like powers.
“Bankruptcy Order” means any court order made in a proceeding pursuant to or within the meaning of any Bankruptcy Law, containing an
adjudication of bankruptcy or insolvency, or providing for liquidation, winding-up, dissolution or reorganization, or appointing a Custodian of
a debtor or of all or any substantial part of a debtor’s property, or providing for the staying, arrangement, adjustment or compromise of
indebtedness or other relief of a debtor.
SECTION 502. Acceleration of Maturity; Rescission and Annulment .
If an Event of Default described in clause (1), (2) or (3) of Section 501 with respect to Securities of any series at the time
Outstanding occurs and is continuing, then in every such case the Trustee or the Holders of not less than 25% in principal amount of the
Outstanding Securities of that series may declare the principal amount (or, if the Securities of that series are Original Issue Discount Securities
or Indexed Securities, such portion of the principal amount as may be specified in the terms of such series) of all of the Outstanding Securities
of that series and any accrued but unpaid interest thereon to be due and payable immediately, by a notice in writing to the applicable Issuer and,
in the case of Guaranteed Securities, the Guarantor (and to
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the Trustee if given by Holders), and upon any such declaration such principal amount (or specified portion thereof) and any accrued but
unpaid interest thereon shall become immediately due and payable. If an Event of Default described in clause (4) or (9) of Section 501 occurs
and is continuing with respect to the Securities of one or more series, then in every such case the Trustee or the Holders of not less than 25% in
principal amount of the Outstanding Securities of all series affected thereby (as one class) may declare the principal amount (or, if any such
Securities are Original Issue Discount Securities or Indexed Securities, such portion of the principal amount as may be specified in the terms of
such affected series) of all of the Outstanding Securities of such affected series and any accrued but unpaid interest thereon to be due and
payable immediately, by a notice in writing to the applicable Issuer and, in the case of Guaranteed Securities, the Guarantor (and to the Trustee
if given by the Holders) and upon any such declaration such principal amount (or specified portion thereof) and any accrued but unpaid interest
thereon shall become immediately due and payable. If an Event of Default described in clause (5), (6), (7) or (8) of Section 501 occurs and is
continuing, then in every such case the Trustee or the Holders of not less than 25% in principal amount of all the Securities then Outstanding
(as a class) may declare the principal amount (or, if any such Securities are Original Issue Discount Securities or Indexed Securities, such
portion of the principal amount as may be specified in the terms of that series) of all of the Outstanding Securities and any accrued but unpaid
interest thereon to be due and payable immediately, by a notice in writing to the applicable Issuer and, in the case of Guaranteed Securities, the
Guarantor (and to the Trustee if given by the Holders), and upon any such declaration such principal amount (or specified portion thereof) and
any accrued but unpaid interest thereon shall become immediately due and payable.
At any time after a declaration of acceleration with respect to Securities of any series (or of all series, as the case may be) has been
made and before a judgment or decree for payment of the money due has been obtained by the Trustee as hereinafter provided in this Article,
the Holders of a majority in principal amount of the Outstanding Securities of such series (or of all series, as the case may be), by written notice
to the applicable Issuer, the Guarantor (in the case of Guaranteed Securities) and the Trustee, may rescind and annul such declaration and its
consequences if:
(1) the applicable Issuer or, in the case of Guaranteed Securities, the Guarantor has paid or deposited with the Trustee a sum
sufficient to pay in the Currency in which the Securities of such series are payable (except as otherwise specified pursuant to Section 301
for the Securities of such series and except, if applicable, as provided in Sections 312(b), 312(d) and 312(e)),
(A) all overdue interest, if any, on all Outstanding Securities of that series (or of all series, as the case may be) and any related
coupons,
(B) all unpaid principal of (and premium, if any, on) all Outstanding Securities of that series (or of all series, as the case may
be) which has become due otherwise than by such declaration of acceleration, and interest on such unpaid principal at the rate or
rates prescribed therefor in such Securities,
(C) to the extent lawful, interest on overdue interest, if any, at the rate or rates prescribed therefor in such Securities, and
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(D) all sums paid or advanced by the Trustee hereunder and the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel; and
(2) all Events of Default with respect to Securities of that series (or of all series, as the case may be), other than the non-payment of
amounts of principal of or interest on Securities of that series (or of all series, as the case may be) which have become due solely by such
declaration of acceleration, have been cured or waived as provided in Section 513.
No such rescission shall affect any subsequent default or impair any right consequent thereon.
SECTION 503. Collection of Indebtedness and Suits for Enforcement by Trustee .
Each Issuer covenants that if:
(1) default is made in the payment of any installment of interest on any Security issued by such Issuer and any related coupon when
such interest becomes due and payable and such default continues for a period of 30 days, or
(2) default is made in the payment of the principal of (or premium, if any, on) any Security issued by such Issuer at the Maturity
thereof,
then such Issuer will, upon demand of the Trustee, pay to the Trustee for the benefit of the Holders of such Securities and coupons, the whole
amount then due and payable on such Securities and coupons for principal (and premium, if any) and interest, if any, and interest on any
overdue principal (and premium, if any) and to the extent lawful on any overdue interest, at the rate or rates prescribed therefor in such
Securities, and, in addition thereto, such further amount as shall be sufficient to cover the costs and expenses of collection, including the
reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel.
If such Issuer fails to pay such amounts forthwith upon such demand, the Trustee, in its own name as trustee of an express trust,
may institute a judicial proceeding for the collection of the sums so due and unpaid, may prosecute such proceeding to judgment or final decree
and may enforce the same against such Issuer, the Guarantor (in the case of Guaranteed Securities) or any other obligor upon such Securities
and collect the moneys adjudged or decreed to be payable in the manner provided by law out of the property of such Issuer, the Guarantor (in
the case of Guaranteed Securities) or any other obligor upon such Securities, wherever situated.
If an Event of Default with respect to Securities of any series (or of all series, as the case may be) occurs and is continuing, the
Trustee may in its discretion proceed to protect and enforce its rights and the rights of the Holders of Securities of such series (or of all series,
as the case may be) by such appropriate judicial proceedings as the Trustee shall deem most effectual to protect and enforce any such rights,
whether for the specific enforcement of any covenant or agreement in this Indenture or in aid of the exercise of any power granted herein, or to
enforce any other proper remedy.
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SECTION 504. Trustee May File Proofs of Claim .
In case of the pendency of any receivership, insolvency, liquidation, bankruptcy, reorganization, arrangement, adjustment,
composition or other judicial proceeding relative to the applicable Issuer, the Guarantor (in the case of Guaranteed Securities) or any other
obligor upon the Securities or the property of such Issuer, the Guarantor (in the case of Guaranteed Securities) or of such other obligor or their
creditors, the Trustee (irrespective of whether the principal of the Securities shall then be due and payable as therein expressed or by
declaration or otherwise and irrespective of whether the Trustee shall have made any demand on such Issuer or the Guarantor for the payment
of overdue principal, premium, if any, or interest) shall be entitled and empowered, by intervention in such proceeding or otherwise,
(i) to file and prove a claim for the whole amount of principal (and premium, if any), or such portion of the principal amount of any
series of Original Issue Discount Securities or Indexed Securities as may be specified in the terms of such series, and interest, if any,
owing and unpaid in respect of the Securities or, in the case of Guaranteed Securities, the Guarantees and to file such other papers or
documents as may be necessary or advisable in order to have the claims of the Trustee (including any claim for the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents and counsel) and of the Holders allowed in such judicial
proceeding, and
(ii) to collect and receive any moneys or other property payable or deliverable on any such claims and to distribute the same;
and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such judicial proceeding is hereby
authorized by each Holder to make such payments to the Trustee and, in the event that the Trustee shall consent to the making of such
payments directly to the Holders, to pay to the Trustee any amount due it for the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel, and any other amounts due the Trustee under Section 606.
Nothing herein contained shall be deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any
Holder any plan of reorganization, arrangement, adjustment or composition affecting the Securities or the Guarantees or the rights of any
Holder thereof or to authorize the Trustee to vote in respect of the claim of any Holder in any such proceeding.
SECTION 505. Trustee May Enforce Claims Without Possession of Securities .
All rights of action and claims under this Indenture, the Securities or coupons or the Guarantees may be prosecuted and enforced by
the Trustee without the possession of any of the Securities or coupons or the production thereof in any proceeding relating thereto, and any
such proceeding instituted by the Trustee shall be brought in its own name as trustee of an express trust, and any recovery of judgment shall,
after provision for the payment of the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel,
be for the ratable benefit of the Holders of the Securities and coupons in respect of which such judgment has been recovered.
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SECTION 506. Application of Money Collected .
Any money collected by the Trustee pursuant to this Article shall be applied in the following order, at the date or dates fixed by the
Trustee and, in case of the distribution of such money on account of principal (or premium, if any) or interest, if any, upon presentation of the
Securities or coupons, or both, as the case may be, and the notation thereon of the payment if only partially paid and upon surrender thereof if
fully paid:
First : To the payment of all amounts due the Trustee under Section 606;
Second : To the payment of the amounts then due and unpaid for principal of (and premium, if any) and interest, if any, on the
Securities and coupons in respect of which or for the benefit of which such money has been collected, ratably, without preference or priority of
any kind, according to the amounts due and payable on such Securities and coupons for principal (and premium, if any) and interest, if any,
respectively; and
Third : The balance, if any, to the Person or Persons entitled thereto.
SECTION 507. Limitation on Suits .
No Holder of any Security of any series or any related coupons shall have any right to institute any proceeding, judicial or
otherwise, with respect to this Indenture, the Securities or the Guarantees, or for the appointment of a receiver or trustee, or for any other
remedy hereunder, unless
(1) such Holder has previously given written notice to the Trustee of a continuing Event of Default with respect to the Securities of
that series;
(2) the Holders of not less than 25% in principal amount of the Outstanding Securities of all series affected by such Event of
Default (determined as provided in Section 502 and, if more than one series of Securities, as one class), shall have made written request
to the Trustee to institute proceedings in respect of such Event of Default in its own name as Trustee hereunder;
(3) such Holder or Holders have offered to the Trustee reasonable indemnity against the costs, expenses and liabilities to be
incurred in compliance with such request;
(4) the Trustee for 60 days after its receipt of such notice, request and offer of indemnity has failed to institute any such proceeding;
and
(5) no direction inconsistent with such written request has been given to the Trustee during such 60-day period by the Holders of a
majority or more in principal amount of the Outstanding Securities of all series affected by such Event of Default (determined as provided
in Section 502 and, if more than one series of Securities, as one class);
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it being understood and intended that no one or more of such Holders shall have any right in any manner whatever by virtue of, or by availing
of, any provision of this Indenture to affect, disturb or prejudice the rights of any other Holders of Outstanding Securities of such affected
series, or to obtain or to seek to obtain priority or preference over any other of such Holders or to enforce any right under this Indenture, except
in the manner herein provided and for the equal and ratable benefit of all Holders of Outstanding Securities of such affected series. For
purposes of clarity, it is hereby understood and agreed that an Event of Default described in clause (1), (2) or (3) of Section 501 with respect to
the Securities of any series shall, for purposes of this Section 507, be deemed to affect only such series of Securities.
SECTION 508. Unconditional Right of Holders to Receive Principal, Premium and Interest .
Notwithstanding any other provision in this Indenture, the Holder of any Security shall have the right, which is absolute and
unconditional, to receive payment, as provided herein (including, if applicable, Article Fourteen) and in such Security (and, in the case of any
Guaranteed Securities, the Guarantees endorsed thereon) of the principal of (and premium, if any) and (subject to Section 307) interest, if any,
on, such Security or payment of such coupon on the respective Stated Maturities expressed in such Security or coupon (or, in the case of
redemption, on the Redemption Date or, in the case of repayment at the option of the Holder as contemplated by Article Thirteen hereof, on the
Repayment Date) and to institute suit for the enforcement of any such payment, and such rights shall not be impaired without the consent of
such Holder.
SECTION 509. Restoration of Rights and Remedies .
If the Trustee or any Holder has instituted any proceeding to enforce any right or remedy under this Indenture and such proceeding
has been discontinued or abandoned for any reason, or has been determined adversely to the Trustee or to such Holder, then and in every such
case, subject to any determination in such proceeding, the applicable Issuer, the Guarantor (in the case of Guaranteed Securities), the Trustee
and the Holders of Securities and coupons shall be restored severally and respectively to their former positions hereunder and thereafter all
rights and remedies of the Trustee and the Holders shall continue as though no such proceeding had been instituted.
SECTION 510. Rights and Remedies Cumulative .
Except as otherwise provided with respect to the replacement or payment of mutilated, destroyed, lost or stolen Securities or
coupons in the last paragraph of Section 306, no right or remedy herein conferred upon or reserved to the Trustee or to the Holders of Securities
or coupons is intended to be exclusive of any other right or remedy, and every right and remedy shall, to the extent permitted by law, be
cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The
assertion or employment of any right or remedy hereunder, or otherwise, shall not, to the extent permitted by law, prevent the concurrent
assertion or employment of any other appropriate right or remedy.
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SECTION 511. Delay or Omission Not Waiver .
No delay or omission of the Trustee or of any Holder of any Security or coupon to exercise any right or remedy accruing upon any
Event of Default shall impair any such right or remedy or constitute a waiver of any such Event of Default or an acquiescence therein. Every
right and remedy given by this Article or by law to the Trustee or to the Holders may be exercised from time to time, and as often as may be
deemed expedient, by the Trustee or by the Holders, as the case may be.
SECTION 512. Control by Holders .
The Holders of not less than a majority in principal amount of the Outstanding Securities of all series affected by an Event of
Default (determined as provided in Section 502 and, if more than one series of Securities, as one class) shall have the right to direct the time,
method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred on the
Trustee, with respect to the Outstanding Securities of such affected series (and in the case of Guaranteed Securities, the Guarantees in respect
thereof), provided in each case
(1) such direction shall not be in conflict with any rule of law or with this Indenture,
(2) the Trustee may take any other action deemed proper by the Trustee which is not inconsistent with such direction, and
(3) the Trustee need not take any action which might expose the Trustee to personal liability or be unduly prejudicial to the Holders
of Outstanding Securities of such affected series not joining therein.
For purposes of clarity, it is hereby understood and agreed that an Event of Default described in clause (1), (2) or (3) of Section 501 with
respect to the Securities of any series shall, for purposes of this Section 512, be deemed to affect only such series of Securities.
SECTION 513. Waiver of Past Defaults .
Subject to Section 502, the Holders of not less than a majority in principal amount of the Outstanding Securities of all series with
respect to which a Default shall have occurred and be continuing (as one class if more than one series) may on behalf of the Holders of all the
Outstanding Securities of such affected series waive any such past Default, and its consequences, except a Default
(1) in respect of the payment of the principal of (or premium, if any) or interest, if any, on any Security or any related coupon, or
(2) in respect of a covenant or provision which under Article Nine cannot be modified or amended without the consent of the
Holder of each Outstanding Security of such affected series.
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Upon any such waiver, any such Default shall cease to exist, and any Event of Default arising therefrom shall be deemed to have
been cured, for every purpose of this Indenture; but no such waiver shall extend to any subsequent or other Default or Event of Default or
impair any right consequent thereon. For purposes of clarity, it is hereby understood and agreed that an Event of Default described in
clause (1), (2) or (3) of Section 501 with respect to the Securities of any series shall, for purposes of this Section 513, be deemed to affect only
such series of Securities.
SECTION 514. Waiver of Stay or Extension Laws .
Each Issuer and the Guarantor covenants (to the extent that it may lawfully do so) that it will not at any time insist upon, or plead, or
in any manner whatsoever claim or take the benefit or advantage of, any stay or extension law wherever enacted, now or at any time hereafter
in force, which may affect the covenants or the performance of this Indenture; and each Issuer and the Guarantor (to the extent that it may
lawfully do so) hereby expressly waives all benefit or advantage of any such law and covenants that it will not hinder, delay or impede the
execution of any power herein granted to the Trustee, but will suffer and permit the execution of every such power as though no such law had
been enacted.
SECTION 515. Undertaking for Costs .
All parties to this Indenture agree, and each Holder of any Security by its acceptance thereof shall be deemed to have agreed, that
any court may in its discretion require, in any suit for the enforcement of any right or remedy under this Indenture, or in any suit against the
Trustee for any action taken or omitted by it as Trustee, the filing by any party litigant in such suit of any undertaking to pay the costs of such
suit, and that such court may in its discretion assess reasonable costs, including reasonable attorneys’ fees, against any party litigant in such suit
having due regard to the merits and good faith of the claims or defenses made by such party litigant; but the provisions of this Section shall not
apply to any suit instituted by the Trustee, to any suit instituted by any Holder, or group of Holders, holding in the aggregate more than 10% in
principal amount of the Outstanding Securities, or to any suit instituted by any Holder for the enforcement of the payment of the principal of
(or premium, if any) or interest on any Security (or under any Guarantee) on or after the respective Stated Maturities expressed in such Security
(or, in the case of redemption, on or after the Redemption Date or, in the case of repayment at the option of Holders as contemplated by Article
Thirteen hereof, on or after the applicable Repayment Date).
ARTICLE SIX
THE TRUSTEE
SECTION 601. Notice of Defaults .
Within 90 days after the occurrence of any Default hereunder with respect to the Securities of any series, the Trustee shall transmit
in the manner and to the extent provided in TIA Section 313(c), notice of such default hereunder known to the Trustee, unless such Default
shall have been cured or waived; provided , however , that, except in the case of a Default in the payment of the principal of (or premium, if
any) or interest, if any, on any Security of such series
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or in the payment of any sinking fund installment with respect to Securities of such series, the Trustee shall be protected in withholding such
notice if and so long as the board of directors, the executive committee or a trust committee of directors and/or Responsible Officers of the
Trustee in good faith determine that the withholding of such notice is in the interest of the Holders of Securities of such series and any related
coupons; and provided further that in the case of any Default of the character specified in Section 501(4) with respect to Securities of such
series, no such notice to Holders shall be given until at least 30 days after the occurrence thereof.
SECTION 602. Certain Rights of Trustee .
Subject to the provisions of TIA Sections 315(a) through 315(d):
(1) the Trustee may rely and shall be protected in acting or refraining from acting upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence of indebtedness or other paper
or document believed by it to be genuine and to have been signed or presented by the proper party or parties;
(2) any request or direction of an Issuer mentioned herein shall be sufficiently evidenced by an Issuer Request or Issuer Order and
any resolution of the Board of Directors may be sufficiently evidenced by a Board Resolution;
(3) whenever in the administration of this Indenture the Trustee shall deem it desirable that a matter be proved or established prior
to taking, suffering or omitting any action hereunder, the Trustee (unless other evidence be herein specifically prescribed) may, in the
absence of bad faith on its part, rely upon an Officers’ Certificate;
(4) the Trustee may consult with counsel and the advice of such counsel or any Opinion of Counsel shall be full and complete
authorization and protection in respect of any action taken, suffered or omitted by it hereunder in good faith and in reliance thereon;
(5) except during a default, the Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this
Indenture at the request or direction of any of the Holders of Securities of any series or any related coupons pursuant to this Indenture,
unless such Holders shall have offered to the Trustee reasonable security or indemnity against the costs, expenses and liabilities which
might be incurred by it in compliance with such request or direction;
(6) the Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence of indebtedness or other paper
or document, but the Trustee, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit,
and, if the Trustee shall determine to make such further inquiry or investigation, it shall be entitled to examine the books, records and
premises of the applicable Issuer and the Guarantor, personally or by agent or attorney;
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(7) the Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through
agents or attorneys and the Trustee shall not be responsible for any misconduct or negligence on the part of any agent or attorney
appointed with due care by it hereunder; and
(8) the Trustee shall not be liable for any action taken, suffered or omitted by it in good faith and believed by it to be authorized or
within the discretion or rights or powers conferred upon it by this Indenture.
The Trustee shall not be required to expend or risk its own funds or otherwise incur any financial liability in the performance of any
of its duties hereunder, or in the exercise of any of its rights or powers if it shall have reasonable grounds for believing that repayment of such
funds or adequate indemnity against such risk or liability is not reasonably assured to it.
SECTION 603. Trustee Not Responsible for Recitals or Issuance of Securities .
The recitals contained herein and in the Securities, except for the Trustee’s certificates of authentication, and in any coupons shall
be taken as the statements of the Issuers and the Guarantor, and neither the Trustee nor any Authenticating Agent assumes any responsibility
for their correctness. The Trustee makes no representations as to the validity or sufficiency of this Indenture or of the Securities or coupons,
except that the Trustee represents that it is duly authorized to execute and deliver this Indenture, authenticate the Securities and perform its
obligations hereunder and that the statements made by it in a Statement of Eligibility on Form T-1 supplied to the Issuers are true and accurate,
subject to the qualifications set forth therein. Neither the Trustee nor any Authenticating Agent shall be accountable for the use or application
by the Issuers of Securities or the proceeds thereof.
SECTION 604. May Hold Securities .
The Trustee, any Authenticating Agent, any Paying Agent, any Security Registrar or any other agent of the applicable Issuer or of
the Trustee, in its individual or any other capacity, may become the owner or pledgee of Securities and coupons and, subject to TIA
Sections 310(b) and 311, may otherwise deal with such Issuer with the same rights it would have if it were not Trustee, Authenticating Agent,
Paying Agent, Security Registrar or such other agent.
SECTION 605. Money Held in Trust .
Money held by the Trustee in trust hereunder need not be segregated from other funds except to the extent required by law. The
Trustee shall be under no liability for interest on any money received by it hereunder except as otherwise agreed with the applicable Issuer.
SECTION 606. Compensation and Reimbursement .
The Issuers agree:
(1) to pay to the Trustee from time to time such reasonable compensation as the applicable Issuer and the Trustee shall from time to
time agree in writing, for all services rendered by it hereunder (which compensation shall not be limited by any provision of law in regard
to the compensation of a trustee of an express trust);
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(2) except as otherwise expressly provided herein, to reimburse the Trustee upon its request for all reasonable expenses,
disbursements and advances incurred or made by the Trustee in accordance with any provision of this Indenture (including the reasonable
compensation and the expenses and disbursements of its agents and counsel), except any such expense, disbursement or advance as may
be attributable to its negligence or bad faith; and
(3) to indemnify the Trustee for, and to hold it harmless against, any loss, liability or expense incurred without negligence or bad
faith on its part, arising out of or in connection with the acceptance or administration of the trust or trusts hereunder, including the costs
and expenses of defending itself against any claim or liability in connection with the exercise or performance of any of its powers or
duties hereunder.
The obligations of the Issuers under this Section to compensate the Trustee, to pay or reimburse the Trustee for expenses,
disbursements and advances and to indemnify and hold harmless the Trustee shall constitute additional indebtedness hereunder and shall
survive the satisfaction and discharge of this Indenture. As security for the performance of such obligations of the Issuers, the Trustee shall
have a claim prior to the Securities upon all property and funds held or collected by the Trustee as such, except funds held in trust for the
payment of principal of (or premium, if any) or interest, if any, on particular Securities or any coupons.
When the Trustee incurs expenses or renders services in connection with an Event of Default specified in Section 501(6), (7) or (8),
the expenses (including reasonable charges and expense of its counsel) of and the compensation for such services are intended to constitute
expenses of administration under any applicable bankruptcy, insolvency or other similar law.
The provisions of this Section shall survive the termination of this Indenture.
SECTION 607. Corporate Trustee Required; Eligibility; Conflicting Interests .
The Trustee shall comply with the terms of Section 310(b) of the TIA. There shall be at all times a Trustee hereunder which shall be
eligible to act as Trustee under TIA Section 310(a)(1) and shall have a combined capital and surplus (together with that of its parent, if
applicable) of at least $50,000,000. If such corporation publishes reports of condition at least annually, pursuant to law or to the requirements
of Federal, State, territorial or District of Columbia supervising or examining authority, then for the purposes of this Section, the combined
capital and surplus of such corporation shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition
so published. If at any time the Trustee shall cease to be eligible in accordance with the provisions of this Section, it shall resign immediately in
the manner and with the effect hereinafter specified in this Article. There shall be excluded from the operation of the terms of Section 310(b) of
the TIA (i) the indenture dated as of November 12, 2004, pursuant to which the 5.80% notes due 2034 of the Company and the 5.80% notes
due 2034 and the 4.875% notes due 2014 of Barrick Gold Finance Company, guaranteed by the Company, were issued and are outstanding, and
(ii) the indenture dated as of
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October 12, 2006, pursuant to which the 5.75% Series A ABXFC notes due 2016 and the 6.35% Series B ABXFC notes due 2036 of ABX
Financing Company, guaranteed by the Barrick International Bank Corp., the Joint Obligors (as such term is defined therein) and the Company,
were issued and are outstanding.
SECTION 608. Resignation and Removal; Appointment of Successor .
(a) No resignation or removal of the Trustee and no appointment of a successor Trustee pursuant to this Article shall become
effective until the acceptance of appointment by the successor Trustee in accordance with the applicable requirements of Section 609.
(b) The Trustee may resign at any time with respect to the Securities of one or more series by giving written notice thereof to the
Issuers. If the instrument of acceptance by a successor Trustee required by Section 609 shall not have been delivered to the Trustee within 30
days after the giving of such notice of resignation, the resigning Trustee may petition any court of competent jurisdiction for the appointment of
a successor Trustee with respect to the Securities of such series.
(c) The Trustee may be removed at any time with respect to the Securities of any series by Act of the Holders of not less than a
majority in principal amount of the Outstanding Securities of such series, delivered to the Trustee and to the applicable Issuer.
(d) If at any time:
(1) the Trustee shall fail to comply with the provisions of TIA Section 310(b) after written request therefor by either Issuer or by
any Holder who has been a bona fide Holder of a Security for at least six months, or
(2) the Trustee shall cease to be eligible under Section 607 and shall fail to resign after written request therefor by either Issuer or
by any Holder who has been a bona fide Holder of a Security for at least six months, or
(3) the Trustee shall become incapable of acting or shall be adjudged a bankrupt or insolvent or a receiver of the Trustee or of its
property shall be appointed or any public officer shall take charge or control of the Trustee or of its property or affairs for the purpose of
rehabilitation, conservation or liquidation,
then, in any such case, (i) either Issuer, by a Board Resolution, may remove the Trustee with respect to all Securities or the Securities of such
series, or (ii) subject to TIA Section 315(e), any Holder who has been a bona fide Holder of a Security for at least six months may, on behalf of
himself and all others similarly situated, petition any court of competent jurisdiction for the removal of the Trustee with respect to all Securities
of such series and the appointment of a successor Trustee or Trustees.
(e) If the Trustee shall resign, be removed or become incapable of acting, or if a vacancy shall occur in the office of Trustee for any
cause, with respect to the Securities of one or more series, the applicable Issuer, by a Board Resolution, shall promptly appoint a successor
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Trustee or Trustees with respect to the Securities of that or those series (it being understood that any such successor Trustee may be appointed
with respect to the Securities of one or more or all of such series and that at any time there shall be only one Trustee with respect to the
Securities of any particular series). If, within one year after such resignation, removal or incapability, or the occurrence of such vacancy, a
successor Trustee with respect to the Securities of any series shall be appointed by Act of the Holders of a majority in principal amount of the
Outstanding Securities of such series delivered to the applicable Issuer and the retiring Trustee, the successor Trustee so appointed shall,
forthwith upon its acceptance of such appointment, become the successor Trustee with respect to the Securities of such series and to that extent
supersede the successor Trustee appointed by such Issuer. If no successor Trustee with respect to the Securities of any series shall have been so
appointed by the applicable Issuer or the Holders and accepted appointment in the manner hereinafter provided, any Holder who has been a
bona fide Holder of a Security of such series for at least six months may, on behalf of himself and all others similarly situated, petition any
court of competent jurisdiction for the appointment of a successor Trustee with respect to the Securities of such series.
(f) The applicable Issuer shall give notice of each resignation and each removal of the Trustee with respect to the Securities of any
series and each appointment of a successor Trustee with respect to the Securities of any series to the Holders of Securities of such series in the
manner provided for in Section 106. Each notice shall include the name of the successor Trustee with respect to the Securities of such series
and the address of its Corporate Trust Office.
SECTION 609. Acceptance of Appointment by Successor .
(a) In case of the appointment hereunder of a successor Trustee with respect to all Securities, every such successor Trustee so
appointed shall execute, acknowledge and deliver to the Issuers, to the Guarantor and to the retiring Trustee an instrument accepting such
appointment, and thereupon the resignation or removal of the retiring Trustee shall become effective and such successor Trustee, without any
further act, deed or conveyance, shall become vested with all the rights, powers, trusts and duties of the retiring Trustee; but, on the request of
any Issuer, the Guarantor or the successor Trustee, such retiring Trustee shall, upon payment of its charges, execute and deliver an instrument
transferring to such successor Trustee all the rights, powers and trusts of the retiring Trustee and shall duly assign, transfer and deliver to such
successor Trustee all property and money held by such retiring Trustee hereunder.
(b) In case of the appointment hereunder of a successor Trustee with respect to the Securities of one or more (but not all) series, the
applicable Issuer, the Guarantor (in the case of Guaranteed Securities), the retiring Trustee and each successor Trustee with respect to the
Securities of one or more series shall execute and deliver an indenture supplemental hereto wherein each successor Trustee shall accept such
appointment and which (1) shall contain such provisions as shall be necessary or desirable to transfer and confirm to, and to vest in, each
successor Trustee all the rights, powers, trusts and duties of the retiring Trustee with respect to the Securities of that or those series to which the
appointment of such successor Trustee relates, (2) if the retiring Trustee is not retiring with respect to all Securities, shall contain such
provisions as shall be deemed necessary or desirable to confirm that all the rights, powers, trusts and duties of the retiring Trustee with respect
to the Securities of that or those series as to which
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the retiring Trustee is not retiring shall continue to be vested in the retiring Trustee, and (3) shall add to or change any of the provisions of this
Indenture as shall be necessary to provide for or facilitate the administration of the trusts hereunder by more than one Trustee, it being
understood that nothing herein or in such supplemental indenture shall constitute such Trustees co-trustees of the same trust and that each such
Trustee shall be trustee of a trust or trusts hereunder separate and apart from any trust or trusts hereunder administered by any other such
Trustee; and upon the execution and delivery of such supplemental indenture the resignation or removal of the retiring Trustee shall become
effective to the extent provided therein and each such successor Trustee, without any further act, deed or conveyance, shall become vested with
all the rights, powers, trusts and duties of the retiring Trustee with respect to the Securities of that or those series to which the appointment of
such successor Trustee relates; but, on request of the applicable Issuer, the Guarantor (in the case of Guaranteed Securities) or any successor
Trustee, such retiring Trustee shall duly assign, transfer and deliver to such successor Trustee all property and money held by such retiring
Trustee hereunder with respect to the Securities of that or those series to which the appointment of such successor Trustee relates. Whenever
there is a successor Trustee with respect to one or more (but less than all) series of securities issued pursuant to this Indenture, the terms
“Indenture” and “Securities” shall have the meanings specified in the provisos to the respective definitions of those terms in Section 101 which
contemplate such situation.
(c) Upon request of any such successor Trustee, the Issuers and the Guarantor shall execute any and all instruments for more fully
and certainly vesting in and confirming to such successor Trustee all rights, powers and trusts referred to in paragraph (a) or (b) of this Section,
as the case may be.
(d) No successor Trustee shall accept its appointment unless at the time of such acceptance such successor Trustee shall be qualified
and eligible under this Article.
SECTION 610. Merger, Conversion, Consolidation or Succession to Business .
Any corporation into which the Trustee may be merged or converted or with which it may be consolidated, or any corporation
resulting from any merger, conversion or consolidation to which the Trustee shall be a party, or any corporation succeeding to all or
substantially all the corporate trust business of the Trustee, shall be the successor of the Trustee hereunder, provided such corporation shall be
otherwise qualified and eligible under this Article, without the execution or filing of any paper or any further act on the part of any of the
parties hereto. In case any Securities shall have been authenticated, but not delivered, by the Trustee then in office, any successor by merger,
conversion or consolidation to such authenticating Trustee may adopt such authentication and deliver the Securities so authenticated with the
same effect as if such successor Trustee had itself authenticated such Securities. In case any of the Securities shall not have been authenticated
by such predecessor Trustee, any successor Trustee may authenticate such Securities either in the name of any predecessor hereunder or in the
name of the successor Trustee. In all such cases such certificates shall have the full force and effect which this Indenture provides for the
certificate of authentication of the Trustee; provided , however , that the right to adopt the certificate of authentication of any predecessor
Trustee or to authenticate Securities in the name of any predecessor Trustee shall apply only to its successor or successors by merger,
conversion or consolidation.
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SECTION 611. Appointment of Authenticating Agent .
At any time when any of the Securities remain Outstanding, the Trustee may appoint an Authenticating Agent or Agents with
respect to one or more series of Securities which shall be authorized to act on behalf of the Trustee to authenticate Securities of such series and
the Trustee shall give written notice of such appointment to all Holders of Securities of the series with respect to which such Authenticating
Agent will serve, in the manner provided for in Section 106. Securities so authenticated shall be entitled to the benefits of this Indenture and
shall be valid and obligatory for all purposes as if authenticated by the Trustee hereunder. Any such appointment shall be evidenced by an
instrument in writing signed by a Responsible Officer of the Trustee, and a copy of such instrument shall be promptly furnished to the
applicable Issuer. Wherever reference is made in this Indenture to the authentication and delivery of Securities by the Trustee or the Trustee’s
certificate of authentication, such reference shall be deemed to include authentication and delivery on behalf of the Trustee by an
Authenticating Agent and a certificate of authentication executed on behalf of the Trustee by an Authenticating Agent. Each Authenticating
Agent shall be acceptable to the applicable Issuer and shall at all times be a corporation organized and doing business under the laws of the
United States of America, any state thereof or the District of Columbia, authorized under such laws to act as Authenticating Agent, having a
combined capital and surplus of not less than $50,000,000 and subject to supervision or examination by federal or state authority. If such
corporation publishes reports of condition at least annually, pursuant to law or to the requirements of said supervising or examining authority,
then for the purposes of this Section, the combined capital and surplus of such corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published. If at any time an Authenticating Agent shall cease to be eligible in
accordance with the provisions of this Section, it shall resign immediately in the manner and with the effect specified in this Section.
Any corporation into which an Authenticating Agent may be merged or converted or with which it may be consolidated, or any
corporation resulting from any merger, conversion or consolidation to which such Authenticating Agent shall be a party, or any corporation
succeeding to the corporate agency or corporate trust business of an Authenticating Agent, shall continue to be an Authenticating Agent,
provided such corporation shall be otherwise eligible under this Section, without the execution or filing of any paper or any further act on the
part of the Trustee or the Authenticating Agent.
An Authenticating Agent may resign at any time by giving written notice thereof to the Trustee and to the applicable Issuer. The
Trustee may at any time terminate the agency of an Authenticating Agent by giving written notice thereof to such Authenticating Agent and to
the applicable Issuer. Upon receiving such a notice of resignation or upon such a termination, or in case at any time such Authenticating Agent
shall cease to be eligible in accordance with the provisions of this Section, the Trustee may appoint a successor Authenticating Agent which
shall be acceptable to the applicable Issuer and shall give written notice of such appointment to all Holders of Securities of the series with
respect to which such Authenticating Agent will serve, in the manner provided for in Section 106. Any successor Authenticating Agent upon
acceptance of its appointment hereunder shall become vested with all the rights, powers and duties of its predecessor hereunder, with like effect
as if originally named as an Authenticating Agent. No successor Authenticating Agent shall be appointed unless eligible under the provisions
of this Section.
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The Trustee agrees to pay to each Authenticating Agent from time to time reasonable compensation for its services under this
Section, and the Trustee shall be entitled to be reimbursed for such payments, subject to the provisions of Section 606.
If an appointment with respect to one or more series is made pursuant to this Section, the Securities of such series may have
endorsed thereon, in addition to the Trustee’s certificate of authentication, an alternate certificate of authentication in the following form:
Dated:
This is one of the Securities of the series designated therein referred to in the within-mentioned Indenture.
THE BANK OF NEW YORK
as Trustee
By
as Authenticating Agent
By
Authorized Officer
ARTICLE SEVEN
HOLDERS’ LISTS AND REPORTS BY TRUSTEE, ISSUERS AND GUARANTOR
SECTION 701. Disclosure of Names and Addresses of Holders .
Every Holder of Securities or coupons, by receiving and holding the same, agrees with the applicable Issuer, the Guarantor (in the
case of Guaranteed Securities) and the Trustee that none of such Issuer, the Guarantor or the Trustee or any agent of any of them shall be held
accountable by reason of the disclosure of any such information as to the names and addresses of the Holders in accordance with TIA
Section 312, regardless of the source from which such information was derived, and that the Trustee shall not be held accountable by reason of
mailing any material pursuant to a request made under TIA Section 312(b).
SECTION 702. Reports by Trustee .
(a) Within 60 days after May 15 of each year commencing with the first May 15 after the first issuance of Securities pursuant to this
Indenture, the Trustee shall transmit a brief report by mail to the Holders of Securities, in accordance with and to the extent required by
Section 313 of the TIA.
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(b) A copy of each such report at the time of its mailing to Holders shall be filed with the Commission and each stock exchange on
which Debt Securities of any series are listed.
SECTION 703. Reports by the Company .
The Company shall:
(1) file with the Trustee, within 15 days after the Company files the same with the Commission (but in no event later than 50 days
after the Company is required to make such filing with the Commission), (i) copies of the annual reports containing audited financial
statements and copies of quarterly reports containing unaudited financial statements and (ii) copies of the information, documents and
other reports (or copies of such portions of any of the foregoing as the Commission may from time to time by rules and regulations
prescribe) which the Company may be required to file with the Commission pursuant to Section 13 or Section 15(d) of the Securities
Exchange Act of 1934;
(2) file with the Trustee, within 15 days after the Company files the same with the Commission (but in no event later than 50 days
after the Company is required to make such filing with the Commission), in accordance with rules and regulations prescribed from time
to time by the Commission, such additional information, documents and reports with respect to compliance by the Issuers and the
Guarantor with the conditions and covenants of this Indenture as may be required from time to time by such rules and regulations;
(3) in the event that the Company is not required to remain subject to the reporting requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, or otherwise report on an annual and quarterly basis on forms provided for such annual and quarterly
reporting pursuant to rules and regulations promulgated by the Commission, continue to file with the Commission and provide the
Trustee:
(a) within 140 days after the end of each fiscal year, annual reports on Form 20-F, 40-F or Form 10-K, as applicable (or any
successor form), containing audited financial statements and the other information required to be contained therein (or required in
such successor form); and
(b) within 60 days after the end of each of the first three fiscal quarters of each fiscal year, reports on Form 6-K or Form 10-Q
(or any successor form), containing unaudited financial statements and the other information which, regardless of applicable
requirements shall, at a minimum, contain such information required to be provided in quarterly reports under the laws of Canada or
any province thereof to security holders of a corporation with securities listed on the Toronto Stock Exchange, whether or not the
Company has any of its securities so listed.
Each of such reports will be prepared in accordance with Canadian or United States disclosure requirements, as required by the
appropriate form or report, and U.S.
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GAAP and/or accounting principles generally accepted in Canada, provided, however , that the Company shall not be so obligated to file
such reports with the Commission if the Commission does not permit such filings; and
(4) transmit to all Holders, in the manner and to the extent provided in and required by TIA Section 313(c), within 30 days after the
filing thereof with the Trustee, such summaries of any information, documents and reports required to be filed by the Company pursuant
to paragraphs (1) and (2) of this Section as may be required by rules and regulations prescribed from time to time by the Commission.
SECTION 704. The Company to Furnish Trustee Names and Addresses of Holders .
The Company will furnish or cause to be furnished to the Trustee:
(1) semi-annually, not later than 15 days after the Regular Record Date for interest for each series of Securities, a list, in such form
as the Trustee may reasonably require, of the names and addresses of the Holders of Registered Securities of such series as of such
Regular Record Date, or if there is no Regular Record Date for interest for such series of Securities, semi-annually, upon such dates as are
set forth in the Board Resolution, Officers’ Certificate or indenture supplemental hereto authorizing such series, and
(2) at such other times as the Trustee may request in writing, within 30 days after the receipt by the Company of any such request, a
list of similar form and content as of a date not more than 15 days prior to the time such list is furnished,
provided, however , that so long as the Trustee is the Security Registrar, no such list shall be required to be furnished.
ARTICLE EIGHT
CONSOLIDATION, AMALGAMATION, MERGER, CONVEYANCE,
TRANSFER OR LEASE
SECTION 801. Issuers and Guarantor May Amalgamate or Consolidate, etc., Only on Certain Terms .
Neither any Issuer nor the Guarantor shall amalgamate or consolidate with or merge into any other Person or convey, transfer or
lease its properties and assets substantially as an entirety to any other Person, unless:
(1) in a transaction in which the applicable Issuer or the Guarantor, as the case may be, does not survive or continue in existence or
in which the applicable Issuer or the Guarantor, as the case may be, transfers or leases its properties and assets substantially as an entirety
to any other Person, the Person formed by such amalgamation or consolidation or into which the applicable Issuer or the Guarantor, as the
case may be, is merged or the Person which acquires by conveyance or transfer or otherwise, or which leases, the properties and assets of
the applicable Issuer or the
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Guarantor, as the case may be, substantially as an entirety (A) shall be a corporation, partnership or trust organized under the laws of
Canada or any province or territory of Canada or the United States of America, any state thereof or the District of Columbia or, if such
consolidation, amalgamation, merger or other transaction would not impair (as determined by resolution of the Board of Directors of the
Company) the rights of the Holders of the Securities (including, in the case of Guaranteed Securities, their rights under the Guarantees),
in any other country, provided that if such successor entity is organized under the laws of a jurisdiction other than Canada or any province
or territory of Canada, or the United States of America, any state thereof or the District of Columbia, the successor entity assumes by a
supplemental indenture the obligations of the applicable Issuer or the Guarantor or both, as the case may be, under the Securities, the
Guarantees and this Indenture to pay Additional Amounts, adding the name of such successor jurisdiction in addition to Canada in each
place that Canada appears in Section 1005 and Section 1404(4) of this Indenture and adding references to the provinces, territories, states
or other applicable political subdivisions of such successor jurisdiction in addition to references to the provinces and territories of Canada
appearing in Section 1005 and Section 1404(4) of this Indenture and appropriately revising Section 1404(5) to add references to any
“preference” or other similar period under applicable bankruptcy, insolvency or other similar laws of the successor jurisdiction or any
province, territory, state or other political subdivision thereof and, if necessary, revising Sections 1404(5) and 1404(6) to extend the 91
day period referred to therein so that it is at least one day longer than any such “preference” or similar period of the successor
jurisdiction; and (B) shall expressly assume, by an indenture supplemental hereto, executed and delivered to the Trustee, in form
satisfactory to the Trustee, the obligations of the applicable Issuer or the Guarantor or both, as the case may be, in respect of the
Securities and, in the case of the Guarantor, the Guarantees and the performance and observance of every covenant of the Indenture to be
performed or observed by the applicable Issuer or the Guarantor, as the case may be;
(2) immediately before and after giving effect to such transaction, no Event of Default or event that after notice or passage of time
or both would be an Event of Default shall have occurred and be continuing; and
(3) the applicable Issuer, the Guarantor or such Person shall have delivered to the Trustee an Officers’ Certificate and an Opinion of
Counsel, each stating that such consolidation, amalgamation, merger, conveyance, transfer or lease and such supplemental indenture
comply with this Article and that all conditions precedent herein provided for relating to such transaction have been complied with.
In the event that the Company shall enter into any amalgamation, consolidation, merger, conveyance, transfer or lease of the nature
contemplated by the first paragraph of this Section 801, then the supplemental indenture contemplated by clause (1)(B) of such paragraph shall
be entered into by the Company both in its capacity as an Issuer and the Guarantor.
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SECTION 802. Successor Person Substituted .
Upon any consolidation or amalgamation by an Issuer or the Guarantor with or merger by an Issuer or the Guarantor into any other
Person or any conveyance, transfer or lease of the properties and assets of an Issuer or the Guarantor substantially as an entirety to any other
Person in accordance with Section 801, the successor Person formed by such consolidation or amalgamation or into which the applicable Issuer
or the Guarantor is merged or to which such conveyance, transfer or lease is made shall succeed to, and be substituted for, and may exercise
every right and power of, the applicable Issuer or the Guarantor, as the case may be, under this Indenture with the same effect as if such
successor Person had been named as the applicable Issuer or the Guarantor, as the case may be, herein, and in the event of any such transaction,
the applicable Issuer (which term shall for this purpose mean the applicable Person named as an “Issuer” in the first paragraph of this Indenture
or any successor Person which shall theretofore become such in the manner described in this Section 802) or the Guarantor (which term shall
for this purpose mean the Person named as the “Guarantor” in the first paragraph of this Indenture or any successor Person which shall
theretofore become such in the manner described in this Section 802), as the case may be, except in the case of a lease, shall be discharged of
all obligations and covenants under this Indenture and the Securities and the coupons, and the Guarantees, as the case may be, and may be
dissolved and liquidated.
In the event that a successor Person shall succeed to, and be substituted for, an Issuer (other than the Company) as provided in the
immediately preceding paragraph, then such Person shall be deemed to have succeeded to, and to have been substituted for, the applicable
Subsidiary Issuer, all on the same terms and subject to the same conditions set forth in the immediately preceding paragraph, mutatis mutandis .
SECTION 803. Securities to Be Secured in Certain Events .
If, upon any consolidation or amalgamation of an Issuer or the Guarantor with or merger of an Issuer or the Guarantor into any
other Person, or upon any conveyance, lease or transfer of the properties and assets of an Issuer or the Guarantor substantially as an entirety to
any other Person, any Principal Assets would thereupon become subject to any Lien, then unless such Lien could be created pursuant to
Section 1009 without equally and ratably securing the Securities, the Company shall, prior to or simultaneously with such consolidation,
amalgamation, merger, conveyance, lease or transfer, secure the Securities (together with, at the Company’s option, any other obligations that
are not subordinate in right of payment to the Securities) equally and ratably with (or prior to) any and all obligations which upon such
consolidation, amalgamation, merger, conveyance, lease or transfer are to become secured by such Lien, or will cause the Securities to be so
secured, in each case for so long as such obligations are so secured.
ARTICLE NINE
SUPPLEMENTAL INDENTURES
SECTION 901. Supplemental Indentures Without Consent of Holders .
Without the consent of any Holders, each of the Issuers and the Guarantor, when authorized by or pursuant to a Board Resolution,
and the Trustee, at any time and from time to time, may enter into one or more indentures supplemental hereto, in form satisfactory to the
Trustee, for any of the following purposes:
(1) to evidence the succession of another Person to an Issuer or the Guarantor and the assumption by any such successor of the
covenants of such Issuer or the Guarantor contained herein and in the Securities or the Guarantees and to make the changes to Sections
1005 and 1404 contemplated by Section 801(1); or
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(2) to add to the covenants of an Issuer or the Guarantor for the benefit of the Holders of all or any series of Securities and any
related coupons (and if such covenants are to be for the benefit of less than all series of Securities, stating that such covenants are being
included solely for the benefit of such series) or to surrender any right or power herein conferred upon any Issuer or the Guarantor, as the
case may be; or
(3) to add any additional Events of Default (and if such Events of Default are to be for the benefit of less than all series of
Securities, stating that such Events of Default are being included solely for the benefit of such series); or
(4) to add to or change any of the provisions of this Indenture to provide that Bearer Securities may be registrable as to principal, to
change or eliminate any restrictions on the payment of principal of or any premium or interest on Bearer Securities, to permit Bearer
Securities to be issued in exchange for Registered Securities, to permit Bearer Securities to be issued in exchange for Bearer Securities of
other authorized denominations or to permit or facilitate the issuance of Securities in uncertificated form, in each case to the extent then
permitted under the U.S. Internal Revenue Code of 1986, as amended, and the U.S. Treasury Regulations thereunder; provided that any
such action shall not adversely affect the interests of the Holders of Securities of any series or any related coupons in any material
respect; or
(5) to change or eliminate any of the provisions of this Indenture; provided that any such change or elimination shall become
effective only when there is no Security Outstanding of any series created prior to the execution of such supplemental indenture which is
entitled to the benefit of such provision; or
(6) to secure the Securities pursuant to the requirements of Section 803 or 1009 or otherwise; or
(7) to establish the form or terms of Securities of any series and any related Guarantees as permitted by Sections 201 and 301; or
(8) to evidence and provide for the acceptance of appointment hereunder by a successor Trustee with respect to the Securities of one
or more series and to add to or change any of the provisions of this Indenture as shall be necessary to provide for or facilitate the
administration of the trusts hereunder by more than one Trustee, pursuant to the requirements of Section 609(b); or
(9) (A) to close this Indenture with respect to the authentication and delivery of additional series of Securities or (B) to cure any
ambiguity, to correct or supplement any provision herein which may be defective or inconsistent with any other provision herein, or to
make any other provisions with respect to matters or
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questions arising under this Indenture; provided such action under clause (B) shall not adversely affect the interests of the Holders of
Securities of any series (including, without limitation, their rights under any Guarantees) and any related coupons in any material respect;
or
(10) to supplement any of the provisions of this Indenture to such extent as shall be necessary to permit or facilitate the defeasance
and discharge of any series of Securities pursuant to Sections 401, 1402 or 1403; provided that any such action shall not adversely affect
the interests of the Holders of Securities of such series and any related coupons or any other series of Securities (including, without
limitation, their rights under any Guarantees) in any material respect.
SECTION 902. Supplemental Indentures with Consent of Holders .
With the consent of the Holders of not less than a majority in principal amount of all Outstanding Securities of all series affected by
such supplemental indenture, by Act of said Holders delivered to the applicable Issuer, the Guarantor (in the case of Guaranteed Securities) and
the Trustee, such Issuer and the Guarantor, when authorized by or pursuant to a Board Resolution, and the Trustee may enter into an indenture
or indentures supplemental hereto for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions
of this Indenture which affect such series of Securities or of modifying in any manner the rights of the Holders of Securities of such series
under this Indenture; provided , however , that no such supplemental indenture shall, without the consent of the Holder of each Outstanding
Security of such series,
(1) change the Stated Maturity of the principal of (or premium, if any) or any installment of interest on any Security of such series,
or reduce the principal amount thereof (or premium, if any) or the rate of interest, if any, thereon, or the Redemption Price thereof or any
amount payable upon repayment thereof at the option of the Holder, or any amount payable under Section 1005, change any obligation of
the applicable Issuer or the Guarantor to pay Additional Amounts (or other amounts) contemplated by Section 1005 (except as
contemplated by Section 801(1) and permitted by Section 901(1)), reduce the amount of the principal of an Original Issue Discount
Security of such series that would be due and payable upon a declaration of acceleration of the Maturity thereof pursuant to Section 502
or the amount thereof provable in bankruptcy pursuant to Section 504, or adversely affect any right of repayment at the option of any
Holder of any Security of such series, or change any Place of Payment where, or the Currency in which, any Security of such series or
any premium or interest thereon is payable, or impair the right to institute suit for the enforcement of any such payment on or after the
Stated Maturity thereof (or, in the case of redemption or repayment at the option of the Holder, on or after the Redemption Date or
Repayment Date, as the case may be), or adversely affect any right to convert or exchange any Security as may be provided pursuant to
Section 301 herein, or
(2) reduce the percentage in principal amount of the Outstanding Securities of such series required for any such supplemental
indenture, for any waiver
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of compliance with certain provisions of this Indenture which affect such series or certain defaults applicable to such series hereunder and
their consequences provided for in Section 513 or 1010 of this Indenture, or reduce the requirements of Section 1604 for quorum or
voting with respect to Securities of such series, or
(3) modify any of the provisions of this Section, Section 513 or Section 1010, except to increase any such percentage or to provide
that certain other provisions of this Indenture which affect such series cannot be modified or waived without the consent of the Holder of
each Outstanding Security of such series.
Any such supplemental indenture adding any provisions to or changing in any manner or eliminating any of the provisions of this
Indenture, or modifying in any manner the rights of the Holders of Securities of such series, shall not affect the rights under this Indenture of
the Holders of Securities of any other series.
It shall not be necessary for any Act of Holders under this Section to approve the particular form of any proposed supplemental
indenture, but it shall be sufficient if such Act shall approve the substance thereof.
SECTION 903. Execution of Supplemental Indentures .
In executing, or accepting the additional trusts created by, any supplemental indenture permitted by this Article or the modifications
thereby of the trusts created by this Indenture, the Trustee shall be entitled to receive, and shall be fully protected in relying upon, an Opinion
of Counsel stating that the execution of such supplemental indenture is authorized or permitted by this Indenture. The Trustee may, but shall
not be obligated to, enter into any such supplemental indenture which affects the Trustee’s own rights, duties or immunities under this
Indenture or otherwise.
SECTION 904. Effect of Supplemental Indentures .
Upon the execution of any supplemental indenture under this Article, this Indenture shall be modified in accordance therewith, and
such supplemental indenture shall form a part of this Indenture for all purposes; and every Holder of Securities theretofore or thereafter
authenticated and delivered hereunder shall be bound thereby.
SECTION 905. Conformity with Trust Indenture Act .
Every supplemental indenture executed pursuant to this Article shall conform to the requirements of the Trust Indenture Act as then
in effect.
SECTION 906. Reference in Securities to Supplemental Indentures .
Securities of any series authenticated and delivered after the execution of any supplemental indenture pursuant to this Article may,
and shall if required by the Trustee, bear a notation in form approved by the Trustee as to any matter provided for in such supplemental
indenture. If the applicable Issuer or the Guarantor (in the case of Guaranteed Securities) shall so determine, new Securities of any series and
any Guarantees endorsed thereon so modified as
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to conform, in the opinion of the Trustee, such Issuer and the Guarantor, to any such supplemental indenture may be prepared and executed by
such Issuer and the Guarantor and authenticated and delivered by the Trustee in exchange for Outstanding Securities of such series.
SECTION 907. Notice of Supplemental Indentures .
Promptly after the execution by the applicable Issuer, the Guarantor (in the case of Guaranteed Securities) and the Trustee of any
supplemental indenture pursuant to the provisions of Section 902, such Issuer shall give notice thereof to the Holders of each Outstanding
Security affected, in the manner provided for in Section 106, setting forth in general terms the substance of such supplemental indenture.
ARTICLE TEN
COVENANTS
SECTION 1001. Payment of Principal, Premium, if any, and Interest .
Each Issuer covenants and agrees for the benefit of the Holders of each series of Securities issued by such Issuer and any related
coupons that it will duly and punctually pay the principal of (and premium, if any) and interest, if any, on the Securities of that series in
accordance with the terms of the Securities, any coupons appertaining thereto and this Indenture. Unless otherwise specified as contemplated
by Section 301 with respect to any series of Securities, any interest installments due on Bearer Securities on or before Maturity shall be payable
only upon presentation and surrender of the several coupons for such interest installments as are evidenced thereby as they severally mature.
SECTION 1002. Maintenance of Office or Agency .
If the Securities of a series are issuable only as Registered Securities, the applicable Issuer will maintain in each Place of Payment
for any series of Securities an office or agency where Securities of that series may be presented or surrendered for payment, where Securities of
that series may be surrendered for registration of transfer or exchange, where Securities of that series that are convertible or exchangeable may
be surrendered for conversion or exchange, as applicable and where notices and demands to or upon such Issuer in respect of the Securities of
that series and this Indenture may be served. If such Securities are Guaranteed Securities, the Guarantor will maintain an office or agency in
The City of New York where notices and demands to or upon the Guarantor in respect of the Securities of that series and this Indenture may be
served.
If Securities of a series are issuable as Bearer Securities, the applicable Issuer will maintain (A) in The City of New York, an office
or agency where any Registered Securities of that series may be presented or surrendered for payment, where any Registered Securities of that
series may be surrendered for registration of transfer, where Securities of that series may be surrendered for exchange, where Securities of that
series that are convertible or exchangeable may be surrendered for conversion or exchange, as applicable, where notices and demands to or
upon such Issuer in respect of the Securities of that series and this Indenture may be served and where Bearer Securities of that series and
related coupons may be presented or surrendered for payment in the circumstances described in the second succeeding paragraph (and not
otherwise),
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(B) subject to any laws or regulations applicable thereto, in a Place of Payment for that series which is located outside the United States and
Canada, an office or agency where Securities of that series and related coupons may be presented and surrendered for payment; provided ,
however , that, if the Securities of that series are listed on any stock exchange located outside the United States and Canada and such stock
exchange shall so require, such Issuer will maintain a Paying Agent for the Securities of that series in any required city located outside the
United States and Canada so long as the Securities of that series are listed on such exchange, and (C) subject to any laws or regulations
applicable thereto, in a Place of Payment for that series located outside the United States and Canada an office or agency where any Registered
Securities of that series may be surrendered for registration of transfer, where Securities of that series may be surrendered for exchange, where
Securities of that series that are convertible and exchangeable may be surrendered for conversion or exchange, as applicable and where notices
and demands to or upon such Issuer in respect of the Securities of that series and this Indenture may be served. If such Securities are
Guaranteed Securities, the Guarantor will maintain an office or agency in The City of New York where notices and demands to or upon the
Guarantor in respect of the Securities of that series and this Indenture may be served.
The applicable Issuer and the Guarantor (in the case of Guaranteed Securities) will give prompt written notice to the Trustee of the
location, and any change in the location, of any such office or agency. If at any time such Issuer or the Guarantor shall fail to maintain any such
required office or agency or shall fail to furnish the Trustee with the address thereof, such presentations, surrenders, notices and demands may
be made or served at the Corporate Trust Office of the Trustee, except that Bearer Securities of any series and the related coupons may be
presented and surrendered for payment at the offices specified in the Security, and each of the Issuers and the Guarantor hereby appoints the
same as its agents to receive such respective presentations, surrenders, notices and demands.
Unless otherwise specified with respect to any Securities pursuant to Section 301, no payment of principal, premium or interest on
Bearer Securities shall be made at any office or agency of an Issuer or the Guarantor in the United States or Canada or by check mailed to any
address in the United States or Canada or by transfer to an account maintained with a bank located in the United States or Canada; provided ,
however , that, if the Securities of a series are payable in Dollars, payment of principal of (and premium, if any) and interest, if any, on any
Bearer Security shall be made at the office of the applicable Issuer’s Paying Agent in The City of New York, if (but only if) payment in Dollars
of the full amount of such principal, premium or interest, as the case may be, at all offices or agencies outside the United States maintained for
such purpose by such Issuer in accordance with this Indenture is illegal or effectively precluded by exchange controls or other similar
restrictions.
Either Issuer may also from time to time designate one or more other offices or agencies where the Securities of one or more series
may be presented or surrendered for any or all such purposes and may from time to time rescind any such designation; provided , however , that
no such designation or rescission shall in any manner relieve such Issuer of its obligation to maintain an office or agency in accordance with the
requirements set forth above for Securities of any series for such purposes. Such Issuer will give prompt written notice to the Trustee of any
such designation or rescission and of any change in the location of any such other office or agency. Unless otherwise specified with respect to
any Securities as contemplated by
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Section 301 with respect to a series of Securities, the Issuers hereby designate as a Place of Payment for each series of Securities the office or
agency of the Trustee in the Borough of Manhattan, The City of New York or, in the case of holders in Ontario, in Toronto, Ontario, Canada,
and initially appoints the Trustee at its Corporate Trust Office as Paying Agent in such cities and as its agent to receive all such presentations,
surrenders, notices and demands.
Unless otherwise specified with respect to any Securities pursuant to Section 301, if and so long as the Securities of any series
(i) are denominated in a Currency other than Dollars or (ii) may be payable in a Currency other than Dollars, or so long as it is required under
any other provision of the Indenture, then the applicable Issuer will maintain with respect to each such series of Securities, or as so required, at
least one Exchange Rate Agent.
SECTION 1003. Money for Securities Payments to Be Held in Trust .
If either Issuer or the Guarantor shall at any time act as its own Paying Agent with respect to any series of Securities and any related
coupons, it will, on or before each due date of the principal of (or premium, if any) or interest, if any, on any of the Securities of that series,
segregate and hold in trust for the benefit of the Persons entitled thereto a sum in the Currency in which the Securities of such series are
payable (except as may otherwise be specified pursuant to Section 301 for the Securities of such series and except, if applicable, as provided in
Sections 312(b), 312(d) and 312(e)) sufficient to pay the principal of (or premium, if any) or interest, if any, on Securities of such series so
becoming due until such sums shall be paid to such Persons or otherwise disposed of as herein provided and will promptly notify the Trustee of
its action or failure so to act.
Whenever the applicable Issuer shall have one or more Paying Agents for any series of Securities and any related coupons, it will,
prior to or on each due date of the principal of (or premium, if any) or interest, if any, on any Securities of that series, deposit with a Paying
Agent a sum (in the Currency described in the preceding paragraph) sufficient to pay the principal (or premium, if any) or interest, if any, so
becoming due, such sum to be held in trust for the benefit of the Persons entitled to such principal, premium or interest, and (unless such
Paying Agent is the Trustee) such Issuer will promptly notify the Trustee of its action or failure so to act.
The applicable Issuer will cause the bank through which payment of funds to the Paying Agent will be made to deliver to the
Paying Agent by 10:00 a.m. (New York Time) two Business Days prior to the due date of such payment an irrevocable confirmation (by tested
telex or authenticated Swift MT 100 Message) of its intention to make such payment.
The applicable Issuer will cause each Paying Agent (other than the Trustee) for any series of Securities to execute and deliver to the
Trustee an instrument in which such Paying Agent shall agree with the Trustee, subject to the provisions of this Section, that such Paying
Agent will:
(1) hold all sums held by it for the payment of the principal of (and premium, if any) and interest, if any, on Securities of such series
in trust for the benefit of the Persons entitled thereto until such sums shall be paid to such Persons or otherwise disposed of as herein
provided;
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(2) give the Trustee notice of any default by such Issuer (or any other obligor upon the Securities of such series) in the making of
any payment of principal of (or premium, if any) or interest, if any, on the Securities of such series; and
(3) at any time during the continuance of any such default, upon the written request of the Trustee, forthwith pay to the Trustee all
sums so held in trust by such Paying Agent.
The applicable Issuer may at any time, for the purpose of obtaining the satisfaction and discharge of this Indenture or for any other
purpose, pay, or by Issuer Order direct any Paying Agent to pay, to the Trustee all sums held in trust by such Issuer or such Paying Agent, such
sums to be held by the Trustee upon the same trusts as those upon which sums were held by such Issuer or such Paying Agent; and, upon such
payment by any Paying Agent to the Trustee, such Paying Agent shall be released from all further liability with respect to such sums.
Except as provided in the Securities of any series, any money deposited with the Trustee or any Paying Agent, or then held by the
applicable Issuer or the Guarantor (in the case of Guaranteed Securities), in trust for the payment of the principal of (or premium, if any) or
interest, if any, on any Security of any series, or any coupon appertaining thereto, and remaining unclaimed for two years after such principal,
premium or interest has become due and payable shall be paid to such Issuer or the Guarantor, or (if then held by such Issuer or the Guarantor)
shall be discharged from such trust; and the Holder of such Security or coupon shall thereafter, as an unsecured general creditor, look only to
such Issuer or the Guarantor (in the case of Guaranteed Securities), as the case may be, for payment thereof, and all liability of the Trustee or
such Paying Agent with respect to such trust money, and all liability of such Issuer or the Guarantor, as the case may be, as trustee thereof,
shall thereupon cease; provided , however , that the Trustee or such Paying Agent, before being required to make any such repayment, shall at
the written direction and at the expense of such Issuer cause to be published once, in an Authorized Newspaper, or cause to be mailed to such
Holder or both, notice that such money remains unclaimed and that, after a date specified therein, which shall not be less than 30 days from the
date of such publication or mailing, any unclaimed balance of such money then remaining will be repaid to such Issuer or the Guarantor, as the
case may be.
SECTION 1004. Statement as to Compliance .
Each of the Issuers and the Guarantor will deliver to the Trustee, within 120 days after the end of each fiscal year (which as of the
date hereof ends on the 31 day of December), a brief certificate from the principal executive officer, principal financial officer or principal
accounting officer as to his or her knowledge of such Issuer’s or the Guarantor’s compliance with all conditions and covenants under this
Indenture and as to any default in such performance. For purposes of this Section 1004, such compliance shall be determined without regard to
any period of grace or requirement of notice under this Indenture.
st
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SECTION 1005. Additional Amounts .
Unless otherwise specified pursuant to Section 301 with respect to the Securities of any series, all payments made by or on behalf of
the applicable Issuer or the Guarantor under or with respect to the Securities or any Guarantees will be made free and clear of and without
withholding or deduction for or on account of any present or future tax, duty, levy, impost, assessment or other governmental charge (including
penalties, interest and other liabilities related thereto) imposed or levied by or on behalf of the Government of Canada or any province or
territory thereof or by any authority or agency therein or thereof having power to tax (hereinafter “Canadian Taxes”), unless the applicable
Issuer or the Guarantor, as the case may be, is required to withhold or deduct Canadian Taxes by law or by the interpretation or administration
thereof by the relevant government authority or agency. If the applicable Issuer or the Guarantor is so required to withhold or deduct any
amount for or on account of Canadian Taxes from any payment made under or with respect to the Securities or the Guarantees, the applicable
Issuer or the Guarantor, as the case may be, will pay to each Holder of such Securities (or to each Holder of the Securities on which such
Guarantees are endorsed, as the case may be) as additional interest such additional amounts (“Additional Amounts”) as may be necessary so
that the net amount received by each such Holder after such withholding or deduction (and after deducting any Canadian Taxes on such
Additional Amounts) will not be less than the amount such Holder would have received if such Canadian Taxes had not been withheld or
deducted, except as described in this Section 1005. However, no Additional Amounts will be payable with respect to a payment made to a
Holder (such Holder, an “Excluded Holder”) in respect of the beneficial owner thereof:
(1) with which the applicable Issuer or the Guarantor, as the case may be, does not deal at arm’s length (for the purposes of the
Income Tax Act (Canada) ) at the time of the making of such payment;
(2) which is subject to such Canadian Taxes by reason of the Holder being a resident, domiciliary or national of, engaged in
business or maintaining a permanent establishment or other physical presence in or otherwise having some connection with Canada or
any province or territory thereof otherwise than by the mere holding of Securities or the receipt of payments thereunder;
(3) which is subject to such Canadian Taxes by reason of the Holder’s failure to comply with any certification, identification,
documentation or other reporting requirements if compliance is required by law, regulation, administrative practice or an applicable treaty
as a precondition to exemption from, or a reduction in the rate of deduction or withholding of, such Canadian Taxes (provided that the
applicable Issuer or the Guarantor shall give written notice to the Trustee and the Holders of the Securities then outstanding of any
change in such requirements); or
(4) which is a fiduciary or partnership or Person other than the sole beneficial owner of such payment to the extent that the
Canadian Taxes would not have been imposed on such payment had such holder been the sole beneficial owner of such Securities.
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The applicable Issuer or the Guarantor, as the case may be, will also:
(i) make such withholding or deduction; and
(ii) remit the full amount deducted or withheld to the relevant authority in accordance with applicable law.
The applicable Issuer or the Guarantor, as the case may be, will furnish to the Holders of the Securities, within 60 days after the
date the payment of any Canadian Taxes is due pursuant to applicable law, certified copies of tax receipts or other documents evidencing such
payment by such person.
The applicable Issuer will and, in the case of Guaranteed Securities, the applicable Issuer and the Guarantor will, jointly and
severally, indemnify and hold harmless each Holder (other than an Excluded Holder) from and against and, upon written request, reimburse
each such Holder for the amount (excluding any Additional Amounts that have previously been paid by the applicable Issuer or the Guarantor
with respect thereto) of:
(1) any Canadian Taxes so levied or imposed and paid by such Holder as a result of payments made under or with respect to the
Securities or the Guarantees;
(2) any liability (including penalties, interest and expenses) arising therefrom or with respect thereto; and
(3) any Canadian Taxes imposed with respect to any reimbursement under clause (1) or (2) in this paragraph, but excluding any
such Canadian Taxes on such Holder’s net income.
At least five (5) days prior to each date on which any payment under or with respect to the Securities is due and payable, if the
applicable Issuer or the Guarantor will be obligated to pay Additional Amounts with respect to such payment, the applicable Issuer or the
Guarantor, as the case may be, will deliver to the Trustee an Officers’ Certificate stating the fact that such Additional Amounts will be payable
and specifying the amounts so payable and will set forth such other information necessary to enable the Trustee to pay such Additional
Amounts (upon receipt by the Trustee from the applicable Issuer or Guarantor, as the case may be, of such Additional Amounts) to Holders on
the date on which such payment is due and payable.
In any event, no Additional Amounts or indemnity amounts will be payable under the provisions set forth above in this
Section 1005 in respect of any Security in excess of the Additional Amounts and the indemnity amounts which would be required if, at all
relevant times, the Holder of such Security were a resident of the United States for purposes of the Canada-U.S. Income Tax Convention
(1980), as amended, including any protocols thereto.
Wherever in this Indenture, the Securities or the Guarantees there is mentioned, in any context, the payment of principal (or
premium, if any), interest, if any, or any other amount payable under or with respect to a Security or Guarantee, such mention shall be deemed
to include mention of the payment of Additional Amounts to the extent that, in such context, Additional Amounts are, were or would be
payable in respect thereof.
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The provisions of this Section 1005 shall survive any termination, defeasance, covenant defeasance or discharge of this Indenture or
of any Securities and the repayment, redemption or other retirement of the Securities.
SECTION 1006. Payment of Taxes and Other Claims .
Each of the Issuers and the Guarantor will pay or discharge or cause to be paid or discharged, before the same shall become
delinquent, (1) all material taxes, assessments and governmental charges levied or imposed upon such Issuer or the Guarantor, as the case may
be, or upon the income, profits or property of such Issuer or the Guarantor, as the case may be, and (2) all material lawful claims for labor,
materials and supplies which, if unpaid, might by law become a Lien upon any property of such Issuer or the Guarantor; provided , however,
that such Issuer or the Guarantor shall not be required to pay or discharge or cause to be paid or discharged any such tax, assessment, charge or
claim whose amount, applicability or validity is being contested in good faith by appropriate proceedings.
SECTION 1007. Maintenance of Properties .
Each of the Issuers and the Guarantor will cause all its properties to be maintained and kept in good condition, repair and working
order and supplied with all necessary equipment and will cause to be made all necessary repairs, renewals, replacements, betterments and
improvements thereof, all as in the judgment of such Issuer or the Guarantor, as the case may be, may be necessary so that the business carried
on in connection therewith may be properly and advantageously conducted at all times except to the extent that the failure to do so would not
materially impair the operations of the Company and its Subsidiaries taken as a whole; provided , however , that nothing in this Section shall
prevent or restrict the sale, abandonment or other disposition of any of such properties if such action is, in the judgment of such Issuer or the
Guarantor, as the case may be, desirable in the conduct of the business of such Issuer or the Guarantor, as the case may be, and not
disadvantageous in any material respect to the Holders.
SECTION 1008. Corporate Existence .
Subject to Article Eight, each of the Issuers and the Guarantor will do or cause to be done all things necessary to preserve and keep
in full force and effect its existence (corporate or other) and the rights (charter and statutory) and franchises of such Issuer or the Guarantor, as
the case may be; provided , however , that such Issuer or the Guarantor, as the case may be, shall not be required to preserve any such right or
franchise if such Issuer or the Guarantor, as the case may be, shall determine that the preservation thereof is no longer desirable in the conduct
of the business of such Issuer or the Guarantor and its Subsidiaries as a whole, as the case may be.
SECTION 1009. Limitation on Liens .
The Company will not, and will not permit any Restricted Subsidiary to, create, incur or assume any Lien (except for Permitted
Liens) on any Principal Assets securing payment of Indebtedness of the Company or any of its Subsidiaries unless the Securities (together with,
at the Company’s option, any other obligations that are not subordinate in right of payment to the Securities) are secured equally and ratably
with (or prior to) any and all obligations secured or to be secured by any such Lien and for so long as such obligations are so secured.
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For greater certainty, the following shall not constitute Liens securing payment of Indebtedness:
(a) all rights reserved to or vested in any Governmental Authority by the terms of any lease, license, franchise, grant or permit held
by the Company or any Restricted Subsidiary, or by any statutory provision, to terminate any such lease, license, franchise, grant or
permit, or to require annual or other periodic payments as a condition of the continuance thereof or to distrain against or to obtain a
charge on any property or assets of the Company or any Restricted Subsidiary in the event of failure to make any such annual or other
periodic payment;
(b) any Lien upon any Principal Asset in favor of any party to a joint development or operating agreement or any similar Person
paying all or part of the expenses of developing or conducting operations for the recovery, storage, treatment, transportation or sale of the
mineral resources of the Principal Asset (or property or assets with which it is united) that secures the payment to such Person of the
Company’s or any Restricted Subsidiary’s proportionate part of such development or operating expenses;
(c) any acquisition by the Company or by any Restricted Subsidiary of any Principal Asset subject to any reservation or exception
under the terms of which any vendor, lessor or assignor creates, reserves or excepts or has created, reserved or excepted an interest in
precious metals or any other mineral or timber in place or the proceeds thereof; and
(d) any conveyance or assignment whereby the Company or any Restricted Subsidiary conveys or assigns to any Person or Persons
an interest in precious metals or any other mineral or timber in place or the proceeds thereof.
SECTION 1010. Waiver of Certain Covenants .
The applicable Issuer and the Guarantor (in the case of Guaranteed Securities) may, with respect to any series of Securities, omit in
any particular instance to comply with any term, provision or condition which affects such series set forth in Section 803 or Sections 1006
to 1009, inclusive, or, as specified pursuant to Section 301(18) for Securities of such series, in any covenants added to Article Ten pursuant to
Section 301(18) in connection with Securities of such series, if before the time for such compliance the Holders of at least a majority in
principal amount of all Outstanding Securities of such series, by Act of such Holders, waive such compliance in such instance with such term,
provision or condition, but no such waiver shall extend to or affect such term, provision or condition except to the extent so expressly waived,
and, until such waiver shall become effective, the obligations of such Issuer and the Guarantor and the duties of the Trustee to Holders of
Securities of such series in respect of any such term, provision or condition shall remain in full force and effect.
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ARTICLE ELEVEN
REDEMPTION OF SECURITIES
SECTION 1101. Applicability of Article .
Securities of any series which are redeemable before their Stated Maturity shall be redeemable in accordance with the terms of such
Securities and (except as otherwise specified as contemplated by Section 301 for Securities of any series) in accordance with this Article.
SECTION 1102. Election to Redeem; Notice to Trustee .
The election of an Issuer to redeem any Securities shall be evidenced by or pursuant to a Board Resolution. In case of any
redemption at the election of the applicable Issuer, such Issuer shall, at least 60 days prior to the Redemption Date fixed by such Issuer (unless
a shorter notice shall be satisfactory to the Trustee), notify the Trustee of such Redemption Date and of the principal amount of Securities of
such series to be redeemed and shall deliver to the Trustee such documentation and records as shall enable the Trustee to select the Securities to
be redeemed pursuant to Section 1103. In the case of any redemption of Securities prior to the expiration of any restriction on such redemption
provided in the terms of such Securities or elsewhere in this Indenture, the applicable Issuer shall furnish the Trustee with an Officers’
Certificate evidencing compliance with such restriction.
SECTION 1103. Selection by Trustee of Securities to Be Redeemed .
If less than all the Securities of any series are to be redeemed, the particular Securities to be redeemed shall be selected not more
than 60 days prior to the Redemption Date by the Trustee, from the Outstanding Securities of such series not previously called for redemption,
by lot or in such manner as the Trustee shall deem fair and appropriate and which may provide for the selection for redemption of portions of
the principal of Securities of such series; provided , however , that no such partial redemption shall reduce the portion of the principal amount
of a Security not redeemed to less than the minimum authorized denomination for Securities of such series established pursuant to Section 301.
The Trustee shall promptly notify the applicable Issuer and the Guarantor (in the case of Guaranteed Securities) in writing of the
Securities selected for redemption and, in the case of any Securities selected for partial redemption, the principal amount thereof to be
redeemed.
For all purposes of this Indenture, unless the context otherwise requires, all provisions relating to the redemption of Securities shall
relate, in the case of any Security redeemed or to be redeemed only in part, to the portion of the principal amount of such Security which has
been or is to be redeemed.
SECTION 1104. Notice of Redemption .
Except as otherwise specified as contemplated by Section 301, notice of redemption shall be given in the manner provided for in
Section 106 not less than 30 nor more than 60 days prior to the Redemption Date, to each Holder of Securities to be redeemed.
All notices of redemption shall state:
(1) the Redemption Date,
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(2) the Redemption Price and the amount of accrued interest to the Redemption Date payable as provided in Section 1106, if any,
(3) if less than all the Outstanding Securities of any series are to be redeemed, the identification (and, in the case of partial
redemption, the principal amounts) of the particular Securities to be redeemed,
(4) in case any Security is to be redeemed in part only, the notice which relates to such Security shall state that on and after the
Redemption Date, upon surrender of such Security, the Holder will receive, without charge, a new Security or Securities of authorized
denominations for the principal amount thereof remaining unredeemed,
(5) that on the Redemption Date, the Redemption Price and accrued interest, if any, to the Redemption Date payable as provided in
Section 1106 will become due and payable upon each such Security, or the portion thereof, to be redeemed and, if applicable, that interest
thereon will cease to accrue on and after said date,
(6) the Place or Places of Payment where such Securities, together in the case of Bearer Securities with all coupons appertaining
thereto, if any, maturing after the Redemption Date, are to be surrendered for payment of the Redemption Price and accrued interest, if
any,
(7) that the redemption is for a sinking fund, if such is the case,
(8) that, unless otherwise specified in such notice, Bearer Securities of any series, if any, surrendered for redemption must be
accompanied by all coupons maturing subsequent to the Redemption Date or the amount of any such missing coupon or coupons will be
deducted from the Redemption Price unless security or indemnity satisfactory to the applicable Issuer, the Trustee and any Paying Agent
is furnished, and
(9) if Bearer Securities of any series are to be redeemed and any Registered Securities of such series are not to be redeemed, and if
such Bearer Securities may be exchanged for Registered Securities not subject to redemption on such Redemption Date pursuant to
Section 305 or otherwise, the last date, as determined by the applicable Issuer, on which such exchanges may be made.
Notice of redemption of Securities to be redeemed at the election of the applicable Issuer shall be given by such Issuer or, at such
Issuer’s request, by the Trustee in the name and at the expense of such Issuer.
SECTION 1105. Deposit of Redemption Price .
Prior to any Redemption Date, the applicable Issuer shall deposit or cause to be deposited with the Trustee or with a Paying Agent
(or, if such Issuer is acting as its own Paying Agent, segregate and hold in trust as provided in Section 1003) an amount of money in the
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Currency in which the Securities of such series are payable (except, if applicable, as otherwise specified pursuant to Section 301 for the
Securities of such series and except, if applicable, as provided in Sections 312(b), 312(d) and 312(e)) sufficient to pay the Redemption Price of,
and accrued interest, if any, on, all the Securities which are to be redeemed on that date.
The applicable Issuer will cause the bank through which payment of funds to the Trustee or the Paying Agent will be made to
deliver to the Trustee or the Paying Agent, as the case may be, by 10:00 a.m. (New York Time) two Business Days prior to the due date of such
payment an irrevocable confirmation (by tested telex or authenticated Swift MT 100 Message) of its intention to make such payment.
SECTION 1106. Securities Payable on Redemption Date .
Notice of redemption having been given as aforesaid, the Securities so to be redeemed shall, on the Redemption Date, become due
and payable at the Redemption Price therein specified in the Currency in which the Securities of such series are payable (except, if applicable,
as otherwise specified pursuant to Section 301 for the Securities of such series and except, if applicable, as provided in Sections 312(b), 312(d)
and 312(e)) (together with accrued interest, if any, to the Redemption Date), and from and after such date (unless the applicable Issuer shall
default in the payment of the Redemption Price and accrued interest, if any) such Securities shall, if the same were interest-bearing, cease to
bear interest and the coupons for such interest appertaining to any Bearer Securities so to be redeemed, except to the extent provided below,
shall be void. Upon surrender of any such Security for redemption in accordance with said notice, together with all coupons, if any,
appertaining thereto maturing after the Redemption Date, such Security shall be paid by the applicable Issuer at the Redemption Price, together
with accrued interest, if any, to the Redemption Date; provided , however , that installments of interest on Bearer Securities whose Stated
Maturity is on or prior to the Redemption Date shall be payable only at an office or agency located outside the United States and Canada
(except as otherwise provided in Section 1002) and, unless otherwise specified as contemplated by Section 301, only upon presentation and
surrender of coupons for such interest; and provided further that installments of interest on Registered Securities whose Stated Maturity is on or
prior to the Redemption Date shall be payable to the Holders of such Securities, or one or more Predecessor Securities, registered as such at the
close of business on the relevant record dates according to their terms and the provisions of Section 307.
If any Bearer Security surrendered for redemption shall not be accompanied by all appurtenant coupons maturing after the
Redemption Date, such Security may be paid after deducting from the Redemption Price an amount equal to the face amount of all such
missing coupons, or the surrender of such missing coupon or coupons may be waived by the applicable Issuer and the Trustee if there be
furnished to them such security or indemnity as they may require to save each of them and any Paying Agent harmless. If thereafter the Holder
of such Security shall surrender to the Trustee or any Paying Agent any such missing coupon in respect of which a deduction shall have been
made from the Redemption Price, such Holder shall be entitled to receive the amount so deducted; provided , however , that interest
represented by coupons shall be payable only at an office or agency located outside the United States and Canada (except as otherwise provided
in Section 1002) and, unless otherwise specified as contemplated by Section 301, only upon presentation and surrender of those coupons.
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If any Security called for redemption shall not be so paid upon surrender thereof for redemption, the principal (and premium, if any)
shall, until paid, bear interest from the Redemption Date at the rate of interest or Yield to Maturity (in the case of Original Issue Discount
Securities) set forth in such Security.
SECTION 1107. Securities Redeemed in Part .
Any Security which is to be redeemed only in part (pursuant to the provisions of this Article or of Article Twelve) shall be
surrendered at a Place of Payment therefor (with, if the applicable Issuer or the Trustee so requires, due endorsement by, or a written instrument
of transfer in form satisfactory to such Issuer and the Trustee duly executed by, the Holder thereof or such Holder’s attorney duly authorized in
writing), and such Issuer shall execute, and the Trustee shall authenticate and deliver to the Holder of such Security without service charge, a
new Security or Securities of the same series, each, in the case of Guaranteed Securities, having endorsed thereon a Guarantee executed by the
Guarantor, of any authorized denomination as requested by such Holder, in aggregate principal amount equal to and in exchange for the
unredeemed portion of the principal of the Security so surrendered.
SECTION 1108. Tax Redemption .
Unless otherwise specified pursuant to Section 301, the applicable Issuer shall have the right to redeem, at any time, the Securities
of any series issued by such Issuer, in whole but not in part, at a Redemption Price equal to the principal amount thereof together with accrued
and unpaid interest to the date fixed for redemption, upon the giving of a notice and on the terms and subject to satisfaction of the other
conditions described below, if (1) (a) as a result of any change (including any announced prospective change) in or amendment to the laws (or
any regulations or rulings promulgated thereunder) of Canada (or the jurisdiction of organization of the successor to the applicable Issuer or, if
the Securities of such series are Guaranteed Securities, the Guarantor pursuant to Section 802) or of any political subdivision or taxing
authority thereof or therein affecting taxation, or any change in official position regarding the application or interpretation of such laws,
regulations or rulings (including a holding by a court of competent jurisdiction), which change or amendment is announced or becomes
effective on or after the date specified pursuant to Section 301(24) with respect to the Securities of such series and which in a written opinion to
the applicable Issuer or, in the case of Guaranteed Securities, the Guarantor of legal counsel of recognized standing has resulted or will result
(assuming, in the case of any announced prospective change, that such announced change will become effective as of the date specified in such
announcement and in the form announced) in the applicable Issuer or, if the Securities of such series are Guaranteed Securities, the Guarantor
becoming obligated to pay, on the next succeeding date on which interest is due, Additional Amounts with respect to any Security of such
series pursuant to Section 1005 or (b) on or after the date specified pursuant to Section 301(24) with respect to the Securities of such series, any
action has been taken by any taxing authority of, or any decision has been rendered by a court of competent jurisdiction in, Canada (or the
jurisdiction of organization of the successor to the applicable Issuer or, if the Securities of such series are Guaranteed Securities, the Guarantor
pursuant to Section 802) or any political subdivision or taxing authority thereof or therein, including any of those actions specified in (a) above,
whether or not such action was taken or decision was rendered with respect to the applicable Issuer or the Guarantor, or any change,
amendment, application or
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interpretation shall be officially proposed, which, in any such case, in the written opinion to the applicable Issuer or, in the case of Guaranteed
Securities, the Guarantor of legal counsel of recognized standing, will result (assuming, in the case of any announced prospective change, that
such announced change will become effective as of the date specified in such announcement and in the form announced) in the applicable
Issuer or, if the Securities of such series are Guaranteed Securities, the Guarantor becoming obligated to pay, on the next succeeding date on
which interest is due, Additional Amounts with respect to any Security of such series and (2) in any such case, the applicable Issuer or, if the
Securities of such series are Guaranteed Securities, the Guarantor (or its successor pursuant to Section 802), in its business judgment,
determines that such obligation cannot be avoided by the use of reasonable measures available to it (or its successor pursuant to Section 802);
provided , however , that (i) no such notice of redemption may be given earlier than 60 or later than 30 days prior to the earliest date on which
the applicable Issuer or, if the Securities of such series are Guaranteed Securities, the Guarantor would be obligated to pay such Additional
Amounts were a payment in respect of the Securities of such series then due; (ii) at the time such notice of redemption is given, such obligation
to pay such Additional Amounts remains in effect; and (iii) with respect to any jurisdiction of organization of any such successor other than
Canada or any province or territory of Canada, or the United States, any state thereof or the District of Columbia, the consolidation,
amalgamation, merger or other transaction that resulted in such successor becoming the successor to the applicable Issuer or the Guarantor was
not undertaken for the primary purpose of redeeming the Securities of such series. Any redemption pursuant to this Section 1108 shall be
effected in accordance with the other provisions of this Article Eleven, including, without limitation, the first paragraph of Section 1104.
In the event that the applicable Issuer elects to redeem the Securities of any series pursuant to this Section 1108, it shall deliver to
the Trustee, prior to the giving of the notice of redemption to Holders, an Officers’ Certificate stating that it is entitled to redeem the Securities
of such series pursuant to this Section.
ARTICLE TWELVE
SINKING FUNDS
SECTION 1201. Applicability of Article .
Retirements of Securities of any series pursuant to any sinking fund shall be made in accordance with the terms of such Securities
and (except as otherwise specified as contemplated by Section 301 for Securities of any series) in accordance with this Article.
The minimum amount of any sinking fund payment provided for by the terms of Securities of any series is herein referred to as a
“mandatory sinking fund payment”, and any payment in excess of such minimum amount provided for by the terms of Securities of any series
is herein referred to as an “optional sinking fund payment”. If provided for by the terms of Securities of any series, the cash amount of any
mandatory sinking fund payment may be subject to reduction as provided in Section 1202. Each sinking fund payment shall be applied to the
redemption of Securities of any series as provided for by the terms of Securities of such series.
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SECTION 1202. Satisfaction of Sinking Fund Payments with Securities .
Subject to Section 1203, in lieu of making all or any part of any mandatory sinking fund payment with respect to any Securities of a
series in cash, the applicable Issuer may at its option (1) deliver to the Trustee Outstanding Securities of such series (other than any previously
called for redemption) theretofore purchased or otherwise acquired by such Issuer together in the case of any Bearer Securities of such series
with all unmatured coupons appertaining thereto, and/or (2) receive credit for the principal amount of Securities of such series which have been
previously redeemed either at the election of such Issuer pursuant to the terms of such Securities or through the application of permitted
optional sinking fund payments pursuant to the terms of such Securities, in each case in satisfaction of all or any part of any mandatory sinking
fund payment with respect to the Securities of the same series required to be made pursuant to the terms of such Securities as provided for by
the terms of such series; provided , however , that such Securities have not been previously so credited. Such Securities shall be received and
credited for such purpose by the Trustee at the Redemption Price specified in such Securities for redemption through operation of the sinking
fund and the amount of such mandatory sinking fund payment shall be reduced accordingly.
SECTION 1203. Redemption of Securities for Sinking Fund .
Not less than 60 days prior to each sinking fund payment date for any series of Securities, the applicable Issuer will deliver to the
Trustee an Officers’ Certificate specifying the amount of the next ensuing sinking fund payment for that series pursuant to the terms of that
series, the portion thereof, if any, which is to be satisfied by payment of cash in the Currency in which the Securities of such series are payable
(except, if applicable, as otherwise specified pursuant to Section 301 for the Securities of such series and except, if applicable, as provided in
Sections 312(b), 312(d) and 312(e)) and the portion thereof, if any, which is to be satisfied by delivering or crediting Securities of that series
pursuant to Section 1202 (which Securities will, if not previously delivered, accompany such certificate) and whether such Issuer intends to
exercise its right to make a permitted optional sinking fund payment with respect to such series. Such certificate shall be irrevocable and upon
its delivery such Issuer shall be obligated to make the cash payment or payments therein referred to, if any, on or before the next succeeding
sinking fund payment date. In the case of the failure of such Issuer to deliver such certificate, the sinking fund payment due on the next
succeeding sinking fund payment date for that series shall be paid entirely in cash and shall be sufficient to redeem the principal amount of
such Securities subject to a mandatory sinking fund payment without the option to deliver or credit Securities as provided in Section 1202 and
without the right to make any optional sinking fund payment, if any, with respect to such series.
Not more than 60 days before each such sinking fund payment date the Trustee shall select the Securities to be redeemed upon such
sinking fund payment date in the manner specified in Section 1103 and cause notice of the redemption thereof to be given in the name of and at
the expense of the applicable Issuer in the manner provided in Section 1104. Such notice having been duly given, the redemption of such
Securities shall be made upon the terms and in the manner stated in Sections 1106 and 1107.
Prior to any sinking fund payment date, the applicable Issuer shall pay to the Trustee or a Paying Agent (or, if such Issuer is acting
as its own Paying Agent, segregate and hold in trust as provided in Section 1003) in cash a sum equal to any interest that will accrue to the date
fixed for redemption of Securities or portions thereof to be redeemed on such sinking fund payment date pursuant to this Section 1203.
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The applicable Issuer will cause the bank through which payment of funds to the Trustee or the Paying Agent will be made to
deliver to the Trustee or the Paying Agent, as the case may be, by 10:00 a.m. (New York Time) two Business Days prior to the due date of such
payment an irrevocable confirmation (by tested telex or authenticated Swift MT 100 Message) of its intention to make such payment.
Notwithstanding the foregoing, with respect to a sinking fund for any series of Securities, if at any time the amount of cash to be
paid into such sinking fund on the next succeeding sinking fund payment date, together with any unused balance of any preceding sinking fund
payment or payments for such series, does not exceed in the aggregate $100,000, the Trustee, unless requested by the applicable Issuer, shall
not give the next succeeding notice of the redemption of Securities of such series through the operation of the sinking fund. Any such unused
balance of moneys deposited in such sinking fund shall be added to the sinking fund payment for such series to be made in cash on the next
succeeding sinking fund payment date or, at the request of such Issuer, shall be applied at any time or from time to time to the purchase of
Securities of such series, by public or private purchase, in the open market or otherwise, at a purchase price for such Securities (excluding
accrued interest and brokerage commissions, for which the Trustee or any Paying Agent will be reimbursed by such Issuer) not in excess of the
principal amount thereof.
ARTICLE THIRTEEN
REPAYMENT AT OPTION OF HOLDERS
SECTION 1301. Applicability of Article .
Repayment of Securities of any series before their Stated Maturity at the option of Holders thereof shall be made in accordance with
the terms of such Securities and (except as otherwise specified as contemplated by Section 301 for Securities of any series) in accordance with
this Article.
SECTION 1302. Repayment of Securities .
Securities of any series subject to repayment in whole or in part at the option of the Holders thereof will, unless otherwise provided
in the terms of such Securities, be repaid at a price equal to the principal amount thereof, together with interest, if any, thereon accrued to the
Repayment Date specified in or pursuant to the terms of such Securities. Each of the Issuers covenants that, with respect to Securities issued by
such Issuer, on or before the Repayment Date it will deposit with the Trustee or with a Paying Agent (or, if such Issuer is acting as its own
Paying Agent, segregate and hold in trust as provided in Section 1003) an amount of money in the Currency in which the Securities of such
series are payable (except, if applicable, as otherwise specified pursuant to Section 301 for the Securities of such series and except, if
applicable, as provided in Sections 312(b), 312(d) and 312(e)) sufficient to pay the principal (or, if so provided by the terms of the Securities of
any series, a percentage of the principal) of and (except if the Repayment Date shall be an Interest Payment Date) accrued interest, if any, on,
all the Securities or portions thereof, as the case may be, to be repaid on such date.
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SECTION 1303. Exercise of Option .
Securities of any series subject to repayment at the option of the Holders thereof will contain an “Option to Elect Repayment” form
on the reverse of such Securities. To be repaid at the option of the Holder, any Security so providing for such repayment, with the “Option to
Elect Repayment” form on the reverse of such Security duly completed by the Holder (or by the Holder’s attorney duly authorized in writing),
must be received by the applicable Issuer at the Place of Payment therefor specified in the terms of such Security (or at such other place or
places or which such Issuer shall from time to time notify the Holders of such Securities) not earlier than 45 days nor later than 30 days prior to
the Repayment Date. If less than the entire principal amount of such Security is to be repaid in accordance with the terms of such Security, the
principal amount of such Security to be repaid, in increments of the minimum denomination for Securities of such series, and the denomination
or denominations of the Security or Securities to be issued to the Holder for the portion of the principal amount of such Security surrendered
that is not to be repaid, must be specified. The principal amount of any Security providing for repayment at the option of the Holder thereof
may not be repaid in part if, following such repayment, the unpaid principal amount of such Security would be less than the minimum
authorized denomination of Securities of the series of which such Security to be repaid is a part. Except as otherwise may be provided by the
terms of any Security providing for repayment at the option of the Holder thereof, exercise of the repayment option by the Holder shall be
irrevocable unless waived by the applicable Issuer.
SECTION 1304. When Securities Presented for Repayment Become Due and Payable .
If Securities of any series providing for repayment at the option of the Holders thereof shall have been surrendered as provided in
this Article and as provided by or pursuant to the terms of such Securities, such Securities or the portions thereof, as the case may be, to be
repaid shall become due and payable and shall be paid by the applicable Issuer on the Repayment Date therein specified, and on and after such
Repayment Date (unless such Issuer shall default in the payment of such Securities on such Repayment Date together with, if applicable,
accrued interest, if any, thereon to the Repayment Date) such Securities shall, if the same were interest-bearing, cease to bear interest and the
coupons for such interest appertaining to any Bearer Securities so to be repaid, except to the extent provided below, shall be void. Upon
surrender of any such Security for repayment in accordance with such provisions, together with all coupons, if any, appertaining thereto
maturing after the Repayment Date, the principal amount of such Security so to be repaid shall be paid by the applicable Issuer, together with
accrued interest, if any, to the Repayment Date; provided , however , that coupons whose Stated Maturity is on or prior to the Repayment Date
shall be payable only at an office or agency located outside the United States and Canada (except as otherwise provided in Section 1002) and,
unless otherwise specified pursuant to Section 301, only upon presentation and surrender of such coupons; and provided further that, in the
case of Registered Securities, installments of interest, if any, whose Stated Maturity is on or prior to the Repayment Date shall be payable to the
Holders of such Securities, or one or more Predecessor Securities, registered as such at the close of business on the relevant Record Dates
according to their terms and the provisions of Section 307.
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If any Bearer Security surrendered for repayment shall not be accompanied by all appurtenant coupons maturing after the
Repayment Date, such Security may be paid after deducting from the amount payable therefor as provided in Section 1302 an amount equal to
the face amount of all such missing coupons, or the surrender of such missing coupon or coupons may be waived by the applicable Issuer and
the Trustee if there be furnished to them such security or indemnity as they may require to save each of them and any Paying Agent harmless.
If thereafter the Holder of such Security shall surrender to the Trustee or any Paying Agent any such missing coupon in respect of which a
deduction shall have been made as provided in the preceding sentence, such Holder shall be entitled to receive the amount so deducted;
provided , however , that interest represented by coupons shall be payable only at an office or agency located outside the United States and
Canada (except as otherwise provided in Section 1002) and, unless otherwise specified as contemplated by Section 301, only upon presentation
and surrender of those coupons.
If the principal amount of any Security surrendered for repayment shall not be so repaid upon surrender thereof, such principal
amount (together with interest, if any, thereon accrued to such Repayment Date) shall, until paid, bear interest from the Repayment Date at the
rate of interest or Yield to Maturity (in the case of Original Issue Discount Securities) set forth in such Security.
SECTION 1305. Securities Repaid in Part .
Upon surrender of any Registered Security which is to be repaid in part only, the applicable Issuer shall execute and the Trustee
shall authenticate and deliver to the Holder of such Security, without service charge and at the expense of the such Issuer, a new Registered
Security or Securities of the same series each, in the case of Guaranteed Securities, having endorsed thereon the Guarantee executed by the
Guarantor, of any authorized denomination specified by the Holder, in an aggregate principal amount equal to and in exchange for the portion
of the principal of such Security so surrendered which is not to be repaid.
ARTICLE FOURTEEN
DEFEASANCE AND COVENANT DEFEASANCE
SECTION 1401. Option to Effect Defeasance or Covenant Defeasance .
Except as otherwise specified as contemplated by Section 301 for Securities of any series, the provisions of this Article Fourteen
shall apply to each series of Securities, and the applicable Issuer or the Guarantor (in the case of Guaranteed Securities) may, at its option,
effect defeasance of the Securities of a series under Section 1402, or covenant defeasance of a series under Section 1403 in accordance with the
terms of such Securities and in accordance with this Article; provided , however , that, unless otherwise specified pursuant to Section 301 with
respect to the Securities of any series, the applicable Issuer or the Guarantor (in the case of Guaranteed Securities) may effect defeasance or
covenant defeasance only with respect to all of the Securities of such series.
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SECTION 1402. Defeasance and Discharge .
Upon the exercise by the applicable Issuer or the Guarantor of the above option applicable to this Section with respect to any
Securities of a series, such Issuer and, in the case of Guaranteed Securities, the Guarantor shall each be deemed to have been discharged from
its obligations with respect to such Outstanding Securities and any related coupons on the date the conditions set forth in Section 1404 are
satisfied (hereinafter, “defeasance”). For this purpose, such defeasance means that the applicable Issuer and the Guarantor (in the case of
Guaranteed Securities) shall be deemed to have paid and discharged the entire indebtedness represented by such Outstanding Securities and any
related coupons and Guarantees, respectively, which shall thereafter be deemed to be “Outstanding” only for the purposes of Section 1405 and
the other provisions of this Indenture referred to in (A), (B), (C) and (D) below, and to have satisfied all their other obligations under such
Securities and any related coupons and Guarantees, respectively, and this Indenture insofar as such Securities and any related coupons and
Guarantees are concerned (and the Trustee, at the expense of the applicable Issuer, shall execute proper instruments acknowledging the same),
except for the following which shall survive until otherwise terminated or discharged hereunder: (A) the rights of Holders of such Outstanding
Securities and any related coupons to receive, solely from the trust fund described in Section 1404 and as more fully set forth in such Section,
payments in respect of the principal of (and premium, if any) and interest, if any, on such Securities and any related coupons when such
payments are due, (B) the applicable Issuer’s, the Trustee’s and, if applicable, the Guarantor’s obligations with respect to such Securities under
Sections 113, 114, 304, 305, 306, 1002, 1003, 1005 and 1108 (and any other applicable provisions of Article Eleven), (C) the rights, powers,
trusts, duties and immunities of the Trustee hereunder and (D) this Article Fourteen. Subject to compliance with this Article Fourteen, the
applicable Issuer or the Guarantor may exercise its option under this Section 1402 notwithstanding the prior exercise of the option under
Section 1403 with respect to such Securities and any related coupons and Guarantees.
SECTION 1403. Covenant Defeasance .
Upon the exercise by the applicable Issuer or the Guarantor (in the case of Guaranteed Securities) of the above option applicable to
this Section with respect to any Securities of a series, such Issuer and the Guarantor shall be released from their obligations under Article Eight
and Sections 1006 through 1009, and, if specified pursuant to Section 301, their obligations under any other covenant, in each case with respect
to such Outstanding Securities and any related coupons and Guarantees, respectively, on and after the date the conditions set forth in
Section 1404 are satisfied (hereinafter, “covenant defeasance”), and such Securities and any related coupons and Guarantees shall thereafter be
deemed not to be “Outstanding” for the purposes of any direction, waiver, consent or declaration or Act of Holders (and the consequences of
any thereof) in connection with such covenants, but shall continue to be deemed “Outstanding” for all other purposes hereunder. For this
purpose, such covenant defeasance means that, with respect to such Outstanding Securities and any related coupons and Guarantees, the
applicable Issuer and, if applicable, the Guarantor may omit to comply with and shall have no liability in respect of any term, condition or
limitation set forth in any such covenant, whether directly or indirectly, by reason of any reference elsewhere herein to any such covenant or by
reason of reference in any such covenant to any other provision herein or in any other document and such omission to comply shall not
constitute a Default or an Event of
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Default under Section 501(4) or Section 501(9) or otherwise, as the case may be, but, except as specified above, the remainder of this Indenture
and such Securities and any related coupons and Guarantees shall be unaffected thereby.
SECTION 1404. Conditions to Defeasance or Covenant Defeasance .
The following shall be the conditions to application of either Section 1402 or Section 1403 to any Outstanding Securities of or
within a series and any related coupons:
(1) The applicable Issuer or, in the case of Guaranteed Securities, the Guarantor has deposited or caused to be deposited with the
Trustee (or another trustee satisfying the requirements of Section 607 who shall agree to comply with the provisions of this
Article Fourteen applicable to it) as trust funds in trust for the purpose of making the following payments, specifically pledged as security
for, and dedicated solely to, the benefit of the Holders of such Securities and any related coupons, (A) an amount (in such Currency in
which such Securities and any related coupons are then specified as payable at Stated Maturity), or (B) Government Obligations
applicable to such Securities (determined on the basis of the Currency in which such Securities are then specified as payable at Stated
Maturity) which through the scheduled payment of principal and interest in respect thereof in accordance with their terms will provide,
not later than one day before the due date of any payment of principal of or premium, if any, or interest, if any, or any other sums due
under such Securities and any related coupons, money in an amount, or (C) a combination thereof, sufficient, in the opinion of a
nationally recognized firm of independent certified public accountants expressed in a written certification thereof delivered to the Trustee,
to pay and discharge, and which shall be applied by the Trustee (or other qualifying trustee) to pay and discharge, (i) the principal of (and
premium, if any) and interest, if any, and any other sums due under such Outstanding Securities and any related coupons on the Stated
Maturity (or Redemption Date, if applicable) of such principal (and premium, if any) or installment of interest, if any, or any other sums
and (ii) any mandatory sinking fund payments or analogous payments applicable to such Outstanding Securities and any related coupons
on the day on which such payments are due and payable in accordance with the terms of this Indenture and of such Securities and any
related coupons; provided that the Trustee shall have been irrevocably instructed to apply such money or the proceeds of such
Government Obligations to said payments with respect to such Securities and any related coupons. Before such a deposit, the applicable
Issuer may give to the Trustee, in accordance with Section 1102 hereof, a notice of its election to redeem all or any portion of such
Outstanding Securities at a future date in accordance with the terms of the Securities of such series and Article Eleven hereof, which
notice shall be irrevocable. Such irrevocable redemption notice, if given, shall be given effect in applying the foregoing.
(2) In the case of an election under Section 1402, the applicable Issuer or the Guarantor (in the case of Guaranteed Securities) shall
have delivered to the Trustee an Opinion of Counsel in the United States stating that (x) such Issuer or the Guarantor, as the case may be,
has received from, or there has been published by, the
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Internal Revenue Service a ruling, or (y) since the date of execution of this Indenture, there has been a change in the applicable U.S.
federal income tax law, in either case to the effect that, and based thereon such opinion shall confirm that, the Holders of such
Outstanding Securities and any related coupons will not recognize income, gain or loss for U.S. federal income tax purposes as a result of
such defeasance and will be subject to U.S. federal income tax on the same amounts, in the same manner and at the same times as would
have been the case if such defeasance had not occurred.
(3) In the case of an election under Section 1403, the applicable Issuer or the Guarantor (in the case of Guaranteed Securities) shall
have delivered to the Trustee an Opinion of Counsel in the United States to the effect that the Holders of such Outstanding Securities and
any related coupons will not recognize income, gain or loss for U.S. federal income tax purposes as a result of such covenant defeasance
and will be subject to U.S. federal income tax on the same amounts, in the same manner and at the same times as would have been the
case if such covenant defeasance had not occurred.
(4) The applicable Issuer or the Guarantor (in the case of Guaranteed Securities) has delivered to the Trustee an Opinion of Counsel
in Canada or a ruling from Canada Customs and Revenue Agency to the effect that the Holders of such Outstanding Securities and any
related coupons will not recognize income, gain or loss for Canadian federal or provincial income tax or other tax purposes as a result of
such defeasance or covenant defeasance and will be subject to Canadian federal and provincial income tax and other tax on the same
amounts, in the same manner and at the same times as would have been the case had such defeasance or covenant defeasance not
occurred (and for the purposes of such opinion, such Canadian counsel shall assume that Holders of such Outstanding Securities include
Holders who are not resident in Canada).
(5) The Guarantor (in the case of Guaranteed Securities) is not an “insolvent person” within the meaning of the Bankruptcy and
Insolvency Act (Canada) and the applicable Issuer is not an “insolvent person” under the relevant legislation in the jurisdiction of the
applicable Issuer, in each case, on the date of such deposit or at any time during the period ending on the 91st day after the date of such
deposit (it being understood that this condition shall not be deemed satisfied until the expiration of such period).
(6) No Event of Default or event that, with the passing of time or the giving of notice, or both, shall constitute an Event of Default
with respect to such Securities or any related coupons shall have occurred and be continuing on the date of such deposit or, insofar as
paragraphs (6), (7) and (8) of Section 501 are concerned, at any time during the period ending on the 91st day after the date of such
deposit (it being understood that this condition shall not be deemed satisfied until the expiration of such period).
(7) The applicable Issuer or the Guarantor (in the case of Guaranteed Securities) has delivered to the Trustee an Opinion of Counsel
to the effect that such deposit shall not cause the Trustee or the trust so created to be subject to the Investment Company Act of 1940, as
amended.
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(8) Such defeasance or covenant defeasance shall not result in a breach or violation of, or constitute a default under, this Indenture
or any other material agreement or instrument to which the applicable Issuer or the Guarantor (in the case of Guaranteed Securities) is a
party or by which it is bound.
(9) Notwithstanding any other provisions of this Section, such defeasance or covenant defeasance shall be effected in compliance
with any additional or substitute terms, conditions or limitations in connection therewith pursuant to Section 301.
(10) The applicable Issuer or the Guarantor (in the case of Guaranteed Securities) shall have delivered to the Trustee an Officers’
Certificate and an Opinion of Counsel, each stating that all conditions precedent provided for relating to either the defeasance under
Section 1402 or the covenant defeasance under Section 1403 (as the case may be) have been complied with.
SECTION 1405. Deposited Money and Government Obligations to Be Held in Trust; Other Miscellaneous Provisions .
Subject to the provisions of the last paragraph of Section 1003, all money and Government Obligations (or other property as may be
provided pursuant to Section 301) (including the proceeds thereof) deposited with the Trustee (or other qualifying trustee, collectively for
purposes of this Section 1405, the “Trustee”) pursuant to Section 1404 in respect of such Outstanding Securities and any related coupons shall
be held in trust and applied by the Trustee, in accordance with the provisions of such Securities and any related coupons and this Indenture, to
the payment, either directly or through any Paying Agent as the Trustee may determine (other than, with respect only to defeasance pursuant to
Section 1402, any Issuer or the Guarantor or any of their respective Affiliates), to the Holders of such Securities and any related coupons of all
sums due and to become due thereon in respect of principal (and premium, if any) and interest, if any, but such money need not be segregated
from other funds except to the extent required by law.
Unless otherwise specified with respect to any Security pursuant to Section 301, if, after a deposit referred to in Section 1404(1) has
been made, (a) the Holder of a Security in respect of which such deposit was made is entitled to, and does, elect pursuant to Section 312(b) or
the terms of such Security to receive payment in a Currency other than that in which the deposit pursuant to Section 1404(1) has been made in
respect of such Security, or (b) a Conversion Event occurs as contemplated in Section 312(d) or 312(e) or by the terms of any Security in
respect of which the deposit pursuant to Section 1404(1) has been made, the indebtedness represented by such Security and any related coupons
shall be deemed to have been, and will be, fully discharged and satisfied through the payment of the principal of (and premium, if any) and
interest, if any, on such Security as they become due out of the proceeds yielded by converting (from time to time as specified below in the case
of any such election) the amount or other property deposited in respect of such Security into the Currency in which such
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Security becomes payable as a result of such election or Conversion Event based on the applicable Market Exchange Rate for such Currency in
effect on the third Business Day prior to each payment date, except, with respect to a Conversion Event, for such Currency in effect (as nearly
as feasible) at the time of the Conversion Event.
The applicable Issuer and the Guarantor (in the case of Guaranteed Securities), as the case may be, shall pay and indemnify the
Trustee against any tax, fee or other charge imposed on or assessed against the Government Obligations deposited pursuant to Section 1404 or
the principal and interest received in respect thereof other than any such tax, fee or other charge which by law is for the account of the Holders
of such Outstanding Securities and any related coupons.
Anything in this Article Fourteen to the contrary notwithstanding, the Trustee shall deliver or pay to the applicable Issuer or the
Guarantor (in the case of Guaranteed Securities), as the case may be, from time to time upon request of such Issuer or the Guarantor any money
or Government Obligations (or other property and any proceeds therefrom) held by it as provided in Section 1404 which, in the opinion of a
nationally recognized firm of independent public accountants expressed in a written certification thereof delivered to the Trustee, are in excess
of the amount thereof which would then be required to be deposited to effect an equivalent defeasance or covenant defeasance, as applicable, in
accordance with this Article.
SECTION 1406. Reinstatement .
If the Trustee or any Paying Agent is unable to apply any money in accordance with Section 1405 by reason of any order or
judgment of any court or governmental authority enjoining, restraining or otherwise prohibiting such application, then the obligations of the
applicable Issuer and the Guarantor (in the case of Guaranteed Securities) under this Indenture and such Securities and any related coupons
shall be revived and reinstated as though no deposit had occurred pursuant to Section 1402 or 1403, as the case may be, until such time as the
Trustee or Paying Agent is permitted to apply all such money in accordance with Section 1405; provided , however , that if such Issuer makes
any payment of principal of (or premium, if any) or interest, if any, on any such Security or any related coupon following the reinstatement of
its obligations, such Issuer shall be subrogated to the rights of the Holders of such Securities and any related coupons to receive such payment
from the money held by the Trustee or Paying Agent.
ARTICLE FIFTEEN
GUARANTEE OF GUARANTEED SECURITIES
SECTION 1501. Guarantee .
The Guarantor hereby unconditionally and irrevocably guarantees to each Holder of a Guaranteed Security of each series
authenticated and delivered by the Trustee and to the Trustee on behalf of each such Holder, the due and punctual payment of the principal of,
premium, if any, and interest on such Guaranteed Security, the due and punctual payment of any Additional Amounts that may be payable with
respect to such Guaranteed Security, and the due and punctual payment of the sinking fund or analogous payments referred to therein, if any,
when and as the same shall become due and payable, whether on the Stated Maturity, by
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declaration of acceleration, call for redemption or otherwise, according to the terms thereof and of this Indenture. In case of the failure of the
applicable Subsidiary Issuer punctually to make any such payment of principal, premium, if any, or interest, or any Additional Amounts that
may be payable with respect to any Guaranteed Security, or any such sinking fund or analogous payment, the Guarantor hereby agrees to cause
any such payment to be made punctually when and as the same shall become due and payable, whether on the Stated Maturity or by declaration
of acceleration, call for redemption or otherwise, and as if such payment were made by the applicable Subsidiary Issuer.
The Guarantor hereby agrees that its obligations hereunder shall be as if it were principal debtor and not merely surety, and shall be
absolute and unconditional, irrespective of, and shall be unaffected by, any invalidity, irregularity or unenforceability of any Guaranteed
Security or this Indenture, any failure to enforce the provisions of any Guaranteed Security or this Indenture, or any waiver, modification or
indulgence granted to the applicable Subsidiary Issuer with respect thereto or hereto, by the Holder of any Security or the Trustee or any other
circumstance which may otherwise constitute a legal or equitable discharge of a surety or guarantor; provided , however , that, notwithstanding
the foregoing, no such waiver, modification or indulgence shall, without the consent of the Guarantor, increase the principal amount of any
Guaranteed Security, or increase the interest rate thereon, or increase any premium payable upon redemption thereof, or alter the Stated
Maturity thereof, or increase the principal amount of any Original Issue Discount Security that would be due and payable upon a declaration of
acceleration or the maturity thereof pursuant to Article Five of this Indenture. The Guarantor hereby waives diligence, presentment, demand of
payment, filing of claims with a court in the event of merger or bankruptcy of the applicable Subsidiary Issuer, any right to require a
proceeding first against the applicable Subsidiary Issuer, protest or notice with respect to any Guaranteed Security or the indebtedness
evidenced thereby or with respect to any Additional Amounts that may be payable with respect to such Guaranteed Security or any sinking
fund or analogous payment required under any Guaranteed Security and all demands whatsoever, and covenants that its obligations under this
Article Fifteen and the Guarantees will not be discharged except by payment in full of the principal of, premium, if any, and interest on and any
Additional Amounts that may be payable with respect to the Guaranteed Securities.
The Guarantor shall be subrogated to all rights of the Holder of any Guaranteed Security and the Trustee against the applicable
Subsidiary Issuer in respect of any amounts paid to such Holder by the Guarantor pursuant to the provisions of this Article Fifteen and its
Guarantee of such Security; provided , however , that the Guarantor shall not be entitled to enforce or to receive any payments arising out of or
based upon such right of subrogation until the principal of, premium, if any, and interest on all Guaranteed Securities of the same series issued
under this Indenture and any Additional Amounts with respect to such Guaranteed Securities shall have been paid in full.
SECTION 1502. Execution and Delivery of Guarantees .
The Guarantees to be endorsed on the Guaranteed Securities of each series shall include the terms of the guarantees set forth in
Section 1501 and any other terms that may be set forth in the form established pursuant to Section 204 with respect to such series. The
Guarantor hereby agrees to execute the Guarantees, in a form established pursuant to Section 204, to be endorsed on each Guaranteed Security
authenticated and delivered by a Trustee.
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The Guarantees shall be executed on behalf of the Guarantor by its Chairman, its Chief Executive Officer, its President or a Vice
President, together with any one of the Secretary, an Assistant Secretary, the Treasurer or Assistant Treasurer of the Guarantor. The signature
of any of these officers on the Guarantees may be manual or facsimile signatures of the present or any future such authorized officer and may
be imprinted or otherwise reproduced on the Guarantees.
Guarantees bearing the manual or facsimile signatures of individuals who were at any time the proper officers of the Guarantor shall
bind the Guarantor, notwithstanding that such individuals or any of them have ceased to hold such offices prior to the authentication and
delivery of the Securities on which such Guarantees are endorsed or did not hold such offices at the date of such Securities.
The delivery of any Guaranteed Security by a Trustee, after the authentication thereof hereunder, shall constitute due delivery of the
Guarantee endorsed thereon on behalf of the Guarantor. The Guarantor hereby agrees that its Guarantee set forth in Section 1501 shall remain
in full force and effect notwithstanding any failure to endorse a Guarantee on any Guaranteed Security.
SECTION 1503. Notice to Trustee .
The Guarantor shall give prompt written notice to the Trustee of any fact known to the Guarantor which prohibits the making of any
payment to or by the Trustee in respect of the Guarantee pursuant to the provisions of this Article Fifteen.
SECTION 1504. This Article Not to Prevent Events of Default .
The failure to make a payment on account of principal of, premium, if any, or interest on the Guaranteed Securities by reason of any
provision of this Article will not be construed as preventing the occurrence of an Event of Default.
ARTICLE SIXTEEN
MEETINGS OF HOLDERS OF SECURITIES
SECTION 1601. Purposes for Which Meetings May Be Called .
If Securities of a series are issuable, in whole or in part, as Bearer Securities, a meeting of Holders of Securities of such series may
be called at any time and from time to time pursuant to this Article to make, give or take any request, demand, authorization, direction, notice,
consent, waiver or other action provided by this Indenture to be made, given or taken by Holders of Securities of such series.
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SECTION 1602. Call, Notice and Place of Meetings .
(a) The Trustee may at any time call a meeting of Holders of Securities of any series for any purpose specified in Section 1601, to
be held at such time and at such place in The City of New York or in London as the Trustee shall determine. Notice of every meeting of
Holders of Securities of any series, setting forth the time and the place of such meeting and in general terms the action proposed to be taken at
such meeting, shall be given, in the manner provided for in Section 106, not less than 21 nor more than 180 days prior to the date fixed for the
meeting.
(b) In case at any time an Issuer, pursuant to a Board Resolution, the Guarantor (in the case of Guaranteed Securities) or the Holders
of at least 10% in principal amount of the Outstanding Securities of any series shall have requested the Trustee to call a meeting of the Holders
of Securities of such series for any purpose specified in Section 1601, by written request setting forth in reasonable detail the action proposed to
be taken at the meeting, and the Trustee shall not have made the first publication of the notice of such meeting within 21 days after receipt of
such request or shall not thereafter proceed to cause the meeting to be held as provided herein, then such Issuer, the Guarantor or the Holders of
Securities of such series in the amount above specified, as the case may be, may determine the time and the place in The City of New York or
in Toronto, Ontario, Canada for such meeting and may call such meeting for such purposes by giving notice thereof as provided in
paragraph (a) of this Section.
SECTION 1603. Persons Entitled to Vote at Meetings .
To be entitled to vote at any meeting of Holders of Securities of any series, a Person shall be (1) a Holder of one or more
Outstanding Securities of such series, or (2) a Person appointed by an instrument in writing as proxy for a Holder or Holders of one or more
Outstanding Securities of such series by such Holder of Holders. The only Persons who shall be entitled to be present or to speak at any
meeting of Holders of Securities of any series shall be the Person entitled to vote at such meeting and their counsel, any representatives of the
Trustee and its counsel and any representatives of the applicable Issuer and the Guarantor (in the case of Guaranteed Securities) and their
respective counsel.
SECTION 1604. Quorum; Action .
The Persons entitled to vote a majority in principal amount of the Outstanding Securities of a series shall constitute a quorum for a
meeting of Holders of Securities of such series; provided , however , that, if any action is to be taken at such meeting with respect to a consent
or waiver which this Indenture expressly provides may be given by the Holders of not less than a specified percentage in principal amount of
the Outstanding Securities of a series, the Persons entitled to vote such specified percentage in principal amount of the Outstanding Securities
of such series shall constitute a quorum. In the absence of a quorum within 30 minutes of the time appointed for any such meeting, the meeting
shall, if convened at the request of Holders of Securities of such series, be dissolved. In any other case the meeting may be adjourned for a
period of not less than 10 days as determined by the chairman of the meeting prior to the adjournment of such meeting. In the absence of a
quorum at any such adjourned meeting, such adjourned meeting may be further adjourned for a period of not less than 10 days as determined
by the chairman of the meeting prior to the adjournment of such adjourned meeting. Notice of the reconvening of any adjourned meeting shall
be given as provided in
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Section 1602(a), except that such notice need be given only once not less than five days prior to the date on which the meeting is scheduled to
be reconvened. Notice of the reconvening of any adjourned meeting shall state expressly the percentage, as provided above, of the principal
amount of the Outstanding Securities of such series which shall constitute a quorum.
Subject to the foregoing, at the reconvening of any meeting adjourned for lack of a quorum the Persons entitled to vote 25% in
principal amount of the Outstanding Securities at the time shall constitute a quorum for the taking of any action set forth in the notice of the
original meeting.
Except as limited by the proviso to Section 902, any resolution presented to a meeting or adjourned meeting duly reconvened at
which a quorum is present as aforesaid may be adopted by the affirmative vote of the Holders of not less than a majority in principal amount of
the Outstanding Securities of such series; provided , however , that, except as limited by the proviso to Section 902, any resolution with respect
to any request, demand, authorization, direction, notice, consent, waiver or other action which this Indenture expressly provides may be made,
given or taken by the Holders of a specified percentage, which is less than a majority, in principal amount of the Outstanding Securities of a
series may be adopted at a meeting or an adjourned meeting duly reconvened and at which a quorum is present as aforesaid by the affirmative
vote of the Holders of not less than such specified percentage in principal amount of the Outstanding Securities of such series.
Any resolution passed or decision taken at any meeting of Holders of Securities of any series duly held in accordance with this
Section shall be binding on all the Holders of Securities of such series and the related coupons, whether or not present or represented at the
meeting.
Notwithstanding the foregoing provisions of this Section 1604, if any action is to be taken at a meeting of Holders of Securities of
any series with respect to any request, demand, authorization, direction, notice, consent, waiver or other action that this Indenture expressly
provides may be made, given or taken by the Holders of a specified percentage in principal amount of all Outstanding Securities affected
thereby, or of the Holders of such series and one or more additional series:
(i) there shall be no minimum quorum requirement for such meeting; and
(ii) the principal amount of the Outstanding Securities of such series that vote in favor of such request, demand, authorization,
direction, notice, consent, waiver or other action shall be taken into account in determining whether such request, demand, authorization,
direction, notice, consent, waiver or other action has been made, given or taken under this Indenture.
SECTION 1605. Determination of Voting Rights; Conduct and Adjournment of Meetings .
(a) Notwithstanding any provisions of this Indenture, the Trustee may make such reasonable regulations as it may deem advisable
for any meeting of Holders of Securities of a series in regard to proof of the holding of Securities of such series and of the appointment of
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proxies and in regard to the appointment and duties of inspectors of votes, the submission and examination of proxies, certificates and other
evidence of the right to vote, and such other matters concerning the conduct of the meeting as its shall deem appropriate. Except as otherwise
permitted or required by any such regulations, the holding of Securities shall be proved in the manner specified in Section 104 and the
appointment of any proxy shall be proved in the manner specified in Section 104 or by having the signature of the person executing the proxy
witnessed or guaranteed by any trust company, bank or banker authorized by Section 104 to certify to the holding of Bearer Securities. Such
regulations may provide that written instruments appointing proxies, regular on their face, may be presumed valid and genuine without the
proof specified in Section 104 or other proof.
(b) The Trustee shall, by an instrument in writing appoint a temporary chairman of the meeting, unless the meeting shall have been
called by an Issuer, the Guarantor (in the case of Guaranteed Securities) or by Holders of Securities as provided in Section 1602(b), in which
case such Issuer, the Guarantor or the Holders of Securities of the series calling the meeting, as the case may be, shall in like manner appoint a
temporary chairman. A permanent chairman and a permanent secretary of the meeting shall be elected by vote of the Persons entitled to vote a
majority in principal amount of the Outstanding Securities of such series represented at the meeting.
(c) At any meeting each Holder of a Security of such series or proxy shall be entitled to one vote for each $1,000 principal amount
of Outstanding Securities of such series held or represented by him (determined as specified in the definition of “Outstanding” in Section 101);
provided , however , that no vote shall be cast or counted at any meeting in respect of any Security challenged as not Outstanding and ruled by
the chairman of the meeting to be not Outstanding. The chairman of the meeting shall have no right to vote, except as a Holder of a Security of
such series or proxy.
(d) Any meeting of Holders of Securities of any series duly called pursuant to Section 1602 at which a quorum is present may be
adjourned from time to time by Persons entitled to vote a majority in principal amount of the Outstanding Securities of such series represented
at the meeting; and the meeting may be held as so adjourned without further notice.
SECTION 1606. Counting Votes and Recording Action of Meetings .
The vote upon any resolution submitted to any meeting of Holders of Securities of any series shall be by written ballots on which
shall be subscribed the signatures of the Holders of Securities of such series or of their representatives by proxy and the principal amounts and
serial numbers of the Outstanding Securities of such series held or represented by them. The permanent chairman of the meeting shall appoint
two inspectors of votes who shall count all votes cast at the meeting for or against any resolution and who shall make and file with the secretary
of the meeting their verified written reports in duplicate of all votes cast at the meeting. A record, at least in duplicate, of the proceedings of
each meeting of Holders of Securities of any series shall be prepared by the Secretary of the meeting and there shall be attached to said record
the original reports of the inspectors of votes on any vote by ballot taken thereat and affidavits by one or more persons having knowledge of the
facts setting forth a copy of the notice of the meeting and showing that said notice was given as provided in Section 1602 and, if applicable,
103
Section 1604. Each copy shall be signed and verified by the affidavits of the permanent chairman and secretary of the meeting and one such
copy shall be delivered to the applicable Issuer, and another to the Trustee to be preserved by the Trustee, the latter to have attached thereto the
ballots voted at the meeting. Any record so signed and verified shall be conclusive evidence of the matters therein stated.
*
*
*
104
*
*
This Indenture may be executed in any number of counterparts, each of which so executed shall be deemed to be an original, but all
such counterparts shall together constitute but one and the same Indenture.
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly executed, all as of the day and year first above
written.
BARRICK GOLD CORPORATION,
as Issuer and Guarantor
By:
Name:
Title:
By:
Name:
Title:
BARRICK GOLD FINANCECO LLC,
as Issuer
By:
Name:
Title:
By:
Name:
Title:
BARRICK NORTH AMERICA FINANCE LLC,
as Issuer
By:
Name:
Title:
By:
Name:
Title:
THE BANK OF NEW YORK,
as Trustee
By:
Name:
Title:
EXHIBIT A
FORM OF SECURITY
*[Unless this Security is presented by an authorized representative of The Depository Trust Company, a New York
corporation (“DTC”), to the [Company/applicable Subsidiary Issuer] (as defined below) or its agent for registration of transfer,
exchange or payment, and any certificate issued is registered in the name of Cede & Co. or such other name as is requested by an
authorized representative of DTC (and any payment is made to Cede & Co. or to such other entity as is requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY
PERSON IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest herein.
*[This Security is a global Security within the meaning of the Indenture hereinafter referred to and is registered in the name
of DTC or a nominee of DTC. This Security is exchangeable for Securities registered in the name of a Person other than DTC or its
nominee only in the limited circumstances described in the Indenture, and no transfer of this Security (other than a transfer of this
Security as a whole by DTC to a nominee of DTC or by a nominee of DTC to DTC or another nominee of DTC or by DTC or any such
nominee to a successor Depositary or nominee of such successor Depositary) may be registered except in limited circumstances.]
[BARRICK GOLD CORPORATION] [BARRICK GOLD FINANCECO LLC] [BARRICK
NORTH AMERICA FINANCE LLC]
% [Debenture] [Note] [due] [Due]
No.
$
CUSIP:
[Barrick Gold Corporation, a corporation incorporated under the laws of the Province of Ontario] [[Barrick Gold Financeco LLC]
[Barrick North America Finance LLC], a limited liability company formed under the laws of the State of Delaware] (herein called [the
“Company”] [the “Subsidiary Issuer”], which term includes any successor Person under the Indenture hereinafter referred to), for value
received, hereby promises to pay to [Cede & Co.]*, or registered assigns, the principal sum of
$
(
DOLLARS) on [date and year], at the office or agency of the [Company] [Subsidiary Issuer]
referred to below, and to pay interest thereon on [date and year], and semi-annually thereafter on [date] and [date] in each
*
Include if Securities are to issued in global form. At the time of this writing, DTC will not accept global securities with an aggregate
principal amount in excess of $500,000,000. If the aggregate principal amount of the offering exceeds this amount, use more than one
global security.
A-3
year, from [date and year],** or from the most recent Interest Payment Date to which interest has been paid or duly provided for, at the rate
of
% per annum, until the principal hereof is paid or duly provided for, and (to the extent lawful) to pay on demand interest on any overdue
principal, [premium, if any,] or interest at the rate borne by this Security from the date on which such overdue principal, [premium, if any,] or
interest becomes payable to the date payment of such principal, [premium, if any,] or interest has been made or duly provided for. The interest
so payable, and punctually paid or duly provided for, on any Interest Payment Date will, as provided in such Indenture, be paid to the Person in
whose name this Security (or one or more Predecessor Securities) is registered at the close of business on the Regular Record Date for such
interest, which shall be the [date] or [date] (whether or not a Business Day), as the case may be, next preceding such Interest Payment Date.
Any such interest not so punctually paid or duly provided for shall forthwith cease to be payable to the Holder on such Regular Record Date,
and such Defaulted Interest, and (to the extent lawful) interest on such Defaulted Interest at the rate borne by the Securities of this series, may
be paid to the Person in whose name this Security (or one or more Predecessor Securities) is registered at the close of business on a Special
Record Date for the payment of such Defaulted Interest to be fixed by the Trustee, notice whereof shall be given to Holders of Securities of this
series not less than 10 days prior to such Special Record Date, or may be paid at any time in any other lawful manner not inconsistent with the
requirements of any securities exchange on which the Securities of this series may be listed, and upon such notice as may be required by such
exchange, all as more fully provided in said Indenture. Reference is hereby made to the further provisions of this Security set forth on the
reverse hereof, which further provisions shall for all purposes have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been duly executed by the Trustee by manual signature, this Security shall not be
entitled to any benefit under the Indenture, or be valid or obligatory for any purpose.
IN WITNESS WHEREOF, the [Company] [Subsidiary Issuer] has caused this instrument to be duly executed.
Dated:
[BARRICK GOLD CORPORATION]
[BARRICK GOLD FINANCECO LLC]
[BARRICK NORTH AMERICA FINANCE LLC]
By
By
**
Insert date from which interest is to accrue or, if the Securities are to be sold “flat”, the closing date of the offering.
A-4
TRUSTEE’S CERTIFICATE OF AUTHENTICATION
This is one of the Securities of the series designated therein referred to in the within-mentioned Indenture.
THE BANK OF NEW YORK,
as Trustee
By
Authorized Officer
*[GUARANTEE
OF
BARRICK GOLD CORPORATION
For value received, Barrick Gold Corporation, a corporation incorporated under the laws of the Province of Ontario, having its
principal executive offices at Brookfield Place, Canada Trust Tower, Suite 3700, 161 Bay Street, Toronto, Ontario, Canada M5J 2S1 (herein
called the “Guarantor”, which term includes any successor Person under the Indenture referred to in the Security upon which this Guarantee is
endorsed), hereby unconditionally and irrevocably guarantees to the Holder of the Security upon which this Guarantee is endorsed and to the
Trustee on behalf of such Holder the due and punctual payment of the principal of, premium, if any, and interest on such Security, the due and
punctual payment of any Additional Amounts that may be payable with respect to such Security, [and the due and punctual payment of the
sinking fund or analogous payments referred to therein, if any,]** when and as the same shall become due and payable, whether on the Stated
Maturity, by declaration of acceleration, call for redemption or otherwise, according to the terms thereof and of the Indenture referred to
therein. In case of the failure of [Barrick Gold Financeco LLC] [Barrick North America Finance LLC], a limited liability company formed
under the laws of the State of Delaware (herein called the “Subsidiary Issuer”, which term includes any successor Person under such
Indenture), punctually to make any such payment of principal, premium, if any, or interest, or any Additional Amounts that may be payable
with respect to such Security [or any such sinking fund or analogous payment]**, the Guarantor hereby agrees to cause any such payment to be
made punctually when and as the same shall become due and payable, whether on the Stated Maturity or by declaration of acceleration, call for
redemption or otherwise, and as if such payment were made by the Subsidiary Issuer.
*
**
Include if Securities are to issued by Barrick Gold Financeco LLC or Barrick North America Finance LLC.
Include if the Securities are subject to a sinking fund
A-5
The Guarantor hereby agrees that its obligations hereunder shall be as if it were principal debtor and not merely surety, and shall be
absolute and unconditional, irrespective of, and shall be unaffected by, any invalidity, irregularity or unenforceability of such Security or such
Indenture, any failure to enforce the provisions of such Security or such Indenture, or any waiver, modification or indulgence granted to the
Subsidiary Issuer with respect thereto, by the Holder of such Security or the Trustee or any other circumstance which may otherwise constitute
a legal or equitable discharge of a surety or guarantor; provided , however , that, notwithstanding the foregoing, no such waiver, modification
or indulgence shall, without the consent of the Guarantor, increase the principal amount of such Security, or increase the interest rate thereon,
or increase any premium payable upon redemption thereof, or alter the Stated Maturity thereof, [or increase the principal amount of any
Original Issue Discount Security that would be due and payable upon a declaration of acceleration of the maturity thereof pursuant to Article
Five of such Indenture.]* The Guarantor hereby waives diligence, presentment, demand of payment, filing of claims with a court in the event of
merger or bankruptcy of the Subsidiary Issuer, any right to require a proceeding first against the Subsidiary Issuer, protest or notice with
respect to such Security or the indebtedness evidenced thereby or with respect to any Additional Amounts that may be payable with respect to
such Security [or any sinking fund or analogous payment required under such Security]** and all demands whatsoever, and covenants that its
obligations under this Guarantee will not be discharged except by payment in full of the principal of, premium, if any, and interest and any
Additional Amounts that may be payable with respect to such Security.
The Guarantor shall be subrogated to all rights of the Holder of such Security and the Trustee against the Subsidiary Issuer in
respect of any amounts paid to such Holder by the Guarantor pursuant to the provisions of this Guarantee; provided , however , that the
Guarantor shall not be entitled to enforce or to receive any payments arising out of or based upon such right of subrogation until the principal
of, premium, if any, and interest on all Securities of the same series issued under such Indenture and any Additional Amounts that may be
payable with respect to such Securities shall have been paid in full.
No reference herein to such Indenture and no provision of this Guarantee or of such Indenture shall alter or impair the guarantees of
the Guarantor, which are absolute and unconditional, of the due and punctual payment of the principal of, premium, if any, and interest on, and
any Additional Amounts that may be payable with respect to [, and any sinking fund or analogous payments with respect to,]** the Security
upon which this Guarantee is endorsed.
This Guarantee shall not be valid or obligatory for any purpose until the certificate of authentication of such Security shall have
been manually executed by or on behalf of the Trustee under such Indenture.
All terms used in this Guarantee which are defined in such Indenture shall have the meanings assigned to them in such Indenture.
*
**
Include if an Original Issue Discount Security
Include if the Securities are subject to a sinking fund
A-6
This Guarantee shall be governed by and construed in accordance with the laws of the State of New York.
Executed and dated the date on the face hereof.
BARRICK GOLD CORPORATION
By
Name:
Title:
By
Name:
Title:
A-7
[Form of Reverse]
This Security is one of a duly authorized issue of securities of the [Company] [Subsidiary Issuer] designated as its
%
[Debentures] [Notes] [due] [Due]
(herein called the “Securities”), limited (except as otherwise provided in the
Indenture referred to below [and except as provided in the second succeeding paragraph]) in aggregate principal amount to $[
,000,000],
which may be issued under an indenture (herein called the “Indenture”) dated as of
, 2008 among Barrick Gold Corporation,
Barrick Gold Financeco LLC, Barrick North America Finance LLC and The Bank of New York, as trustee (herein called the “Trustee”, which
term includes any successor trustee under the Indenture), to which Indenture and all indentures supplemental thereto reference is hereby made
for a statement of the respective rights, limitations of rights, duties, obligations and immunities thereunder of the Company, [the Subsidiary
Issuer, the Guarantor]*, the Trustee and the Holders of the Securities, and of the terms upon which the Securities are, and are to be,
authenticated and delivered. [ This Security is a global Security representing $[
,
,000] aggregate principal amount [at maturity]** of
the Securities of this series. ] ***
Payment of the principal of (and premium, if any,) and interest on this Security will be made at the office or agency of the Company
maintained for that purpose in the Borough of Manhattan, The City of New York and, in the case of Holders in Ontario, in Toronto, Ontario,
Canada, in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private
debts; provided, however , that payment of interest may be made at the option of the [Company] [Subsidiary Issuer] (i) by check mailed to the
address of the Person entitled thereto as such address shall appear on the Security Register or (ii) by wire transfer to an account maintained in
the United States by the Person entitled to such payment as specified in the Security Register. [Notwithstanding the foregoing, payments of
principal, premium, if any, and interest on a global Security registered in the name of a Depositary or its nominee will be made by wire transfer
of immediately available funds.] Principal paid in relation to any Security of this series at Maturity shall be paid to the Holder of such Security
only upon presentation and surrender of such Security to such office or agency referred to above.
[As provided for in the Indenture, the [Company] [Subsidiary Issuer] may from time to time without notice to, or the consent of, the
Holders of the Securities, create and issue additional Securities of this series under the Indenture, equal in rank to the Outstanding Securities of
this series in all respects (or in all respects except for the payment of interest accruing prior to the issue date of the new Securities of this series
or except for the first payment of interest following the issue date of the new Securities of this series) so that the new Securities of this series
shall be consolidated and form a single series with the Outstanding Securities of this series and have the same terms as to status, redemption or
otherwise as the Outstanding Securities of this series.]****
*
**
***
****
Include if Securities are to be issued by Barrick Gold Financeco LLC or Barrick North America Finance LLC.
Include if a discount security.
Include in a global Security.
Include if this series of Securities will be reopened pursuant to Section 301 of the Indenture.
A-8
[The [Company] [Subsidiary Issuer] will pay to the Holder of this Security such Additional Amounts and other amounts as may be
payable under Section 1005 of the Indenture. Whenever in this Security there is mentioned, in any context, the payment of principal (or
premium, if any), interest or any other amount payable under or with respect to this Security, such mention shall be deemed to include mention
of the payment of Additional Amounts to the extent that, in such context, Additional Amounts are, were or would be payable in respect
thereof.]*****
[The Securities of this series are subject to redemption upon not less than 30 nor more than 60 days’ notice, at any time after [date
and year], as a whole or in part, at the election of the [Company] [Subsidiary Issuer] [, at a Redemption Price equal to the percentage of the
principal amount set forth below if redeemed during the 12-month period beginning [date], of the years indicated:
Year
Redemption
Price
Year
%
%
%
Redemption
Price
%
%
%
and thereafter] at 100% of the principal amount, together in the case of any such redemption with accrued interest, if any, to the Redemption
Date, all as provided in the Indenture.]*
[The Securities of this series are also subject to redemption on [date] in each year commencing in [year] through the operation of a
sinking fund, at a Redemption Price equal to 100% of the principal amount, together with accrued interest to the Redemption Date, all as
provided in the Indenture. The sinking fund provides for the [mandatory] redemption on [date] in each year beginning with the year [year] of
$
aggregate principal amount of Securities of this series. [In addition, the [Company] [Subsidiary Issuer] may, at its option, elect
to redeem up to an additional $
aggregate principal amount of Securities of this series on any such date.] Securities of this series
acquired or redeemed by the [Company] [Subsidiary Issuer] (other than through operation of the sinking fund) may be credited against
subsequent [mandatory] sinking fund payments.]**
***** Include if Additional Amounts are payable pursuant to Section 1005.
*
Include if the Securities are subject to redemption or replace with any other redemption provisions applicable to the Securities.
**
Include if the Securities are subject to a sinking fund.
A-9
[The Securities of this series are subject to repayment at the option of the Holders thereof on [Repayment Date(s)] at a Repayment
Price equal to
% of the principal amount, together with accrued interest to the Repayment Date, all as provided in the Indenture. To be
repaid at the option of the Holder, this Security, with the “Option to Elect Repayment” form duly completed by the Holder hereof (or the
Holder’s attorney duly authorized in writing), must be received by the [Company] [Subsidiary Issuer] at its office or agency maintained for that
purpose in New York, New York not earlier than 45 days nor later than 30 days prior to the Repayment Date. Exercise of such option by the
Holder of this Security shall be irrevocable unless waived by the [Company] [Subsidiary Issuer].]***
[The Securities of this series are subject to redemption, in whole but not in part, at the option of the [Company][Subsidiary Issuer]
at a Redemption Price equal to 100% of the principal amount thereof plus accrued and unpaid interest to the applicable Redemption Date, all on
the terms and subject to the conditions set forth in Section 1108 of the Indenture].****
In the case of any redemption [repayment] of Securities of this series, interest installments whose Stated Maturity is on or prior to
the Redemption Date [Repayment Date] will be payable to the Holders of such Securities, or one or more Predecessor Securities, of record at
the close of business on the relevant record dates according to their terms and the provisions of Section 307 of the Indenture. Securities of this
series (or portions thereof) for whose redemption [repayment] payment is made or duly provided for in accordance with the Indenture shall
cease to bear interest from and after the Redemption Date [Repayment Date].
In the event of redemption [repayment] of this Security in part only, a new Security or Securities of this series for the unredeemed
[unpaid] portion hereof shall be issued in the name of the Holder hereof upon the cancellation hereof.
If an Event of Default shall occur and be continuing, the principal of [and accrued but unpaid interest on] all the Securities of this
series may be declared due and payable in the manner and with the effect provided in the Indenture.
The Indenture contains provisions for defeasance at any time of (a) the entire indebtedness of the [Company] [Subsidiary Issuer] on
this Security and (b) certain restrictive covenants and the related Defaults and Events of Default applicable to the Securities of this series, upon
compliance by the [Company] [Subsidiary Issuer], with certain conditions set forth therein, which provisions apply to this Security.
*** Include if the Securities are subject to repayment at the option of the Holders.
**** Include if Additional Amounts are payable pursuant to Section 1005.
A-10
The Indenture permits, with certain exceptions as therein provided, the amendment thereof and the modification of the rights and
obligations of the [Company] [Subsidiary Issuer] [and the Guarantor]* and the rights of the Holders under the Indenture at any time by the
[Company] [Subsidiary Issuer] [the Guarantor]* and the Trustee with the consent of the Holders of a majority in aggregate principal amount of
the Securities at the time Outstanding of all series affected by such amendment or modification. The Indenture also contains provisions
permitting the Holders of specified percentages in aggregate principal amount of the Securities of this series at the time Outstanding, on behalf
of the Holders of all the Securities of this series, to waive compliance by the [Company] [Subsidiary Issuer] [and the Guarantor]* with certain
provisions of the Indenture and also contains provisions permitting the Holders of not less than a majority in aggregate principal amount of the
Outstanding Securities of all series with respect to which a Default shall have occurred and shall be continuing, on behalf of the Holders of all
Outstanding Securities of such affected series, to waive certain past defaults under the Indenture and their consequences. Any such consent or
waiver by or on behalf of the Holder of this Security shall be conclusive and binding upon such Holder and upon all future Holders of this
Security and of any Security issued upon the registration of transfer hereof or in exchange herefor or in lieu hereof whether or not notation of
such consent or waiver is made upon this Security.
No reference herein to the Indenture and no provision of this Security or of the Indenture shall alter or impair the obligation of the
[Company] [Subsidiary Issuer], which is absolute and unconditional, to pay the principal of (and premium, if any, on) and interest on this
Security at the times, place, and rate, and in the coin or currency, herein prescribed.
As provided in the Indenture and subject to certain limitations therein set forth, the transfer of this Security is registerable on the
Security Register of the [Company] [Subsidiary Issuer], upon surrender of this Security for registration of transfer at the office or agency of the
[Company] [Subsidiary Issuer] maintained for such purpose in the Borough of Manhattan, The City of New York and Toronto, Ontario duly
endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the [Company] [Subsidiary Issuer] and the Security
Registrar duly executed by, the Holder hereof or his attorney duly authorized in writing, and thereupon one or more new Securities of this
series, of authorized denominations and for the same aggregate principal amount, will be issued to the designated transferee or transferees.
The Securities of this series are issuable only in registered form without coupons in denominations of $1,000 and any integral
multiple thereof. As provided in the Indenture and subject to certain limitations therein set forth, the Securities of this series are exchangeable
for a like aggregate principal amount of Securities of this series of a different authorized denomination, as requested by the Holder surrendering
the same.
No service charge shall be made for any registration of transfer or exchange of Securities of this series, but the [Company]
[Subsidiary Issuer] may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith.
*
Include if Securities are to be issued by Barrick Gold Financeco LLC or Barrick North America Finance LLC.
A-11
Prior to the time of due presentment of this Security for registration of transfer, the [Company] [Subsidiary Issuer], the Trustee and
any agent of the [Company] [Subsidiary Issuer] or the Trustee may treat the Person in whose name this Security is registered as the owner
hereof for all purposes, whether or not this Security is overdue, and neither the [Company] [Subsidiary Issuer], the Trustee nor any agent shall
be affected by notice to the contrary.
Interest on this Security shall be computed on the basis of a 360-day year of twelve 30-day months. For the purposes of disclosure
under the Interest Act (Canada), the yearly rate of interest to which interest calculated under a Security of this series for any period in any
calendar year (the “calculation period”) is equivalent is the rate payable under a Security of this series in respect of the calculation period
multiplied by a fraction the numerator of which is the actual number of days in such calendar year and the denominator of which is the actual
number of days in the calculation period.
[If at any time, (i) the Depositary for the Securities of this series notifies the [Company] [Subsidiary Issuer] that it is unwilling or
unable to continue as Depositary for the Securities of this series or if at any time the Depositary for the Securities of this series shall no longer
be a clearing agency registered as such under the Securities Exchange Act of 1934, as amended and a successor Depositary is not appointed by
the [Company] [Subsidiary Issuer] within 90 days after the [Company] [Subsidiary Issuer] receives such notice or becomes aware of such
condition, as the case may be, [or] (ii) the [Company] [Subsidiary Issuer] determines that the Securities of this series shall no longer be
represented by a global Security or Securities [or (iii) any Event of Default shall have occurred and be continuing with respect to the Securities
of this series]*, then in such event the [Company] [Subsidiary Issuer] will execute and the Trustee will authenticate and deliver Securities of
this series in definitive registered form, in authorized denominations, and in an aggregate principal amount equal to the principal amount of this
Security in exchange for this Security. Such Securities of this series in definitive registered form shall be registered in such names and issued in
such authorized denominations as the Depository, pursuant to instructions from its direct or indirect participants or otherwise, shall instruct the
Trustee. The Trustee shall deliver such Securities of this series to the Persons in whose names such Securities of this series are so registered.]**
The Indenture and this Security shall be governed by and construed in accordance with the laws of the State of New York.
All references herein to “dollars” or “$” means a dollar or other equivalent unit in such coin or currency of the United States of
America as at the time should be legal tender for the payment of public and private debts, and all terms used in this Security which are defined
in the Indenture shall have the meanings assigned to them in the Indenture.
*
**
Include, if applicable.
Include for global security.
A-12
[OPTION TO ELECT REPAYMENT
The undersigned hereby irrevocably requests and instructs the [Company] [Subsidiary Issuer] to repay the within Security [(or the
portion thereof specified below)], pursuant to its terms, on the “Repayment Date” first occurring after the date of receipt of the within Security
as specified below, at a Repayment Price equal to
% of the principal amount thereof, together with accrued interest to the Repayment Date,
to the undersigned at:
(Please Print or Type Name and Address of the Undersigned.)
For this Option to Elect Repayment to be effective, this Security with the Option to Elect Repayment duly completed must be
received not earlier than 45 days prior to the Repayment Date and not later than 30 days prior to the Repayment Date by the [Company]
[Subsidiary Issuer] at its office or agency in New York, New York.
If less than the entire principal amount of the within Security is to be repaid, specify the portion thereof (which shall be $1,000 or an
integral multiple thereof) which is to be repaid: $
.
If less than the entire principal amount of the within Security is to be repaid, specify the denomination(s) of the Security(ies) to be
issued for the unpaid amount ($1,000 or any integral multiple of $1,000): $
.
Dated:
Note: The signature to this Option to Elect Repayment must
correspond with the name as written upon the face of the within
Security in every particular without alterations or enlargement or any
change whatsoever.]
A-13
ASSIGNMENT FORM *
To assign this Security, fill in the form below:
I or we assign and transfer this Security to
(INSERT ASSIGNEE’S SOC. SEC., SOC. INS. OR TAX ID NO.)
(Print or type assignee’s name, address and zip or postal code)
and irrevocably appoint
agent
to transfer this Security on the books of the [Company] [Subsidiary Issuer]. The agent may substitute another to act for him.
Dated:
Your Signature:
(Sign exactly as name appears on the other
side of this Security)
Signature Guarantee:
(Signature must be guaranteed by a
commercial bank or trust company, by a
member or members’ organization of The
New York Stock Exchange or by another
eligible guarantor institution as defined in
Rule 17Ad-15 under the Securities Exchange
Act of 1934)
*
Omit if a global security
A-14
EXHIBIT B
FORMS OF CERTIFICATION
EXHIBIT B-1
FORM OF CERTIFICATE TO BE GIVEN BY
PERSON ENTITLED TO RECEIVE BEARER SECURITY
OR TO OBTAIN INTEREST PAYABLE PRIOR
TO THE EXCHANGE DATE
CERTIFICATE
[Insert title or sufficient description
of Securities to be delivered]
This is to certify that as of the date hereof, and except as set forth below, the above-captioned Securities held by you for our account
(i) are not owned by any person(s) that is a citizen or resident of the United States; a corporation or partnership (including any entity treated as
a corporation or partnership for U.S. federal income tax purposes) created or organized in or under the laws of the United States, any state
thereof or the District of Columbia unless, in the case of a partnership, U.S. Treasury Regulations provide otherwise; any estate whose income
is subject to U.S. federal income tax regardless of its source or; a trust if (A) a U.S. court can exercise primary supervision over the trust’s
administration and one or more United States persons are authorized to control all substantial decisions of the trust or (B) a trust in existence on
August 20, 1996, and treated as a United States person before this date that timely elected to continue to be treated as a United States person
(“United States persons(s)”), (ii) are owned by United States person(s) that are (a) foreign branches of U.S. financial institutions (financial
institutions, as defined in U.S. Treasury Regulation Section 1.165-12(c)(1)(iv) are herein referred to as “financial institutions”) purchasing for
their own account or for resale, or (b) United States person(s) who acquired the Securities through foreign branches of U.S. financial
institutions and who hold the Securities through such U.S. financial institutions on the date hereof (and in either case (a) or (b), each such U.S.
financial institution hereby agrees, on its own behalf or through its agent, that you may advise [Barrick Gold Corporation] [Barrick Gold
Financeco LLC] [Barrick North America Finance LLC] or its agent that such financial institution will comply with the requirements of
Section 165(j)(3)(A), (B) or (C) of the U.S. Internal Revenue Code of 1986, as amended, and the regulations thereunder), or (iii) are owned by
U.S. or foreign financial institution(s) for purposes of resale during the restricted period (as defined in U.S. Treasury Regulation
Section 1.163-5(c)(2)(i)(D)(7)), and, in addition, if the owner is a U.S. or foreign financial institution described in clause (iii) above (whether or
not also described in clause (i) or (ii)), this is to further certify that such financial institution has not acquired the Securities for purposes of
resale directly or indirectly to a United States person or to a person within the United States or its possessions.
B-1
As used herein, “United States” means the United States of America (including the states and the District of Columbia); and its
“possessions” include Puerto Rico, the U.S. Virgin Islands, Guam, American Samoa, Wake Island and the Northern Mariana Islands.
We undertake to advise you promptly by tested telex on or prior to the date on which you intend to submit your certification relating
to the above-captioned Securities held by you for our account in accordance with your Operating Procedures if any applicable statement herein
is not correct on such date, and in the absence of any such notification it may be assumed that this certification applies as of such date.
This certificate excepts and does not relate to [U.S.$]
of such interest in the above-captioned Securities in respect of which
we are not able to certify and as to which we understand an exchange for an interest in a Permanent Global Security or an exchange for and
delivery of definitive Securities (or, if relevant, collection of any interest) cannot be made until we do so certify.
We understand that this certificate may be required in connection with certain tax legislation in the United States. If administrative
or legal proceedings are commenced or threatened in connection with which this certificate is or would be relevant, we irrevocably authorize
you to produce this certificate or a copy thereof to any interested party in such proceedings.
Dated:
[To be dated no earlier than the 15th day prior to (i) the Exchange Date
or (ii) the relevant Interest Payment Date occurring prior to the
Exchange Date, as applicable]
[Name of Person Making Certification]
(Authorized Signatory)
Name:
Title:
B-2
EXHIBIT B-2
FORM OF CERTIFICATE TO BE GIVEN BY EUROCLEAR
AND CLEARSTREAM IN
CONNECTION WITH THE EXCHANGE OF A PORTION OF A
TEMPORARY GLOBAL SECURITY OR TO OBTAIN INTEREST
PAYABLE PRIOR TO THE EXCHANGE DATE
CERTIFICATE
[Insert title or sufficient description
of Securities to be delivered]
This is to certify that based solely on written certifications that we have received in writing, by tested telex or by electronic
transmission from each of the persons appearing in our records as persons entitled to a portion of the principal amount set forth below (our
“Member Organizations”) substantially in the form attached hereto, as of the date hereof, [U.S.$]
principal amount of the
above-captioned Securities (i) is not owned by any person(s) that is a citizen or resident of the United States; a corporation or partnership
(including any entity treated as a corporation or partnership for U.S. federal income tax purposes) created or organized in or under the laws of
the United States, any state thereof or the District of Columbia unless, in the case of a partnership, U.S. Treasury Regulations provide
otherwise; any estate whose income is subject to U.S. federal income tax regardless of its source or; a trust if (A) a U.S. court can exercise
primary supervision over the trust’s administration and one or more United States persons are authorized to control all substantial decisions of
the trust or (B) a trust in existence on August 20, 1996, and treated as a United States person before this date that timely elected to continue to
be treated as a United States person (“United States person(s)”), (ii) is owned by United States person(s) that are (a) foreign branches of U.S.
financial institutions (financial institutions, as defined in U.S. Treasury Regulation Section 1.165-12(c)(1)(iv) are herein referred to as
“financial institutions”) purchasing for their own account or for resale, or (b) United States person(s) who acquired the Securities through
foreign branches of U.S. financial institutions and who hold the Securities through such U.S. financial institutions on the date hereof (and in
either case (a) or (b), each such financial institution has agreed, on its own behalf or through its agent, that we may advise [Barrick Gold
Corporation] [Barrick Gold Financeco LLC] [Barrick North America Finance LLC] or its agent that such financial institution will comply with
the requirements of Section 165(j)(3)(A), (B) or (C) of the Internal Revenue Code of 1986, as amended, and the regulations thereunder), or
(iii) is owned by U.S. or foreign financial institution(s) for purposes of resale during the restricted period (as defined in U.S. Treasury
Regulation Section 1.163-5(c)(2)(i)(D)(7)) and, to the further effect, that financial institutions described in clause (iii) above (whether or not
also described in clause (i) or (ii)) have certified that they have not acquired the Securities for purposes of resale directly or indirectly to a
United States person or to a person within the United States or its possessions.
B-3
As used herein, “United States” means the United States of America (including the states and the District of Columbia); and its
“possessions” include Puerto Rico, the U.S. Virgin Islands, Guam, American Samoa, Wake Island and the Northern Mariana Islands.
We further certify that (i) we are not making available herewith for exchange (or, if relevant, collection of any interest) any portion
of the temporary global Security representing the above-captioned Securities excepted in the above-referenced certificates of Member
Organizations and (ii) as of the date hereof we have not received any notification from any of our Member Organizations to the effect that the
statements made by such Member Organizations with respect to any portion of the part submitted herewith for exchange (or, if relevant,
collection of any interest) are no longer true and cannot be relied upon as of the date hereof.
We understand that this certification is required in connection with certain tax legislation in the United States. If administrative or
legal proceedings are commenced or threatened in connection with which this certificate is or would be relevant, we irrevocably authorize you
to produce this certificate or a copy thereof to any interested party in such proceedings.
Dated:
[To be dated no earlier than the Exchange Date or the
relevant Interest Payment Date occurring prior to the
Exchange Date, as applicable]
[MORGAN GUARANTY TRUST COMPANY OF
NEW YORK, BRUSSELS OFFICE, as Operator of the
Euroclear System]
[CLEARSTREAM]
By
B-4
EXHIBIT 7.2
FORM T-1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2) 
THE BANK OF NEW YORK
(Exact name of trustee as specified in its charter)
New York
13-5160382
(State of incorporation if not a U.S. national bank)
(I.R.S. employer identification no.)
One Wall Street, New York, N.Y.
10286
(Address of principal executive offices)
(Zip code)
BARRICK GOLD CORPORATION
(Exact name of obligor as specified in its charter)
Province of Ontario
98-0161470
(State or other jurisdiction of incorporation or organization)
(I.R.S. employer identification no.)
Brookfield Place, Canada Trust Tower, Suite 3700,
161 Bay Street, Toronto, Ontario, Canada M5J 2S1
(Address of principal executive offices)
(Zip code)
(Title of the indenture securities)
1.
General information. Furnish the following information as to the Trustee:
(a)
Name and address of each examining or supervising authority to which it is subject.
Name
Address
Superintendent of Banks of the State of New York
One State Street, New York, N.Y. 10004-1417, and Albany, N.Y.
12223
Federal Reserve Bank of New York
33 Liberty Street, New York, N.Y. 10045
Federal Deposit Insurance Corporation
Washington, D.C. 20429
New York Clearing House Association
New York, New York 10005
(b)
Whether it is authorized to exercise corporate trust powers.
Yes.
2.
Affiliations with Obligor.
If the obligor is an affiliate of the trustee, describe each such affiliation.
None.
16.
List of Exhibits.
Exhibits identified in parentheses below, on file with the Commission, are incorporated herein by reference as an exhibit hereto,
pursuant to Rule 7a-29 under the Trust Indenture Act of 1939 (the “Act”) and 17 C.F.R. 229.10(d).
1.
A copy of the Organization Certificate of The Bank of New York (formerly Irving Trust Company) as now in effect, which
contains the authority to commence business and a grant of powers to exercise corporate trust powers. (Exhibit 1 to Amendment
No. 1 to Form T-1 filed with Registration Statement No. 33-6215, Exhibits 1a and 1b to Form T-1 filed with Registration
Statement No. 33-21672, Exhibit 1 to Form T-1 filed with Registration Statement No. 33-29637 and Exhibit 1 to Form T-1 filed
with Registration Statement No. 333-121195.)
4.
A copy of the existing By-laws of the Trustee. (Exhibit 4 to Form T-1 filed with Registration Statement No. 333-121195.)
6.
The consent of the Trustee required by Section 321(b) of the Act. (Exhibit 6 to Form T-1 filed with Registration Statement
No. 333-106702.)
7.
A copy of the latest report of condition of the Trustee published pursuant to law or to the requirements of its supervising or
examining authority.
SIGNATURE
Pursuant to the requirements of the Act, the Trustee, The Bank of New York, a corporation organized and existing under the laws of the
State of New York, has duly caused this statement of eligibility to be signed on its behalf by the undersigned, thereunto duly authorized, all in
The City of New York, and State of New York, on the 23rd day of May .
THE BANK OF NEW YORK
By
/s/ Arlene Thelwell
Name: Arlene Thelwell
Title: Assistant Vice President
EXHIBIT 7
Consolidated Report of Condition of
THE BANK OF NEW YORK
of One Wall Street, New York, N.Y. 10286
And Foreign and Domestic Subsidiaries,
a member of the Federal Reserve System, at the close of business December 31, 2007, published in accordance with a call made by the Federal
Reserve Bank of this District pursuant to the provisions of the Federal Reserve Act.
ASSETS
Cash and balances due from depository institutions:
Noninterest-bearing balances and currency and coin
Interest-bearing balances
Securities:
Held-to-maturity securities
Available-for-sale securities
Federal funds sold and securities purchased under agreements to resell:
Federal funds sold in domestic offices
Securities purchased under agreements to
resell
Loans and lease financing receivables:
Loans and leases held for sale
Loans and leases, net of unearned income
LESS: Allowance for loan and lease losses
Loans and leases, net of unearned income and allowance
Trading assets
Premises and fixed assets (including capitalized leases)
Other real estate owned
Investments in unconsolidated subsidiaries and associated companies
Not applicable
Intangible assets:
Goodwill
Other intangible assets
Other assets
Total assets
Dollar Amounts
In Thousands
3,211,000
24,114,000
1,776,000
25,801,000
7,888,000
168,000
0
34,419,000
262,000
34,157,000
4,576,000
946,000
3,000
719,000
2,492,000
1,002,000
8,819,000
115,672,000
LIABILITIES
Deposits:
In domestic offices
Noninterest-bearing
Interest-bearing
In foreign offices, Edge and Agreement subsidiaries, and IBFs
Noninterest-bearing
Interest-bearing
Federal funds purchased and securities sold under agreements to repurchase:
Federal funds purchased in domestic offices
Securities sold under agreements to repurchase
Trading liabilities
Other borrowed money:
(includes mortgage indebtedness and obligations under capitalized leases)
Not applicable
Not applicable
Subordinated notes and debentures
Other liabilities
Total liabilities
Minority interest in consolidated subsidiaries
EQUITY CAPITAL
Perpetual preferred stock and related surplus
Common stock
Surplus (exclude all surplus related to preferred stock)
Retained earnings
Accumulated other comprehensive income
Other equity capital components
Total equity capital
Total liabilities, minority interest, and equity capital
31,109,000
18,814,000
12,295,000
54,411,000
3,890,000
50,521,000
893,000
110,000
3,743,000
3,571,000
2,955,000
9,751,000
106,543,000
157,000
0
1,135,000
2,368,000
5,918,000
-449,000
0
8,972,000
115,672,000
I, Bruce W. Van Saun, Chief Financial Officer of the above-named bank do hereby declare that this Report of Condition is true and
correct to the best of my knowledge and belief.
Bruce W. Van Saun,
Chief Financial Officer
We, the undersigned directors, attest to the correctness of this statement of resources and liabilities. We declare that it has been examined
by us, and to the best of our knowledge and belief has been prepared in conformance with the instructions and is true and correct.
Gerald L. Hassell
Steven G. Elliott
Robert P. Kelly
Directors
EXHIBIT 25.1
FORM T-1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2) 
THE BANK OF NEW YORK
(Exact name of trustee as specified in its charter)
New York
13-5160382
(State of incorporation if not a U.S. national bank)
(I.R.S. employer identification no.)
One Wall Street, New York, N.Y.
10286
(Address of principal executive offices)
(Zip code)
BARRICK NORTH AMERICA FINANCE LLC
(Exact name of obligor as specified in its charter)
Delaware
26-2663280
(State or other jurisdiction of incorporation or organization)
(I.R.S. employer identification no.)
136 East South Temple, Suite 1800, Salt Lake City, Utah
84111-1135
(Address of principal executive offices)
(Zip code)
(Title of the indenture securities)
1.
General information. Furnish the following information as to the Trustee:
(a)
Name and address of each examining or supervising authority to which it is subject.
Name
Address
Superintendent of Banks of the State of New York
One State Street, New York, N.Y. 10004-1417, and Albany, N.Y.
12223
Federal Reserve Bank of New York
33 Liberty Street, New York, N.Y. 10045
Federal Deposit Insurance Corporation
Washington, D.C. 20429
New York Clearing House Association
New York, New York 10005
(b)
Whether it is authorized to exercise corporate trust powers.
Yes.
2.
Affiliations with Obligor.
If the obligor is an affiliate of the trustee, describe each such affiliation.
None.
16.
List of Exhibits.
Exhibits identified in parentheses below, on file with the Commission, are incorporated herein by reference as an exhibit hereto,
pursuant to Rule 7a-29 under the Trust Indenture Act of 1939 (the “Act”) and 17 C.F.R. 229.10(d).
1.
A copy of the Organization Certificate of The Bank of New York (formerly Irving Trust Company) as now in effect, which
contains the authority to commence business and a grant of powers to exercise corporate trust powers. (Exhibit 1 to Amendment
No. 1 to Form T-1 filed with Registration Statement No. 33-6215, Exhibits 1a and 1b to Form T-1 filed with Registration
Statement No. 33-21672, Exhibit 1 to Form T-1 filed with Registration Statement No. 33-29637 and Exhibit 1 to Form T-1 filed
with Registration Statement No. 333-121195.)
4.
A copy of the existing By-laws of the Trustee. (Exhibit 4 to Form T-1 filed with Registration Statement No. 333-121195.)
6.
The consent of the Trustee required by Section 321(b) of the Act. (Exhibit 6 to Form T-1 filed with Registration Statement
No. 333-106702.)
7.
A copy of the latest report of condition of the Trustee published pursuant to law or to the requirements of its supervising or
examining authority.
SIGNATURE
Pursuant to the requirements of the Act, the Trustee, The Bank of New York, a corporation organized and existing under the laws of the
State of New York, has duly caused this statement of eligibility to be signed on its behalf by the undersigned, thereunto duly authorized, all in
The City of New York, and State of New York, on the 23rd day of May .
THE BANK OF NEW YORK
By
/s/ Arlene Thelwell
Name: Arlene Thelwell
Title: Assistant Vice President
EXHIBIT 7
Consolidated Report of Condition of
THE BANK OF NEW YORK
of One Wall Street, New York, N.Y. 10286
And Foreign and Domestic Subsidiaries,
a member of the Federal Reserve System, at the close of business December 31, 2007, published in accordance with a call made by the Federal
Reserve Bank of this District pursuant to the provisions of the Federal Reserve Act.
ASSETS
Cash and balances due from depository institutions:
Noninterest-bearing balances and currency and coin
Interest-bearing balances
Securities:
Held-to-maturity securities
Available-for-sale securities
Federal funds sold and securities purchased under agreements to resell:
Federal funds sold in domestic offices
Securities purchased under agreements to
resell
Loans and lease financing receivables:
Loans and leases held for sale
Loans and leases, net of unearned income
LESS: Allowance for loan and lease losses
Loans and leases, net of unearned income and allowance
Trading assets
Premises and fixed assets (including capitalized leases)
Other real estate owned
Investments in unconsolidated subsidiaries and associated companies
Not applicable
Intangible assets:
Goodwill
Other intangible assets
Other assets
Total assets
Dollar Amounts
In Thousands
3,211,000
24,114,000
1,776,000
25,801,000
7,888,000
168,000
0
34,419,000
262,000
34,157,000
4,576,000
946,000
3,000
719,000
2,492,000
1,002,000
8,819,000
115,672,000
LIABILITIES
Deposits:
In domestic offices
Noninterest-bearing
Interest-bearing
In foreign offices, Edge and Agreement subsidiaries, and IBFs
Noninterest-bearing
Interest-bearing
Federal funds purchased and securities sold under agreements to repurchase:
Federal funds purchased in domestic offices
Securities sold under agreements to repurchase
Trading liabilities
Other borrowed money:
(includes mortgage indebtedness and obligations under capitalized leases)
Not applicable
Not applicable
Subordinated notes and debentures
Other liabilities
Total liabilities
Minority interest in consolidated subsidiaries
EQUITY CAPITAL
Perpetual preferred stock and related surplus
Common stock
Surplus (exclude all surplus related to preferred stock)
Retained earnings
Accumulated other comprehensive income
Other equity capital components
Total equity capital
Total liabilities, minority interest, and equity capital
31,109,000
18,814,000
12,295,000
54,411,000
3,890,000
50,521,000
893,000
110,000
3,743,000
3,571,000
2,955,000
9,751,000
106,543,000
157,000
0
1,135,000
2,368,000
5,918,000
-449,000
0
8,972,000
115,672,000
I, Bruce W. Van Saun, Chief Financial Officer of the above-named bank do hereby declare that this Report of Condition is true and
correct to the best of my knowledge and belief.
Bruce W. Van Saun,
Chief Financial Officer
We, the undersigned directors, attest to the correctness of this statement of resources and liabilities. We declare that it has been examined
by us, and to the best of our knowledge and belief has been prepared in conformance with the instructions and is true and correct.
Gerald L. Hassell
Steven G. Elliott
Robert P. Kelly
Directors
EXHIBIT 25.2
FORM T-1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2) 
THE BANK OF NEW YORK
(Exact name of trustee as specified in its charter)
New York
13-5160382
(State of incorporation if not a U.S. national bank)
(I.R.S. employer identification no.)
One Wall Street, New York, N.Y.
10286
(Address of principal executive offices)
(Zip code)
BARRICK GOLD FINANCECO LLC
(Exact name of obligor as specified in its charter)
Delaware
26-2663197
(State or other jurisdiction of incorporation or organization)
(I.R.S. employer identification no.)
136 East South Temple, Suite 1800, Salt Lake City, Utah
84111-1135
(Address of principal executive offices)
(Zip code)
(Title of the indenture securities)
1.
General information. Furnish the following information as to the Trustee:
(a)
Name and address of each examining or supervising authority to which it is subject.
Name
Address
Superintendent of Banks of the State of New York
One State Street, New York, N.Y. 10004-1417, and Albany, N.Y.
12223
Federal Reserve Bank of New York
33 Liberty Street, New York, N.Y. 10045
Federal Deposit Insurance Corporation
Washington, D.C. 20429
New York Clearing House Association
New York, New York 10005
(b)
Whether it is authorized to exercise corporate trust powers.
Yes.
2.
Affiliations with Obligor.
If the obligor is an affiliate of the trustee, describe each such affiliation.
None.
16.
List of Exhibits.
Exhibits identified in parentheses below, on file with the Commission, are incorporated herein by reference as an exhibit hereto,
pursuant to Rule 7a-29 under the Trust Indenture Act of 1939 (the “Act”) and 17 C.F.R. 229.10(d).
1.
A copy of the Organization Certificate of The Bank of New York (formerly Irving Trust Company) as now in effect, which
contains the authority to commence business and a grant of powers to exercise corporate trust powers. (Exhibit 1 to Amendment
No. 1 to Form T-1 filed with Registration Statement No. 33-6215, Exhibits 1a and 1b to Form T-1 filed with Registration
Statement No. 33-21672, Exhibit 1 to Form T-1 filed with Registration Statement No. 33-29637 and Exhibit 1 to Form T-1 filed
with Registration Statement No. 333-121195.)
4.
A copy of the existing By-laws of the Trustee. (Exhibit 4 to Form T-1 filed with Registration Statement No. 333-121195.)
6.
The consent of the Trustee required by Section 321(b) of the Act. (Exhibit 6 to Form T-1 filed with Registration Statement
No. 333-106702.)
7.
A copy of the latest report of condition of the Trustee published pursuant to law or to the requirements of its supervising or
examining authority.
SIGNATURE
Pursuant to the requirements of the Act, the Trustee, The Bank of New York, a corporation organized and existing under the laws of the
State of New York, has duly caused this statement of eligibility to be signed on its behalf by the undersigned, thereunto duly authorized, all in
The City of New York, and State of New York, on the 23rd day of May .
THE BANK OF NEW YORK
By
/s/ Arlene Thelwell
Name: Arlene Thelwell
Title: Assistant Vice President
EXHIBIT 7
Consolidated Report of Condition of
THE BANK OF NEW YORK
of One Wall Street, New York, N.Y. 10286
And Foreign and Domestic Subsidiaries,
a member of the Federal Reserve System, at the close of business December 31, 2007, published in accordance with a call made by the Federal
Reserve Bank of this District pursuant to the provisions of the Federal Reserve Act.
ASSETS
Cash and balances due from depository institutions:
Noninterest-bearing balances and currency and coin
Interest-bearing balances
Securities:
Held-to-maturity securities
Available-for-sale securities
Federal funds sold and securities purchased under agreements to resell:
Federal funds sold in domestic offices
Securities purchased under agreements to
resell
Loans and lease financing receivables:
Loans and leases held for sale
Loans and leases, net of unearned income
LESS: Allowance for loan and lease losses
Loans and leases, net of unearned income and allowance
Trading assets
Premises and fixed assets (including capitalized leases)
Other real estate owned
Investments in unconsolidated subsidiaries and associated companies
Not applicable
Intangible assets:
Goodwill
Other intangible assets
Other assets
Total assets
Dollar Amounts
In Thousands
3,211,000
24,114,000
1,776,000
25,801,000
7,888,000
168,000
0
34,419,000
262,000
34,157,000
4,576,000
946,000
3,000
719,000
2,492,000
1,002,000
8,819,000
115,672,000
LIABILITIES
Deposits:
In domestic offices
Noninterest-bearing
Interest-bearing
In foreign offices, Edge and Agreement subsidiaries, and IBFs
Noninterest-bearing
Interest-bearing
Federal funds purchased and securities sold under agreements to repurchase:
Federal funds purchased in domestic offices
Securities sold under agreements to repurchase
Trading liabilities
Other borrowed money:
(includes mortgage indebtedness and obligations under capitalized leases)
Not applicable
Not applicable
Subordinated notes and debentures
Other liabilities
Total liabilities
Minority interest in consolidated subsidiaries
EQUITY CAPITAL
Perpetual preferred stock and related surplus
Common stock
Surplus (exclude all surplus related to preferred stock)
Retained earnings
Accumulated other comprehensive income
Other equity capital components
Total equity capital
Total liabilities, minority interest, and equity capital
31,109,000
18,814,000
12,295,000
54,411,000
3,890,000
50,521,000
893,000
110,000
3,743,000
3,571,000
2,955,000
9,751,000
106,543,000
157,000
0
1,135,000
2,368,000
5,918,000
-449,000
0
8,972,000
115,672,000
I, Bruce W. Van Saun, Chief Financial Officer of the above-named bank do hereby declare that this Report of Condition is true and
correct to the best of my knowledge and belief.
Bruce W. Van Saun,
Chief Financial Officer
We, the undersigned directors, attest to the correctness of this statement of resources and liabilities. We declare that it has been examined
by us, and to the best of our knowledge and belief has been prepared in conformance with the instructions and is true and correct.
Gerald L. Hassell
Steven G. Elliott
Robert P. Kelly
Directors