Barrick Gold Corp. (ABX-TSX; NYSE) Strong Year Ahead In 2017

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1 Andrew Khov, CPA, CA, CFA Associate, (416) , Recommendation: Market Perform Target Price: C$24.00 Barrick Gold Corp. (ABX-TSX; NYSE) Strong Year Ahead In 2017 Current Price C$26.81 Shares Outstanding (MM) 52 Wk High C$30.45 Basic 1, Wk Low C$15.98 Diluted 1,167.9 Cash (MM) $2,389 Mgmt. & Dir. 3.2 Debt (MM) $7,931 NAV* C$11.30 Market Cap. C$31,245.2 P/NAV* 2.37x EV C$37,555.9 NAV (spot)* C$12.45 P/NAV(spot)* 2.15x Reserves Target Return -10.5% Total Resource 86.0 MMoz MMoz FYE Dec A 2017E 2018E Production Q1 1,280 1,411 1,285 (000 oz) Q2 1,340 1,411 1,285 Q3 1,381 1,411 1,285 Q4 1,516 1,411 1,285 FY 5,517 5,644 5,140 Cash Cost ($/oz) FY $546 $532 $543 AISC ($/oz) FY $730 $769 $763 EPS, adj. Q Q Q Q FY CFPS, adj. Q Q Q Q FY $2.58 $2.75 $2.36 P/CF 7.9x 7.5x 8.7x * Cormark deck is $1,200/oz; spot gold is $1,241/oz Unless otherwise denoted, all figures shown in US$ Investment Thesis: Over the last several years, Barrick has reduced its production profile, lowered its cost base, sold non-core assets and dramatically reduced its debt. The company is now bettfer positioned in the current gold environment to generate positive free cash flow and spend on future production additions. Highlights: Strong Year Ahead In 2017; But Longer-Term Declines Looming The three-year production guidance was higher than our previous estimates and the operating cost guidance was slightly better than our projections, but the capital spending (at least $1.30 BB in ) is higher than we were modeling. While significant capital expenditures and permitting time is still needed before Barrick s longer-term projects can come online in 2021, we have added these projects to our estimates which results in a 12% increase in our NAV to C$11.30 and help maintain production above 4.0 MMoz/yr until Upgrading To Market Perform Rating, Increasing Target To C$24.00 The shares trade at 2.37x NAV and 8.7x 2018 CF, which are at the high end of the range for the senior group, especially considering the production declines in 2018 and beyond. That said, the core mines are delivering significant free cash flow and the balance sheet risk has been reduced over the last two years. The company is on solid ground and we are upgrading Barrick to Market Perform (from Reduce) and increasing our target price to C$24.00 (from C$18.00). Company Description: As the world s largest gold company, Barrick Gold produces approximately 5.5 MMoz/year from its portfolio of operations on five continents. Source: BigCharts.com, February 16, 2017 (Chart C$)

2 Three-Year Guidance Provided: Guidance for was provided and is outlined below. We have adjusted our estimates to fit into the new guidance ranges provided by the company. 2017: MMoz at AISC of $ /oz and capex of $ BB 2018: MMoz at AISC of $ /oz and capex of $ BB 2019: MMoz at AISC of $ /oz and capex of $ BB Reserves Decline: Reserves at year-end 2016 were 85.9 MMoz, down from 91.9 MMoz at the end of Depletion of 6.8 MMoz through mining and the divestiture of 1.9 MMoz were offset by the addition of 2.7 MMoz, namely at Lagunas Norte (+1.1 MMoz), Hemlo (+9.2 MMoz) and Goldstrike (+0.64 MMoz). We note that 37% of the reserve total (31.5 MMoz) come from Cerro Casale and Pascua-Lama, two projects that are not in the company's pipeline. Long-Term Projects Moving Ahead: Barrick's primary long-term projects (Cortez underground, Goldrush, Lagunas Norte optimization/refractory, Turquoise Ridge expansion) are all on track and should add 1.1 MMoz/yr by While significant capital expenditures and permitting time are still needed before these projects can come online, we have added these projects to our estimates which results in a 12% increase in our NAV to C$11.30 and help maintain production above 4.0 MMoz/yr until 2024 (see Figure 3). Lama Underground To Get A Look: Barrick has initiated a prefeasibility study to evaluate construction of an underground mine at Lama, the Argentinean side of the Pascua-Lama project. Conceptually, cash flow would support staged development that would incorporate ore from the Chilean side subject to permitting success. Capital costs for an underground mine were not provided, but Barrick indicated that "returns on Lama deteriorate if initial capital is more than $1.5 BB". Upgrading To Market Perform Rating, Increasing Target To C$24.00: The shares trade at 2.37x NAV and 8.7x 2018 CF, which are at the high end of the range for the senior group, especially considering the production declines in 2018 and beyond. That said, the core mines are delivering significant free cash flow and the balance sheet risk has been reduced over the last two years. The company is on solid ground and we are upgrading Barrick to Market Perform (from Reduce) and increasing our target price to C$24.00 (from C$18.00), which is now based on 1.50x NAV and 10x CF (from 1.0x and 10x previously). Figure 1: Seniors Gold Valuation Multiples 2.50x P/NAV at $1,200/oz 25.0x P/CF at $1,200/oz 2.00x 1.50x 1.00x 0.50x 0.00x 2.37x 1.93x 1.74x 1.48x 1.46x 1.25x 1.23x 1.15x 1.10x 1.09x 1.04x 0.98x 0.96x 0.95x 0.95x 0.82x 0.81x 0.79x 0.78x 0.77x 0.77x 0.77x 0.59x 0.58x ABX AEM G BTO SSO K OGC IMG RIC TXG NGD GUY ROG ELD YRI GQM AR CG AKG TGZ DGC P BRIO BDR 20.0x 15.0x 10.0x 5.0x 0.0x 20.4x 14.5x 12.5x 11.8x 11.0x 10.6x 9.1x 8.7x 7.6x 7.6x 7.3x 7.2x 6.3x 6.3x 6.3x 5.3x 4.5x 3.9x 3.8x 3.8x 3.3x 2.7x 1.9x 1.5x ELD AEM SSO TXG G RIC GUY ABX IMG DGC TGZ ROG BTO K OGC AR AKG YRI NGD BDR CG GQM BRIO P During the past twenty-four months, Cormark Securities Inc., either on its own or as a syndicate member, participated in the underwriting of securities and/or provided financial advice regarding the stock market insight and financial analysis regarding potential transactions for these companies

3 Figure 2: Quarterly Results Richard Gray, CFA, (416) , Q4/15 Q1/16 Q2/16 Q3/16 Q4/16 % Q/Q Q4/16 Actual Actual Actual Actual Actual Diff. CSI Est. Gold production (000 oz) 1,619 1,280 1,340 1,381 1, % 1,516 Cash costs - by-prod ($/oz) $547 $553 $578 $518 $540 +4% $540 AISC - by-prod ($/oz) $733 $706 $782 $704 $732 +4% $792 Margin - cash ($/oz) $558 $628 $681 $815 $677-17% $725 Margin - AISC ($/oz) $372 $475 $477 $629 $485-23% $490 Copper production (MMlb) % 101 AISC ($/lb) $2.15 $1.97 $2.14 $2.02 $ % $2.09 Margin ($/lb) nm.30 Adjusted EPS % 0.22 Adjusted CFPS % 0.63 Capital spending ($MM) $311 $270 $253 $277 $ % $400 Free cash flow ($MM) $387 $181 $274 $674 $385-43% $330 Cash ($MM) $2,455 $2,323 $2,441 $2,648 $2,389-10% $2,889 Adjusted Q4/16 EPS of.22 was in line with our estimate of.22 and beat consensus of.20. Adjusted CFPS of.66 was above our.63 estimate and in line with consensus of.66. FCF of positive $385 MM was above our $330 MM estimate and consensus of $307 MM, primarily on lower capital spending ($326 MM vs our $400 MM). Production of 1.52 MMoz was previously reported and was the company's best quarter of the year and was 10% higher than Q3/16 production. Cash costs of $540/oz were in line with our $540/oz and AISC of $732/oz were below our estimate of $792/oz. Copper production was 101 MMlb and copper AISC was $2.04/lb For the full-year, gold production of 5.52 MMoz was at the high end of guidance of MMoz. Full year cash cost of $546/oz was within the recently lowered guidance range of $ /oz while AISC of $730/oz was lower than $ /oz range. Full year copper production of 415 MMlb was in line with guidance of MMlb. Full year copper AISC of $2.05/lb was within guidance of $2.00-$2.20/lb. Barrick ended the year with $2.39 BB in cash, down from $2.65 BB at the end of Q3/16 as positive free cash flow of $385 MM was offset by a $617 MM debt reduction. Total debt is now $7.93 BB, down from $9.97 BB a year ago and $13.08 BB at the end of Barrick slightly exceeded its debt reduction target of $2.0 BB by reducing debt by $2.04 BB. Of the remaining debt, less than $200 MM is due in before 2019 and $5.0 BB is not due until after The company indicated it intends to reduce debt by a further $2.90 BB to $5.0 BB by the end of 2018, using its free cash flow, further non-core asset sales and "creating new joint ventures and partnerships".

4 Figure 3: Production & Cost Profile 1,750 $1,250 8,000 $1,250 Gold Production (000 oz) 1,500 1,250 1, $750 Cash costs (US$/oz) Gold Production (000 oz) 7,000 6,000 5,000 4,000 3,000 2,000 $750 Cash costs (US$/oz) 250 1,000 0 $250 0 $250 Other Goldstrike Cortez Pueblo Viejo Acacia Veladero Porgera Lagunas Norte Cash cost AISC Figure 4: Free Cash Flow Profile Free cash flow (US$ MM) $800 $700 $600 $400 $300 $200 $100 Free cash flow (US$ MM) Other Goldstrike Cortez Pueblo Viejo Acacia Veladero Porgera Lagunas Norte Cash cost AISC $2,500 $1,500 () FCF at $1,300/oz FCF at $1,100/oz FCF at $1,200/oz FCF at $1,300/oz FCF at $1,100/oz FCF at $1,200/oz Figure 5: Cash Balance Profile Cash flow (US$ MM) $2,500 $1,500 () () ($1,500) () ($2,500) $6,000 $5,000 $4,000 () () ($4,000) ($5,000) ($6,000) Cash balance (US$ MM) Cash flow (US$ MM) $6,000 $5,000 $4,000 () () ($4,000) ($5,000) ($6,000) $15,000 $12,000 $9,000 $6,000 ($6,000) ($9,000) ($12,000) ($15,000) Cash balance (US$ MM) Op. CF at $1,200/oz Capital expenditures Dividends Debt additions Debt repayments Equity / Asset sale Cash (at $1,300/oz) Cash (at $1,100/oz) Cash (at $1,200/oz) Op. CF at $1,200/oz Capital expenditures Dividends Debt additions Debt repayments Equity / Asset sale Cash (at $1,300/oz) Cash (at $1,100/oz) Cash (at $1,200/oz)

5 We, Richard Gray and Andrew Khov, hereby certify that the views expressed in this research report accurately reflect our personal views about the subject company(ies) and its (their) securities. We also certify that we have not been, and will not be receiving direct or indirect compensation in exchange for expressing the specific recommendation(s) in this report.

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