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Gold/Mining/Energy : Gold Price Monitor -- Ignore unavailable to you. Want to Upgrade?

To: Gersh Avery who wrote (73064)	7/8/2001 12:32:00 PM
From: long-gone	Respond to of 116753

From the WSJ report: During a conference call to discuss the deal, some Homestake investors also voiced concerns over Barrick's so-called hedging strategy, where the company contracts to sell much of its future gold production at set prices to reduce risk. Hedging has produced hundreds of millions of dollars of added revenue for Barrick over the years. Homestake has hedged some production recently, but the company traditionally has been a favorite among gold bugs seeking to play any price rise. Barrick's Mr. Oliphant said he doesn't plan to raise the hedging position on Homestake's gold production. public.wsj.com

To: Gersh Avery who wrote (73064)	7/8/2001 12:58:41 PM
From: long-gone	Read Replies (1) \| Respond to of 116753

pages 2 & 3 from the actual press release at: barrick.com but does not include remarks during Q/A BARRICK GOLD CORPORATION PAGE 2 OF 4 Homestake's shares over the last 10 trading days. Following the merger, holders of exchangeable shares of Homestake Canada will be entitled to exchange their shares into Barrick common shares based on the same ratio. The Boards of Directors of both companies have unanimously approved the transaction. Barrick has signed commitment agreements with certain shareholders and directors of Homestake, who hold approximately 12% ofHomestake's outstanding shares and have agreed to vote in favor of the merger , The transaction is intended to be tax-free for U.S. income tax purposes and is subject to regulatory and Homestake shareholder approvals. No approval by Barrick shareholders is required. The transaction is planned to be treated as a pooling of interests under U.S. Generally Accepted Accounting Principles ( GAAP) and is expected to close in the fourth quarter of 2001. Since the transaction will further increase Barrick's United States shareholder base, and in order to bring the company in line with its peer group, Barrick will adopt U .$. GAAP as its primary basis of communicating financial results upon completion of the merger . BARRICK GOlD CORPORAllON PAGE 3 OF ( . . at an average annual minimum price of US$345 per ounce. This is roughly three years of production and 22 per cent of reserves, providing floor price protection on approximately two-thirds of production through 2003 and a declining portion thereafter. The combined position provides a comfortable level of gold price protection for the merged entity , and is in line with the historic parameters of Barrick's program. Based on 2000 pro forma results, the combined company had: Production totaling 6 million ounces of gold at cash costs of US$156 per ounce, the lowest of any major gold producer; with a Reserve base of 79 million ounces, among the least sensitive to lower gold prices in the industry . FINANCIALLY ACCRETIVE The merger is expected to create annual cost-savlng synergies of approximately US$55 million (after-tax) beginning in 2002. The majority of these savings will be realized in the tax, exploration and administrative areas. "With the operating and financial synergies for shareholders, this transaction is expected to be financiallyaccretive for both Barrick and Homestake, " said Randall Ollphant. A joint integration team has been formed to maximize synergies and to ensure efficient Integration of the newly merged company. LEADING PRODUCER IN LOW-RISK LOCATIONS The merger creates a company with low geo-political risk, with 54% of its reserves In North America and Australia, 33% in South America, and 13% in Tanzania. Based in Toronto, the merged company's major properties will include: Barrick's Goldstrike Property in Nevada, PIerIna Mine in Peru and Bulyanhulu Mine in Tanzania, and Homestake's Eskay Creek and Hemlo Mines In Canada and Kalgoorlie Mine and y ilgarn Operations in Australia. The combined company will also have an attractive pipeline of projects that provide excellent leverage ~ a rising gold price. These include a combined resource of 35 million ounces at Barrick's Pascua-Lama Project on the Chile/Argentina border and the adjacent Veladero District, owned 60 per cent by Homestake and 40 per cent by Barrick before the merger . Homestake produced 2.2 million ounces of gold at a cash cost of US$17 4 an ounce in 2000. At year-end 2000, the company had gold reserves of 20.8 million ounces. COMPLEMENTARY ASSETS "Homestake's high-quality, low-cost assets are very complementary to Barrick's. Our production profile is enhanced by Homestake's annual production of approximately 2 million ounces at similar low costs,'. said Randall Oliphant. .'In addition to becoming the largest producer in Canada and the United States, we will be the second-largest producer in Australia.'. "This transaction opens a new chapter in Homestake's 125-year history," said Jack Thompson, who becomes a member of the Board of Directors of the merged company. " Our great legacy will be carried on in a combined company that will reinforce Homestake's long-held tradition of operating excellence, technical innovation and financial strength. " LEADER IN QUALm AND SCALE In terms of financial strength. the merged company is expected to have: .Industry~high earnings and cash flows; backed by .The industry's only A-rated balance sheet; and .A Premium Gold Sales Program that offers protection during periods of low gold prices. while maintaining complete flexibiUty to participate in higher prices. With the inclusion of Homestake.s 2-million-ounce hedge position. the merged entity will have a combined gold forward sale position totaling 18 million ounces,