DBRS Assigns Provisional “A” Rating - Under Review Negative to Proposed $4.0 Billion Barrick Debt Issues

DBRS has today assigned a provisional rating of “A”, which is Under Review with Negative Implications, to (1) $700 million of senior unsecured notes maturing May 2014; (2) $1,100 million of senior unsecured notes maturing May 2016 to be issued by Barrick Gold Corporation (Barrick or the Company) (collectively, new Barrick Notes); (3) $1,350 million of senior unsecured notes maturing May 2021; and (4) $850 million of senior unsecured notes maturing May 2041 to be issued by Barrick North America Finance LLC (Barrick NA Finance) and unconditionally guaranteed by Barrick (collectively, new Barrick NA Finance Notes), to be issued following Barrick’s bid to acquire copper producer Equinox Minerals Limited (Equinox). The proceeds from the issuance of $4.0 billion new Barrick Notes and new Barrick NA Finance Notes will be used to acquire Equinox or for general corporate purposes. If Barrick does not acquire at least a majority interest in Equinox on or prior to January 24, 2012, or if Barrick’s offer for Equinox expires or is withdrawn prior to January 24, 2012, Barrick and Barrick NA Finance will be obligated to redeem $3,300 million of the new notes (excluding Barrick’s issue of $700 million of senior unsecured notes maturing May 2014) at a redemption price equal to 101% of their principal amount plus accrued and unpaid interest to, but not including, the date of redemption.

DBRS placed the senior unsecured debt ratings of Barrick and its subsidiaries Under Review with Negative Implications on April 25, 2011, following the Company’s announcement that it will make an approximately CAD7.3 billion, all-cash offer for copper producer Equinox. DBRS intends to resolve the review status of the new notes to be issued by Barrick and Barrick NA Finance and Barrick’s other long-term ratings once it can clarify the ultimate cost of the Equinox acquisition, the potential long-term value of the deal to Barrick, the financing structure of the deal and the impact of a successful transaction on Barrick’s business profile and financial metrics.

The new Barrick Notes will be unsecured, unsubordinated obligations of Barrick and will rank equally with the other unsecured, unsubordinated obligations of Barrick. The new Barrick NA Finance Notes will be unsecured, unsubordinated obligations of Barrick NA Finance and will rank equally with Barrick NA Finance’s other unsecured, unsubordinated obligations. In addition, the new Barrick NA Finance Notes will be unconditionally and irrevocably guaranteed by Barrick; the guarantees will be unsecured, unsubordinated obligations of Barrick and will rank equally with Barrick’s other unsecured, unsubordinated obligations.

Barrick has indicated that the Equinox acquisition will be financed utilizing existing cash resources and new debt. Barrick has entered into a $5.0 billion financing arrangement for the Equinox acquisition consisting of an underwritten bridge loan and a revolving credit facility. In addition, the Company had available approximately $4.4 billion in cash and $1.5 billion in unutilized credit facilities at March 31, 2011. In the event that any portion of the bridge loan is utilized before the new Barrick Notes and new Barrick NA Finance Notes are issued, the Equinox acquisition financing arrangements require that all or a portion of the net proceeds from the sale of the new notes will be used to repay the bridge loan.

DBRS expects that, if completed as currently contemplated, the acquisition of Equinox will, on a pro forma basis, increase Barrick’s gross debt leverage from 23% at March 31, 2011, to approximately 35% assuming $5.0 billion of the cost is financed by new debt and the remainder by cash resources. Barrick’s pro forma EBITDA gross interest coverage would be expected to drop from 14 times in 2010 to approximately 9.0 times.

As the largest gold producer in the world, Barrick has a solid business profile, as well as strong financial metrics due to low production costs and high prices for gold and copper, its two main products. The successful acquisition of Equinox would broaden the Company’s copper diversification but increase its political risk profile as Equinox’s major assets are in Zambia and Saudi Arabia. In addition, these properties will potentially require significant added investment to meet original design targets and to expand operations as is contemplated. Neither Equinox operation is expected to be a low-cost producer and both currently have only sufficient reserves defined to support moderate-length mine lives, although they do have good exploration potential.

Notes:
All figures are in U.S. dollars unless otherwise noted.

The applicable methodology is Rating Mining, which can be found on our website under Methodologies.