Unlocking the hidden value in joint ventures and acquisitions: A case history of Barrick’s reserve and resource growth in Nevada

Following Barrick’s entry into Nevada, with the purchase of an interest in the
Pinson property in 1984 and the acquisition of Goldstrike in 1987, the Company has
experienced an unprecedented growth in gold reserves and resources in Nevada.
Most of this growth has come from exploration successes that followed a number of
major acquisitions. Successful exploration programs at several joint venture properties
have also contributed to Barrick’s gold reserve and resource base. In addition
to Goldstrike, the key corporate acquisitions impacting Barrick in Nevada include
LACMinerals in 1994, Homestake in 2001 and Placer Dome in 2006. Important joint
venture deals include the acquisition of 60% interests in Dee in 1997, Rossi in 1998
and the recent joint venture at Spring Valley in 2009. In each case, the acquired
properties contained known reserves and/or resources and most had some production
prior to acquisition by Barrick. This study reviews the existing reserves and resources,
the perceived exploration discovery upside in gold ounces and the value that
Barrick assigned to the exploration potential for the properties. Some properties
such as Goldstrike,which had reserves of 625,000 ounces (20.2 metric tons) of gold at
the time of the acquisition, have delivered significantly more ounces than anticipated.
Other properties have yielded value and exploration results on par with that
expected, while a few have not delivered any significant upside following their acquisition.
The exploration successes and reserve/resource additions can be attributed to
a number of factors which include breakthroughs in the understanding of the geological,
geochemical, geophysical and metallurgical aspects of the mining districts
and their individual deposits. In some cases the key factors in helping discover new
ounces were the development of new drilling techniques and technologies to accurately
test and develop the deposits as they became deeper, sulfide-bearing and often
well below groundwater levels. In all cases following acquisition, Barrick has initiated
aggressive and well funded exploration programs designed to maximize value
from the acquisition. This has been the key factor in unlocking “hidden value” from
the acquisitions and joint ventures.