Management’s Discussion and Analysis (“MD&A”) is intended to help the reader understand Barrick Gold Corporation (“Barrick”, “we”, “our” or the “Company”), our operations, financial performance and the present and future business environment. This MD&A, which has been prepared as of February 12, 2019, should be read in conjunction with our audited consolidated financial statements (“Financial Statements”) for the year ended December 31, 2018. Unless otherwise indicated, all amounts are presented in U.S. dollars.

For the purposes of preparing our MD&A, we consider the materiality of information. Information is considered material if: (i) such information results in, or would reasonably be expected to result in, a significant change in the market price or value of our shares; (ii) there is a substantial likelihood that

a reasonable investor would consider it important in making an investment decision; or (iii) it would significantly alter the total mix of information available to investors. We evaluate materiality with reference to all relevant circumstances, including potential market sensitivity.

Continuous disclosure materials, including our most recent Form 40-F/Annual Information Form, annual MD&A, audited consolidated financial statements, and Notice of Annual Meeting of Shareholders and Proxy Circular will be available on our website at www.barrick.com, on SEDAR at www.sedar.com and on EDGAR at www.sec.gov. For an explanation of terminology unique to the mining industry, readers should refer to the glossary on page 79.

Certain information contained or incorporated by reference in this MD&A, including any information as to our strategy, projects, 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”, “target”, “plan”, “objective”, “assume”, “intend”, “intention”, “project”, “goal”, “continue”, “budget”, “estimate”, “potential”, “may”, “will”, “can”, “could”, “would” and similar expressions identify forward-looking statements. In particular, this MD&A contains forward-looking statements including, without limitation, with respect to: (i) Barrick’s forward-looking production guidance; (ii) estimates of future cost of sales per ounce for gold and per pound for copper, cash costs per ounce and C1 cash costs per pound, and all-in-sustaining costs per ounce/pound; (iii) cash flow forecasts; (iv) projected capital, operating and exploration expenditures; (v) targeted debt and cost reductions; (vi) mine life and production rates; (vii) potential mineralization and metal or mineral recoveries; (viii) the benefits expected from the Randgold merger and Barrick’s expectations regarding the assets it acquired in its merger with Randgold; (ix) our ability to identify, invest in and develop potential Tier One, Tier Two and Strategic Assets; (x) the combined Company’s future plans, growth potential, financial strength, investments and overall strategy; (xi) Barrick’s business improvement and automation initiatives; (xii) the success of our efforts to evaluate opportunities at Pascua-Lama; (xiii) our ability to convert resources into reserves; (xiv) asset sales, joint ventures and partnerships; (xv) expectations regarding future price assumptions, financial performance and other outlook or guidance; and (xvi) timing of completion of the proposed 50 kilometer gas pipeline at Pueblo Viejo.

Forward-looking statements are necessarily based upon a number of estimates and assumptions including material estimates and assumptions related to the factors set forth below that, while considered reasonable by the Company as at the date of this MD&A in light of management’s experience and perception of current conditions and expected developments, 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 and undue reliance should not be placed on such statements and information. Such factors include, but are not limited to: fluctuations in the spot and forward price of gold, copper or certain other commodities (such as silver, diesel fuel, natural gas and electricity); the speculative nature of mineral exploration and development; changes in mineral production performance, exploitation and exploration successes; risks associated with the fact that certain Best-in-Class initiatives are still in the early stages of evaluation and additional engineering and other analysis is required to fully assess their impact; the duration of the Tanzanian ban on mineral concentrate exports; the ultimate terms of any definitive agreement between Acacia and the Government of Tanzania to resolve a dispute relating to the imposition of the concentrate export ban and allegations by the Government of Tanzania that Acacia under-declared the metal content of concentrate exports from Tanzania; the status of certain tax reassessments by the Tanzanian government; the manner in which amendments to the 2010 Mining Act (Tanzania) increasing the royalty rate applicable to metallic minerals such as gold, copper and silver to 6% (from 4%), the new Finance Act (Tanzania) imposing a 1% clearing fee on the value of all minerals exported from Tanzania from July 1, 2017, and the new Mining Regulations announced by the Government of Tanzania in January 2018 will be implemented and the impact of these and other legislative changes on Acacia; whether Barrick will successfully negotiate an agreement with respect to the dispute between Acacia and the Government of Tanzania and whether Acacia will approve the terms of any such final agreement; the benefits expected from recent transactions (including the Randgold merger) being realized; diminishing quantities or grades of reserves; increased costs, delays, suspensions and technical challenges associated with the construction of capital projects; operating or technical difficulties in connection with mining or development activities, including geotechnical challenges and disruptions in the maintenance or provision of required infrastructure and information technology systems; failure to comply with environmental and health and safety laws and regulations; timing of receipt of, or failure to comply with, necessary permits and approvals; uncertainty whether some or all of the Best-in-Class initiatives, targeted investments and projects

(including our project to treat refractory sulfide ore at Lagunas Norte) will meet the Company’s capital allocation objectives and internal hurdle rate; the impact of global liquidity and credit availability on the timing of cash flows and the values of assets and liabilities based on projected future cash flows; adverse changes in our credit ratings; the impact of inflation; fluctuations in the currency markets; changes in U.S. dollar interest rates; risks arising from holding derivative instruments; changes in national and local government legislation, taxation, controls or regulations and/or changes in the administration of laws, policies and practices; expropriation or nationalization of property and political or economic developments in Canada, the United States and other jurisdictions in which the Company or its affiliates do or may carry on business in the future; lack of certainty with respect to foreign legal systems, corruption and other factors that are inconsistent with the rule of law; the outcome of the appeal of the decision of Chile’s Superintendencia del Medio Ambiente; damage to the Company’s reputation due to the actual or perceived occurrence of any number of events, including negative publicity with respect to the Company’s handling of environmental matters or dealings with community groups, whether true or not; the possibility that future exploration results will not be consistent with the Company’s expectations; risks that exploration data may be incomplete and considerable additional work may be required to complete further evaluation, including but not limited to drilling, engineering and socioeconomic studies and investment; risk of loss due to acts of war, terrorism, sabotage and civil disturbances; litigation; contests over title to properties, particularly title to undeveloped properties, or over access to water, power and other required infrastructure; business opportunities that may be presented to, or pursued by, the Company; risks associated with the fact that certain of the initiatives described in this MD&A are still in the early stages and may not materialize; our ability to successfully integrate

acquisitions or complete divestitures; risks associated with working with partners in jointly controlled assets; employee relations including loss of key employees; increased costs and physical risks, including extreme weather events and resource shortages, related to climate change; availability and increased costs associated with mining inputs and labor; and the organization of our previously held African gold operations and properties under a separate listed Company. 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, copper cathode or gold or copper concentrate 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 MD&A are qualified by these cautionary statements. Specific reference is made to the most recent Form 40-F/Annual Information Form on file with the SEC and Canadian provincial securities regulatory authorities for a more detailed discussion of some of the factors underlying forward-looking statements and the risks that may affect Barrick’s ability to achieve the expectations set forth in the forward-looking statements contained in this MD&A. 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.

USE OF NON-GAAP FINANCIAL PERFORMANCE MEASURES

We use the following non-GAAP financial performance measures in our MD&A:

For a detailed description of each of the non-GAAP measures used in this MD&A and a detailed reconciliation to the most directly comparable measure under International Financial Reporting Standards (“IFRS”), please refer to the Non-GAAP Financial Performance Measures section of this MD&A on pages 61 to 76. Each non-GAAP financial performance measure has been annotated with a reference to an endnote on page 77. The non-GAAP financial performance measures set out in this MD&A are intended to provide additional information to investors and do not have any standardized meaning under IFRS, and therefore may not be comparable to other issuers, and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS.

Changes in Presentation of Non-GAAP Financial Performance Measures

Adjusted EBITDA

Starting in this fourth quarter 2018 MD&A, we amended our calculation of Adjusted EBITDA to remove the impact of the income tax expense, finance costs, finance income and depreciation incurred in our equity method accounted investments. The prior periods have been restated to reflect the change in presentation. We believe this change will assist analysts, investors and other stakeholders of Barrick in better understanding the ability of our full business, including equity method investments, to generate liquidity from operating cash flow.

Our Vision

Our Vision is to be the world’s most valued gold mining business by finding, developing and owning the best assets, and employing the best people, to deliver sustainable returns for our owners, and real benefits to our partners, host countries, and communities.

Our Business

The merger of Barrick and Randgold Resources Limited (“Randgold”) on January 1, 2019 has created a sector-leading gold mining company with five Tier One Gold Assets⁸ and a diversified asset portfolio positioned for growth in many of the world’s most prolific gold districts. The combination of Barrick and Randgold holds interests in thirteen producing gold mines, which are located in Argentina, Australia, Canada, Côte d’Ivoire, the Democratic Republic of Congo, the Dominican Republic, Mali, Papua New Guinea, Peru and the United States. We also hold a 63.9% equity interest in Acacia Mining plc (“Acacia”), a company listed on the London Stock Exchange (“LSE”) that owns gold mines and exploration properties in Africa, principally in Tanzania. Our copper business contains a wholly-owned copper mine in Zambia and 50% interests in copper mines in Chile and Saudi Arabia. We also have projects located throughout the Americas and Africa. We sell our production in the world market through the following distribution channels: gold bullion is sold in the gold spot market; and gold and copper concentrate is sold to independent smelting companies. Barrick changed its ticker symbol on the New York Stock Exchange (“NYSE”) from ABX to GOLD beginning on the merged company’s first day of trading on January 2, 2019. Barrick continues to trade on the Toronto Stock Exchange under the symbol ABX.

Our Strategy

Our strategy is to operate as business owners, focused on returns to shareholders by optimizing return on free cash flow, alongside managing risk to create long-term value for our shareholders and partnering with host governments and communities to transform their natural resources into sustainable benefits and mutual prosperity. We aim to achieve this through the following:

Asset Quality

Operational Excellence

Sustainable Profitability

In 2018, we generated net cash flow provided by operating activities (“operating cash flow”) of $1.8 billion and free cash flow¹ of $365 million for the year. Our cost of sales applicable to gold⁴ increased by $98 per ounce to $892 per ounce, while our all-in sustaining costs¹ (“AISC”) increased by 7% to $806 per ounce. Our cost of sales applicable to copper⁴ increased by $0.63 per pound to $2.40 per pound, while our AISC¹ increased by 21% to $2.82 per pound. The increases for both gold and copper reflect the impact of lower sales volume, and higher capital expenditures on a per ounce basis as we increased investments in the future of our business.

In 2018, we recognized $900 million ($799 million net of tax and non-controlling interest) of impairments, mainly relating to a non-current asset impairment of $405 million (no tax impact) at Lagunas Norte following the decision not to proceed with the treatment of refractory sulphide ore project (“PMR”) at this time; and a non-current asset impairment of $246 million (pre-tax) and a goodwill impairment of $154 million (no tax impact) at Veladero reflecting an increase in the cost structure related to increasing government imposts coupled with higher energy costs. In addition, an inventory impairment of $166 million (no tax impact) was recorded as we concluded that the Lagunas Norte project related to the processing of carbonaceous material (“CMOP”) does not meet our investment criteria. We also recorded deferred tax expense of $673 million and $141 million related to de-recognition of the deferred tax assets in Canada and Peru, respectively. It was determined that the realizability of these deferred tax assets was no longer probable due to management’s focus on growing the business globally, particularly on our Tier One Gold Assets outside of Canada, the updated mine plan at Lagunas Norte and a change in our expected approach to financing future reclamation activities in Peru.

Balance Sheet and Liquidity

Our liquidity position is strong and continues to improve, with robust cash flow generation, modest near-term debt repayment obligations, a $3 billion undrawn credit facility and a consolidated cash balance of approximately $1.6 billion^3. As discussed on page 28, on January 1, 2019, we completed the merger with Randgold. As at December 31, 2018, Randgold had $0.7 billion of cash and cash equivalents, which would bring the cash position of the combined company to $2.3 billion from January 1, 2019, and had no debt outstanding.

In 2018, we reduced our total debt by $685 million, or 11%, from $6.42 billion to $5.74 billion. We currently have less than $50 million² in debt due before 2020, and approximately $5 billion of our outstanding debt matures after 2032. We increased the dividend by 33% from $0.12 per share in respect of the 2017 financial year to $0.16 per share in respect of the 2018 financial year. Barrick has targeted a quarterly dividend of $0.04 per share, commencing with the dividend we anticipate declaring in April 2019 in respect of the first quarter of 2019.

Safety

Our safety vision is “Every person going home safe and healthy every day.” In 2018, we operated with zero fatalities and continued to improve our total reportable injury frequency rate⁵ (“TRIFR”) year over year, decreasing our rate across all operations by 9% - from 0.35 to 0.32. We have achieved a 44% improvement in the TRIFR (from 0.58 in 2014) over the past 5 years.

Barrick is fully committed to the safety, health and well-being of our people, their families and the communities in which we operate. In late 2018, the weekly Business Plan Review meetings transitioned to a weekly Executive Committee Review which is now the main forum for senior management to review our current safety performance, share lessons learned and communicate best practices across our business. Our safety metrics demonstrate improvements in performance and we will continue our efforts to further reduce injury occurrences.

Strong safety leadership, transparency and an engaged, knowledgeable workforce provide the foundation for Barrick’s safety culture. To provide our people with the data and information needed to perform their work safely, we have implemented a new enterprise-wide Health, Safety, and Environmental (“HSE”) and Risk Management software system. This was achieved through a collaborative effort that involved personnel from all Barrick sites and regional offices.

Planning and implementation workshops were carried out this year with a cross section of personnel from all sites and regional offices to review and improve our fatality prevention controls. Outputs from these efforts include updated workforce engagement and hazard control evaluation tools, along with a renewed management commitment to identify and reinforce actions that will promote the safest and healthiest workplaces possible. Internal management system assurance reviews were also carried out this year to promote continuous improvement of hazard controls associated with mobile equipment and fire protection/prevention systems.

Environment

Barrick continues to rebuild our reputation for environmental excellence and aims to become the world’s most valued gold mining business by delivering sustainable returns for our owners and partners, including the host communities and countries in which we operate. In 2018, our operations made progress on developing and implementing the ICMM Critical Control Management Plans for reliable environmental performance within our operations. The results of these efforts are demonstrated by a sustained reduction of environmental incidents over the past 5 years. Globally, Barrick has achieved an 87% reduction in Reportable Environmental Incidents between 2014 and 2018. There were zero Significant Environmental Incidents in 2018.

Climate Change

Climate change, including shifts in temperature and precipitation and more frequent severe weather events, could affect the mining industry in a range of possible ways. Volatile climatic conditions can affect the stability and effectiveness of infrastructure and equipment; potentially impact environmental protection and site closure practices; lead to changes in the regulatory environment, including increased carbon tax regimes; and potentially impact the stability and cost of water and energy supplies. We therefore view climate change as a company, community, and global concern. In 2018, we continued to implement the climate change strategy we developed in 2017, which is aligned with our overall business strategy to grow free cash flow per share through safe and responsible mining.

Barrick’s climate change strategy has three pillars: understand and mitigate the risks associated with climate change; reduce our impacts on climate change; and improve our disclosure on climate change. Action taken on each pillar in 2018 is described below.

Understand and mitigate the risks associated with climate change

In 2018, climate change was incorporated into Barrick’s formal risk assessment process, whereby sites included climate-related factors into their risk assessment process (e.g., by considering the impact of increased precipitation, drought, or severe storms on operations as well as on communities near our operations). This followed the risk and opportunity assessment we conducted in 2017, where we identified three primary climate-related risks and opportunities for our business: an increase in extended duration extreme precipitation events; an increase in climate change regulations to limit greenhouse gas (“GHG”) emissions; and increased global investment in innovation and low carbon technologies.

Reduce the Company’s impact on climate change

Mining is an energy-intensive business, and we understand the important link between energy use and GHG emissions. By effectively managing our energy use, we can reduce our draw from local energy grids, reduce our GHG emissions, achieve more efficient production, and save direct mining costs. In 2018, a tangible example of this was the announcement of our plan to convert the Quisqueya I power generation facility in the Dominican Republic from heavy fuel oil to natural gas in 2019. Converting the facility is expected to reduce GHG emissions associated with Pueblo Viejo by approximately 260 thousand CO₂ equivalent tonnes per year and reduce costs, which are reflected in our guidance.

Overall, our GHG emissions in 2018 were 4.0 million CO₂ equivalent tonnes (MT CO₂e), which is consistent with our shorter-term GHG emissions management goals.

Improve our disclosure on climate change

In 2018, we published our 2017/18 Climate report, which describes our climate change strategy, identified climate-related risks and opportunities, and reported on emissions for all operating facilities and power plants. Publishing this report reflects our commitment to the voluntary disclosure of our emissions.

Throughout 2018, the Board’s Corporate Responsibility Committee, which met quarterly, was responsible for overseeing Barrick’s policies, programs, and performance relating to the environment, including climate change. The Risk Committee assisted the Board in overseeing the Company’s management of enterprise risks as well as the implementation of policies and standards for monitoring and mitigating such risks. Climate change is built into our formal risk management process, outputs of which were reviewed by the Risk Committee throughout 2018 (as of January 1, 2019, this Committee has been combined with the Audit Committee). In addition, the Audit Committee reviewed the Company’s approach to climate change in the context of Barrick’s public disclosure.

Throughout 2018, at the management level, our Climate Change Committee, comprised of senior members of our management team, provided strategic oversight and governance over key decisions related to Barrick’s Climate Change Strategy. In 2018, the Climate Change Committee focused on site-level assessment and mitigation of climate-related risk; monitoring progress against GHG emissions targets; providing guidance on external disclosures; and initiating a climate change scenario analysis project.

Further to the specific focus of the Climate Change Committee, regular review meetings throughout 2018 allowed for the discussion of opportunities and risks that may help or hinder the Company from achieving its objectives, including climate-related risks (e.g., spring snow melts, hurricanes, flooding, and mud slides). Additionally, during mine site optimization reviews undertaken in the fourth quarter, each site presented for review their life of mine energy and GHG reduction plans.

We expect climate change activities to continue into 2019 and beyond. Site-level climate-related risks and mitigation plans will continue to be reviewed in the context of the company-

wide risk assessment, and site-level plans to reduce energy and GHG emissions will be strengthened. We also expect to sustain our climate-related disclosure. Overall, based on the work completed in 2018, Barrick continues to build resilience to withstand the potential impacts of climate change and leverage potential opportunities as the global economy transitions to a low-carbon future.

Following the merger between Barrick and Randgold on January 1, 2019, we are reviewing how climate-related risks and opportunities will be governed in the new company.

Reserves and Resources

Barrick’s 2018 reserves were calculated using a gold price assumption of $1,200 per ounce, consistent with 2017. As of December 31, 2018, Barrick’s proven and probable gold reserves were 62.3 million ounces⁶, compared to 64.4 million ounces at the end of 2017.⁹ While 5.4 million ounces of reserves were depleted through mining and processing, the Company added 3.2 million ounces of reserves at an average grade of 4.7 grams per tonne, significantly higher than our overall reserve grade of 1.56 grams per tonne. Reserves at our underground operations, where the majority of the Company’s future production will come from, were replaced, with additions at Turquoise Ridge, Goldstrike, Hemlo and Porgera.

In 2018, measured, indicated, and inferred gold resources were calculated using a gold price assumption of $1,500 per ounce, consistent with 2017. Measured and indicated gold resources increased slightly to 88.8 million ounces⁶, compared to 88.6 million ounces at the end of 2017.⁹ Inferred gold resources also increased to 33.5 million ounces at the end of 2018⁶, compared to 30.8 million ounces at the end of 2017.⁹

Approximately 1.25 million ounces of proven and probable reserves, 1.3 million ounces of measured and indicated resources, and 1.2 million ounces of inferred resources (Barrick’s 63.9 percent share) were removed at Acacia’s Bulyanhulu operation following a review by Acacia of the mine’s geological and mineral resource models, and other optimization work.⁶

Copper reserves and resources for 2018 were calculated using a copper price of $2.75 per pound and $3.50 per pound, respectively, consistent with 2017. As of December 31, 2018, proven and probable copper reserves were 10.6 billion pounds⁶, compared to 11.2 billion pounds at the end of 2017^.9 Measured and indicated copper resources, including copper contained within measured and indicated gold resources, were 11.6 billion pounds⁶, compared to 11.7 billion pounds at the end of 2017.⁹ Inferred copper resources were 2.8 billion pounds as of December 31, 2018, compared to 3.0 billion pounds at the end of 2017.⁹

Randgold Merger

On September 24, 2018, we announced an agreement on the terms of a recommended share-for-share merger of Barrick and Randgold. The transaction closed on January 1, 2019, with Barrick acquiring 100% of the issued and outstanding Randgold shares. Each Randgold shareholder received 6.1280 common shares of Barrick for each Randgold share, which resulted in the issuance of 583,669,178 Barrick common shares. After this share issuance, Barrick shareholders owned 66.7%, while former Randgold shareholders owned 33.3%, of the shares of the combined company. We have determined that this transaction represents a business combination with Barrick identified as the acquirer. Based on the December 31, 2018 closing share price of Barrick’s common shares, the total consideration of the acquisition is $7.9 billion. We began consolidating the operating results, cash flows and net assets of Randgold from January 1, 2019. Randgold was a publicly traded mining company with ownership interests in the following gold mines: Kibali in the Democratic Republic of Congo; Tongon in Côte d’Ivoire; Loulo-Gounkoto and Morila in Mali; and the Massawa project in Senegal.

Management Structure Refinements

Barrick now has a new management team, effective January 1, 2019. Mark Bristow is now President and Chief Executive Officer of Barrick. Mark was formerly the Chief Executive Officer of Randgold, a position he held since its incorporation in 1995. Graham Shuttleworth is now Senior Executive Vice-President and Chief Financial Officer of Barrick, having formerly served as Randgold‘s Chief Financial Officer. Kevin Thomson, Senior Executive Vice-President, Strategic Matters, continues in the role to which he was appointed at Barrick in October 2014.

In addition, Barrick will be managed by three regional Chief Operating Officers, each of whom report to the President and CEO. Mark Hill, formerly Barrick’s Chief Investment Officer, was appointed Chief Operating Officer, LATAM and Australia Pacific. Willem Jacobs, formerly Randgold’s General Manager East and Central Africa, was appointed Chief Operating Officer, Africa and Middle East. Catherine Raw, formerly Barrick’s Chief Financial Officer, was appointed to Chief Operating Officer, North America.

Kelvin Dushnisky, formerly Barrick’s President, left Barrick at the end of August 2018.

Board Renewal & Appointments

Following the closing of the Randgold merger, Barrick’s Board of Directors was reconstituted with the following nine directors: John Thornton (executive chairman), Mark Bristow, María Ignacia Benítez, Gustavo Cisneros, Christopher Coleman, Michael Evans, Brian Greenspun, Brett Harvey (lead independent director), and Andrew Quinn.

Investment in Shandong Gold Mining

In September 2018, we entered into a mutual investment agreement with Shandong Gold Group Co., Ltd. (“Shandong Gold”), further strengthening Barrick’s partnership with one of China’s leading mining companies. Under the agreement, Shandong Gold will purchase up to $300 million of Barrick shares, and Barrick will invest an equivalent amount in shares of Shandong Gold Mining Co., Ltd., a publicly listed company controlled by Shandong Gold. Shares will be purchased in the open market and purchases made by Barrick will be accounted for as an available-for-sale financial asset presented in other non-current assets with future changes in fair value recorded in other comprehensive income. As at December 31, 2018, Shandong Gold had purchased approximately $198 million of shares of Barrick and Barrick had purchased approximately $120 million of shares of Shandong Gold Mining Co., Ltd., which had a fair value of $168 million as of February 6, 2019.

Hemlo Royalty Acquisition

In July 2018, Barrick acquired a 2.5% Gross Revenue Royalty for $14.9 million on certain surface and mineral lands adjacent to the Hemlo property in Ontario which was originally granted to Newmont Mining Corporation as part of the land acquisition in 2015. The royalty covers approximately 37% of Barrick’s overall land holding at Hemlo and includes large highly prospective areas immediately west of the current operation. Drilling up to 800m beyond the limits of the existing resource has partly validated that ore grade mineralization is continuous. The area covered by the royalty could represent potentially significant mine life extensions given the more favorable economics without the royalty.

Investment in Midas Gold

In May 2018, we announced the acquisition of 46.55 million common shares, representing approximately 19.9 percent of issued and outstanding common shares of Midas Gold Corporation in a non-brokered private placement for total consideration of $38 million. Upon acquisition of the shares, we accounted for our interest as an available-for-sale financial asset presented in other non-current assets with future changes in fair value recorded in other comprehensive income.

Bald Mountain Exploration JV Disposition

In October 2018, Barrick sold its remaining interest in the Bald Mountain Exploration Joint Venture to an affiliate of Kinross Gold Corporation, which was formed as part of the sale of the Bald Mountain asset in January 2016. In consideration for its interest, Barrick received US$15.5 million in cash and a 1.25% NSR on the property.

Debt Management

In July 2018, Barrick completed a make-whole repurchase of the approximately $629 million of outstanding principal amount of the 4.40% Notes due 2021 and incurred a related loss on debt extinguishment of $29 million in the third quarter of 2018. The debt repayment is expected to result in an annualized interest saving of approximately $28 million.

2019 Guidance Analysis

Estimates of future production, cost of sales, and cash costs¹ presented in this MD&A are based on mine plans that reflect the expected method by which we will mine reserves at each site. Actual gold and copper production and associated costs may vary from these estimates due to a number of operational and non-operational risk factors (see the “Cautionary Statement on Forward-Looking Information” on page 17 of this MD&A for a description of certain risk factors that could cause actual results to differ materially from these estimates).

Production

We expect 2019 gold production to be in the range of 5.1 to 5.6 million ounces with production in the second half of the year to be slightly higher than the first half. As the merger between Barrick and Randgold was effective on January 1, 2019, gold production in 2019 is expected to be higher than 2018 as a result of inclusion of a full year of production from our 80% interest in Loulo-Gounkoto, our 45% interest in Kibali, our 89.7% interest in Tongon and our 40% interest in Morila. Offsetting the inclusion of these additional production sources, production from Barrick Nevada is expected to be lower in 2019 relative to 2018 primarily due to the cessation of Cortez Hills open pit operations in the first half of 2019.

Production at Pueblo Viejo and Turquoise Ridge in 2019 is expected to be in line with 2018 production levels. At Veladero, we expect 2019 production to be lower than 2018 production levels as a result of lower grades from the mine in 2019.

Cost of Sales

On a per ounce basis, cost of sales applicable to gold⁴, after removing the portion related to non-controlling interests, is expected to be in the range of $880 to $940 per ounce, higher than the prior year. The projected increase is mainly due to higher cash costs per ounce¹ at Barrick Nevada. We are planning to mitigate those rising costs with a continued focus on lowering our other direct mining costs by improving operating efficiencies and lowering labor and contractor costs.

Cash Costs per ounce¹

Cash costs per ounce¹ are expected to be in the range of $650 to $700, higher than the prior year due to increases at Barrick Nevada, offset by lower cash costs at Turquoise Ridge and the inclusion of lower cost production from Loulo-Gounkoto and Kibali.

We expect Barrick Nevada to have higher cash costs per ounce¹ than 2018 driven primarily by the cessation of the comparatively high-grade, low cost Cortez Hills open pit in the first half of 2019, which negatively impacts Barrick Nevada’s overall production, sales mix and open pit costs from the continuing lower grade Cortez operations. This is expected to be partly offset by an increase in bulk mining rates at both Goldstrike and Cortez Hills underground operations.

We expect lower cash costs per ounce¹ at Turquoise Ridge in 2019 compared to the prior year due to lower mining unit costs.

The inclusion of lower cost production from Loulo-Gounkoto and Kibali as a result of the merger with Randgold and lower mining unit costs at Turquoise Ridge is expected to partially offset these impacts on Barrick’s consolidated cash costs per ounce¹.

All-In Sustaining Costs per ounce¹

All-in sustaining costs per ounce¹ are expected to be in the range of $870 to $920 for gold, higher than the $806 per ounce in 2018, driven primarily by the higher expected cash costs per ounce¹ as well as an increase in minesite sustaining capital expenditures on a per ounce basis. In 2019, we expect to incur lower corporate administration expense. We will also continue to focus on reducing mining costs.

Exploration and Project Expenses

We expect to incur approximately $160 to $170 million of exploration and evaluation expenditures in 2019 with approximately 80 percent allocated to the Americas. Our exploration programs balance high-quality brownfield projects, greenfield exploration, and new discoveries that we believe may have the potential to become profitable mines. Exploration plans for North America in 2019 are heavily weighted to the Cortez District where deep drilling will continue to add resources, as well as test open mineralization, extensions, and concepts farther afield.

Consolidation of the Goldrush and Fourmile geology models is a top priority and in progress. We anticipate that Fourmile and Goldrush will be integrated and developed as a single project.

We expect to incur approximately $120 to $150 million of project expenses in 2019, compared to $217 million in 2018. In 2019, project expenses include the Pascua-Lama ongoing site costs, costs associated with our Donlin Gold Project and Norte Abierto (our joint venture with Goldcorp containing Cerro Casale and Caspiche) projects.

General and Administrative Expenses

In 2019, we expect corporate administration costs to be approximately $140 million, a decrease of $72 million compared to 2018. This reflects the impact of severance costs incurred in 2018 as a result of the decentralized operating model implementation in the second quarter of 2018, and the workforce reduction following the merger with Randgold. This is partially offset by integration costs in 2019.

Finance Costs, Net

Finance costs of $500 to $550 million primarily represent interest expense on long-term debt, non-cash interest expense relating to gold and silver streaming agreements, and accretion, net of finance income. We expect net finance costs in 2019 to be in line with 2018 finance costs of $545 million due in part to lower interest expense in 2019 following $0.7 billion of debt repayments in 2018. This is expected to be offset by an increase in interest expense as a result of implementing IFRS 16 Leases, which requires all leases with a few exceptions, to be accounted for as finance leases beginning on January 1, 2019. 2018 net finance costs included a $29 million net loss on the extinguishment of debt, and further debt repurchases could lead to additional losses on extinguishment that could cause an increase to forecasted 2019 finance costs.

Capital Expenditures

Total attributable capital expenditures for 2019 are expected to be in the range of $1,400 to $1,700 million. We continue to focus on the delivery of our project capital pipeline and we expect attributable project capital expenditures to be in the range of $300 to $400 million.

Approximately three quarters of our project capital expenditures in 2019 relates to building our next expected Tier One Gold Assets at Goldrush and Turquoise Ridge as well as the underground expansion and Crossroads project at Cortez. The remainder of project capital expenditure is associated with Zaldívar and Pascua-Lama.

Attributable minesite sustaining capital expenditures are expected to be in the range of $1,100 to $1,300 million compared to $946 million in 2018. The increase is primarily a result of the addition of the acquired Randgold sites with expected minesite sustaining expenditures in the range of $150 to $200 million as we expect minesite sustaining capital expenditures for all other sites to be in line with 2018 actuals.

Effective Income Tax Rate

At a gold price of $1,250/oz, our expected effective tax rate range for 2019 is between 40% to 50%. The rate is sensitive to relative sales in high versus low tax jurisdictions (i.e., sales mix), the proportion of income from our equity accounted investments and the level of non-tax affected costs in countries where we generate net losses.

Risks and Risk Management

Overview

The ability to deliver on our vision, strategic objectives and operating guidance depends on our ability to understand and appropriately respond to the uncertainties or “risks” we face that may prevent us from achieving our objectives. In order to achieve this we:

Board and Committee Oversight

We maintain strong risk oversight practices, with responsibilities outlined in the Board’s and related committees’ mandates. The Board’s mandate makes clear its responsibility for reviewing and discussing with management the processes used to assess and manage risk, including the identification by management of the principal risks of the business, and the implementation of appropriate systems to deal with such risks.

The Audit & Risk Committee of the Board of Directors assists the Board in overseeing the Company’s management of principal risks as well as the implementation of policies and standards for monitoring and modifying such risks, and monitoring and reviewing the Company’s financial position and financial risk management programs generally. The Corporate Governance & Nominating Committee assists the Board in overseeing the Company’s environmental, safety and health, corporate social responsibility, and human rights programs, policies and performance.

Management Oversight

In late 2018, the weekly Business Plan Review meetings transitioned to a weekly Executive Committee Review which is now the main forum for senior management to raise and discuss risks facing the operations and organization more broadly. At regularly scheduled meetings, the Board and the Audit & Risk Committee are provided with updates on issues identified by management at these weekly sessions.

Principal Risks

The following subsections describe some of our key sources of uncertainty and most important risk modification activities. The risks described below are not the only ones facing Barrick. Our business is subject to inherent risks in financial, regulatory, strategic and operational areas. For a more comprehensive discussion of those inherent risks, see “Risk Factors” in our most recent Form 40-F/Annual Information Form on file with the SEC and Canadian provincial securities regulatory authorities. Also see the “Cautionary Statement on Forward-Looking Information” on page 17 of this MD&A.

Financial position and liquidity

Our liquidity profile, level of indebtedness and credit ratings are all factors in our ability to meet short- and long-term financial demands. Barrick’s outstanding debt balances impact liquidity through scheduled interest and principal repayments and the results of leverage ratio calculations, which could influence our investment grade credit ratings and ability to access capital markets. In addition, our ability to draw on our credit facility is subject to meeting its covenants. Our primary source of liquidity is our operating cash flow, which is dependent on the ability of our operations to deliver projected future cash flows. The ability of our operations to deliver projected future cash flows, as well as future changes in gold and copper market prices, either favorable or unfavorable, will continue to have a material impact on our cash flow and liquidity.

Key risk modification activities:

Improving free cash flow¹ and costs

Our ability to improve productivity, drive down operating costs and reduce working capital remains a focus in 2019 and is subject to several sources of uncertainty. This includes our ability to achieve and maintain industry-leading margins by improving the productivity and efficiency of our operations through automation. We also recognize that effective cybersecurity is of high importance to address the ongoing threat of cyberattacks and have acted to improve our cybersecurity posture.

Key risk modification activities:

Social license to operate

At Barrick, we are committed to building, operating, and closing our mines in a safe and responsible manner. To do this, we seek to build trust-based partnerships with host governments and local communities to drive shared long-term value while working to minimize the social and environmental impacts of our activities. Geopolitical risks such as resource nationalism and incidents of corruption are inherent for a company operating globally. Past environmental incidents in the extractive industry highlight the hazards (e.g., water management, tailings storage facilities, etc.) and the potential consequences to both the environment and community health and safety. Barrick also recognizes climate change as an area of risk requiring specific focus. Our ability to maintain compliance with regulatory and community obligations in order to protect the environment and our host communities alike remains one of our top priorities.

Key risk modification activities:

Resources and reserves and production outlook

Like any mining company, we face the risk that we are unable to discover or acquire new resources or that we do not convert resources into production. As we move into 2019 and beyond, our overriding objective of growing free cash flow per share is underpinned by a strong pipeline of organic projects and minesite expansion opportunities in our core regions. Uncertainty related to these and other opportunities exists (potentially both favorable and unfavorable) due to the speculative nature of mineral exploration and development as well as the potential for increased costs, delays, suspensions and technical challenges associated with the construction of capital projects.

Key risk modification activities:

Market Overview

The market prices of gold, and, to a lesser extent, copper are the primary drivers of our profitability and our ability to generate free cash flow for our shareholders.

Gold

The price of gold is subject to volatile price movements over short periods of time and is affected by numerous industry and macroeconomic factors. During 2018, the gold price ranged from $1,160 per ounce to $1,366 per ounce. The average market price for the year of $1,268 per ounce represented an increase of 1% versus 2017.

The price of gold generally fell over the course of mid-2018 before rising in the fourth quarter, experiencing its low in August and ending the year above the annual average. In the middle of the year, the gold price was negatively impacted by US dollar strength, rising US dollar interest rates, strong equity markets that reached record highs, and weakness in Chinese and Indian currencies. In the fourth quarter, the gold price was positively impacted by a downturn in equity markets coupled with an increase in volatility, and a reduction in US interest rates.

Copper

During 2018, London Metal Exchange (“LME”) copper prices traded in a range of $2.62 to $3.33 per pound, averaged $2.96 per pound, and closed the year at $2.71 per pound. Copper prices are significantly influenced by physical demand from emerging markets, especially China.

The price of copper traded up to four-year highs in June 2018, benefiting from strong global economic data, increases in the prices of other base metals, and concerns over potential supply disruptions from labor actions. Copper prices subsequently fell to the lows of the year due to a strengthening US dollar, a weakening Chinese yuan, and concerns over global trade due to tariff actions. A dearth of new projects scheduled to enter production in the coming years could positively impact prices should physical demand continue to grow.

We have provisionally priced copper sales for which final price determination versus the relevant copper index is outstanding at the balance sheet date. As at December 31, 2018, we recorded 51 million pounds of copper sales subject to final settlement at an average provisional price of $2.71 per pound. The impact to net income before taxation of a 10% movement in the market price of copper would be approximately $14 million, holding all other variables constant.

In 2018, we recorded hedge gains in earnings of $10 million relating to our option collar strategies (2017: $4 million loss and 2016: $nil). There are no copper collars remaining as at December 31, 2018.

Currency Exchange Rates

The results of our mining operations outside of the United States are affected by US dollar exchange rates. Although we have made dispositions, we continue to have exposure to the Australian and Canadian dollars through a combination of mine operating and corporate administration costs, as well as exposure to the Argentine peso through operating costs at our

Veladero mine, and peso denominated VAT receivable balances. In addition, we have exposure to the Chilean peso, Papua New Guinea kina, Peruvian sol, Zambian kwacha, Tanzanian shilling, Dominican peso, Communautè Financière Africaine franc, Euro, South African rand, and British pound through mine operating and capital costs.

Fluctuations in the US dollar increase the volatility of our costs reported in US dollars, subject to positions put in place through our currency hedging program. In 2018, the Australian dollar traded in a range of $0.70 to $0.81 against the US dollar, while the US dollar against the Canadian dollar and Argentine peso ranged from $1.22 to $1.37 and ARS 17.41 to ARS 41.58, respectively. During the year, the US dollar traded strongly and Treasury yields increased. Along with inflation pressures in Argentina and concerns by foreign investors about the country’s level of debt, this led to a continued weakening of the Argentine peso during the year. During 2018, we did not have any currency hedge positions, and are unhedged against foreign exchange exposures as at December 31, 2018 beyond spot requirements.

Fuel

For 2018, the price of West Texas Intermediate (“WTI”) crude oil traded in a wide range between $42 and $77 per barrel, with an average market price of $65 per barrel, and closed the year at $45 per barrel. During 2018, the price of crude oil rose to its highest levels since 2014 in early October before falling significantly over the remainder of the fourth quarter, reaching year-to-date lows in late December due to global economic concerns, financial market volatility, a strong US dollar, and increased US crude oil supply.

In 2018, we recorded hedge losses in earnings of $4 million on our fuel hedge positions (2017: $32 million loss and 2016: $47 million loss). A significant portion of these losses has already been recorded in the consolidated statements of income as an unrealized loss on non-hedge derivatives. Beginning in January 2015, upon early adoption of IFRS 9, Barrick’s fuel hedges qualified for hedge accounting and unrealized gains and losses began being recorded in Other Comprehensive Income.

US Dollar Interest Rates

Beginning in 2008, in response to the contraction of global credit markets and in an effort to spur economic activity and avoid potential deflation, the US Federal Reserve reduced the range for its benchmark rate to between 0% and 0.25%. The benchmark was kept at this level until December 2015, when the range was increased by 25 basis points. The range was

raised by an additional 25 basis points in December 2016, 75 basis points over the course of 2017, and 100 basis points over the course of 2018. Further changes to short-term rates in 2019 are expected to be dependent on economic data as the US benchmark rate has gotten closer to an assumed neutral level.

At present, our interest rate exposure mainly relates to interest receipts on our cash balances ($1.6 billion at December 31, 2018); the mark-to-market value of derivative instruments; the fair value of and ongoing payments under US dollar interest-rate swaps; the carrying value of certain long-lived assets and liabilities; and the interest payments on our variable-rate debt

($0.1 billion at December 31, 2018). Currently, the amount of interest expense recorded in our consolidated statement of income is not materially impacted by changes in interest rates, because the majority of debt was issued at fixed interest rates. The relative amounts of variable-rate financial assets and liabilities may change in the future, depending on the amount of operating cash flow we generate, as well as the level of capital expenditures and our ability to borrow on favorable terms using fixed rate debt instruments. Changes in interest rates affect the accretion expense recorded on our provision for environmental rehabilitation and therefore would affect our net earnings.

Revenue

In 2018, gold revenues were down 14% compared to the prior year primarily due to a decrease in gold sales volume, partially offset by higher realized gold prices¹. The average realized gold price¹ for 2018 was up $9 per ounce compared to the prior year reflecting the higher market gold prices in 2018, which averaged $11 per ounce higher than 2017.

In 2018, gold production was 796 thousand ounces or 15% lower than the prior year. Excluding the impact of the 50% divestment of the Veladero mine on June 30, 2017, gold production decreased by 13% or 685 thousand ounces compared to the prior year, mainly due to lower grades and recoveries across most operations as per previous guidance, lower throughput at Acacia as a result of reduced operations at Bulyanhulu, and lower tonnage processed at Lagunas Norte.

Copper revenues for 2018 were down 16% compared to the prior year due to lower copper sales volume, combined with lower realized copper prices¹. In 2018, the realized copper price¹ was down $0.07 per pound compared to 2017, while the market copper price increased by $0.16 compared to the prior year. The realized copper price¹ was lower than the market copper price as a result of the impact of negative provisional pricing adjustments recorded in the first quarter of 2018.

Copper production for 2018 was 30 million pounds lower than the prior year. The decrease is mainly a result of lower production at Lumwana of 32 million pounds or 13% compared to the prior year, primarily due to mill shutdowns, crusher availability issues, and lower head grade and recoveries. This was combined with lower production at Zaldívar of 10 million pounds or 9% compared to the prior year, attributed to lower throughput, which was partially mitigated by higher grades and recoveries. This was partially offset by an increase in production at Jabal Sayid of 12 million pounds or 28% compared to the prior year, due to higher mined grade and throughput as the site was still ramping up in the prior year.

Production Costs

In 2018, cost of sales applicable to gold was 4% lower than the prior year primarily due to a decrease in sales volume driving lower depreciation costs and royalty expenses, and the divestment of 50% of the Veladero mine on June 30, 2017. This was partially offset by an inventory impairment of $166 million at Lagunas Norte. On a per ounce basis, cost of sales applicable to gold⁴ after removing the portion related to non-controlling interests, was 12% higher than the prior year primarily due to the impact of lower grades and recoveries across most operations as per previous guidance, combined with higher direct mining costs. The increase in direct mining costs was mainly due to higher energy prices and consumption.

In 2018, gold all-in sustaining costs¹ were up $56 per ounce or 7% compared to the prior year primarily due to higher cost of sales, excluding the Lagunas Norte inventory impairment, and minesite sustaining capital expenditures on a per ounce basis.

In 2018, cost of sales applicable to copper was 40% higher than the prior year. The increase in direct mining costs is mainly attributed to higher maintenance costs due to mill shutdowns and crusher availability issues, higher energy

consumption to truck ore to the crusher and tire costs due to road conditions at Lumwana. Depreciation expense was higher mainly as a result of the impairment reversal recorded in the fourth quarter of 2017 relating to Lumwana, resulting in higher non-current asset values to depreciate compared to the prior year. Our 50% interests in Zaldívar and Jabal Sayid are equity accounted for and therefore we do not include their cost of sales in our consolidated copper cost of sales. On a per pound basis, cost of sales applicable to copper⁴, after including our proportionate share of cost of sales at our equity method investees, increased by 36% compared to the prior year primarily due to the impact of lower sales volume at Lumwana and Zaldívar, higher direct mining costs and depreciation expense at Lumwana as discussed above, and lower capitalized stripping as phase 6B was completed in the prior year at Zaldívar. This was slightly offset by the impact of higher sales volume at Jabal Sayid.

Copper all-in sustaining costs¹, which have been adjusted to include our proportionate share of equity method investments, were 21% higher than the prior year primarily reflecting the higher cost of sales applicable to copper combined with higher minesite sustaining capital expenditures at Lumwana and Zaldívar.

Capital Expenditures¹

In 2018, total consolidated capital expenditures increased by 4% compared to the prior year primarily due to an increase in project capital expenditures, partially offset by a decrease in minesite sustaining capital expenditures.

Project capital expenditures increased by 68% primarily as a result of increased spending at Crossroads, the Cortez Range Front declines, Goldrush, and the Deep South Expansion at Barrick Nevada and construction of the third shaft at Turquoise Ridge. As at December 31, 2018, we have spent $37 million (including $4 million in the fourth quarter of 2018) out of a total estimated capital cost of $1.0 billion on Goldrush, $33 million (including $2 million in the fourth quarter of 2018) out of a total estimated capital cost of $106 million on the Deep South Expansion, and $62 million (including $3 million in the fourth quarter of 2018) out of an estimated capital cost of $300-$325 million (100% basis) on the construction of the third shaft at

Turquoise Ridge. Capitalized interest for the year relates to the Cortez Range Front declines.

Minesite sustaining capital expenditures decreased by 12% mainly due to the completion of several initiatives occurring in the prior year, including the Goldstrike underground cooling and ventilation project; digitization initiatives; the autoclave thiosulfate water treatment plant conversion at the Goldstrike autoclaves; the optimization of development sequencing at Turquoise Ridge; and the construction of phases 4B and 5B of the leach pad expansion at Veladero.

General and Administrative Expenses

General and administrative expenses were $17 million higher than the prior year mainly due to higher severance costs as a result of the implementation of a number of organizational reductions, including the decentralized operating model in the second and third quarter of 2018 and the workforce reduction resulting from the merger with Randgold, partially offset by lower corporate administration expenses resulting from these reductions.

Exploration, Evaluation and Project Costs

Exploration, evaluation and project costs for 2018 increased by $29 million compared to the prior year. The increase is primarily due to higher corporate development costs of $47 million primarily as a result of $37 million in transaction costs related to the merger with Randgold, and an increase in other advanced project costs of $22 million mainly attributed to the Pueblo Viejo plant expansion. This was partially offset by a

decrease in advanced project costs at Pascua-Lama of $45 million.

Finance Costs, Net

In 2018, net finance costs were $146 million lower than the prior year primarily due to a $98 million reduction in debt extinguishment costs and lower interest expense of $59 million, both attributed to debt reductions we made in 2018 and 2017, although a larger amount was repaid in the prior year. The loss on debt extinguishment in 2018 relates to the make-whole repurchase in July 2018 of the remaining $629 million of principal on the 4.40% notes due 2021. For 2017, the loss on debt extinguishment relates primarily to the make-whole repurchase of the remaining $279 million of principal on the 6.95% notes due 2019 and the make-whole repurchase of the remaining $731 million of principal on the 4.10% notes due 2023.

Additional Significant Statement of Income Items

Impairment Charges (Reversals)

In 2018, we recognized $645 million (net of tax and non-controlling interests) of net impairments for non-current assets mainly at Lagunas Norte as the project to treat refractory sulphide ore does not meet our investment criteria. In addition, we recognized impairments of $160 million (net of tax) of non-current assets and $154 million of goodwill at Veladero, reflecting an increase in the cost structure related to increasing government imposts coupled with higher energy costs. This compares to non-current asset impairment reversals of $7 million (net of tax and non-controlling interests) in the prior year primarily as a result of impairment reversals at the Cerro Casale project upon reclassification of the project’s net assets as held-for-sale as at March 31, 2017, combined with impairment reversals at Lumwana due to an increase in reserves. These were largely offset by an impairment taken at Acacia’s Bulyanhulu mine related to the continued challenges experienced in the operating

environment in Tanzania and net impairments taken at Pascua-Lama, mainly attributable to the reclassification of open-pit reserves to resources after receiving a closure order from the Chilean regulators. Refer to note 21 to the Financial Statements for a full description of impairment charges, including pre-tax amounts and sensitivity analysis.

Loss on Currency Translation

Loss on currency translation for 2018 increased by $64 million compared to the prior year primarily due an increase in unrealized foreign currency translation losses related to the Argentine peso, which depreciated significantly in the current year period, and devalued our peso denominated VAT receivable balances. During the year, the US dollar traded strongly and Treasury yields increased. Along with inflation pressures in Argentina and concerns by foreign investors about the country’s level of debt, this led to a continued weakening of the Argentine peso during the year.

Other Expense (Income)

Other expense was $90 million in 2018 compared to income of $799 million in the prior year. In 2018, we recognized $68 million of litigation fees, which primarily consists of legal fees at Acacia, and the settlement of a dispute regarding a historical supplier contract acquired as part of the Equinox acquisition in 2011; $51 million of write-offs, which relates primarily to the write-off of a Western Australia long-term stamp duty receivable; and $13 million related to an insurance payment to our Porgera JV. This was partially offset by a $45 million gain on the sale of a non-core royalty asset at Acacia, and $24 million of insurance proceeds received at Kalgoorlie. In 2017, we recorded gains of $718 million connected to the sale of a 50% interest in the Veladero mine and $193 million related to the sale of a 25% interest in the Cerro Casale project. For a further breakdown of other expense (income), refer to note 9 to the Financial Statements.

Income Tax Expense

Income tax expense was $1,198 million in 2018. The underlying effective tax rate for ordinary income in 2018 was 52% after adjusting for the impact of the de-recognition of deferred tax assets; the net impact of foreign currency translation losses on deferred tax balances; the impact of impairment charges (reversals); the impact of debt extinguishment costs; the impact of asset sales and non-hedge derivatives; the impact of non-deductible foreign exchange losses; the credit impact of the United States adjustment to the one-time toll charge; the impact of the Dominican Republic tax audit; the credit impact of US withholding taxes; and the impact of other expense adjustments. The unadjusted tax rate for income in 2018 was 505% of the loss before income taxes.

We record deferred tax charges or credits if changes in facts or circumstances affect the estimated tax basis of assets and therefore the amount of deferred tax assets or liabilities to reflect changing expectations in our ability to realize deferred tax assets. The interpretation of tax regulations and legislation and their application to our business is complex and subject to change. We have significant amounts of deferred tax assets, including tax loss carry forwards, and also deferred tax liabilities. Potential changes of any of these amounts, as well as our ability to realize deferred tax assets, could significantly affect net income or cash flow in future periods.

The more significant items impacting income tax expense in 2018 and 2017 include the following:

Currency Translation

Deferred tax balances are subject to remeasurement for changes in currency exchange rates each period. The most significant balances are Argentine deferred tax liabilities. In 2018 and 2017, tax expense of $41 million and $10 million, respectively, primarily arose from translation losses due to the weakening of the Argentine peso against the US dollar. These translation losses are included within deferred tax expense (recovery).

De-recognition of Deferred Tax Assets

In fourth quarter of 2018, we recorded a deferred tax expense of $673 million related to de-recognition of the deferred tax asset in Canada, and a deferred tax expense of $141 million related to de-recognition of the deferred tax asset in Peru. The de-recognition of the deferred tax asset in Canada follows the merger with Randgold and management’s focus on growing the business globally, particularly on Tier One Gold Assets outside of Canada. This required us to re-assess the level of repatriated earnings expected in Canada, and Canadian income thereon to support the deferred tax asset. The de-recognition of the deferred tax asset does not constrain our ability to use Canadian carry forward tax losses against future income in Canada; however, we do not currently

expect to be able to use these losses in the foreseeable future as a result of the change in strategy in the fourth quarter. The de-recognition of the deferred tax asset in Peru follows management’s review of expected future earnings and the associated impairment of inventory at Lagunas Norte and is driven by a fourth quarter change in our expected approach to financing future reclamation activities in Peru. Based on these reviews in Canada and Peru it was determined that the realizability of these deferred tax assets was no longer probable.

United States Tax Reform

On December 22, 2017, Tax Reform was enacted in the United States. The significant changes include: (i) a reduction from 35% to 21% in the corporate income tax rate effective January 1, 2018, which resulted in a deferred tax recovery of $343 million on our net deferred tax liability in the US, (ii) a repeal of the corporate alternative minimum tax (“AMT”) effective January 1, 2018, (iii) the mandatory repatriation of earnings and profits of specified foreign corporations effective December 31, 2017, which resulted in an estimated one-time 2017 toll charge of $228 million, offset by (iv) the recognition of our previously unrecognized deferred tax asset on AMT credits in the amount of $88 million.

In the third quarter of 2018, during the process of completing the 2017 United States income tax returns, the calculation of the one-time 2017 toll charge was finalized and revised, resulting in a decrease of $49 million to the one-time toll charge, with a corresponding reduction to current income tax expense.

Dominican Republic Tax Audit

In the first quarter of 2018, current tax expense of $5 million and deferred tax expense of $37 million were recorded, resulting from a tax audit of Pueblo Viejo in the Dominican Republic. The deferred tax expense relates to additional tax deductions included in the audit that reduced deferred tax assets but did not reduce tax expense due to the application of annual minimum tax in certain taxation years.

United States Withholding Taxes

Prior to the fourth quarter 2017, we had not previously recorded withholding tax related to the undistributed earnings of our United States subsidiaries because our intention was to reinvest our current and future undistributed earnings of our United States subsidiaries indefinitely. During the fourth quarter of 2017, we reassessed our intentions regarding those undistributed earnings. As a result of our reassessment, we concluded that it was no longer our intent to indefinitely reinvest our current and future undistributed earnings of our United States subsidiaries, and therefore in the fourth quarter of 2017, we recognized an increase in our income tax provision in the amount of $252 million, representing withholding tax on the undistributed United States earnings. Accordingly, $150 million was recorded in the tax charge for the year, and $102 million was recorded as deferred tax expense. Of the $150 million, $122 million has been recorded in other non-current liabilities (see note 29) and $28 million of withholding tax was paid in 2018.

In the fourth quarter of 2018, primarily due to restructuring associated with the merger with Randgold, we concluded that going forward, we would reinvest our future undistributed earnings of our United States subsidiaries indefinitely. As a result of our reassessment, we recorded a deferred tax recovery of $107 million.

Proposed Framework for Acacia Operations in Tanzania and the Increase to Income Tax Related Contingent Liabilities in Tanzania

The terms of the Proposed Framework for Acacia Mining Operations in Tanzania were announced on October 19, 2017. The Proposed Framework indicates that in support of ongoing efforts to resolve outstanding tax claims, Acacia would make a payment of $300 million to the government of Tanzania, on terms to be settled by a working group. A tax provision of $128 million had been recorded prior to December 31, 2016 in respect of tax disputes related to Acacia. Of this amount, $70 million was recorded in 2016. In the third quarter of 2017, an additional amount of $172 million was recorded as current tax expense. See note 36 for further information with respect to these matters.