Kinross Gold Corporation (TSX: K, NYSE: KGC) today announced its
results for the first-quarter ended March 31, 2019.
(This news release contains forward-looking
information about expected future events and financial and
operating performance of the Company. We refer to the risks and
assumptions set out in our Cautionary Statement on Forward-Looking
Information located on page 18 of this release. All dollar amounts
are expressed in U.S. dollars, unless otherwise noted.)
2019 first-quarter highlights:
|
Q1 2019 results |
2019 guidance(+/- 5%) |
Gold
equivalent production1(ounces) |
606,031 |
2.5 million |
Production cost of sales2 ($ per Au eq. oz.) |
$682 |
$730 |
All-in sustaining cost2($ per Au eq.
oz.) |
$925 |
$995 |
Capital expenditures |
$264.8 million |
$1,050 million |
- Company on track to meet 2019 annual guidance
for production, production cost of sales per ounce, all-in
sustaining cost per ounce, and capital expenditures.
- Operating cash flow of $251.6 million and
adjusted operating cash flow2 of $230.8
million.
- Reported net earnings3 of $64.7 million, or
$0.05 per share, and adjusted net earnings2,3 of
$83.3 million, or $0.07 per share.
- Cash and cash equivalents of $406.9 million
and total liquidity of approximately $1.8 billion
at March 31, 2019, with no debt maturities until 2021.
Operations and organic development projects
highlights:
- Paracatu delivered record quarterly production
and its lowest costs since 2010 mainly due to improved grade
control, mill efficiencies, high recoveries, and lower power
costs.
- Tasiast achieved record quarterly production
and its lowest costs since 2011, as the mine continued its strong
performance since the completion of the Phase One project.
- The Round Mountain Phase W project is nearing
completion, with Phase W ore now being placed on the newly
completed heap leach pad.
- The Bald Mountain Vantage Complex project is
well-advanced, with commissioning of processing facilities now
commenced as scheduled. Ore is now being placed on the new heap
leach pad.
- The Fort Knox Gilmore project is on schedule
to start stripping in Q3 2019, with initial ore expected in early
2020. Heap leach construction activities are proceeding well.
- The completed Lobo-Marte project scoping study
shows encouraging results for a potential return to long-term
production in Chile, with Lobo-Marte production commencing after
the La Coipa Restart project's mine life, where a
feasibility study is on schedule to be completed in Q3 2019.
- The Company expects to complete the evaluation of low-cost
alternative approaches to increase throughput at Tasiast in the
second half of 2019.
CEO commentary
J. Paul Rollinson, President and CEO, made the
following comments in relation to 2019 first-quarter results:
“We had an excellent first quarter built on
strong operational performance and disciplined cost management. We
continue to maintain our financial strength and solid liquidity and
are once again well positioned to deliver on our annual production
and cost guidance for the year.
“Our three largest operations – Paracatu,
Tasiast and Kupol – all exceeded expectations. At Paracatu,
improved grade control, mill efficiencies, high recoveries and
lower power costs resulted in record quarterly production and the
lowest production costs since 2010. Tasiast set another production
record in the quarter and costs continued to decline. Kupol
continued its consistent high performance and delivered yet another
strong quarter.
“During the quarter we advanced work on our
development pipeline. The Nevada projects at Round Mountain Phase W
and Bald Mountain Vantage Complex are nearing completion and
entering their commissioning phases. The Fort Knox Gilmore project
is on schedule and heap leach construction activities are ramping
up. We completed the scoping study for Lobo-Marte and the results
highlight the potential for long-term production in Chile in
conjunction with the La Coipa Restart project. At Tasiast, we are
continuing to evaluate low-cost alternative approaches to increase
throughput, which we are targeting for completion in the second
half of 2019.”
Financial results
Summary of financial and operating results
|
|
|
|
|
|
|
|
|
Three months ended |
|
|
|
|
March 31, |
|
|
(in millions, except ounces, per share amounts, and per ounce
amounts) |
|
2019 |
|
2018 |
|
|
Operating
Highlights |
|
|
|
|
|
Total gold equivalent ounces(1) |
|
|
|
|
|
Produced(3) |
|
611,263 |
|
659,955 |
|
|
Sold(3) |
|
603,057 |
|
674,661 |
|
|
|
|
|
|
|
|
Attributable gold equivalent ounces(1) |
|
|
|
|
Produced(3) |
|
606,031 |
|
653,937 |
|
|
Sold(3) |
|
597,649 |
|
668,217 |
|
|
|
|
|
|
|
|
Financial
Highlights |
|
|
|
|
|
Metal sales |
|
$ |
786.2 |
$ |
897.2 |
|
|
Production cost of sales |
|
$ |
411.7 |
$ |
444.6 |
|
|
Depreciation, depletion and amortization |
|
$ |
164.1 |
$ |
193.1 |
|
|
Operating
earnings |
|
$ |
115.4 |
$ |
177.9 |
|
|
Net
earnings attributable to common shareholders |
|
$ |
64.7 |
$ |
106.1 |
|
|
Basic
earnings per share attributable to common shareholders |
|
$ |
0.05 |
$ |
0.09 |
|
|
Diluted
earnings per share attributable to common shareholders |
|
$ |
0.05 |
$ |
0.08 |
|
|
Adjusted
net earnings attributable to common shareholders(2) |
|
$ |
83.3 |
$ |
125.2 |
|
|
Adjusted
net earnings per share(2) |
|
$ |
0.07 |
$ |
0.10 |
|
|
Net cash
flow provided from operating activities |
|
$ |
251.6 |
$ |
293.5 |
|
|
Adjusted
operating cash flow(2) |
|
$ |
230.8 |
$ |
363.7 |
|
|
Capital
expenditures |
|
$ |
264.8 |
$ |
246.9 |
|
|
Average
realized gold price per ounce(2) |
|
$ |
1,304 |
$ |
1,330 |
|
|
Consolidated production cost of sales per equivalent ounce(3)
sold(2) |
|
$ |
683 |
$ |
659 |
|
|
Attributable(1) production cost of sales per equivalent ounce(3)
sold(2) |
|
$ |
682 |
$ |
658 |
|
|
Attributable(1) production cost of sales per ounce sold on a
by-product basis(2) |
|
$ |
668 |
$ |
644 |
|
|
Attributable(1) all-in sustaining cost per ounce sold on a
by-product basis(2) |
|
$ |
917 |
$ |
835 |
|
|
Attributable(1) all-in sustaining cost per equivalent ounce(3)
sold(2) |
|
$ |
925 |
$ |
846 |
|
|
Attributable(1) all-in cost per ounce sold on a by-product
basis(2) |
|
$ |
1,239 |
$ |
1,124 |
|
|
Attributable(1) all-in cost per equivalent ounce(3) sold(2) |
|
$ |
1,240 |
$ |
1,128 |
|
- "Total" includes 100% of Chirano production. "Attributable"
includes Kinross' share of Chirano (90%) production.
- The definitions and reconciliation of these non-GAAP financial
measures is included on pages 13 to 17 of this news release.
- "Gold equivalent ounces" include silver ounces produced and
sold converted to a gold equivalent based on a ratio of the average
spot market prices for the commodities for each period. The ratio
for the first quarter of 2019 was 83.74:1 (first quarter of 2018 -
79.25:1)
The following operating and financial results
are based on first quarter 2019 gold equivalent production.
Production and cost measures are on an attributable basis:
Production: Kinross produced
606,031 attributable Au eq. oz. in the first quarter of 2019,
compared with 653,937 Au eq. oz. in the first quarter of 2018.
Production cost of sales:
Production cost of sales per Au eq. oz.2 was $682 for the first
quarter of 2019, compared with $658 for the first quarter of 2018.
Production cost of sales per Au oz. on a by-product basis2 was $668
in Q1 2019, compared with $644 in Q1 2018, based on Q1 2019
attributable gold sales of 584,427 ounces and attributable silver
sales of 1,107,143 ounces.
All-in sustaining cost: All-in
sustaining cost per Au eq. oz. sold2 was $925 in Q1 2019, compared
with $846 in Q1 2018. All-in sustaining cost per Au oz. sold on a
by-product basis2 was $917 in Q1 2019, compared with $835 in Q1
2018.
Revenue: Revenue from metal
sales was $786.2 million in the first quarter of 2019, compared
with $897.2 million during the same period in 2018, mainly due to a
decrease in gold equivalent ounces sold and a lower realized gold
price.
Average realized gold price4:
The average realized gold price in Q1 2019 was $1,304 per ounce,
compared with $1,330 per ounce in Q1 2018.
Margins: Kinross’ attributable
margin per Au eq. oz. sold5 was $622 for the first quarter of 2019,
compared with the Q1 2018 margin of $672 per Au eq. oz. sold.
Operating cash flow: Adjusted
operating cash flow2 was $230.8 million for the first quarter of
2019, compared with $363.7 million for Q1 2018, mainly as a result
of a decrease in margins due to a lower realized gold price.
Net operating cash flow was $251.6 million for
the first quarter of 2019, compared with $293.5 million for Q1
2018.
Earnings: Adjusted net
earnings2,3 was $83.3 million, or $0.07 per share, for Q1 2019,
compared with adjusted net earnings of $125.2 million, or $0.10 per
share, for Q1 2018.
Reported net earnings3 was $64.7 million, or
$0.05 per share, for Q1 2019, compared with earnings of $106.1
million, or $0.09 per share, in Q1 2018. The decrease was mainly as
a result of lower operating earnings, partially offset by a
decrease in income tax expense.
Capital expenditures: Capital
expenditures was $264.8 million for Q1 2019, compared with $246.9
million for the same period last year, mainly due to increased
spending at our U.S. projects offset by lower spending at Tasiast.
Operating results Mine-by-mine summaries for
2019 first-quarter operating results may be found on pages eight
and 12 of this news release. Highlights include the following:
Americas
Paracatu continued its strong
performance, achieving record quarterly production and the lowest
cost of sales per ounce sold since Q4 2010. Recoveries remained
strong during the quarter while improvements in grade control,
higher mill efficiencies and increased mill throughput contributed
to the record production. Cost of sales per ounce sold decreased
year-over-year due to lower operating waste mined, favourable
foreign exchange movements, and lower power costs. Cost of sales
per ounce sold decreased quarter-over-quarter mainly due to lower
maintenance costs, reduced contractor and tire costs, and lower
power costs.
At Round Mountain, production
was lower compared with Q4 2018 mainly due to lower mill
throughput, as the site mined harder ore during the quarter, and
fewer ounces produced from the heap leach pads. Lower mill grades
also contributed to the lower production compared with Q1 2018.
Cost of sales per ounce sold was lower compared with both periods
mainly due to a decrease in operating waste mined.
At Bald Mountain, production
was largely in line compared with the previous quarter and was
lower compared with Q1 2018 mainly due to the timing of ounces
recovered from the heap leach pads. Cost of sales per ounce sold
was lower quarter-over-quarter mainly due to lower operating waste
mined, and higher year-over-year as a result of a decrease in gold
produced from the heap leach, partially offset by lower operating
waste mined.
At Fort Knox, production
decreased as anticipated, with Q1 2019 performance reflecting the
mining and reduced milling strategy at the mine. The lower
production versus the previous quarter and year was due to the
combined effects of lower mill tonnages, the timing of heap leach
recoveries, the continued effects of the pit wall slide in Q1 2018,
and geotechnical instability as a result of higher than average
rainfall in the second half of 2018. The lower production
contributed to the higher cost of sales per ounce sold
quarter-over-quarter and year-over year.
At Maricunga, gold production
was better than expected, as rinsing of heap materials placed on
the pads prior to the suspension of mining activities continued
during the quarter. Cost of sales per ounce sold was lower compared
with Q4 2018 and Q1 2018 mainly due to lower processing costs.
Russia
At Kupol and Dvoinoye,
production increased quarter-over-quarter and year-over-year mainly
due to higher grades at Kupol. Cost of sales per ounce sold
increased compared with Q4 2018 largely due to higher operating
waste mined and higher operating costs at Dvoinoye. Increased fuel
costs also contributed to higher cost of sales versus Q1 2018,
which was partially offset by lower labour costs and favourable
foreign exchange movements.
Development at the Dvoinoye Zone
1 deposit is proceeding on schedule and production is
expected to commence in mid-2019.
West Africa
Tasiast achieved another record
production quarter, and decreased cost of sales per ounce, as the
site continues to benefit from the Phase One expansion. Excellent
mill throughput rates, which exceeded expectations, and higher mill
grades and recoveries, contributed to the increased production and
lower cost per ounce. Decreases in contractor expense and
maintenance supplies also contributed to the lower cost per ounce,
which were at their lowest level since Q1
2011.
Chirano continued to perform
well, with production mainly in line with Q4 2018. Production was
lower versus Q1 2018 mainly due to an expected decrease in grades.
Cost of sales per ounce sold was higher quarter-over-quarter and
year-over-year mainly due to higher operating waste mined, as the
site re-started open pit mining during the quarter.
Organic development projects and
opportunities
Tasiast phased expansion
Tasiast continued its strong performance since
the completion of the Phase One expansion. The mine achieved record
quarterly production, and decreased cost of sales per ounce, as the
new SAG mill continued to outperform, with throughput during Q1
2019 averaging approximately 15,000 tonnes per day (tpd), excluding
the planned mill shutdown days for relining and inspection.
While the Phase Two expansion remains a viable
option, Kinross is targeting the second half of 2019 to complete an
evaluation of lower cost alternative approaches to increase
throughput and preserve, and potentially enhance, the overall value
proposition. This includes taking into account the strong Phase One
performance and increasing throughput to 30,000 tpd. The evaluation
also includes opportunities for an initial incremental step to
increase throughput to above 20,000 tpd at a significantly lower
capital cost through de-bottlenecking, continuous improvement and
further optimization of the current processing circuit.
The Company is advancing the project financing
for Tasiast, as due diligence activities and discussions regarding
commercial terms continue to progress well. Kinross is seeking to
obtain a total of $300 million in financing from Export Development
Canada, the International Financial Corporation, and two commercial
banks, and is targeting completion of the financing in the second
half of 2019.
Round Mountain Phase W
The Round Mountain Phase W
project is near completion, and continues to be on schedule and on
budget. Construction of the new heap leach pad is now complete,
with Phase W ore currently being placed on the pads. Commissioning
of the processing circuit has commenced ahead of schedule, with
initial solution being applied to the pads to prepare for
completion of the vertical carbon-in-column (VCIC) plant, which is
approximately 80% complete. Construction of mine infrastructure,
including the truck shop, warehouse, wash bay and fuel island, is
now 60% complete.
Click here for video highlighting Phase W
development: https://youtu.be/Qx8I3ZL9xyI
Bald Mountain Vantage
Complex
The Bald Mountain Vantage
Complex project is well-advanced, as the VCIC plant is
approximately 70% complete, and the heap leach pad is approximately
90% complete, with ore being placed on completed portions of the
pad. While unusually severe winter weather has challenged the
project budget and schedule, commissioning of the processing
circuit commenced as scheduled at the end of Q1 2019 with solution
now being applied on the heap to build solution grade. The project
cost forecast is now expected to be approximately $130 million,
mainly due to weather challenges, higher than anticipated
construction contract rates, and issues with the supply of some of
the fabricated components. Construction of support infrastructure,
including the truck shop, warehouse and wash bay, is 60% complete.
An operations readiness task force has been established to ensure a
smooth transition of the project to Operations.
Fort Knox Gilmore
The Fort Knox Gilmore project
is progressing on schedule and on budget, with initial ore expected
in early 2020. Procurement and contracting for 2019 heap
construction activities are proceeding well, with the majority of
contracts issued and awarded, and contractors mobilizing to site.
Stripping is on schedule to commence in Q3 2019, with expansion of
the dewatering system continuing on plan.
La Coipa Restart and
Lobo-Marte
The Company continues to evaluate the potential
for a return to long-term production in Chile, which includes the
La Coipa Restart project followed by the
Lobo-Marte project, one of the highest grade
deposits in the Maricunga district, and located approximately 80
kilometres southeast of La Coipa.
The scoping study for Lobo-Marte has been
completed and contemplates production commencing after the La Coipa
project's mine life, along with a heap leach and SART
(sulphidization, acidification, recycling and thickening) plant
operation. Kinross has previously leveraged SART technology in the
region with positive results.
Preliminary estimates for Lobo-Marte include a
mine life that could extend more than 10 years, with total life of
mine production of approximately 4.1 million Au oz. at a grade of
1.2 g/t. The initial estimate for capital is $750 million (+/-
20%), with an approximate three-year construction timeline after
project approval. Lobo-Marte is now progressing to a
pre-feasibility study (PFS) with permitting efforts also underway.
The PFS is expected to be completed in mid-2020.
Kinross is on schedule to complete the La Coipa
Restart feasibility study in Q3 2019. The La Coipa feasibility
study and the Lobo-Marte PFS are expected to determine the degree
to which resources such as personnel, water, energy and capital
equipment can be shared and leveraged for synergies and
efficiencies between the two potential projects.
Balance sheet and financial
flexibility
As of March 31, 2019, Kinross had cash and cash
equivalents of $406.9 million, compared with $349.0 million at
December 31, 2018.
The Company also had available credit of
$1,417.2 million, for total liquidity of approximately $1.8
billion, and no debt maturities until 2021.
OutlookThe following section of the news
release represents forward-looking information and users are
cautioned that actual results may vary. We refer to the risks and
assumptions contained in the Cautionary Statement on
Forward-Looking Information on page 18 of this news release.
Kinross expects to meet its production guidance
of 2.5 million Au eq. oz. (+/- 5%) for the year. The Company also
expects to be within its production cost of sales guidance of $730
per Au eq. oz. (+/- 5%) and all-in sustaining cost guidance of $995
per Au eq. oz. (+/-5%) in 2019.
The Company is on track to meet its 2019 capital
expenditure forecast of approximately $1,050 million (+/-5%).
Conference call details
In connection with the release, Kinross will
hold a conference call and audio webcast on Wednesday, May 8, 2019
at 7:45 a.m. ET. to discuss the results, followed by a
question-and-answer session. To access the call, please dial:
Canada & US toll-free –
(877) 201-0168; Conference ID: 3886121Outside of Canada
& US – +1 (647) 788-4901; Conference ID: 3886121
Replay (available up to 14 days after the
call):
Canada & US toll-free –
(800) 585-8367; Conference ID: 3886121Outside of Canada
& US – +1 (416) 621-4642; Conference ID: 3886121
You may also access the conference call on a
listen-only basis via webcast at our website www.kinross.com. The
audio webcast will be archived on www.kinross.com.
Kinross’ Annual and Special Meeting of
Shareholders will also be held on Wednesday, May 8, 2019 at 10:00
a.m. ET at the Glenn Gould Studio, 250 Front Street West, Toronto,
Ontario, Canada. A live audio webcast (listen-only mode) of the
meeting will be available at www.kinross.com and will also be
archived for later access.
This news release should be read in conjunction
with Kinross’ 2019 first-quarter unaudited Financial
Statements and Management’s Discussion and Analysis report at
www.kinross.com. Kinross’ 2019 first-quarter
unaudited Financial Statements and Management’s Discussion and
Analysis have been filed with Canadian securities regulators
(available at www.sedar.com) and furnished to the U.S. Securities
and Exchange Commission (available at www.sec.gov). Kinross
shareholders may obtain a copy of the financial statements free of
charge upon request to the Company.
About Kinross Gold
Corporation
Kinross is a Canadian-based senior gold mining
company with mines and projects in the United States, Brazil,
Russia, Mauritania, Chile and Ghana. Kinross maintains listings on
the Toronto Stock Exchange (symbol:K) and the New York Stock
Exchange (symbol:KGC).
Media Contact Louie DiazSenior
Director, Corporate Communicationsphone:
416-369-6469louie.diaz@kinross.com
Investor Relations ContactTom
Elliott
Senior Vice-President, Investor Relations and Corporate
Developmentphone:
416-365-3390
tom.elliott@kinross.com
Review of operations
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended March
31, |
|
Gold equivalent ounces |
|
|
|
|
|
|
|
|
Produced |
|
Sold |
|
Production cost ofsales ($millions) |
|
Production cost ofsales/equivalent ounce
sold |
|
2019 |
|
2018 |
|
|
2019 |
|
2018 |
|
|
|
2019 |
|
|
2018 |
|
|
|
2019 |
|
2018 |
|
|
|
|
|
|
|
|
|
|
|
|
Fort Knox |
37,613 |
|
79,928 |
|
|
37,937 |
|
79,611 |
|
|
$ |
38.8 |
|
$ |
42.2 |
|
|
$ |
1,023 |
$ |
530 |
Round Mountain |
85,135 |
|
97,083 |
|
|
83,614 |
|
97,781 |
|
|
|
56.0 |
|
|
66.6 |
|
|
|
670 |
|
681 |
Bald Mountain |
47,255 |
|
93,440 |
|
|
43,230 |
|
98,142 |
|
|
|
29.2 |
|
|
46.1 |
|
|
|
675 |
|
470 |
Kettle River - Buckhorn |
- |
|
- |
|
|
- |
|
927 |
|
|
|
- |
|
|
- |
|
|
|
- |
|
- |
Paracatu |
146,776 |
|
128,200 |
|
|
146,397 |
|
128,279 |
|
|
|
94.9 |
|
|
115.9 |
|
|
|
648 |
|
903 |
Maricunga |
10,716 |
|
22,166 |
|
|
7,624 |
|
22,354 |
|
|
|
4.8 |
|
|
15.5 |
|
|
|
630 |
|
693 |
Americas Total |
327,495 |
|
420,817 |
|
|
318,802 |
|
427,094 |
|
|
|
223.7 |
|
|
286.3 |
|
|
|
702 |
|
670 |
|
|
|
|
|
|
|
|
|
|
|
|
Kupol |
130,088 |
|
120,181 |
|
|
130,414 |
|
122,624 |
|
|
|
78.0 |
|
|
64.6 |
|
|
|
598 |
|
527 |
Russia Total |
130,088 |
|
120,181 |
|
|
130,414 |
|
122,624 |
|
|
|
78.0 |
|
|
64.6 |
|
|
|
598 |
|
527 |
|
|
|
|
|
|
|
|
|
|
|
|
Tasiast |
101,358 |
|
58,778 |
|
|
99,758 |
|
60,503 |
|
|
|
66.0 |
|
|
46.8 |
|
|
|
662 |
|
774 |
Chirano
(100%) |
52,322 |
|
60,179 |
|
|
54,083 |
|
64,440 |
|
|
|
44.0 |
|
|
46.9 |
|
|
|
814 |
|
728 |
West Africa Total |
153,680 |
|
118,957 |
|
|
153,841 |
|
124,943 |
|
|
|
110.0 |
|
|
93.7 |
|
|
|
715 |
|
750 |
|
|
|
|
|
|
|
|
|
|
|
|
Operations Total |
611,263 |
|
659,955 |
|
|
603,057 |
|
674,661 |
|
|
|
411.7 |
|
|
444.6 |
|
|
|
683 |
|
659 |
Less Chirano non-controlling interest (10%) |
(5,232 |
) |
(6,018 |
) |
|
(5,408 |
) |
(6,444 |
) |
|
|
(4.4 |
) |
|
(4.7 |
) |
|
|
|
Attributable Total |
606,031 |
|
653,937 |
|
|
597,649 |
|
668,217 |
|
|
$ |
407.3 |
|
$ |
439.9 |
|
|
$ |
682 |
$ |
658 |
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated balance sheets
|
(unaudited expressed in millions of United States dollars, except
share amounts) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As at |
|
|
|
|
March 31, |
|
December 31, |
|
|
|
|
|
2019 |
|
|
|
2018 |
|
|
|
|
|
|
|
|
|
|
Assets |
|
|
|
|
|
|
Current assets |
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
406.9 |
|
|
$ |
349.0 |
|
|
|
Restricted cash |
|
|
13.3 |
|
|
|
12.7 |
|
|
|
Accounts receivable and other assets |
|
|
92.7 |
|
|
|
101.4 |
|
|
|
Current income tax recoverable |
|
|
73.4 |
|
|
|
79.0 |
|
|
|
Inventories |
|
|
1,004.2 |
|
|
|
1,052.0 |
|
|
|
Unrealized fair value of derivative assets |
|
|
6.9 |
|
|
|
3.8 |
|
|
|
|
|
|
1,597.4 |
|
|
|
1,597.9 |
|
|
|
Non-current assets |
|
|
|
|
|
|
Property, plant and equipment |
|
|
5,656.2 |
|
|
|
5,519.1 |
|
|
|
Goodwill |
|
|
158.8 |
|
|
|
162.7 |
|
|
|
Long-term investments |
|
|
154.3 |
|
|
|
155.9 |
|
|
|
Investments in joint ventures |
|
|
18.3 |
|
|
|
18.3 |
|
|
|
Unrealized fair value of derivative assets |
|
|
2.0 |
|
|
|
0.8 |
|
|
|
Other long-term assets |
|
|
581.9 |
|
|
|
564.1 |
|
|
|
Deferred tax assets |
|
|
48.4 |
|
|
|
45.0 |
|
|
|
Total assets |
|
$ |
8,217.3 |
|
|
$ |
8,063.8 |
|
|
|
|
|
|
|
|
|
|
Liabilities |
|
|
|
|
|
|
Current liabilities |
|
|
|
|
|
|
Accounts payable and accrued liabilities |
|
$ |
384.4 |
|
|
$ |
465.9 |
|
|
|
Current income tax payable |
|
|
58.9 |
|
|
|
21.7 |
|
|
|
Current portion of provisions |
|
|
63.3 |
|
|
|
72.6 |
|
|
|
Other current liabilities |
|
|
22.6 |
|
|
|
52.2 |
|
|
|
|
|
|
529.2 |
|
|
|
612.4 |
|
|
|
Non-current liabilities |
|
|
|
|
|
|
Long-term debt and credit facilities |
|
|
1,870.6 |
|
|
|
1,735.0 |
|
|
|
Provisions |
|
|
823.2 |
|
|
|
816.4 |
|
|
|
Long-term lease liabilities |
|
|
41.7 |
|
|
|
- |
|
|
|
Unrealized fair value of derivative liabilities |
|
|
3.4 |
|
|
|
9.6 |
|
|
|
Other long-term liabilities |
|
|
101.5 |
|
|
|
97.9 |
|
|
|
Deferred tax liabilities |
|
|
236.8 |
|
|
|
265.2 |
|
|
|
Total liabilities |
|
|
3,606.4 |
|
|
|
3,536.5 |
|
|
|
|
|
|
|
|
|
|
Equity |
|
|
|
|
|
|
Common shareholders' equity |
|
|
|
|
|
|
Common share capital |
|
$ |
14,919.2 |
|
|
$ |
14,913.4 |
|
|
|
Contributed surplus |
|
|
234.6 |
|
|
|
239.8 |
|
|
|
Accumulated deficit |
|
|
(10,483.3 |
) |
|
|
(10,548.0 |
) |
|
|
Accumulated other comprehensive income (loss) |
|
|
(80.1 |
) |
|
|
(98.5 |
) |
|
|
Total common shareholders' equity |
|
|
4,590.4 |
|
|
|
4,506.7 |
|
|
|
Non-controlling interest |
|
|
20.5 |
|
|
|
20.6 |
|
|
|
Total equity |
|
|
4,610.9 |
|
|
|
4,527.3 |
|
|
|
Total liabilities and equity |
|
$ |
8,217.3 |
|
|
$ |
8,063.8 |
|
|
|
|
|
|
|
|
|
|
Common shares |
|
|
|
|
|
|
Authorized |
|
Unlimited |
|
Unlimited |
|
|
Issued and outstanding |
|
|
1,252,293,410 |
|
|
|
1,250,228,821 |
|
|
|
|
|
|
|
|
|
Consolidated statements of operations
|
(unaudited expressed in millions of United States dollars, except
share and per share amounts) |
|
|
|
|
|
|
|
|
|
Three months ended |
|
|
|
|
|
March 31, |
|
March 31, |
|
|
|
|
|
|
2019 |
|
|
|
2018 |
|
|
|
|
Revenue |
|
|
|
|
|
|
|
Metal sales |
|
$ |
786.2 |
|
|
$ |
897.2 |
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales |
|
|
|
|
|
|
|
Production cost of sales |
|
|
411.7 |
|
|
|
444.6 |
|
|
|
|
Depreciation, depletion and amortization |
|
|
164.1 |
|
|
|
193.1 |
|
|
|
|
Total cost of sales |
|
|
575.8 |
|
|
|
637.7 |
|
|
|
|
Gross profit |
|
|
210.4 |
|
|
|
259.5 |
|
|
|
|
Other operating expense |
|
|
32.9 |
|
|
|
25.4 |
|
|
|
|
Exploration and business development |
|
|
19.5 |
|
|
|
20.5 |
|
|
|
|
General and administrative |
|
|
42.6 |
|
|
|
35.7 |
|
|
|
|
Operating earnings |
|
|
115.4 |
|
|
|
177.9 |
|
|
|
|
Other income (expense) - net |
|
|
2.7 |
|
|
|
5.9 |
|
|
|
|
Equity in losses of joint ventures |
|
|
- |
|
|
|
(0.1 |
) |
|
|
|
Finance income |
|
|
2.1 |
|
|
|
3.4 |
|
|
|
|
Finance expense |
|
|
(27.5 |
) |
|
|
(26.9 |
) |
|
|
|
Earnings before tax |
|
|
92.7 |
|
|
|
160.2 |
|
|
|
|
Income tax expense - net |
|
|
(28.1 |
) |
|
|
(54.0 |
) |
|
|
|
Net earnings |
|
$ |
64.6 |
|
|
$ |
106.2 |
|
|
|
|
Net earnings (loss) attributable to: |
|
|
|
|
|
|
|
Non-controlling interest |
|
$ |
(0.1 |
) |
|
$ |
0.1 |
|
|
|
|
Common shareholders |
|
$ |
64.7 |
|
|
$ |
106.1 |
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share attributable to common
shareholders |
|
|
|
|
|
|
|
Basic |
|
$ |
0.05 |
|
|
$ |
0.09 |
|
|
|
|
Diluted |
|
$ |
0.05 |
|
|
$ |
0.08 |
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of common shares
outstanding (millions) |
|
|
|
|
|
|
|
Basic |
|
|
1,250.6 |
|
|
|
1,247.5 |
|
|
|
|
Diluted |
|
|
1,259.1 |
|
|
|
1,258.3 |
|
|
|
Consolidated statements of cash flows
|
(unaudited expressed in millions of United States dollars) |
|
|
|
|
|
|
|
|
Three months ended |
|
|
|
|
March 31, |
|
March 31, |
|
|
|
|
|
2019 |
|
|
|
2018 |
|
|
|
Net inflow (outflow) of cash related to the following
activities: |
|
|
|
|
|
|
Operating: |
|
|
|
|
|
|
Net earnings |
|
$ |
64.6 |
|
|
$ |
106.2 |
|
|
|
Adjustments to reconcile net earnings to net cash provided from
operating activities: |
|
|
|
|
|
|
Depreciation, depletion and amortization |
|
|
164.1 |
|
|
|
193.1 |
|
|
|
Equity in losses of joint ventures |
|
|
- |
|
|
|
0.1 |
|
|
|
Share-based compensation expense |
|
|
4.6 |
|
|
|
4.0 |
|
|
|
Finance expense |
|
|
27.5 |
|
|
|
26.9 |
|
|
|
Deferred tax (recovery) expense |
|
|
(37.2 |
) |
|
|
11.4 |
|
|
|
Foreign exchange losses and other |
|
|
7.2 |
|
|
|
22.0 |
|
|
|
Changes in operating assets and liabilities: |
|
|
|
|
|
|
Accounts receivable and other assets |
|
|
14.6 |
|
|
|
(2.4 |
) |
|
|
Inventories |
|
|
37.4 |
|
|
|
(23.0 |
) |
|
|
Accounts payable and accrued liabilities |
|
|
(14.2 |
) |
|
|
(23.2 |
) |
|
|
Cash flow provided from operating activities |
|
|
268.6 |
|
|
|
315.1 |
|
|
|
Income taxes paid |
|
|
(17.0 |
) |
|
|
(21.6 |
) |
|
|
Net cash flow provided from operating
activities |
|
|
251.6 |
|
|
|
293.5 |
|
|
|
Investing: |
|
|
|
|
|
|
Additions to property, plant and equipment |
|
|
(264.8 |
) |
|
|
(246.9 |
) |
|
|
Settlement of deferred payment obligation and acquisition |
|
|
(30.0 |
) |
|
|
(35.1 |
) |
|
|
Net additions to long-term investments and other assets |
|
|
(6.4 |
) |
|
|
(14.3 |
) |
|
|
Net proceeds from the sale of property, plant and equipment |
|
|
0.9 |
|
|
|
3.0 |
|
|
|
Increase in restricted cash |
|
|
(0.6 |
) |
|
|
(0.7 |
) |
|
|
Interest received and other |
|
|
0.9 |
|
|
|
2.6 |
|
|
|
Net cash flow used in investing activities |
|
|
(300.0 |
) |
|
|
(291.4 |
) |
|
|
Financing: |
|
|
|
|
|
|
Net proceeds from issuance/drawdown of debt |
|
|
160.0 |
|
|
|
- |
|
|
|
Repayment of debt |
|
|
(25.0 |
) |
|
|
- |
|
|
|
Payment of finance lease liabilities |
|
|
(3.3 |
) |
|
|
- |
|
|
|
Interest paid |
|
|
(27.3 |
) |
|
|
(30.0 |
) |
|
|
Other |
|
|
0.2 |
|
|
|
0.4 |
|
|
|
Net cash flow provided from (used in) financing
activities |
|
|
104.6 |
|
|
|
(29.6 |
) |
|
|
Effect of exchange rate changes on cash and cash
equivalents |
|
|
1.7 |
|
|
|
(0.4 |
) |
|
|
Increase (decrease) in cash and cash
equivalents |
|
|
57.9 |
|
|
|
(27.9 |
) |
|
|
Cash and cash equivalents, beginning of
period |
|
|
349.0 |
|
|
|
1,025.8 |
|
|
|
Cash and cash equivalents, end of period |
|
$ |
406.9 |
|
|
$ |
997.9 |
|
|
Operating Summary |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mine |
Period |
Ownership |
Tonnes OreMined (1) |
Ore Processed(Milled)
(1) |
Ore Processed(HeapLeach)
(1) |
Grade
(Mill) |
Grade(HeapLeach) |
Recovery (2) |
Gold Eq Production(5) |
Gold EqSales (5) |
Productioncost ofsales |
Productioncost ofsales/oz |
Cap Ex (7) |
DD&A |
|
|
|
|
(%) |
('000 tonnes) |
('000 tonnes) |
('000 tonnes) |
(g/t) |
(g/t) |
(%) |
(ounces) |
(ounces) |
($ millions) |
($/ounce) |
($ millions) |
($ millions) |
|
Americas |
Fort Knox |
Q1 2019 |
100 |
5,796 |
1,556 |
4,295 |
0.72 |
0.22 |
84% |
37,613 |
37,937 |
$ |
38.8 |
$ |
1,023 |
$ |
28.9 |
$ |
18.0 |
|
Q4 2018 |
100 |
5,645 |
2,856 |
2,927 |
0.44 |
0.19 |
83% |
52,194 |
51,889 |
|
49.1 |
$ |
946 |
|
30.5 |
|
21.9 |
|
Q3 2018 |
100 |
5,306 |
2,718 |
3,262 |
0.42 |
0.19 |
81% |
51,984 |
52,197 |
|
53.0 |
$ |
1,015 |
|
32.6 |
|
26.0 |
|
Q2 2018 |
100 |
4,620 |
3,106 |
4,279 |
0.44 |
0.18 |
80% |
71,463 |
72,340 |
|
70.1 |
$ |
969 |
|
16.8 |
|
38.8 |
|
Q1 2018 |
100 |
9,075 |
3,110 |
5,839 |
0.70 |
0.20 |
82% |
79,928 |
79,611 |
|
42.2 |
$ |
530 |
|
9.6 |
|
23.0 |
|
Round Mountain |
Q1 2019 |
100 |
3,904 |
845 |
3,557 |
1.31 |
0.38 |
86% |
85,135 |
83,614 |
$ |
56.0 |
$ |
670 |
$ |
64.2 |
$ |
7.9 |
|
Q4 2018 |
100 |
4,386 |
987 |
4,172 |
1.38 |
0.43 |
83% |
96,715 |
91,769 |
|
70.0 |
$ |
763 |
|
68.0 |
|
9.6 |
|
Q3 2018 |
100 |
5,023 |
980 |
4,410 |
1.43 |
0.42 |
82% |
94,153 |
96,496 |
|
69.0 |
$ |
715 |
|
47.1 |
|
12.7 |
|
Q2 2018 |
100 |
4,721 |
853 |
4,361 |
1.44 |
0.37 |
86% |
97,650 |
95,432 |
|
72.0 |
$ |
754 |
|
43.6 |
|
13.9 |
|
Q1 2018 |
100 |
7,893 |
832 |
8,175 |
1.62 |
0.28 |
86% |
97,083 |
97,781 |
|
66.6 |
$ |
681 |
|
26.4 |
|
14.8 |
|
Bald Mountain (8) |
Q1 2019 |
100 |
2,659 |
- |
2,836 |
- |
0.48 |
nm |
47,255 |
43,230 |
$ |
29.2 |
$ |
675 |
$ |
64.6 |
$ |
16.2 |
|
Q4 2018 |
100 |
4,929 |
- |
5,406 |
- |
0.47 |
nm |
47,211 |
68,288 |
|
46.9 |
$ |
687 |
|
40.4 |
|
22.4 |
|
Q3 2018 |
100 |
7,106 |
- |
5,806 |
- |
0.38 |
nm |
72,560 |
90,931 |
|
53.4 |
$ |
587 |
|
44.2 |
|
29.3 |
|
Q2 2018 |
100 |
7,109 |
- |
7,109 |
- |
0.48 |
nm |
71,435 |
60,730 |
|
27.7 |
$ |
456 |
|
44.9 |
|
20.8 |
|
Q1 2018 |
100 |
5,333 |
- |
5,333 |
- |
0.38 |
nm |
93,440 |
98,142 |
|
46.1 |
$ |
470 |
|
20.4 |
|
27.2 |
|
Kettle River- Buckhorn |
Q1 2019 |
100 |
- |
- |
- |
- |
- |
0% |
- |
- |
$ |
- |
$ |
- |
$ |
- |
$ |
- |
|
Q4 2018 |
100 |
- |
- |
- |
- |
- |
0% |
- |
- |
|
- |
$ |
- |
|
- |
|
- |
|
Q3 2018 |
100 |
- |
- |
- |
- |
- |
0% |
- |
- |
|
- |
$ |
- |
|
- |
|
- |
|
Q2 2018 |
100 |
- |
- |
- |
- |
- |
0% |
- |
- |
|
- |
$ |
- |
|
- |
|
- |
|
Q1 2018 |
100 |
- |
- |
- |
- |
- |
0% |
- |
927 |
|
- |
$ |
- |
|
- |
|
- |
|
Paracatu |
Q1 2019 |
100 |
12,393 |
14,283 |
- |
0.38 |
- |
80% |
146,776 |
146,397 |
$ |
94.9 |
$ |
648 |
$ |
16.5 |
$ |
35.9 |
|
Q4 2018 |
100 |
11,680 |
13,479 |
- |
0.44 |
- |
81% |
145,634 |
152,395 |
|
116.6 |
$ |
765 |
|
33.3 |
|
41.7 |
|
Q3 2018 |
100 |
12,565 |
13,547 |
- |
0.38 |
- |
76% |
126,515 |
125,700 |
|
97.6 |
$ |
776 |
|
25.1 |
|
42.2 |
|
Q2 2018 |
100 |
11,677 |
14,074 |
- |
0.37 |
- |
75% |
121,226 |
117,043 |
|
100.4 |
$ |
858 |
|
23.7 |
|
30.8 |
|
Q1 2018 |
100 |
11,988 |
13,041 |
- |
0.36 |
- |
77% |
128,200 |
128,279 |
|
115.9 |
$ |
903 |
|
15.5 |
|
34.2 |
|
Maricunga (8) |
Q1 2019 |
100 |
- |
- |
- |
- |
- |
nm |
10,716 |
7,624 |
$ |
4.8 |
$ |
630 |
$ |
- |
$ |
0.4 |
|
Q4 2018 |
100 |
- |
- |
- |
- |
- |
nm |
7,226 |
19,399 |
|
16.1 |
$ |
830 |
|
- |
|
0.6 |
|
Q3 2018 |
100 |
- |
- |
- |
- |
- |
nm |
10,808 |
30,442 |
|
22.4 |
$ |
736 |
|
- |
|
1.1 |
|
Q2 2018 |
100 |
- |
- |
- |
- |
- |
nm |
19,866 |
17,764 |
|
11.7 |
$ |
659 |
|
- |
|
0.8 |
|
Q1 2018 |
100 |
- |
- |
- |
- |
- |
nm |
22,166 |
22,354 |
|
15.5 |
$ |
693 |
|
- |
|
1.5 |
|
Russia |
Kupol (3)(4)(6) |
Q1 2019 |
100 |
362 |
425 |
- |
9.62 |
- |
93% |
130,088 |
130,414 |
$ |
78.0 |
$ |
598 |
$ |
8.2 |
$ |
27.4 |
|
Q4 2018 |
100 |
400 |
425 |
- |
8.77 |
- |
95% |
123,478 |
124,408 |
|
68.7 |
$ |
552 |
|
19.4 |
|
30.1 |
|
Q3 2018 |
100 |
412 |
439 |
- |
8.69 |
- |
95% |
125,870 |
123,624 |
|
81.3 |
$ |
658 |
|
22.0 |
|
32.0 |
|
Q2 2018 |
100 |
412 |
430 |
- |
8.42 |
- |
95% |
120,418 |
124,179 |
|
73.6 |
$ |
593 |
|
11.2 |
|
33.0 |
|
Q1 2018 |
100 |
412 |
427 |
- |
8.58 |
- |
95% |
120,181 |
122,624 |
|
64.6 |
$ |
527 |
|
10.8 |
|
38.4 |
|
West Africa |
Tasiast |
Q1 2019 |
100 |
1,962 |
1,269 |
- |
2.37 |
- |
97% |
101,358 |
99,758 |
$ |
66.0 |
$ |
662 |
$ |
75.7 |
$ |
31.0 |
|
Q4 2018 |
100 |
3,267 |
1,301 |
- |
2.19 |
- |
94% |
91,548 |
83,780 |
|
69.5 |
$ |
830 |
|
71.1 |
|
28.5 |
|
Q3 2018 |
100 |
2,187 |
947 |
924 |
1.72 |
0.42 |
91% |
53,363 |
50,549 |
|
66.2 |
$ |
1,310 |
|
98.1 |
|
29.1 |
|
Q2 2018 |
100 |
966 |
750 |
755 |
1.88 |
0.29 |
91% |
47,276 |
48,409 |
|
54.8 |
$ |
1,132 |
|
101.4 |
|
18.9 |
|
Q1 2018 |
100 |
1,786 |
736 |
279 |
2.26 |
0.36 |
93% |
58,778 |
60,503 |
|
46.8 |
$ |
774 |
|
157.8 |
|
19.0 |
|
Chirano - 100% |
Q1 2019 |
90 |
499 |
908 |
- |
1.97 |
- |
92% |
52,322 |
54,083 |
$ |
44.0 |
$ |
814 |
$ |
3.3 |
$ |
25.4 |
|
Q4 2018 |
90 |
527 |
840 |
- |
2.08 |
- |
92% |
51,273 |
49,173 |
|
39.5 |
$ |
803 |
|
5.7 |
|
28.3 |
|
Q3 2018 |
90 |
505 |
908 |
- |
2.10 |
- |
92% |
56,675 |
53,915 |
|
41.7 |
$ |
773 |
|
6.9 |
|
30.8 |
|
Q2 2018 |
90 |
458 |
873 |
- |
2.23 |
- |
92% |
58,572 |
57,399 |
|
44.6 |
$ |
777 |
|
5.0 |
|
31.4 |
|
Q1 2018 |
90 |
523 |
885 |
- |
2.34 |
- |
92% |
60,179 |
64,440 |
|
46.9 |
$ |
728 |
|
6.4 |
|
33.3 |
|
Chirano - 90% |
Q1 2019 |
90 |
499 |
908 |
- |
1.97 |
- |
92% |
47,090 |
48,675 |
$ |
39.6 |
$ |
814 |
$ |
3.0 |
$ |
22.9 |
|
Q4 2018 |
90 |
527 |
840 |
- |
2.08 |
- |
92% |
46,146 |
44,255 |
|
35.5 |
$ |
802 |
|
5.1 |
|
25.5 |
|
Q3 2018 |
90 |
505 |
908 |
- |
2.10 |
- |
92% |
51,007 |
48,524 |
|
37.6 |
$ |
775 |
|
6.2 |
|
27.7 |
|
Q2 2018 |
90 |
458 |
873 |
- |
2.23 |
- |
92% |
52,715 |
51,659 |
|
40.1 |
$ |
776 |
|
4.5 |
|
28.3 |
|
Q1 2018 |
90 |
523 |
885 |
- |
2.34 |
- |
92% |
54,161 |
57,996 |
|
42.2 |
$ |
728 |
|
5.8 |
|
30.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1 |
) |
Tonnes of ore mined
and processed represent 100% Kinross for all periods
presented. |
|
(2 |
) |
Due to the nature of
heap leach operations, recovery rates at Maricunga and Bald
Mountain cannot be accurately measured on a quarterly basis.
Recovery rates at Fort Knox, Round Mountain and Tasiast represent
mill recovery only. |
|
(3 |
) |
The Kupol segment
includes the Kupol and Dvoinoye mines. |
|
(4 |
) |
Kupol silver grade
and recovery were as follows: Q1 2019: 69.61 g/t, 82.1%; Q4 2018:
73.35 g/t, 83.5%; Q3 2018: 72.38 g/t, 85.5%; Q2 2018: 68.65 g/t,
84%; Q1 2018: 69.35 g/t, 81.0% |
|
(5 |
) |
Gold equivalent
ounces include silver ounces produced and sold converted to a gold
equivalent based on the ratio of the average spot market prices for
the commodities for each period. The ratios for the quarters
presented are as follows: Q1 2019: 83.74:1; Q4 2018: 84.42:1; Q3
2018: 80.80:1; Q2 2018: 79.00:1; Q1 2018: 79.25:1 |
|
(6 |
) |
Dvoinoye ore
processed and grade were as follows: Q1 2019: 135,529, 7.46 g/t; Q4
2018: 104,495, 9.82 g/t; Q3 2018: 106,918, 10.03 g/t; Q2 2018:
121,739, 9.22 g/t; Q1 2018: 103,369, 10.13 g/t |
|
(7 |
) |
Capital expenditures
are presented on a cash basis, consistent with the statement of
cash flows. |
|
(8 |
) |
"nm" means not
meaningful. |
|
|
|
|
Reconciliation of non-GAAP financial
measures
The Company has included certain non-GAAP
financial measures in this document. These measures are not defined
under International Financial Reporting Standards (IFRS) and should
not be considered in isolation. The Company believes that these
measures, together with measures determined in accordance with
IFRS, provide investors with an improved ability to evaluate the
underlying performance of the Company. The inclusion of these
measures is meant to provide additional information and should not
be used as a substitute for performance measures prepared in
accordance with IFRS. These measures are not necessarily standard
and therefore may not be comparable to other issuers.
Adjusted net earnings attributable to common
shareholders and adjusted net earnings per share are non-GAAP
measures which determine the performance of the Company, excluding
certain impacts which the Company believes are not reflective of
the Company’s underlying performance for the reporting period, such
as the impact of foreign exchange gains and losses, reassessment of
prior year taxes and/or taxes otherwise not related to the current
period, impairment charges (reversals), gains and losses and other
one-time costs related to acquisitions, dispositions and other
transactions, and non-hedge derivative gains and losses. Although
some of the items are recurring, the Company believes that they are
not reflective of the underlying operating performance of its
current business and are not necessarily indicative of future
operating results. Management believes that these measures, which
are used internally to assess performance and in planning and
forecasting future operating results, provide investors with the
ability to better evaluate underlying performance, particularly
since the excluded items are typically not included in public
guidance. However, adjusted net earnings and adjusted net earnings
per share measures are not necessarily indicative of net earnings
and earnings per share measures as determined under IFRS.
The following table provides a reconciliation of
net earnings to adjusted net earnings for the periods
presented:
|
|
|
|
|
|
|
Adjusted Net Earnings |
|
(in millions, except per share amounts) |
Three months ended |
|
|
|
March 31, |
|
|
|
|
2019 |
|
|
2018 |
|
|
|
|
|
|
|
Net earnings attributable to common shareholders - as reported |
$ |
64.7 |
|
$ |
106.1 |
|
|
Adjusting
items: |
|
|
|
|
Foreign exchange gains |
|
(2.1 |
) |
|
(0.5 |
) |
|
|
Foreign exchange (gains)
losses on translation of tax basis and foreign exchange on
deferred income taxes within income tax expense |
|
(1.2 |
) |
|
0.2 |
|
|
|
Impairment, net of
reversals(a) |
|
- |
|
|
- |
|
|
|
Taxes in respect of prior
periods |
|
5.7 |
|
|
20.1 |
|
|
|
Fort Knox pit wall slide
related costs |
|
6.5 |
|
|
- |
|
|
|
Restructuring costs |
|
9.2 |
|
|
- |
|
|
|
Other |
|
1.9 |
|
|
(0.5 |
) |
|
|
Tax effect of the above
adjustments |
|
(1.4 |
) |
|
(0.2 |
) |
|
|
|
|
18.6 |
|
|
19.1 |
|
|
Adjusted net earnings attributable to common
shareholders |
$ |
83.3 |
|
$ |
125.2 |
|
|
Weighted average number of common shares outstanding - Basic |
|
1,250.6 |
|
|
1,247.5 |
|
|
Adjusted net earnings per share |
$ |
0.07 |
|
$ |
0.10 |
|
|
|
|
|
|
|
The Company makes reference to a non-GAAP
measure for adjusted operating cash flow. Adjusted operating cash
flow is defined as cash flow from operations excluding certain
impacts which the Company believes are not reflective of the
Company’s regular operating cash flow, and excluding changes in
working capital. Working capital can be volatile due to numerous
factors, including the timing of tax payments, and in the case of
Kupol, a build-up of inventory due to transportation logistics. The
Company uses adjusted operating cash flow internally as a measure
of the underlying operating cash flow performance and future
operating cash flow-generating capability of the Company. However,
the adjusted operating cash flow measure is not necessarily
indicative of net cash flow from operations as determined under
IFRS.
The following table provides a reconciliation of
adjusted operating cash flow for the periods presented:
|
|
|
|
|
|
|
Adjusted Operating Cash
Flow |
|
(in millions) |
Three months ended |
|
|
|
March 31, |
|
|
|
|
2019 |
|
|
2018 |
|
|
|
|
|
|
Net cash flow provided from operating activities - as reported |
$ |
251.6 |
|
$ |
293.5 |
|
|
|
|
|
|
Adjusting
items: |
|
|
|
|
Working capital
changes: |
|
|
|
|
Accounts receivable and other assets |
|
(14.6 |
) |
|
2.4 |
|
|
Inventories |
|
(37.4 |
) |
|
23.0 |
|
|
Accounts payable and other liabilities, including income taxes
paid |
|
31.2 |
|
|
44.8 |
|
|
|
|
(20.8 |
) |
|
70.2 |
|
Adjusted
operating cash flow |
$ |
230.8 |
|
$ |
363.7 |
|
|
|
|
|
|
Consolidated production cost of sales per gold
equivalent ounce sold is a non-GAAP measure and is defined as
production cost of sales as per the consolidated financial
statements divided by the total number of gold equivalent ounces
sold. This measure converts the Company’s non-gold production into
gold equivalent ounces and credits it to total production.
Attributable production cost of sales per gold
equivalent ounce sold is a non-GAAP measure and is defined as
attributable production cost of sales divided by the attributable
number of gold equivalent ounces sold. This measure converts the
Company’s non-gold production into gold equivalent ounces and
credits it to total production.
Management uses these measures to monitor and
evaluate the performance of its operating properties. The following
table presents a reconciliation of consolidated and attributable
production cost of sales per equivalent ounce sold for the periods
presented:
|
|
Consolidated and Attributable Production Cost of
Sales Per Equivalent Ounce Sold |
|
(in millions, except ounces and production cost of sales per
equivalent ounce) |
Three months ended |
|
|
|
March 31, |
|
|
|
|
2019 |
|
|
2018 |
|
|
|
|
|
|
|
Production cost of sales - as reported |
$ |
411.7 |
|
$ |
444.6 |
|
|
Less:
portion attributable to Chirano non-controlling interest |
|
(4.4 |
) |
|
(4.7 |
) |
|
Attributable production cost of sales |
$ |
407.3 |
|
$ |
439.9 |
|
|
|
|
|
|
|
Gold
equivalent ounces sold |
|
603,057 |
|
|
674,661 |
|
|
Less:
portion attributable to Chirano non-controlling interest |
|
(5,408 |
) |
|
(6,444 |
) |
|
Attributable gold equivalent ounces sold |
|
597,649 |
|
|
668,217 |
|
|
Consolidated production cost of sales per equivalent ounce
sold |
$ |
683 |
|
$ |
659 |
|
|
Attributable production cost of sales per equivalent ounce
sold |
$ |
682 |
|
$ |
658 |
|
|
|
|
|
|
Attributable production cost of sales per ounce
sold on a by-product basis is a non-GAAP measure which calculates
the Company’s non-gold production as a credit against its per ounce
production costs, rather than converting its non-gold production
into gold equivalent ounces and crediting it to total production,
as is the case in co-product accounting. Management believes that
this measure provides investors with the ability to better evaluate
Kinross’ production cost of sales per ounce on a comparable basis
with other major gold producers who routinely calculate their cost
of sales per ounce using by-product accounting rather than
co-product accounting.
The following table provides a reconciliation of
attributable production cost of sales per ounce sold on a
by-product basis for the periods presented:
|
|
|
|
|
|
|
Attributable Production Cost ofSales Per Ounce
Soldon a By-Product Basis |
|
(in millions, except ounces and production cost of sales per
ounce) |
Three months ended |
|
|
|
March 31, |
|
|
|
|
2019 |
|
|
2018 |
|
|
|
|
|
|
|
Production cost of sales - as reported |
$ |
411.7 |
|
$ |
444.6 |
|
|
Less:
portion attributable to Chirano non-controlling interest |
|
(4.4 |
) |
|
(4.7 |
) |
|
Less:
attributable silver revenues |
|
(17.1 |
) |
|
(18.3 |
) |
|
Attributable production cost of sales net of silver by-product
revenue |
$ |
390.2 |
|
$ |
421.6 |
|
|
|
|
|
|
|
Gold
ounces sold |
|
589,825 |
|
|
660,884 |
|
|
Less:
portion attributable to Chirano non-controlling interest |
|
(5,398 |
) |
|
(6,433 |
) |
|
Attributable gold ounces sold |
|
584,427 |
|
|
654,451 |
|
|
Attributable production cost of sales per ounce sold on a
by-product basis |
$ |
668 |
|
$ |
644 |
|
|
|
|
|
|
|
In November 2018, the World Gold Council (“WGC”)
published updates to its guidelines for reporting all-in sustaining
costs and all-in costs to address how the costs associated with
leases, after a company’s adoption of IFRS 16 “Leases”, should be
treated. Although the WGC is not a mining industry regulatory
organization, it worked closely with its member companies to
develop these non-GAAP measures. Adoption of the all-in
sustaining cost and all-in cost metrics is voluntary and not
necessarily standard, and therefore, these measures presented by
the Company may not be comparable to similar measures presented by
other issuers. The Company believes that the all-in
sustaining cost and all-in cost measures complement existing
measures reported by Kinross.
All-in sustaining cost includes both operating
and capital costs required to sustain gold production on an ongoing
basis. The value of silver sold is deducted from the total
production cost of sales as it is considered residual
production. Sustaining operating costs represent expenditures
incurred at current operations that are considered necessary to
maintain current production. Sustaining capital represents
capital expenditures at existing operations comprising mine
development costs and ongoing replacement of mine equipment and
other capital facilities, and does not include capital expenditures
for major growth projects or enhancement capital for significant
infrastructure improvements at existing operations.
All-in cost is comprised of all-in sustaining
cost as well as operating expenditures incurred at locations with
no current operation, or costs related to other non-sustaining
activities, and capital expenditures for major growth projects or
enhancement capital for significant infrastructure improvements at
existing operations.
Attributable all-in sustaining cost and all-in
cost per ounce sold on a by-product basis are calculated by
adjusting total production cost of sales, as reported on the
consolidated statement of operations, as follows:
|
|
Attributable All-In Sustaining Costand All-In Cost Per
Ounce Soldon a By-Product Basis |
|
|
|
|
(in
millions, except ounces and costs per ounce) |
Three months ended |
|
|
|
March 31, |
|
|
|
|
2019 |
|
|
2018 |
|
|
|
|
|
|
|
Production cost of sales - as reported |
$ |
411.7 |
|
$ |
444.6 |
|
|
Less: portion attributable to Chirano non-controlling
interest(1) |
|
(4.4 |
) |
|
(4.7 |
) |
|
Less: attributable(2) silver revenues(3) |
|
(17.1 |
) |
|
(18.3 |
) |
|
Attributable(2) production cost of sales net of silver by-product
revenue |
$ |
390.2 |
|
$ |
421.6 |
|
|
Adjusting items on an attributable(2) basis: |
|
|
|
|
General and
administrative(4) |
|
33.4 |
|
|
35.7 |
|
|
|
Other operating expense -
sustaining(5) |
|
5.5 |
|
|
6.8 |
|
|
|
Reclamation and remediation -
sustaining(6) |
|
11.4 |
|
|
15.2 |
|
|
|
Exploration and business
development - sustaining(7) |
|
13.9 |
|
|
12.3 |
|
|
|
Additions to property, plant
and equipment - sustaining(8) |
|
78.4 |
|
|
55.1 |
|
|
|
Lease payments -
sustaining(9) |
|
2.9 |
|
|
- |
|
|
All-in Sustaining Cost on a by-product basis - attributable(2) |
$ |
535.7 |
|
$ |
546.7 |
|
|
|
Other operating expense -
non-sustaining(5) |
|
16.2 |
|
|
8.1 |
|
|
|
Reclamation and remediation -
non-sustaining(6) |
|
1.7 |
|
|
1.3 |
|
|
|
Exploration -
non-sustaining(7) |
|
5.5 |
|
|
8.1 |
|
|
|
Additions to property, plant
and equipment - non-sustaining(8) |
|
164.7 |
|
|
171.5 |
|
|
|
Lease payments -
non-sustaining(9) |
|
0.4 |
|
|
- |
|
|
All-in Cost on a by-product basis - attributable(2) |
$ |
724.2 |
|
$ |
735.7 |
|
|
Gold
ounces sold |
|
589,825 |
|
|
660,884 |
|
|
Less:
portion attributable to Chirano non-controlling
interest(9) |
|
(5,398 |
) |
|
(6,433 |
) |
|
Attributable(2) gold ounces sold |
|
584,427 |
|
|
654,451 |
|
|
Attributable(2) all-in sustaining cost per ounce sold on a
by-product basis |
$ |
917 |
|
$ |
835 |
|
|
Attributable(2) all-in cost per ounce sold on a by-product
basis |
$ |
1,239 |
|
$ |
1,124 |
|
|
|
|
|
|
|
The Company also assesses its all-in sustaining
cost and all-in cost on a gold equivalent ounce basis. Under these
non-GAAP measures, the Company’s production of silver is converted
into gold equivalent ounces and credited to total production.
Attributable all-in sustaining cost and all-in
cost per equivalent ounce sold are calculated by adjusting total
production cost of sales, as reported on the interim condensed
consolidated statement of operations, as follows:
|
|
Attributable All-In Sustaining Costand All-In Cost
Per Equivalent Ounce Sold |
|
(in
millions, except ounces and costs per equivalent ounce) |
Three months ended |
|
|
|
March 31, |
|
|
|
|
2019 |
|
|
2018 |
|
|
|
|
|
|
|
Production cost of sales - as reported |
$ |
411.7 |
|
$ |
444.6 |
|
|
Less: portion attributable to Chirano non-controlling
interest(1) |
|
(4.4 |
) |
|
(4.7 |
) |
|
Attributable(2) production cost of sales |
$ |
407.3 |
|
$ |
439.9 |
|
|
Adjusting items on an attributable(2) basis: |
|
|
|
|
General and
administrative(4) |
|
33.4 |
|
|
35.7 |
|
|
|
Other operating expense -
sustaining(5) |
|
5.5 |
|
|
6.8 |
|
|
|
Reclamation and remediation -
sustaining(6) |
|
11.4 |
|
|
15.2 |
|
|
|
Exploration and business
development - sustaining(7) |
|
13.9 |
|
|
12.3 |
|
|
|
Additions to property, plant
and equipment - sustaining(8) |
|
78.4 |
|
|
55.1 |
|
|
|
Lease payments -
sustaining(9) |
|
2.9 |
|
|
- |
|
|
All-in Sustaining Cost - attributable(2) |
$ |
552.8 |
|
$ |
565.0 |
|
|
|
Other operating expense -
non-sustaining(5) |
|
16.2 |
|
|
8.1 |
|
|
|
Reclamation and remediation -
non-sustaining(6) |
|
1.7 |
|
|
1.3 |
|
|
|
Exploration -
non-sustaining(7) |
|
5.5 |
|
|
8.1 |
|
|
|
Additions to property, plant
and equipment - non-sustaining(8) |
|
164.7 |
|
|
171.5 |
|
|
|
Lease payments -
non-sustaining(9) |
|
0.4 |
|
|
- |
|
|
All-in Cost - attributable(2) |
$ |
741.3 |
|
$ |
754.0 |
|
|
Gold equivalent ounces sold |
|
603,057 |
|
|
674,661 |
|
|
Less: portion attributable to Chirano non-controlling
interest(9) |
|
(5,408 |
) |
|
(6,444 |
) |
|
Attributable(2) gold equivalent ounces sold |
|
597,649 |
|
|
668,217 |
|
|
Attributable(2) all-in sustaining cost per equivalent ounce
sold |
$ |
925 |
|
$ |
846 |
|
|
Attributable(2) all-in cost per equivalent ounce sold |
$ |
1,240 |
|
$ |
1,128 |
|
|
|
|
|
|
|
- The portion attributable to Chirano non-controlling interest
represents the non-controlling interest (10%) in the production
cost of sales for the Chirano mine.
- “Attributable” includes Kinross' share of Chirano (90%)
production.
- “Attributable silver revenues” represents the attributable
portion of metal sales realized from the production of the
secondary or by-product metal (i.e. silver). Revenue from the sale
of silver, which is produced as a by-product of the process used to
produce gold, effectively reduces the cost of gold production.
- “General and administrative” expenses is as reported on the
interim condensed consolidated statement of operations, net of
certain restructuring expenses. General and administrative expenses
are considered sustaining costs as they are required to be absorbed
on a continuing basis for the effective operation and governance of
the Company.
- “Other operating expense – sustaining” is calculated as “Other
operating expense” as reported on the interim condensed
consolidated statement of operations, less other operating and
reclamation and remediation expenses related to non-sustaining
activities as well as other items not reflective of the underlying
operating performance of our business. Other operating expenses are
classified as either sustaining or non-sustaining based on the type
and location of the expenditure incurred. The majority of other
operating expenses that are incurred at existing operations are
considered costs necessary to sustain operations, and are therefore
classified as sustaining. Other operating expenses incurred at
locations where there is no current operation or related to other
non-sustaining activities are classified as non-sustaining.
- “Reclamation and remediation - sustaining” is calculated as
current period accretion related to reclamation and remediation
obligations plus current period amortization of the corresponding
reclamation and remediation assets, and is intended to reflect the
periodic cost of reclamation and remediation for currently
operating mines. Reclamation and remediation costs for development
projects or closed mines are excluded from this amount and
classified as non-sustaining.
- “Exploration and business development – sustaining” is
calculated as “Exploration and business development” expenses as
reported on the interim condensed consolidated statement of
operations, less non-sustaining exploration expenses. Exploration
expenses are classified as either sustaining or non-sustaining
based on a determination of the type and location of the
exploration expenditure. Exploration expenditures within the
footprint of operating mines are considered costs required to
sustain current operations and so are included in sustaining costs.
Exploration expenditures focused on new ore bodies near existing
mines (i.e. brownfield), new exploration projects (i.e. greenfield)
or for other generative exploration activity not linked to existing
mining operations are classified as non-sustaining. Business
development expenses are considered sustaining costs as they are
required for general operations.
- “Additions to property, plant and equipment – sustaining”
represents the majority of capital expenditures at existing
operations including capitalized exploration costs, capitalized
stripping and underground mine development costs, ongoing
replacement of mine equipment and other capital facilities and
other capital expenditures and is calculated as total additions to
property, plant and equipment (as reported on the interim condensed
consolidated statements of cash flows), less capitalized interest
and non-sustaining capital. Non-sustaining capital represents
capital expenditures for major growth projects as well as
enhancement capital for significant infrastructure improvements at
existing operations. Non-sustaining capital expenditures during the
three months ended March 31, 2019, primarily relate to projects at
Round Mountain, Bald Mountain and Fort Knox. Non-sustaining capital
expenditures during the three months ended March 31, 2018,
primarily relate to projects at Tasiast and Round Mountain.
- “Lease payments – sustaining” represents the majority of lease
payments as reported on the interim condensed consolidated
statements of cash flows and is made up of the principal and
financing components of such cash payments, less non-sustaining
lease payments. Lease payments for development projects or
closed mines are classified as non-sustaining.
- “Portion attributable to Chirano non-controlling interest”
represents the non-controlling interest (10%) in the ounces sold
from the Chirano mine.
- “Average realized gold price per ounce” is a non-GAAP financial
measure and is defined as gold metal sales divided by the total
number of gold ounces sold. This measure is intended to enable
Management to better understand the price realized in each
reporting period. The realized price measure does not have any
standardized definition under IFRS and should not be considered a
substitute for measure of performance prepared in accordance with
IFRS.
Cautionary statement on forward-looking
information
All statements, other than statements of
historical fact, contained or incorporated by reference in this
news release including, but not limited to, any information as to
the future financial or operating performance of Kinross,
constitute ‘‘forward-looking information’’ or ‘‘forward-looking
statements’’ within the meaning of certain securities laws,
including the provisions of the Securities Act (Ontario) and the
provisions for ‘‘safe harbor’’ under the United States Private
Securities Litigation Reform Act of 1995 and are based on
expectations, estimates and projections as of the date of this news
release. Forward-looking statements contained in this news release,
include, but are not limited to, those under the headings (or
headings that include) “2019 first-quarter highlights”, “Operations
and organic development project highlights”, “CEO commentary”,
“Russia”, “Organic development projects and opportunities” and
“Outlook” as well as statements with respect to our guidance
for production, production costs of sales, all-in sustaining cost
and capital expenditures; the schedules and budgets for the
Company’s development projects; mine life; and continuous
improvement initiatives, as well as references to other
possible events, the future price of gold and silver, the timing
and amount of estimated future production, costs of production,
capital expenditures, costs and timing of the development of
projects and new deposits, estimates and the realization of such
estimates (such as mineral or gold reserves and resources or mine
life), success of exploration, development and mining, currency
fluctuations, capital requirements, project studies, mine life
extensions, government regulation permit applications and
conversions, restarting suspended or disrupted operations;
environmental risks and proceedings; and resolution of pending
litigation. The words “advance”, “assumption”, “believe”, “budget”,
“consideration”, “continue”, "could", “develop”, “enhancement”,
“estimates”, “expand”, “expects”, “explore”, “extend”,, “forecast”,
“focus”, “forward”, “future”, “guidance”, “indicate”, “initiative”,
“intend”, “measures”, “on budget”, “on schedule”, “opportunity”,
“optimize”, “outlook”, “phased”, “plan”, “possible”, “potential”,
“pre-feasibility study”, “progress”, “project”, “projection”,
“schedule”, “scoping study”, “seek”, “study”, “target”, or
variations of or similar such words and phrases or statements that
certain actions, events or results may, could, should or will be
achieved, received or taken, or will occur or result and similar
such expressions identify forward-looking statements.
Forward-looking statements are necessarily based upon a number of
estimates and assumptions that, while considered reasonable by
Kinross as of the date of such statements, are inherently subject
to significant business, economic and competitive uncertainties and
contingencies. The estimates, models and assumptions of Kinross
referenced, contained or incorporated by reference in this news
release, which may prove to be incorrect, include, but are not
limited to, the various assumptions set forth herein and in our
Management’s Discussion and Analysis (“MD&A”) for the year
ended December 31, 2018 and the quarter ended March 31, 2019, and
the Annual Information Form dated March 29, 2019 as well as: (1)
there being no significant disruptions affecting the operations of
the Company, whether due to extreme weather events (including,
without limitation, excessive or lack of rainfall, in particular,
the potential for further production curtailments at Paracatu
resulting from insufficient rainfall and the potential for
operational challenges at Fort Knox resulting from excessive
rainfall, which can impact costs and/or production) and other or
related natural disasters, labour disruptions (including but not
limited to workforce reductions), supply disruptions, power
disruptions, damage to equipment, pit wall slides (in particular
that the effects of the pit wall slides at Fort Knox and Round
Mountain are consistent with the Company’s expectations) or
otherwise; (2) permitting, development, operations and production
from the Company’s operations and development projects being
consistent with Kinross’ current expectations including, without
limitation: the maintenance of existing permits and approvals and
the timely receipt of all permits and authorizations necessary for
the development and operation of the Tasiast Phase One and Phase
Two expansions or any such alternate expansion that the Company
decides to pursue and the Round Mountain Phase W expansion
including, without limitation, work permits, necessary import
authorizations for goods and equipment; operation of the SAG mill
at Tasiast; exploration license conversions at Tasiast; land
acquisitions and permitting for the construction and operation of
the new tailings facility, water and power supply and launch of the
new tailings reprocessing facility at Paracatu; and the renewal of
the Chirano mining lease in a manner consistent with the Company’s
expectations; (3) political and legal developments in any
jurisdiction in which the Company operates being consistent with
its current expectations including, without limitation, the impact
of any political tensions and uncertainty in the Russian Federation
and Ukraine or any related sanctions and any other similar
restrictions or penalties imposed, or actions taken, by any
government, including but not limited to amendments to the mining
laws, and potential power rationing and tailings facility
regulations in Brazil, potential amendments to water laws and/or
other water use restrictions and regulatory actions in Chile, new
dam safety regulations, potential amendments to minerals and mining
laws and energy levies laws, the enforcement of labour
laws, as well as the potential impact of the financial audit
of producing mining companies in Ghana, new regulations
relating to work permits, potential amendments to customs and
mining laws (including but not limited to amendments to the VAT)
and the pending implementation of revisions to the tax code in
Mauritania, and satisfactory resolution of the discussions
with the Mauritanian government regarding the Company’s activities
in Mauritania, the potential passing of Environmental Protection
Agency regulations in the US relating to the provision of financial
assurances under the Comprehensive Environmental Response,
Compensation and Liability Act, the European Union’s General Data
Protection Regulation and potential amendments to and enforcement
of tax laws in Russia (including, but not limited to, the
interpretation, implementation, application and enforcement of any
such laws and amendments thereto), and the impact of any trade
tariffs being consistent with Kinross’ current expectations; (4)
the completion of studies, including optimization studies, scoping
studies and prefeasibility and feasibility studies, on the
timelines currently expected and the results of those studies being
consistent with Kinross’ current expectations; (5) the exchange
rate between the Canadian dollar, Brazilian real, Chilean peso,
Russian rouble, Mauritanian ouguiya, Ghanaian cedi and the U.S.
dollar being approximately consistent with current levels; (6)
certain price assumptions for gold and silver; (7) prices for
diesel, natural gas, fuel oil, electricity and other key supplies
being approximately consistent with current levels; (8) production
and cost of sales forecasts for the Company meeting expectations;
(9) the accuracy of the current mineral reserve and mineral
resource estimates of the Company (including but not limited to ore
tonnage and ore grade estimates), mine plans for the Company’s
mining operations, and the Company’s internal models; (10) labour
and materials costs increasing on a basis consistent with Kinross’
current expectations; (11) the terms and conditions of the legal
and fiscal stability agreements for the Tasiast and Chirano
operations being interpreted and applied in a manner consistent
with their intent and Kinross’ expectations and without amendment
or formal dispute (including without limitation the application of
tax, customs and duties exemptions); (12) goodwill and/or asset
impairment potential; (13) the regulatory and legislative regime
regarding mining, electricity production and transmission
(including rules related to power tariffs) in Brazil being
consistent with Kinross’ current expectations; (14) access to
capital markets, including but not limited to maintaining our
current credit ratings consistent with the Company’s current
expectations; (15) that the Brazilian power plants will operate in
a manner consistent with our current expectations; (16) that the
Tasiast project financing will proceed in a manner consistent with
our current expectations; and (17) litigation and regulatory
proceedings and the potential ramifications thereof being concluded
in a manner consistent with the Company’s expectations (including
without limitation the ongoing litigation in Chile relating to the
alleged damage of wetlands and the scope of any remediation plan or
other environmental obligations arising therefrom) . Known and
unknown factors could cause actual results to differ materially
from those projected in the forward-looking statements. Such
factors include, but are not limited to: sanctions (any other
similar restrictions or penalties) now or subsequently imposed,
other actions taken, by, against, in respect of or otherwise
impacting any jurisdiction in which the Company is domiciled or
operates (including but not limited to the Russian Federation,
Canada, the European Union and the United States), or any
government or citizens of, persons or companies domiciled in, or
the Company’s business, operations or other activities in, any such
jurisdiction; fluctuations in the currency markets; fluctuations in
the spot and forward price of gold or certain other commodities
(such as fuel and electricity); changes in the discount rates
applied to calculate the present value of net future cash flows
based on country-specific real weighted average cost of capital;
changes in the market valuations of peer group gold producers and
the Company, and the resulting impact on market price to net asset
value multiples; changes in various market variables, such as
interest rates, foreign exchange rates, gold or silver prices and
lease rates, or global fuel prices, that could impact the
mark-to-market value of outstanding derivative instruments and
ongoing payments/receipts under any financial obligations; risks
arising from holding derivative instruments (such as credit risk,
market liquidity risk and mark-to-market risk); changes in national
and local government legislation, taxation (including but not
limited to income tax, advance income tax, stamp tax, withholding
tax, capital tax, tariffs, value-added or sales tax, capital
outflow tax, capital gains tax, windfall or windfall profits tax,
royalty, excise tax, customs/import or export taxes/duties, asset
taxes, asset transfer tax, property use or other real estate tax,
together with any related fine, penalty, surcharge, or interest
imposed in connection with such taxes), controls, policies and
regulations; the security of personnel and assets; political or
economic developments in Canada, the United States, Chile, Brazil,
Russia, Mauritania, Ghana, or other countries in which Kinross does
business or may carry on business; business opportunities that may
be presented to, or pursued by, us; our ability to successfully
integrate acquisitions and complete divestitures; operating or
technical difficulties in connection with mining or development
activities; employee relations; litigation or other claims against,
or regulatory investigations and/or any enforcement actions or
sanctions in respect of the Company (and/or its directors,
officers, or employees) including, but not limited to, securities
class action litigation in Canada and/or the United States,
environmental litigation or regulatory proceedings or any
investigations, enforcement actions and/or sanctions under any
applicable anti-corruption, international sanctions and/or
anti-money laundering laws and regulations in Canada, the United
States or any other applicable jurisdiction; the speculative nature
of gold exploration and development including, but not limited to,
the risks of obtaining necessary licenses and permits; diminishing
quantities or grades of reserves; adverse changes in our credit
rating; and contests over title to properties, particularly title
to undeveloped properties. In addition, there are risks and hazards
associated with the business of gold exploration, development and
mining, including environmental hazards, industrial accidents,
unusual or unexpected formations, pressures, cave-ins, flooding and
gold bullion losses (and the risk of inadequate insurance, or the
inability to obtain insurance, to cover these risks). Many of these
uncertainties and contingencies can directly or indirectly affect,
and could cause, Kinross’ actual results to differ materially from
those expressed or implied in any forward-looking statements made
by, or on behalf of, Kinross, including but not limited to
resulting in an impairment charge on goodwill and/or assets. There
can be no assurance that forward-looking statements will prove to
be accurate, as actual results and future events could differ
materially from those anticipated in such statements.
Forward-looking statements are provided for the purpose of
providing information about management’s expectations and plans
relating to the future. All of the forward-looking statements made
in this news release are qualified by this cautionary statement and
those made in our other filings with the securities regulators of
Canada and the United States including, but not limited to, the
cautionary statements made in the “Risk Analysis” section of our
MD&A for the year ended December 31, 2018 and the quarter ended
March 31, 2019 and the Annual Information Form dated March 29,
2019. These factors are not intended to represent a complete list
of the factors that could affect Kinross. Kinross disclaims any
intention or obligation to update or revise any forward-looking
statements or to explain any material difference between subsequent
actual events and such forward-looking statements, except to the
extent required by applicable law.
Key Sensitivities
Approximately 70%-80% of the Company's costs are
denominated in U.S. dollars.
A 10% change in foreign currency exchange rates
would be expected to result in an approximate $15 impact on
production cost of sales per ounce6.
Specific to the Russian rouble, a 10% change in
the exchange rate would be expected to result in an approximate $19
impact on Russian production cost of sales per ounce.
Specific to the Brazilian real, a 10% change in
the exchange rate would be expected to result in an approximate $27
impact on Brazilian production cost of sales per ounce.
A $10 per barrel change in the price of oil
would be expected to result in an approximate $3 impact on
production cost of sales per ounce.
A $100 change in the price of gold would be
expected to result in an approximate $5 impact on production cost
of sales per ounce as a result of a change in royalties.
Other information
Where we say ‘‘we’’, ‘‘us’’, ‘‘our’’, the ‘‘Company’’, or
‘‘Kinross’’ in this news release, we mean Kinross Gold Corporation
and/or one or more or all of its subsidiaries, as may be
applicable.
The technical information about the Company’s mineral properties
contained in this news release has been prepared under the
supervision of Mr. John Sims, an officer of the Company who is a
“qualified person” within the meaning of National Instrument
43-101.
Source: Kinross Gold Corporation
_________________________________
1 Unless otherwise stated, production figures in
this news release are based on Kinross’ 90% share of Chirano
production.
2 These figures are non-GAAP financial measures and are defined
and reconciled on pages 13 to 17 of this news release.
3 Net earnings figures in this release represent “net earnings
from continuing operations attributable to common
shareholders”.
4 Average realized gold price is a non-GAAP financial measure
and is defined as gold metal sales divided by the total number of
gold ounces sold.
5 Attributable margin per equivalent ounce sold is a non-GAAP
financial measure defined as “average realized gold price per
ounce” less “attributable production cost of sales per gold
equivalent ounce sold.”
6 Refers to all of the currencies in the countries where the
Company has mining operations, fluctuating simultaneously by 10% in
the same direction, either appreciating or depreciating, taking
into consideration the impact of hedging and weighting of each
currency within our consolidated cost structure.
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