Kinross Gold Corporation (TSX: K, NYSE: KGC) today announced its
results for the second-quarter ended June 30, 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 19 of this
release. All dollar amounts are expressed in U.S. dollars, unless
otherwise noted.)
2019 second-quarter highlights:
|
Q2 2019 results |
First half 2019 results |
2019 guidance(+/- 5%) |
Gold
equivalent production1(ounces) |
648,251 |
1,254,282 |
2.5 million |
Production cost of sales2 ($ per Au eq. oz.) |
$663 |
$672 |
$730 |
All-in sustaining cost2($ per Au eq.
oz.) |
$925 |
$925 |
$995 |
Capital expenditures |
$276.7 million |
$541.5 million |
$1,050 million |
- On track to meet 2019
annual guidance for production, cost of sales per ounce,
all-in sustaining cost per ounce and capital expenditures.
- Operating cash
flow of $333.0 million and adjusted operating cash
flow2 of $287.7 million for Q2 2019.
- Reported net
earnings3 of $71.5 million, or $0.06 per share, and
adjusted net earnings2,3 of $79.6 million, or
$0.06 per share for Q2 2019.
- Cash and cash
equivalents of $475.4 million and total
liquidity of approximately $1.9 billion at June 30, 2019,
with no debt maturities until 2021.
Operations and development projects
highlights:
- Three largest producing mines –
Paracatu, Kupol-Dvoinoye and
Tasiast – representing 63% of total company
production, achieve lowest costs in portfolio for Q2 2019 and the
first half of the year.
- Round Mountain Phase
W and Bald Mountain Vantage Complex
projects achieve major milestone and produce first gold.
- Paracatu continues
to deliver record performance, surpassing its peak quarterly
production in first quarter of 2019 and maintaining its lowest
costs since 2010.
- Sustained strong performance at
Tasiast as mill throughput continues to
outperform. The Company expects to announce results of the
evaluation of low-capital alternative approaches to increase
throughput in mid-September.
CEO Commentary
J. Paul Rollinson, President and CEO, made the
following comments in relation to 2019 second-quarter results:
“In the second quarter we delivered excellent
operating and financial results, as our portfolio of mines
increased production and lowered costs compared with the previous
quarter and year. We generated robust cash flow, improved our
margins, and maintained our strong liquidity position. We remain on
track to meet our annual production and cost outlook for 2019
following a strong first half of the year.
“The performance of our largest producing assets
bolstered our results as Paracatu, Kupol and Tasiast, which
represent more than 60% of our production, delivered the lowest
costs in our portfolio during the quarter and in the first half of
the year. Paracatu continues to outperform, surpassing its first
quarter production record and maintaining its lowest costs since
2010.
“Our Nevada development projects – Round
Mountain Phase W and Bald Mountain Vantage Complex – achieved a
major milestone as both produced their first gold bars. At Tasiast,
our evaluation of alternative approaches to increase throughput at
a significantly lower capital cost is making good progress, and we
expect to announce results in mid-September.”
Financial results
Summary of financial and operating results
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|
|
|
|
Three months ended |
Six months ended |
|
|
|
June 30, |
June 30, |
|
(in millions, except ounces, per share amounts, and per ounce
amounts) |
|
2019 |
|
2018 |
|
2019 |
|
2018 |
|
Operating
Highlights |
|
|
|
|
|
|
Total gold equivalent ounces(1) |
|
|
|
|
|
|
Produced(3) |
|
653,586 |
|
607,906 |
|
1,264,849 |
|
1,267,861 |
|
Sold(3) |
|
641,149 |
|
593,296 |
|
1,244,206 |
|
1,267,957 |
|
|
|
|
|
|
|
|
Attributable gold equivalent ounces(1) |
|
|
|
|
|
Produced(3) |
|
648,251 |
|
602,049 |
|
1,254,282 |
|
1,255,986 |
|
Sold(3) |
|
636,035 |
|
587,556 |
|
1,233,684 |
|
1,255,773 |
|
|
|
|
|
|
|
|
Financial Highlights |
|
|
|
|
|
|
Metal sales |
|
$ |
837.8 |
$ |
775.0 |
$ |
1,624.0 |
$ |
1,672.2 |
|
Production cost of sales |
|
$ |
426.1 |
$ |
454.9 |
$ |
837.8 |
$ |
899.5 |
|
Depreciation, depletion and amortization |
|
$ |
179.9 |
$ |
190.3 |
$ |
344.0 |
$ |
383.4 |
|
Operating
earnings |
|
$ |
144.3 |
$ |
46.3 |
$ |
259.7 |
$ |
224.2 |
|
Net
earnings attributable to common shareholders |
|
$ |
71.5 |
$ |
2.4 |
$ |
136.2 |
$ |
108.5 |
|
Basic
earnings per share attributable to common shareholders |
|
$ |
0.06 |
$ |
0.00 |
$ |
0.11 |
$ |
0.09 |
|
Diluted
earnings per share attributable to common shareholders |
|
$ |
0.06 |
$ |
0.00 |
$ |
0.11 |
$ |
0.09 |
|
Adjusted
net earnings attributable to common shareholders(2) |
|
$ |
79.6 |
$ |
37.8 |
$ |
162.9 |
$ |
163.0 |
|
Adjusted
net earnings per share(2) |
|
$ |
0.06 |
$ |
0.03 |
$ |
0.13 |
$ |
0.13 |
|
Net cash
flow provided from operating activities |
|
$ |
333.0 |
$ |
184.5 |
$ |
584.6 |
$ |
478.0 |
|
Adjusted
operating cash flow(2) |
|
$ |
287.7 |
$ |
231.5 |
$ |
518.5 |
$ |
595.2 |
|
Capital
expenditures |
|
$ |
276.7 |
$ |
247.1 |
$ |
541.5 |
$ |
494.0 |
|
Average
realized gold price per ounce(2) |
|
$ |
1,307 |
$ |
1,306 |
$ |
1,305 |
$ |
1,319 |
|
Consolidated production cost of sales per equivalent ounce(3)
sold(2) |
|
$ |
665 |
$ |
767 |
$ |
673 |
$ |
709 |
|
Attributable(1) production cost of sales per equivalent ounce(3)
sold(2) |
|
$ |
663 |
$ |
767 |
$ |
672 |
$ |
709 |
|
Attributable(1) production cost of sales per ounce sold on a
by-product basis(2) |
|
$ |
650 |
$ |
754 |
$ |
659 |
$ |
696 |
|
Attributable(1) all-in sustaining cost per ounce sold on a
by-product basis(2) |
|
$ |
918 |
$ |
1,011 |
$ |
917 |
$ |
918 |
|
Attributable(1) all-in sustaining cost per equivalent ounce(3)
sold(2) |
|
$ |
925 |
$ |
1,018 |
$ |
925 |
$ |
926 |
|
Attributable(1) all-in cost per ounce sold on a by-product
basis(2) |
|
$ |
1,242 |
$ |
1,343 |
$ |
1,240 |
$ |
1,226 |
|
Attributable(1) all-in cost per equivalent ounce(3) sold(2) |
|
$ |
1,243 |
$ |
1,342 |
$ |
1,242 |
$ |
1,228 |
|
|
|
|
|
|
|
|
(1) "Total" includes 100% of Chirano production. "Attributable"
includes Kinross' share of Chirano (90%) production. |
|
(2) The definition and reconciliation of these non-GAAP financial
measures is included on pages 13 to 18 of this news
release. |
|
(3) “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 second quarter of 2019 was 87.98:1 (second quarter of 2018
- 79.00:1). The ratio for the first six months of 2019 was 85.78:1
(first six months of 2018 - 79.12:1). |
|
The following operating and financial results
are based on second-quarter 2019 gold equivalent production.
Production and cost measures are on an attributable basis:
Production: Kinross produced
648,251 attributable Au eq. oz. in the second quarter of 2019,
compared with 602,049 Au eq. oz. in the second quarter of 2018.
Production cost of sales:
Production cost of sales per Au eq. oz.2 was $663 for the second
quarter of 2019, compared with $767 for the second quarter of 2018,
mainly due to lower costs at Paracatu, Tasiast and Round Mountain.
Production cost of sales per Au oz. on a by-product basis2 was $650
in Q2 2019, compared with $754 in Q2 2018, based on Q2 2019
attributable gold sales of 624,098 ounces and attributable silver
sales of 1,050,325 ounces.
All-in sustaining cost: All-in
sustaining cost per Au eq. oz. sold2 was $925 in Q2 2019, compared
with $1,018 in Q2 2018. All-in sustaining cost per Au oz. sold on a
by-product basis2 was $918 in Q2 2019, compared with $1,011 in Q2
2018.
Revenue: Revenue from metal
sales was $837.8 million in the second quarter of 2019, compared
with $775.0 million during the same period in 2018, mainly due to
an increase in gold equivalent ounces sold.
Average realized gold price4:
The average realized gold price in Q2 2019 was $1,307 per ounce,
compared with $1,306 per ounce in Q2 2018.
Margins: Kinross’ attributable
margin per Au eq. oz. sold5 was $644 for the second quarter of
2019, compared with the Q2 2018 margin of $539 per Au eq. oz.
sold.
Operating cash flow: Adjusted
operating cash flow2 was $287.7 million for the second quarter of
2019, compared with $231.5 million for Q2 2018, primarily due to
the increase in margins.
Net operating cash flow was $333.0 million for
the second quarter of 2019, compared with $184.5 million for Q2
2018.
Earnings: Adjusted net
earnings2,3 was $79.6 million, or $0.06 per share, for Q2 2019,
compared with adjusted net earnings of $37.8 million, or $0.03 per
share, for Q2 2018.
Reported net earnings3 was $71.5 million, or
$0.06 per share, for Q2 2019, compared with earnings of $2.4
million, or $0.00 per share, in Q2 2018. The increase was primarily
a result of the increase in operating earnings, partially offset by
an increase in income tax expense.
Capital expenditures: Capital
expenditures was $276.7 million for Q2 2019, compared with $247.1
million for the same period last year, mainly due to increased
spending at our U.S. development projects offset by lower spending
at Tasiast.
Operating results Mine-by-mine
summaries for 2019 second-quarter operating results may be found on
pages eight and 12 of this news release. Highlights include the
following:
Americas
Paracatu continued its record
performance, surpassing the peak quarterly production it achieved
last quarter by approximately 40,000 Au oz. and reducing cost of
sales per ounce for the fifth consecutive quarter, which is at the
lowest level since Q4 2010. Grades improved quarter-over-quarter
and year-over-year as higher grade portions of the orebody were
mined during Q2 2019, while recoveries and throughput remained
strong. Mining is expected to transition to lower grade portions of
the pit in the second half of the year. Cost of sales per ounce
sold was lower versus last quarter mainly due to higher grades and
lower maintenance costs. Favourable foreign exchange movements and
lower power, maintenance and reagent costs also contributed to the
decrease in costs compared with the previous year.
Round Mountain performed well
during the quarter, as production increased versus Q1 2019 mainly
due to timing of ounces recovered from the heap leach pads,
partially offset by lower mill grades. Production decreased
compared with Q2 2018 mainly due to lower mill grades. Cost of
sales per ounce sold was lower quarter-over-quarter and
year-over-year mainly due to timing of ounces processed through the
mill.
At Bald Mountain, production
was lower compared with Q1 2019 mainly due to the timing of ounces
recovered from the heap leach pads and lower grades. Production was
lower compared with Q2 2018 as weather-related challenges impacted
mining rates resulting in less ore placed on the heap leach pads.
Cost of sales per ounce sold was higher quarter-over-quarter and
year-over-year mainly due to a decrease in gold equivalent ounces
produced. An increase in maintenance and fuel costs also
contributed to higher cost of sales per ounce sold
quarter-over-quarter. The Vantage Complex project is expected to
ramp up in the second half of the year, although at a lower than
planned rate mainly due to weather challenges.
Exploration during the first half of the year at
Bald Mountain has returned promising results at Redbird, including
high grade intercepts adjacent to the current Redbird resource pit
shell. Exploration in the second half of the year plans to test the
high-grade mineralization along the northeast trend and the
southeast extension.
At Fort Knox, production
increased compared with the previous quarter mainly as a result of
timing of ounces recovered from the heap leach pads, partially
offset by lower mill grades and weather-related conditions that
affected geotechnical stability in the northwest section of the
pit. Production decreased year-over-year primarily due to lower
mill throughput and less ore placed on and recovered from the heap
leach pads, partially offset by higher mill grades. Cost of sales
per ounce sold decreased compared with the previous quarter
primarily due to the timing of ounces recovered from the heap leach
pads, and decreased year-over-year mainly due to lower operating
waste mined and favourable processing costs.
At Maricunga, minor production
continued as a result of the rinsing of heap materials placed on
the pads prior to the suspension of mining activities. Cost of
sales per ounce sold increased quarter-over-quarter and
year-over-year mainly due to higher processing costs.
Russia
At Kupol and
Dvoinoye, production decreased slightly
quarter-over-quarter mainly due to anticipated lower grades at
Kupol, which was partially offset by higher mill throughput, and
increased year-over-year mainly due to planned mine sequencing and
better grades. Cost of sales per ounce sold decreased compared with
Q1 2019 mainly due to timing of ore processed. Compared with Q2
2018, cost of sales per ounce sold in Q2 2019 was lower mainly due
to higher mill grades.
Production at Dvoinoye Zone 1
commenced during the second quarter as planned. Exploration results
during the first half of the year at Zone 37 West in Dvoinoye have
been encouraging. At Kupol, drilling focused on depth extensions of
the Kupol main zone and hanging wall. Results continue to be
positive. At the Big Bend area, drilling continues to intercept
significant grade, though widths are narrower than expected. Infill
and extension drilling at North Extension also returned grades
higher than previously modeled. The Company will continue to test
targets with the goal of adding to the site’s estimated mineral
resources in the second half of the year.
West Africa
Tasiast performed strongly
during the quarter, with mill throughput rates continuing to
outperform. Anticipated lower grades during Q2 2019 contributed to
a decrease in production compared with the previous quarter’s
record high. Grades are expected to improve in the second half of
the year. Cost of sales per ounce sold decreased by $40 an ounce
compared with the previous quarter as a result of operational
efficiencies and lower operating waste mined. Production was higher
and cost of sales per ounce lower compared with the previous year
reflecting the benefits of the completion and commissioning of the
Phase One expansion.
Chirano continued its
consistent performance, with production largely in line compared
with the previous quarter. Production was lower year-over-year as a
result of anticipated lower grades. Cost of sales per ounce sold
was higher versus Q1 2019 and Q2 2018 primarily due to higher
operating waste mined as the site commenced open pit mining in late
Q1 2019.
The Company continued its priority exploration
program at Chirano and results during the first half of the year
have been promising, including depth extensions at Akwaaba and
Paboase. At both areas, drilling has identified extensions of
high-grade mineralization up to approximately 100 metres beneath
the current reserve base. At Akwaaba, the hanging wall
mineralization identified in 2018 is proving to be continuous and
high grade with depth. For the second half of the year, drilling
will continue at Akwaaba and Paboase, as well as Tano, where a
drift from Paboase has been completed, and Mamnao North.
Exploration at site will continue to seek near near-term mine life
extensions.
Organic development projects and
opportunities
Tasiast phased expansion
Kinross continues to take into account Tasiast’s
excellent performance since the completion of the Phase One
expansion as it evaluates alternative approaches to further
increase throughput. The alternatives include preserving and
potentially enhancing the value proposition of the original Phase
Two 30,000 tpd concept by increasing throughput to above 20,000 tpd
at a significantly lower capital cost through de-bottlenecking,
continuous improvement and further optimization of the existing
processing circuit. The Company expects to complete the evaluation
of alternative approaches and announce results in
mid-September.
The Company is on schedule to complete the $300
million project financing for Tasiast from the International
Finance Corporation (IFC), Export Development Canada (EDC), and two
commercial banks later this year. While the financing remains
subject to final approval by all lenders, final due diligence
activities are advancing well, with work now focused on completing
the details of the loan documentation.
Round Mountain Phase W
The Round Mountain Phase W
project continues to be on budget and on schedule. The processing
circuit was commissioned ahead of schedule and is now in
production, with the first gold bar from the completed vertical
carbon-in-column (VCIC) plant poured in late May. Mine
infrastructure, including the truck shop, warehouse, wash bay and
fuel island, is now approximately 95% complete and expected to be
fully commissioned in Q3 2019. Stripping activities are making
excellent progress and expected to continue until late 2020 as
planned, with initial near-surface Phase W ore now encountered.
Bald Mountain Vantage
Complex
The Bald Mountain Vantage
Complex project also commenced production, and the
first gold bar from the project was poured in late June.
Weather-related challenges, higher than anticipated labour rates
and issues with supply for some of the fabricated components
continued to challenge the project budget and ramp up of
production. Despite these challenges, commissioning for the project
is well-advanced, with the VCIC plant and heap leach pads now
substantially complete and in production, and construction of
support infrastructure, such as the truck shop, warehouse and wash
bay, close to completion.
Fort Knox Gilmore
The Fort Knox
Gilmore project is progressing on schedule and on
budget, with initial ore now expected later in the year.
Construction of the new heap leach pad is underway and proceeding
well, with half the impermeable liner now laid. Dewatering for the
Gilmore pit expansion is proceeding according to plan and stripping
for the initial Gilmore pushback is on target to begin in late Q3
2019.
La Coipa Restart and
Lobo-Marte
The La Coipa Restart project
feasibility study is proceeding well and is on schedule to be
completed in Q3 2019. At the Lobo-Marte project,
the Company is following up the positive scoping study completed
last quarter with a pre-feasibility study that is expected to be
completed in mid-2020. The studies are evaluating the potential for
a return to long-term production in Chile based on the concept of
commencing Lobo-Marte production following the end of La Coipa’s
mine life. Both studies are evaluating 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 June 30, 2019, Kinross had cash and cash
equivalents of $475.4 million, compared with $349.0 million at
December 31, 2018.
The Company also had available credit of
$1,397.2 million, for total liquidity of approximately $1.9
billion, and no debt maturities until 2021.
On July 25, 2019, the Company extended the
maturity date of its $1.5 billion revolving credit facility by one
year to August 2024, restoring a five-year term.
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 19 of this news release.
Kinross is on track to meet its production
guidance of 2.5 million Au eq. oz. (+/- 5%), its production cost of
sales guidance of $730 per Au eq. oz. (+/- 5%) and its all-in
sustaining cost guidance of $995 per Au eq. oz. (+/-5%) for
2019.
The Company is on track to meet its 2019 capital
expenditure forecast of approximately $1,050 million (+/-5%).
Depreciation, depletion and amortization is now
expected to be approximately $300 (+/-5%) per Au eq. oz., compared
with the previously disclosed $330 (+/-5%) per Au eq. oz, mainly
due to increased production at Paracatu and lower production from
Bald Mountain in the first half of the year.
Conference call details
In connection with the release, Kinross will
hold a conference call and audio webcast on Thursday, August 1,
2019 at 8:00 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: 3163386Outside of
Canada & US – +1 (647) 788-4901; Conference
ID: 3163386
Replay (available up to 14 days after the
call):
Canada & US toll-free –
(800) 585-8367; Conference ID: 3163386Outside of
Canada & US – +1 (416) 621-4642; Conference
ID: 3163386
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.
This news release should be read in conjunction
with Kinross’ 2019 second-quarter unaudited Financial
Statements and Management’s Discussion and Analysis report at
www.kinross.com. Kinross’ 2019 second-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
ElliottSenior Vice-President, Investor Relations and Corporate
Developmentphone: 416-365-3390tom.elliott@kinross.com
Review of operations
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|
Three months ended June
30, |
|
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 |
55,440 |
|
71,463 |
|
|
55,740 |
|
72,340 |
|
|
$ |
50.7 |
|
$ |
70.1 |
|
|
$ |
910 |
$ |
969 |
Round Mountain |
90,833 |
|
97,650 |
|
|
87,106 |
|
95,432 |
|
|
|
57.8 |
|
|
72.0 |
|
|
|
664 |
|
754 |
Bald Mountain |
40,564 |
|
71,435 |
|
|
31,547 |
|
60,730 |
|
|
|
27.0 |
|
|
27.7 |
|
|
|
856 |
|
456 |
Kettle River - Buckhorn |
- |
|
- |
|
|
- |
|
- |
|
|
|
- |
|
|
- |
|
|
|
- |
|
- |
Paracatu |
186,167 |
|
121,226 |
|
|
186,520 |
|
117,043 |
|
|
|
106.8 |
|
|
100.4 |
|
|
|
573 |
|
858 |
Maricunga |
6,648 |
|
19,866 |
|
|
9,474 |
|
17,764 |
|
|
|
8.0 |
|
|
11.7 |
|
|
|
844 |
|
659 |
Americas Total |
379,652 |
|
381,640 |
|
|
370,387 |
|
363,309 |
|
|
|
250.3 |
|
|
281.9 |
|
|
|
676 |
|
776 |
|
|
|
|
|
|
|
|
|
|
|
|
Kupol |
127,684 |
|
120,418 |
|
|
124,873 |
|
124,179 |
|
|
|
70.2 |
|
|
73.6 |
|
|
|
562 |
|
593 |
Russia Total |
127,684 |
|
120,418 |
|
|
124,873 |
|
124,179 |
|
|
|
70.2 |
|
|
73.6 |
|
|
|
562 |
|
593 |
|
|
|
|
|
|
|
|
|
|
|
|
Tasiast |
92,901 |
|
47,276 |
|
|
94,748 |
|
48,409 |
|
|
|
58.9 |
|
|
54.8 |
|
|
|
622 |
|
1,132 |
Chirano
(100%) |
53,349 |
|
58,572 |
|
|
51,141 |
|
57,399 |
|
|
|
46.7 |
|
|
44.6 |
|
|
|
913 |
|
777 |
West Africa Total |
146,250 |
|
105,848 |
|
|
145,889 |
|
105,808 |
|
|
|
105.6 |
|
|
99.4 |
|
|
|
724 |
|
939 |
|
|
|
|
|
|
|
|
|
|
|
|
Operations Total |
653,586 |
|
607,906 |
|
|
641,149 |
|
593,296 |
|
|
|
426.1 |
|
|
454.9 |
|
|
|
665 |
|
767 |
Less Chirano non-controlling interest (10%) |
(5,335 |
) |
(5,857 |
) |
|
(5,114 |
) |
(5,740 |
) |
|
|
(4.7 |
) |
|
(4.5 |
) |
|
|
|
Attributable Total |
648,251 |
|
602,049 |
|
|
636,035 |
|
587,556 |
|
|
$ |
421.4 |
|
$ |
450.4 |
|
|
$ |
663 |
$ |
767 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six months ended June 30, |
|
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 |
93,053 |
|
151,391 |
|
|
93,677 |
|
151,951 |
|
|
$ |
89.5 |
|
$ |
112.3 |
|
|
$ |
955 |
$ |
739 |
Round Mountain |
175,968 |
|
194,733 |
|
|
170,720 |
|
193,213 |
|
|
|
113.8 |
|
|
138.6 |
|
|
|
667 |
|
717 |
Bald Mountain |
87,819 |
|
164,875 |
|
|
74,777 |
|
158,872 |
|
|
|
56.2 |
|
|
73.8 |
|
|
|
752 |
|
465 |
Kettle River - Buckhorn |
- |
|
- |
|
|
- |
|
927 |
|
|
|
- |
|
|
- |
|
|
|
- |
|
- |
Paracatu |
332,943 |
|
249,426 |
|
|
332,917 |
|
245,322 |
|
|
|
201.7 |
|
|
216.3 |
|
|
|
606 |
|
882 |
Maricunga |
17,364 |
|
42,032 |
|
|
17,098 |
|
40,118 |
|
|
|
12.8 |
|
|
27.2 |
|
|
|
749 |
|
678 |
Americas Total |
707,147 |
|
802,457 |
|
|
689,189 |
|
790,403 |
|
|
|
474.0 |
|
|
568.2 |
|
|
|
688 |
|
719 |
|
|
|
|
|
|
|
|
|
|
|
|
Kupol |
257,772 |
|
240,599 |
|
|
255,287 |
|
246,803 |
|
|
|
148.2 |
|
|
138.2 |
|
|
|
581 |
|
560 |
Russia Total |
257,772 |
|
240,599 |
|
|
255,287 |
|
246,803 |
|
|
|
148.2 |
|
|
138.2 |
|
|
|
581 |
|
560 |
|
|
|
|
|
|
|
|
|
|
|
|
Tasiast |
194,259 |
|
106,054 |
|
|
194,506 |
|
108,912 |
|
|
|
124.9 |
|
|
101.6 |
|
|
|
642 |
|
933 |
Chirano
(100%) |
105,671 |
|
118,751 |
|
|
105,224 |
|
121,839 |
|
|
|
90.7 |
|
|
91.5 |
|
|
|
862 |
|
751 |
West Africa Total |
299,930 |
|
224,805 |
|
|
299,730 |
|
230,751 |
|
|
|
215.6 |
|
|
193.1 |
|
|
|
719 |
|
837 |
|
|
|
|
|
|
|
|
|
|
|
|
Operations Total |
1,264,849 |
|
1,267,861 |
|
|
1,244,206 |
|
1,267,957 |
|
|
|
837.8 |
|
|
899.5 |
|
|
|
673 |
|
709 |
Less Chirano non-controlling interest (10%) |
(10,567 |
) |
(11,875 |
) |
|
(10,522 |
) |
(12,184 |
) |
|
|
(9.1 |
) |
|
(9.2 |
) |
|
|
|
Attributable Total |
1,254,282 |
|
1,255,986 |
|
|
1,233,684 |
|
1,255,773 |
|
|
$ |
828.7 |
|
$ |
890.3 |
|
|
$ |
672 |
$ |
709 |
Consolidated balance sheets
|
|
|
|
|
|
(unaudited expressed in millions of United States dollars, except
share amounts) |
|
|
|
|
|
|
|
|
|
|
|
|
|
As at |
|
|
|
June 30, |
|
December 31, |
|
|
|
2019 |
|
2018 |
|
|
|
|
|
|
|
Assets |
|
|
|
|
|
Current assets |
|
|
|
|
|
Cash and cash equivalents |
|
$ |
475.4 |
|
|
$ |
349.0 |
|
|
Restricted cash |
|
|
13.5 |
|
|
|
12.7 |
|
|
Accounts receivable and other assets |
|
|
129.8 |
|
|
|
101.4 |
|
|
Current income tax recoverable |
|
|
44.8 |
|
|
|
79.0 |
|
|
Inventories |
|
|
991.3 |
|
|
|
1,052.0 |
|
|
Unrealized fair value of derivative assets |
|
|
6.7 |
|
|
|
3.8 |
|
|
|
|
|
1,661.5 |
|
|
|
1,597.9 |
|
|
Non-current assets |
|
|
|
|
|
Property, plant and equipment |
|
|
5,769.6 |
|
|
|
5,519.1 |
|
|
Goodwill |
|
|
158.8 |
|
|
|
162.7 |
|
|
Long-term investments |
|
|
182.4 |
|
|
|
155.9 |
|
|
Investments in joint ventures |
|
|
18.4 |
|
|
|
18.3 |
|
|
Unrealized fair value of derivative assets |
|
|
3.9 |
|
|
|
0.8 |
|
|
Other long-term assets |
|
|
577.1 |
|
|
|
564.1 |
|
|
Deferred tax assets |
|
|
35.6 |
|
|
|
45.0 |
|
|
Total assets |
|
$ |
8,407.3 |
|
|
$ |
8,063.8 |
|
|
|
|
|
|
|
|
Liabilities |
|
|
|
|
|
Current liabilities |
|
|
|
|
|
Accounts payable and accrued liabilities |
|
$ |
441.1 |
|
|
$ |
465.9 |
|
|
Current income tax payable |
|
|
69.2 |
|
|
|
21.7 |
|
|
Current portion of provisions |
|
|
49.9 |
|
|
|
72.6 |
|
|
Other current liabilities |
|
|
16.3 |
|
|
|
52.2 |
|
|
|
|
|
576.5 |
|
|
|
612.4 |
|
|
Non-current liabilities |
|
|
|
|
|
Long-term debt and credit facilities |
|
|
1,891.2 |
|
|
|
1,735.0 |
|
|
Provisions |
|
|
836.0 |
|
|
|
816.4 |
|
|
Long-term lease liabilities |
|
|
39.2 |
|
|
|
- |
|
|
Unrealized fair value of derivative liabilities |
|
|
2.3 |
|
|
|
9.6 |
|
|
Other long-term liabilities |
|
|
107.0 |
|
|
|
97.9 |
|
|
Deferred tax liabilities |
|
|
235.3 |
|
|
|
265.2 |
|
|
Total liabilities |
|
|
3,687.5 |
|
|
|
3,536.5 |
|
|
|
|
|
|
|
|
Equity |
|
|
|
|
|
Common shareholders' equity |
|
|
|
|
|
Common share capital |
|
$ |
14,919.9 |
|
|
$ |
14,913.4 |
|
|
Contributed surplus |
|
|
237.6 |
|
|
|
239.8 |
|
|
Accumulated deficit |
|
|
(10,411.8 |
) |
|
|
(10,548.0 |
) |
|
Accumulated other comprehensive income (loss) |
|
|
(46.0 |
) |
|
|
(98.5 |
) |
|
Total common shareholders' equity |
|
|
4,699.7 |
|
|
|
4,506.7 |
|
|
Non-controlling interest |
|
|
20.1 |
|
|
|
20.6 |
|
|
Total equity |
|
|
4,719.8 |
|
|
|
4,527.3 |
|
|
Total liabilities and equity |
|
$ |
8,407.3 |
|
|
$ |
8,063.8 |
|
|
|
|
|
|
|
|
Common shares |
|
|
|
|
|
Authorized |
|
Unlimited |
|
Unlimited |
|
Issued and outstanding |
|
|
1,252,468,491 |
|
|
|
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 |
|
Six months ended |
|
|
|
|
June 30, |
|
June 30, |
|
June 30, |
|
June 30, |
|
|
|
|
2019 |
|
2018 |
|
2019 |
|
2018 |
|
|
Revenue |
|
|
|
|
|
|
|
|
|
|
Metal sales |
|
$ |
837.8 |
|
|
$ |
775.0 |
|
|
$ |
1,624.0 |
|
|
$ |
1,672.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales |
|
|
|
|
|
|
|
|
|
|
Production cost of sales |
|
|
426.1 |
|
|
|
454.9 |
|
|
|
837.8 |
|
|
|
899.5 |
|
|
|
Depreciation, depletion and amortization |
|
|
179.9 |
|
|
|
190.3 |
|
|
|
344.0 |
|
|
|
383.4 |
|
|
|
Total cost of sales |
|
|
606.0 |
|
|
|
645.2 |
|
|
|
1,181.8 |
|
|
|
1,282.9 |
|
|
|
Gross profit |
|
|
231.8 |
|
|
|
129.8 |
|
|
|
442.2 |
|
|
|
389.3 |
|
|
|
Other operating expense |
|
|
29.5 |
|
|
|
29.4 |
|
|
|
62.4 |
|
|
|
54.8 |
|
|
|
Exploration and business development |
|
|
28.4 |
|
|
|
23.8 |
|
|
|
47.9 |
|
|
|
44.3 |
|
|
|
General and administrative |
|
|
29.6 |
|
|
|
30.3 |
|
|
|
72.2 |
|
|
|
66.0 |
|
|
|
Operating earnings |
|
|
144.3 |
|
|
|
46.3 |
|
|
|
259.7 |
|
|
|
224.2 |
|
|
|
Other income (expense) - net |
|
|
(2.6 |
) |
|
|
1.8 |
|
|
|
0.1 |
|
|
|
7.7 |
|
|
|
Equity in earnings (losses) of joint ventures |
|
|
0.1 |
|
|
|
(0.1 |
) |
|
|
0.1 |
|
|
|
(0.2 |
) |
|
|
Finance income |
|
|
1.9 |
|
|
|
3.2 |
|
|
|
4.0 |
|
|
|
6.6 |
|
|
|
Finance expense |
|
|
(26.1 |
) |
|
|
(24.7 |
) |
|
|
(53.6 |
) |
|
|
(51.6 |
) |
|
|
Earnings before tax |
|
|
117.6 |
|
|
|
26.5 |
|
|
|
210.3 |
|
|
|
186.7 |
|
|
|
Income tax expense - net |
|
|
(46.5 |
) |
|
|
(24.4 |
) |
|
|
(74.6 |
) |
|
|
(78.4 |
) |
|
|
Net earnings |
|
$ |
71.1 |
|
|
$ |
2.1 |
|
|
$ |
135.7 |
|
|
$ |
108.3 |
|
|
|
Net earnings (loss) attributable to: |
|
|
|
|
|
|
|
|
|
|
Non-controlling interest |
|
$ |
(0.4 |
) |
|
$ |
(0.3 |
) |
|
$ |
(0.5 |
) |
|
$ |
(0.2 |
) |
|
|
Common shareholders |
|
$ |
71.5 |
|
|
$ |
2.4 |
|
|
$ |
136.2 |
|
|
$ |
108.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share attributable to common
shareholders |
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
0.06 |
|
|
$ |
0.00 |
|
|
$ |
0.11 |
|
|
$ |
0.09 |
|
|
|
Diluted |
|
$ |
0.06 |
|
|
$ |
0.00 |
|
|
$ |
0.11 |
|
|
$ |
0.09 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of common shares
outstanding (millions) |
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
1,252.3 |
|
|
|
1,250.2 |
|
|
|
1,251.5 |
|
|
|
1,248.7 |
|
|
|
Diluted |
|
|
1,261.2 |
|
|
|
1,259.3 |
|
|
|
1,260.3 |
|
|
|
1,258.3 |
|
|
|
Consolidated statements of cash flows
|
|
|
|
|
|
|
|
|
|
(unaudited expressed in millions of United States dollars) |
|
|
|
|
|
|
|
|
|
|
|
Three months ended |
|
Six months ended |
|
|
|
June 30, |
|
June 30, |
|
June 30, |
|
June 30, |
|
|
|
2019 |
|
2018 |
|
2019 |
|
2018 |
|
Net inflow (outflow) of cash related to the following
activities: |
|
|
|
|
|
|
|
|
|
Operating: |
|
|
|
|
|
|
|
|
|
Net earnings |
|
$ |
71.1 |
|
|
$ |
2.1 |
|
|
$ |
135.7 |
|
|
$ |
108.3 |
|
|
Adjustments to reconcile net earnings to net cash provided from
operating activities: |
|
|
|
|
|
|
|
|
|
Depreciation, depletion and amortization |
|
|
179.9 |
|
|
|
190.3 |
|
|
|
344.0 |
|
|
|
383.4 |
|
|
Equity in (earnings) losses of joint ventures |
|
|
(0.1 |
) |
|
|
0.1 |
|
|
|
(0.1 |
) |
|
|
0.2 |
|
|
Share-based compensation expense |
|
|
3.0 |
|
|
|
3.5 |
|
|
|
7.6 |
|
|
|
7.5 |
|
|
Finance expense |
|
|
26.1 |
|
|
|
24.7 |
|
|
|
53.6 |
|
|
|
51.6 |
|
|
Deferred tax expense (recovery) |
|
|
5.8 |
|
|
|
15.9 |
|
|
|
(31.4 |
) |
|
|
27.3 |
|
|
Foreign exchange losses (gains) and other |
|
|
1.9 |
|
|
|
(5.1 |
) |
|
|
9.1 |
|
|
|
16.9 |
|
|
Changes in operating assets and liabilities: |
|
|
|
|
|
|
|
|
|
Accounts receivable and other assets |
|
|
(40.3 |
) |
|
|
(41.7 |
) |
|
|
(25.7 |
) |
|
|
(44.1 |
) |
|
Inventories |
|
|
12.6 |
|
|
|
21.2 |
|
|
|
50.0 |
|
|
|
(1.8 |
) |
|
Accounts payable and accrued liabilities |
|
|
56.6 |
|
|
|
7.2 |
|
|
|
42.4 |
|
|
|
(16.0 |
) |
|
Cash flow provided from operating activities |
|
|
316.6 |
|
|
|
218.2 |
|
|
|
585.2 |
|
|
|
533.3 |
|
|
Income taxes recovered (paid) |
|
|
16.4 |
|
|
|
(33.7 |
) |
|
|
(0.6 |
) |
|
|
(55.3 |
) |
|
Net cash flow provided from operating
activities |
|
|
333.0 |
|
|
|
184.5 |
|
|
|
584.6 |
|
|
|
478.0 |
|
|
Investing: |
|
|
|
|
|
|
|
|
|
Additions to property, plant and equipment |
|
|
(276.7 |
) |
|
|
(247.1 |
) |
|
|
(541.5 |
) |
|
|
(494.0 |
) |
|
Acquisition of La Coipa Phase 7 mining concessions |
|
|
- |
|
|
|
- |
|
|
|
(30.0 |
) |
|
|
(35.1 |
) |
|
Net additions to long-term investments and other assets |
|
|
(5.9 |
) |
|
|
(15.9 |
) |
|
|
(12.3 |
) |
|
|
(30.2 |
) |
|
Net proceeds from the sale of property, plant and equipment |
|
|
1.2 |
|
|
|
1.0 |
|
|
|
2.1 |
|
|
|
4.0 |
|
|
(Increase) decrease in restricted cash |
|
|
(0.2 |
) |
|
|
0.6 |
|
|
|
(0.8 |
) |
|
|
(0.1 |
) |
|
Interest received and other |
|
|
1.2 |
|
|
|
2.4 |
|
|
|
2.1 |
|
|
|
5.0 |
|
|
Net cash flow used in investing activities |
|
|
(280.4 |
) |
|
|
(259.0 |
) |
|
|
(580.4 |
) |
|
|
(550.4 |
) |
|
Financing: |
|
|
|
|
|
|
|
|
|
Net proceeds from issuance/drawdown of debt |
|
|
100.0 |
|
|
|
- |
|
|
|
260.0 |
|
|
|
- |
|
|
Repayment of debt |
|
|
(80.0 |
) |
|
|
- |
|
|
|
(105.0 |
) |
|
|
- |
|
|
Payment of lease liabilities |
|
|
(3.9 |
) |
|
|
- |
|
|
|
(7.2 |
) |
|
|
- |
|
|
Interest paid |
|
|
(1.1 |
) |
|
|
- |
|
|
|
(28.4 |
) |
|
|
(30.0 |
) |
|
Other |
|
|
(0.4 |
) |
|
|
- |
|
|
|
(0.2 |
) |
|
|
0.4 |
|
|
Net cash flow provided from (used in) financing
activities |
|
|
14.6 |
|
|
|
- |
|
|
|
119.2 |
|
|
|
(29.6 |
) |
|
Effect of exchange rate changes on cash and cash
equivalents |
|
|
1.3 |
|
|
|
(4.7 |
) |
|
|
3.0 |
|
|
|
(5.1 |
) |
|
Increase (decrease) in cash and cash
equivalents |
|
|
68.5 |
|
|
|
(79.2 |
) |
|
|
126.4 |
|
|
|
(107.1 |
) |
|
Cash and cash equivalents, beginning of
period |
|
|
406.9 |
|
|
|
997.9 |
|
|
|
349.0 |
|
|
|
1,025.8 |
|
|
Cash and cash equivalents, end of period |
|
$ |
475.4 |
|
|
$ |
918.7 |
|
|
$ |
475.4 |
|
|
$ |
918.7 |
|
|
Operating Summary |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mine |
Period |
Ownership |
Tonnes Ore Mined (1) |
Ore Processed (Milled)
(1) |
Ore Processed (HeapLeach)
(1) |
Grade
(Mill) |
Grade(Heap
Leach) |
Recovery (2) |
Gold Eq Production(5) |
Gold Eq Sales (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 |
Q2 2019 |
100 |
4,829 |
1,811 |
3,440 |
0.59 |
0.20 |
81% |
55,440 |
55,740 |
$ |
50.7 |
$ |
910 |
$ |
35.0 |
$ |
22.6 |
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 |
Round Mountain |
Q2 2019 |
100 |
4,074 |
909 |
3,910 |
1.17 |
0.33 |
86% |
90,833 |
87,106 |
$ |
57.8 |
$ |
664 |
$ |
58.9 |
$ |
10.2 |
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 |
Bald Mountain (8) |
Q2 2019 |
100 |
3,725 |
- |
4,138 |
- |
0.36 |
nm |
40,564 |
31,547 |
$ |
27.0 |
$ |
856 |
$ |
57.5 |
$ |
12.2 |
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 |
Paracatu |
Q2 2019 |
100 |
12,307 |
14,439 |
- |
0.48 |
- |
80% |
186,167 |
186,520 |
$ |
106.8 |
$ |
573 |
$ |
34.6 |
$ |
45.2 |
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 |
Maricunga (8) |
Q2 2019 |
100 |
- |
- |
- |
- |
- |
nm |
6,648 |
9,474 |
$ |
8.0 |
$ |
844 |
$ |
- |
$ |
0.5 |
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 |
Russia |
Kupol (3)(4)(6) |
Q2 2019 |
100 |
431 |
432 |
- |
9.23 |
- |
94% |
127,684 |
124,873 |
$ |
70.2 |
$ |
562 |
$ |
8.2 |
$ |
30.7 |
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 |
West Africa |
Tasiast |
Q2 2019 |
100 |
819 |
1,281 |
- |
2.19 |
- |
97% |
92,901 |
94,748 |
$ |
58.9 |
$ |
622 |
$ |
75.2 |
$ |
32.2 |
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 |
Chirano - 100% |
Q2 2019 |
90 |
619 |
904 |
- |
1.95 |
- |
92% |
53,349 |
51,141 |
$ |
46.7 |
$ |
913 |
$ |
2.7 |
$ |
23.8 |
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 |
Chirano - 90% |
Q2 2019 |
90 |
619 |
904 |
- |
1.95 |
- |
92% |
48,014 |
46,027 |
$ |
42.0 |
$ |
913 |
$ |
2.4 |
$ |
21.4 |
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 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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: Q2 2019: 75.29
g/t, 84.9%; 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% |
(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: Q2 2019: 87.98:1; Q1
2019: 83.74:1; Q4 2018: 84.42:1; Q3 2018: 80.80:1; Q2 2018:
79.00:1. |
(6) Dvoinoye ore processed and grade were as follows: Q2 2019:
113,872, 9.24 g/t; 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 |
(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 |
|
Six months ended |
|
|
June 30, |
|
June 30, |
|
|
|
2019 |
|
|
2018 |
|
|
|
2019 |
|
|
2018 |
|
|
|
|
|
|
|
|
Net earnings attributable to common shareholders - as reported |
$ |
71.5 |
|
$ |
2.4 |
|
|
$ |
136.2 |
|
$ |
108.5 |
|
Adjusting
items: |
|
|
|
|
|
|
Foreign exchange losses
(gains) |
|
4.1 |
|
|
(3.4 |
) |
|
|
2.0 |
|
|
(3.9 |
) |
|
Foreign exchange (gains)
losses on translation of tax basis and foreign exchange on
deferred income taxes within income tax expense |
|
(5.6 |
) |
|
28.1 |
|
|
|
(6.8 |
) |
|
28.3 |
|
|
Taxes in respect of prior
periods |
|
5.7 |
|
|
(0.1 |
) |
|
|
11.4 |
|
|
20.0 |
|
|
Reclamation and remediation
expense |
|
- |
|
|
4.5 |
|
|
|
- |
|
|
4.5 |
|
|
Tasiast Phase One
commissioning costs |
|
- |
|
|
6.4 |
|
|
|
- |
|
|
6.4 |
|
|
Fort Knox pit wall slide
related costs |
|
4.9 |
|
|
- |
|
|
|
11.4 |
|
|
- |
|
|
Restructuring costs |
|
- |
|
|
- |
|
|
|
9.2 |
|
|
- |
|
|
Other |
|
0.3 |
|
|
1.5 |
|
|
|
2.2 |
|
|
1.0 |
|
|
Tax effect of the above
adjustments |
|
(1.3 |
) |
|
(1.6 |
) |
|
|
(2.7 |
) |
|
(1.8 |
) |
|
|
|
8.1 |
|
|
35.4 |
|
|
|
26.7 |
|
|
54.5 |
|
Adjusted net earnings attributable to common shareholders |
$ |
79.6 |
|
$ |
37.8 |
|
|
$ |
162.9 |
|
$ |
163.0 |
|
Weighted average number of common shares outstanding - Basic |
|
1,252.3 |
|
|
1,250.2 |
|
|
|
1,251.5 |
|
|
1,248.7 |
|
Adjusted net earnings per share |
$ |
0.06 |
|
$ |
0.03 |
|
|
$ |
0.13 |
|
$ |
0.13 |
|
|
|
|
|
|
|
|
|
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 |
|
Six months ended |
|
|
June 30, |
|
June 30, |
|
|
|
2019 |
|
|
2018 |
|
|
|
2019 |
|
|
2018 |
|
|
|
|
|
|
|
Net cash flow provided from operating activities - as reported |
$ |
333.0 |
|
$ |
184.5 |
|
|
$ |
584.6 |
|
$ |
478.0 |
|
|
|
|
|
|
|
Adjusting
items: |
|
|
|
|
|
|
Working capital changes: |
|
|
|
|
|
|
Accounts receivable and other assets |
|
40.3 |
|
|
41.7 |
|
|
|
25.7 |
|
|
44.1 |
|
Inventories |
|
(12.6 |
) |
|
(21.2 |
) |
|
|
(50.0 |
) |
|
1.8 |
|
Accounts payable and other liabilities, including income taxes
paid |
|
(73.0 |
) |
|
26.5 |
|
|
|
(41.8 |
) |
|
71.3 |
|
|
|
(45.3 |
) |
|
47.0 |
|
|
|
(66.1 |
) |
|
117.2 |
Adjusted
operating cash flow |
$ |
287.7 |
|
$ |
231.5 |
|
|
$ |
518.5 |
|
$ |
595.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 |
|
Six months ended |
June 30, |
|
June 30, |
|
|
|
2019 |
|
|
2018 |
|
|
|
2019 |
|
|
2018 |
|
|
|
|
|
|
|
|
Production cost of sales - as reported |
|
$ |
426.1 |
|
$ |
454.9 |
|
|
$ |
837.8 |
|
$ |
899.5 |
|
Less: portion attributable to Chirano non-controlling
interest(1) |
|
(4.7 |
) |
|
(4.5 |
) |
|
|
(9.1 |
) |
|
(9.2 |
) |
Attributable(2) production cost of sales |
$ |
421.4 |
|
$ |
450.4 |
|
|
$ |
828.7 |
|
$ |
890.3 |
|
|
|
|
|
|
|
|
Gold
equivalent ounces sold |
|
|
641,149 |
|
|
593,296 |
|
|
|
1,244,206 |
|
|
1,267,957 |
|
Less: portion attributable to Chirano non-controlling
interest(9) |
|
(5,114 |
) |
|
(5,740 |
) |
|
|
(10,522 |
) |
|
(12,184 |
) |
Attributable(2) gold equivalent ounces sold |
|
636,035 |
|
|
587,556 |
|
|
|
1,233,684 |
|
|
1,255,773 |
|
Consolidated production cost of sales per equivalent ounce
sold |
$ |
665 |
|
$ |
767 |
|
|
$ |
673 |
|
$ |
709 |
|
Attributable(2) production cost of sales per equivalent ounce
sold |
$ |
663 |
|
$ |
767 |
|
|
$ |
672 |
|
$ |
709 |
|
|
|
|
|
|
|
|
|
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 of Sales Per Ounce
Sold on a By-Product Basis |
(in millions, except ounces and production cost of sales per
ounce) |
Three months ended |
|
Six months ended |
|
|
June 30, |
|
June 30, |
|
|
|
2019 |
|
|
2018 |
|
|
|
2019 |
|
|
2018 |
|
|
|
|
|
|
|
|
Production cost of sales - as reported |
|
$ |
426.1 |
|
$ |
454.9 |
|
|
$ |
837.8 |
|
$ |
899.5 |
|
Less: portion attributable to Chirano non-controlling
interest(1) |
|
(4.7 |
) |
|
(4.5 |
) |
|
|
(9.1 |
) |
|
(9.2 |
) |
Less: attributable(2) silver revenue(3) |
|
(15.5 |
) |
|
(17.2 |
) |
|
|
(32.6 |
) |
|
(35.5 |
) |
Attributable(2) production cost of sales net of silver by-product
revenue |
$ |
405.9 |
|
$ |
433.2 |
|
|
$ |
796.1 |
|
$ |
854.8 |
|
|
|
|
|
|
|
|
Gold
ounces sold |
|
|
629,206 |
|
|
580,173 |
|
|
|
1,219,031 |
|
|
1,241,057 |
|
Less:
portion attributable to Chirano non-controlling interest(9) |
|
|
(5,108 |
) |
|
(5,729 |
) |
|
|
(10,506 |
) |
|
(12,162 |
) |
Attributable(2) gold ounces sold |
|
624,098 |
|
|
574,444 |
|
|
|
1,208,525 |
|
|
1,228,895 |
|
Attributable(2) production cost of sales per ounce sold on a
by-product basis |
$ |
650 |
|
$ |
754 |
|
|
$ |
659 |
|
$ |
696 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 Cost and All-In Cost Per
Ounce Sold on a By-Product Basis |
|
(in
millions, except ounces and costs per ounce) |
Three months ended |
|
Six months ended |
|
June 30, |
|
June 30, |
|
|
2019 |
|
|
2018 |
|
|
|
2019 |
|
|
2018 |
|
|
|
|
|
|
|
Production cost of sales - as reported |
$ |
426.1 |
|
$ |
454.9 |
|
|
$ |
837.8 |
|
$ |
899.5 |
|
Less: portion attributable to Chirano non-controlling
interest(1) |
|
(4.7 |
) |
|
(4.5 |
) |
|
|
(9.1 |
) |
|
(9.2 |
) |
Less: attributable(2) silver revenue(3) |
|
(15.5 |
) |
|
(17.2 |
) |
|
|
(32.6 |
) |
|
(35.5 |
) |
Attributable(2) production cost of sales net of silver by-product
revenue |
$ |
405.9 |
|
$ |
433.2 |
|
|
$ |
796.1 |
|
$ |
854.8 |
|
Adjusting items on an attributable(2) basis: |
|
|
|
|
|
General and administrative(4) |
|
29.6 |
|
|
30.3 |
|
|
|
63.0 |
|
|
66.0 |
|
Other operating expense - sustaining(5) |
|
6.0 |
|
|
9.6 |
|
|
|
11.5 |
|
|
16.4 |
|
Reclamation and remediation - sustaining(6) |
|
11.9 |
|
|
13.6 |
|
|
|
23.3 |
|
|
28.8 |
|
Exploration and business development - sustaining(7) |
|
18.2 |
|
|
13.6 |
|
|
|
32.1 |
|
|
25.9 |
|
Additions to property, plant and equipment - sustaining(8) |
|
97.8 |
|
|
80.6 |
|
|
|
176.2 |
|
|
135.7 |
|
Lease payments - sustaining(9) |
|
3.5 |
|
|
- |
|
|
|
6.4 |
|
|
- |
|
All-in Sustaining Cost on a by-product basis - attributable(2) |
$ |
572.9 |
|
$ |
580.9 |
|
|
$ |
1,108.6 |
|
$ |
1,127.6 |
|
Other operating expense - non-sustaining(5) |
|
12.0 |
|
|
13.5 |
|
|
|
28.2 |
|
|
21.6 |
|
Reclamation and remediation - non-sustaining(6) |
|
1.8 |
|
|
1.4 |
|
|
|
3.5 |
|
|
2.7 |
|
Exploration - non-sustaining(7) |
|
10.0 |
|
|
10.1 |
|
|
|
15.5 |
|
|
18.2 |
|
Additions to property, plant and equipment - non-sustaining(8) |
|
177.8 |
|
|
165.3 |
|
|
|
342.5 |
|
|
336.8 |
|
Lease payments - non-sustaining(9) |
|
0.4 |
|
|
- |
|
|
|
0.8 |
|
|
- |
|
All-in Cost on a by-product basis - attributable(2) |
$ |
774.9 |
|
$ |
771.2 |
|
|
$ |
1,499.1 |
|
$ |
1,506.9 |
|
Gold
ounces sold |
|
629,206 |
|
|
580,173 |
|
|
|
1,219,031 |
|
|
1,241,057 |
|
Less:
portion attributable to Chirano non-controlling interest(9) |
|
(5,108 |
) |
|
(5,729 |
) |
|
|
(10,506 |
) |
|
(12,162 |
) |
Attributable(2) gold ounces sold |
|
624,098 |
|
|
574,444 |
|
|
|
1,208,525 |
|
|
1,228,895 |
|
Attributable(2) all-in sustaining cost per ounce sold on a
by-product basis |
$ |
918 |
|
$ |
1,011 |
|
|
$ |
917 |
|
$ |
918 |
|
Attributable(2) all-in cost per ounce sold on a by-product
basis |
$ |
1,242 |
|
$ |
1,343 |
|
|
$ |
1,240 |
|
$ |
1,226 |
|
|
|
|
|
|
|
|
|
|
|
|
|
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 Cost and All-In
Cost Per Equivalent Ounce Sold |
(in
millions, except ounces and costs per equivalent ounce) |
Three months ended |
|
Six months ended |
|
|
June 30, |
|
June 30, |
|
|
|
2019 |
|
|
2018 |
|
|
|
2019 |
|
|
2018 |
|
|
|
|
|
|
|
|
Production cost of sales - as reported |
$ |
426.1 |
|
$ |
454.9 |
|
|
$ |
837.8 |
|
$ |
899.5 |
|
Less: portion attributable to Chirano non-controlling
interest(1) |
|
(4.7 |
) |
|
(4.5 |
) |
|
|
(9.1 |
) |
|
(9.2 |
) |
Attributable(2) production cost of sales |
$ |
421.4 |
|
$ |
450.4 |
|
|
$ |
828.7 |
|
$ |
890.3 |
|
Adjusting items on an attributable(2) basis: |
|
|
|
|
|
|
General and
administrative(4) |
|
29.6 |
|
|
30.3 |
|
|
|
63.0 |
|
|
66.0 |
|
|
Other operating expense -
sustaining(5) |
|
6.0 |
|
|
9.6 |
|
|
|
11.5 |
|
|
16.4 |
|
|
Reclamation and remediation -
sustaining(6) |
|
11.9 |
|
|
13.6 |
|
|
|
23.3 |
|
|
28.8 |
|
|
Exploration and business
development - sustaining(7) |
|
18.2 |
|
|
13.6 |
|
|
|
32.1 |
|
|
25.9 |
|
|
Additions to property, plant
and equipment - sustaining(8) |
|
97.8 |
|
|
80.6 |
|
|
|
176.2 |
|
|
135.7 |
|
|
Lease payments -
sustaining(9) |
|
3.5 |
|
|
- |
|
|
|
6.4 |
|
|
- |
|
All-in Sustaining Cost - attributable(2) |
$ |
588.4 |
|
$ |
598.1 |
|
|
$ |
1,141.2 |
|
$ |
1,163.1 |
|
|
Other operating expense -
non-sustaining(5) |
|
12.0 |
|
|
13.5 |
|
|
|
28.2 |
|
|
21.6 |
|
|
Reclamation and remediation -
non-sustaining(6) |
|
1.8 |
|
|
1.4 |
|
|
|
3.5 |
|
|
2.7 |
|
|
Exploration -
non-sustaining(7) |
|
10.0 |
|
|
10.1 |
|
|
|
15.5 |
|
|
18.2 |
|
|
Additions to property, plant
and equipment - non-sustaining(8) |
|
177.8 |
|
|
165.3 |
|
|
|
342.5 |
|
|
336.8 |
|
|
Lease payments -
non-sustaining(9) |
|
0.4 |
|
|
- |
|
|
|
0.8 |
|
|
- |
|
All-in Cost - attributable(2) |
$ |
790.4 |
|
$ |
788.4 |
|
|
$ |
1,531.7 |
|
$ |
1,542.4 |
|
Gold equivalent ounces sold |
|
641,149 |
|
|
593,296 |
|
|
|
1,244,206 |
|
|
1,267,957 |
|
Less: portion attributable to Chirano non-controlling
interest(9) |
|
(5,114 |
) |
|
(5,740 |
) |
|
|
(10,522 |
) |
|
(12,184 |
) |
Attributable(2) gold equivalent ounces sold |
|
636,035 |
|
|
587,556 |
|
|
|
1,233,684 |
|
|
1,255,773 |
|
Attributable(2) all-in sustaining cost per equivalent ounce
sold |
$ |
925 |
|
$ |
1,018 |
|
|
$ |
925 |
|
$ |
926 |
|
Attributable(2) all-in cost per equivalent ounce sold |
$ |
1,243 |
|
$ |
1,342 |
|
|
$ |
1,242 |
|
$ |
1,228 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) The portion attributable to Chirano
non-controlling interest represents the non-controlling interest
(10%) in the production cost of sales for the Chirano mine.(2)
“Attributable” includes Kinross' share of Chirano (90%)
production.(3) “Attributable silver revenue” 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.(4) “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.(5) “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.(6) “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.(7)
“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.(8) “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 and six months ended June 30, 2019, primarily related to
projects at Tasiast, Round Mountain, and Bald Mountain and Fort
Knox. Non-sustaining capital expenditures during the three and six
months ended June 30, 2018, primarily relate to projects at
Tasiast, Round Mountain, and Bald Mountain.(9) “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.(10) “Portion attributable to Chirano
non-controlling interest” represents the non-controlling interest
(10%) in the ounces sold from the Chirano mine.(11) “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 second-quarter highlights”,
“Operations and organic development project highlights”, “CEO
Commentary”, “Russia”, “West Africa”, “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”, “anticipate”, “believe”, “budget”, “continue”,
“develop”, “encouraging”, “enhancement”, “estimates”, “expects”,
“explore”, “forecast”, “focus”, “future”, “goal”, “guidance”,
“intend”, “measures”, “on budget”, “on schedule”, “on target”, “on
track”, “opportunity”, “optimize”, “outlook”, “phased”, “plan”,
“potential”, “progress”, “project”, “promising”, “schedule”,
“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 June 30, 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 operational challenges at Fort Knox and Bald
Mountain 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 expansion, Phase Two expansion 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; land acquisitions
and permitting for the construction and operation of the new
tailings facility, water and power supply and continued operation
of the tailings reprocessing facility at Paracatu; implementation
of fire permitting upgrades required at Paracatu; and the renewal
of the Chirano mining permit 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, and potential amendments to minerals and
mining laws and energy levies laws, and the enforcement of labour
laws 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 including those related to Tasiast Sud,
the potential passing of Environmental Protection Agency
regulations in the U.S. relating to the provision of financial
assurances under the Comprehensive Environmental Response,
Compensation and Liability Act, the European Union’s General Data
Protection Regulation or similar legislation in other jurisdictions
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,
administrative orders 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
ratings; 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
June 30, 2019 and the Annual Information Form dated March 29, 2019.
Please also refer to the cautionary statement on forward looking
information from the July 31, 2019 press release related to the
Company’s acquisition of the Chulbatkan project. 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 $18 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 $37
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 presentation, 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 (which does not include the Chulbatkan project)
contained in this presentation 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 18 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
the weighting of each currency within our consolidated cost
structure.
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