On track to meet company-wide annual
production and cost guidance
Kinross Gold Corporation (TSX: K, NYSE: KGC) today announced its
results for the third-quarter ended September 30, 2018.
(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.)
2018 third-quarter
highlights:
- Production1: 586,260 gold equivalent ounces
(Au eq. oz.), compared with 653,993 Au eq. oz. in Q3 2017.
- Gold equivalent ounces sold: 618,463 Au eq.
oz. compared with 638,659 Au eq. oz. sold in Q3 2017.
- Revenue: $753.9 million, compared with $828.0
million in Q3 2017.
- Production cost of sales2: $777 per Au eq.
oz., compared with $662 in Q3 2017.
- All-in sustaining cost2: $1,049 per Au eq. oz.
sold, compared with $937 in Q3 2017. All-in sustaining cost per
gold ounce (Au oz.) sold on a by-product basis was $1,046 in Q3
2018, compared with $927 in Q3 2017.
- Operating cash flow: $127.2 million, compared
with $197.7 million in Q3 2017.
- Adjusted operating cash flow2: $143.2 million,
compared with $320.8 million in Q3 2017.
- Reported net earnings/loss3: loss of 104.4
million, or $0.08 per share, compared with net earnings of $60.1
million, or $0.05 per share, in Q3 2017.
- Adjusted net earnings/loss2,3: loss of $48.4
million, or $0.04 per share, compared with adjusted net earnings of
$84.1 million, or $0.07 per share, in Q3 2017.
- Organic projects and development
opportunities:
- Tasiast expansion: Phase One SAG mill
commissioning has been completed. The Company continues to assess
alternative throughput approaches to expand Tasiast and advanced
discussions with the Government of Mauritania. Kinross also
advanced project financing activities during the quarter.
- Round Mountain Phase W
project: On schedule and on budget, with initial
ore expected in mid-2019.
- Fort Knox Gilmore project: On
schedule and on budget, with initial production expected in early
2020.
- Bald Mountain Vantage Complex
project: On schedule and on budget, as stripping
and stacking on the new heap leach pad have now commenced. On
October 2, 2018, the Company acquired the remaining 50% interest in
the Bald Mountain Exploration Joint Venture that it did not already
own from Barrick Gold for consideration including $15.5 million in
cash and a 1.25% net smelter royalty, giving Kinross 100% ownership
of the entire Bald Mountain land package.
- Russia satellite projects: The
Moroshka project was completed as production
commenced at the high-grade deposit located near Kupol. Development
at Dvoinoye Zone 1 is proceeding as planned.
- Chile projects: The La Coipa
Restart project feasibility study remains on schedule to
be completed in the second half of 2019, with permitting now
complete for the project. The Lobo Marte scoping
study also remains on schedule, and is expected to be completed in
the first half of 2019.
- Outlook: Kinross expects to produce 2.5
million Au eq. oz. (+/- 5%) at a production cost of sales per Au
eq. oz. of $730 (+/- 5%) and all-in sustaining cost of $975 (+/-
5%) per ounce sold on both a gold equivalent and by-product basis
for 2018. Total capital expenditures are forecast to be
approximately $1,075 million (+/- 5%).
- Balance sheet: As of September 30, 2018,
Kinross had cash and cash equivalents of $470.1 million and
available credit of $1,554.3 million, for total liquidity of
approximately $2.0 billion, and no debt maturities until 2021.
- Board Chair update: John Oliver has announced
he will retire from his role as Board Chair effective December
31, 2018. Catherine McLeod-Seltzer, a Board member since 2005, has
been appointed the new Independent Chair effective January 1,
2019.
CEO Commentary
J. Paul Rollinson, President and CEO, made the
following comments in relation to 2018 third-quarter results:
“During the first nine months of 2018, our
global portfolio of mines achieved solid production and generated
robust cash flow. Our Nevada, Brazil, Ghana and Russia operations
performed well during the quarter and we remain on track to meet
our company-wide production and cost guidance for the year.
“Commissioning of the new SAG mill for the
Tasiast Phase One expansion has been completed. Performance at
Tasiast is expected to further improve in the fourth quarter, as
the mine delivered record monthly production in October and began
mining higher grade ore. We also continue to advance discussions
with the Government of Mauritania regarding our operations in the
country and have now signed mandate letters with Export Development
Canada (EDC) and the International Finance Corporation (IFC), a
division of the World Bank, regarding project financing.
“Construction at our U.S. projects – Round
Mountain Phase W and Bald Mountain Vantage Complex in Nevada and
Fort Knox Gilmore in Alaska – remain on schedule and on budget as
we continue to solidify our production footprint in the country. In
Russia, the Moroskha project was completed and production commenced
at the high-grade satellite deposit near Kupol, while our studies
assessing a return to long-term production in Chile are proceeding
well.”
Financial results
Summary of financial and operating
results
|
|
Three months ended |
Nine months ended |
|
|
September 30, |
September 30, |
(in millions, except ounces, per share amounts, and per
ounce amounts) |
2018 |
2017 |
2018 |
2017 |
Operating
Highlights |
|
|
|
|
|
Total gold equivalent ounces(a) |
|
|
|
|
|
Produced(c) |
591,928 |
660,564 |
1,859,789 |
2,038,797 |
Sold(c) |
623,854 |
645,235 |
1,891,811 |
1,987,113 |
|
|
|
|
|
|
Attributable gold equivalent ounces(a) |
|
|
|
|
Produced(c) |
586,260 |
653,993 |
1,842,246 |
2,020,823 |
Sold(c) |
618,463 |
638,659 |
1,874,236 |
1,968,189 |
|
|
|
|
|
|
Financial Highlights |
|
|
|
|
|
Metal sales |
|
$ |
|
753.9 |
|
$ |
828.0 |
|
$ |
2,426.1 |
|
$ |
2,492.7 |
Production cost of sales |
|
$ |
|
484.6 |
|
$ |
427.5 |
|
$ |
1,384.1 |
|
$ |
1,342.9 |
Depreciation, depletion and amortization |
|
$ |
|
204.7 |
|
$ |
207.6 |
|
$ |
588.1 |
|
$ |
629.1 |
Operating earnings (loss) |
|
$ |
|
(48.8) |
|
$ |
80.1 |
|
$ |
175.4 |
|
$ |
233.6 |
Net earnings (loss) attributable to common shareholders |
|
$ |
|
(104.4) |
|
$ |
60.1 |
|
$ |
4.1 |
|
$ |
227.8 |
Basic earnings (loss) per share attributable to common
shareholders |
|
$ |
|
(0.08) |
|
$ |
0.05 |
|
$ |
0.00 |
|
$ |
0.18 |
Diluted earnings (loss) per share attributable to common
shareholders |
|
$ |
|
(0.08) |
|
$ |
0.05 |
|
$ |
0.00 |
|
$ |
0.18 |
Adjusted net earnings (loss) attributable to common
shareholders(b) |
|
$ |
|
(48.4) |
|
$ |
84.1 |
|
$ |
114.6 |
|
$ |
162.4 |
Adjusted net earnings (loss) per share(b) |
|
$ |
|
(0.04) |
|
$ |
0.07 |
|
$ |
0.09 |
|
$ |
0.13 |
Net cash flow provided from operating activities |
|
$ |
|
127.2 |
|
$ |
197.7 |
|
$ |
605.2 |
|
$ |
585.2 |
Adjusted operating cash flow(b) |
|
$ |
|
143.2 |
|
$ |
320.8 |
|
$ |
738.4 |
|
$ |
802.5 |
Capital expenditures |
|
$ |
|
276.4 |
|
$ |
204.7 |
|
$ |
770.4 |
|
$ |
584.3 |
Average realized gold price per ounce(d) |
|
$ |
|
1,209 |
|
$ |
1,283 |
|
$ |
1,283 |
|
$ |
1,254 |
Consolidated production cost of sales per equivalent ounce(c)
sold(b) |
|
$ |
|
777 |
|
$ |
663 |
|
$ |
732 |
|
$ |
676 |
Attributable(a) production cost of sales per equivalent ounce(c)
sold(b) |
|
$ |
|
777 |
|
$ |
662 |
|
$ |
731 |
|
$ |
674 |
Attributable(a) production cost of sales per ounce sold on a
by-product basis(b) |
|
$ |
|
768 |
|
$ |
645 |
|
$ |
719 |
|
$ |
658 |
Attributable(a) all-in sustaining cost per ounce sold on a
by-product basis(b) |
|
$ |
|
1,046 |
|
$ |
927 |
|
$ |
960 |
|
$ |
924 |
Attributable(a) all-in sustaining cost per equivalent ounce(c)
sold(b) |
|
$ |
|
1,049 |
|
$ |
937 |
|
$ |
967 |
|
$ |
933 |
Attributable(a) all-in cost per ounce sold on a by-product
basis(b) |
|
$ |
|
1,360 |
|
$ |
1,155 |
|
$ |
1,270 |
|
$ |
1,117 |
Attributable(a) all-in cost per equivalent ounce(c) sold(b) |
|
$ |
|
1,356 |
|
$ |
1,158 |
|
$ |
1,270 |
|
$ |
1,121 |
- "Total" includes 100% of Chirano production. "Attributable"
includes Kinross' share of Chirano (90%) production.
- The definition 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 third quarter of 2018 was 80.80:1 (third quarter of 2017 -
75.91:1). The ratio for the first nine months of 2018 was 79.65:1
(first nine months of 2017 - 72.94:1).
- The definition of this non-GAAP financial measure is included
on pages 13 to 17 of this news release.
The following operating and financial results
are based on third quarter 2018 gold equivalent production.
Production and cost measures are on an attributable basis:
Production: Kinross produced
586,260 attributable Au eq. oz. in Q3 of 2018, compared with
653,993 Au eq. oz. in Q3 2017.
Gold equivalent ounces sold:
Kinross sold 618,463 Au eq. oz. in Q3 2018, which was higher than
production during the quarter due to timing, but less than the
638,659 Au eq. oz. sold in Q3 2017 due to lower production.
Production cost of sales:
Production cost of sales per Au eq. oz.2 was $777 for Q3 2018,
compared with $662 for Q3 2017, mainly as a result of higher cost
of sales per ounce sold at Fort Knox, Tasiast and Kupol.
Production cost of sales per Au oz. on a
by-product basis2 was $768 in Q3 2018, compared with $645 in Q3
2017, based on Q3 2018 attributable gold sales of 605,244 ounces
and attributable silver sales of 1,068,248 ounces.
All-in sustaining cost: All-in
sustaining cost per Au eq. oz. sold2 was $1,049 in Q3 2018,
compared with $937 in Q3 2017. All-in sustaining cost per Au oz.
sold on a by-product basis2 was $1,046 in Q3 2018, compared with
$927 in Q3 2017.
Revenue: Revenue from metal
sales was $753.9 million in the third quarter of 2018, compared
with $828.0 million during the same period in 2017, due to a
decrease in gold equivalent ounces sold and the average realized
gold price.
Average realized gold price4:
The average realized gold price in Q3 2018 was $1,209 per ounce,
compared with $1,283 per ounce in Q3 2017.
Margins: Kinross’ attributable
margin was $432 per Au eq. oz. sold5 for Q3 2018, compared with
$621 per Au eq. oz. sold in Q3 2017.
Operating cash flow: Net
operating cash flow was $127.2 million for the third quarter of
2018, compared with $197.7 million for Q3 2017.
Adjusted operating cash flow2 was $143.2 million
for Q3 2018, compared with $320.8 million for Q3 2017.
Earnings/loss: Reported net
loss3 was $104.4 million, or $0.08 per share, for Q3 2018, compared
with earnings of $60.1 million, or $0.05 per share, in Q3 2017. The
decrease was mainly a result of lower margins and an increase in
income tax expense.
Adjusted net loss2,3 was $48.4 million, or $0.04
per share, for Q3 2018, compared with adjusted net earnings of
$84.1 million, or $0.07 per share, for Q3 2017.
Capital expenditures: Capital
expenditures increased to $276.4 million for Q3 2018, compared with
$204.7 million for the same period last year, mainly due to
increased spending at Round Mountain and Bald Mountain.
Operating results
Mine-by-mine summaries for 2018 third-quarter
operating results may be found on pages eight and 12 of this news
release. Highlights include the following:
Americas
Round Mountain continued its
consistent performance, with production in line and cost of sales
per ounce sold lower compared with the previous quarter mainly due
to a decrease in operating waste mined and the timing of ounces
processed through the mill. Production was lower and cost of sales
per ounce sold was higher year-over-year primarily due to lower
mill grade, as the mine achieved the highest mill grades since 2003
during Q3 2017. The site experienced a wall failure in the
southwest corner of the pit, which the Company does not expect to
significantly impact production or the Phase W project.
At Bald Mountain, production
was down year-over-year mainly due to fewer tonnes and lower grade
ore placed on the heap leach pads and was in line
quarter-over-quarter. Gold sales were higher compared with the
previous quarter and year-over-year mainly due to timing of sales.
Cost of sales per ounce sold decreased year-over-year as a result
of less operating waste mined and was higher quarter-over-quarter
mainly due to an increase in operating waste mined.
At Fort Knox, production was
lower year-over-year largely due to the impact of the pit wall
slide in Q1 2018 and higher than average amount of rainfall in the
area which affected geotechnical stability during the quarter. In
addition, production was lower compared with the previous quarter
mainly due to lower mill grades and fewer tonnes of ore processed
on the heap leach pads. Cost of sales per ounce sold was higher
compared with the previous quarter and prior year primarily due to
the decline in mill grades and lower gold equivalent ounces sold.
Additionally, cost of sales per ounce was higher compared with Q3
2017 due to an increase in operating waste mined. Fort Knox
production and costs are expected to be at similar levels in Q4
2018.
Paracatu continued to perform
well in Q3 2018, with increased production compared with the second
quarter due to timing of ounces processed through the mill and
slightly higher grades and recoveries. Production was significantly
higher year-over-year as mining and processing activities were
curtailed in Q3 2017 due to lower than average rainfall in the
region. Cost of sales per ounce sold was lower compared with the
previous quarter and year-over-year due to lower power costs as a
result of the acquisition of the power plants in Q3 2018 and
favourable foreign exchange movements.
At Maricunga, production
decreased compared with the previous quarter and Q3 2017 as the
rinsing of ore placed on the heap leach pads prior to the
suspension of mining activities ramped down. Cost of sales per
ounce sold increased quarter-over-quarter and year-over-year mainly
due to timing of gold sales.
Russia
The region performed well in Q3 2018, as
Kupol and Dvoinoye production
increased compared with the previous quarter mainly due to higher
grades. Compared with Q3 2017, production decreased mainly due to
planned mining of lower grade ore. Cost of sales per ounce sold
increased quarter-over-quarter mainly due to higher reagent costs,
and increased year-over-year mainly due to lower grades and high
operating waste mined, partially offset by favourable foreign
exchange movements.
West Africa
At Tasiast, commissioning of
the new SAG mill was completed during the quarter as the ramp-up of
throughput advanced well and was consistently at nameplate capacity
by the end of the quarter. Production increased
quarter-over-quarter as the mill achieved higher throughput with
the completion of Phase One commissioning. Production decreased
year-over-year mainly due to lower mill grades as a result of
delays in the mine plan to access higher grade material. Cost of
sales per ounce sold increased quarter-over-quarter and
year-over-year mainly due to higher fuel and maintenance costs. An
increase in operating waste mined and lower gold equivalent ounces
sold also contributed to the higher year-over-year cost of sales.
Tasiast performance is expected to further improve in the fourth
quarter, with the mine achieving record monthly production in
October as mining moved to higher grade areas of the pit.
Chirano continued to perform
well, with production largely in line with Q2 2018 due to strong
mill performance. Production decreased year-over-year
primarily due to anticipated lower grades. Cost of sales per ounce
sold was in line quarter-over-quarter and higher year-over-year due
to fewer ounces sold, partially offset by lower labour, power and
maintenance costs. Exploration activities focused on potential
incremental additions to mine life continue to show promising
results.
Organic development projects and
opportunities
Tasiast expansion update
Kinross continues to analyze alternative
approaches to incrementally expand throughput at the Tasiast mine
after pausing activities at the Phase Two project.
The Company also continues to advance its discussions with the
Government of Mauritania regarding its activities in the country,
including agreeing to a process with the Minister of Petroleum,
Energy and Mines to facilitate a resolution of the matter raised in
the letter received from the Government in May 2018. The Company’s
evaluation of alternative throughput approaches, and a decision on
the next steps for Phase Two, are subject to the ongoing engagement
with the Government.
Kinross has also advanced the approximately $300
million in project financing it is targeting for Tasiast. During
the third quarter, the Company signed a mandate letter with EDC,
indicating their interest in the financing, subject to further due
diligence. This was in addition to a mandate letter signed with the
IFC, a division of the World Bank, in Q2 2018. Meetings with EDC,
IFC and their technical advisors were conducted during the quarter,
followed by a due diligence site visit in early Q4 2018 that
included meetings with relevant Mauritanian government Ministers
and officials. Commercial banks continue to express interest in the
financing.
Round Mountain Phase W
The Round Mountain Phase W
project is progressing on schedule and on budget, with
pre-stripping advancing well and initial Phase W ore expected to be
encountered in mid-2019. Detailed engineering of all major
infrastructure is now complete and construction of the vertical
carbon-in-column (VCIC) plant is proceeding well, with supporting
concrete work nearing completion. Construction of the new heap
leach pad has commenced and is now 20% complete, with construction
of project infrastructure such as the truck shop, warehouse, wash
bay and fueling area proceeding as planned.
Fort Knox Gilmore project
The Fort Knox Gilmore project
is progressing on schedule and on budget, with initial production
expected in early 2020. Preparations for major construction of the
new heap leach pad, which includes grading, is proceeding well.
Drilling and expansion of the dewatering system has begun to
prepare for the expected start of stripping in mid-2019.
Engineering is now essentially complete.
Bald Mountain Vantage
Complex
The Bald Mountain Vantage
Complex project is proceeding well and is on schedule and
on budget. Stripping and stacking of economic but previously
leached ore on the new heap leach pad have commenced. Commissioning
of the heap leach and processing facilities is expected to begin in
Q1 2019, with ore from the Vantage Complex expected to be
encountered by year-end. Engineering is now complete and initial
construction and concrete work has begun for the truck shop, wash
bay and the VCIC plant.
On October 2, 2018, KG Mining (Bald Mountain)
Inc., a subsidiary of the Company, completed a transaction with
Barrick Gold to acquire the remaining 50% interest in the Bald
Mountain Exploration Joint Venture that it did not already own for
consideration including $15.5 million in cash and a 1.25% net
smelter royalty. The Company now owns 100% of the Bald Mountain
property, the largest private mining land package in the U.S.
Russia satellite deposits
The Moroshka project has been
completed, as production commenced in October at the high-grade
satellite deposit located approximately four kilometres east of
Kupol. At the Dvoinoye Zone 1 deposit, mine and
surface infrastructure is nearly complete and development is
continuing as scheduled, with production expected to commence in
mid-2019.
Chile projects
The feasibility study for the La Coipa
Restart project and the scoping study for the Lobo
Marte project both remain on schedule to be completed in
the second half of 2019 and the first half of 2019 respectively.
Permitting for the La Coipa Restart project has now been completed,
as the Company received final sectoral permits for the Phase 7
deposit in the third quarter. Engineering firms have been selected
and have commenced work on the studies.
The Company is evaluating both projects for a
return to long-term production in Chile and assessing the potential
to share resources and leverage synergies between the projects,
which are located approximately 80 kilometres apart. The La Coipa
Restart feasibility study is contemplating refurbishments of the
existing plant and infrastructure, and the processing of high-grade
materials from the Phase 7 deposit. The Lobo Marte scoping study is
taking a refreshed look at the project and assessing optimum
processing scenarios for the potential for a production start at
the end of La Coipa’s mine life.
Balance sheet and financial flexibility
As of September 30, 2018, Kinross had cash and
cash equivalents of $470.1 million, compared with $1,025.8 million
at December 31, 2017, mainly due to capital expenditures at the
Company’s development projects across its portfolio and the
acquisition of two hydroelectric power plants in Brazil, partially
offset by operating cash flow. The Company also had available
credit of $1,554.3 million, for total liquidity of approximately
$2.0 billion, and has no debt maturities until 2021.
Outlook
The 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 annual production guidance remains
unchanged, as the Company expects to produce 2.5 million Au eq. oz.
(+/- 5%) for the year. The Company is also on track to meet its
2018 full-year production cost of sales guidance of $730 per Au eq.
oz. (+/- 5%) and all-in sustaining cost guidance of $975 (+/- 5%)
per ounce sold on both a gold equivalent and by-product basis.
The Company expects to meet its 2018 capital
expenditure forecast of approximately $1,075 million (+/- 5%),
which includes sustaining capital of $355 million and
non-sustaining capital of approximately $680 million.
Other operating costs are now expected to be
approximately $130 million for 2018, compared with the previous
guidance of approximately $100 million, mainly as a result of tax
related items at Tasiast and pit wall slide related costs at Fort
Knox.
Board Chair update
John Oliver, Kinross’ Independent Board Chair
since 2002, has announced that he will retire from his role as
Board Chair effective December 31, 2018. Catherine McLeod-Seltzer,
a Board member since 2005, has been appointed the new Independent
Chair of Kinross, effective January 1, 2019.
Mr. Oliver has made numerous significant
contributions during his long and distinguished directorship at the
Company. He has overseen strategy as Kinross grew and expanded to
be one of the leading gold mining companies in the world. During
his tenure, he also oversaw a number of key Board governance
initiatives, including: a “refresh” of the Board; the development
and implementation of various governance policies, such as Board
diversity; and a restructuring of Board committees. These
initiatives have addressed the evolving business needs of the
Company to position it for future success in a more complex
regulatory and operating environment. Mr. Oliver was also chair of
the Human Resources and Compensation Committee and oversaw
executive compensation and the development and successorship of
senior management. Following a short transition period with the new
Chairperson, Mr. Oliver will not stand for re-election at the 2019
Annual Meeting of Shareholders.
Ms. McLeod-Seltzer has extensive and proven
leadership experience in the mining industry, having been a
founder, Board member and Chief Executive Officer in numerous
mineral companies. She is recognized for her financial expertise,
ability to create growth-focused companies, and has been an
instrumental part of many corporate transactions and mining
ventures. Ms. McLeod-Seltzer was named “Mining Man of the Year” by
The Northern Miner in 1999; given the “Award for Performance” by
the Association of Women in Finance in 1997; named on the Financial
Post’s “Power 50”; has received the “Canada’s Most Powerful Women
Top 100 Award”; and was named one of “100 Global Inspirational
Women in Mining” in 2013 and 2016 by Women In Mining (UK).
“We are pleased that Catherine will take on the
role of Independent Chair and look forward to her guidance and
stewardship as we continue to build on Kinross’ strong foundation
and responsibly deliver on our strategy to create value for all our
stakeholders,” said J. Paul Rollinson, President and CEO. “On
behalf of the Board and Kinross management, I would like to extend
a sincere thank you to John for his leadership and deep commitment
to the Company. John has been an important part of Kinross for more
than 20 years and has overseen Kinross’ tremendous growth during
his chairmanship.”
Conference call details
In connection with the release, Kinross will
hold a conference call and audio webcast on Thursday, November 8,
2018 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: 7793997Outside of Canada
& US – +1 (647) 788-4901; Conference ID: 7793997
Replay (available up to 14 days after the
call):
Canada & US toll-free –
(800) 585-8367; Conference ID: 7793997Outside of Canada
& US – +1 (416) 621-4642; Conference ID: 7793997
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’ 2018 third-quarter unaudited Financial Statements and
Management’s Discussion and Analysis report at www.kinross.com.
Kinross’ 2018 third-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
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Three months ended September 30, |
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Gold equivalent ounces |
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Produced |
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Sold |
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Production cost of sales
($millions) |
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Production cost of sales/equivalent ounce
sold |
|
2018 |
2017 |
|
2018 |
2017 |
|
2018 |
2017 |
|
2018 |
2017 |
|
|
|
|
|
|
|
|
|
|
|
|
Fort Knox |
51,984 |
101,047 |
|
52,197 |
101,077 |
|
$ |
53.0 |
$ |
64.8 |
|
$ |
1,015 |
$ |
641 |
Round Mountain |
94,153 |
120,743 |
|
96,496 |
120,944 |
|
69.0 |
75.7 |
|
715 |
626 |
Bald Mountain |
72,560 |
80,677 |
|
90,931 |
67,598 |
|
53.4 |
46.7 |
|
587 |
691 |
Kettle River - Buckhorn |
- |
17,132 |
|
- |
17,385 |
|
- |
10.3 |
|
- |
592 |
Paracatu |
126,515 |
46,971 |
|
125,700 |
53,076 |
|
97.6 |
53.0 |
|
776 |
999 |
Maricunga |
10,808 |
20,463 |
|
30,442 |
14,129 |
|
22.4 |
8.1 |
|
736 |
573 |
Americas Total |
356,020 |
387,033 |
|
395,766 |
374,209 |
|
295.4 |
258.6 |
|
746 |
691 |
|
|
|
|
|
|
|
|
|
|
|
|
Kupol |
125,870 |
145,759 |
|
123,624 |
142,821 |
|
81.3 |
74.8 |
|
658 |
524 |
Russia Total |
125,870 |
145,759 |
|
123,624 |
142,821 |
|
81.3 |
74.8 |
|
658 |
524 |
|
|
|
|
|
|
|
|
|
|
|
|
Tasiast |
53,363 |
62,065 |
|
50,549 |
62,448 |
|
66.2 |
46.1 |
|
1,310 |
738 |
Chirano (100%) |
56,675 |
65,707 |
|
53,915 |
65,757 |
|
41.7 |
48.0 |
|
773 |
730 |
West Africa Total |
110,038 |
127,772 |
|
104,464 |
128,205 |
|
107.9 |
94.1 |
|
1,033 |
734 |
|
|
|
|
|
|
|
|
|
|
|
|
Operations Total |
591,928 |
660,564 |
|
623,854 |
645,235 |
|
484.6 |
427.5 |
|
777 |
663 |
Less Chirano non-controlling interest (10%) |
(5,668) |
(6,571) |
|
(5,391) |
(6,576) |
|
(4.1) |
(4.8) |
|
|
|
Attributable Total |
586,260 |
653,993 |
|
618,463 |
638,659 |
|
$ |
480.5 |
$ |
422.7 |
|
$ |
777 |
$ |
662 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine months ended September 30, |
|
Gold equivalent ounces |
|
|
|
|
|
|
|
|
Produced |
|
Sold |
|
Production cost of sales
($millions) |
|
Production cost of sales/equivalent ounce
sold |
|
2018 |
2017 |
|
2018 |
2017 |
|
2018 |
2017 |
|
2018 |
2017 |
|
|
|
|
|
|
|
|
|
|
|
|
Fort Knox |
203,375 |
285,933 |
|
204,148 |
287,055 |
|
$ |
165.3 |
$ |
181.2 |
|
$ |
810 |
$ |
631 |
Round Mountain |
288,886 |
338,683 |
|
289,709 |
333,853 |
|
207.6 |
220.9 |
|
717 |
662 |
Bald Mountain |
237,435 |
177,635 |
|
249,803 |
163,553 |
|
127.2 |
121.9 |
|
509 |
745 |
Kettle River - Buckhorn |
- |
72,664 |
|
927 |
73,138 |
|
- |
36.4 |
|
- |
498 |
Paracatu |
375,941 |
293,936 |
|
371,022 |
293,408 |
|
313.9 |
250.4 |
|
846 |
853 |
Maricunga |
52,840 |
72,088 |
|
70,560 |
30,115 |
|
49.6 |
13.0 |
|
703 |
432 |
Americas Total |
1,158,477 |
1,240,939 |
|
1,186,169 |
1,181,122 |
|
863.6 |
823.8 |
|
728 |
697 |
|
|
|
|
|
|
|
|
|
|
|
|
Kupol |
366,469 |
435,150 |
|
370,427 |
435,489 |
|
219.5 |
227.1 |
|
593 |
521 |
Russia Total |
366,469 |
435,150 |
|
370,427 |
435,489 |
|
219.5 |
227.1 |
|
593 |
521 |
|
|
|
|
|
|
|
|
|
|
|
|
Tasiast |
159,417 |
182,966 |
|
159,461 |
181,263 |
|
167.8 |
135.2 |
|
1,052 |
746 |
Chirano (100%) |
175,426 |
179,742 |
|
175,754 |
189,239 |
|
133.2 |
156.8 |
|
758 |
829 |
West Africa Total |
334,843 |
362,708 |
|
335,215 |
370,502 |
|
301.0 |
292.0 |
|
898 |
788 |
|
|
|
|
|
|
|
|
|
|
|
|
Operations Total |
1,859,789 |
2,038,797 |
|
1,891,811 |
1,987,113 |
|
1,384.1 |
1,342.9 |
|
732 |
676 |
Less Chirano non-controlling interest (10%) |
(17,543) |
(17,974) |
|
(17,575) |
(18,924) |
|
(13.3) |
(15.7) |
|
|
|
Attributable Total |
1,842,246 |
2,020,823 |
|
1,874,236 |
1,968,189 |
|
$ |
1,370.8 |
$ |
1,327.2 |
|
$ |
731 |
$ |
674 |
Consolidated balance sheets
(unaudited expressed in millions of United States dollars, except
share amounts) |
|
|
|
|
|
|
|
|
|
|
|
|
|
As at |
|
|
|
September 30, |
|
December 31, |
|
|
|
2018 |
|
2017 |
|
|
|
|
|
|
|
Assets |
|
|
|
|
|
Current assets |
|
|
|
|
|
Cash and cash
equivalents |
|
$ |
470.1 |
|
$ |
1,025.8 |
|
Restricted cash |
|
12.5 |
|
12.1 |
|
Accounts receivable and other assets |
|
191.3 |
|
91.3 |
|
Current income tax recoverable |
|
35.7 |
|
43.9 |
|
Inventories |
|
1,047.7 |
|
1,094.3 |
|
Unrealized fair value of derivative assets |
|
17.3 |
|
17.0 |
|
|
|
1,774.6 |
|
2,284.4 |
|
Non-current assets |
|
|
|
|
|
Property, plant and equipment |
|
5,385.5 |
|
4,887.2 |
|
Goodwill |
|
162.7 |
|
162.7 |
|
Long-term investments |
|
154.8 |
|
188.0 |
|
Investments in joint ventures |
|
24.3 |
|
23.7 |
|
Unrealized fair value of derivative assets |
|
8.4 |
|
3.9 |
|
Other long-term assets |
|
628.9 |
|
574.0 |
|
Deferred tax assets |
|
30.0 |
|
33.3 |
|
Total assets |
|
$ |
8,169.2 |
|
$ |
8,157.2 |
|
|
|
|
|
|
|
Liabilities |
|
|
|
|
|
Current liabilities |
|
|
|
|
|
Accounts payable and accrued liabilities |
|
$ |
456.2 |
|
$ |
482.6 |
|
Current income tax payable |
|
27.3 |
|
35.1 |
|
Current portion of provisions |
|
36.3 |
|
66.5 |
|
Current portion of unrealized fair value of derivative
liabilities |
|
28.0 |
|
1.1 |
|
Deferred payment obligation |
|
30.0 |
|
- |
|
|
|
577.8 |
|
585.3 |
|
Non-current liabilities |
|
|
|
|
|
Long-term debt |
|
1,734.4 |
|
1,732.6 |
|
Provisions |
|
849.0 |
|
830.5 |
|
Unrealized fair value of derivative liabilities |
|
13.7 |
|
0.2 |
|
Other long-term liabilities |
|
139.9 |
|
133.8 |
|
Deferred tax liabilities |
|
277.0 |
|
255.6 |
|
Total liabilities |
|
3,591.8 |
|
3,538.0 |
|
|
|
|
|
|
|
Equity |
|
|
|
|
|
Common shareholders' equity |
|
|
|
|
|
Common share capital |
|
$ |
14,913.4 |
|
$ |
14,902.5 |
|
Contributed surplus |
|
236.4 |
|
240.7 |
|
Accumulated deficit |
|
(10,520.3) |
|
(10,580.7) |
|
Accumulated other comprehensive income (loss) |
|
(73.6) |
|
21.1 |
|
Total common shareholders' equity |
|
4,555.9 |
|
4,583.6 |
|
Non-controlling interest |
|
21.5 |
|
35.6 |
|
Total equity |
|
4,577.4 |
|
4,619.2 |
|
Total liabilities and equity |
|
$ |
8,169.2 |
|
$ |
8,157.2 |
|
|
|
|
|
|
|
Common shares |
|
|
|
|
|
Authorized |
|
Unlimited |
|
Unlimited |
|
Issued and outstanding |
|
1,250,228,821 |
|
1,247,003,940 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated statements of operations
(unaudited expressed in millions of United
States dollars, except share and per share amounts) |
|
|
|
|
|
|
|
|
|
Three months ended |
|
Nine months ended |
|
|
September 30, |
|
September 30, |
|
September 30, |
|
September 30, |
|
|
2018 |
|
2017 |
|
2018 |
|
2017 |
|
|
|
|
|
|
|
|
|
Revenue |
|
|
|
|
|
|
|
|
Metal sales |
|
$ |
753.9 |
|
$ |
828.0 |
|
$ |
2,426.1 |
|
$ |
2,492.7 |
|
|
|
|
|
|
|
|
|
Cost of sales |
|
|
|
|
|
|
|
|
Production cost of sales |
|
484.6 |
|
427.5 |
|
1,384.1 |
|
1,342.9 |
Depreciation, depletion and amortization |
|
204.7 |
|
207.6 |
|
588.1 |
|
629.1 |
Total cost of sales |
|
689.3 |
|
635.1 |
|
1,972.2 |
|
1,972.0 |
Gross profit |
|
64.6 |
|
192.9 |
|
453.9 |
|
520.7 |
Other operating expense |
|
46.7 |
|
55.1 |
|
101.5 |
|
116.3 |
Exploration and business
development |
|
32.5 |
|
26.1 |
|
76.8 |
|
72.0 |
General and administrative |
|
34.2 |
|
31.6 |
|
100.2 |
|
98.8 |
Operating earnings
(loss) |
|
(48.8) |
|
80.1 |
|
175.4 |
|
233.6 |
Other income (expense) - net |
|
(2.6) |
|
(1.2) |
|
5.1 |
|
123.5 |
Equity in losses of joint ventures and
associate |
|
(0.2) |
|
(0.1) |
|
(0.4) |
|
(1.0) |
Finance income |
|
2.5 |
|
3.3 |
|
9.1 |
|
9.4 |
Finance expense |
|
(22.1) |
|
(32.3) |
|
(73.7) |
|
(89.3) |
Earnings (loss) before
tax |
|
(71.2) |
|
49.8 |
|
115.5 |
|
276.2 |
Income tax recovery (expense) - net |
|
(34.1) |
|
10.3 |
|
(112.5) |
|
(50.6) |
Net earnings
(loss) |
|
$ |
(105.3) |
|
$ |
60.1 |
|
$ |
3.0 |
|
$ |
225.6 |
Net earnings (loss) attributable
to: |
|
|
|
|
|
|
|
|
Non-controlling interest |
|
$ |
(0.9) |
|
$ |
- |
|
$ |
(1.1) |
|
$ |
(2.2) |
Common shareholders |
|
$ |
(104.4) |
|
$ |
60.1 |
|
$ |
4.1 |
|
$ |
227.8 |
Earnings (loss) per share attributable
to common shareholders |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
(0.08) |
|
$ |
0.05 |
|
$ |
0.00 |
|
$ |
0.18 |
Diluted |
|
$ |
(0.08) |
|
$ |
0.05 |
|
$ |
0.00 |
|
$ |
0.18 |
|
|
|
|
|
|
|
|
|
Weighted average number of common
shares outstanding (millions) |
|
|
|
|
|
|
|
|
Basic |
|
1,250.2 |
|
1,247.0 |
|
1,249.2 |
|
1,246.5 |
Diluted |
|
1,250.2 |
|
1,257.1 |
|
1,258.7 |
|
1,256.5 |
Consolidated statements of cash flows
(unaudited expressed in millions of United States
dollars) |
|
|
|
|
|
|
|
|
Three months ended |
|
Nine months ended |
|
September 30, |
|
September 30, |
|
September 30, |
|
September 30, |
|
2018 |
|
2017 |
|
2018 |
|
2017 |
Net inflow (outflow) of cash related
to the following activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating: |
|
|
|
|
|
|
|
Net earnings (loss) |
$ |
(105.3) |
|
$ |
60.1 |
|
$ |
3.0 |
|
$ |
225.6 |
Adjustments to reconcile net earnings (loss)
to net cash provided from operating activities: |
|
|
|
|
|
|
|
Depreciation, depletion and amortization |
204.7 |
|
207.6 |
|
588.1 |
|
629.1 |
Gain on disposition of associate and other
interests - net |
- |
|
- |
|
- |
|
(11.0) |
Reversal of impairment charges |
- |
|
- |
|
- |
|
(97.0) |
Equity in losses of joint ventures and
associate |
0.2 |
|
0.1 |
|
0.4 |
|
1.0 |
Share-based compensation expense |
3.7 |
|
3.5 |
|
11.2 |
|
10.1 |
Finance expense |
22.1 |
|
32.3 |
|
73.7 |
|
89.3 |
Deferred tax expense (recovery) |
7.8 |
|
3.7 |
|
35.1 |
|
(13.5) |
Foreign exchange losses (gains) and other |
10.0 |
|
1.6 |
|
26.9 |
|
(45.0) |
Reclamation expense |
- |
|
11.9 |
|
- |
|
13.9 |
Changes in operating assets and
liabilities: |
|
|
|
|
|
|
|
Accounts receivable and other assets |
(74.0) |
|
(76.5) |
|
(118.1) |
|
(33.4) |
Inventories |
15.9 |
|
(60.7) |
|
14.1 |
|
(65.8) |
Accounts payable and accrued liabilities |
65.0 |
|
46.1 |
|
49.0 |
|
28.3 |
Cash flow provided from operating
activities |
150.1 |
|
229.7 |
|
683.4 |
|
731.6 |
Income taxes paid |
(22.9) |
|
(32.0) |
|
(78.2) |
|
(146.4) |
Net cash flow provided from operating
activities |
127.2 |
|
197.7 |
|
605.2 |
|
585.2 |
|
|
|
|
|
|
|
|
Investing: |
|
|
|
|
|
|
|
Additions to property, plant and
equipment |
(276.4) |
|
(204.7) |
|
(770.4) |
|
(584.3) |
Acquisition |
(253.7) |
|
- |
|
(288.8) |
|
- |
Net additions to long-term investments and
other assets |
(6.0) |
|
(32.9) |
|
(36.2) |
|
(48.0) |
Net proceeds from the sale of property, plant
and equipment |
0.8 |
|
1.5 |
|
4.8 |
|
6.3 |
Net proceeds from disposition of associate and
other interests |
- |
|
- |
|
- |
|
267.5 |
Decrease (increase) in restricted cash |
(0.3) |
|
0.4 |
|
(0.4) |
|
(0.7) |
Interest received and other |
1.5 |
|
1.9 |
|
6.5 |
|
5.2 |
Net cash flow used in investing
activities |
(534.1) |
|
(233.8) |
|
(1,084.5) |
|
(354.0) |
Financing: |
|
|
|
|
|
|
|
Issuance of common shares on exercise of
options |
- |
|
- |
|
0.5 |
|
0.8 |
Proceeds from issuance of debt |
80.0 |
|
494.7 |
|
80.0 |
|
494.7 |
Repayment of debt |
(80.0) |
|
(500.0) |
|
(80.0) |
|
(500.0) |
Interest paid |
(27.8) |
|
(28.4) |
|
(57.8) |
|
(62.9) |
Dividend paid to non-controlling interest |
(13.0) |
|
- |
|
(13.0) |
|
- |
Other |
(1.8) |
|
(1.1) |
|
(1.9) |
|
(1.6) |
Net cash flow used in financing
activities |
(42.6) |
|
(34.8) |
|
(72.2) |
|
(69.0) |
Effect of exchange rate changes on
cash and cash equivalents |
0.9 |
|
1.7 |
|
(4.2) |
|
2.9 |
Increase (decrease) in cash and cash
equivalents |
(448.6) |
|
(69.2) |
|
(555.7) |
|
165.1 |
Cash and cash equivalents, beginning
of period |
918.7 |
|
1,061.3 |
|
1,025.8 |
|
827.0 |
Cash and cash equivalents, end of
period |
$ |
470.1 |
|
$ |
992.1 |
|
$ |
470.1 |
|
$ |
992.1 |
|
|
|
|
|
|
|
|
|
Mine |
Period |
Ownership |
Tonnes Ore Mined
(1) |
Ore Processed
(Milled) (1) |
Ore Processed (Heap
Leach) (1) |
Grade (Mill) |
Grade (Heap
Leach) |
Recovery
(2) |
Gold Eq Production
(5) |
Gold Eq Sales
(5) |
Production cost of sales |
Production cost of
sales/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 |
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 |
Q4 2017 |
100 |
8,276 |
3,239 |
4,464 |
0.96 |
0.23 |
82% |
95,182 |
94,724 |
58.7 |
$ 620 |
27.3 |
23.6 |
Q3 2017 |
100 |
7,490 |
3,228 |
6,088 |
0.78 |
0.26 |
81% |
101,047 |
101,077 |
64.8 |
$ 641 |
25.4 |
20.5 |
Round
Mountain |
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 |
Q4 2017 |
100 |
5,429 |
864 |
4,201 |
1.46 |
0.46 |
84% |
98,249 |
104,198 |
81.6 |
$ 783 |
66.2 |
15.3 |
Q3 2017 |
100 |
6,906 |
865 |
5,177 |
1.73 |
0.50 |
81% |
120,743 |
120,944 |
75.7 |
$ 626 |
14.7 |
34.9 |
Bald Mountain
(8) |
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 |
Q4 2017 |
100 |
5,691 |
- |
5,691 |
- |
0.72 |
nm |
105,080 |
99,363 |
47.0 |
$ 473 |
46.6 |
28.6 |
Q3 2017 |
100 |
7,090 |
- |
7,105 |
- |
1.09 |
nm |
80,677 |
67,598 |
46.7 |
$ 691 |
12.6 |
24.6 |
Kettle River-
Buckhorn |
Q3 2018 |
100 |
- |
- |
- |
- |
- |
0% |
- |
- |
$ - |
$ - |
$ - |
$ - |
Q2 2018 |
100 |
- |
- |
- |
- |
- |
0% |
- |
- |
- |
$ - |
- |
- |
Q1 2018 |
100 |
- |
- |
- |
- |
- |
0% |
- |
927 |
- |
$ - |
- |
- |
Q4 2017 |
100 |
- |
- |
- |
- |
- |
0% |
3,906 |
3,949 |
0.4 |
$ 101 |
- |
- |
Q3 2017 |
100 |
- |
43 |
- |
4.36 |
- |
67% |
17,132 |
17,385 |
10.3 |
$ 592 |
- |
0.1 |
Paracatu |
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 |
Q4 2017 |
100 |
6,895 |
8,331 |
- |
0.40 |
- |
75% |
66,023 |
62,843 |
59.8 |
$ 952 |
32.5 |
26.2 |
Q3 2017 |
100 |
227 |
4,067 |
- |
0.42 |
- |
69% |
46,971 |
53,076 |
53.0 |
$ 999 |
32.6 |
30.6 |
Maricunga (8) |
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 |
Q4 2017 |
100 |
- |
- |
- |
- |
- |
nm |
19,039 |
11,201 |
6.9 |
$ 616 |
1.3 |
1.1 |
Q3 2017 |
100 |
- |
- |
- |
- |
- |
nm |
20,463 |
14,129 |
8.1 |
$ 573 |
- |
1.7 |
Russia |
Kupol
(3)(4)(6) |
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 |
Q4 2017 |
100 |
487 |
425 |
- |
10.38 |
- |
95% |
145,301 |
141,518 |
73.8 |
$ 521 |
19.1 |
43.3 |
Q3 2017 |
100 |
491 |
451 |
- |
9.69 |
- |
95% |
145,759 |
142,821 |
74.8 |
$ 524 |
14.4 |
41.4 |
West Africa |
Tasiast |
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 |
Q4 2017 |
100 |
2,534 |
807 |
318 |
2.28 |
0.69 |
92% |
60,274 |
54,993 |
43.0 |
$ 782 |
119.3 |
17.8 |
Q3 2017 |
100 |
2,139 |
764 |
576 |
2.42 |
0.67 |
93% |
62,065 |
62,448 |
46.1 |
$ 738 |
93.8 |
16.7 |
Chirano -
100% |
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 |
Q4 2017 |
90 |
496 |
878 |
- |
2.52 |
- |
92% |
66,285 |
61,973 |
43.3 |
$ 699 |
10.9 |
32.5 |
Q3 2017 |
90 |
456 |
886 |
- |
2.51 |
- |
92% |
65,707 |
65,757 |
48.0 |
$ 730 |
7.7 |
34.8 |
Chirano - 90% |
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 |
Q4 2017 |
90 |
496 |
878 |
- |
2.52 |
- |
92% |
59,656 |
55,776 |
39.0 |
$ 699 |
9.8 |
29.3 |
Q3 2017 |
90 |
456 |
886 |
- |
2.51 |
- |
92% |
59,136 |
59,181 |
43.2 |
$ 730 |
6.9 |
31.3 |
(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: Q3 2018: 72.38 g/t, 85.5%; Q2 2018: 68.65
g/t, 84%; Q1 2018: 69.35 g/t, 81.0%; Q4 2017: 81.85 g/t, 82.8%; Q3
2017: 81.50 g/t, 85.8%. (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: Q3 2018: 80.80:1; Q2 2018: 79.00:1; Q1
2018: 79.25:1; Q4 2017: 76.22:1; Q3 2017:
75.91:1. (6) Dvoinoye ore processed and grade were
as follows: Q3 2018: 106,918, 10.03 g/t; Q2 2018: 121,739, 9.22
g/t; Q1 2018: 103,369, 10.13 g/t; Q4 2017: 127,671 tonnes, 13.44
g/t; Q3 2017: 111,330 tonnes, 15.37 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 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 (loss) to adjusted net earnings (loss) for the periods
presented:
|
|
|
|
|
|
|
|
|
Adjusted Net Earnings
(loss) |
(in millions, except per share amounts) |
Three months ended |
|
Nine months ended |
|
|
September 30, |
|
September 30, |
|
|
2018 |
2017 |
|
2018 |
2017 |
|
|
|
|
|
|
|
Net earnings (loss) attributable
to common shareholders - as reported |
$ |
(104.4) |
$ |
60.1 |
|
$ |
4.1 |
$ |
227.8 |
Adjusting items: |
|
|
|
|
|
|
Foreign exchange
(gains) losses |
2.7 |
2.7 |
|
(1.2) |
5.1 |
|
Gain (loss) on disposition of associate and interests and other
assets - net |
0.8 |
(0.2) |
|
0.9 |
(9.8) |
|
Foreign exchange losses (gains) on translation of tax basis and
foreign exchange on deferred income taxes within income tax
expense |
25.4 |
(12.1) |
|
53.7 |
(10.9) |
|
Brazil power plant acquisition related costs |
3.4 |
- |
|
3.4 |
- |
|
Impairment
reversal(a) |
- |
- |
|
- |
(97.0) |
|
Taxes in respect of
prior periods |
3.6 |
9.9 |
|
23.6 |
39.0 |
|
Mine curtailment and suspension related costs |
- |
15.1 |
|
- |
15.1 |
|
Reclamation and remediation expense |
- |
11.9 |
|
4.5 |
11.9 |
|
Tasiast Phase One commissioning costs |
- |
- |
|
6.4 |
- |
|
Fort Knox pit wall slide related costs |
21.4 |
- |
|
21.4 |
- |
|
Chile weather event related costs |
- |
1.7 |
|
- |
3.3 |
|
Insurance recoveries |
- |
- |
|
- |
(17.5) |
|
Other(b) |
- |
- |
|
0.9 |
1.2 |
|
Tax effect of the above adjustments |
(1.3) |
(5.0) |
|
(3.1) |
(5.8) |
|
|
56.0 |
24.0 |
|
110.5 |
(65.4) |
Adjusted net earnings (loss)
attributable to common shareholders |
$ |
(48.4) |
$ |
84.1 |
|
$ |
114.6 |
$ |
162.4 |
Weighted average number of common
shares outstanding - Basic |
1,250.2 |
1,247.0 |
|
1,249.2 |
1,246.5 |
Adjusted net earnings (loss) per
share |
$ |
(0.04) |
$ |
0.07 |
|
$ |
0.09 |
$ |
0.13 |
|
|
|
|
|
|
|
- During the nine months ended September 30, 2017, the Company
recognized a reversal of impairment charges related to the disposal
of its 25% interest in Cerro Casale.
- “Other” includes non-hedge derivatives losses (gains).
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 |
|
Nine months ended |
|
|
September 30, |
|
September 30, |
|
|
2018 |
2017 |
|
2018 |
2017 |
|
|
|
|
|
|
|
Net cash flow provided from
operating activities - as reported |
$ |
127.2 |
$ |
197.7 |
|
$ |
605.2 |
$ |
585.2 |
|
|
|
|
|
|
|
Adjusting items: |
|
|
|
|
|
|
Working capital
changes: |
|
|
|
|
|
|
Accounts receivable and other assets |
74.0 |
76.5 |
|
118.1 |
33.4 |
|
Inventories |
(15.9) |
60.7 |
|
(14.1) |
65.8 |
|
Accounts payable and other liabilities, including taxes |
(42.1) |
(14.1) |
|
29.2 |
118.1 |
|
|
16.0 |
123.1 |
|
133.2 |
217.3 |
Adjusted operating cash flow |
$ |
143.2 |
$ |
320.8 |
|
$ |
738.4 |
$ |
802.5 |
|
|
|
|
|
|
|
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 |
|
Nine months ended |
|
|
September 30, |
|
September 30, |
|
|
2018 |
2017 |
|
2018 |
2017 |
|
|
|
|
|
|
|
Production cost of sales - as reported |
$ |
484.6 |
$ |
427.5 |
|
$ |
1,384.1 |
$ |
1,342.9 |
Less: portion attributable to Chirano non-controlling
interest |
(4.1) |
(4.8) |
|
(13.3) |
(15.7) |
Attributable production cost of sales |
$ |
480.5 |
$ |
422.7 |
|
$ |
1,370.8 |
$ |
1,327.2 |
|
|
|
|
|
|
|
Gold equivalent ounces sold |
623,854 |
645,235 |
|
1,891,811 |
1,987,113 |
Less: portion attributable to Chirano non-controlling
interest |
(5,391) |
(6,576) |
|
(17,575) |
(18,924) |
Attributable gold equivalent ounces sold |
618,463 |
638,659 |
|
1,874,236 |
1,968,189 |
Consolidated production cost of
sales per equivalent ounce sold |
$ |
777 |
$ |
663 |
|
$ |
732 |
$ |
676 |
Attributable production cost of
sales per equivalent ounce sold |
$ |
777 |
$ |
662 |
|
$ |
731 |
$ |
674 |
|
|
|
|
|
|
|
|
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 |
|
Nine months ended |
|
|
September 30, |
|
September 30, |
|
|
2018 |
2017 |
|
2018 |
2017 |
|
|
|
|
|
|
|
Production cost of sales - as reported |
$ |
484.6 |
$ |
427.5 |
|
$ |
1,384.1 |
$ |
1,342.9 |
Less: portion attributable to Chirano non-controlling
interest |
(4.1) |
(4.8) |
|
(13.3) |
(15.7) |
Less: attributable silver revenues |
(15.7) |
(21.8) |
|
(51.2) |
(67.0) |
Attributable production cost of
sales net of silver by-product revenue |
$ |
464.8 |
$ |
400.9 |
|
$ |
1,319.6 |
$ |
1,260.2 |
|
|
|
|
|
|
|
Gold ounces sold |
610,630 |
628,280 |
|
1,851,687 |
1,933,711 |
Less: portion attributable to Chirano non-controlling
interest |
(5,386) |
(6,560) |
|
(17,548) |
(18,884) |
Attributable gold ounces sold |
605,244 |
621,720 |
|
1,834,139 |
1,914,827 |
Attributable production cost of
sales per ounce sold on a by-product basis |
$ |
768 |
$ |
645 |
|
$ |
719 |
$ |
658 |
|
|
|
|
|
|
|
In June 2013, the World Gold Council (“WGC”)
published its guidelines for reporting all-in sustaining costs and
all-in costs. The WGC is a market development organization
for the gold industry and is an association whose membership
comprises leading gold mining companies including Kinross.
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 |
|
Nine months ended |
|
|
September 30, |
|
September 30, |
|
|
2018 |
2017 |
|
2018 |
2017 |
|
|
|
|
|
|
|
Production cost of sales - as
reported |
$ |
484.6 |
$ |
427.5 |
|
$ |
1,384.1 |
$ |
1,342.9 |
Less: portion attributable to
Chirano non-controlling interest(1) |
(4.1) |
(4.8) |
|
(13.3) |
(15.7) |
Less: attributable(2) silver
revenues(3) |
(15.7) |
(21.8) |
|
(51.2) |
(67.0) |
Attributable(2) production cost of
sales net of silver by-product revenue |
$ |
464.8 |
$ |
400.9 |
|
$ |
1,319.6 |
$ |
1,260.2 |
Adjusting items on an
attributable(2) basis: |
|
|
|
|
|
|
General and
administrative(4) |
34.2 |
31.6 |
|
100.2 |
98.8 |
|
Other operating expense
- sustaining(5) |
10.0 |
15.6 |
|
26.4 |
35.7 |
|
Reclamation and
remediation - sustaining(6) |
11.8 |
23.7 |
|
40.6 |
65.9 |
|
Exploration and
business development - sustaining(7) |
15.0 |
13.6 |
|
40.9 |
38.5 |
|
Additions to property,
plant and equipment - sustaining(8) |
97.1 |
91.2 |
|
232.8 |
270.3 |
All-in Sustaining Cost on a
by-product basis - attributable(2) |
$ |
632.9 |
$ |
576.6 |
|
$ |
1,760.5 |
$ |
1,769.4 |
|
Other operating expense
- non-sustaining(5) |
11.8 |
24.7 |
|
33.4 |
44.2 |
|
Reclamation and
remediation - non-sustaining(6) |
2.9 |
1.5 |
|
5.6 |
4.6 |
|
Exploration -
non-sustaining(7) |
17.3 |
12.3 |
|
35.5 |
33.0 |
|
Additions to property,
plant and equipment - non-sustaining(8) |
158.2 |
102.7 |
|
495.0 |
288.4 |
All-in Cost on a by-product basis
- attributable(2) |
$ |
823.1 |
$ |
717.8 |
|
$ |
2,330.0 |
$ |
2,139.6 |
Gold ounces sold |
610,630 |
628,280 |
|
1,851,687 |
1,933,711 |
Less: portion attributable to Chirano non-controlling
interest(9) |
(5,386) |
(6,560) |
|
(17,548) |
(18,884) |
Attributable(2) gold ounces
sold |
605,244 |
621,720 |
|
1,834,139 |
1,914,827 |
Attributable(2) all-in sustaining
cost per ounce sold on a by-product basis |
$ |
1,046 |
$ |
927 |
|
$ |
960 |
$ |
924 |
Attributable(2) all-in cost per
ounce sold on a by-product basis |
$ |
1,360 |
$ |
1,155 |
|
$ |
1,270 |
$ |
1,117 |
|
|
|
|
|
|
|
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 consolidated statement
of operations, as follows:
(in millions, except ounces and
costs per equivalent ounce) |
Three months
ended |
|
Nine months
ended |
|
|
September 30, |
|
September 30, |
|
|
2018 |
2017 |
|
2018 |
2017 |
|
|
|
|
|
|
|
Production cost of sales - as
reported |
$ |
484.6 |
$ |
427.5 |
|
$ |
1,384.1 |
$ |
1,342.9 |
Less: portion attributable to
Chirano non-controlling interest(1) |
(4.1) |
(4.8) |
|
(13.3) |
(15.7) |
Attributable(2) production cost of
sales |
$ |
480.5 |
$ |
422.7 |
|
$ |
1,370.8 |
$ |
1,327.2 |
Adjusting items on an
attributable(2) basis: |
|
|
|
|
|
|
General and
administrative(4) |
34.2 |
31.6 |
|
100.2 |
98.8 |
|
Other operating expense
- sustaining(5) |
10.0 |
15.6 |
|
26.4 |
35.7 |
|
Reclamation and
remediation - sustaining(6) |
11.8 |
23.7 |
|
40.6 |
65.9 |
|
Exploration and
business development - sustaining(7) |
15.0 |
13.6 |
|
40.9 |
38.5 |
|
Additions to property,
plant and equipment - sustaining(8) |
97.1 |
91.2 |
|
232.8 |
270.3 |
All-in Sustaining Cost -
attributable(2) |
$ |
648.6 |
$ |
598.4 |
|
$ |
1,811.7 |
$ |
1,836.4 |
|
Other operating expense
- non-sustaining(5) |
11.8 |
24.7 |
|
33.4 |
44.2 |
|
Reclamation and
remediation - non-sustaining(6) |
2.9 |
1.5 |
|
5.6 |
4.6 |
|
Exploration -
non-sustaining(7) |
17.3 |
12.3 |
|
35.5 |
33.0 |
|
Additions to property,
plant and equipment - non-sustaining(8) |
158.2 |
102.7 |
|
495.0 |
288.4 |
All-in Cost - attributable(2) |
$ |
838.8 |
$ |
739.6 |
|
$ |
2,381.2 |
$ |
2,206.6 |
Gold equivalent ounces sold |
623,854 |
645,235 |
|
1,891,811 |
1,987,113 |
Less: portion attributable to
Chirano non-controlling interest(9) |
(5,391) |
(6,576) |
|
(17,575) |
(18,924) |
Attributable(2) gold equivalent
ounces sold |
618,463 |
638,659 |
|
1,874,236 |
1,968,189 |
Attributable(2) all-in sustaining
cost per equivalent ounce sold |
$ |
1,049 |
$ |
937 |
|
$ |
967 |
$ |
933 |
Attributable(2) all-in cost per
equivalent ounce sold |
$ |
1,356 |
$ |
1,158 |
|
$ |
1,270 |
$ |
1,121 |
|
|
|
|
|
|
|
- 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
consolidated statement of operations. 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 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 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 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 nine months ended September 30, 2018, primarily relate to
projects at Tasiast, Round Mountain, and Bald Mountain.
- “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” 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): “2018 third-quarter highlights”, “CEO
Commentary”, “Operating results”, “Organic development projects and
opportunities”, “Balance sheet and financial flexibility”,
“Outlook” and “Board Chair update” and include, without limitation,
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;
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, success of exploration,
development and mining activities, currency fluctuations, capital
requirements, project studies, mine life extensions, permit
applications and conversions, restarting suspended or disrupted
operations; continuous improvement initiatives; and resolution of
pending litigation. The words “advance”, “anticipate”,
“assumption”, “believe”, “estimates”, ‘‘expects’’,
“forecast”, “focus”, “forward”, “guidance”, “initiative”,
“measures”, “on budget”, “on schedule”, “outlook”, “plan”,
“potential”, “progress”, “project”, “projection”, “promising”, 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
most recently filed Annual Information Form and our Management’s
Discussion and Analysis 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 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;
commissioning and operation of the SAG mill at Tasiast; exploration
license conversions at Tasiast; and 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; (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 labor
laws in Ghana, new regulations relating to work permits, potential
amendments to customs and mining laws (including but not limited
amendments to the VAT) and the potential implementation of a new
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) and mine plans for the Company’s
mining operations (including but not limited to throughput and
recoveries being affected by metallurgical characteristics at
Paracatu), 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 a debt
rating consistent with the Company’s current expectations; and (15)
that Kinross will integrate the Brazilian power plants, and that
they will operate, in a manner consistent with our current
expectations. 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, 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 these cautionary statements
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 Factors’’ section of our
most recently filed Annual Information Form and the “Risk Analysis”
section of our full-year 2017 and third-quarter 2018 MD&A.
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.
Other informationWhere 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/loss figures in this release represent “net
earnings (loss) 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.”
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